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https://www.courtlistener.com/api/rest/v3/opinions/3517158/

DISSENTING OPINION. The rule is established, without dissent, that a penal statute is one which prescribes a punishment, pecuniary or otherwise, for a wrong to the public, while one which provides for the redress of an injury to an individual *Page 625 is remedial. And the same statute may be both penal and remedial, that is to say, it may be penal in one part and remedial in another. And that is the sort of statute which we have here. But a statute which furnishes redress to an individual will nevertheless be penal if it allow recovery by a party not harmed by the unlawful act, or where a fixed sum is permitted without reasonable relation to the actual damage, or where an arbitrary amount is allowed in addition to the damage. The majority opinion proceeds upon the contention that the issuance of the certificate did no harm to the teacher, wherefore to allow her or her assignee to recover the amount of the certificate would make the statute penal and not remedial. This, it seems to me, is too narrow a construction. By the same reasoning it would follow that, since a person who pays usury is actually harmed only to the extent that he paid more than the legal rate of interest, if allowed to recover all the interest paid, the statute so allowing would be penal and an action barred after one year; but this Court has repeatedly held that the one-year statute does not apply. The statute in question is one among others which have been enacted in recent years in the endeavor to put counties, municipalities and other subdivisions of the state on a cash rather than a credit basis, in the ordinary administration of their affairs. For instance, under Section 5979, Code 1930, it is provided that "no warrant shall be issued or indebtedness incurred by any county or municipality unless there is sufficient money in the particular fund from which the allowance is or must be made, to pay such warrant or indebtedness." For years before the enactment of those statutes, it was no uncommon thing that the warrants or pay certificates of the various subdivisions of the state would, for want of seasonable payment, be peddled around everywhere seeking speculators in depreciated paper who, not knowing themselves what the paper was worth, would buy at whatever the present necessities of the holders would compel them to take, often *Page 626 as low as fifty cents on the dollar, and the pay certificates and pay warrants of teachers were notoriously, and often pitifully, among those subjected to this evil. The paramount purpose of the statute in question was to afford protection to teachers, as well as the holders of these pay certificates, and to remedy the condition in which they so often had found themselves. For several reasons it was not so easy, as in other cases of county or municipal obligations, to provide an effective and at the same time practicable plan in respect to contracts with, and the pay of, teachers. By far the most of the teachers, outside municipal districts, are without any reserved capital and must depend for their livelihood upon their monthly salaries, and that this be paid month by month. Their positions, as related the county superintendent of education, are such that they could scarcely be expected to question any statement made to them by him as to those things pertaining to the inside of his office with which, under the law, he is required to be familiar, and with which they had no reasonable means of becoming familiar. Certainly it is the duty of a county superintendent to know the amount of the funds available for the support and maintenance of the public schools for the current fiscal year, and when the statute made it unlawful for him to incur obligations for the year in excess of such funds, the effect of the statute was that, when the superintendent made a contract with a teacher, such action amounted to a representation on his part to the teacher, and upon which she had the right to rely, that the contract was within the available funds and that the pay certificates issued under the contract would be valid for the full amount thereof. A teacher cannot receive pay without a contract or without a pay certificate issued thereunder. The possession of a contract to teach and the performance of the duties thereunder, entitles the teacher to the pay certificates. When, therefore, the superintendent made the contract *Page 627 carrying, as a legal result, the aforesaid representations by him and the teacher acted on it, as she had the right to do, it was but declaratory of a principle of the common law itself when the statute made the superintendent liable for the amount of the contract and the pay certificates which were merely evidentiary of the contract plus the performance thereof by the teacher. Had she been informed by the superintendent at the time the contract was made, as it was his duty to inform her, that the funds were insufficient, and that therefore the contract was illegal and that no valid pay certificate could be issued thereunder, the teacher could have declined and sought work where she would be paid, and presumably, when nothing to the contrary appears, at as high a rate as the tendered contract carried. To say, therefore, that the illegal issuance of the pay certificate did no harm, and that making the superintendent liable for the amount thereof is penal, is to look at only a part of the picture, is to adhere to the shadow not the substance, is too narrow a construction, and in my judgment results in a denial of simple justice, as well as an incorrect application of the true principles of the law. A common concomitant of unpaid obligations issued by counties, cities, and other subdivisions, is the repeated promise made to the holders that in a little while longer the obligation will be paid. They are besought to wait patiently, and now the court says if, thus further entrapped, they let the short period of a year get by, they get nothing for their work. Had the statute not permitted the certificates to be assigned whereby those with the means to wait could take them, and thus allow the teacher to receive her pittance as earned, a stronger contention for the penalty idea might perhaps be presented; but such is not the statute. Roberds, J., joins in the above dissent. *Page 628

01-03-2023

07-05-2016

https://www.courtlistener.com/api/rest/v3/opinions/2969170/

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA MILTON GODDARD, Plaintiff, v. Civil Action No. 14-1640 (JEB) SERVICE EMPLOYEES INTERNATIONAL UNION LOCAL 32BJ, et al., Defendants. MEMORANDUM OPINION AND ORDER Pro se Plaintiff Milton Goddard filed this action for wrongful termination in District of Columbia Superior Court on August 26, 2014. See ECF No. 1 (Notice of Removal), Atts. 1-2. After Defendants removed the case here and filed their Answer, the Court held an Initial Scheduling Conference on November 10, 2014. At such hearing, Plaintiff informed the Court that he did not wish to proceed with the case. The Court granted his request and dismissed the matter without prejudice. See Minute Order of Nov. 10, 2014. Ten months later, he now moves to reopen the case without offering any reasons for his change of heart. See ECF No. 10. Given his delay and his lack of any explanation therefor, the Court cannot grant the Motion, but Plaintiff may file a new case, assuming that procedural bars such as the statute of limitations so permit. I. Legal Standard Federal Rule of Civil Procedure 60(b) governs relief from final judgments or orders. Rule 60(b)(1) permits a court to “relieve a party . . . from a final judgment, order, or proceeding for the following reasons: . . . mistake, inadvertence, surprise, or excusable neglect.” Motions 1 thereunder must be filed “within a reasonable time . . . and . . . no more than a year after the entry of the judgment.” Fed. R. Civ. P. 60(c)(1). Rule 60(b)(6), the so called “catch-all provision,” conversely, is not subject to a specific time limit, although such motions must also be made “within a reasonable time.” Id. This latter provision allows the vacating of a judgment for “any other reason that justifies relief,” but is only available in “extraordinary circumstances.” Pioneer Inv. Services Co. v. Brunswick Assoc. Ltd. Partnership, 507 U.S. 380, 393 (1993). The Court pauses here for one ancillary issue. When Plaintiff asked that the case be dismissed, the Court did so by Minute Order, but did not enter a separate judgment. Rule 58(c) states that “judgment is entered . . . [when] entered in the civil docket . . . and the earlier of these events occurs: it is set out in a separate document; or 150 days have run from the entry in the civil docket.” In other words, when a district court enters an order that would otherwise constitute a final judgment but fails to set it forth in a separate document as required by Rule 58, the judgment is nevertheless considered final 150 days later. See Cambridge Holdings Group, Inc. v. Fed. Ins. Co., 489 F.3d 1356, 1363-64 (D.C. Cir. 2007). As a result, the Court still properly views Plaintiff’s Motion as one for relief from either a judgment or a final order under Rule 60. II. Analysis As a threshold matter, the Court must discern what type of Rule 60(b) motion Goddard is bringing here, since he never invokes the rule. The Court will nevertheless read the Motion liberally to include requests for relief under both 60(b)(1) and 60(b)(6) given his pro se status. See Haines v. Kerner, 404 U.S. 519, 520 (1972) (pleadings drafted by pro se plaintiff held to less stringent standards than pleading drafted by attorneys). A separate analysis of each subsection follows. 2 A. 60(b)(1) Goddard’s Motion under Rule 60(b)(1) fails at the outset because it has not been made within a “reasonable time,” as required by Rule 60(c)(1). Although the latter Rule imposes a maximum time limit of one year for 60(b)(1) motions, this does not mean that any filing within that period is reasonable. See, e.g., Hilliard v. Int’l City/County Mgmt. Ass’n, No. 08-2201, 2014 WL 5741194, at *1 (D.D.C. Nov. 3, 2014). While the D.C. Circuit “has not identified a standard for assessing ‘reasonable time,’” Salazar ex rel. Salazar v. District of Columbia, 633 F.3d 1110, 1118 (D.C. Cir. 2011), it has indicated that courts should assess “the facts of each case, taking into consideration the interest in finality, the reason for delay, the practical ability of the litigant to learn earlier of the grounds relied upon, and prejudice to the other parties.” Id. at 1118 n.5 (collecting cases) (internal quotation marks and citation omitted). The Court will consider each of these factors. First, finality would be undermined by granting the Motion because the length of delay is significant: Plaintiff waited to file until approximately ten months after he voluntarily dismissed his case. See, e.g., Laxton v. Cincinnati Bell Tel., No. 07-797, 2010 WL 715667, at *5 (S.D. Ohio Feb. 23, 2010) (deeming ten-month delay in filing Rule 60(b) motion to be unreasonable largely due to finality concerns). Second, he offers no explanation whatsoever for the delay. Courts in this district, furthermore, have not given great weight to pro se status when evaluating delays in bringing Rule 60(b) motions. See, e.g., Carvajal v. Drug Enforcement Admin., 286 F.R.D. 23, 27 (D.D.C. 2012) (“That courts will often give pro se inmates more time to learn about case developments, however, does not mean that courts allow inmates significantly more time than other litigants to file [a 60(b) motion] after learning about the developments. 3 Moreover, there is no general excuse for a pro se plaintiff's procedural missteps in a civil case.”); Scott v. United States, No. 05-2043, 2006 WL 1274763, at *1 (D.D.C. May 8, 2006) (finding that pro se 60(b)(1) motion filed more than two months after final judgment was untimely). Third, because Plaintiff does not cite any recently discovered grounds for reconsideration, he cannot claim inability to uncover such information as an excuse for the delay. Fourth, the other parties may be prejudiced as the suit becomes temporally removed from the underlying facts, and as defenses become harder to assemble. See Canales v. A.H.R.E., Inc., 254 F.R.D. 1, 11 (D.D.C. 2008) (holding that “[a]lthough delay in and of itself does not constitute prejudice, the dangers associated with such delay, such as loss of evidence and increased difficulties in discovery, do establish prejudice”) (internal quotation marks omitted). Plaintiff, moreover, has not set forth any harm he will suffer as a result of dismissal without prejudice; for example, he has not alleged a statute-of-limitations complication. Weighing all of the factors, then, the Court concludes that Goddard did not file his request for relief under Rule 60(b)(1) within a reasonable time. Yet, even if he had done so, he still would not prevail here because he cannot satisfy the other factors. He himself voluntarily dismissed the case in open court and has alleged only that “when came to court the first time I we’re confuse [sic].” Mot. at 2. This simple statement does not qualify as “mistake, inadvertence, surprise, or excusable neglect” sufficient to permit a vacating of the dismissal. B. 60(b)(6) Moving to Rule 60(b)(6), which permits relief for “any other reason that justifies” it, the Court begins by noting that Goddard’s request under this rule is also likely untimely. As one court in this district has explained, “In this Circuit, courts almost uniformly deny Rule 60(b)(6) motions as untimely when they are filed more than three months after judgment.” Carvajal, 286 4 F.R.D. at 26; see also Brannum v. Buriltanu, No. 96-302, 1999 WL 680007, at *2 (D.D.C. July 28, 1999) (collecting cases and finding that this Circuit almost always denies 60(b)(6) motions filed more than three months after judgment is filed). A more significant delay is permissible only if the movant bears “no fault for the delay and filed the motion as soon as feasible.” Carvajal, 286 F.R.D. at 27. As discussed at length above, that simply is not the case here. This Court, moreover, has found nothing to suggest that pro se, non-incarcerated plaintiffs should be treated differently in assessing the timeliness of a Rule 60(b)(6) motion. Even were the Motion timely, Plaintiffs ultimately cannot meet the high standard required to obtain relief under Rule 60(b)(6). Although the language of that provision is “essentially boundless[,] . . . the Supreme Court has held that it applies only to ‘extraordinary’ situations,” and the D.C. Circuit has cautioned that it should be used “sparingly.” Twelve John Does v. District of Columbia, 841 F.2d 1133, 1140 (D.C. Cir. 1988) (quoting Ackermann v. United States, 340 U.S. 193, 202 (1950), and Good Luck Nursing Home, Inc. v. Harris, 636 F.2d 572, 577 (D.C. Cir. 1980)). Extraordinary circumstances exist, for example, “‘when a party timely presents a previously undisclosed fact so central to the litigation that it shows the initial judgment to have been manifestly unjust . . . .’” Salazar, 633 F.3d at 1121 (quoting Good Luck Nursing Home, 636 F.2d at 577). The circumstances here are anything but extraordinary. Plaintiff voluntarily dismissed his case and now, ten months later, wants it reopened. The proper recourse is to file another suit, particularly since the case was dismissed without prejudice. 5 III. Conclusion The Court, accordingly, ORDERS that Plaintiff’s Motion is DENIED. IT IS SO ORDERED. /s/ James E. Boasberg JAMES E. BOASBERG United States District Judge Date: September 21, 2015 6

01-03-2023

09-22-2015

https://www.courtlistener.com/api/rest/v3/opinions/8569578/

*167TEXTO COMPLETO DE LA SENTENCIA Comparece ante nos, Raycom National, Inc. (Teleonce), Cyd Marie Fleming, Glamaris Valentín y su Sociedad Legal de Gananciales; Linda Hernández, Millie Gil y Nuria G. Sebazco (en adelante, Raycom), mediante auto de Certiorari presentado el 25 de septiembre de 2003. Nos solicita revisemos la Resolución emitida el 14 de agosto de 2003, por el Tribunal de Primera Instancia (en adelante, TPI), notificada el 29 de agosto de 2003, en la acción civil núm. K DP00-0903 (804). Mediante la aludida Resolución, el foro recurrido denegó la moción de sentencia sumaria presentada por los peticionarios. Habiendo analizado los escritos presentados por las partes, a la luz del derecho aplicable, resolvemos confirmar la Resolución recurrida. I El 21 de febrero de 2000, Teleonce (canal 11 y 9 en Puerto Rico) difundió el programa televisivo “Las Noticias Extra”. Como parte del mismo, de conformidad con la transcripción del programa, se hicieron las siguientes manifestaciones: “Millie Gil Reportera ¿Ha empañetado o pintado una pared alguna vez en su vida? ¿Se siente capaz de levantar una columna de bloques o de madera? ¿Sabría poner ventanas, puertas o losetas a una casa? Si ha contestado que si a algunas (sic) de estas preguntas, usted podría ser elegible para participar en las subastas de por lo menos 100 proyectos de modernización de residenciales[....] Pero no piense que va de albañil o carpintero, usted sería ‘el contratista’, si gana la subasta y no puede cumplir con el trabajo...abandone la obra...y el que venga que arree. Si le parece un chiste de mal gusto, sepa que no lo es, eso ya pasó en tres proyectos de modernización en Ponce, Caguas y Maunabo donde unas cien familias esperan, desde hace dos años que le entreguen sus viviendas. Y seguirán esperando porque el contratista se declaró en quiebraj....] Millie Gil Reportera’ Para estos trabajos de construcción, la Administración de Vivienda Pública y la privatizadora CM Services concedió la subasta inicial a la compañía San Juan Construction and Painting, de José González Alonso. Una empresa que según supo Las Noticias Extra no tenía experiencia en proyectos de esa envergaduraj....] [....] Millie Gil Reportera Sin embargo, un año después de iniciada la modernización del residencial Ponce de León, en Ponce, el contratista abandonó la obra argumentando incapacidad económica. *168 [....] Millie Gil Reportera Las Noticias Extra hizo una inspección ocular de la obra inconclusa en compañía del Ingeniero Carrillo y como verá, su evaluación contrasta dramáticamente con el conformismo institucional. Para empezar, en un año, San Juan Construction sólo completó el siete por ciento de la obra en los primeros dos edificios, mientras el contrato exigía la entrega de un edificio por mes. Ing. Carrillo Al proyecto le falta un 93 por ciento que es una cantidad..., sabes un contratista que se declara en default como una dice a menos de un 10 por ciento, algo grave hay... ”. Así pues, se difundieron expresiones concernientes al alegado incumplimiento de San Juan Construction & Painting, Inc., con un contrato de remodelación para tres residenciales públicos, que ésta suscribiera con el Departamento de Vivienda. San Juan Construction & Painting, Inc., es una corporación privada constituida bajo las leyes del Estado Libre Asociado de Puerto Rico y sus oficiales principales lo son el Sr. José González y la Sra. Brenda de Jesús (en adelante, recurridos). Entre otras expresiones, el reportaje postuló que varios residentes de los referidos complejos de vivienda habían sufrido daños por el alegado incumplimiento de la parte recurrida, al no completar las referidas obras. El 17 de mayo de 2000, la parte recurrida incoó una demanda por difamación y daños y perjuicios en contra de los peticionarios. Los recurridos alegaron, entre otras cosas, que por razón del aludido reportaje habían sufrido daños económicos, así como daños morales a su reputación. Indicaron, que contrario a lo precisado en el reportaje en controversia, éstos nunca se habían acogido a la Ley de Quiebras. Sostuvieron, además, que eran una compañía con experiencia. Asimismo, en cuanto al proyecto visitado por la reportera Millie Gil en compañía del Ing. Luis Carrillo, los recurridos alegaron, que en contrario a lo expresado, el referido proyecto estaba completado en un 50%. A la vez, adujeron que nunca se habían negado a una entrevista, sino que no habían recibido solicitud alguna al respecto. El 5 de julio de 2000, Raycom presentó su Contestación a Demanda. Allí argüyó en síntesis, que los recurridos eran funcionarios públicos por lo cual estaban obligados a probar malicia real en su reclamación. Asimismo, el 28 de julio de 2000, el Ing. Luis Carrillo presentó su contestación a la demanda de autos. Con fecha de 8 de junio de 2001, Raycom presentó ante el foro de instancia una Moción en Solicitud de Sentencia Sumaria. El 6 de julio de 2001, el TPI emitió una Orden concediendo treinta (30) días a la parte recurrida para expresarse en torno a la moción sumaria. En atención a ello, con fecha de 28 de agosto de 2001, esta parte presentó una Oposición a Moción en Solicitud de Sentencia Sumaria. Con fecha de 6 de septiembre de 2001, Raycom presentó una Réplica a la Oposición a Moción en Solicitud de Sentencia Sumaria. [8] El 10 de noviembre de 2001, el TPI emitió una Orden señalando una vista argumentativa a celebrarse el 19 de diciembre de 2001. Así las cosas, el 23 de abril de 2002 se llevó a cabo la vista argumentativa con relación a los planteamientos de ambas partes sobre la sentencia sumaria solicitada. En la misma, las partes tuvieron oportunidad de presentar sus respectivas posiciones respecto a la aplicabilidad de la figura de funcionario público a la parte recurrida. El 26 de junio de 2002, los recurridos presentaron un Suplemento a oposición a Moción en Solicitud de Sentencia Sumaria. El 11 de julio de 2002, Raycom presentó su Contestación a Suplemento a Moción en Solicitud de Sentencia Sumaria. Posterior a ello, el 14 de agosto de 2003, el foro recurrido emitió la Resolución de autos. Por la misma, el TPI declaró No Ha Lugar a la moción de sentencia sumaria solicitada por Raycom. Esta resolución fue notificada el 29 de agosto de 2003. *169No conforme con lo anterior, el 25 de septiembre de 2003, Raycom acudió ante nos mediante Petición de Auto de Certiorari. En la misma, se levantaron los siguientes señalamientos de error: “ERRÓ EL TRIBUNAL DE PRIMERA INSTANCIA AL DETERMINAR QUE LOS DEMANDANTES NO PUEDEN SER CONSIDERADOS COMO ‘FUNCIONARIOS PÚBLICOS’ PARA PROPÓSITOS DE LA ADJUDICACIÓN DE UNA SOLICITUD DE SENTENCIA SUMARIA EN UN PLEITO POR DIFAMACIÓN. ” “ERRÓ EL TRIBUNAL DE PRIMERA INSTANCIA AL DENEGAR LA SOLICITUD DE SENTENCIA SUMARIA FUNDAMENTADA EN LA AUSENCIA DE PRUEBA CLARA, ROBUSTA Y CONVINCENTE DE QUE LOS PETICIONARIOS ACTUARON CON MALICIA REAL AL DISEMINAR LA INFORMACIÓN PERIODÍSTICA OBJETO DE DEMANDA. ” El 7 de noviembre de 2003, emitimos Resolución concediendo treinta (30) días a la parte recurrida para presentar escrito fijando su posición. El 26 de noviembre de 2003, el ing. Luis Carrillo presentó una Moción en Cumplimiento de Resolución y Solicitando Inclusión con la Parte Demandada-Peticionaria. El 4 de diciembre de 2003, declaramos Ha Lugar la anterior moción. El 22 de diciembre de 2003, la parte recurrida presentó su Moción en Cumplimiento de Orden y en Oposición a Solicitud de Certiorari. El 30 de diciembre de 2003, Raycom presentó una Réplica a la Oposición a Solicitud de Certiorari. II “Se dice comúnmente que los derechos humanos son 'fundamentales' Esto únicamente puede implicar que son importantes; que la vida, la dignidad y otros elevados valores humanos dependen de ellos. No significa que sean absolutos y que nunca pueden ser extractados por ningún motivo y bajo ninguna circunstancia; significa que dan derecho a una protección especial, gozando por lo menos de una presunta inviolabilidad a prima facie, cediendo únicamente a intereses sociales obligados, en circunstancias limitadas, durante tiempo y motivos limitados, y por medios limitados. ” Louis Henkin, Los Derechos del Hombre Hoy (México: Editores Asociados, M.S.A., EDAMEX, 1981, trad. Por Aurora Merino del libro The Rights of Man Today, Westview Press: 1978), págs 16-18., según citado en Serrano Geyls, Derecho Constitucional de Estados Unidos y Puerto Rico, Vol. II, 1997, alapág. 767. La Constitución del Estado Libre Asociado de Puerto Rico dispone en su Sección 4 del Artículo II, que: “No se aprobará ley alguna que restringa la libertad de palabra o de prensa o el derecho del pueblo a reunirse en asamblea pacífica y a pedir al gobierno la reparación de agravios. ” Desde su concepción, nuestra Constitución ha sido interpretada como una de factura más ancha que la Carta Magna Federal, reconociendo de manera más abarcadora la extensión de los derechos fundamentales. Empresas Puertorriqueñas de Desarrollo, Inc. v. Hermandad Independiente de Empleados Telefónicos, 2000 J.T.S. 83; López Vives v. Policía, 118 D.P.R. 219 (1987). El lenguaje de avanzada de la Ley Suprema de nuestro pueblo encumbra el respeto por la libertad del hombre, la cual se ha de manifestar plenamente por medio de la expresión. En Puerto Rico se ha defendido vigorosamente el derecho de todo ciudadano a expresarse de manera escrita, verbal o simbólica; se ha reconocido así la importancia intrínseca que atañe a las libertades del hombre. Asoc. de Medicina Podiátrica v. Romero Bassó, 2002 J.T.S. 87; Empresas Puertorriqueñas de Desarrollo, Inc. v. Hermandad Independiente de Empleados Telefónicos, supra; Ramírez de Ferrer v. Mari Brás, 144 D.P.R. 141 (1997). En numerosas oportunidades, el Tribunal Supremo de Puerto Rico ha manifestado su deber insoslayable de defender el ejercicio de la libre expresión. Al analizar la jurisprudencia pertinente, hallamos que las decisiones del Tribunal Supremo de Puerto Rico han versado en su gran mayoría sobre la libertad de palabra; específicamente en su modalidad de contenido de la expresión. Asociación de Maestros de Puerto Rico v. Srio. del Departamento de Educación, 2002 J.T.S. 64; Muñiz v. Adm. del Deporte Hípico, 2002 J.T.S. 8; U.N.T.S. v. Srio. de Salud, 133 D.P.R. 153 (1993); Aponte Martínez v. Lugo, 100 D.P.R. 282 (1971). *170El énfasis en la protección al contenido de la expresión obedece a la posición de primacía que ocupa el contenido dentro del esquema constitucional. Así, ante cualquier reglamentación o actuación gubernamental que censure el contenido de expresión, los tribunales nos vemos compelidos a atender la misma con cautela y celosía. Empresas Puertorriqueñas de Desarrollo, Inc. v. Hermandad Independiente de Empleados Telefónicos, supra. Será necesario, si lo ameritan los hechos, utilizar en ocasiones el escrutinio estricto para salvaguardar el interés de libertad que sea amenazado. Muñiz v. Adm. del Deporte Hípico, supra. No obstante lo anterior, los derechos fundamentales no son absolutos. En ocasiones, han de ceder ante otros intereses, de ser asi justificado y siempre en aras de la menor restricción posible. Asociación de Maestros de Puerto Rico v. Srio. del Departamento de Educación, supra; Hernández Estrella v. Junta de Apelaciones del Sistema de Educación Pública, 147 D.P.R. 840 (1999); Mari Brás v. Casañas, 96 D.P.R. 15 (1968). Como mencionáramos con anterioridad, la libertad de prensa está consagrada en la Sección 4 del Artículo II de nuestra Constitución. Pérez v. Criado, 2000 J.T.S. 105. A través del desarrollo jurisprudencial de la libertad de prensa, se han identificado varias modalidades contenidas en esta doctrina; así la censura previa, el efecto disuasivo (chilling effect) y el derecho a obtener información son las de mayor envergadura al considerar la libertad de prensa. Mientras, en la esfera federal la Constitución de los Estados Unidos de América dispone en su Primera Enmienda: “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof, or abridging the freedom of speech or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances. ” El Tribunal Supremo Federal ha reconocido la importancia de la libertad de prensa ante los intentos de socavarla mediante la censura y las restricciones indebidas. Así por ejemplo, en New York Times Co. v. United States, 403 U.S. 713 (1971), el Tribunal permitió la publicación del material en controversia {“The Pentagon Papers”), negándose a acoger el planteamiento del gobierno que reclamaba la censura del mismo por razón de seguridad nacional. Asimismo, ha reconocido el derecho de la prensa a atender los procedimientos criminales. Richmond Newspapers, Inc. v. Virginia, 448 U.S. 555 (1980). Nuestro Tribunal Supremo reiteradamente se ha pronunciado en torno a la vital importancia que constituye la labor de la prensa en nuestra sociedad. Así, reitera que “nuestra constitución y la federal sitúan la libertad de prensa como derecho fundamental...su esencia estriba en impedir la restricción arbitraria del contenido de publicaciones, así como el medio, lugar y manera que se realicen, no importa su veracidad, popularidad o simpatía...conlleva la libertad de los periódicos para decidir lo que quieren imprimir y la protección al público de recibir la información tal y como es publicada”. (Citas omitidas). Pérez v. Criado, supra, a la pág. 1363. Conforme lo mencionado, y como dijéramos, nuestra Constitución es de factura más ancha que la Constitución Federal, y contiene una visión más abarcadora y protectora de los derechos fundamentales, entre ellos, la libertad de expresión o de prensa. Empresas Puertorriqueñas de Desarrollo, Inc. v. Hermandad Independiente de Empleados Telefónicos y otros, supra. La Constitución del Estado Libre Asociado expone en lo concerniente, “[l]a dignidad del ser humano es inviolable.... ”. Art. II, Sec. 1. Es de evidente plusvalía, y así se ha reconocido, el derecho fundamental que cobija a las personas contra ataques abusivos a la honra y la inviolabilidad de la dignidad del ser humano. Asi pues, [e] l derecho a la intimidad es de tal envergadura que el mismo opera ex propio vigore, y puede hacerse valer entre personas privadas. ..Es por ello que la protección opera tanto frente al Estado como ante personas particulares. Citas omitidas. Castro Cotto v. Tiendas Pitusa, 2003 J.T.S. 101, a la pág. 1131; Véase además: Arroyo v. Rattan Specialties, 117 D.P.R. 35 (1986). *171A su vez, en el ámbito federal, el Tribunal Supremo ha dictaminado que existe un derecho a la privacidad bajo el palio de la Constitución Federal. Como cuestión de hecho, el Tribunal determinó que la Enmienda XIV alberga el derecho a la intimidad, a base del concepto de libertad personal allí encumbrado. Roe v. Wade, 410 U. S. 113 (1973); Whalen v. Roe, 429 U.S. 589 (1977); Borucki v. Ryan, 827 F.2d 836 (1987). Recientemente, el más alto Foro federal decidió que el interés de privacidad de una familia reflejado en que no se publiquen fotos sobre un pariente fallecido en circunstancias misteriosas, derrota el interés público que pueda haber sobre ese asunto. National Archives and Records Administration v. Favish, 124 S.Ct. 1570, resuelto el 30 de marzo de 2004. El Tribunal Supremo de Puerto Rico ha determinado que este fundamental derecho se vulnera, entre otras instancias, cuando se limita la facultad de un individuo de tomar decisiones personales, familiares o íntimas, Pueblo v. Duarte, 109 D.P.R. 596 (1980); o cuando se requiere exponer públicamente la vida íntima de una pareja para poder así divorciarse, Figueroa Ferrer v. E.L.A., 107 D.P.R. 250 (1976). Asimismo, el derecho de intimidad y la protección contra ataques abusivos a la honra y la reputación personal se lesiona, cuando la constante presencia de una foto en los medios de comunicación representa una intromisión indebida en la vida familiar. Colón v. Romero Barceló, 112 D.P.R. 573 (1982). Sin embargo, al igual que algunos de los derechos fundamentales, el derecho a la intimidad no es absoluto. Vega Rodríguez, et als. v. Telefónica de P.R., et als., 2002 J.T.S. 58. Se ha establecido que el criterio rector para extender la protección de la intimidad gravita, en si la persona que lo reclama tiene una expectativa legítima a la intimidad en consideración a los hechos del caso. Castro Cotto v. Tiendas Pitusa, supra. Ill El Tribunal Supremo Federal resolvió la controversia de “figura pública” en N.Y Times v. Sullivan, 376 U.S. 254 (1964). En el aludido caso, el Tribunal determinó, en suma, que si la persona afectada por la información alegadamente difamatoria es una figura pública, tendría entonces que probar que esa información fue propagada mediando malicia real. En vista de ello, el Tribunal Supremo de Puerto Rico acogió lo resuelto por el Tribunal Supremo Federal, en tomo a las acciones de difamación, al enunciar lo siguiente: “New York Times v. Sullivan, marca un nuevo hito en el fortalecimiento de la garantía constitucional de la libertad de prensa al determinar que la publicación de un informe falso o comentarios injustificados relacionados con la conducta oficial de un funcionario público están inmunes de reclamaciones por libelo y gozan de un privilegio restringido, a menos que la información fuera publicada a sabiendas de que era falsa o con grave menosprecio de si era falsa o no. Será necesario de ahí en adelante que el funcionario público demuestre la existencia de malicia real como requisito indispensable para ser indemnizado por daños a su reputación.... ”. Torres Silva v. El Mundo, Inc., 106 D.P.R. 415 (1977), a la pág. 421. Allí mismo, nuestro Tribunal Supremo definió que conforme lo dispuesto en Gertz v. Robert Welch, Inc., 418 U.S. 323 (1974), procedía instaurar un sistema de conciliación entre los intereses de prensa y el de reputación de la persona. Así, pues, “[e]n acciones basadas en libelo, aparte de probar que la información difamatoria sea falsa y que se causen daños reales, existen dos posibilidades respecto a la clasificación de la persona afectada: que sea una figura privada o pública. Bajo la primera, para que la acción prospere, basta con que el afectado establezca la negligencia del autor del escrito o manifestación, según elaborado en el campo del derecho de daños y perjuicios. Sin embargo, respecto a la segunda, es necesario demostrar malicia real.... González Martínez v. López, 118 D.P.R. 190 (1987), a la pág. 192. En síntesis, “...si la persona injuriada no es figura pública, sino privada, las leyes estaduales podrán establecer una norma de responsabilidad menos exigente, siempre que no sea la de responsabilidad sin falta.... ”. Torres Silva v. El Mundo, Inc., supra, a la pág. 421. En adición a lo anterior, el Tribunal Supremo de Puerto Rico adoptó la definición enarbolada por el Tribunal Supremo Federal sobre el concepto de figura pública: *172“’En su mayor parte aquellos que alcanzan este status han asumido roles de especial prominencia en los asuntos de la sociedad. Algunos ocupan posiciones de tal poder e influencias que se consideran figura pública para todo propósito. Mas comúnmente, aquellos clasificados como figura pública se han lanzado a la palestra de una controversia pública en particular para influir en las soluciones de las cuestiones envueltas.’” Torres Silva v. El Mundo, Inc., supra, a la pág. 422, haciendo referencia a lo manifestado en Gertz v. Robert Welch, Inc., 418 U.S 323 (1974). Véanse además: Oliveras v. Paniagua Diez, 115 D.P.R. 257 (1984); Pueblo v. Olivero Rodríguez, 112 D.P.R. 369 (1982). Además, el Tribunal Supremo ha expresado que al momento de determinar si un individuo en particular es un funcionario o figura pública, su “...atención no se ha concentrado tanto en el análisis abstracto del status de la persona afectada como en el contexto específico en que se da la controversia: la naturaleza de la declaración alegadamente difamatoria, el auditorio a que se dirige, los intereses que se sirven o vulneran y la relación funcional entre estos factores....”. Soc. de Gananciales v. López, supra, a la pág. 117; Padilla v. WKAQ Radio, 140 D.P.R. 178 (1996). Predicado en todo ello, el Tribunal Supremo de Puerto Rico tuvo oportunidad de delimitar “los rasgos más peculiares de la figura pública” siendo éstos, a saber: “1. especial prominencia en los asuntos de la sociedad. 2. capacidad para ejercer influencia y persuasión en la discusión de asuntos de interés público; y 3. participación activa en la discusión de controversias públicas específicas con el propósito de inclinar la balanza en la resolución de las cuestiones envueltas. ” Id; González Martínez v. López, 118 D.P.R. 190 (1987). De igual forma, intimó que la figura pública se caracteriza por gozar de un acceso mayor a los medios de comunicación para rebatir la publicación difamatoria, y así enfrentar su efecto. A la vez, el Tribunal acotó que "... se asume que la figura pública se ha expuesto voluntariamente al riesgo de un juicio más riguroso por el público. Pero tal asunción no se justifica en el caso de las figuras privadas que no se han lanzado a la palestra pública y cuyo interés en la reputación personal no ha sido menguado por ninguna actuación voluntaria de su parte....” Bastardillas nuestras. Id., a la pág. 422. Así las cosas, la Ley de Libelo y Calumnia de 1902, 32 L.P.R.A. see. 3141-3149, establece en lo pertinente: “Se entiende por libelo, la difamación maliciosa que públicamente se hace en contra de una persona, por escrito, impreso, signo, retrato, figura, efigie u otro medio mecánico de publicación, tendente a exponer a dicha persona al odio del pueblo o a su desprecio, o a privarle del beneficio de la confianza pública y trato social, o a perjudicarle en sus negocios... ”, 32 L.P.R.A. see. 3142. En tanto, se ha determinado que para que prospere una acción de libelo es necesario probar que: “...a) la información difamatoria es falsa, b) en el caso de funcionarios o figuras públicas, que se publicó a sabiendas de que era falsa o con grave menosprecio de si era falsa o no, c) en el caso de la persona privada, que la publicación se hizo negligentemente, y d) que se causaron los daños reales. ” Torres Silva v. El Mundo, Inc., supra, a la pág. 427; Villanueva v. Hernández Class, 128 D.P.R. 618 (1991). Por otra parte, sabido es que la Regla 36.3 de las de Procedimiento Civil permite a un tribunal dictar sentencia sumaria en aquellos casos en que "las alegaciones, [deposiciones], contestaciones a interrogatorios y admisiones ofrecidas, en unión a las declaraciones juradas, si las hubiere, demostraren que no hay controversia real sustancial en cuanto a ningún hecho material y que como cuestión de derecho debe dictarse sentencia sumaria a favor de la parte promovente". 32 L.P.R.A. Ap. Ill, R. 36.3. *173Este mecanismo procesal es un remedio discrecional extraordinario que se concederá solamente en casos claros en los cuales no exista una controversia real sustancial sobre hechos materiales. García Díaz v. Darex P.R. Inc., 148 D.P.R. 364 (1999); Pinero González v. A.A.A., 146 D.P.R. 890 (1998); PFZ Properties, Inc. v. General Accident Insurance Co., 136 D.P.R. 881 (1994). Su propósito consiste en agilizar los procedimientos judiciales mediante la resolución justa y rápida de un pleito el cual se limita a la aplicación del derecho a unos hechos no controvertidos. Pardo Santos v. Sucn. de Jorge Stella, 145 D.P.R. 816 (1998); PFZ Properties, Inc. v. General Accident Insurance Co., supra. El Tribunal Supremo de Puerto Rico ha establecido que no es aconsejable utilizar el mecanismo procesal de sentencia sumaria en casos donde hay elementos subjetivos, de intención, propósitos mentales o negligencia, y cuando el factor credibilidad sea esencial. Véanse, Soto v. Hotel Caribe Hilton, 131 D.P.R. 294 (1994); Rodríguez Meléndez v. Supermercados Amigo, Inc., 126 D.P.R. 117 (1990); García López v. Méndez García, 88 D.P.R. 363 (1963). La parte promovente tendrá que demostrar la “inexistencia de una controversia real sobre todo hecho material pertinente que a la luz del derecho sustantivo aplicable determinaría una sentencia a su favor como cuestión de ley”. Tello, Rivera v. Eastern Airlines, 119 D.P.R. 83 (1987), a la pág. 86. El Tribunal debe quedar convencido de la inexistencia de controversia sobre hechos materiales y que lo que resta es aplicar el derecho. Roig Commercial Bank v. Rosario Cirino, 126 D.P.R. 613 (1990). Asimismo, el Tribunal podrá dictar sentencia en contra de la parte promovente si como cuestión de derecho procede que la misma se dicte a favor del promovido. Piñero González v. A.A.A., supra; PFZ Properties, Inc. v. General Accident Insurance Co., supra. Es preciso destacar que para derrotar una moción de sentencia sumaria, no basta con la presentación de meras alegaciones; la parte promovida deberá presentar documentación que sitúe en controversia los hechos aludidos por el promovente de la acción. Audiovisual Language v. Sistema de Estacionamiento, 144 D.P.R. 563 (1997). Véanse además, Mercado Vega v. U.P.R., 128 D.P.R. 273 (1991); Tello, Rivera v. Eastern Airlines, supra. No obstante, el hecho de no presentar los referidos documentos no implica que de forma automática proceda la sentencia sumaria, pues ésta sólo deberá dictarse en casos claros. Además, cualquier duda sobre si un hecho ha sido o no contradicho, deberá resolverse en contra del promovente. Es menester subrayar que los casos en donde se presente una solicitud de sentencia sumaria, se han de atender conforme las figuras involucradas. Así pues, en los casos que estén envueltos funcionarios o figuras públicas, el tribunal deberá dictar sentencia a favor de la parte demandada, a menos que este foro determine a base de prueba que la parte demandante puede probar malicia real. Villanueva v. Hernández Class, supra. De igual modo, pero en casos de personas privadas, se ha expuesto que éstos tienen igual carga de prueba. "... [L]a diferencia estriba en el hecho de que, debido a que no se han lanzado voluntariamente a la ‘palestra pública’,...las ‘personas privadas’ sólo vendrán obligadas a demostrar que cuentan con prueba suficiente para establecer que medió negligencia por parte del periódico en la publicación de la noticia difamatoria.... ”. Énfasis suprimido. Id., a la pág. 644. Contando con la comparecencia de las partes, y analizada la controversia de marras bajo el marco doctrinal previamente esbozado, nos hallamos en posición de resolver. Lo hacemos. IV Por estar íntimamente relacionados entre sí, discutiremos en conjunto los errores señalados. Contrario a lo argüido por la peticionaria, con el paso del tiempo, el Tribunal Supremo de los Estados Unidos ha restringido la categoría de individuos que han de considerarse funcionarios o figura pública. Así lo reflejan las decisiones pertinentes al caso de autos. A modo de ejemplo, en Hutchinson v. Proxmire, 443 US 111 (1979), *174un profesor que realizaba estudios médicos demandó a un senador de los Estados Unidos, luego de que este último se refiriera a los aludidos estudios como un desperdicio de fondos públicos, entre otras cosas. Como defensa, el senador levantó que la Cláusula de expresión o debate cubría sus expresiones, y que el profesor era un funcionario o figura pública. De entrada, el Tribunal Supremo Federal enunció que desde New York Times Co. v. Sullivan, supra, esa Corte ha perseguido definir el acomodo requerido para asegurar el debate vigoroso de asuntos de interés público, conforme lo ideó la Primera Enmienda; a la vez que se protege la reputación de los individuos. A su vez, revalidó la definición de figura pública plasmada en Gertz v. Robert Welch, Inc., supra, a saber: “[flor the most part, those who attain this status [of public figure] have assumed roles of special prominence in the affairs of society. Some occupy positions of such persuasive power and influence that they are deemed public figures for all purposes. More commonly, those classed as public figures have thrust themselves to the forefront of particular public controversies in order to influence the resolution of the issues involved. In either event, they invite attention and comment. ” Hutchinson v. Proxmire, supra, a la pág. 134. Luego, en su aplicación del referido estándar, el Tribunal resolvió que el profesor no cumplía con los requisitos de figura pública. Más aún, expresó de forma específica que el hecho de que Hutchinson recibiera fondos públicos para sus investigaciones, no lo convertía de por sí en una figura pública. Acotó en cuanto a ello: “Hutchinson did not thrust himself or his views into public controversy to influence others. Respondents have not identified such a particular controversy; at most, they point to concern about general public expenditures. But that concern is shared by most and relates to most public expenditures; ¡it is not sufficient to make Hutchinson a public figure. If it were, everyone who received or benefited from the myriad public grants for research could be classified as a public figure -a conclusion that our previous opinions have rejected. The ‘use of such subject-matter classifications to determine the extend of constitutional protection afforded defamatory falsehoods may too often result in an improper balance between the competing interests in this areaBastardillas nuestras. Id., a la pág. 135, citando a Time, Inc. v. Firestone, 424 U.S. 448 (1976). Ciertamente, en la esfera federal no existe uniformidad en tomo a quiénes han sido definidos como funcionarios públicos, figura pública y lo que constituye una controversia pública. Advero, estas diferencias se han derivado de la definición que esbozara el Tribunal Supremo Federal, “...while there are widespread differences in how lower appellate courts have defined public officials, public figures, and public controversies, those definitions, at least, were based on relatively clear guidance from the Supreme Court.” W. Wat Hopkins, The Involuntary Public Figure: Not So Dead After All, 21 Cardozo Arts & Ent. L.J. 1 (2003), pág. 2. Así pues, conforme lo mencionado, una de las características de los funcionarios o figuras públicas lo es su acceso a los medios de comunicación. El Tribunal Supremo Federal ha determinado que la figura pública tiene como primer recurso el “utilizar las oportunidades a su disposición para contradecir la mentira o corregir el error y entonces minimizar su impacto adverso a la reputación. ” Gertz v. Robert Welch, Inc., supra. Traducción nuestra. De conformidad con lo expresado, el Tribunal Supremo de Puerto Rico enunció en Soc. de Gananciales v. López, supra, que los rasgos más peculiares de la figura pública son los siguientes: “1. especial prominencia en los asuntos de la sociedad. 2. capacidad para ejercer influencia y persuasión en la discusión de asuntos de interés público; y 3. participación activa en la discusión de controversias públicas específicas con el propósito de inclinar la balanza en la resolución de las cuestiones envueltas. *175Con lo anterior en consideración, procede analicemos si debe considerarse a la parte recurrida como un funcionario o figura pública a tenor con la jurisprudencia aplicable en ambas jurisdicciones. Veamos. La controversia medular de marras, pues, estriba en determinar si en ausencia de designio legislativo o jurisprudencial, de forma automática, se puede considerar a individuos privados que hacen negocios con el Gobierno como funcionarios públicos. De contestarse en la afirmativa, sin duda procedería la contemplación de un análisis riguroso de las características que circundan el mismo, con la consabida imposición de prueba de malicia real en acciones incoadas por éstos alegando difamación. En cuanto al primer requisito, descuella que la parte recurrida es un contratista que mediante el proceso de subasta, contrató con el Gobierno para la remodelación de tres residenciales públicos. En tomo al segundo requisito, de los documentos en autos no surge que su posición como contratista le capacitaba para ejercer influencia en la discusión de asuntos de interés públicos. Esto, pues su propósito primordial era el de remodelar estructuras. No surge prueba de que la parte recurrida ocupara un sitial a través del cual pudiera persuadir o influenciar controversias públicas. En cuanto al tercer requisito, definitivamente éste no se consuma, pues los recurridos no son una figura que tenga acceso a los medios de comunicación para refutar la información alegadamente difamatoria. Asimismo, y en aras de auscultar las características en tomo al funcionario público, se colige que los recurridos no son empleados gubernamentales, entiéndase, que no reciben un jornal por parte del Gobierno. Mas, éstos recibieron fondos del erario público al contratar con el Departamento de Vivienda para la remodelación de los residenciales en cuestión. No obstante, de acuerdo a lo intimado por la jurisprudencia federal, el recibir fondos públicos no les convierte en funcionarios públicos sua sponte. Por su parte, a pesar de que el Tribunal Supremo de Puerto Rico decidió que las corporaciones o individuos privados que tengan contratos con el Gobierno están sujetos a investigación por parte del Contralor, el caso que nos ocupa es claramente distinguible. Raycom argumenta que la parte recurrida ha de ser considerada como funcionario público de conformidad con lo resuelto en HMCA (P.R), Inc. v. Contralor, 133 D.P.R. 945 (1993). No le asiste la razón. Los hechos del aludido caso pueden resumirse de la siguiente forma: HMCA, una corporación privada, suscribió un contrato con el Departamento de Salud para la operación y administración del Hospital Subregional de Carolina. Posteriormente, la Contralor del Estado Libre Asociado de Puerto Rico inició una investigación del Departamento de Salud relacionada al contrato con HMCA. Ante ello, HMCA objetó lo anterior apoyándose primordialmente en su carácter de corporación privada. Sin embargo, el Tribunal Supremo resolvió que el Contralor es un cargo de estirpe constitucional, que tiene como fin el fiscalizar las cuentas públicas y, por tanto, cuenta con amplios poderes investigativos. Asimismo, el Tribunal expresó que “...la autoridad del Contralor para requerir la producción de testimonio o de documentos se determina según su pertinencia con un asunto legítimamente objeto de fiscalización. Ello implica que, cuando el curso de una investigación de los desembolsos públicos así lo exija, el Contralor podrá requerir información de entidades privadas hasta donde sea necesario para esclarecer el asunto en cuestión.... ”. HMCA (P.R.), Inc. v. Contralor, supra, a la pág. 964. En fin, el Tribunal declaró que el Contralor puede requerir información de empresas privadas, cuando esto sea en consecución de fiscalizar los fondos públicos. Es menester notar que el caso se circunscribe a delimitar la facultad del Contralor de Puerto Rico, como funcionario de rango constitucional, para investigar corporaciones privadas en su función inspectora. La parte peticionaria arguye que, “...el Tribunal Supremo ha brindado dimensiones expandidas a conceptos y nociones que anteriormente podían considerarse como exclusivas del ámbito gubernamental. Tal es el caso, por ejemplo, con una dependencia gubernamental que cumple un rol de rango constitucional que se parece en cierta medida al rol constitucional de la prensa como ente fiscalizador: la Oficina del Contralor.... ”. Petición de *176Certiorari, a la pág. 15 en autos. Además, plantea que este caso y su progenie [RDT Construction Corp. v. Contralor, 141 D.P.R. 424 (1996)], han refrendado la facultad de intervenir con personas privadas que hayan contratado o participado de la administración de fondos del fisco. Aun cuando lo anterior es correcto, no así su pretensión de que esta facultad se extendiera de forma automática a entes que no sean la Oficina del Contralor. La premisa que sostiene el argumento de la parte peticionaria para equiparar el caso de marras con el citado caso, es una inconcusamente errónea. Dentro de la jurisprudencia vigente, nada hay que sostenga la posición de la parte peticionaria. A pesar de que en algunos casos se haya expandido el concepto de funcionario público para recoger a un contratista, ello ha sido decidido en cortes de distrito de naturaleza persuasiva. Huelga decir, pues, que los hechos del caso que nos ocupa, difieren en cuestiones neurálgicas que impiden consintamos una analogía entre los mismos. Pese a que nos encontramos ante corporaciones privadas que recibieron fondos públicos, en aquel caso se refrendó la autoridad del Gobierno, a través del Contralor, para conducir investigaciones a corporaciones privadas. Ciertamente, es razonable que compañías que se benefician de dineros provenientes del erario estén sujetas a fiscalización por parte de la Oficina del Contralor. Empero, el que estén sujetos a la fiscalización de la Oficina del Contralor, no los hace figuras públicas. A pesar de que se reconoce a la prensa una labor de investigación, que promueva el debate de ideas enérgico y consecuente, ello no puede en lógica y estricto derecho equipararse a las funciones del Contralor. Este ultimo, es un puesto de origen constitucional que en representación del Gobierno, tiene la cimera consecución del manejo circunspecto de fondos públicos. Por otro lado, la libertad de prensa encumbrada en nuestra Constitución, al igual que en la homónima Federal, preceptúa que el Estado no habrá de intervenir irrazonablemente con el derecho de la prensa para reportar e investigar. Es indubitado que esa no es la situación de autos. Reiteramos. Del análisis a los hechos de autos, es ineluctable concluir que la parte recurrida no reúne los requisitos necesarios para poder considerarse un funcionario público. El hecho de que esta parte haya contratado con el gobierno, de por sí no le atribuye de forma mecánica el carácter de funcionario o figura publica. Contrariamente a lo esgrimido por la parte peticionaria, no hallamos que la prueba refleje que los recurridos ocuparan una posición de especial prominencia en los asuntos de la sociedad, ni que estuviera ante el ojo publico de forma que abandonara voluntariamente su status de persona privada. Además, no se desprende que el recurrido, incluso, tuviera acceso a medios de comunicación para afrontar las expresiones alegadamente lesivas a su reputación. En suma, no hallamos fundamentos en el ordenamiento vigente, o en los hechos del caso, que nos muevan a revocar el dictamen recurrido. Subrayamos que por razón de los hechos particulares al caso de marras, no ha de interpretarse nuestra decisión como una disyunción a la consabida protección del derecho de la libertad de prensa. Es innegable que los miembros de la clase periodística en todas sus manifestaciones rinden una labor meritoria y fragosa, que ha de ser ejercitada sin impedimentos irrazonables. Nuestro dictamen no incide en el derecho de investigar y difundir la información noticiosa que éstos entiendan meritoria. Lo resuelto se circunscribe al balance de unos derechos fundamentales, privacidad y libertad de prensa, a la luz del derecho vigente. Por último, y como corolario de lo antes enarbolado, al determinarse que los recurridos no cumplen con los requisitos de funcionario o figura pública, procedía denegar la mocion sumaria según solicitada por Raycom. Existen dos posibilidades respecto a la clasificación de la persona afectada: que sea una figura privada o pública. Bajo la primera, para que la acción prospere, basta con que el afectado establezca la negligencia del autor del escrito o manifestación, según elaborado en el campo del derecho de daños y perjuicios.González Martínez v. López, supra, a la pág. 192. Las figuras privadas no están obligadas a probar malicia real conforme lo estipulado en New York Times, Inc. v. Sullivan, supra, sino que es suficiente la prueba de negligencia. No se cometieron los errores señalados. *177V Por los fundamentos anteriormente expresados, se confirma la Resolución recurrida. Así lo acordó y lo manda el Tribunal y lo certifica la Secretaria General. Aida Ileana Oquendo Graulau Secretaria General ESCOLIOS 2004 DTA 95 1. Véase, Transcripción, Lunes, 21 de febrero de 2000, Las Noticias Extra, folios num. 8-9 en Apéndice de autos. 2. Véase, Demanda, folio núm. 1 en Apéndice de autos. 3. "Ni la compañía aseguradora, ni el contratista que supervisaba la reconstrucción del residencial Juan Ponce de León, accedieron a una entrevista en cámara.... ”. Véase, Transcripción, supra, folio núm. 11 en Apéndice de autos. 4. Véase, folio núm. 13 en Apéndice de autos. 5. Véase, folio núm. 21 en Apéndice de autos. 6. Véase, folio núm. 160 en Apéndice de autos. 7. Véase, folio núm. 161 en Apéndice de autos. 8. Véase, folio núm. 187 en Apéndice de autos. 9. Véase, folio núm. 200 en Apéndice de autos. 10. Véase, Minuta, folio núm. 202 en Apéndice de autos. 11. Véase, folio núm. 205 en Apéndice de autos. 12. Véase, folio núm. 209 en Apéndice de autos. 13. Véase, folio núm. 216 en Apéndice de autos. 14. “Pensar y expresar el pensamiento libremente, por la palabra hablada o escrita, no solamente es lo propio de la naturaleza humana, sino el medio único del progreso humano. ” Diario de Sesiones de la Convención Constituyente de Puerto Rico, Tomo I, Equity Publishing Corp., 1961, pág. 389, según citado en Asoc. de Maestros v. Sec. de Educación, 2002 J.T.S. 64. 15. Véase, Soto v. Secretario de Justicia, 112 D.P.R. 477 (1982). 16. Señala el tratadista Serrano Geyls, “Existe un grado considerable de controversia sobre la protección que realmente quiso dársele a las libertades de palabra y prensa con la adopción de la Carta de Derechos de 1791. Algunos opinan que su ámbito no excedía el ya reconocido en el derecho inglés para la época, es decir, la protección contra la censura previa.... ”, op. cit., a la pág. 1273. 17. Véase además, CBS Inc. v. Davis, 510 U.S. 1315 (1994); Organization for a Better Austin v. Keefe, 402 U.S. 415 (1971); Carroll v. President and Commissioners of Princess Anne, 393 U.S. 175 (1968); Near v. Minnesota, 283 U.S. 697 (1931). 18. En este caso, un ciudadano particular peticionó a la Oficina del Investigador Independiente que dirigiera Kenneth Starr, la *178entrega de fotografías del cuerpo de Vince Foster luego de éste haberse suicidado. Al momento de cometer suicidio, Vince Foster se desempeñaba como asesor legal del Presidente Clinton. 19. “Para que esa expectativa de intimidad sea razonable, deben concurrir dos elementos: (1) que el reclamante, dentro de las circunstancias de su caso, tenga una expectativa real de que su intimidad se respete (criterio subjetivo), y (2) que la sociedad esté dispuesta a reconocer esa expectativa como legítimo o razonable (criterio objetivo)....”. Vega Rodríguez, et als. v. Telefónica de P.R., et als., supra, a la pág. 978. 20. No empece, la malicia real nunca se presume. Soc. de Gananciales v. López, 116 D.P.R. 112 (1985). 21. “...[Tjhe Supreme Court has indicated that the designation of someone as a public oficial turns on the source of their pay (whether they are a government employee), and their level of responsibility (the Court has repeatedly indicated that not all public employees are public officials for purpose of the New York Times rule). Although the Court has not decided a public official case since Gertz, the lower courts facing the issue have used source of pay and level of responsibility, not voluntary assumption of risk, as the test for public official status....” Susan M. Gilíes, From Baseball Parks to the Public Arena: Assumption of the Risk in Tort Law and Constitutional Libel Law, 75 Temp. L. Rev. 231 (2002), pág. 249. 22. Soc. de Gananciales v. López, supra. 23. Soc. de Gananciales v. López, supra. 24. Soc. de Gananciales v. López, supra.

01-03-2023

11-23-2022

https://www.courtlistener.com/api/rest/v3/opinions/2843708/

Opinion issued April 28, 2010       In The Court of Appeals For The First District of Texas NO. 01-10-00284-CV IN RE BFI WASTE SERVICES OF TEXAS, LP, Relator Original Proceeding on Petition for Writ of Mandamus MEMORANDUM OPINION By petition for writ of mandamus, relator, BFI Waste Services of Texas, LP, challenges the trial court’s orders granting a motion to obtain documents filed in camera. We deny the petition for writ of mandamus. Per Curiam    Panel consists of Justices Jennings, Higley, and Bland.

01-03-2023

09-03-2015

https://www.courtlistener.com/api/rest/v3/opinions/3516134/

The question for decision herein is whether a certain cotton gin is, or is not, a part of the property covered by a lease of what is called the MayFair Plantation executed by appellant as lessor to appellees as lessees. The chancellor found that the lease includes the gin, from which Mrs. McBee appeals. The question is to be determined by a construction of the lease contract in the light of the circumstances surrounding the parties and the property at the time of its execution. The contract, dated November 21, 1942, described the property as: "That certain plantation comprising 889 acres, more or less, and known as MayFair Plantation, situated and located in Sunflower County, Mississippi; said plantation being the same plantation heretofore leased to J.C. Allen of Sunflower County, Mississippi, by the Lessor in Sunflower *Page 152 County, and being the only plantation owned by the Lessor in Sunflower County, and being the same plantation pointed out to the lessees and accepted by them; and together with the rights to connect with the flowing artesian well on adjacent property and the right to use water from said flowing well reasonably necessary for the operation of said plantation, and for the use of the tenants thereon." The lease is for five years, from January 1, 1943, to December 31, 1947, and the consideration to be paid by lessees therefor totals $25,000, payable in designated yearly payments, except that five thousand dollars thereof was to be expended in accordance with the specifications already prepared for the repair of the main dwelling and thirteen of the tenant houses located on said plantation. It will be noted the gin is not specifically mentioned but it is actually located on the MayFair Plantation. At the time of the death of Mr. G.A. Wilson November 30, 1930, he owned, and for many years prior thereto had owned, a number of large plantations in Sunflower County, Mississippi, one of which was the Markham Plantation, comprising some sixteen to seventeen hundred acres of land. The gin in question was located on that plantation. From the date of his death to June 16, 1936, the plantation was operated by his heirs as a unit. On that date his heirs partited the lands of the estate. The deed conveyed to Mrs. McBee, appellant, a daughter of Mr. Wilson, "All that part of the Markham Plantation that lies north and east of the Baird-Klondike Road, and also all of the Northeast Quarter of Section 31, Township 18, North, Range 3, West, together with an undivided one-half interest in and to the gin-house, seed-house and wagon shed lot . . .," describing by metes and bounds the gin lot, followed by this recital: "The above described tract of gin, seed and wagon shed land is situated in the Southeast Quarter of Section 13, Township 18, Range 4 West, and is the Markham Plantation Gin Lot." Then this recital: "It being the intention to *Page 153 describe the May Wilson McBee part of the said Markham Plantation. . . ." The deed then conveyed to Mrs. Yandell, a sister of Mrs. McBee, all of the Markham Plantation not theretofore conveyed to Mrs. McBee, saying that the McBee part is that part of the Markham Plantation north and east of said public road "and the said Northeast Quarter of the said Section thirty-one . . .," which appears to be south of the road. There is a further stipulation that they, Mrs. McBee and Mrs. Yandell, shall "jointly own the gin property." And further: "It being the intention to describe the N.W. Yandell part and the May Wilson McBee part of the said Markham Plantation." All of Mrs. Yandell's land is south of the public road. The gin is located north of the road. This was the first time the gin lot was specifically and separately described, and presumably the reason therefor was to be certain to vest in Mrs. Yandell a half interest therein, since the gin is across the road from her part of the land and is located on the MayFair part. Mr. J.C. Allen rented the Yandell plantation in 1933 and later brought it, with her half interest in the gin property, and he leased for the years 1941 and 1942 the MayFair Plantation from McBee for a rental of $3,500 and $4,000 per year respectively. The gin property was included in his lease with Mrs. McBee, although, because of a question of description in the original lease, a later supplemental description of the gin lot was made, which is not in the record. However, there is no question Mr. Allen got the gin under his lease, for the one consideration, and used and operated Mrs. McBee's half interest therein in connection with MayFair Plantation. It might be added here that during all the time the Markham Plantation was owned by Mr. Wilson and his heirs and down to the lease to appellees this gin was used exclusively in ginning the cotton produced on the Markham Plantation when operated as an entity and on the Yandell and McBee plantations after the partition. It was a private and not a public gin. *Page 154 It will be noted the McBee-Bicket lease described the leased property as "being the same plantation heretofore leased to J.C. Allen. . . ." Shortly after going into possession of the premises, the Bickets, because of some confusion in "certifying" the cotton seed from the joint operation, made an arrangement with Allen for the exclusive operation by him of the gin, and in August, 1943, appellant had an offer of $5,800 for purchase of her interest therein, which situation gave rise to this litigation. It is explained in the evidence that the reason the lease dealt specifically with the rights of Mrs. McBee in the artesian well was because the well is located south of the road and on the Yandell part. Mr. Dalton McBee, brother-in-law of appellant, and who assisted her in the management of MayFair Plantation, and who conducted the preliminary negotiations for the lease with the Bickets, testified: "The only thing said with reference to the gin, when we were talking about him buying it — he said he wasn't interested in the gin." That was prior to the lease negotiations and said to Mr. Bicket who was discussing the purchase of the plantation. Appellant testified that ". . . it (the gin) does not look like it belongs to the plantation." On the other hand, it is shown there was no fence or enclosure about the gin property separating it from the rest of the plantation. From the foregoing it is clear, we think, that this gin was used and considered a part of the plantation, and was included within the designation "MayFair Plantation" as used in the lease. This conclusion is strengthened by the certainty of confusion and conflict which would result from the attempt to operate this gin one-half public, or by not owning MayFair Plantation, and the other half private in ginning the cotton from the Yandell plantation. It is difficult to see how such public operation of a one-half interest, or the use of that half interest in *Page 155 ginning cotton from plantations other than MayFair, could be adopted and made to conform to the proper use and operation of the other half interest in ginning the cotton produced on the Yandell plantation. Affirmed.

01-03-2023

07-05-2016

https://www.courtlistener.com/api/rest/v3/opinions/4240637/

Fourth Court of Appeals San Antonio, Texas MEMORANDUM OPINION No. 04-17-00784-CV ESTATE OF Estella Q. CAMPOS, Deceased From the Probate Court No. 2, Bexar County, Texas Trial Court No. 2014PC3884 Honorable Tom Rickhoff, Judge Presiding PER CURIAM Sitting: Patricia O. Alvarez, Justice Luz Elena D. Chapa, Justice Irene Rios, Justice Delivered and Filed: January 24, 2018 DISMISSED FOR WANT OF JURISDICTION In the case underlying this appeal, the trial court signed an appealable order on September 22, 2017. The deadline to file a motion for new trial was October 23, 2017. See TEX. R. CIV. P. 329b(a). Because no motion for new trial or other timely postjudgment motion that would extend the deadline to file a notice of appeal was filed, the notice of appeal was due thirty days after the judgment was signed, on October 23, 2017. TEX. R. APP. P. 26.1. A motion for extension of time to file a notice of appeal was due not later than November 7, 2017. See id. R. 26.3. Appellant’s notice of appeal was filed on November 22, 2017, fifteen days after the last day to timely file the notice. See TEX. R. APP. P. 26.3. Because Appellant’s notice of appeal appeared to be untimely, we ordered Appellant to show cause in writing not later than January 3, 2018, why this appeal should not be dismissed for want of jurisdiction. See TEX. R. APP. P. 42.3(a); 04-17-00784-CV Verburgt v. Dorner, 959 S.W.2d 615, 617 (Tex. 1997) (“[O]nce the period for granting a motion for extension of time under Rule [26.3] has passed, a party can no longer invoke the appellate court’s jurisdiction.”). We warned Appellant that if she failed to respond as ordered within the time provided, this appeal would be dismissed. See TEX. R. APP. P. 42.3(c). On December 28, 2017, Appellant filed a partially completed docketing statement. But to date, Appellant has not filed a response to our December 13, 2017 order requiring her to show how this court has jurisdiction in this appeal. Contra id. R. 42.3(c). We conclude Appellant’s notice of appeal was not timely filed, and Appellant did not invoke this court’s jurisdiction. See Verburgt, 959 S.W.2d at 617. We dismiss this appeal for want of jurisdiction. See TEX. R. APP. P. 42.3(a). PER CURIAM -2-

01-03-2023

01-31-2018

https://www.courtlistener.com/api/rest/v3/opinions/4160687/

[Cite as State v. Watson, 2017-Ohio-1403.] IN THE COURT OF APPEALS TWELFTH APPELLATE DISTRICT OF OHIO BUTLER COUNTY STATE OF OHIO, : Plaintiff-Appellee, : CASE NO. CA2016-08-159 : OPINION - vs - 4/17/2017 : KEVIN WATSON, : Defendant-Appellant. : CRIMINAL APPEAL FROM BUTLER COUNTY COURT OF COMMON PLEAS Case No. CR87-06-0303 Michael T. Gmoser, Butler County Prosecuting Attorney, Lina N. Alkamhawi, Government Services Center, 315 High Street, 11th Floor, Hamilton, Ohio 45011, for plaintiff-appellee Barney DeBrosse, LLC, Derek A. DeBrosse, 503 South Front Street, Suite 240B, Columbus, Ohio 43215, for defendant-appellant HENDRICKSON, P.J. {¶ 1} Defendant-appellant, Kevin Watson, appeals a decision of the Butler County Court of Common Pleas, dismissing his motion for leave to file a motion for new trial and his motion for new trial and/or petition for postconviction relief. For the reasons that follow, we affirm the decision of the trial court. {¶ 2} We have previously detailed the facts of appellant's case as follows: Butler CA2016-08-159 {¶ 3} On the evening of June 3, 1987, Eli Mast and Krista Toney were checking lottery receipts at Mast's New and Used Furniture Store located at 427 South Second Street in Hamilton, Ohio. State v. Watson, 12th Dist. Butler No. CA88-02-014, 1989 Ohio App. LEXIS 1165, *1 (Mar. 31, 1989) (Watson I). Two juveniles, Marlon Moon, age 15, and Willie Prater, age 16, were in the rear of the store playing video games. Id. At approximately 7:30 p.m., a black man entered the store carrying a gym bag and a 12-gauge shotgun. Id. The man ordered Mast to lie face down on the floor and then threw the gym bag at Toney and told her to fill it with money. Id. Moon and Prater ran into a back room, apparently unnoticed by the assailant. Id. at *2. As Toney filled the gym bag with money, the assailant placed the shotgun at the back of Mast's head and fired once, killing Mast instantly. Id. He then pointed the gun at Toney and threatened to kill her before running out of the store. Id. {¶ 4} The police arrived and Toney provided a description of the assailant. Id. The next day, Donald Cook reported that Rodney Henderson had stolen a twelve-gauge shotgun from him the day of the robbery at 6:30 p.m. Id. Cook explained that he was conversing with Henderson and appellant, and then, Henderson left the room and retrieved a shotgun from the trunk of Cook's car. Id. at *2-3. According to Cook, Henderson loaded the gun with seven shells and showed it to appellant, who nodded his head in approval when asked, "will this do?" Id. at *3. Cook unsuccessfully protested giving the gun to Henderson. Id. Moon, Prater, and Toney all positively identified appellant as the man they saw in the store in statements made both before and during the trial. Id. at *6. Toney recognized that appellant was the assailant because appellant had stayed at her house the previous night with her stepbrother Rodney Henderson. Id. at *7. {¶ 5} On October 31, 1987, appellant was adjudged guilty by a jury in the Butler County Court of Common Pleas of one count of aggravated murder with a firearm specification and one count of aggravated robbery with a firearm specification. Id. at *3-4. -2- Butler CA2016-08-159 The jury recommended that appellant be sentenced to death, the trial court accepted the recommendation, and on November 12, 1987, sentenced appellant to death. Id. at *4. {¶ 6} Appellant presented seven assignments of error to this court in his direct appeal. Id. We overruled all seven assignments of error and affirmed the trial court's judgment. Id. Appellant appealed his case to the Ohio Supreme Court, which found that a death sentence was an inappropriate penalty, and remanded the case to the trial court for the imposition of a life sentence. State v. Watson, 61 Ohio St. 3d 1, 18 (1991) (Watson II). On remand, the trial court imposed a sentence of life imprisonment with eligibility for parole after 30 years for the aggravated murder conviction, to be served consecutively with the terms of incarceration imposed for the aggravated robbery conviction and the firearm specification. State v. Watson, 76 Ohio App. 3d 258, 260 (12th Dist.1992) (Watson III). Appellant appealed the trial court's sentence to this court, and we affirmed the judgment of the trial court. Id. A motion for leave to appeal to the Supreme Court of Ohio was overruled in State v. Watson, 65 Ohio St. 3d 1421 (1992) (Watson IV). {¶ 7} On September 16, 1996, appellant filed a petition for postconviction relief pursuant to R.C. 2953.21. Appellant alleged the state suppressed exculpatory evidence and that evidence existed that Henderson admitted he was the person who murdered Mast. Appellant supported the latter argument with the affidavit of Larry Smith, who served prison time with Henderson. We affirmed the trial court's decision to dismiss appellant's petition and the Ohio Supreme Court declined jurisdiction. State v. Watson, 126 Ohio App. 3d 316, 327 (12th Dist.1998) (Watson V), jurisdiction declined by State v. Watson, 82 Ohio St. 3d 1413 (1998) (Table) (Watson VI). {¶ 8} On February 16, 2016, appellant filed his instant motion for leave to file a motion for new trial and his motion for new trial and/or petition for postconviction relief. Appellant supported his present motions with his own affidavit and Smith's affidavit from -3- Butler CA2016-08-159 1996, as well as the affidavits of Prater, Michelle Williams, Kimberly Blair, and Zanetta Williams. {¶ 9} Appellant avers he has always maintained his innocence and has pursued proving such with reasonable diligence and any delay in bringing the present motions/petition was caused by the Innocence Project dropping his case, which forced him to search for new counsel while incarcerated with limited financial resources. Smith avers that while incarcerated together, Henderson admitted to murdering Mast. Prater avers he was young and very afraid when questioned, so he was eager to please the police; therefore, he has "had misgivings about [his] identification" of appellant and truly does not believe appellant killed Mast. Michelle Williams avers she is related to Henderson and when she was seven years old, she recalls Henderson admitting to shooting Mast. Blair avers she had a child with Henderson and lived with him in the 1990s until their separation in July 1997. Blair further avers that while they lived together, Henderson admitted to killing Mast. Zanetta Williams avers she and Henderson were close friends, and that, during the late 1990s Henderson admitted to killing Mast. Michelle Williams, Blair, and Zanetta Williams all aver Henderson died of an apparent overdose in 2000. {¶ 10} The trial court denied appellant's present motion for leave to file a motion for new trial and motion for new trial and/or petition for postconviction relief without holding an evidentiary hearing and this appeal followed {¶ 11} Assignment of Error No. 1: {¶ 12} THE TRIAL COURT ABUSED ITS DISCRETION IN DENYING MR. WATSON'S MOTION FOR NEW TRIAL OR IN THE ALTERNATIVE PETITION FOR POSTCONVICTION RELIEF. {¶ 13} In his sole assignment of error, appellant presents four issues for review. Appellant asserts he has shown by clear and convincing proof that he was unavoidably -4- Butler CA2016-08-159 prevented from discovering the evidence supporting his motion for leave within the time requirements as set forth in Crim.R. 33 and R.C. 2953.23. Appellant further argues the affidavits submitted in his motion for new trial and/or petition for postconviction relief did more than merely impeach or contradict former evidence as well as that they are reliable and credible. Finally, appellant contends the trial court abused its discretion by denying his motions/petition without holding a hearing on the matter. {¶ 14} "[A] postconviction proceeding is not an appeal of a criminal conviction but, rather, a collateral civil attack on the judgment." State v. Calhoun, 86 Ohio St. 3d 279, 281 (1999). A trial court's decision to grant or deny a postconviction petition pursuant to R.C. 2953.21 is upheld absent an abuse of discretion. State v. Gondor, 112 Ohio St. 3d 377, 2006-Ohio-6679, ¶ 58. Likewise, Crim.R. 33 motions for new trial are not to be granted lightly and will not be disturbed absent an abuse of discretion. State v. Thornton, 12th Dist. Clermont No. CA2012-09-063, 2013-Ohio-2394, ¶ 21. A review under the abuse of discretion standard is a deferential review. State v. Morris, 132 Ohio St. 3d 337, 2012-Ohio- 2407, ¶ 14. An abuse of discretion is more than an error of law or judgment. Rather, it suggests the "trial court's decision was unreasonable, arbitrary or unconscionable." State v. Perkins, 12th Dist. Clinton No. CA2005-01-002, 2005-Ohio-6557, ¶ 8. MOTION FOR LEAVE {¶ 15} Crim.R. 33 provides a new trial may be granted on a defendant's motion for any of six causes materially affecting the defendant's substantial rights, including "[w]hen new evidence material to the defense is discovered, which the defendant could not with reasonable diligence have discovered and produced at the trial." Crim.R. 33(A)(6). Crim.R. 33(B), provides, in pertinent part: Motions for new trial on account of newly discovered evidence shall be filed within one hundred twenty days after the day upon which the verdict was rendered * * *. If it is made to appear by -5- Butler CA2016-08-159 clear and convincing proof that the defendant was unavoidably prevented from the discovery of the evidence upon which he must rely, such motion shall be filed within seven days from an order of the court finding that he was unavoidably prevented from discovering the evidence within the one hundred twenty day period. Therefore, appellant must establish by "clear and convincing proof that [he] was unavoidably prevented from the discovery of the evidence upon which he must rely." Thornton at ¶ 18, discussing Crim.R. 33(B). Unavoidable delay results "'when the [appellant] had no knowledge of the existence of the ground supporting the motion for a new trial and could not have learned of the existence of that ground within the required time in the exercise of reasonable diligence.'" Id., quoting State v. Rodriguez-Baron, 7th Dist. Mahoning No. 12-MA- 44, 2012-Ohio-5360, ¶ 11. Clear and convincing proof requires appellant to establish more than a mere allegation he was unavoidably prevented from discovering the evidence he now seeks to introduce to support his motion for leave to file a motion for new trial. Thornton at ¶ 19. To meet his burden, the measure or degree of proof appellant must demonstrate is that "which will produce in the mind of the trier of facts a firm belief or conviction as to the allegations sought to be established." Cross v. Ledford, 161 Ohio St. 469, 477 (1954). {¶ 16} Because the present matter is well outside the 120-day period, appellant was required to obtain leave of court to file a motion for new trial. State v. Williams, 12th Dist. Butler No. CA2003-01-001, 2003-Ohio-5873, ¶ 17. If leave of court is given to file a motion for new trial, the defendant must then demonstrate the alleged newly discovered evidence "(1) discloses a strong probability that it will change the result if a new trial is granted, (2) has been discovered since the trial, (3) is such as could not in the exercise of due diligence have been discovered before the trial, (4) is material to the issues, (5) is not merely cumulative to former evidence, and (6) does not merely impeach or contradict the former evidence." State v. Petro, 148 Ohio St. 505 (1947), syllabus. -6- Butler CA2016-08-159 {¶ 17} Likewise, appellant's petition for postconviction relief is untimely. R.C. 2953.21(A)(2) states a petition for postconviction relief must be filed no later than 365 days after the date on which the trial transcript is filed with the court of appeals in the direct appeal. R.C. 2953.23(A)(1)(a) thru (b) provide that an untimely petition for postconviction relief may be considered by a trial court where "the petitioner [demonstrates he] was unavoidably prevented from discovery of the facts upon which the petitioner must rely to present the claim for relief" and the "petitioner shows by clear and convincing evidence that, but for constitutional error at trial, no reasonable factfinder would have found the petitioner guilty of the offense of which the petitioner was convicted * * *." {¶ 18} Appellant argues that he was unavoidably prevented from discovering the affidavits relied upon to support his motion for leave, and therefore, the trial court abused its discretion by finding otherwise. Appellant contends that it would have been impossible for him to produce this evidence at trial because it did not exist at such time and did not become available until the affiants later came forward. {¶ 19} With respect to Smith's affidavit, the trial court properly found it did not constitute newly discovered evidence, as the affidavit was previously addressed by the trial court when it dismissed appellant's first petition for postconviction relief, which we affirmed in Watson V. {¶ 20} The trial court summarily found appellant failed to meet his burden to show by clear and convincing proof he was unavoidably prevented from discovering the remainder of the evidence within the parameters of Crim.R. 33 and R.C. 2953.23, based on the factors in Petro and an analysis of the reliability and credibility of each supporting affidavit. While the analysis conducted by the trial court is certainly pertinent to ruling on whether to grant appellant's motion for new trial and/or petition for postconviction relief, the framework for ruling on appellant's motion for leave begins with an examination of whether new evidence -7- Butler CA2016-08-159 material to appellant's defense was discovered that the appellant could not with reasonable diligence have discovered and produced at trial. If appellant meets his burden under Crim.R. 33 and R.C. 2953.23 for newly discovered evidence, then the question becomes whether such evidence warrants granting a new trial or appellant's petition for postconviction. {¶ 21} In consideration of Prater's affidavit, appellant has failed to demonstrate he was unavoidably prevented from presenting such evidence at trial. Prater testified as a witness for the state at appellant's trial in 1987. Appellant, with reasonable diligence, could have discovered Prater's "misgivings" concerning his trial testimony within the periods prescribed by Crim.R. 33 and R.C. 2953.23 for filing a timely motion for new trial and petition for postconviction relief. Furthermore, neither affidavit provides an explanation as to why Prater's "misgivings" about his trial testimony was not discovered earlier. For instance, the affidavits neither address why it was impossible to discuss the issue with Prater earlier nor is there any indication that Prater refused to recant his trial testimony prior to 2011. Therefore, appellant has failed to meet his burden of proof to establish unavoidable prevention in seeking leave to file his motion/petition with respect to Prater's affidavit. {¶ 22} With respect to the affidavits of Michelle Williams, Blair, and Zanetta Williams, appellant has met his burden to demonstrate he could not have with reasonable diligence discovered and produced such evidence at trial. There is no indication that appellant had knowledge of the existence of the affiants claims within the prescribed periods. Nor was it possible for appellant to possess such knowledge since Henderson's alleged admissions did not occur until the 1990s. Therefore, appellant has met his burden of proof to establish unavoidable prevention in seeking leave to file his motion/petition with respect to the affidavits of Michelle Williams, Blair, and Zanetta Williams. Accordingly, the trial court erred by finding appellant did not meet his burden of proof for these three affidavits. However, as demonstrated by our analysis below, this error was not more than an error of law or judgment -8- Butler CA2016-08-159 necessitating a finding the trial court abused its discretion. MOTION FOR NEW TRIAL AND/OR PETITION FOR POSTCONVICTION RELIEF {¶ 23} Appellant asserts the affidavits submitted in support of his motion/petition do more than merely impeach or contradict former evidence – as the trial found – but rather, they establish a new trial would likely have resulted in a different result. Appellant further asserts the trial court erred in finding the supporting affidavits unreliable and not credible. Appellant contends the trial court further erred by making these findings without holding an evidentiary hearing. Therefore, appellant argues the trial court abused its discretion by denying appellant's motion for new trial and/or petition for postconviction relief. {¶ 24} The Ohio Supreme Court has stated "[t]he trial court may, under appropriate circumstances in postconviction relief proceedings, deem affidavit testimony to lack credibility without first observing or examining the affiant." State v. Calhoun, 86 Ohio St. 3d 279, 284 (1999). "That conclusion is supported by common sense, the interests of eliminating delay and unnecessary expense, and furthering the expeditious administration of justice." Id. Likewise, the decision to hold an evidentiary hearing on a motion for new trial is left to the sound discretion of the trial court. State v. Zielinksi, 12th Dist. Warren No. CA2014-05-069, 2014-Ohio-5318, ¶ 16. {¶ 25} We note that we need not further address Smith's affidavit because the trial court properly found that it did not constitute newly discovered evidence. Likewise, appellant failed to meet his burden for unavoidable prevention in regards to Prater's affidavit. Nonetheless, even if we assume arguendo appellant had met his burden, as discussed below, Prater's affidavit is still insufficient to warrant the granting of appellant's motion/petition. {¶ 26} As stated above, to warrant the granting of a motion for new trial based on newly discovered evidence in a criminal case, appellant must show the new evidence (1) -9- Butler CA2016-08-159 discloses a strong probability of a different result if the motion is granted, (2) the evidence has been discovered since the trial, (3) it could not have been discovered in the exercise of due diligence prior to trial, (4) is material to the issues, (5) is not merely cumulative of former evidence, and (6) does not merely impeach or contradict the former evidence. State v. Petro, 148 Ohio St. 505 (1947), syllabus. {¶ 27} In making credibility determinations, the trial court should consider all the relevant factors, including, but not limited to "(1) whether the judge reviewing the postconviction relief petition also presided at the trial, (2) whether multiple affidavits contain nearly identical language, or otherwise appear to have been drafted by the same person, (3) whether the affidavits contain or rely on hearsay, (4) whether the affiants are relatives of the petitioner, or otherwise interested in the success of the petitioner's efforts, and (5) whether the affidavits contradict evidence proffered by the defense at trial." State v. Calhoun, 86 Ohio St. 3d 279, 285 (1999). "[A] trial court may find sworn testimony in an affidavit to be contradicted by evidence in the record by the same witness, or to be internally inconsistent, thereby weakening the credibility of that testimony." Id. {¶ 28} Appellant contends the trial court erred by not considering the Calhoun factors in its credibility analyses. Specifically, appellant asserts the trial court should have been limited to the five factors listed in Calhoun, and thus, the trial court's consideration of the timeliness of information contained in the affidavits was improper. However, appellant's argument that Calhoun provides an exclusive listing of the factors to be considered does not comport with the plain language of the opinion. The case provides that a trial court should "consider all relevant factors", and then, proceeds to list five specific factors as "among" the relevant factors for a trial court to consider. Accord id. ("Depending on the entire record, one or more of these or other factors may be sufficient to justify the conclusion that an affidavit asserting information outside the record lacks credibility"). Therefore, contrary to appellant's - 10 - Butler CA2016-08-159 assertion otherwise, the timeliness of bringing forth the affidavits and the fact they were not offered until well after Henderson's death were relevant factors for the trial court to consider. {¶ 29} Appellant argues the trial court erred in its finding that Prater's affidavit was unreliable and not credible because it unequivocally states he does not believe appellant shot Mast. Appellant states Prater was a key prosecutorial witness since he identified appellant as the shooter; therefore, his recanted testimony tends to create a strong probability of a different result at a new trial. Appellant further argues that individually or collectively, the affidavits of Michelle Williams, Blair, and Zanetta Williams create a strong possibility of a different result at trial because they each identify Henderson as the actual shooter. {¶ 30} We first note that a claim of newly discovered evidence founded in the recantation of the testimony of an important witness does not alone entitle the appellant to a new trial. State v. Wood, 12th Dist. Madison No. CA97-08-034, 1998 Ohio App. LEXIS 2361, *4 (June 1, 1998). Rather, when such a motion is brought, the trial court, acting as the finder of fact, must assess the credibility of the alleged recanting testimony. Id., citing State v. Moore, 99 Ohio App. 3d 748, 755 (1st. Dist.1994); see also Taylor v. Ross, 150 Ohio St. 448 (1948), paragraph three of the syllabus ("[r]ecanting testimony ordinarily is unreliable and should be subjected to the closest scrutiny"). {¶ 31} We find the trial court properly considered Prater's affidavit recanting his trial testimony. In so doing, the trial court acknowledged Prater "had misgivings about" his identification of appellant as the shooter and found this position to be contradictory to his trial testimony. The trial court stated recanting affidavits as the basis for a new trial upon newly discovered evidence are viewed with extreme suspicion and determined Prater's affidavit lacked reliability and credibility. Appellant argues that the trial court erred by making this finding solely on the basis the recanting testimony contradicts or impeaches the original testimony. However, the record does not reflect appellant's assertion. As discussed below, - 11 - Butler CA2016-08-159 the trial court further explained that the circumstances in which the supporting affidavits were set forth contributed to its finding that the affidavits would not create a strong probability of a different result. {¶ 32} Likewise, appellant fails to identify how the affidavits of Michelle Williams, Blair, and Zanetta Williams do not merely impeach or contradict former evidence. At trial, Prater, Moon, and Toney all identified appellant as the shooter. The statements in the three affidavits directly contradict the trial testimony by identifying Henderson as the shooter. Additionally, Henderson's alleged admissions to Michelle Williams, Blair, and Zanetta Williams constitute hearsay, as they are statements made by one other than the declarant while testifying, offered in evidence to prove the truth of the matter asserted. Evid.R. 801(C). {¶ 33} Appellant asserts the statements fall within a hearsay exception because they are statements against Henderson's interest. A hearsay statement is admissible pursuant to Evid.R. 804 where the declarant is unavailable and the statement, at the time of its making, tended to subject the declarant to criminal liability, such that a reasonable person in the declarant's position would not have made the statement unless the declarant believed it to be true. Appellant correctly asserts the alleged admissions would meet this definition because Henderson is now deceased and the statements tend to subject him to criminal liability as the actual shooter. {¶ 34} However, Evid.R. 804(B)(3) further provides that "[a] statement tending to expose the declarant to criminal liability, whether offered to exculpate or inculpate the accused, is not admissible unless corroborating circumstances clearly indicate the trustworthiness of the statement." Furthermore, "[a] bare showing of some extent of corroboration is not enough. Instead, the rule contemplates a demonstration of corroborating circumstances which, on balance, persuade the [court] that the statement bears the clear indicia of reliability and trustworthiness * * *." State v. Branham, 104 Ohio App. 3d 355, 359 - 12 - Butler CA2016-08-159 (12th Dist.1995). Compare State v. Yarbrough, 95 Ohio St. 3d 227, 235-36 (2002) (stating courts usually find statements made to someone sharing a close relationship with the defendant, such as a spouse or child, a corroborating circumstance, that when considered with the other circumstances, may support a finding the statements are trustworthy), with State v. Issa, 93 Ohio St. 3d 49, 60-61 (2001) (analyzing circumstances indicating untrustworthiness, such as circumstances added using hindsight, where the appellant has something to gain by inculpating another for a crime, and an attempt to shift the blame for the crime), and State v. Saunders, 23 Ohio App. 3d 69, 74 (10th Dist.1984) (explaining a relevant consideration is whether the corroborating circumstances "lead one to be skeptical about [the statement's] reliability"). {¶ 35} The trial court identified the circumstances under which the alleged admissions were made and properly found that they tend to show the untrustworthiness of the statements. The affidavits state that in the 1990s Henderson told the affiants he was the actual shooter; yet the affiants waited over a decade before coming forward with this revelation. In addition to the substantial delay in coming forward, the trial court found that identifying Henderson, who died of an apparent drug overdose in 2000, as the actual shooter was "convenient and suspicious", and thus, negated the statements trustworthiness. The trial court further discussed that Blair ended her relationship with Henderson in 1997 and Henderson died in 2000, yet she waited until 2011. Similarly, Zanetta Williams avers that her promise to not tell anyone about the admission dissolved when Henderson passed away, yet she waited until 2011. The record clearly supports the trial court's findings that the above circumstances indicate the statements' untrustworthiness; therefore, the alleged admissions constitute inadmissible hearsay. {¶ 36} Finally, the trial court determined that appellant's affidavit was self-serving and - 13 - Butler CA2016-08-159 "of little value and consequence to th[e] court." We find no error in the trial court's decision.1 "Ohio courts have consistently held that affidavits from interested parties such as defendants, co-defendants, and family members are self-serving and may be discounted." State v. Robinson, 12th Dist. Butler No. CA2013-05-085, 2013-Ohio-5672, ¶ 17. Appellant's affidavit does not set forth any operative facts to support any newly discovered evidence; therefore, the trial court properly found it to be of little consequence. {¶ 37} Accordingly, the trial court did not abuse its discretion by denying appellant's motion/petition without holding an evidentiary hearing when it found the affidavits not credible and unreliable, and thus, did not create a strong possibility of a different result. {¶ 38} Appellant's sole assignment of error is overruled. {¶ 39} Judgment affirmed. RINGLAND and M. POWELL, JJ., concur. 1. To clarify, a defendant's affidavit in a case such as this will always be "self-serving" in the sense that it supports the relief the defendant seeks. The affidavit is not disqualified merely because it is "self-serving." Rather, an affidavit properly characterized as "self-serving" is subject to the analysis under Calhoun to determine the weight to which it is entitled. State v. Calhoun, 86 Ohio St. 3d 279, 285 (1999) - 14 -

01-03-2023

04-17-2017

https://www.courtlistener.com/api/rest/v3/opinions/3516112/

I concur in all that is said in the main opinion herein except the reason given for not applying the rule announced in Revenue Agent v. Clarke, 80 Miss. 134, 31 So. 216, 218, and Miller v. Citizens' National Bank, 144 Miss. 533, 110 So. 439, 440, that "an assessment of property for taxation is conclusive . . . as against the taxpayer, that he is the owner, or taxable for the property shown on the roll." If the court was there called on to decide that question, its decision thereof would be controlling here. In the Clarke case, the revenue agent sought to back assess solvent credits of Clarke to the amount of twenty thousand dollars, which he claimed had escaped taxation for the year 1900. The assessment roll for that year contained an assessment against Clarke of five thousand dollars of solvent credits. Clarke pleaded this assessment as res judicata of his solvent credits assessment for that year. The question thus presented to the courts was set forth in its opinion as follows: "The question is precisely this: Where a taxpayer actually has, say one hundred *Page 422 thousand dollars of solvent credits, which are actually collectible for the full value, and he knows that fact, and so regards them, and intentionally undervalues them, by returning them, say, at five thousand dollars, as probably collectible, even supposing him to have sworn to his assessment, have not the ninety-five thousand dollars escaped taxation by reason of not having been assessed?" In showing why this question should be answered in the affirmative, the court said that an assessment of property for taxation is conclusive of two things only: "First, as against the taxpayer, that he is the owner, or taxable for the property shown on the roll; second, as against the taxpayer and the public, that the valuation of the enumerated property is as finally shown on the roll" — thereby brining the case it had under consideration without the res judicata rule. The method there adopted of determining whether the given case was within or without the rule of res judicata was that of inclusion and exclusion, a perfectly legitimate method and one frequently adopted by the courts; but, in such cases, their opinions become authoritative within the rule of stare decisis only as to the questions actually presented to them for decision, and the only question presented in the Clarke case was whether Clarke owned property for which he had not been previously assessed. In Miller v. Citizens' National Bank, the revenue agent sought to back assess the bank on the value of its shares of stock which he claimed had been undervalued in a prior assessment. This assessment was pleaded by the bank as res judicata, and the court, in sustaining the plea, reproduced the statement from the Clarke case as to the elements of which an assessment roll is res judicata. The second of these elements was the only one there involved and the only one on which the court could express an authoritative opinion. There was no question in either of those cases as to whether an assessment is res judicata of the ownership of the property assessed, and courts are not bound by *Page 423 any expressions appearing in their decisions upon uncontested points. Adams v. Yazoo M.V.R. Co., 77 Miss. 194, 24 So. 200, 317, 28 So. 956, 60 L.R.A. 33. These expressions of the court in the two cases as to the conclusiveness of the judgment roll on the question of the ownership of the property assessed were not obiter, but were in the nature of judicial dicta, and therefore are not within the strict rule of stare decisis; but they do show the "views entertained by the court at that time" are "of persuasive force. . . ." and should be followed unless found to be erroneous. Sprague v. Northern Pacific R. Co., 122 Wis. 509, 100 N.W. 842, 106 Am. St. Rep. 997; 15 C.J. 953; and State v. Tingle, 103 Miss. 672, 60 So. 728.

01-03-2023

07-05-2016

https://www.courtlistener.com/api/rest/v3/opinions/3516118/

This is a suit in equity to settle a disputed boundary between adjoining owners of lots, in Harrison county, fronting on the Gulf of Mexico. The lots are a part of what is known as lot 50 of the Henderson, Shipman and Hughes partition, made in 1843. This partition was laid out under and in accordance with the original government survey and plat of 1822, by which the township was surveyed and platted into regular sections, and wherein the said lot 50 and the land herein dispute was a part of section 21, township 8 S., R. 12 W. Later and in 1849, practically all the water front in this township was *Page 5 resurveyed into the Bartholomew Pellerin claim, and was finally platted by the government in such manner that all these lands were designated as section 22. There is, however, upon the new township plat made in 1849, a small triangular or wedge-shaped piece of land running over from the adjoining township in order to fill out a fractional balance of the Asmond claim; this small triangle being in the extreme southwest corner of said township 8 S., R. 12 W. and bordering on the seashore, and which is numbered 21 on the new plat; but, owing to the size, shape, and peculiar location of this fractional piece of land so designated, it is manifestly impossible, under the rules which shall be referred to at a subsequent place in this opinion, that the said wedge-shaped fraction could have been within the intention of any of the parties under any of the many deeds which have been produced in evidence in this case. All the parties to this litigation seem correctly to have wholly disregarded this small wedge-shaped triangle, and it has not been mentioned either in the course of the trial or in the argument. But some question did run through the trial by way of objection on the part of appellees to the several deeds introduced by appellant, because these deeds, all of them, except in the last few years, described the lots here in litigation as being in section 21, whereas by the last and final government plat there is no section 21 in this township that could possibly be applicable. See Goff v. Avent, 122 Miss. 86, 98, 84 So. 134; Id.,129 Miss. 782, 794, 93 So. 193; Weston Lumber Co. v. Strahan,128 Miss. 54, 90 So. 452; Lott v. Rouse, 147 Miss. 802, 111 So. 838. If this objection were sustainable, or should be sustained, then the bill might have to be dismissed at the threshold, for there is no title by adverse possession, and the foundation deeds in the chain of title upon which complainant appellant stands would place *Page 6 his lot as being in section 21 of said township and range when, as already said, according to the final government plat, there is no such section in that township which could possibly apply to the lands described in these deeds, or else the said section 21 would have to be rejected and the complainant left to stand on the remaining items of the description, Ladnier v. Cuevas,138 Miss. 502, 103 So. 217; Pegram v. Newman, 54 Miss. 612, to do which would embarrass the case of both parties on the merits, and would endanger the future marketability of their respective titles. But we do not think the point of objection was well taken, because all these lots are described as being bounded south by the Gulf of Mexico and on the north by the Louisville Nashville Railroad, both of which permanent and monumental physical locations are shown on the surveyors' maps here in evidence. The location of these two permanent boundaries are not in any way disputed; and, it being clear that these two controlling monuments are not, and cannot be for all these associated and contiguously connected lots, in any section 21 of this township, according to the new plat of the township, it is thus made certain that the section 21 referred to in these deeds is section 21 of the original 1822 survey, and that all of these deeds have simply followed the original section descriptions, as used in the older deeds before the plat of 1849 was made. It was not held in the line of cases first cited supra that it is not allowable to describe lands according to the original or older survey, if it should appear by what is in the deed itself that the said original survey was the one referred to. When there is that in a deed, either on its face at large or by dependable reference therein, which shows that a particular earlier survey, or even that a survey made by others than government surveyors, was intended, this would be good under the principle that "that will be considered certain *Page 7 which can be made certain." It is only when there is nothing in the deed sufficient to show that a different survey was referred to, that the last or final official government survey and plat is conclusively presumed to have been in mind. It is the duty of courts in construing deeds to effectuate the intention of the parties, but, since deeds must be in writing, the intention must be found in the writing either by way of complete delineation of the description on the face of the deed or by dependable references therein made which, when applied, render the delineation complete. The sundry rules that have been formulated by the courts for the interpretation of descriptions are but aids in arriving at the probable true intention of the written instrument. These rules, so far as applicable to this case, may be summarized thus: In construing a deed, (1) effect must be given, if possible, to each item of the written contents and no item included in the deed as a part of the description is to be rejected as erroneous, or shall be varied, so long as it is reasonably possible to make all of them harmonize; and (2) those parts which are the more certain and dependable as descriptive items will interpret those items which are the less certain and dependable, and, when it is necessary in order to satisfy and harmonize all items, the more certain will, if reasonably possible, draw to themselves those that are the less certain; and (3) if any item is to be rejected as impossible, or varied as erroneous, the item which is the less certain and about which it is the more probable the grantor was mistaken will be thus rejected or varied. Following upon the foregoing summary, and as a resume, we find that there are three conjoint and absolutely certain and dependable features which are disclosed by the three deeds to the three lots here brought into review: (1) There is the Gulf on the south; and (2) the railroad on the north of these lots; and (3) their combined *Page 8 width is not less than one thousand four hundred sixty-seven feet measuring directly east and west. These facts are derived from the face of the deeds themselves, deeds executed by the same grantor, and all the parties to this case agree upon the facts as just stated. But these facts are impossible of fulfillment under section 21 of the new plat, but all are present, and can be fulfilled and satisfied and harmonized under section 21 of the old survey; wherefore the said certain and undisputed items drawn to themselves the said section 21 of the old survey as being the one to which reference is had, and as the only one to which reference could reasonably have been had, in all these several foundation deeds. With this preliminary question determined, the merits may be satisfactorily reached, although involved in a considerable mass of related deeds and other pertinent data. The seashore line of the Gulf at this point is on a general eastward and westward course, but slightly north of east. The railroad which has existed there for approximately sixty years runs practically parallel with the shore line and at a present distance therefrom of approximately two thousand five hundred feet. The railroad runs east twenty degrees north. All the deeds reasonably construed would seem to have reference, in respect to their measurements eastwardly and westwardly, to the general course of the shore line, and to the approximately corresponding course of the railroad on the rear of the lots. The original owner, or the common source of title, was C.H. Hiern. (a) On December 2, 1890, Hiern, conveyed to M.G. May a strip of land "beginning on the seashore of the Gulf of Mexico at the southeast corner of a certain tract conveyed to John J. Gribble on May 27, 1884, thence north with the east line of said tract to the right of way of the Louisville Nashville Railroad, thence east along said right of way four hundred feet, thence south in a *Page 9 course parallel with the first line to the seashore, and thence in a westerly direction along the seashore to the point of beginning, in section 21 township 8, range 12." (b) In the following year, and on September 14, 1891, said Hiern conveyed to Gribble, the predecessor in title of appellees, a strip of land described as "commencing on the Gulf of Mexico five hundred fifty feet east of the eastern boundary line of land now owned by M.G. May and running thence eastwardly along said Gulf six hundred fifty-eight feet, thence north to the Louisville Nashville Railroad; thence west along said right of way of said railroad six hundred fifty-eight feet, thence south to the place of beginning, said land being in section 21, township 8 S., R. 12 W." (c) And on May 23, 1892, the said Hiern conveyed to Michel, the predecessor in title of appellant, a strip described as "commencing on the Gulf of Mexico at the southeast corner of a lot sold to M.G. May and running eastwardly along said Gulf five hundred fifty feet to the western boundary of a lot sold to Gribble, thence north with said western boundary of Gribble's land to the right of way of the L. N.R.R., thence westwardly with said right of way five hundred fifty feet to the land of May, thence south with the eastern boundary of May's land to the Gulf and to the beginning point." Just what was the location of the western and eastern lines of the May property at the time of the three conveyances above set out, and particularly what was the exact location of the southeast corner thereof, is the question that primarily is in dispute in this case. To accept the southeast corner of the May lot as same has been generally accepted for, say, the last fifteen or twenty years, would shorten the distance of five hundred fifty feet plus six hundred fifty-eight feet declared in the second or Gribble deed, above mentioned, by approximately thirty-five feet, according to one view, and by *Page 10 about forty-nine feet according to another, when measured along the shore line, and would thus narrow appellant's middle lot by that much, unless he can take the shortage from appellees' lot, and that is the ultimate issue here presented. These conveyances were made now nearly forty years ago. No monument, natural or artificial, within the section, is referred to in the deeds in such a way in respect to the east or west lines as to dependably affix them to anything now in existence and which may be seized upon as indicating exactly where the said southeast corner of the May lot was located on the ground at that remote time. There is an old fence on a line now claimed to be the west line of the May lot, and there are stakes and the like on the ground, and there are those who by repute or tradition attempt to point out the said southeast corner of the May lot by close approximation, but none have testified who say when and by whom this fence or these stakes were placed or who assert any real knowledge of what was the actual situation at the time these deeds were made. From these features, thus in some doubt, we turn to the lot conveyed to appellees' predecessor in title, that is, to the second deed above mentioned; the said deed being the prior in time and therefore the superior in right as between the parties in this suit. According to the contention of appellees, the said second, or Gribble, deed carried the eastern line of the lot therein conveyed to the east side or eastern section line of said section 21; while it is the contention of appellant that the measurements in this Gribble deed would carry that lot not only to said section line, but several feet beyond it. There are no circumstances shown by the record which would justify a conclusion that there was any intention to extend the lot to the eastward beyond section 21, and the deed itself limits the lot as being within said section 21. The inference *Page 11 is the more probable, if not unavoidable, taking all the related conveyances shown in the record and the entire history of these transactions into view, that Hiern, the grantor, in the said second deed intended thereby to convey to Gribble up to said eastern section line of section 21. This eastern section line was established and marked on the ground by the government surveyors more than one hundred years ago. This section line is not, and has never been, in dispute, and the surveyors who testified in this case agree on its location and that it corresponds as now traced on the ground with the original field notes which describe it. This, therefore, gives to the lot conveyed by said superior second deed, the deed upon which appellees stand, the eastern, the southern, and the northern boundaries definitely and unmistakably fixed upon the ground. And the deed by its express terms conveys a strip six hundred fifty-eight feet wide measured eastwardly and westwardly along the shore line on the south and the railroad on the north, which as shown by the testimony is six hundred twenty-six feet directly at right angles east and west. This exactly is all that appellees are claiming and of which they have taken possession as the successor in title to Gribble; and, as already said, Gribble's deed, being a year older than the deed to appellant's predecessor in title, must prevail over the latter. In order to displace and trench upon the eastward and westward contents of appellees' lot in a portion of the six hundred fifty-eight feet in width along the shore line, or six hundred twenty-six feet at right angles, the measurement of five hundred fifty feet as and for the starting point must be shown to be the more certain or more accurate than the inside measurement of the six hundred fifty-eight feet. There is nothing in the evidence or in the record which preponderates in favor of that conclusion, leaving aside the frequently applied rule *Page 12 that, where there is error in one of two items in a description, so that uncertainty is thereby produced, that will be accepted as correct, which, if reasonable, is the more favorable to the grantee. While as a general proposition the calls in distance and course for a starting point are controlling, nevertheless the true rule is that, when the succeeding calls are as readily ascertained and are as little liable to mistake, they are of equal dignity with, and may control, the first, 9 C.J. 164; Hubbard v. Whitehead, 221 Mo. 672, 682, 683, 121 S.W. 69, and cases therein cited. Moreover, as already indicated, appellant would have to show by such strength of proof as to overturn one or both the measurements aforesaid, that the point now taken by the surveyors, who testified in behalf of appellant in this case, as the southeast corner of the May lot, was the identical point which was in the eyes of the parties when Hiern's deed to Gribble in 1891 was executed. The case thus is that, in order to show that appellees' width of six hundred fifty-eight feet along the shore line is incorrect, appellant must show (a) that the present fence line on the west of May's lot is correctly located according to the actual situation and the understanding of the parties forty years ago; and (b) that there was no error made then in the measurement of May's lot of four hundred feet; and (c) that there was no error in the measurement of the five hundred fifty feet between the May lot and the lot of appellees. There are thus three chances of error which appellant must overcome, whereas there is only one chance that appellees' measurement of six hundred fifty-eight feet was an error. We cannot say that the chancellor was manifestly wrong in his conclusions upon these issues of fact; from which it follows that the decree must be affirmed. Affirmed. *Page 13

01-03-2023

07-05-2016

https://www.courtlistener.com/api/rest/v3/opinions/3516119/

The appellant was indicted in the Neshoba county circuit court of the crime of assault and battery, with intent to kill and murder Roy Gipson, was there convicted of simple assault, sentenced to pay a fine of one hundred dollars and to serve sixty days in the county jail, and from this conviction he appeals here. *Page 841 It appears that the prosecuting witness, Roy Gipson, accompanied by a lady, went to a place known as Riverside Camp, and while in a restaurant, some one took the shift keys of his car, rendering him unable to move or operate it. He became angry and had a good deal to say about the person who took his keys. Odell Herrington, appellant, who was present, stated that if Gipson would carry him to a place called "Busted Knuckle." he would get his keys. Two boys in a truck offered to take them to this place, and when they arrived there, in which place there seems to have been a pool room and beer joint, Herrington went into the building and returned presently with the keys, giving them to Gipson, who identified them as his. Gipson insisted that Herrington had agreed to show him the person who took the keys, stating that he could whip whoever did take them, while Herrington stated that he only agreed to get the keys, and did not agree to point out the person who had taken them. It is shown that Herrington said he would take it on himself, asking Gipson, "What are you going to do about it?" Whereupon Gipson struck him with his fist knocking him against the fender of a car. There is conflict in the testimony as to how many times Gipson struck Herrington, and whether he was "fixing" to strike him again. There is testimony to the effect that when Herrington came up from the fender, while Gipson was apparently intending to strike him again, Herrington struck what is termed a left-handed blow cutting Gipson on the breast. Gipson turned to his brother, who was standing nearby, and stated that Herrington had cut him, and that the brother started toward Herrington, who then ran. There were some witnesses who testified that Gipson struck Herrington twice and was preparing to strike him again when he was cut, and others who testified that Gipson had struck Herrington only once and did not *Page 842 have his hand in a striking position when he was cut. Gipson, himself, testified that when Herrington stated he was responsible, he threw out his breast; that Gipson struck him, and suspected he had his fist drawn to strike again when Herrington cut him, the wound being made with a knife, as he expected to have a tough time with Herrington. Gipson stated that he weighed one hundred ninety-five pounds; he supposed Herrington weighed one hundred eighty-five pounds, and he thought Herrington had more experience in fighting than he (Gipson) had. The appellant, Odell Herrington, testified that while at Riverside camp, a boy about fifteen years old took Gipson's keys and left, stating he was going to "Busted Knuckle;" that he declined to give Gipson the name of the person who took the keys, whereupon Gipson cursed, and when Herrington said if he would take him to "Busted Knuckle" he would get the keys, Gipson said if he could get the keys there, he could get them at Riverside, and when Herrington gave him the keys, Gipson used a vile epithet, stating that he would whip whoever did it, and asked Herrington who it was, and that Herrington said he would take it on himself. That Gipson then struck him, knocking him down, and when he arose Gipson struck him again, and was preparing, apparently, to strike once more, when Herrington cut him with a knife. As stated above, the witnesses, of whom there were several, disagreed as to the number of times Gipson struck Herrington, and whether he was in a position to strike him once more when he was cut by Herrington. In this condition of the testimony, the court, for the state, gave the following instruction: "The court further instructs the jury for the State that if you believe, from the evidence, beyond reasonable doubt, that the defendant, Odell Herrington, armed himself with a deadly weapon, to-wit; a knife, and provoked a difficulty with Roy Gipson, and was the aggressor in said difficulty, and *Page 843 so engaged in said difficulty in which Roy Gipson was cut and wounded, then Odell Herrington cannot plead self defense." It seems to have been the view of the district attorney and the court below that Herrington was the aggressor by stating to Gipson that he would take it upon himself, and asking Gipson what he was going to do about it. Under the common law, mere words do not constitute assault, and a person was not the aggressor merely because of epithets used toward another, but the statutes in this state (Code 1930, sec. 1282) provide that words which by their ordinary acceptation and meaning are considered insulting, and calculated to lead to a breach of the peace, may be given in evidence as justifying assault. Under neither statute, nor common law, did Herrington's statements constitute assault, and did not make him the aggressor in the difficulty, and the language used, that he would take it on himself, was not such as would be insulting and calculated to lead to a breach of the peace. Furthermore, the quoted instruction is not technically correct, in that it omits the element that the knife was procured for the purpose of being used in the difficulty, and the hypothesis stated in the instruction cuts off the right of self-defense. This court has often warned against the giving of instructions cutting off the right of self-defense, and the giving of this instruction supra was error. It may be that Herrington used excessive force, or unnecessarily used a weapon in the fight, and he may be guilty of assault because thereof. This, however, was a question for the consideration of the jury under proper instructions. The appellant requested a peremptory instruction, but, under the facts, we do not think he was entitled *Page 844 thereto. As stated, it was a question for the jury to determine from all the facts. For the giving of the quoted instruction cutting off the right of self-defense, the judgment must be reversed and the cause remanded for a new trial. Reervsed and remanded.

01-03-2023

07-05-2016

https://www.courtlistener.com/api/rest/v3/opinions/3516133/

The facts as found by the commission, and which are undisputed, are as follows: "The Warren Credit Corporation was incorporated under the laws of the State of Mississippi in 1935 and since its incorporation has been and is engaged in the City of Vicksburg, Mississippi, in the business of commercial banking or sales finance; that the Warren Brokerage Company, Incorporated, was incorporated in 1938 under the laws of the State of Mississippi and since its incorporation has been and is engaged in the City of Vicksburg, Mississippi, in the business of brokering personal loans through the Industrial Finance Thrift Corporation in New Orleans, Louisiana; that when the Warren Brokerage Company, Incorporated, was originally chartered and first began to do business its shares of capital stock were owned as follows: J.E. Bonelli, 2500 shares, F.Y. Dabney, 2500 shares, Natalie Groome, 1 share, and the Warren Credit Corporation 4999 shares; that on November 1, 1939, J.E. Bonelli and F.Y. Dabney each assigned, transferred and conveyed to the Warren Credit Corporation 250 *Page 861 shares of the stock held by them, thus increasing the interest of the Warren Credit Corporation's ownership of the capital stock of the Warren Brokerage Company, Incorporated, to 5499 shares, a substantial majority of all the capital stock of the Warren Brokerage Company, Incorporated; that all of said stock was voting stock, the only class of stock authorized and issued by the said Warren Brokerage Company, Incorporated; that this stock holding and ownership remained the same throughout the calendar years 1940 and 1941; that at no time during the calendar years 1940 and 1941 was any stock of the Warren Credit Corporation owned by the Warren Brokerage Company, Incorporated; that all of the Warren Credit Corporation stock was, during the calendar years 1940 and 1941, in the hands of twelve stockholders and that during said period all of the stock of the Warren Brokerage Company, Incorporated, was in the hands of four stockholders; that the two corporations are and have been at all times separate legal entities and that during said two calendar years of 1940 and 1941 they maintained separate books, accounts, bank accounts and records; that neither corporation alone has had as many as eight or more employees during the period for which the aforesaid assessment was made, but that during the whole of said period for which the said assessment was made, the Warren Credit Corporation and the Warren Brokerage Company, Incorporated, did have together more than eight employees engaged in non-exempt employment as defined by the said Unemployment Compensation Law." Under the facts as stated, the commission ruled that appellant was an employer subject to Sec. 19(h) (4) of the Unemployment Compensation Act, Chap. 176, Laws 1936, as amended. Sec. 19(h) (1) and (4) of the statute, as amended by Laws 1938, ch. 147, sec. 16, reads as follows: "`Employer' means: "(1) Any employing unit which for some portion of a day, but not necessarily simultaneously, in each of twenty *Page 862 different weeks, whether or not such weeks are or were consecutive, within either the current or the preceding calendar year, has or had in employment, eight or more individuals (irrespective of whether the same individuals are or were employed in each such day); . . . . . . . "(4) Any employing unit which, together with one or more other employing units, is owned or controlled (by legally enforceable means or otherwise) directly or indirectly by the same interests, or which owns or controls one or more other employing units (by legally enforceable means or otherwise), and which, if treated as a single unit with such other employing units or interests, or both, would be an employer under paragraph (1) of this subsection." Appellant contends, to quote the contention in its own language, as follows: "That provisions of the Mississippi Unemployment Compensation Commission statute, including in definition of employer and employing unit, which together with one or more other employing units is owned or controlled by the same interests, and which, if treated as a single unit with such other employing units would be an `employer' violates the `equal protection' clauses of the State and Federal Constitutions as applied to a corporation which does not employ the minimum of eight required by the Act, but which is controlled by one also owns a majority of the stock of another corporation which must be treated with the first as a single unit in order to render them subject to the act." To support its position appellant relies on Independent Gasoline Co. v. Bureau of Unemployment Compensation, 190 Ga. 613,10 S.E.2d 58, and Benner-Coryell Lbr. Co. v. Indiana Unemployment Compensation Board (Ind. Sup.), 29 N.E.2d 776. These two cases represent the minority view and seem to stand alone. They were discussed and disapproved in State of Washington v. Kitsap County Bank, 10 Wn.2d 520, 117 P.2d 228, and in Unemployment Comp. Comm. v. Willis, 219 N.C. 709,15 S.E.2d 4. *Page 863 In addition to the two cases last mentioned, there are in accord therewith New Haven Metal Heating Co. v. Danaher,128 Conn. 213, 21 A.2d 383; Florida Industrial Comm. v. Gary-Lockhart Drug Stores, Inc., 143 Fla. 293, 196 So. 845; Gibson Products Co. v. Murphy, 186 Okla. 714, 100 P.2d 453; Maine Unemployment Comp. Comm. v. Androscoggin, Junior, Inc.,137 Me. 154, 16 A.2d 252; and Wiley Motors, Inc., v. Unemployment Comm., 130 N.J.L. 30, 31 A.2d 39. By these it is seen that the majority of the courts have ruled against the contention here made by appellant; and there is such an elaboration of authority and reasoning in those cases that we do not attempt to enlarge upon them, adding only that we concur in the results reached therein, which means that we are of the opinion that the action of the commission in the present case was correct. Although not in precise point, Mississippi Unemployment Comp. Comm. v. Avent, 192 Miss. 85, 4 So.2d 296, 684, is of interest. Affirmed.

01-03-2023

07-05-2016

https://www.courtlistener.com/api/rest/v3/opinions/3516135/

The appellant was indicted, tried, and convicted in the circuit court of De Soto county for the murder of one W.C. Belote, and was sentenced to life imprisonment in the state penitentiary. The killing occurred on the 8th of April, 1930, and both the appellant and the deceased lived at Lakeview in said county. It appears from the testimony that Belote, the deceased, had directed a negro to bring some lumber from the bank of the lake up to the store of Belote not far distant from the lake, and that the negro reported that Blackwell ordered him not to carry the lumber, and that thereupon Belote stated that he would get the lumber himself and he went down to the lake where the *Page 494 appellant then was. Shortly after this happened a shot was fired, and the wife of the deceased and a man by the named of Clark ran down to where the shooting occurred and found Belote lying in the roadway, shot in the mouth, neck, and breast. According to the witness Clark, about this time the appellant came out of a shack or room occupied by him, with a shotgun and went north into the woods. Mrs. Belote made some statement to Blackwell about the killing of Belote, or the shooting of him, and the appellant stated: "I had enough to kill him for — God damn him," and went on. Belote was put in a conveyance and carried to Memphis, but died shortly after reaching the hospital, one of the shots having punctured or severed the jugular vein. Another witness who claimed to be an eyewitness to the shooting testified that he had come to Lakeview to investigate the fishing, and that when he reached the depot he heard some talking down at the lake, and that he went down there, and Blackwell and Belote were having some words, but when he came up the words ceased; that Belote directed a negro to take a piece of lumber up to the store; that Blackwell had gone ahead of the negro to a place occupied by him, and as the negro came by with the piece of lumber Blackwell stated to the negro, "Negro, drop that board," and that Belote directed the negro to take the lumber up and carry it on, stating that he was behind him. This witness also stated that when Blackwell left where Belote was standing, starting in the direction of his room, Belote stated to him that he better not bring that gun out, or words to that effect, and if he did that he would hurt him. The witness further stated that Belote went on behind the negro, and as he reached the point where he was shot Blackwell came out with a gun and took deliberate aim at Belote; that Belote was not doing anything and did not have anything in his hands, but was merely looking at the appellant, *Page 495 Blackwell, at the time he fired the shot. He stated that after Blackwell fired the shot he returned to his room, and that he (the witness) stepped up near the room and saw him reloading his gun, and, when he did this, the witness ran away and tried to find a gun or pistol with which to arrest Blackwell. The sheriff was notified of the killing, and about forty minutes later his deputy arrived at Lakeview, and either the deputy or Mr. Woods, the witness above referred to, went into the woods and found the appellant, Blackwell, in an intoxicated condition and arrested him, and he was placed in jail. On the trial, Blackwell, the appellant, testified that Belote came down to the lake where he was in reference to the lumber, and that he (Blackwell) had told the negro not to get the lumber, that it belonged to Blackwell and not to Belote, and that he needed all the lumber he had; that Belote accused Blackwell of having charged him with selling beer and called him vile names and struck him with a hatchet on the back of the head, having thrown the hatchet at him, and knocked him against a boat which injured his side, and that he got out of the mud and water where he was standing and ran to the house where he lived, all the while being pursued by Belote, who still had a hatchet, and that at the instant the shot was fired Belote had started to throw the hatchet at him again. Blackwell also stated that when Belote fell he went and picked up the hatchet and carried it to the rear of his room and either left it there or threw it in the weeds, that he does not know where the hatchet is or whether it remains there or not, and that he did not tell any person about where the hatchet was or where he had placed it until the trial. The witness Woods was shown to have been a transient person who had been at a good many different places and had been arrested a good many different times. This testimony was developed by Woods' testimony on cross-examination *Page 496 principally, and does not show that he was convicted of many of the offenses arrested for, although he was convicted of some of them. A former sheriff of one of the counties in Missouri where the witness Woods had formerly lived, but from which he had been absent about ten years, testified that Woods' reputation for veracity in that county was not good. It appears from examination of Woods that he had formerly been in the Army and had deserted, but that during the World War he re-enlisted in the army and saw service overseas, being in a number of battles, including Chateau Thierry and the Argonne, and that he was honorably discharged from the army. It is argued that the evidence is insufficient to sustain a conviction, and that the witness Woods is unworthy of belief and his testimony is insufficient. There seems to have been no objection to the introduction of evidence affecting Woods' credibility, although Woods had been away from the community some ten years. It was for the jury upon the whole evidence to determine the credibility of Woods' testimony in connection with the other testimony in the case. Taking Woods' testimony and the other facts stated, especially Blackwell's statement to Mrs. Belote in which he used the language above set out indicating malice or hostility towards the deceased, we think the proof is ample to sustain a conviction. While the district attorney was making his argument, exception was taken to statements made in the argument. The statements set out in the bill of exceptions which were objected to and excepted to are as follows: "I don't blame the defendant for testifying as he did in this case. If I were on trial for my life I would hold up my hand and swear to anything to save my own life;" and: "If you don't believe it was necessary for Blackwell to kill Belote to save his own life then you must find the defendant guilty as charged." He repeated these statements *Page 497 several times over objection, and the objection was overruled, and he further stated, "Do you blame the defendant for coming on the witness stand and swearing a lie and committing perjury to save his life — I would do it myself," and again, "I don't blame the defendant for swearing as he did, if I was on trial for my life I would swear as he did." This argument is vigorously assailed and is the principal thing relied upon for a reversal of the judgment. It will be noted from the statement that a very brief part of the argument was singled out for exception. It is difficult from the brief statement of the argument to tell its setting in the argument as a whole, or its relation to the argument of the attorney for the appellant in the trial. In Carter v. State, 140 Miss. 265, 105 So. 514, 515, we held in the seventh syllabus: "Where statements of a prosecuting attorney are objected to, a sufficient amount of the language should be set out in the bill of exceptions to show the court the context in which the language was used, so that the real meaning of the language may be judged by the context." At page 278 of the Mississippi Report (105 So. 514, 517), in discussing objections to the argument of the district attorney in that case, the court said: "It is next insisted that the district attorney said, `If you don't believe all she said (referring to appellant's wife) you have a right to disbelieve all; if you don't believe a part, you can disbelieve all." It was for the jury to decide whether they would believe all that the witness said and if she were worthy of credit. The jury was not authorized, of course, to disregard all of the testimony of the witness for the sole reason that they did not believe a part of it. To authorize them to disregard all of it because a part is false requires a belief that the falsity was knowingly and corruptly testified to. The statement is not elaborate enough or full enough for us to know its full effect. It is not permissible to single out *Page 498 sentences disconnected with the context, and, where objection is taken to statements, enough of the context ought to be embraced in the bill of exceptions to enable the court to know what a fair construction of the statement would mean." In McLeod v. State, 130 Miss. 83, 92 So. 828, 831, the court referred to the same matter, saying: "The bill of exceptions with reference to the argument of the district attorney, as above stated, is insufficient to show any abuse of the privilege of advocacy. The evidence showed that the appellant was claiming to have acted in defense of his mother, and that the deceased called her very vile names, and there is much evidence tending to show that such a theory was false in fact. The connection in which the statement made in the argument of the district attorney does not sufficiently appear, and therefore this assignment is without merit." In the recent case of Nelms Blum Co. v. Fink, 131 So. 817, 820, we discussed the advantages that the trial court has over this court in judging the propriety of statements made in argument by the attorneys. As the trial judge hears all of the arguments on both sides and knows from the course of the argument the setting of the particular language excepted to and what relation it had to the rest of the argument made by the attorney or to the argument made by opposing attorneys, he has a much greater advantage in determining whether it is proper or not than has this court. We said in the case last mentioned: "It is always a difficult matter, as well as a delicate one, to determine whether there has been an abuse of the privilege of advocacy in the argument of the causes, except in few cases where it is so palpably evident that the case has been prejudiced by a statement of facts not in evidence or by gross invectives and abuse, and we do not have the advantage that the trial judge has of hearing the argument as a whole. The trial judge *Page 499 has a peculiar and distinct advantage of the judges of this court in judging upon such questions, because he is not only familiar with the evidence and the atmosphere of the case, as it may be called, but he has heard the entire argument and knows the setting that the language complained of has in connection with the argument on both sides of a case." In Gray v. State, 90 Miss. 235, 43 So. 289, 290, the court dealt with statements made and arguments, and discussed the question fully and eloquently. In that case the prosecuting attorney said: "`He is as guilty as he can be;' `called him a bloody assassin;' `that he said that the appellant was an athlete, and sprang to his feet, and shot Newt Wallace in the back of the head while he was standing, and then shot Felix Jones straight through from the front while he was standing, the ball going through him;' that he said `that the defendant murdered Newt Wallace in cold blood, and that he called on the jury whether they will put a stop to these homicides, and that there had been three or four in his neighborhood within the last few months, committed by negroes;' and `that the proof in the case in the justice's court showed that the defendant had not lived with his wife for two and one-half years or more,' etc." The court said, in reference thereto: "So far as the observation about his not having lived with his wife for two and one-half years is concerned, the testimony in this record shows that that was true. It is also true that Jones was shot in the same difficulty. So far as the expression of opinion of the learned counsel that the defendant was guilty is concerned, he certainly had the right to state his opinion from the evidence." After discussing the right of argument on the facts which were brought in the evidence, the court had the following to say with reference to the effect upon the jury: "The frequency with which these assignments of error recur would seem to indicate that *Page 500 the learned counsel who represent defendant have forgotten that the twelve men who sit in the jury box represent the average intelligence and the average integrity of the counties from which they respectively serve. Most surely, if the laws with regard to the selection of juries have been themselves honestly and intelligently followed, juries do always represent the average intelligence and the average integrity of their counties. They do not sit as dummies in the jury box. They are to be dealt with by the judge of the lower court and by this court as men who appreciate and understand the oaths which they took as jury men, as men having and exercising average intelligence and average integrity, capable mentally of understanding the written instructions of the court and the argument of counsel, and capable morally of having the courage and firmness to draw their own conclusions for themselves from the law as written and from the testimony as delivered, without reference to improper appeals from counsel on either side. The administration of justice is a pre-eminently practical thing." In Bufkin v. State, 134 Miss. 116, 98 So. 455, 457, we were called upon to decide the effect of arguments made by attorneys in reference to the interest that the appellant had in the result of the trial. We said: "It is next argued that the prosecuting attorney commented upon the evidence of the defendant, and stated to the jury that the appellant's interest in the result of the trial was greater than the state's witnesses; that he had a direct personal interest in the case, in that he would be sent to prison if convicted. To which argument exception was taken, but the court refused to sustain objection to this. We think it is within the privileges of the attorneys to comment upon the evidence. The very purpose of argument is to suggest conclusions that may be drawn from the evidence, which might not occur to the jury without argument, and, while the court cannot single out the defendant's evidence by instruction and comment *Page 501 thereon, this does not apply to the attorneys in the case. They have the privilege of commenting on the evidence and drawing inferences or deductions therefrom, and may refer to the witnesses by name. And in our opinion no error was committed in making said argument." In the case of Nelms Blum Co. v. Fink, supra, we discussed the right of counsel in making an argument to the jury, and pointed out that he could comment upon any evidence introduced from the witness stand and upon an fact of which the court would take judicial knowledge, that his argument did not have to be sound or his conclusions sound. We dressed this opinion in rhetorical evening clothes with the hope that the attention of counsel making objections to argument of other counsel would look to the previous decisions of this court and recognize the broad field of advocacy and difficulty of judges undertaking to control counsel in regard thereto, and the character of objections that would be acted upon in this court. Taking the bill of exceptions in the case before us in the light of the evidence in the case, it is manifest that the district attorney was drawing a deduction from the testimony that the defendant's evidence was false, and that he was calling attention to the motives that the defendant had in regard thereto. He was within the field of permissible argument so far as he commented upon the truthfulness or falsity of the defendant's evidence in this case. There was ample foundation in the testimony for comment of this character. The attorney can draw deductions and make arguments suggesting the falsity or truthfulness of the evidence in the case. It is one of the necessary functions of advocacy in the case of conflicting evidence. We cannot therefore reverse the case for the argument made. We do not mean that we approve of all that was said. Indeed we must condemn the part of the statement which said, "Do you blame the defendant for coming on the witness stand and *Page 502 swearing a lie and committing perjury to save his life — I would do it myself." While this comment is not reversible error and is palliative rather than condemnatory of perjury, we regret that the statement was made, and hope that it was the ebullition arising in the heat of argument and not the attitude of the law-enforcing officer of the state. The law does not justify perjury in any case, although a man may be swearing with the issue of his own life at stake. When he takes the witness stand he is under legal obligation to tell the truth, and, if he willfully and corruptly testifies falsely, he may be indicted and punished for so doing, although his own life was an issue in the case. The punishment for perjury is by imprisonment in the penitentiary, Code of 1930, sections 1083-1085. The definition of perjury is contained in section 1082 of the same Code. Not only is it a felony, but it operates in law as a permanent disqualification of the witness in a court of justice forever thereafter. Of all the crimes denounced in the Code, it alone carries with it, in addition to the infamy attached to ordinary felonies, the further infamy of disqualification from testifying afterwards in court. It is true there must be a conviction in legal and due form before the severe disqualification attaches, but when a person has been convicted he may not thereafter testify in court in any cause, although the life of his father and mother, or brother, or sister, or wife, or children, might be at stake. He could not be produced to give evidence, although his evidence might exculpate them. The law, therefore, has visited upon perjury extreme odium; it is the vilest sin in the code of crime. The Legislature deemed it so vile and so hurtful that it provided that after a conviction therefor such person should never be heard again so far as the courts were concerned; it also undertook to provide that a pardon of the crime of perjury should not restore the witness to competency. Whether that limitation upon the pardoning power is *Page 503 valid or not is no concern here, but it is the deliberate judgment of the people acting through their elected representatives that perjury is so disastrous and so unpardonable that one convicted of it can never thereafter be used as a witness. As the law so severely condemns it and visited it with such odium, it does not warrant officers of the law and ministers of justice in palliating or excusing it. Perjury is one of the greatest evils that afflicts the country today. It is the cankerworm gnawing at the heart of justice. It is a moral reptile whose venom is more deadly to the administration of law and justice than the venom of the worm of the Nile or the cobra is to the human organism. Perjury should be characterized and reprobated in every charge to the grand jury of the counties; its odium and disqualification and disastrous effect should be taught in every school, denounced in the press and pulpits of the land; it should be gibbeted on the sky line of infamy for the execration of the ages. Let the judgment be affirmed. Affirmed.

01-03-2023

07-05-2016

https://www.courtlistener.com/api/rest/v3/opinions/2986154/

August 22, 2013 JUDGMENT The Fourteenth Court of Appeals WILBURT DWAINE CASH, Appellant NO. 14-12-00715-CR V. NO. 14-12-00716-CR NO. 14-12-00720-CR THE STATE OF TEXAS, Appellee ________________________________ These causes were heard on the transcript of the record of the court below. Having considered the record, this Court holds that there was no error in the judgments. The Court orders the judgments AFFIRMED. We further order this decision certified below for observance.

01-03-2023

09-23-2015

https://www.courtlistener.com/api/rest/v3/opinions/3517159/

* Corpus Juris-Cyc References: Certiorari, 11CJ, section 5, p. 89, n. 27; section 267, p. 176, n. 27. Suit was filed in the county court by the appellant against appellee upon a conditional sales contract for the purchase of an automobile truck. There was a judgment for the plaintiff in the county court, and the defendant therein attempted to appeal to the circuit court, but the appeal bond was filed too late, and in consequence the appeal was dismissed. Thereafter, but within the six months allowed, the record and proceedings in the cause were removed to the circuit court under a writ of certiorari, and, as a part of the record so returned into the circuit court, there was included a copy of the official transcript of the evidence taken and heard *Page 491 in the county court. There was a motion in the circuit court on the hearing in certiorari to strike from the return the transcript of the stenographer's notes of the evidence, but the motion was overruled; and the court thereupon, taking into consideration the entire record so removed, including the transcript of the evidence, reversed the judgment of the county court, and dismissed the suit, from which judgment of the circuit court an appeal is brought to this court. The motion to strike the transcript of the evidence has been renewed here, and we now deal solely with that motion. It is said to be a rule of almost universal application that the writ of certiorari will not issue in those cases in which there is a plain, speedy, and adequate remedy by appeal, which statement is no more than an application of the elementary rule of procedure that an extraordinary remedy will not be allowed when an ordinary remedy is, or has been, fully available.Certiorari cannot be made to serve the office of an appeal, and the rule is not altered by the fact that a party entitled to an appeal has allowed the time for taking it to elapse without availing himself of that right. "It is essential to the harmony and consistency of every judicial system that each wrong or injustice, whether resulting from acts of individuals or courts, shall have its specific, adequate, and distinct remedy. Therefore it may be stated as a general principle, — which, however, is not by any means uniformly adhered to, — that certiorari does not issue for the rectification of any judicial wrongs or usurpations which may be reached by other methods provided for by law. This rule is subject to the qualification that such other means of redress, in order to constitute a bar, should be adequate to meet the necessities of the case." 2 Spelling, Extra ordinary Relief, pp. 1570, 1571. It is also the general rule that, under a writ of certiorari, the evidence on which the inferior court based its *Page 492 determination forms no part of the record, and should not be returned, unless required by statute or shall become essential by some extraordinary circumstances; as for instance, where the inferior tribunal acts beyond or in disregard of its lawful jurisdiction. 11 C.J., p. 176; 4 Ency. Pl. Pr., p. 221; 4 Stand. Ency. Proc., p. 938. But the appellee contends in response to this general rule that our statutes, sections 90 and 91, Code 1906, expressly provide that, under a writ of certiorari, there shall be brought up and considered by the superior court "the record and proceedings," and that the record of the evidence, when transcribed and lawfully filed, is a part of the record of the case, and shows forth, certainly, a part of the proceedings. It is to be at once admitted that the terms, "the record and proceedings," when given a broad interpretation, may well, and in proper connection generally do, include the official transcript of the evidence; but, keeping in mind the general principles above set forth, and keeping in mind also the dominant consideration that in concrete instances there must be given to procedural statutes that construction, if possible, which will preserve the essentials of "harmony and consistency in our judicial system," we must here look to the terms of the county court act and to the policy and purposes of its enactment, and carefully consider that we do not give assent to a construction of an interrelated statute which would amount, in substance, to a judicial repeal of a vital provision of the county court act, both as to its letter and as to its purpose and general public policy. It was the purpose of the legislature in creating the county court to furnish an efficient, economical, and expeditious tribunal for the settlement of litigation involving small amounts, and to give a speedier final determination to cases of misdemeanor and petty offenses. It was therefore required, among other provisions to that end, that appeals from the county court shall be *Page 493 taken and bond given within ten days from the date of the entry of the final judgment on the minutes of the court and that such appeals should be considered solely upon the record as made in the county court. If, instead of taking the ordinary course, that is by way of appeal, the unsuccessful party may delay until the period of six months is about to expire, and by resort to the extraordinary means of certiorari, bring up the entire record to the circuit court, and there have the whole of it considered, then the provision requiring appeals to be taken within ten days would become practically a dead letter, and, if we should sanction such a practice, we would repeal by judicial construction that which not only is the plain letter of the law in the county court act, but that which is expressive of a vital part of its very purpose and policy. It is no answer to this to say that there would yet be left some shade of distinction as to what the superior court may do on the whole record sent up bycertiorari as against that which may be done on appeal on the same record. Among the everyday small cases within the jurisdiction of the county court, it would be only in the exceptional that the distinction adverted to would be of any practicable use or importance; and, to approve the substantial destruction of a vital provision in the county court act by the means sought to be availed of in this case, would find but little justification in the fact that there would be left in the debris a thin, technical, and generally impracticable distinction, as the sole and only remnant. We therefore hold that, under a writ of certiorari from the circuit court to the county court, the return shall not as a general rule include a transcript of the evidence. We do not say that extraordinary circumstances, instances of which are shown in the books, will not justify a cautious exception; but such is not the case here. The motion to strike the stenographer's transcript will be sustained. Motion sustained. *Page 494

01-03-2023

07-05-2016

https://www.courtlistener.com/api/rest/v3/opinions/4555614/

Nebraska Supreme Court Online Library www.nebraska.gov/apps-courts-epub/ 08/14/2020 08:07 AM CDT - 418 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TRAVIS v. LAHM Cite as 306 Neb. 418 Harold Travis, appellant, v. Rhonda K. Lahm, director, Nebraska Department of Motor Vehicles, appellee. ___ N.W.2d ___ Filed July 10, 2020. No. S-19-585. 1. Administrative Law: Judgments: Appeal and Error. A judgment or final order rendered by a district court in a judicial review pursuant to the Administrative Procedure Act may be reversed, vacated, or modified by an appellate court for errors appearing on the record. 2. ____: ____: ____. When reviewing an order of a district court under the Administrative Procedure Act for errors appearing on the record, the inquiry is whether the decision conforms to the law, is supported by com- petent evidence, and is neither arbitrary, capricious, nor unreasonable. 3. Judgments. Whether a decision conforms to law is by definition a ques- tion of law. 4. Judgments: Appeal and Error. An appellate court determines ques- tions of law independently of the lower court. 5. Administrative Law: Motor Vehicles: Licenses and Permits: Revocation: Police Officers and Sheriffs: Proof. In an administrative license revocation hearing, the State establishes its prima facie case for license revocation by submitting the arresting officer’s sworn report. Thereafter, the burden of proof rests solely with the motorist, who must show by a preponderance of the evidence that the requirements of revo- cation are not satisfied. Appeal from the District Court for Cheyenne County: Derek C. Weimer, Judge. Affirmed. Bell Island, of Island Law Office, P.C., L.L.O., for appellant. Douglas J. Peterson, Attorney General, and Milissa D. Johnson-Wiles for appellee. - 419 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TRAVIS v. LAHM Cite as 306 Neb. 418 Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, Papik, and Freudenberg, JJ. Papik, J. Harold Travis appeals from a district court order affirming the revocation of his motor vehicle operator’s license for refus- ing to submit to a chemical test of his breath. Travis asserts that he did not refuse to submit to a chemical test because he did not understand he was being asked to submit to a chemical test and because the arresting officer misled him as to the rela- tive seriousness of a failure to submit to such a test. We find the district court’s decision was not contrary to law and was supported by competent evidence and therefore affirm. BACKGROUND Travis’ Arrest. Around 10:30 p.m. on December 6, 2018, in Cheyenne County, Nebraska, Austin Smith, a police officer with the Sidney Police Department, determined that the vehicle Travis was driving was exceeding the speed limit. Smith initiated a traffic stop. When Smith approached Travis, he detected the odor of alcohol and marijuana coming from the vehicle and began to investigate whether Travis was driving under the influence. To facilitate that investigation, Smith asked Travis to leave his vehicle and to sit in the front passenger seat of the patrol vehicle. Travis complied. After Travis moved to the patrol vehicle, Smith noticed an even stronger smell of alcohol and the smell of burnt marijuana. Travis admitted to drinking alcohol and smok- ing marijuana earlier that afternoon. Smith then administered standardized field sobriety tests during which Travis showed signs of impairment. At that point, Smith asked Travis to submit to a preliminary breath test. Travis refused, and Smith arrested him. Shortly after the arrest, Smith asked Travis to submit to a chemical test. Travis did not agree to take the chemical test. - 420 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TRAVIS v. LAHM Cite as 306 Neb. 418 License Revocation Proceedings. A few days after Travis’ arrest, Smith submitted a sworn report to the Department of Motor Vehicles (Department). In the report, Smith stated that he had stopped Travis’ vehicle for speeding, that he had detected the odor of alcohol and mari- juana, that Travis did not complete standard field sobriety tests as directed, that Travis had refused to take a preliminary breath test, that he had placed Travis under arrest, that he had read Travis the postarrest chemical test advisement form, and that Travis had refused to take the chemical test. Travis filed a petition contesting the revocation of his license and requested a hearing. A hearing officer for the Department presided over a telephonic hearing at which Travis was rep- resented by counsel. Travis and Smith testified about their roadside encounter, with most of their testimony focused on their interaction after Travis was arrested. On this topic, the testimony of Travis and Smith diverged. Travis testified that less than a minute after he refused to take the preliminary breath test and while he and Smith were still at the same roadside location, Smith asked him to take another breath test. According to Travis, Smith did not explain this chemical test was a different test than the preliminary breath test he had refused earlier, and Travis did not understand he was being asked to submit to a separate test. Travis also testified that he asked the officer about the relative seriousness of the consequences of driving under the influence and refusing a test, and the officer told him that driving under the influence was “a worse offense than the refusal.” Travis admitted that he was asked to submit to a chemical test and that he declined to take the test. He also testified that he declined to take the test because of the information Smith provided regarding refusal being a less serious offense. Smith testified that shortly after he placed Travis under arrest and while still at the scene of the arrest, Smith read Travis the postarrest chemical test advisement form, instructed Travis that the chemical test was separate from the preliminary - 421 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TRAVIS v. LAHM Cite as 306 Neb. 418 breath test, and asked Travis to submit to a chemical test. According to Smith, Travis refused to take the chemical test. In response to questioning from Travis’ counsel, Smith acknowl- edged that at some point, Travis asked him questions about the consequences of refusing a test. Smith testified that he did not fully understand Travis’ question and that he did not recall say- ing that driving under the influence was more serious than a refusal. Smith remembered saying that he was arresting Travis for driving under the influence and that if he refused a test, Travis “would go to jail for that too.” After the submission of evidence, Travis contended that he did not understand he was being asked to submit to a test other than the preliminary breath test and that the officer told him that driving under the influence was more serious than refus- ing a test. Under those circumstances, he argued, a refusal had not occurred. The hearing officer recommended revocation of Travis’ operator’s license. In a recommended order of revocation, the hearing officer stated that a refusal occurs when a motorist behaves in a way that would justify a reasonable person in the officer’s position to believe the motorist understood he was being directed to take a test and that he displayed an unwill- ingness to do so. The hearing officer found that, under this standard, a refusal occurred, emphasizing that Travis admitted he knew he was being asked to take a test and he chose not to cooperate. The director of the Department adopted the hearing offi- cer’s recommended order and revoked Travis’ license. Travis appealed to the district court. District Court. The district court affirmed the director’s revocation of Travis’ driving privileges in a written order. In its order, the district court acknowledged Travis’ arguments that he did not refuse to submit to a chemical test because the officer “gave him incorrect information regarding the consequences of a - 422 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TRAVIS v. LAHM Cite as 306 Neb. 418 refusal and . . . he did not understand what he was being asked to do.” But the district court concluded that under State v. Green, 238 Neb. 328, 470 N.W.2d 736 (1991), the fact that Travis misunderstood exactly what he was being asked to do or the consequences of refusing the chemical test were not rel- evant. The only relevant questions, the district court asserted, were whether Travis was asked to take a test and whether he refused. The district court concluded that the record showed Travis was both asked to take a chemical test and refused and that thus, revocation of his license was proper. Travis timely appeals from the district court’s order. ASSIGNMENT OF ERROR Travis assigns one error on appeal. Travis argues, restated, that the district court erred in failing to find that the require- ments for revocation of his driver’s license were not satisfied. STANDARD OF REVIEW [1,2] A judgment or final order rendered by a district court in a judicial review pursuant to the Administrative Procedure Act may be reversed, vacated, or modified by an appellate court for errors appearing on the record. Hoppens v. Nebraska Dept. of Motor Vehicles, 288 Neb. 857, 852 N.W.2d 331 (2014). When reviewing an order of a district court under the act for errors appearing on the record, the inquiry is whether the decision conforms to the law, is supported by competent evidence, and is neither arbitrary, capricious, nor unreasonable. Id. [3,4] Whether a decision conforms to law is by definition a question of law. Id. An appellate court determines questions of law independently of the lower court. Id. ANALYSIS Background Regarding Administrative License Revocation. Before addressing Travis’ arguments, we briefly review the law governing this administrative license revocation proceed- ing. Under Nebraska statute, any person who operates a motor - 423 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TRAVIS v. LAHM Cite as 306 Neb. 418 vehicle is deemed to have given his or her consent to submit to a chemical test of his or her blood, breath, or urine for the pur- pose of determining the concentration of alcohol or the pres- ence of drugs. See Neb. Rev. Stat. § 60-6,197(1) (Cum. Supp. 2018). Another subsection of the same statute authorizes peace officers to, under certain circumstances, require persons they have arrested to submit to a chemical test. See § 60-6,197(2). The refusal to submit to such a chemical test is a crime just as driving a motor vehicle while under the influence of alcohol or drugs is a crime. See State v. Cornwell, 294 Neb. 799, 884 N.W.2d 722 (2016). If a person refuses to submit to a chemical test as described above, the officer is also to inform the arrested person of the intention to confiscate and revoke the arrestee’s driver’s license. See Neb. Rev. Stat. § 60-498.01(2) (Cum. Supp. 2018). The officer is directed to initiate the revocation procedure by sending to the director of the Department a sworn report stat- ing “(a) that the person was arrested as described in subsec- tion (2) of section 60-6,197 and the reasons for such arrest, (b) that the person was requested to submit to the required test, and (c) that the person refused to submit to the required test.” § 60-498.01(2). The arrested person may then request an administrative license revocation hearing at which the revoca- tion of the person’s driver’s license may be challenged. [5] In an administrative license revocation hearing, the State establishes its prima facie case for license revocation by sub- mitting the arresting officer’s sworn report. Urwiller v. Neth, 263 Neb. 429, 640 N.W.2d 417 (2002). Thereafter, the burden of proof rests solely with the motorist, who must show by a preponderance of the evidence that the requirements of revoca- tion are not satisfied. Id. In this appeal, Travis does not dispute that Smith’s sworn report established a prima facie case for license revocation. Instead, he argues that the district court erred by not finding he had demonstrated that the requirements of revocation were not satisfied. Specifically, Travis contends that the evidence - 424 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TRAVIS v. LAHM Cite as 306 Neb. 418 introduced at the administrative license revocation hearing showed that he did not refuse to take a chemical test. We turn to that question now. Refusal of Chemical Test. We have held that a refusal of a chemical test takes place when the motorist’s conduct allows a reasonable person in the officer’s position to believe that the motorist was capable of refusal and manifested an unwillingness to submit to the test. See, e.g., Betterman v. Department of Motor Vehicles, 273 Neb. 178, 728 N.W.2d 570 (2007); State v. Green, 238 Neb. 328, 470 N.W.2d 736 (1991), overruled on other grounds, State v. Vann, ante p. 91, ___ N.W.2d ___ (2020); Wohlgemuth v. Pearson, 204 Neb. 687, 285 N.W.2d 102 (1979). As we origi- nally explained when adopting that rule in Wohlgemuth, “any other result would force the director and the trial court into a psychological guessing game as to the [driver’s] state of mind and his degree of capability of comprehension.” 204 Neb. at 691, 285 N.W.2d at 104. We have also held that a motorist is capable of refusal even if he or she does not understand the consequences of refusing or is not able to make a reasoned judgment as to what course of action to take. The only under- standing required on the part of the driver is that he or she has been asked to take a test. See, e.g., Green, supra. The district court saw this proceeding as requiring a straight- forward application of the principles discussed above. It acknowledged Travis’ arguments that he did not understand that the chemical test and preliminary breath test were different and that Smith misled him by saying that a driving under the influence charge was a “worse offense” than a refusal to sub- mit to a chemical test, but found these arguments were legally irrelevant. In the district court’s view, the only relevant ques- tions were whether Travis was asked to take a test and whether he refused. Because the district court found that the answer to both of those questions was yes, it affirmed the revocation of Travis’ license. - 425 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TRAVIS v. LAHM Cite as 306 Neb. 418 Travis argues that this case is not as simple as the district court believed it to be. He argues that under several of our prior cases, even if Travis understood that Smith asked him to take a test and he refused, no refusal occurred because the information Smith provided was ambiguous or misleading. We turn now to the cases upon which Travis relies. The first cases Travis relies on are Smith v. State, 248 Neb. 360, 535 N.W.2d 694 (1995) (superseded by statute as stated in Davis v. Wimes, 263 Neb. 504, 641 N.W.2d 37 (2002)), and Perrine v. State, 249 Neb. 518, 544 N.W.2d 364 (1996) (super- seded by statute). Under a statute in existence at the time of these cases, upon requesting a driver to submit to a chemical test, an arresting officer was required to inform the arrestee of the consequences of both refusing and failing a chemical test. In Smith and Perrine, however, the arresting officer failed to advise the driver of all such consequences. Because the statute made such an advisement mandatory, we held that even though the driver in Smith failed the test and the driver in Perrine refused it, their licenses could not be revoked. We do not believe Smith or Perrine applies here. We held that revocation was not proper in those cases because the offi- cer failed to provide information he was obligated by statute to provide. Travis does not argue Smith failed to provide statuto- rily required advice here, and there is no indication Smith did. The statute requiring the officer to advise the driver of various consequences of refusing or failing a chemical test has since been amended. See State v. Turner, 263 Neb. 896, 644 N.W.2d 147 (2002). The current version of the statute requires only that an arrestee be advised that “refusal to submit to such test or tests is a separate crime for which the person may be charged.” § 60-6,197(5). Smith’s testimony suggests he advised Travis that refusal was a separate crime, and Travis makes no argu- ment otherwise. The other case Travis relies upon is Wiseman v. Sullivan, 190 Neb. 724, 211 N.W.2d 906 (1973). In that license revo- cation proceeding, after the driver was arrested on suspicion - 426 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TRAVIS v. LAHM Cite as 306 Neb. 418 of driving while intoxicated, an officer interspersed accurate information concerning the consequences of refusing a chemi- cal test with “Miranda type” warnings which included a state- ment that the driver had the right to have an attorney present during “any part of my investigation.” Id. at 727, 211 N.W.2d at 909 (emphasis omitted). The officer then asked the arrestee if he wished to contact an attorney before finally asking if he would submit to a chemical test of his breath. The driver responded that he wanted to consult with an attorney. We held that, under the circumstances, the driver’s failure to agree to the test did not amount to a refusal. We reasoned that only a person trained in law and familiar with both the Miranda doc- trine and the implied consent statute would reasonably under- stand that he had no right to consult with counsel concerning the breath test. We find Travis’ reliance on Wiseman unavailing. Our hold- ing in Wiseman was limited to cases in which a driver is asked to submit to a chemical test but also given a Miranda warn- ing that reasonably leads the driver to believe he or she has the right to consult with an attorney regarding the test and the driver does so. See Wiseman, supra. In a later case, we recognized that our holding in Wiseman was narrow. See State v. Richter, 240 Neb. 913, 917, 485 N.W.2d 201, 204 (1992) (“[o]ur cases have clearly held that unless there has been a commingling of the Miranda warning and the implied consent statute, a defendant’s lack of understanding of the conse- quences of a refusal to take a chemical test is not a defense”) (citing Wiseman, supra). Not only does the holding of Wiseman not assist Travis, neither does its reasoning. The driver in Wiseman was reason- ably led to believe that he had a legal right to consult with an attorney and merely asked to do so. In that sense, the driver was not so much refusing a test as electing to first talk to an attorney, an option which was presented as legally permit- ted. Travis, on the other hand, claims he declined to take the chemical test because Smith told him that driving under - 427 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TRAVIS v. LAHM Cite as 306 Neb. 418 the influence was a “worse offense” than refusing the test. Even assuming that testimony is true and Smith’s testimony to the contrary is not, it does not establish that Travis was led to believe that he could choose to decline the test without legal consequence or that he was doing something other than declin- ing to submit to the test. At best, Travis’ testimony would show that he did not submit to the chemical test because he believed declining the test was a less serious offense. Unlike the facts in Wiseman, we see no basis to say that this was not a refusal for purposes of the statute. With respect to Travis’ contention that Smith provided him with misleading information and that he refused to submit to the test in reliance on that information, we are aware of cases in which courts have held that it is a violation of the Due Process Clause of the U.S. Constitution for an officer to provide misleading information regarding the consequences of taking or failing to take a blood alcohol test. See, e.g., State v. Stade, 683 A.2d 164 (Me. 1996); Cates v. Director of Revenue State of Mo., 943 S.W.2d 281 (Mo. App. 1997). But see State v. Gifford, No. A-15-492, 2016 WL 2764727 (Neb. App. May 10, 2016) (selected for posting to court website) (holding that offi- cer did not violate defendant’s due process rights by providing inaccurate information prior to asking him to take chemical test). But because Travis has never argued that his due process rights were violated as a result of the misleading information he alleges Smith provided to him, we do not consider that issue here. Having rejected Travis’ argument that the district court applied an incorrect legal framework, the only question that remains is whether the district court’s decision that Travis refused to take the test is supported by competent evidence. We find that it is. Whatever Travis may not have under- stood, he admitted that he was asked to submit to the chemi- cal test and that he declined to take it. Indeed, as we have noted, Travis identified specific reasons he refused to take the test. Further, Travis points to no evidence that suggests - 428 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TRAVIS v. LAHM Cite as 306 Neb. 418 a reasonable person in Smith’s position would have believed that he was not capable of refusal or that he did not understand that he was asked to take a test. Smith’s report established a prima facie case that Travis refused to take the chemical test. The district court’s decision that Travis failed to carry his burden to show otherwise is sup- ported by competent evidence. CONCLUSION We find that the district court did not err in affirming the order revoking Travis’ driver’s license. Accordingly, we affirm. Affirmed.

01-03-2023

08-14-2020

https://www.courtlistener.com/api/rest/v3/opinions/819259/

Slip Op. 01-136 UNITED STATES COURT OF INTERNATIONAL TRADE BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS ________________________________________ : NTN BEARING CORPORATION OF AMERICA and : NTN KUGELLAGERFABRIK (DEUTSCHLAND) GmbH;: SKF USA INC. and SKF GmbH; : FAG KUGELFISCHER GEORG SCHAFER AG and : FAG BEARINGS CORPORATION, : : Plaintiffs and : Defendant-Intervenors, : : and : : INA WALZLAGER SCHAEFFLER oHG and : INA BEARING COMPANY, INC., : : Plaintiffs, : : v. : Consol. Court No. : 97-10-01800 UNITED STATES, : : Defendant, : : and : : THE TORRINGTON COMPANY, : : Defendant-Intervenor : and Plaintiff. : ________________________________________: JUDGMENT This Court having received and reviewed the United States Department of Commerce, International Trade Administration’s (“Commerce”) Final Results of Redetermination Pursuant to Court Remand (“Remand Results”), NTN Bearing Corp. of Am. v. United States, Slip Op. 01-76 (CIT June 22, 2001) and Commerce having complied with the Court’s remand, and no responses to the Remand Results having been submitted by the parties, it is hereby ORDERED that the Remand Results filed by Commerce on October 4, 2001, are affirmed in their entirety; and it is further Consol. Court No. 97-10-01800 Page 2 ORDERED that since all other issues were previously decided, this case is dismissed. ______________________________ NICHOLAS TSOUCALAS SENIOR JUDGE Dated: November 27, 2001 New York, New York

01-03-2023

02-05-2013

https://www.courtlistener.com/api/rest/v3/opinions/3859004/

Argued October 7, 1938. This was an action in trespass to recover damages for personal injuries sustained by reason of a fall on a greasy sidewalk where fuel oil had been placed and permitted to remain. Plaintiff's statement of claim averred, inter alia, that the defendant through its agents or employees, "negligently and carelessly permitted a large quantity of fuel oil to come upon the sidewalk adjacent to the aforesaid premises and allowed the said fuel oil to remain upon said sidewalk, so that travel thereon by the general public, and more particularly by the plaintiff was made dangerous and unsafe." No affidavit of defense was filed. The case came up for trial before MacNEILLE, J. and a jury, and resulted in a verdict for plaintiff in the sum of $1500. The defendant filed motions for judgment non obstante veredicto and for a new trial. The court dismissed the motion for a new trial, but granted the motion for judgment n.o.v. This appeal followed. In determining whether or not the court below should have entered the judgment n.o.v. all evidence and inferences therefrom favorable to the party obtaining the verdict must be taken as true, and all unfavorable to him, if depending solely on testimony, must be rejected: Hostetler v. Kniseley, 322 Pa. 248,185 A. 300. *Page 284 The accident happened on the northwest corner of 20th and Mt. Vernon Streets. The grease was on the 20th Street side of the premises, a short distance north of Mt. Vernon Street. The long side of this dwelling is on 20th Street, and running northwardly from Mt. Vernon Street about twenty-five feet there is an iron fence 25 inches from the house line. Against the wall of the house is a receptacle for receiving oil, which receptacle is placed 17 inches north of the Mt. Vernon Street house line. Plaintiff testified that about 11:15 A.M. on March 2, 1934, she walked east on Mt. Vernon Street and turned to go north on 20th Street in the City of Philadelphia. After taking two or three steps along the house line she fell. On her glove and clothing she noticed water, oil and grease, and, upon inspecting in the vicinity of the oil receptacle, she saw oil in the wet snow and dripping from the receptacle. There had been snow and the contention of the plaintiff is that the oil was retained by the snow until the sun caused the melting of the snow to release the oil and in that way it passed down on the sidewalk. The plaintiff also testified that at the time of this happening, there had been thawing, and the pavement on 20th Street was covered with water and dirt from the snow melting and flowing across the pavement from the yard or enclosure; that what appeared to her to be dirty water, turned out to be dirty oil. This condition covered the pavement from the fence to the curb. It was established at the trial of the case, that at about 5:00 o'clock in the afternoon of the preceding day, the defendant's agent had delivered two hundred gallons of fuel oil through the receptacle. There was testimony by a witness, John Davie, a resident of 2001 Mt. Vernon Street, that at 8:45 or 9:00 o'clock in the morning when he left home, the pavement from the iron railing to the curb was dry; that he passed there and the pavement was all right; that there *Page 285 were two or three inches of snow in the yard. He further testified that on his return home between 11:30 A.M. and 12:30 P.M., as a result of someone telling him of the accident, he examined the pavement and the receptacle. He testified that the receptacle was all right, but that there was oil across the pavement and water mixed with oil; that the snow in the enclosure had mostly melted and flowed down across the pavement from the railing to the curb for the length of the railing; that there was fuel oil and water under the receptacle and flowing from there down toward the curb; that he took soapy water and cleaned the pavement from the receptacle to the curb for a space about four feet wide. He also testified that he had cleaned his pavement from the fence to the curb the day after the storm. It was also established that oil already in the tank could not possibly flow back and come through the receptacle on to the pavement. There was testimony that on the 26th and 27th of February there had been snow storms amounting to a depth of seven and four-tenth inches; that on March 1st at 8:00 P.M., there remained on the ground a depth of five and seven-tenths inches; that on March 2d this depth had been reduced by thaw to three and five-tenths inches; that from the time of delivery of the oil until after the time Mr. Davie had left home, viz: 9:00 A.M., the temperature had been at 32 degrees or lower, and the thaw had not started. It was also testified that during the morning of March 2d, there had been considerable thawing. The witness, Davie, also testified that there was no other oil on the sidewalk except at the point indicated, starting from the receptacle down to the curb, approximately four to six feet wide. The witness also testified that the receptacle was oily and greasy on the outside of it, and that in back of the receptacle there was some snow, which was all yellow from fuel oil, which snow he knocked off. The witness also testified that when the oil was delivered on March 1st, the defendant's *Page 286 driver didn't come into the house, but that he opened the window and told him that the tank was about one-eighth full, and that he wanted 200 gallons. The witness also testified that he was home practically every time that Green delivered oil, and that he personally saw Green on at least two prior occasions spill oil, and that on one occasion Green said to Davie at the time of the spill — "I have opened my vent too wide, or valve too wide, at the receptacle." Davie also testified that on at least ten occasions he saw oil under the receptacle immediately after Green had delivered it. Davie also testified that there was never any other oil of any character or kind on the sidewalk on 20th Street or on Mt. Vernon Street, other than fuel oil which came there at the time of the delivery by Green on prior occasions. Davie also testified that the oil at all times had its source at the receptacle down to the ground, and from that point on to "the pavement and run, all depending on the amount that was spilled." Davie also testified that it was dark at the time the oil was delivered on March 1, 1934. Madeline Bateman, daughter of the plaintiff, testified to the fact that the plaintiff's clothes were filled with oil when she returned home the day of the accident. Walter E. Vosselmann, testified that he has been driving fuel oil apparatus and delivering fuel oil since 1923, and enumerated several causes of spillage. This witness testified that if oil were put in snow, it would stay in the snow as long as the temperature remained below 32 degrees, and when the snow melted, the oil would run down with the melted snow, and also that the oil would discolor the snow. This witness also testified that from his experience, if one stepped on oil and water mixed, he would slip. The court below, in entering judgment non obstante veredicto, relied on Gorman v. Brahm's Sons Inc., 298 Pa. 142, 148 A. 40, and kindred cases. That case *Page 287 was an action against the owners of a grocery store to recover for personal injuries from plaintiff's falling on a flight of stairs in the store, where plaintiff's proof is that after entering the store as a customer, she ascended a flight of stairs, on which men were carrying up open baskets of spinach, and after an expiration of an hour, she descended the same stairs and slipped on a bunch of wet and crushed spinach on the stairs and was injured. There was no evidence that the spinach had fallen from the baskets or how long it had been there. The court held that plaintiff had not met the burden of proof and entered a nonsuit which it subsequently refused to take off. On appeal, the order was affirmed. That case is readily distinguishable from the instant case. There was ample evidence to warrant the jury in finding that the oil on the sidewalk was of the same character as that delivered by the defendant and since it was established that the oil, once delivered, could not flow back out of the receptacle, the necessary inference would be that it had been placed at the receptacle reserved for the defendant by its servant at the time of delivery. The length of time that the oil remained would not affect the negligence of the defendant. If it was placed there at the time of the delivery of the fuel oil, the defendant's servant saw it or had an opportunity to discover it by the exercise of proper care and it was his duty to remove it, and his failure to do so would be negligence imposing liability on the defendant. The defendant had exclusive control of the delivery of the fuel oil. Under the circumstances, it was the duty of the defendant to use proper care to avoid any spillage of fuel oil that might come upon the sidewalk and endanger pedestrians. In the ordinary course of things, the accident would not have occurred, if due care had been exercised in making the delivery of the fuel oil. Quoting from the opinion by Brother CUNNINGHAM *Page 288 in Butler v. Del Favero, 116 Pa. Super. 534, 176 A. 765, at p. 539: ". . . . . . where the instrumentality which causes the injury is under the control of the defendant and an accident of the kind shown does not ordinarily occur when proper care is used, the defendant, if the accident is capable of an explanation which repels the inference that it resulted from his negligence, should make the explanation — the reason for the rule being that he is in a position to do so, while from the nature of the case, it may not be in the power of the party injured to show just how the accident happened." Also, in O'Brien v. Gray, 121 Pa. Super. 27, 182 A. 746, in an opinion by Brother BALDRIGE, at pp. 29, 30, said: "The plaintiff must furnish some facts tending to show a probability that the accident would not have occurred without the defendant's negligence; but it is notnecessary to prove the negligence by positive evidence. It may be shown by a proof of circumstances from which the jury are permitted to infer negligence on the part of the defendant. . . . . ." (Italics supplied). And in Reardon v. Smith, 298 Pa. 554,558, 148 A. 860, the Supreme Court said, "`. . . . . . The proof may be furnished by the circumstances themselves. The test is whether they are such as to satisfy reasonable and well-balanced minds that the accidents resulted from the negligence of the defendant.'" In Wright et al. v. Straessley, 321 Pa. 1, 182 A. 682, the Supreme Court, in an opinion by Justice MAXEY said, at p. 5: "There is a class of cases in which accidents are attended by circumstances from which the inference of negligence is legitimate. But in such cases negligence is not a presumption of law. It is a finding of fact, and before the fact can be found a jury must consider the circumstances, reason on them and draw the inference of negligence. We held in Maerkle v. Pittsburgh Rys.Co., 311 Pa. 517, 165 A. 503, that the burden resting upon a plaintiff to show defendant's *Page 289 negligence in certain types of cases was met by proof of circumstances reasonably giving rise to that inference. Negligence cannot be presumed from the mere fact of the happening of an accident, but it may be inferred from the attendant circumstances." We believe that the court below erred in entering judgment non obstante veredicto. Judgment reversed, with leave to reinstate the motion for new trial.

01-03-2023

07-06-2016

https://www.courtlistener.com/api/rest/v3/opinions/2813870/

NONPRECEDENTIAL DISPOSITION To be cited only in accordance with Fed. R. App. P. 32.1  United States Court of Appeals For the Seventh Circuit  Chicago, Illinois 60604    Argued June 9, 2015  Decided July 1, 2015    Before    RICHARD A. POSNER, Circuit Judge    MICHAEL S. KANNE, Circuit Judge    DIANE S. SYKES, Circuit Judge    No. 14‐3497                Appeal from the  ERIC LEE CAPMAN,    United States District Court for the    Plaintiff‐Appellant,  Northern District of Indiana,    Fort Wayne Division.    v.      No. 1:13cv286  CAROLYN W. COLVIN,    Acting Commissioner of Social Security, William C. Lee,    Defendant‐Appellee.  Judge.      O R D E R  Eric Capman, at age 42, applied for disability benefits and supplemental security  income after mental and physical impairments left him unable to work. An  administrative law judge (“ALJ”) denied benefits, finding that Capman retained the  residual functional capacity (“RFC”) to perform work at all exertional levels but with  certain limitations. Capman challenges this RFC determination and particularly the  ALJ’s omission of other limitations that he claims are necessary. The district court  rejected this argument and we affirm.    No. 14‐3497    Page 2    I. Background    In 1987 Capman enlisted in the Navy, where he was a member of a fighter  squadron that was deployed aboard an aircraft carrier. During his time in the Navy, he  was treated for migraine headaches and back pain. He witnessed a terrible fire on the  U.S.S. Dallas and saw many sailors “burned beyond recognition.” In 1990 he was  discharged because of a personality disorder.      The record of Capman’s medical and psychiatric history over the next two  decades is spotty. There are references to symptoms of depression and anxiety in 2001  that temporarily prevented him from working. In 2007 and 2008, he was treated for  bipolar disorder, depression, and anxiety. He also reported that he experienced back  pain and frequent, severe headaches, and was a recovering alcoholic.        Capman was incarcerated from early 2010 until early 2011 for manufacturing  methamphetamine. His prison medical records note only hypertension and obesity as  his then‐current medical conditions. In prison Capman sought medical help for  nightmares and sleeplessness. He was evaluated for posttraumatic stress disorder and  anxiety disorder but did not meet the criteria for either diagnosis.      After his release from prison, Capman was treated at a Veteran’s Administration  facility for a host of physical and mental ailments. Doctors diagnosed bipolar disorder,  posttraumatic stress disorder, personality disorder, and severe depression. He attended  group therapy sessions for his posttraumatic stress disorder and reported nightmares  and trouble sleeping. He also reported anxiety attacks when around crowds. Capman  was also treated for lower back pain, which dated to an injury in the Navy. He got some  relief from a transcutaneous electrical nerve stimulation unit, which sends electrical  currents to relieve pain. His doctors also prescribed Tramadol (a painkiller), Sulindac (a  nonsteroidal anti‐inflammatory drug), and Cyclobenzaprine (for stiffness and spasms).  In a doctor’s visit in late 2011, his pain was recorded as stable. During a January 2012  examination, Capman’s doctor noted that he had guarded partial range of motion in his  lumbar spine. Also in 2012, his doctor diagnosed diabetes and treated him for frequent  migraines (three or four times a week). He was diagnosed with sinusitis once, for which  he was given medication. Finally, Capman’s doctors continued to prescribe medication  for hypertension.    In 2011 Capman applied for disability benefits and supplemental security income,  listing on an initial Disability Report that he was “manic depressant and bipolar  suicidal” and also noting that he took medicine for high blood pressure and back pain.  No. 14‐3497    Page 3    He claimed that his back pain prevented him from standing or walking for any length of  time and that he could not go out in crowds or be in groups of more than three people  because he feared having an anxiety attack. He added that he did not do well with  authority, stress, or changes in his routine.  In a consultative mental examination in 2011, two psychologists, Neal Davidson  and Lezlea Jones, confirmed that Capman suffers from mood disorder, posttraumatic  stress disorder, borderline personality disorder, alcohol dependence, and cannabis  abuse in remission. They reported, however, that Capman was “able to understand,  remember, and carry out instructions” and his attention and concentration were  adequate. Davidson and Jones concluded that Capman was “somewhat limited” in his  ability to “perform activities and interact with the public without interference from  psychologically based symptoms” because of his “irritability and reactive tendencies.”    Psychologist Kenneth Lovko also evaluated Capman and completed two forms  for the agency—the Psychiatric Review Technique form and the Mental Residual  Functional Capacity Assessment (“RFC Assessment”). On the first form, Lovko checked  boxes to record that Capman’s mood disorder, posttraumatic stress disorder, borderline  personality disorder, and alcohol dependence did not equal a listed impairment. In  Section I of the RFC Assessment— effectively a worksheet on which a medical  consultant sets forth summary conclusions— Lovko noted that Capman was moderately  limited in six categories: understanding and memory (one category); sustained  concentration and persistence (three categories); and social interaction (two categories).  In Section III of the RFC Assessment, Lovko concluded that Capman’s allegations of his  symptoms were credible but his claims about their severity were not. Lovko explained  that Capman’s symptoms could “present some impediment to work situations with  large numbers of people,” but that “it does seem that [Capman] could deal with  environments that have fewer persons in them, and where stress is limited.” In Lovko’s  opinion Capman could carry out unskilled tasks, relate to others on a superficial basis,  “attend to task[s] for sufficient periods of time,” and manage the stress of unskilled  work.    At his hearing before the ALJ, Capman testified about his mental and physical  impairments, reiterating that he could not work because of anxiety attacks that occur  when he is around too many people. He also claimed that his back pain prevented him  from sitting or standing for long periods and that although he could walk a mile, he had  not done so for two years. He testified that he took aspirin for his migraines instead of  his prescribed medication because he did not like the side effects of the prescription  No. 14‐3497    Page 4    drug. He added that he experienced migraines twice a month and they lasted four to five  hours.    Finally, Capman testified that he last worked at a hotel in 2009, when he was fired  because he would “snap” when he was around too many people. Prior jobs—all short  term—included stints as a collection clerk, a front‐desk clerk, and a telemarketer.  A vocational expert (“VE”) testified and responded to hypothetical questions  from the ALJ about future work opportunities for an individual of Capman’s age,  education, work experience, and limitations. The ALJ first hypothesized an individual  who could not do complex or detailed tasks but could perform simple, routine tasks that  did not require working with the public or in close proximity or cooperation with others.  The expert responded that a person with these limitations could not perform Capman’s  past work but could perform jobs at the medium exertional level—such as “stores  laborer” or “hand packager”—as well as jobs at the light exertional level—such as  “inspector and hand packager” or “folder of laundry products.” When asked if an  individual with limitations consistent with Capman’s testimony could perform  Capman’s past work or other jobs, the VE responded that he could not. The VE  explained that competitive employment would not allow a worker to be so “off task”—  in the sense that he could not interact with others or sit or stand for long periods of time.    The ALJ applied the required five‐step analysis, see 20 CFR §§ 404.1520(a)(4),  416.920(a)(4), and determined that Capman had not engaged in substantial gainful  activity since the onset date (step one); that Capman’s mood disorder, posttraumatic  stress disorder, borderline personality disorder, and history of polysubstance abuse  were severe impairments, but that his back pain and headaches were not (step two); that  none of these impairments equaled a listed impairment (step three); that Capman could  not perform his past work but had the residual functional capacity to perform a full  range of work at all exertional levels provided he was limited to simple, routine tasks  that did not require working with the public or in close proximity or cooperation with  others (step four); and that given his age, education, work experience, and residual  functional capacity, Capman could work as a stores laborer or hand packager (step five).    The Appeals Council denied Capman’s request for review, precipitating this suit  in district court. The district judge concluded that substantial evidence supports the  ALJ’s decision, and Capman now appeals.      No. 14‐3497    Page 5    II. Discussion  A. Concentration, Persistence, and Pace    Capman first argues that the ALJ’s RFC findings do not adequately reflect his  limitations in concentration, persistence, and pace—limitations that Dr. Lovko classified  as “moderate” in a checklist in Section I of his RFC Assessment. The Commissioner  responds that Section I of the form is merely a worksheet while Section III is the  psychologist’s bottom‐line assessment, so the ALJ can reasonably rely on Section III.  See Smith v. Comm’r Soc. Sec., 631 F.3d 632, 636–37 (3d Cir. 2010).    The agency’s Program Operations Manual System (“POMS”) identifies the  purpose of Section I of the RFC Assessment and instructs medical consultants to record  and explain their conclusions in narrative format in Section III of the form:  The purpose of section I … is chiefly to have a worksheet to ensure that the  psychiatrist or psychologist has considered each of these pertinent mental  activities and the claimant’s or beneficiary’s degree of limitation … . It is the  narrative written by the psychiatrist or psychologist in section III … that  adjudicators are to use as the assessment of RFC.  POMS DI 25020.010(B)(1), available at https://secure.ssa.gov/apps10/poms.nsf/lnx/  0425020010 (emphasis added and bold omitted); see Johansen v. Barnhart, 314 F.3d 283,  289 (7th Cir. 2002) (accepting an ALJ’s RFC assessment based on a psychologist’s  evaluation that “went further” and “translated” Section I observations into a mental RFC  finding in Section III). Although an ALJ should not ignore limitations recorded in  Section I, the POMS directs that “[t]he degree and extent of the capacity or limitation  must be described in narrative format in Section III.” See POMS DI 24510.063(B)(2),  available at https://secure.ssa.gov/apps10/poms.nsf/lnx/0424510063 (emphasis added and  bold omitted). So the ALJ may reasonably rely on the examiner’s narrative in Section III,  at least where it is not inconsistent with the findings in the Section I worksheet.  Lovko’s notations in Section I and Section III are not inconsistent. The examiner  explained in narrative form in Section III that Capman could adequately manage the  stress of unskilled tasks. That Capman is moderately limited in his ability to complete a  day or week of work without interruption, as noted in Section I of the form, does not  mean that he could not function satisfactorily. A moderate limitation is not a complete  impairment. See Roberson v. Astrue, 481 F.3d 1020, 1024 (8th Cir. 2007).    No. 14‐3497    Page 6    Moreover, the ALJ’s RFC findings accurately reflected Lovko’s assessment by  restricting Capman to simple, routine tasks and limited interactions with others. Both  the medical evidence and Capman’s testimony support the finding that any limitations  in concentration, persistence, and pace stem from Capman’s anxiety attacks, which occur  when he is around other people. Therefore, the limitations incorporated into the ALJ’s  RFC findings adequately addressed Capman’s deficiencies in concentration, persistence,  and pace. See O’Connor‐Spinner v. Astrue, 627 F.3d 614, 619 (7th Cir. 2010) (“We also have  let stand an ALJʹs hypothetical omitting the terms ‘concentration, persistence and pace’  when it was manifest that the ALJʹs alternative phrasing specifically excluded those  tasks that someone with the claimantʹs limitations would be unable to perform.”);  Simila v. Astrue, 573 F.3d 503, 521–22 (7th Cir. 2009).        B. Difficulty Accepting Instructions and Responding to Supervisors      Capman next argues that the ALJ failed to include a limitation reflecting his  difficulty in accepting instructions and responding appropriately to criticism from  supervisors—a limitation that Lovko had also marked as moderate on Section I of his  RFC Assessment. To the contrary, we’re satisfied that the ALJ adequately addressed this  limitation. Lovko specifically concluded in his Section III analysis that Capman could  relate to coworkers and supervisors on at least a superficial basis. And the ALJ  accommodated the need for superficial interactions with supervisors in the RFC by  limiting Capman to work that does not involve “close proximity or cooperation with  others.”      C. Back Pain  Capman further argues that the ALJ erred by not including in the RFC an  exertional limit to light‐level work to account for his back pain. But the ALJ rejected  Capman’s testimony concerning his back pain as not credible, a determination that was  not patently wrong. True, the ALJ used disfavored boilerplate at step four of his analysis,  saying that “the claimant’s statements concerning the intensity, persistence and limiting  effects of these symptoms are not credible to the extent they are inconsistent with the  above residual functional capacity assessment.” See Murphy v. Colvin, 759 F.3d 811, 816  (7th Cir. 2014); Bjornson v. Astrue, 671 F.3d 640, 644–45 (7th Cir. 2012). But the ALJ made a  more detailed credibility finding at step two when he determined that Capman’s back  pain did not qualify as a severe impairment, citing unexplained gaps in Capman’s  No. 14‐3497    Page 7    medical treatment during the relevant period. See 20 C.F.R. § 404.1529(c)(3)(v); SSR 96– 7p; Roddy v. Astrue, 705 F.3d 631, 638 (7th Cir. 2013); Simila, 573 F.3d at 519.    The ALJ also determined at step two that there was no objective medical evidence  corroborating the limitations Capman claimed. An ALJ cannot disregard subjective  complaints about pain based solely on the absence of objective medical evidence.  See Carradine v. Barnhart, 360 F.3d 751, 753 (7th Cir. 2004). But an ALJ may take the lack of  medical evidence into account, as the ALJ did here. See Schmidt v. Barnhart, 395 F.3d 737,  746–47 (7th Cir. 2005). And an ALJ’s decision should not be overturned simply because  the relevant analysis is set forth at a different step of the process. See Curvin v. Colvin, 778  F.3d 645, 650 (7th Cir. 2015); see also Moore v. Colvin, 743 F.3d 1118, 1122 (7th Cir. 2014)  (noting that use of boilerplate does not automatically discredit an ALJ’s credibility  determination).    D. Migraines  Capman next argues that the ALJ should have included a limitation for the effects  of his migraines on his ability to work. He claimed that he had migraines twice a month,  whereas the VE testified that a single‐day’s absence would be acceptable to an employer.  Capman misunderstands the VE’s testimony, which was that one absence per month  beyond allotted sick time would be unacceptable. Moreover, Capman submitted no  evidence that his headaches had worsened or impaired his ability to work during the  relevant time period. See Pepper v. Colvin, 712 F.3d 351, 364 (7th Cir. 2013); Schmidt,  395 F.3d at 746. Indeed, the evidence actually suggested that his migraines had  improved.    E. Diabetes, Hypertension, Hypertriglyceridemia, and Sinusitis  Capman also argues that the ALJ failed to account for his diabetes, hypertension,  hypertriglyceridemia, and sinusitis. While an ALJ must consider all the claimant’s  ailments in combination and may not ignore lines of evidence, see 20 C.F.R.  § 404.1545(a)(2); Thomas v. Colvin, 745 F.3d 802, 807 (7th Cir. 2014); Villano v. Astrue,  556 F.3d 558, 563 (7th Cir. 2009), Capman submitted no evidence to show how these  particular ailments affected his ability to work. He now argues that his diabetes and  related issues cause him to nap during the day, but he testified at the hearing that his  naps were caused by boredom or prescription medication for other conditions. And he    No. 14‐3497    Page 8    offered no evidence about any limitations attributable to sinusitis, which he suffered  from only once.    F. Obesity  Finally, Capman summarily argues that the ALJ erred by not acknowledging his  obesity and its effect on his other medical conditions. True, an ALJ must consider the  effect of a claimant’s obesity when combined with other impairments. See SSR 02‐1p;  Goins v. Colvin, 764 F.3d 677, 681 (7th Cir. 2014); Sienkiewicz v. Barnhart, 409 F.3d 798, 803  (7th Cir. 2005). But Capman never submitted any evidence explaining how his obesity  affected his ability to work or aggravated his other conditions.    AFFIRMED.

01-03-2023

07-01-2015

https://www.courtlistener.com/api/rest/v3/opinions/3525626/

[1] This is an action in three counts by which plaintiff school district seeks to recover the tuition fee allegedly due from defendant because of the attendance at its school of defendant's three minor children not residents within the district. Each count was for the amount due for the attendance of a particular child at the rate of tuition established by the board of directors of plaintiff school district from time to time. [2] Plaintiff school district is located in Cape Girardeau County and comprises the same territory as the City of Cape Girardeau, while defendant, his wife, and his three children reside at Illmo, in Scott County, which adjoins Cape Girardeau County to the south. However defendant, who is an attorney at law, maintains his office in the City of Cape Girardeau where he is an active member of the local bar; and during the period in question he was the owner of several parcels of real estate in the City of Cape Girardeau upon which he regularly paid whatever taxes were due for the benefit of plaintiff school district. [3] The petition alleged that the Illmo school district within which defendant and his three children resided had maintained an approved high school offering a course of study through the twelfth grade during all the time in question, and that the three children were wholly supported by defendant and his wife, and were not bound in any way as apprentices. All this was to negative any state of facts which, under the law, would have entitled the children to attend plaintiff district's school without imposing a personal liability upon defendant for the payment of their tuition. [4] It was then alleged in the first count of the petition that on September 1, 1940, defendant's daughter, Betty, applied for admission to plaintiff district's high school, and was admitted upon the condition that defendant pay the sum of $5 a month for her tuition; that she thereafter attended the high school for a period of twenty-seven months until her graduation in May, 1943; and that there was due from defendant for her tuition the sum of $135 with interest, aggregating $152.89. [5] In the second count it was alleged that on September 1, 1942, defendant's son John applied for admission to plaintiff district's high school, and was admitted upon the condition that defendant pay the sum of $5 a month for his tuition; that prior to the opening of school in September, 1943, the board of directors had increased the rate of *Page 486 tuition to $7.50 a month; that John attended the high school for a period of twenty-seven months until his graduation in May, 1945; and that there was due from defendant for his tuition at the respectively established rates the total sum of $180 with interest, aggregating $192.49. [6] In the third count it was alleged that on September 1, 1943, defendant's son William applied for admission to the high school, and was admitted upon the condition that defendant pay the sum of $7.50 a month for his tuition; that William attended the high school for a period of twenty-seven months until his graduation in May, 1946; and that there was due from defendant for his tuition the sum of $202.50 with interest, aggregating $212.71. [7] For his answer defendant denied that his children were admitted to plaintiff district's high school upon the condition that he pay for their attendance at the established rate of tuition, and then set up that any portion of the alleged claim accruing more than five years prior to the institution of the action was barred by limitation of time. [8] Coupled with the answer was a motion to dismiss the petition upon the ground that it failed to state a claim upon which relief could be granted. [9] Thereafter the regular judge of the court disqualified himself, and by agreement Honorable Randolph H. Weber, Judge of the Thirty-third Judicial Circuit, was requested to hear the case as special judge. There was a further agreement that the court should try the facts without a jury; and after defendant's motion to dismiss had been overruled, the case proceeded to trial before the court alone. [10] The court found that the defense of the statute of limitations did not apply, and that plaintiff school district had sustained its petition in all respects except as to its demand for interest, to which the court found that it was not entitled. The court further found that defendant was not entitled to credit for school taxes paid to plaintiff district, since no such question has been raised in the pleadings. [11] Judgment was entered in favor of plaintiff school district, and against defendant, in the aggregate amount of $517.50. Following an unavailing motion for a new trial, defendant gave notice of appeal, and by subsequent steps has caused the case to be transferred to this court for our review. [12] Defendant, raises two principal points on his appeal, the first, that the petition fails to state a cause of action against him, and the second, that even if the petition should be held to state a cause of action, the evidence nevertheless failed to establish a contract to pay tuition, but instead disclosed that the children were admitted upon the solicitation of the superintendent of plaintiff's district's school and with the superintendent's assurance to defendant that no tuition would be demanded. There is still a third point, not carried forward in the argument, that defendant could not in any event be held liable for any part of the claim accruing more than five years before the institution of the action. [13] It seems entirely clear that the petition states a cause of action. As we have already pointed out, it sets up admitted facts which negative any idea that defendant's children were entitled to attend plaintiff district's school without the payment of tuition, or that their tuition was a proper charge against the district within which they resided; and it then avers that in each instance each of defendant's children was admitted upon the condition that defendant pay tuition at the regular rate prescribed by the board of directors. Since the children were admittedly nonresidents, they were not lawfully entitled to attend plaintiff district's school without the payment of tuition. Sec. 10340, R.S.Mo. 1939, Mo.R.S.A. § 10340; Binde v. Klinge, 30 Mo. App. 285; Barnard School District v. Matherly, 84 Mo.App. 140. Reading the petition in the light of Section 10340 which empowers a board of directors to admit pupils not residents within the district and to prescribe the tuition fee to be paid for their attendance, it reveals a situation imposing a personal liability upon defendant for payment of the regularly established tuition charges in return for the privilege of having his children attend school in a district other than that in which he and *Page 487 they resided. It is a liability which the law creates, and the lack of an express contract to the same effect would be wholly immaterial. [14] With all the material facts admitted, the conclusion that the petition states a cause of action leaves no room for doubt upon the question of the sufficiency of the evidence to sustain plaintiff district's right to recover. [15] The defense, as heretofore indicated, was put upon the ground that defendant's three children were admitted to plaintiff district's school at the solicitation of the superintendent and upon his assurance that no tuition would be required. [16] In support of this defense, defendant testified that some time in April, 1940, he attended a meeting of the Optomist Club in Cape Girardeau and sat with the superintendent, Louis J. Schultz, who was to address the meeting on matters connected with the operation of the schools. In response to Schultz' inquiry regarding the facilities of the Illmo school which the children were then attending, defendant stated that the school was small and without the wealth or personnel to maintain an adequate plant, but that he had hopes of remedying the situation by a consolidation of the Illmo and Fornfelt schools. [17] Schultz then inquired about the ages of defendant's children and the grades to which they had progressed, and was told that Betty was finishing the ninth grade or first year of high school that year, and that John and William, being younger, were in lower grades. Schultz also inquired whether defendant was a taxpayer in plaintiff school district, and upon being told that he was, suggested to defendant that he have Betty enter plaintiff district's high school the following September, and then follow the same course with both John and William as each of them completed the first year of high school in Illmo. He then assured defendant that "we would be glad to have them", and that inasmuch as defendant was a taxpayer in the district, "the Board of Education never questions about tuition, you won't be required to pay anything". As a further explanation of his desire to have the children attend the school in Cape Girardeau, he informed defendant that their inclusion among the student body would result in a better showing with the state department, and that the district would be in a position to get additional state aid on account of a higher enrollment. He then went so far as to recommend that the children ride with defendant as he traveled back and forth each day to his office in Cape Girardeau, and he reiterated that "it won't cost you a dime, there will be no charges at all". [18] Defendant testified further that in his discussion with Schultz he had not been conversant either with the school law or with plaintiff district's rules and regulations, but had simply taken Schultz' word without investigation; that while he had occasionally met Schultz and inquired about the children's progress during the time they were in school, there had never, been anything said about the payment of tuition; that he had at no time received a statement for the children's tuition; and that the first he had known that such a claim was to be made was when he received a letter from Schultz dated June 12, 1946, in which Schultz wrote that regular statements had been sent defendant from time to time, and that the board of directors had instructed him to notify defendant of his obligation and request that payment be made. Defendant did not answer Schultz' letter, nor did he reply to one subsequently received from Judge Oscar A. Knehans after the latter had been employed in his professional capacity to handle the claim on behalf of the district. [19] Miss Elizabeth Walther, secretary to both the board of directors and the superintendent of schools, testified on direct examination as a witness for plaintiff district that at the end of each school year during the period in question she had mailed defendant a statement for the amount of tuition then due for such of his children as had attended school during the previous year. Her testimony on direct examination was couched in positive terms, and seemingly left no room for any suspicion that she was at all uncertain about the fact that such statements had been sent out. However on *Page 488 cross examination she frankly admitted that she could not remember any specific instance when such a statement had been mailed; and while she said that carbon copies of the statements had been made at the time of the preparation of the originals, she nevertheless confessed that when she had looked in the files the day previously, there were no such copies to be found. She further admitted that there was no record or minute to show that the question of defendant's obligation to pay tuition had ever been brought before or considered by the board of directors prior to August 26, 1946, when Schultz had read the board the letter he had previously written defendant on June 12, 1946. [20] Schultz testified that he had no recollection of having sat and talked with defendant at the meeting of the Optomist Club in April, 1940, and that he did not recall having discussed the question of whether defendant was a taxpayer in plaintiff district, or whether a larger enrollment would entitle his school to receive a greater amount of state aid. After some equivocation he finally stated that to the best of his knowledge he had not at any time told defendant that there would be no tuition charged for his children. However he had previously testified that if he did in fact make any such statement, it was because he had informed defendant that "he could get credit for his taxes for the tuition". Earlier in his examination he had said that defendant's nonpayment of tuition had been called to his attention by the secretary of the board, and that it was then that he had written defendant the letter of June 12, 1946. [21] The dispute between defendant on the one hand and Miss Walther and Schultz on the other hand comprises the only conflict over the facts of the case; and if the matters thus in dispute were so material as to require that the particular controversy be definitely resolved one way or the other, there would certainly be strong ground for accepting defendant's version of what occurred. While defendant's testimony was positive and unequivocal, the same cannot be said for that of Miss Walther and Schultz, as our recital of the facts has already disclosed. On the contrary, the background of the case indicates a situation where it would be plausible to believe that Schultz, being anxious to increase the enrollment of his school, and acting no doubt with the very best intentions, suggested to defendant that he have his children complete their high school courses in plaintiff district's school all without the knowledge of the board of directors, who apparently did not have the matter brought to their attention until August 26, 1946, three months after the last of the children had graduated. It unquestionably weakens defendant's position that in denying his liability he concededly did not inform either the board of directors or Judge Knehans of Schultz' alleged assurance that no tuition would be charged, but the explanation undoubtedly is that tempers were running short, and that in a matter involving his own personal affairs defendant did not exercise the fine judgment that he might have been expected to exercise in the interest of a client. [22] However the fact of the matter is, just as plaintiff school district insists in its brief, that it is of no real importance whether Schultz assured defendant that no tuition would be charged, since in the event he did give such assurance, he was acting beyond his authority and without the capacity to bind the board of directors, who constituted the governing body of the district and in whose hands the administrative power reposed. Consolidated School Dist. No. 6 v. Shawhan, Mo.App., 273 S.W. 182; 56 C. J. 333. Nor indeed could the directors themselves have lawfully waived the payment of tuition in the case of defendant's children. A board of directors is but a creature of statute, and its members can exercise no authority unless the same is either expressly conferred or else arises by necessary implication from the powers that are conferred. State v. Kessler, 136 Mo. App. 236, 240, 117 S.W. 85, Consolidated School Dist. No. 6 v. Shawhan, supra. We have already pointed out that Section 10340 empowers the board to admit pupils not resident within the district and to prescribe the tuition fee which such pupils must pay. The section then goes on to provide that certain classes of children may attend without *Page 489 the payment of tuition; and by thus limiting the privilege to certain definitely specified classes, it necessarily excludes the idea that other nonresident children are entitled to the privilege. Binde v. Klinge, supra. It is conceded that defendant's children did not come within the exception; and the directors, in the performance of their public function, would consequently have lacked the authority to open the school maintained by the taxpayers of their own district for the free instruction of children residing in another district. 56 C.J. 811. It was therefore no defense that Schultz may have solicited the attendance of defendant's children and have represented to defendant that no tuition would be charged. [23] Defendant's failure in his printed argument to deal with the question of whether any part of the claim was barred by limitation of time would indicate that he lays no stress upon the point. [24] It is the settled rule that where the last item of an open running account accrued within five years before the institution of the action, no part of the account is barred, and this is true even though the account may arise on several different transactions. Klene v. Campbell, Mo.App., 213 S.W. 520. Schultz testified that it had been his idea that defendant would be asked for the payment of tuition after the last of his three children had graduated, and while defendant denied his liability for tuition, his theory nevertheless was that the understanding regarding the attendance of all three of his children had been reached in the one conversation between himself and Schultz. In this situation it is therefore of no particular consequence that plaintiff school district elected to proceed on three counts, since actually the whole of defendant's liability for the attendance of all three children comprised but a single cause of action. Newton v. Miller, 49 Mo. 298. The last item of the account accrued well within five years before the institution of the action, and the lower court ruled properly in holding that the statute of limitations did not apply to any part of the claim. [25] It follows that the judgment rendered by the Cape Girardeau Court of Common Pleas should be affirmed; and the Commissioner so recommends.

01-03-2023

07-05-2016

https://www.courtlistener.com/api/rest/v3/opinions/4290500/

THE THIRTEENTH COURT OF APPEALS 13-18-00132-CR Cristobal Garcia v. The State of Texas On Appeal from the 36th District Court of San Patricio County, Texas Trial Cause No. S-17-3337CR JUDGMENT THE THIRTEENTH COURT OF APPEALS, having considered this cause on appeal, concludes the appeal should be DISMISSED. The Court orders the appeal DISMISSED in accordance with its opinion. We further order this decision certified below for observance. June 28, 2018

01-03-2023

07-02-2018

https://www.courtlistener.com/api/rest/v3/opinions/819245/

Slip Op. 01-150 UNITED STATES COURT OF INTERNATIONAL TRADE BEFORE: RICHARD K. EATON, JUDGE ____________________________________ : FORMER EMPLOYEES OF AST : RESEARCH, INC., : : Plaintiffs, : : v. : Court No. 00-10-00481 : UNITED STATES DEPARTMENT : OF LABOR, : : Defendant. : ____________________________________: Former Employees of AST Research, Inc. (“Plaintiffs”) brought action seeking judicial review of United States Department of Labor’s (“Labor”) denial of petition for Trade Adjustment Assistance benefits. United States (“Government”), on behalf of Labor, moved to dismiss complaint for lack of subject matter jurisdiction pursuant to USCIT R. 12(b)(1). Defendant alleged Plaintiffs had not commenced action within sixty-day statutory filing period under 28 U.S.C. § 2636(d). Plaintiffs argued filing was timely because: (1) Labor waived sixty-day filing period by its “acts and omissions”; and (2) submission of papers to Member of Congress was “functional equivalent of a court filing.” United States Court of International Trade, Eaton, J., held: (1) Labor did not waive filing period by alleged “acts and omissions” and, moreover, Plaintiffs received both constructive notice of determination, and actual notice of determination, time limits, and procedure for seeking judicial review; and (2) submission of documents to Member of Congress was not sufficient to commence action in United States Court of International Trade. [Defendant’s motion to dismiss for lack of subject matter jurisdiction granted; action dismissed.] Decided: December 20, 2001 Cameron & Hornbostel LLP (Alexander W. Sierck), for Plaintiffs. Robert D. McCallum, Jr., Assistant Attorney General of the United States; David M. Cohen, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice; Velta A. Melnbrencis, Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Delfa Castillo), for Defendant. Court No. 00-10-00481 Page 2 OPINION EATON, JUDGE: Plaintiffs seek judicial review of the United States Department of Labor’s (“Labor”) determination that they were ineligible for Trade Adjustment Assistance (“TAA”) benefits under the Trade Act of 1974, as amended, 19 U.S.C. §§ 2271–2322 (1994). The United States (“Government”), on behalf of Labor, moves, pursuant to USCIT R. 12(b)(1), to dismiss the complaint for lack of subject matter jurisdiction. For the reasons set forth below, the court grants the Government’s motion. BACKGROUND Plaintiffs are former employees of AST Research, Inc. (“AST”) who, prior to their separation from that company, serviced warranty claims for desktop computers. Proceeding pro se, Plaintiffs petitioned for TAA benefits on April 10, 2000. (R. at 1.) After an investigation, Labor determined that Plaintiffs were ineligible for benefits because they did not produce an “article” within the meaning of 19 U.S.C. § 2272.1 See Notice of Determination Regarding 1 A group of workers is eligible to receive TAA benefits where Labor determines: (1) that a significant number or proportion of the workers . . . have become totally or partially separated . . . , (2) that sales or production, or both . . . have decreased absolutely, and (3) that increases of imports of articles like or directly competitive with articles produced by such workers’ firm . . . contributed importantly to such total or partial separation . . . . 19 U.S.C. § 2272(a) (1994). Court No. 00-10-00481 Page 3 Eligibility To Apply for Worker Adjustment Assistance and NAFTA Transitional Adjustment Assistance, 65 Fed. Reg. 34,732, 34,733 (May 31, 2000). On June 1, 2000, Plaintiffs petitioned for administrative reconsideration of Labor’s decision. (R. at 31.) On July 10, 2000, Labor sent all Plaintiffs letters stating that their request for reconsideration had been dismissed, and that they had 60 days from the publication of the notice of determination in the Federal Register to petition for judicial review. (See Compl., letter from Beale to Williams of 7/10/00 (“Beale Letter”)). Notice of Labor’s determination was subsequently published in the Federal Register on July 20, 2000. See AST Research, Inc., Fort Worth, Texas; Dismissal of Application for Recons., 65 Fed. Reg. 45,108 (July 20, 2000) (“Notice of Dismissal”). Thereafter, on August 25, 2000, Plaintiffs wrote their Member of Congress asking for help in obtaining benefits. (See Compl., letter from Williams et al. to Lewis of 8/25/00.) Finally, on September 28, 2000, the Clerk of this court received a copy of the documents previously sent to Plaintiffs’ Member of Congress. (Compl., letter from Thornton to Williams of 01/23/01.) The Clerk, pursuant to USCIT R. 3(a)(3),2 deemed these documents to be a summons and complaint sufficient to commence this action on September 28, 2000. (Id. (“The Office of the Clerk has reviewed your correspondence and has accepted it as fulfilling in principle the requirements of the summons and complaint for commencement of a civil action to review a final determination regarding certification of eligibility for trade adjustment assistance.”).) 2 This rule provides that a “civil action is commenced by filing with the clerk of the court: . . . [a] summons and complaint. . . .” USCIT R. 3(a)(3). Court No. 00-10-00481 Page 4 STANDARD OF REVIEW Because they seek to invoke the court’s jurisdiction, Plaintiffs have the burden of proving its existence by a preponderance of the evidence. See McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936); Reynolds v. Army and Air Force Exch. Serv., 846 F.2d 746, 748 (Fed. Cir. 1988). DISCUSSION In support of its motion, the Government asserts that Plaintiffs commenced this action beyond the sixty-day statutory time period within which an aggrieved party may file suit to contest a final determination with respect to the eligibility of workers for TAA benefits. (See Def.’s Mot. Dismiss at 2–3.) For their part, Plaintiffs claim that the court has jurisdiction over this matter because the sixty-day statutory time period for commencing an action under 28 U.S.C. § 1581(d)(1) was waived by the Government’s “acts and omissions” (see Pls.’ Resp. to Def.’s Reply in Supp. Mot. Dismiss at 1–2) or that Plaintiffs’ letter to their Member of Congress was “the functional equivalent of a formal court filing.”3 (Pls.’ Resp. to Def.’s Mot. Dismiss at 3.) The timeliness of actions brought under 28 U.S.C. § 1581(d)(1) is governed by 28 U.S.C. § 2636 (1994). See Former Employees of ITT v. United States, 12 CIT 823, 824 (1988); Former 3 Plaintiffs also contend that the statutory sixty-day time frame for filing may be subject to estoppel or equitable tolling. While estoppel and equitable tolling are available in TAA cases, see, e.g., Former Employees of Seimens Info. Communication Network v. Herman, 24 CIT __, __, Slip Op. 00-141, at 8–13 (2000) (discussing TAA and equitable tolling), here it is not necessary for the court to reach these questions as Plaintiffs allege no conduct that could colorably invoke either doctrine. Court No. 00-10-00481 Page 5 Employees of Badger Coal Co. v. United States, 10 CIT 693, 694, 649 F. Supp. 818, 819 (1986). The statute provides: A civil action contesting a final determination of the Secretary of Labor under [19 U.S.C. § 2273] . . . is barred unless commenced in accordance with the rules of the Court of International Trade within sixty days after the date of notice of such determination. 28 U.S.C. § 2636(d); see also 19 U.S.C. § 2395(a) (specifying that an aggrieved party “may, within sixty days after notice of such determination, commence a civil action in the United States Court of International Trade”); 29 C.F.R. § 90.19(a) (2000). A “final determination” includes a negative determination on an application for reconsideration. See 29 C.F.R. § 90.18(e) (2000) (stating that such decisions “shall constitute a final determination for purposes of judicial review”); see also 29 C.F.R. § 90.19(a) (identifying the variety of final determinations that may be issued by Labor pursuant to the Trade Act of 1974). By statute, Labor is required to publish its final determinations in the Federal Register. See 19 U.S.C. § 2273(c). Publication constitutes constructive notice, see Former Employees of Malapai Res. v. Dole, 15 CIT 25, 27 (1991), and, in accordance with regulations, begins the running of the sixty-day period. See 29 C.F.R. § 90.19(a) (a party “must file for review in the Court of International Trade within sixty (60) days after the notice of determination has been published in the Federal Register.”); See also Malapai, 15 CIT at 27. Pro se plaintiffs are not excepted from the application of this constructive notice rule. See Kelley v. Sec’y, United States Dep’t of Labor, 812 F.2d 1378, 1380 (Fed. Cir. 1987). Here, there is no dispute as to the relevant facts: the Notice of Dismissal was published in the Federal Register on July 20, 2000; Plaintiffs were sent, on July 10, 2000, and received a Court No. 00-10-00481 Page 6 copy of Labor’s determination; and Plaintiffs’ documents were accepted for filing by the Clerk of the Court on September 28, 2000. Thus, (1) Plaintiffs received both constructive notice of Labor’s final determination by publication of the Notice of Dismissal in the Federal Register and actual notice, by letter, of both the final determination and the method for seeking judicial review, and (2) Plaintiffs’ documents were accepted for filing by the Clerk of this court more than 60 days following publication of the Notice of Dismissal. Plaintiffs contend that “the Department of Labor, by its acts and omissions, waived its right to object to plaintiff’s allegedly tardy filing . . . .” (Pls.’ Resp. to Def.’s Reply in Supp. Mot. Dismiss at 2.) Plaintiffs do not, however, specify what these “acts and omissions” might be. The only point at which Plaintiffs allude to something akin to acts or omissions is when they ask the court to “order defendant to explain to this Court the reason for its apparent failure to specifically inform before February 4, 2000 each Plaintiff that if AST did not lay them off by that date each would be ineligible” for TAA benefits.4 (Pls.’ Resp. to Def.’s Mot. Dismiss at 4.) Even if the court were to credit Plaintiffs’ argument that “defendant could have, and should have, done a better job, earlier in the process, of explaining to plaintiffs the crucial significance of the February 4, 2000 cut-off date for eligibility under the February 4, 1998 . . . ruling” (Pls.’ Resp. to Def.’s Mot. Dismiss at 3), it is difficult to see the relevance of this argument to Plaintiffs’ failure to commence an action in this court within sixty days of publication of the Notice of Dismissal. 4 Plaintiffs’ request relates to an earlier finding, not now before the court, in which AST employees—including Plaintiffs—were certified as eligible for TAA benefits in the event they were separated from employment prior to February 4, 2000. See Notice of Determinations Regarding Eligibility To Apply for Workers Adjustment Assistance and NAFTA Transitional Adjustment Assistance, 63 Fed. Reg. 12,830 (Mar. 16, 1998); 19 U.S.C. § 2291(a)(1)(B) (1994). Court No. 00-10-00481 Page 7 Plaintiffs make no argument with respect to failure to receive notice of the sixty-day requirement; and indeed it is difficult to see how they might. Not only was the Notice of Dismissal published—thereby giving Plaintiffs constructive notice—but Plaintiffs were each sent a copy of the Beale Letter describing the procedure for seeking judicial review—including the sixty-day requirement. That the parties received the Beale Letter, and thus had actual notice of the sixty- day requirement, is evident by its inclusion among the documents sent to the Clerk of the Court commencing this action. The court is also unconvinced by Plaintiffs’ argument that their letter to their Member of Congress should constitute “the functional equivalent of a formal Court filing . . . .” It is indeed well established that the briefs of pro se litigants are held to a less stringent standard than formal briefs filed by attorneys. See Hughes v. Rowe, 449 U.S. 5, 9 (1980); Haines v. Kerner, 404 U.S. 519, 520–21 (1972); see also Hilario v. Sec’y, Dep’t of Veterans Affairs, 937 F.2d 586, 589 (Fed. Cir. 1991) (stating pro se litigants “are not required to file artful, legally impeccable submissions in order to proceed on appeal . . . .”). Nevertheless, the leniency afforded pro se litigants with respect to mere formalities does not extend to circumstances involving jurisdictional requirements. See Kelley, 812 F.2d at 1380. Pro se litigants are not immune from laws and proper procedures simply on the basis of their pro se status. See, e.g., Constant v. United States, 929 F.2d 654 (Fed. Cir. 1991) (imposing sanctions against pro se appellant for filing frivolous appeal). Thus, just as a letter to a Member of Congress cannot be considered a filing with this court on behalf of a plaintiff represented by counsel, it cannot be considered a proper filing where, as here, Plaintiffs were proceeding pro se. Court No. 00-10-00481 Page 8 CONCLUSION Because Plaintiffs have not proved, by a preponderance of the evidence, that the court retains subject matter jurisdiction over the instant action, the court grants the Government’s motion to dismiss. ______________________________ Richard K. Eaton, Judge Dated: December 20, 2001 New York, New York

01-03-2023

02-05-2013

https://www.courtlistener.com/api/rest/v3/opinions/1468994/

103 F.Supp. 400 (1952) MADDOX v. WRIGHT et al. Civ. No. 5102. United States District Court District of Columbia. March 18, 1952. Marie Flynn Maddox, Luther R. Maddox, Washington, D. C., for plaintiff. Chase & Rubin, James J. Laughlin, Dickson R. Loos, Washington, D. C., for defendants. YOUNGDAHL, District Judge. There is authority in certain District Courts for the production of income tax returns. Reeves v. Pennsylvania Railroad Co., D.C., 80 F.Supp. 107; Paramount Film Distributing Corp. v. Ram, D.C., 91 F.Supp. 778. There is also authority to the contrary. In O'Connell v. Olsen & Ugelstadt, 10 F. R.D. 142, 143, Chief Judge Jones of the United States District Court for the Northern District of Ohio, said the following concerning this issue: "The Internal Revenue Code, 26 U.S.C. A. § 55, and regulations issued thereunder provide that tax returns shall be confidential and disclosed only upon application of the plaintiff or his attorney in fact. No provision is made for the production of such returns upon order of a Federal Court. Until such provision is made, this section of the Court has been and is of the opinion that such returns are, in private civil actions, confidential information between the taxpayer and the Government and should not be open to inspection under Rule 34, Federal Rules of Civil Procedure, 28 U.S.C.A. Such a ruling is in accord with previous holdings that documents which have been declared confidential by Federal department rulings are not open to discovery under Rule 34. 2 Moore's Federal Practice 2641, F.N. 1. "Such a ruling will have no serious consequences as the information desired can be obtained by intelligent use of other discovery procedure." I am in accord with the doctrine expressed in this statement. It is my conviction that until the Congress declares otherwise, to require the production of income tax returns in private civil actions would open the door to innumerable abuses. The Court is of the opinion moreover that aggressive and intelligent use of other discovery procedure will disclose the desired information sought to be obtained by the production of the income tax returns. *401 Ordered that the motion to vacate the subpoena duces tecum requiring the production of the income tax returns, Nos. 2 and 3 in the subpoena, is hereby granted, and the motion to vacate requiring the production of bank statements and deposit slips, No. 1 in the subpoena, is hereby denied.

01-03-2023

10-30-2013

https://www.courtlistener.com/api/rest/v3/opinions/168049/

460 F.3d 1304 Jennifer J. MICKELSON, Plaintiff-Appellant,v.NEW YORK LIFE INSURANCE COMPANY, Defendant-Appellee.Equal Employment Opportunity Commission, Amicus Curiae. No. 05-3049. United States Court of Appeals, Tenth Circuit. August 28, 2006. COPYRIGHT MATERIAL OMITTED COPYRIGHT MATERIAL OMITTED Mark A. Buchanan, Sanders, Simpson & Fletcher, L. C., Kansas City, MO, for the Appellant. Elaine Drodge Koch (Jeremiah J. Morgan and Heather S. Esau Zerger, with her on the brief), Bryan Cave LLP, Kansas City, MO, for the Appellee. Julie Gantz, Attorney (Eric S. Dreiband, General Counsel, Carolyn L. Wheeler, Acting Associate General Counsel, and Vincent J. Blackwood, Assistant General Counsel, with her on the brief), Equal Employment Opportunity Commission, Office of General Counsel, Washington, D.C., for amicus curiae Equal Employment Opportunity Commission. Before TACHA, Chief Circuit Judge, BALDOCK, and LUCERO, Circuit Judges. TACHA, Chief Circuit Judge. 1 Plaintiff-Appellant Jennifer J. Mickelson sued her employer, Defendant-Appellee New York Life Insurance Company ("NYL"), alleging retaliation and discrimination on the basis of sex under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., and salary discrimination under the Equal Pay Act ("EPA"), 29 U.S.C. § 206(d). The District Court granted summary judgment in favor of NYL on all claims. On appeal, Ms. Mickelson argues that there is a genuine issue of material fact regarding whether she was paid less than male employees performing the same work because of her sex and whether the actions of her employer constitute an adverse employment action. We take jurisdiction under 28 U.S.C. § 1291 and REVERSE. I. BACKGROUND 2 NYL sells life insurance products to independent insurance brokers throughout the United States. Sales are made mainly through field directors — marketing representatives who promote the sale of NYL products and services to the independent insurance brokers. Field directors receive internal support from marketing service consultants ("MSC"). An MSC acts as a liaison between the field directors, who are out in the field selling insurance, and NYL's producing groups. Six MSCs worked in NYL's Leawood, Kansas office. 3 That office hired Ms. Mickelson as an MSC in September 2000. Ms. Mickelson's resume indicates that she graduated from law school in May 2000 and that for the six years before and during law school she worked part-time for another life insurance company, first in the underwriting department, and later (for the last six months), as a marketing service representative — a position very similar to the one she was hired to perform at NYL. Because of her law degree, Ms. Mickelson was assigned to the MSC group responsible for high net worth clients and corporations; for this reason, the group was considered relatively prestigious. Although a law degree was not required for her position, NYL believed it added to Ms. Mickelson's credibility when dealing with those clients; additionally, Ms. Mickelson used her legal knowledge to prepare estate planning illustrations for those clients. Although she did not have any insurance-related professional licences when she was hired, she steadily worked toward and obtained a Series 6 license.1 In addition, Ms. Mickelson earned a "Fellow Life Management Insurance" designation, which indicates extensive knowledge of products in the life insurance industry, as well as a "Chartered Life Underwriter" designation, which indicates passage of ten professional courses. 4 When a new employee is hired, NYL assigns him or her to a grade level; each grade level carries a specific salary range. Typically, MSCs are assigned to grade level 13, which carries a salary range of $45,100 to $69,900. John Begley, the director of human resources at the Leawood office, and James Vavra, the vice-president of operations at the Leawood office, assigned Ms. Mickelson to grade level 13 and set her salary, without negotiation, at $50,000. By September 2002 she was earning $53,400. 5 Vickie Day was hired as an MSC in October 2000, the month after Ms. Mickelson. Ms. Day brought to NYL five years of experience working in the life insurance industry, as well as eleven years experience in an administrative assistant position. She had a Bachelor's degree and Series 6 and 632 professional licenses. Her salary immediately prior to being hired at NYL was $48,000. Like Ms. Mickelson, Ms. Day was assigned to grade level 13 and her starting salary was $50,000. By September 2002, Ms. Day's salary was $52,500. 6 Mark Shelton was hired as an MSC in December 2000, three months after Ms. Mickelson. Mr. Shelton had a Bachelor's degree and twenty years of experience in the insurance industry. His salary immediately prior to being hired at NYL was $43,000. He was assigned to grade level 14, which carries a salary range of $51,100 to $79,200, and his salary was set at $60,000. By September 2002, his salary was $61,300. 7 Kevin Harriman was hired as an MSC in February 2002. Mr. Harriman had two years of experience as a marketing and business analyst at a life insurance company. It appears that Mr. Harriman's experience in the life insurance industry is limited to these two years. He also had three years of experience working as a securities trader and financial analyst, and two years of experience as a mutual fund representative in which he acted as a liaison between the fund and the broker/dealer. Mr. Harriman had a Bachelor's degree and was working toward obtaining his Masters in Business Administration when he was hired. He also had Series 6, 7,3 and 63 professional licenses. In his most recent job prior to being hired at NYL, he earned $55,000, although for the six months prior to being hired at NYL he was unemployed. He was assigned to grade level 13 and Mr. Begley, Mr. Vavra, and Tracie Billings, the MSC supervisor, set his starting salary at $60,000. No documents were prepared describing how Mr. Harriman's salary was set. 8 Two other MSCs worked in the Leawood office—James Wirtz and Susan Hairgrove. Both were hired in 1993. Although the record does not reveal their qualifications, starting salaries, or performance histories, in 2000, Ms. Hairgrove earned $51,732, compared to Mr. Wirtz's $55,737 salary. By September 2002, both were considered senior MSCs but Ms. Hairgrove earned $63,915 while Mr. Wirtz earned $72,265 — a difference of over $8,000. 9 Shortly after Mr. Harriman was hired, Ms. Mickelson learned that his starting salary was set at $60,000. She made a written inquiry to Ms. Billings asking what criteria were involved in setting salaries. Ms. Billings and Mr. Vavra met with Ms. Mickelson to discuss her concerns. Mr. Vavra told Ms. Mickelson that four factors were taken into consideration in setting Mr. Harriman's salary — experience, qualifications, market factors, and salary history. Not satisfied that these reasons could explain the disparity in pay, Ms. Mickelson made a formal complaint of salary discrimination to NYL's home office in New York City. She sent a copy of the complaint to Mr. Begley. NYL conducted an internal investigation of the complaint and concluded that the disparity in pay was warranted based upon Mr. Harriman's relevant experience in the broker-dealer market, NYL's current need for expertise in that market, Mr. Harriman's and Ms. Mickelson's relative salary histories, and their respective professional licenses. In March 2002, Ms. Mickelson filed a charge of discrimination with the Equal Employment Opportunity Commission ("EEOC"). 10 According to Ms. Mickelson, after she filed her complaint, she experienced several adverse employment actions. First, although Mr. Vavra had personally committed to look for opportunities for Ms. Mickelson in NYL's legal department, he never reported back to her about whether there were any such openings. Second, Ms. Billings cancelled a business trip to Boston that Ms. Mickelson was scheduled to take. Third, Ms. Billings told Ms. Mickelson that she would need to use her vacation time to study for a bar examination she was taking the following week, although Ms. Mickelson was previously told that she did not have to use her vacation time.4 Fourth, Mr. Vavra sent Ms. Mickelson an e-mail, which she considered demeaning, informing her that one of her projects was "DEAD." Fifth, she met with Mr. Vavra, Ms. Billings, and another employee named Louis Gardner to discuss the fact that Ms. Mickelson was asking Mr. Gardner questions regarding work when he was not her supervisor. Mr. Vavra became extremely angry during the meeting. Sixth, after she became engaged to the field director to whom she provided support services, Ms. Mickelson asked that she be promoted to a "key accounts" position or moved to another distribution source because she felt that it was not in the "company's best interest to have a married couple working on the same marketing team." Ms. Billings initially suggested that the "key accounts" position would be a good move for Ms. Mickelson; but later, Ms. Billings indicated that there were no openings for that position. She was then reassigned to a different field director in a less-prestigious MSC group. 11 Finally, in December 2002, Ms. Mickelson took medical leave pursuant to the Family and Medical Leave Act ("FMLA") and was treated for depression and panic attacks. Her leave was scheduled for December 9, 2002, through January 13, 2003. After she had been on leave for approximately two weeks, however, she inquired as to whether she could return to work on a part-time basis because her doctor indicated it would be "a good step" for her. Ms. Billings denied her request, stating that because of business demands and staffing requirements, her position had to be filled by a full-time employee. This response came despite the fact that NYL's employee handbook indicates that FMLA leave for a serious health condition "can be taken intermittently or on a reduced schedule if medically necessary," and despite the fact that Ms. Hairgrove, another MSC, suffered a back injury at work in December 2002 and was permitted to return to work part-time from March through May 2003. After Ms. Mickelson's request to work part-time was denied, Ms. Mickelson's condition worsened. She had to extend her leave until February 19, 2003, which was when her FMLA leave was exhausted. When she could still not return to work, she was fired. 12 Ms. Mickelson filed this complaint against NYL in May 2003, alleging salary discrimination on the basis of sex in violation of both Title VII, see 42 U.S.C. § 2000e-2, and the Equal Pay Act, see 29 U.S.C. § 206(d)(1). She also alleged that NYL retaliated against her for filing her salary discrimination complaint, also in violation of Title VII, see 42 U.S.C. § 2000e-3. The District Court granted summary judgment in favor of NYL on all claims. In dismissing the salary discrimination claims, the court held that NYL showed that the reason for the disparity in pay between Ms. Mickelson and the male employees was based upon their relative experience and qualifications. As to her retaliation claim, the court held that Ms. Mickelson had not shown an adverse employment action. Ms. Mickelson now timely appeals the District Court's order granting summary judgment. II. DISCUSSION A. Standard of Review 13 We review the District Court's entry of summary judgment de novo. Plotke v. White, 405 F.3d 1092, 1093 (10th Cir.2005). Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R.Civ.P. 56(c). We view the evidence, and draw reasonable inferences therefrom, in the light most favorable to the nonmoving party. Plotke, 405 F.3d at 1093-94. B. Salary Discrimination 14 There are two ways a plaintiff can proceed on a claim of salary discrimination: on a theory of intentional discrimination on the basis of sex in violation of Title VII, or on a theory of wage discrimination on the basis of sex in violation of the EPA. This is a significant distinction because a plaintiff's burden to prove discrimination varies depending on the statute at issue. Under Title VII, the plaintiff always bears the burden of proving that the employer intentionally paid her less than a similarly-situated male employee. The EPA, however, has been described as imposing a form of strict liability on employers who pay males more than females for performing the same work — in other words, the plaintiff in an EPA case need not prove that the employer acted with discriminatory intent. Ryduchowski v. Port Auth. of N.Y. & N.J., 203 F.3d 135, 142 (2d Cir. 2000); Sinclair v. Auto. Club of Okla., Inc., 733 F.2d 726, 729 (10th Cir.1984); Miranda v. B & B Cash Grocery Store, Inc., 975 F.2d 1518, 1533 (11th Cir.1992) (stating that the EPA "prescribes a form of strict liability"). 15 Because of this difference in the statutes, the analysis involved in determining whether the plaintiff has met her burden differs depending on the statute at issue. Under Title VII, a plaintiff must prove that the employer intentionally discriminated against her because of her sex. Jaramillo v. Colo. Judicial Dept., 427 F.3d 1303, 1306 (10th Cir.2005). When the plaintiff relies on circumstantial evidence of discrimination — as is the case here — we apply the three-step burden-shifting framework set forth in McDonnell Douglas and its progeny. McDonnell Douglas Corp. v. Green, 411 U.S. 792, 800-07, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973); Plotke, 405 F.3d at 1100. Under McDonnell Douglas, the aggrieved employee must first establish a prima facie case of discrimination. McDonnell Douglas, 411 U.S. at 802, 93 S.Ct. 1817. Relevant to this case, a prima facie showing of discrimination consists of evidence that a female employee "occupies a job similar to that of higher paid males." Miller v. Auto. Club of N.M., Inc., 420 F.3d 1098, 1114 (10th Cir.2005) (quotation omitted). If the plaintiff makes such a showing, the burden of production shifts to the employer "to state a legitimate, nondiscriminatory reason for its adverse employment action." Plotke, 405 F.3d at 1099 (quotation omitted). "If the employer meets this burden, then summary judgment is warranted unless the employee can show there is a genuine issue of material fact as to whether the proffered reasons are pretextual." Id. 16 Claims based upon the EPA, however, do not follow the same McDonnell Douglas burden-shifting framework. Rather, EPA claims proceed in two steps. First, the plaintiff must establish a prima facie case of discrimination by demonstrating that employees of the opposite sex were paid differently for performing substantially equal work. Miller, 420 F.3d at 1119.5 Having met this, the burden of persuasion then shifts to the defendant to prove that the wage disparity was justified by one of four permissible reasons. Tidwell v. Fort Howard Corp., 989 F.2d 406, 409 (10th Cir.1993). "These reasons are: (1) a seniority system; (2) a merit system; (3) a pay system based on quantity or quality of output; (4) a disparity based on any factor other than sex." Id. (citing 29 U.S.C. § 206(d)(1)). If the employer "fails to convince the jury with its evidence of one or more of the `affirmative defenses' . . . the plaintiff will prevail on her prima facie case." Id. This is not to say that an employer may never be entitled to summary judgment on an EPA claim if the plaintiff establishes a prima facie case. But, because the employer's burden in an EPA claim is one of ultimate persuasion, "in order to prevail at the summary judgment stage, the employer must prove at least one affirmative defense so clearly that no rational jury could find to the contrary." Stanziale v. Jargowsky, 200 F.3d 101, 107 (3rd Cir.2000) (quotation omitted). 17 The employer's burden in an EPA case differs from its burden in a Title VII case for another reason. Whereas in a Title VII case the employer need only proffer a legitimate, nondiscriminatory reason for the challenged action, with no need to establish that the reason actually motivated the decision, the EPA prohibits a disparity in pay between men and women "except where such payment is made pursuant to" one of the four aforementioned affirmative defenses. 29 U.S.C. § 206(d)(1) (emphasis added). The Third Circuit has explained, and we agree, that this language requires an employer to "submit evidence from which a reasonable factfinder could conclude not merely that the employer's proffered reasons could explain the wage disparity, but that the proffered reasons do in fact explain the wage disparity." Stanziale, 200 F.3d at 107-108. Accordingly, "where, as here, employers seek summary judgment as to [an] Equal Pay Act claim, they must produce sufficient evidence such that no rational jury could conclude but that the proffered reasons actually motivated the wage disparity of which the plaintiff complains." Id. at 108; see also Tenkku v. Normandy Bank, 348 F.3d 737, 741 n. 2 (8th Cir.2003) ("At the summary judgment stage of the proceedings, the employer's justification for the differences is irrelevant, unless it is strong enough to establish one of the statutory affirmative defenses as a matter of law."). 18 Because of the varying burdens of proof, it is conceivable that in some cases an employer would be entitled to summary judgment on the Title VII claim, but not on the EPA claim. We leave that discussion for another time, however, because in this case we hold the following with respect to NYL's proffered reasons for paying the male employees more than Ms. Mickelson: (1) that Ms. Mickelson has presented sufficient evidence of pretext to survive summary judgment on her Title VII claim; and (2) that NYL has failed to establish that its proffered reasons were in fact the reason for the disparity in pay as a matter of law on the EPA claim. We first turn our attention to the EPA claim. 19 Significantly, NYL admitted for purposes of summary judgment, that Ms. Mickelson made a prima facie showing of discrimination under the EPA. Therefore, summary judgment for NYL is inappropriate unless "no rational jury could conclude but that the proffered reasons actually motivated the wage disparity of which the plaintiff complains." Stanziale, 200 F.3d at 108. Before the District Court, and at oral argument, NYL focused on Mr. Harriman's relevant experience in the broker-dealer market — which refers to the market for variable life insurance products — as warranting the disparity in pay because, at the time he was hired, NYL was trying to break into the broker-dealer market to sell variable life insurance products and needed Mr. Harriman's expertise to do so. Indeed, an employee's prior experience is a factor "other than sex" for purposes of the Equal Pay Act. Angove v. Williams-Sonoma, Inc., 70 Fed.Appx. 500, 508 (10th Cir. 2003) (citing Irby v. Bittick, 44 F.3d 949, 955 (11th Cir.1995)), see also Balmer v. HCA, Inc., 423 F.3d 606, 612 (6th Cir. 2005). Although this reason could explain the wage disparity, we cannot conclude, as a matter of law, that it in fact explained the wage disparity. 20 To begin, no documents were executed contemporaneously with Mr. Harriman's hiring that indicated NYL was looking for someone with broker-dealer experience or that Mr. Harriman was hired because of his broker-dealer experience. When Ms. Mickelson first inquired as to why Mr. Harriman's starting salary was twenty percent higher than her own, Mr. Vavra made no mention of NYL's need for someone with experience in the broker-dealer market. He merely said that Mr. Harriman's "experience, qualifications, market factors, and salary history" warranted the disparity in pay. The form prepared after Mr. Harriman's interview states that the reason he was hired was because of his "life ins[urance] background, self-motivation/drive, team orientation, relevant non-life [insurance] experience (i.e.marketing, communications, securities[)]." Although Mr. Harriman's experience and qualifications necessarily include his broker-dealer experience, the first indication that NYL was looking for such experience and that Mr. Harriman's background in that field warranted the disparity in pay came from the New York office's internal investigation of Ms. Mickelson's complaint. It is undisputed, however, that the New York office played no role in setting either Ms. Mickelson's salary or Mr. Harriman's salary. The results of its internal investigation, therefore, cannot be conclusive on this issue. 21 Moreover, though NYL maintains that it was trying to penetrate the broker-dealer market at the time it hired Mr. Harriman, Mr. Vavra admitted that the market for those products crashed in the summer of 2001, well before Mr. Harriman was hired, and that NYL sold very few variable life insurance products as a result. Also, what is conspicuously missing from the record is any suggestion that Mr. Harriman ever used his experience in the broker-dealer market in any capacity at NYL. In fact, Mr. Vavra admitted that Mr. Harriman's responsibilities were essentially the same as Ms. Mickelson's. 22 In addition, it is undisputed that Ms. Mickelson and Ms. Day had more life insurance industry experience than Mr. Harriman — Mr. Harriman's resume reflects that he had only two years of experience in the life insurance industry. In contrast, Ms. Mickelson had approximately six part-time years in the life insurance industry before she was hired at NYL, and another eighteen months of experience in the industry by the time Mr. Harriman was hired. Similarly, Ms. Day had five years of experience in the life insurance industry when she was hired, and another seventeen months' experience by the time Mr. Harriman was hired. Of course, Mr. Shelton had the most experience of all — eighteen years — and if he were the only higher-paid MSC at NYL's Leawood office, we might well conclude that his experience so far outweighed the women's experience that no rational trier of fact could conclude other than that his experience was the determinative factor in setting his salary. But that is not the case: Mr. Harriman, with the least amount of experience in the life insurance industry of all the MSCs, was paid substantially more than both Ms. Mickelson and Ms. Day. Moreover, as of September 2002, he was earning $3,900 less than Ms. Hairgrove, a senior MSC who had been working at NYL for approximately nine years. 23 There are also disputed issues of fact as to whether "market factors" and "salary history" warranted the disparity in pay. As to "market factors" playing a role in setting Mr. Harriman's salary, Ms. Billings recalled that Mr. Harriman had multiple job offers and that NYL had to compete for his services. See Stanley v. Univ. of Southern Cal., 13 F.3d 1313, 1322 (9th Cir.1994) ("An employer may consider the marketplace value of the skills of a particular individual when determining his or her salary."). But NYL produced no evidence that it had to pay him $60,000 in order to retain him. Further, it is undisputed that Mr. Harriman was unemployed for six months prior to being hired at NYL, and Ms. Mickelson said that during the interview process, which she took part in, that Mr. Harriman said he was "desperately" trying to find a job. As for Mr. Harriman's prior salary history as justification for the wage disparity, this reason is undermined by the fact that at her previous job Ms. Day was making $48,000 and her salary was set at $50,000, while Mr. Shelton was making $43,500 at his previous job and his salary was set at $60,000.6 24 Casting further doubt on NYL's asserted justifications for the disparity in pay is that one of its reasons was that Mr. Harriman has more NASD licenses, which refers to the Series 6, 7, and 63 licenses. To begin, NYL presented no evidence that a Series 7 license is either required or even relevant to the MSC job. Further, Ms. Mickelson had a Series 6 license and a CLU designation — which neither Mr. Shelton nor Mr. Harriman had. Mr. Vavra testified that the CLU designation was more important to the position than a Series 7 license. Indeed, NYL's advertisement for the MSC position states that it prefers an applicant with a CLU designation. Finally, Ms. Day had both a Series 6 and 63 when she was hired, and her starting salary was twenty percent less than Mr. Harriman's. 25 Based on the foregoing, and based on the fact that the employer bears the burden of persuasion, we conclude that the District Court erred in granting summary judgment in favor of NYL on the EPA claim. When the evidence is viewed in the light most favorable to Ms. Mickelson, a jury would not be compelled to find that the reasons proffered by NYL were, in fact, the reason for the disparity in pay. To be sure, these reasons could explain the disparity, but the evidence here is not so overwhelming as to require that conclusion. To the contrary, a jury could reasonably conclude that the common denominator between the $60,000 salaries was being male, not the level of experience, and the common denominator between the $50,000 salaries was being female, not the level of inexperience. 26 Turning to Ms. Mickelson's Title VII claim, we first must address an evidentiary matter. Ms. Mickelson argues that the District Court improperly excluded evidence that other females had complained of discriminatory treatment by NYL. Specifically, the District Court disregarded the affidavits of Julie Hammer-Miller, a former service associate at NYL, and Rhonda Kunz, a former human resources administrative assistant at NYL. Ms. Hammer-Miller averred that she helped to train Ms. Mickelson and Mr. Shelton as MSCs and that both needed an equal amount of training. Ms. Hammer-Miller also claimed that she herself sought a promotion to the MSC position because she was already performing the same duties as an MSC, but for less money. When she asked Mr. Begley for the promotion he repeatedly told her that it was "in the works" but she never was promoted. She ultimately resigned in March 2001; at that time her salary was $35,000. 27 Ms. Kunz, whose position involved reviewing personnel records, keeping track of attendance and vacation schedules, and ensuring that pay raises earned by employees were actually received, averred that she believed there was "no concern for equal pay for equal work" at NYL's Leawood office. Indeed, when she and two others earned their bachelor's degrees at the same time, only the male of the group received a $5,900 raise, while the women did not. 28 The District Court disregarded these affidavits, finding that they "contain[ed] conclusory allegations that are not supported by the record." See Nichols v. Hurley, 921 F.2d 1101, 1113 (10th Cir. 1990). As a general rule, however, "the testimony of other employees about their treatment by the defendant is relevant to the issue of the employer's discriminatory intent." Spulak v. K Mart Corp., 894 F.2d 1150, 1156 (10th Cir.1990); see also Atchley v. Nordam Group, Inc., 180 F.3d 1143, 1149 (10th Cir.1999). Both these women testified from personal knowledge. Ms. Hammer-Miller said that she trained both Ms. Mickelson and Mr. Shelton for the MSC position and that they needed the same amount of training. When the employer's proffered reason for the twenty percent difference in their salaries is, in part, based upon experience and qualifications, that both employees needed the same amount of training is relevant to determination of discriminatory intent. Similarly, Ms. Kunz's testimony that a similarly situated male received a raise while she and another woman did not is relevant to the issue of discriminatory intent. The District Court erred in disregarding these affidavits. See Spulak, 894 F.2d at 1156 (citing Stumph v. Thomas & Skinner, Inc., 770 F.2d 93, 97 (7th Cir. 1985) (reversing summary judgment for employer, holding that affidavits of former employees created a genuine issue of fact on issue of defendant's discriminatory intent)). 29 We turn now to the McDonnell Douglas framework. As with Ms. Mickelson's EPA claim, the parties agree that Ms. Mickelson has met her burden to establish a prima facie case of discrimination — that is, she occupies a job similar to that of higher paid males — and that NYL met its burden to proffer a legitimate, nondiscriminatory reason for the disparity in pay — namely, the relative experience, qualifications, market factors, and salary histories of the higher paid male employees. The remaining question, therefore, is whether Ms. Mickelson has produced sufficient evidence that NYL's proffered reasons are pretext for unlawful discrimination to survive summary judgment. "A plaintiff can show pretext by revealing such weaknesses, implausibilities, inconsistencies, incoherencies, or contradictions in the employer's proffered legitimate reasons for its action that a reasonable factfinder could rationally find them unworthy of credence." Green v. New Mexico, 420 F.3d 1189, 1192-93 (10th Cir.2005) (internal quotations omitted). 30 As the above discussion demonstrates, Ms. Mickelson has cast doubt on all NYL's proffered reasons for paying Mr. Harriman a substantially larger salary for performing identical work such that a jury might reasonably disbelieve NYL's proffered reasons for the disparity in pay, and conclude, instead, that NYL discriminated on the basis of sex in setting salaries. See Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 148, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000) (holding that "plaintiff's prima facie case, combined with sufficient evidence to find that the employer's asserted justification is false, may permit the trier of fact to conclude that the employer unlawfully discriminated."). We therefore conclude that the District Court erred in granting summary judgment in favor of NYL on the Title VII claim. C. Retaliation 31 To state a prima facie case of retaliation, a plaintiff is required to demonstrate: "(1) that [she] engaged in protected opposition to discrimination, (2) that a reasonable employee would have found the challenged action materially adverse, and (3) that a causal connection existed between the protected activity and the materially adverse action." Argo v. Blue Cross & Blue Shield of Kan., Inc., 452 F.3d 1193, 1202 (10th Cir.2006) (citing Burlington N. & Santa Fe Ry. Co. v. White, ___ U.S. ___, 126 S.Ct. 2405, 165 L.Ed.2d 345 (2006)) (footnote omitted). Once the plaintiff establishes a prima facie case, the burden of production shifts to the employer to articulate a legitimate, nondiscriminatory reason for the adverse action. Id. The burden then shifts back to the plaintiff to show that the employer's proffered reason is pretext. Id. at 1203. The District Court concluded that Ms. Mickelson failed to make a prima facie showing of retaliation because she failed to show that she suffered from any adverse employment action. 32 After reviewing the record, we conclude that the District Court erred in granting NYL's motion for summary judgment with respect to NYL's refusal to allow Ms. Mickelson to work part-time while she recovered from depression, and as to her ultimate termination. The FMLA requires covered employers to allow qualified employees twelve weeks' leave, within a twelve-month period, because of a serious health condition. 29 U.S.C. § 2612(a)(1)(D). Leave "may be taken intermittently or on a reduced leave schedule when medically necessary." 29 U.S.C. § 2612(b)(1). Failure to adhere to the mandates of the FMLA, without sufficient justification, can constitute actionable conduct under Title VII. See Orr v. City of Albuquerque, 417 F.3d 1144, 1151 (10th Cir.2005). The District Court appears to have concluded that the refusal to allow an individual to work on a part-time basis could only be actionable if the employee raises and establishes a violation of the FMLA. Since Ms. Mickelson did not raise an FMLA claim, the court found that she failed to establish that she suffered from an adverse employment action. We disagree. 33 Prior to the expiration of her FMLA leave, Ms. Mickelson requested to return to work on a part-time basis, indicating that her physician thought it would be "a good step" for her. NYL, however, refused her request, her condition worsened, and by early January 2003, Ms. Mickelson had exhausted her paid leave. Therefore, NYL's denial of Ms. Mickelson's request to work part-time before she exhausted her FMLA leave prevented her from earning income on a part-time basis. It also caused her to exhaust her FMLA leave sooner. In this way, NYL's conduct caused her to lose both salary and benefits. See White, 126 S.Ct. at 2408 ("[M]any reasonable employees would find a month without a paycheck to be a serious hardship."); Duncan v. Manager, Dept. of Safety, 397 F.3d 1300, 1314 (10th Cir.2005) (adverse employment action includes those decisions "causing a significant change in benefits"). Moreover, if Ms. Mickelson was permitted to return on a part-time basis, she may have recovered from her depression before her FMLA leave expired, and consequently, would not have lost her job. Indeed, "[i]t hardly requires stating that when an employer tells an employee that she no longer has a job, that employee's job status has been significantly and materially altered." Wells v. Colo. Dept. of Transp., 325 F.3d 1205, 1216 (10th Cir.2003). We easily conclude that the prospect of losing wages, benefits, and ultimately a job would "dissuade[] a reasonable worker from making or supporting a charge of discrimination." White, 126 S.Ct. at 2415. 34 Ms. Mickelson has also raised a genuine issue of fact as to whether the denial of her request for leave was causally connected to her protected conduct. Ms. Mickelson filed a complaint with the EEOC in March 2002. She was denied permission to work part-time in December of that year. While the timing between these events, alone, would not support an inference of causation in this instance, see Wells, 325 F.3d at 1217, "[i]f the employee can show that the employer's proffered reason for taking adverse action is false, the factfinder could infer that the employer was lying to conceal its retaliatory motive," id. at 1218.7 NYL's proffered reason for denying Ms. Mickelson's request was that the MSC position must be filled by a regular, full-time employee. But this contention is belied by the fact that just three months later, NYL permitted Ms. Hairgrove to transition back to work on a part-time basis following a back injury. NYL contends that the situation is different because Ms. Hairgrove suffered from a worker's compensation injury, while Ms. Mickelson did not. NYL fails to explain — and we do not see — how this distinction is relevant to the disputed matter. NYL's accommodation of Ms. Hairgrove provides evidence that the MSC position could be filled by a part-time employee, and therefore bolsters Ms. Mickelson's position that NYL's justification of its denial of her request is pretextual. NYL also contends that Ms. Mickelson requested to work on a part-time basis permanently, and seeks to distinguish its refusal of her request to work part-time on this basis. Again, the record reveals the opposite. Ms. Mickelson specifically requested to work part-time as a first step toward resuming her normal duties. 35 That Ms. Mickelson did not raise a claim under the FMLA does not change this analysis. Even if NYL was under no legal obligation to allow Ms. Mickelson to work part time or allow her to return to work after her FMLA leave expired, its failure to do so, in light of her request, and in light of the fact that it permitted another MSC to do so, could be viewed as retaliation. See Wells, 325 F.3d at 1219 (stating that an employer's termination of an employee after exhaustion of sick leave could be considered retaliatory). The causal-connection inquiry does not focus on what the FMLA or personnel rules required the employer to do, but whether the employer treated an employee differently than it would have if she had not engaged in protected activity. Id. In sum, Ms. Mickelson's evidence that she was denied the ability to work part-time and was terminated in retaliation for her wage discrimination complaint is sufficient to satisfy the causal-connection element of the prima facie case.8 36 We next turn to the second and third steps of the McDonnell Douglas burden-shifting framework for a retaliation claim — namely, whether the employer had proffered a legitimate, nondiscriminatory reason for the adverse action and whether the employee has produced sufficient evidence of pretext. As the causal-connection discussion above shows, Ms. Mickelson produced sufficient evidence that NYL's proffered reasons for the adverse action was pretextual. See id. (acknowledging that in some cases, evidence of causation and evidence of pretext may be the same and the tests for causation and pretext may be conflated). Because Ms. Mickelson has demonstrated that genuine issues of fact remain as to Ms. Mickelson's claim that NYL retaliated against her by denying her the ability to work part-time and in terminating her, we conclude that summary judgment was inappropriate. 37 With regard to Ms. Mickelson's other allegations of retaliation, we agree with the District Court that she has failed to establish actionable conduct. As to her claim that Mr. Vavra failed to locate a position in the legal department for her and that NYL failed to promote her to a key accounts position, a plaintiff must apply for a position to state a claim for retaliatory failure to promote, see Stover v. Martinez, 382 F.3d 1064, 1072 (10th Cir. 2004), and there is no evidence that either position existed at the time she sought the promotions. As to her claim relating to the time she was absent due to the bar examination, there is no evidence that she was actually treated differently when studying for her third bar examination as compared to when she studied for her first two. With regard to the email Ms. Mickelson considered derogatory and Mr. Vavra's unruly behavior during a meeting, the retaliation provision prohibits employer's actions "that are likely to deter victims of discrimination from complaining to the EEOC," and a "lack of good manners will not create such deterrence." White, 126 S.Ct. at 2415 (citing 2 EEOC 1998 Manual § 8, p. 8-13) (internal quotation marks omitted). III. CONCLUSION 38 For the foregoing reasons, we conclude that the District Court erred in entering summary judgment in favor of NYL on Ms. Mickelson's allegations of wage discrimination and retaliation. Accordingly, the judgment of the District Court is REVERSED and the cause REMANDED for further proceedings consistent with this opinion. Notes: 1 A Series 6 license is required in order to sell mutual funds and variable annuities 2 A Series 63 license is required to be a securities agent 3 A Series 7 license is required in order to trade in corporate securities, other than commodities and futures 4 Ms. Mickelson had previously taken two bar exams and both times she received paid time off to study. After Ms. Billings said she would need to use her vacation time to study for the third bar exam, Ms. Mickelson had her previous supervisor confirm that she previously received paid time off. Accordingly, when Ms. Mickelson sat for her third exam, she received the same time off that she did the previous two times 5 Specifically, a prima facie case of discrimination under the EPA consists of proof that (1) the plaintiff was performing work which was substantially equal to that of employees of the opposite sex, taking into consideration the skills, duties, supervision, effort and responsibilities of the jobs; (2) the conditions where the work was performed were basically the same; (3) employees of the opposite sex were paid more under such circumstancesMiller, 420 F.3d at 1119. 6 We note that Mr. Shelton received an unspecified bonus as part of his prior employment, which means that his total compensation could have been significantly higher than $43,000. Because we must consider the facts in the light most favorable to Ms. Mickelson, however, we cannot make such an assumption 7 As we explained inWells: [B]y considering an employer's proffered reasons for taking adverse action in the causal-connection portion of the prima facie case, we are assessing pretext evidence that is typically considered in a later phase of the McDonnell Douglas analysis. But . . . evidence of pretext can be useful in multiple stages of a Title VII retaliation claim . . . "and nothing about the McDonnell Douglas formula requires us to ration the evidence between one stage or the other. . . . [W]e will not limit the kinds of evidence that can be probative of a causal link any more than the courts have limited the type of evidence that can be used to demonstrate pretext." 325 F.3d at 1218 (quoting Farrell v. Planters Lifesavers Co., 206 F.3d 271, 286 (3d Cir. 2000)). 8 The District Court correctly dismissed Ms. Mickelson's claim relating to her reassignment to a different MSC group. Reassignment of job duties is not automatically actionableWhite, 126 S.Ct. at 2417. Ms. Mickelson suggests, however, that the new group was less prestigious than her previous group, which is a factor that is appropriately considered in determining whether the conduct is actionable. See id. Nevertheless, because it is undisputed that Ms. Mickelson sought a transfer once she became engaged to her previous group's supervisor, Ms. Mickelson has failed to establish a causal connection between this action and her protected conduct.

01-03-2023

08-14-2010

https://www.courtlistener.com/api/rest/v3/opinions/1909094/

7 F.Supp. 892 (1934) In re 211 EAST DELAWARE PLACE BLDG. CORPORATION. No. 2440. District Court, E. D. Illinois. September 24, 1934. *893 R. P. Perlman, of Chicago, Ill., for receiver. Friedman, Schimberg & Alster, of Chicago, Ill., for petitioning creditors. LINDLEY, District Judge. On July 9, 1934, three petitioning creditors filed in this court a petition under section 77B of the Bankruptcy Act (11 USCA § 207) looking to the reorganization of 211 East Delaware Place Building Corporation, the debtor herein. On August 9, 1934, said petition was duly approved in accordance with the requirements of the act of Congress aforesaid. Thereupon the court appointed H. H. Whittemore as temporary trustee, and directed him to take possession, control, and custody of all the property and assets of the debtor. George A. Golder has filed herein his petition for instructions from the court, and it appears by stipulation of the parties that on or about September 17, 1929, said petitioner was appointed receiver in the superior court of Cook county, Ill., in an equity cause brought for the foreclosure of trust deed upon the premises at 211 East Delaware place; that he duly qualified as such receiver, took possession of the premises, and has remained in possession thereof until the present time. On June 29, 1932, upon the application of the Attorney General of the state of Illinois, after notice had been published in a newspaper as provided by law, the superior court of Cook county entered an order dissolving the 211 East Delaware Place Building Corporation, the owner of the equity of redemption in said premises, because of its failure to pay the franchise taxes due the state on the 15th day of November, 1931. The property covered by said trust deed, foreclosure for which was instituted in the superior court of Cook county as aforesaid, constitutes all the assets of the corporation and the receiver. The receiver appointed under said foreclosure proceedings has the custody and possession thereof, but has rented the same to one Jacob Kampel. The receiver suggests that he is willing to abide by the order of this court, but that the same is ambiguous in that it directs the surrender of all the assets of the corporation, whereas he is in possession only of assets now belonging to the stockholders of the corporation, to whom, under the statute of the state of Illinois, title passes upon dissolution of the corporate charter. He suggests further that a court of bankruptcy may not take jurisdiction of a corporation whose charter has been forfeited, and that there is, therefore, nothing upon which this court may act in a proceeding under section 77B (11 USCA § 207). The obviously fair and reasonable attitude of the petitioner herein to the effect that he is willing to abide the order of the court and comply therewith necessitates a full consideration and careful disposition of his petition by the court. True it is that dissolution of a corporation works an end to its legal existence and that it cannot thereafter, so far as the laws of the state under which it is created is concerned, have any existence. But it has long been the doctrine of the federal courts, encouraged by the decisions of the Supreme Court of the United States to the effect that jurisdiction in bankruptcy is under the Constitution a paramount one, that a petition in bankruptcy may not be defeated by showing the dissolution of the corporation if the debts thereof have not been fully discharged and that the bankruptcy court cannot be deprived of this paramount jurisdiction in bankruptcy to work out a liquidation or other relief proper in bankruptcy by the formal dissolution by the state authorities. In Hammond, et al. v. Lyon Realty Co. et al., 59 F.(2d) 592, the Circuit Court of Appeals for the Fourth Circuit had to do with a situation where a corporation had been dissolved *894 by a decree of the court of equity in the state court. The receivers of that court were conducting a liquidation of the assets in pursuance of the dissolution. The creditors instituted a bankruptcy proceeding, and the District Court held that though this corporation had been dissolved, the bankruptcy court was not deprived of jurisdiction. The Court of Appeals, in affirming, said: "It is said that the effect of the Maryland statutes with regard to the dissolution of corporations is that when a decree of dissolution has been passed by a court of equity, the life of the corporation is completely ended, and it does not survive as a legal entity for any purpose whatsoever. Emphasis is placed upon the absence from the Maryland law of a provision frequently found in the statutes of other states for the continuance of the life of a corporation, even after dissolution, for the distribution of its property and the settlement of its affairs. * * * So it is said that we should apply the general law concerning a dissolved corporation that it `is as if it did not exist, and the result of the dissolution cannot be distinguished from the death of a natural person in its effect,' Oklahoma Natural Gas Company v. Oklahoma, 273 U. S. 257, 259, 260, 47 S. Ct. 391, 392, 71 L. Ed. 634; and we should leave the settlement of the affairs of the dissolved corporation in this case to the state court of equity in the same way as, under the accepted practice, the administration of the estate of a deceased insolvent is left to the probate court of the state of his domicile. * * * "There is no authority to support this position; and it would certainly be contrary to the spirit of the National Bankruptcy Act [11 USCA] to hold that insolvent corporations are excluded, by dissolution, from the scope of its provisions, and that the distribution of their assets and the final settlement of their affairs must be left to the state courts. The general rule governing the jurisdiction of the federal courts in bankruptcy is thus stated in Stellwagen v. Clum, 245 U. S. 605, 613, 38 S. Ct. 215, 217, 62 L. Ed. 507: `The federal Constitution, article I, section 8, gives Congress the power to establish uniform laws on the subject of bankruptcy throughout the United States. In view of this grant of authority to the Congress it has been settled from an early date that state laws to the extent that they conflict with the laws of Congress, enacted under its constitutional authority, on the subject of bankruptcies are suspended. While this is true, state laws are thus suspended only to the extent of actual conflict with the system provided by the Bankruptcy Act of Congress. Sturges v. Crowninshield, 4 Wheat. 122, 4 L. Ed. 529; Ogden v. Saunders, 12 Wheat. 213, 6 L. Ed. 606.' See, also, International Shoe Co. v. Pinkus, 278 U. S. 261, 263, 265, 49 S. Ct. 108, 73 L. Ed. 318; * * * In re Watts & Sachs, 190 U. S. 1, 27, 23 S. Ct. 718, 724, 47 L. Ed. 933. * * * It has been uniformly held, in accordance with these principles, that the dissolution of an insolvent corporation does not put it outside the jurisdiction of the federal court in bankruptcy." Considering the specific contention that the final decree of dissolution deprived the court of jurisdiction, the court said: "The appellants would distinguish this array of authority by pointing out that in most, if not all, of the cases, the corporation had not been completely or validly dissolved when the adjudication took place, or at least that the dissolution was decreed after the proceedings in bankruptcy in the federal court had been instituted. It is said that no court has ever held that a corporation, finally dissolved under a state statute which contains no provision for the continuance of the life of the corporation during the settlement of its affairs, is within the purview of section 4b of the National Bankruptcy Act [11 USCA § 22 (b)]. It is not clear that so sweeping a statement is correct; and, in any event, it is evident that the decisions were not based merely on the ground that the corporate life had not completely ceased, but on the broader ground that neither the Legislature nor the courts of a state can take action which restricts the scope of the national bankruptcy system. It has rather been the view of the courts that the National Bankruptcy Act so far controls the dissolution of an insolvent corporation as to prevent its legal extinction by superseding, at least temporarily and to the extent necessary, all state laws which would prevent the creditors from having the assets of insolvent debtors administered in accordance with the terms of the federal act. It has been thought that to hold otherwise would be to allow the states, by a particular form of legislation, or by the action of their courts, to override a law of Congress on a subject over which the Constitution has given to Congress supreme power. See Thornhill v. Bank of Louisiana, Fed. Cas. No. 13,992, Cresson & Clearfield Coal & Coke Co. v. Stauffer (C. C. A.) 148 F. 981, Vassar Foundry Co. v. Whiting Corporation (C. C. A.) 2 F.(2d) 240." It was contended, furthermore, that the state proceedings did not amount to insolvency proceedings, and that, therefore, the bankruptcy *895 court had no jurisdiction. Concerning this, the court said: "The appellants contend that the federal act of bankruptcy does not supersede the Maryland statutes under discussion because they lack the essential characteristics of a general insolvency law. * * * There was no lack of power in Congress, and there can be no question as to its intent by the use of the term `corporation' in section 4b [11 USCA § 22 (b)] to include not only corporations in the literal sense, but also those bodies, which having once been true corporations, might be dissolved after insolvency by the state courts. No discussion is needed to show the far-reaching effect on the present system of a holding that would permit any insolvent corporation, after committing an act of bankruptcy, to oust the jurisdiction of the federal court by securing a decree of dissolution from the state under a statute similar to that in Maryland. A vast amount of business is conducted by monied or business corporations, and an utter lack of uniformity would follow if the settlement of the affairs of dissolved corporations was committed to the state courts. One of the acts of bankruptcy specified in section 3 of the act (11 U. S. C. § 21 [11 USCA § 21]), the appointment of a receiver to take charge of the insolvent property under the laws of the state, usually takes place as it did in the pending case in a proceeding for corporate dissolution. The conclusion is irresistible that Congress did not intend to leave the affairs of dissolved corporations to the state courts, but intended to include them within the terms of section 4b. The argument which the appellants have grounded upon the literal meaning of the section leads to so extraordinary a conclusion that it cannot be supposed to have been contemplated by Congress. Hawaii v. Mankichi, 190 U. S. 197, 23 S. Ct. 787, 47 L. Ed. 1016." In the case of In re Double Star Brick Company (D. C.) 210 F. 980, a California corporation had forfeited its franchise for nonpayment of the license tax as required by the state statute. The court held that, even though the state decisions supported the view that the forfeiture of the charter under the act referred to operates to terminate the existence of the corporation, the bankruptcy court was not thereby deprived of jurisdiction to administer the estate. The court pointed out the primary purpose of the distribution or other disposal of the debtor's property and said that the court takes jurisdiction of the res rather than of the person of the bankrupt. In the case of In re Munger Vehicle Tire Company, 159 F. 901, the Circuit Court of Appeals for the Second Circuit had under consideration the effect of the dissolution of the charter of a corporation of New Jersey prior to the filing of a petition in bankruptcy. The forfeiture had been proclaimed because of delinquency in payment of corporate taxes. The District Court had taken jurisdiction, and upon appeal the Circuit Court of Appeals held that the proclamation of default and forfeiture did not work such a destruction of the corporation as to prevent an adjudication in bankruptcy, or as to deprive the bankruptcy court of jurisdiction. In the case of In re Storck Lumber Company (D. C.) 114 F. 360, it appeared that prior to the filing of petition in bankruptcy, proceedings had been taken under the statute of Maryland resulting in a decree of the court that the corporation was dissolved and should be deemed to have surrendered its corporate rights, privileges, and franchises. Nevertheless, the jurisdiction in bankruptcy was sustained and an adjudication entered. To the same effect is In re Rainbow Family Laundry Co., 47 A. B. R. 655. The reasoning of the cases cited appeals strongly to the logic of the situation. Bankruptcy jurisdiction is, as has been said, a paramount one, granted to the federal courts in the national Constitution. Its purpose is two-fold, one to relieve the debtor, and the other to secure proper distribution amongst the creditors. In the case of a corporation, where there is no surplus over debts, the first purpose is of minor importance and the other all important. Such purpose is fulfilled by a jurisdiction over a res, the administration and distribution of which is the court's purpose, function and duty under its bankruptcy jurisdiction. It is not logical to hold that a proclamation or decree of the state court declaring a forfeiture because of nonpayment of franchise taxes should defeat this jurisdiction so carefully protected by the constitutional grant thereof in 1787. Notwithstanding such declaration of forfeiture, the corporation's property must be properly distributed. It cannot be constitutionally distributed, liquidated or administered if this paramount jurisdiction of the bankruptcy court is to be maintained in any forum other than the bankruptcy court itself. Congress, by recent legislation, has extended the District Court's jurisdiction to reorganization of the res, and it cannot, by any logical process of thought, be concluded that it was the purpose of Congress to surrender *896 any of the court's paramount jurisdiction, namely, the administration, liquidation, and distribution of the property of a corporation, even though the state authorities have taken away the charter of the corporation. The receiver files as one of his exhibits a current account. He asks that he and his counsel may be allowed compensation. He reports that a lessee of the property has deposited with him, as receiver, the sum of $6,300 as guaranty for the performance of a certain covenant, and he asks that, if this court should direct him to surrender possession of all assets held by him, the court likewise direct the trustee to assume the obligation to surrender said guaranty fund upon compliance of the lessee with his covenant. The court is not now in a position to enter any proper order as to compensation. Under the act of Congress, the court must eventually direct the payment of all such reasonable compensation. It seems to have been intended by Congress that prior receivers and other parties having claims for compensation for administrative services should present their application for fixing such reasonable compensation to the court under whose jurisdiction they were appointed. The proper procedure apparently is for that court to enter an order adjudicating such claims, said action to be followed by the action of the bankruptcy court in directing the payment of such of the same as shall be found to be reasonable. Consequently, this court should not at this time act upon the matter of compensation. As to the guaranty fund of $6,300, it is the belief of the court that same should be surrendered to the trustee and that the latter should hold the same subject to the further order of this court and subject to such equities therein as the lessee may have in accordance with the facts as they may develop. The court is not in position to know whether the present lease is one of desirability or wisdom in the proper administration of the estate and cannot pass upon questions of policies of administration not now before the court. The acceptance of said guaranty fund by the trustee shall be without prejudice to his right hereafter, if he deems it proper, to take any action concerning the validity or invalidity of said lease or the advisability of affirming it or asking its cancellation. Accordingly it will be the order of the court, upon the petition of the receiver for instructions, that the latter surrender to the trustee herein all property real, personal, or mixed, now held by him, formerly belonging to the 211 East Delaware Place Building Corporation and now in his possession and custody as receiver, any and all documents, contracts, and leases with reference thereto, and such funds as he has on hand, including said guaranty fund of $6,300. All questions arising upon accounting by the receiver or the fixing of compensation for the administration of said estate shall be reserved for further action by this court.

01-03-2023

10-30-2013

https://www.courtlistener.com/api/rest/v3/opinions/2502123/

(2008) Thoa Thi LE, Plaintiff, v. Michael J. ASTRUE, Commissioner of Social Security Administration, Defendant. No. SA CV 06-0681 FMO. United States District Court, C.D. California. February 4, 2008. ORDER Re: JOINT STIPULATION FERNANDO M. OLGUIN, United States Magistrate Judge. PROCEEDINGS Plaintiff filed a Complaint on July 26, 2006, seeking review of the denial by the Commissioner of the Social Security Administration ("Commissioner") of her application for Supplemental Security Income ("SSI") pursuant to Title XVI of the Social Security Act ("Act"). 42 U.S.C. § 405(g). On May 9, 2007, the parties submitted a Joint Stipulation ("Joint Stip."). The court has taken the matter under submission without oral argument. THE FIVE-STEP SEQUENTIAL EVALUATION PROCESS To be eligible for disability benefits, a claimant must demonstrate a medically determinable impairment which prevents the claimant from engaging in substantial gainful activity and which is expected to result in death or to last for a continuous period of at least 12 months. 42 U.S.C. § 423(d)(1)(A); Tackett v. Apfel, 180 F.3d 1094, 1098 (9th Cir.1999). Disability claims are evaluated using a five-step test: Step one: Is the claimant engaging in substantial gainful activity? If so, the claimant is found not disabled. If not, proceed to step two. Step two: Does the claimant have a "severe" impairment? If so, proceed to step three. If not, then a finding of not disabled is appropriate. Step three: Does the claimant's impairment or combination of impairments meet or equal an impairment listed in 20 C.F.R., Part 404, Subpart P, Appendix 1? If so, the claimant is automatically determined to be disabled. If not, proceed to step four. Step four: Is the claimant capable of performing his past work? If so, the claimant is not disabled. If not, proceed to step five. Step five: Does the claimant have the residual functional capacity to perform any other work? If so, the claimant is not disabled. If not, the claimant is disabled. 20 C.F.R. §§ 404.1520(a)(4) & 416.920(a)(4); Tackett, 180 F.3d at 1098-99. If a claimant is found "disabled" or "not disabled" at any step, there is no need to complete further steps. 20 C.F.R. §§ 404.1520(a)(4) & 416.920(a)(4); Tackett, 180 F.3d at 1098. BACKGROUND AND SUMMARY OF ADMINISTRATIVE DECISION Plaintiff, who was 61 years of age at the time of her last administrative hearing, obtained a fourth-grade education in Vietnam. (See Administrative Record ("AR") at 16, 49 & 288). Her past work experience includes employment as a rice farmer and a sewing machine operator. (Id. at 16-17, 116 & 131). Plaintiff protectively filed for SSI on March 30, 2001, alleging that she has been disabled since November 1, 1999, due to hypertension, headaches, dizziness, fainting, weakness, fatigue, and back and leg pain. (See AR at 15, 51, 97 & 102). Plaintiff's application was denied initially, on reconsideration, and by an Administrative Law Judge ("ALP) in a written decision issued on April 18, 2003. (See id. at 15, 51, 57 & 75-82). Thereafter, plaintiff filed a timely request for review of the ALJ's decision by the Appeals Council ("AC"). (Id. at 83). On July 8, 2004, the AC vacated the ALJ's decision and remanded the matter for further proceedings based upon the ALJ's failure to share information with plaintiff and her counsel, the ALJ's improper evaluation of the medical evidence, and the ALJ's erroneous determination that plaintiff's past work as a sewing machine operator constituted substantial gainful activity. (See id. at 15 & 93-95). On October 20, 2004, plaintiff appeared and testified at a supplemental hearing before an ALJ.[1] (AR at 15 & 288-97). The ALJ also heard testimony from Alan Boroskin, a vocational expert ("VE"). (Id. at 15 & 297-304). The ALJ denied plaintiff's request for benefits on April 27, 2005. (AR at 15-22). Applying the five-step sequential evaluation process, the ALJ found, at step one, that plaintiff has not engaged in substantial gainful activity since her alleged onset date of disability. (Id. at 16 & 21). At step two, the ALJ found that plaintiff suffers from severe impairments consisting of "hypertension, obesity, and hyperlipidemia." (Id. at 17 & 21). At step three, the All determined that the evidence does not demonstrate that plaintiff's impairments, either individually or in combination, meet or medically equal the severity of any listing set forth in the Social Security regulations.[2] (Id.). The ALJ then assessed plaintiff's residual functional capacity[3] ("RFC") and determined that she can perform a full range of medium work.[4] (AR at 20). Specifically, the ALJ found that plaintiff can: stand and/or walk, with normal breaks, for a total of about 6 hours during an 8-hour workday. She can sit, with normal breaks, for a total of about 6 hours during an 8-hour workday. She can lift and/or carry a maximum of 50 pounds occasionally and 25 pounds frequently. (Id. at 20 & 21). Based on plaintiff's RFC, the ALJ determined, at step four, that "[b]ased on the [plaintiff]'s own description of her past relevant work as a rice farmer, this job did not require the performance of work-related activities precluded by her residual functional capacity.... Thus, the [plaintiff] could return to her past relevant work as a rice farmer as previously performed and as generally performed in the national economy." (Id. at 20-21)(internal citation omitted). Accordingly, the ALJ concluded that plaintiff was not suffering from a disability as defined by the Act. (Id. at 21 & 22). Plaintiff filed a timely request for review of the ALJ's decision, which was denied by the Appeals Council. (See AR at 5-7 & 10). The ALJ's decision stands as the final decision of the Commissioner. STANDARD OF REVIEW Under 42 U.S.C. § 405(g), a district court may review the Commissioner's decision to deny benefits. The ALJ's findings and decision must be upheld if they are free of legal error and supported by substantial evidence. Mayes v. Massanari, 276 F.3d 453, 458-59 (9th Cir.2001, as amended Dec. 21, 2001). If the court, however, determines that the ALJ's findings are based on legal error or are not supported by substantial evidence in the record, the court may reject the findings and set aside the decision to deny benefits. Aukland v. Massanari, 257 F.3d 1033, 1035 (9th Cir.2001); Tonapetyan v. Halter, 242 F.3d 1144, 1147 (9th Cir.2001). "Substantial evidence is more than a mere scintilla, but less than a preponderance." Aukland, 257 F.3d at 1035. Substantial evidence is such "relevant evidence which a reasonable person might accept as adequate to support a conclusion." Reddick v. Chater, 157 F.3d 715, 720 (9th Cir.1998); Mayes, 276 F.3d at 459. To determine whether substantial evidence supports the ALJ's finding, the reviewing court must review the administrative record as a whole, "weighing both the evidence that supports and the evidence that detracts from the ALJ's conclusion." Mayes, 276 F.3d at 459. The ALJ's decision "`cannot be affirmed simply by isolating a specific quantum of supporting evidence.'" Aukland, 257 F.3d at 1035 (quoting Sousa v. Callahan, 143 F.3d 1240, 1243 (9th Cir.1998)). If the evidence can reasonably support either affirming or reversing the ALJ's decision, the reviewing court "may not substitute its judgment for that of the ALJ.'" Id. (quoting Matney ex rel. Matney v. Sullivan, 981 F.2d 1016, 1018 (9th Cir.1992)). DISCUSSION I. THE ALJ IMPROPERLY DETERMINED THAT PLAINTIFF'S PAST WORK AS A RICE FARMER CONSTITUTED SUBSTANTIAL GAINFUL ACTIVITY. Plaintiff contends that the ALJ erred in his step four determination that plaintiff's past employment as a rice farmer qualified as past relevant work. (See Joint Stip at 4-7 & 9-11). Specifically, plaintiff maintains that her work on a family farm in Vietnam where she grew rice and other produce for personal consumption, bartered a small portion for necessities, and was not paid a wage, does not satisfy the requirements for past relevant work because it did not constitute substantial gainful activity ("SGA"). (See id.). Further, plaintiff asserts that whether she was an employee or self-employed does not alter the determination that her work as a rice farmer does not constitute SGA. (See id.). Past relevant work is defined as "work that you have done within the past 15 years, that was substantial gainful activity, and that lasted long enough for you to learn to do it." 20 C.F.R. §§ 404.1560(b)(1) & 416.960(b)(1); see also id. at §§ 404.1565(a) (explaining the 15-year guide for determining SGA) & 416.965(a) (same). Thus, for a claimant's past employment to be considered past relevant work, the work must constitute SGA. Lewis v. Apfel, 236 F.3d 503, 515 (9th Cir.2001) ("A job qualifies as past relevant work only if it involved substantial gainful activity."). SGA is "work activity that is both substantial and gainful[.]" 20 C.F.R. §§ 404.1572 & 416.972; see also Lewis, 236 F.3d at 515 ("Substantial gainful activity is work done for pay or profit that involves significant mental or physical activities."). "Substantial work activity is work activity that involves doing significant physical or mental activities. [A claimant's] work may be substantial even if it is done on a part-time basis or if [the claimant] do[es] less, get[s] paid less, or ha[s] less responsibility than when [the claimant] worked before." 20 C.F.R. §§ 404.1572(a) & 416.972(a). "Gainful work activity is work activity that [a claimant] do[es] for pay or profit. Work activity is gainful if it is the kind of work usually done for pay or profit, whether or not a profit is realized." Id. at §§ 404.1572(b) & 416.972(b). In determining whether a particular job constitutes SGA, the Social Security regulations consider two employment categories: employee and self employed. See 20 C.F.R. §§ 404.1574; 404.1575; 416.974 & 416.975. For an employee, the primary factor in determining whether his or her past work is SGA "will be the earnings [the employee] derive[d] from the work activity." Id. at §§ 404.1574(a)(1) & 416.974(a)(1). There is a rebuttable presumption that the employee either was or was not engaged in SGA if his or her average monthly earnings are above or below a certain amount established by the Commissioner's Earnings Guidelines. See id. at §§ 404.1574(b)(2)-(3) & 416.974(b)(2)(3); see also Lewis, 236 F.3d at 515 ("Earnings can be a presumptive, but not conclusive, sign of whether a job is substantial gainful activity."). Earnings, however, are not dispositive. For example, even where the employee's wages are not substantial, if there is other evidence indicating that the claimant was engaged in SGA or that a claimant was in the position to control the amount of wages he or she was paid, the Commissioner may consider whether the work performed is "comparable to that of unimpaired people in [the employee's] community who are doing the same or similar occupations as their means of livelihood, taking into account the time, energy, skill, and responsibility involved in the work[.]" 20 C.F.R. §§ 404.1574(b)(3)(ii)(A) 416.974(b)(3)(ii)(A). The Commissioner may also rely upon evidence that the employee's work is clearly worth more than the SGA amounts provided for the particular calendar year in the Commissioner's Earning Guidelines based upon the prevailing pay scales in the employee's community. Id. at §§ 404.1574(b)(3)(ii)(B) & 416.974(b)(3)(ii)(B). If a claimant is self-employed, the Commissioner will consider the work activities he or she has performed and their value to the business to determine whether the individual engaged in SGA. 20 C.F.R. §§ 404.1575(a)(2) & 416.975(a)(2). The Social Security Regulations provide three tests for determining whether self-employment qualifies as SGA: Test one: You have engaged in substantial gainful activity if you render services that are significant[5] to the operation of the business and receive a substantial income from the business.... Test Two: You have engaged in substantial gainful activity if your work activity, in terms of factors such as hours, skills, energy output, efficiency, duties, and responsibilities, is comparable to that of unimpaired individuals in your community who are in the same or similar businesses as their means of livelihood. Test Three: You have engaged in substantial gainful activity if your work activity, although not comparable to that of unimpaired individuals, is clearly worth the amount shown in [the Commissioner's Earnings Guidelines] when considered in terms of its value to the business, or when compared to the salary that an owner would pay to an employee to do the work you are doing. Id. at §§ 404.1575(a)(2)(i)-(iii) & 416.975(a)(2)(i)-(iii) (italics omitted). If the individual's work is SGA under test one, the' ALJ need not apply tests two and three. See Camper v. Sullivan, 1991 WL 352422, at *2 (N.D.Cal.1991). "If, on the other hand, it is clearly established that the self-employed person is not engaging in SGA on the basis of significant services and substantial income (i.e., the first test), both the second and third tests concerning comparability and worth of work must be considered." Id. (italics in original). Here, plaintiff described her past job as work in the fields growing rice and other produce, for which she was not paid a wage. (AR at 116 & 132). Her work consisted of farming with hand tools and lifting bundles of food onto a cart to be carried home. (See id.). It appears that plaintiff grew only enough food for personal consumption and to exchange for necessities. (See id.). Finally, plaintiff indicated that she did not lead or supervise any other farm laborers. (Id.). The extent of the ALJ's analysis of whether plaintiff's past work constituted SGA was his conclusory statement that plaintiff has "past relevant work as a rice farmer." (AR at 20). In making this determination, the ALJ relied upon plaintiff's own description of her duties as a rice farmer. (See id.) ("Based on the [plaintiff]'s own description of her past relevant work as a rice farmer, this job did not require the performance of the work-related activities precluded by her residual functional capacity.") (internal citation omitted). In his decision, the ALJ did not specify whether plaintiff's past work on the family farm was done as an employee or a self-employed individual. (See, generally, id. at 15-22). Irrespective of whether plaintiff was an employee or self-employed, however, the court is persuaded that her past work as a rice farmer does not constitute SGA. If plaintiff was an employee, because she earned no wages, a presumption arose that she was not engaged in SGA. See Lewis, 236 F.3d at 515; 20 C.F.R. §§ 404.1574(b)(3) & 416.974(b)(3). The burden then shifted to the Commissioner to point to other evidence in the record to establish that plaintiff was engaged in SGA. See Lewis, 236 F.3d at 515 ("With the presumption, the claimant has carried his or her burden [at step four] unless the ALJ points to substantial evidence, aside from earnings, that the claimant has engaged in substantial gainful activity.") (italics in original). Other than his assertion that plaintiff's work as a rice farmer constituted past relevant work, (AR at 20), the ALJ made no effort to rebut the presumption that plaintiff was not engaged in SGA. See Lewis, 236 F.3d at 517 (ALJ erred in step four determination that plaintiff could perform his past relevant work because the ALJ "did not rebut the presumption that [plaintiff] had not engaged in substantial gainful activity, and thus had not engaged in past relevant work[]"). Finally, even if the earnings presumption did not apply, plaintiff's prior work would still not be considered SGA because there is no evidence of the prevailing pay scales for rice farmers in plaintiff's community or any evidence that unimpaired people in plaintiff's community performed comparable work as rice farmers for profit. See 20 C.F.R. §§ 404.1574(b)(3)(ii) 416.974(b)(3)(ii). Although defendant concedes that plaintiff was not self-employed, (see Joint Stip. at 7) ("there is no evidence in the record that [p]laintiff was `self-employed' nor did the ALJ so conclude[]"), it is worth noting that, even assuming plaintiff was self-employed as a rice farmer, her work nevertheless did not constitute SGA. Under test one, even if plaintiff provided significant services to the rice farm, she did not receive a substantial income and thus her work cannot be considered to be SGA. See 20 C.F.R. §§ 404.1575(a)(2)(i) & 416.975(a)(2)(i). Nor is there any evidence in the record that the rice and produce plaintiff grew would amount to a substantial income. Under test two, there is no evidence that plaintiff's work was comparable (considering factors such as hours, skills, energy output, efficiency, duties and responsibilities) to that of unimpaired persons in her community who earned wages or other substantial income as rice farmers or from other similar occupations. See id. at §§ 404.1575(a)(2)(ii) & 416.975(a)(2)(ii). Under test three, the record contains no evidence to support a finding that plaintiff's work was clearly worth wages amounting to SGA under the Commissioner's Earning Guidelines, in terms of its value to the farm or based upon what an employer would ordinarily pay a rice farmer. See id. at §§ 404.1575(a)(2)(iii) & 416.975(a)(2)(iii). "The lack of conclusive evidence as to the comparability of the required factors" results in a finding that the work plaintiff performed was not SGA. Social Security Ruling[6] ("SSR")83-34, 1983 WL 31256, at *9. Further, "any doubt as to the comparability of the factors should be resolved in favor of" plaintiff. Id. In sum, whether plaintiff was an employee or self-employed, the subsistence farm work she performed in Vietnam did not constitute SGA as defined by the Social Security regulations. Thus, the ALJ's determination, at step four, that plaintiff could perform her past relevant work as a rice farmer, is not supported by substantial evidence. II. THE ALJ ERRED IN FINDING THAT PLAINTIFF IS NOT DISABLED. Plaintiff asserts that the ALJ erred in finding her not disabled under the Medical-Vocational Guidelines ("Grids").[7] (See Joint Stip. at 17-18); see also 20 C.F.R. pt. 404, subpt. P. app. 2. Specifically, plaintiff contends that she meets the requirements of Grids Rule 203.01. (Joint Stip. at 18). Once a plaintiff has established an inability to perform past relevant work, the burden shifts to the Commissioner, at step five, to show that the plaintiff "can perform other substantial gainful work that exists in the national economy." Swenson v. Sullivan, 876 F.2d 683, 687 (9th Cir.1989). The Grids are applied at step five and "present, in table form, a short-hand method for determining the availability and numbers of suitable jobs for a claimant."[8]Lounsburry v. Barnhart, 468 F.3d 1111, 1114 (9th Cir.2006, as amended Nov. 7, 2006). Use of the Grids is appropriate only when a plaintiff's impairment "manifests itself by limitations in meeting the strength requirements of jobs (`exertional limitations'); [the Grids] may not be fully applicable where the nature of a claimant's impairment does not result in such limitations (`non-exertional limitations')." Id. at 1115. Thus, "[w]here a claimant suffers only exertional limitations, the ALJ must consult the grids." Id.; see Tackett, 180 F.3d at 1102 ("The ALJ may rely on the grids alone ... only when the grids accurately and completely describe the claimant's abilities and limitations.") (internal quotation marks and citation omitted). Application of the Grids is limited when, "despite having the residual functional capacity to perform a full range of unskilled occupations at a given exertional level, a claimant may not be able to adjust to these jobs because of non-exertional limitations." Lounsburry, 468 F.3d at 1115. Nevertheless, the Grids are consulted first to determine if plaintiff is "disabled." See id. "In other words, where a person with exertional and non-exertional limitations is `disabled' under the grids, there is no need to examine the effect of the non-exertional limitations[, b]ut if the same person is not disabled under the grids, the non-exertional limitations must be examined separately." Id. at 1116. The Grids provide that an individual with the RFC for medium work is disabled if he or she is closely approaching retirement age, has no more than a marginal education and has only unskilled or no previous work experience. See Grids Rule 203.01. Persons between the ages of 60 and 64 are "closely approaching retirement age[.]" 20 C.F.R. § 404.1563(e). A marginal education is defined as an "ability in reasoning, arithmetic, and language skills which [is] needed to do simple, unskilled types of jobs. [The Commissioner] generally consider[s] that formal schooling at a 6th grade level or less is a marginal education." Id. at § 404.1564(b)(2). For a claimant's work experience to be considered under the Grids, it must constitute SGA and have been performed within the last 15 years for a long enough period for the worker to learn how to do the job. Id. at 404.1565(a) ("We consider that your work experience applies when it was done within the last 15 years, lasted long enough for you to learn to do it, and was substantial gainful activity."). Here, plaintiff meets the requirements of Grids Rule 203.01 because she was 62 years old on the date of the ALJ's decision, has a 4th grade education, (see AR at 16, 49 & 288), and no relevant past work experience. See supra at § I. Thus, she is considered to be disabled. See Lounsburry, 468 F.3d at 1115-16 ("Where application of the grids directs a finding of disability, that finding must be accepted by the [Commissioner.]") (internal quotation marks, brackets, italics and citation omitted). III. AN AWARD OF BENEFITS IS APPROPRIATE. The court has discretion to remand or reverse and award benefits. Harman v. Apfel, 211 F.3d 1172, 1179 (9th Cir.2000, as amended May 4, 2000), cert. denied, 531 U.S. 1038, 121 S. Ct. 628, 148 L. Ed. 2d 537 (2000); McAllister v. Sullivan, 888 F.2d 599, 603 (9th Cir.1989, as amended Oct. 19, 1989). Where no useful purpose would be served by further proceedings, or where the record has been fully developed, it is appropriate to exercise this discretion to direct an immediate award of benefits. See Benecke v. Barnhart, 379 F.3d 587, 595-96 (9th Cir.2004); Varney v. Sec'y of H.H.S., 859 F.2d 1396, 1401 (9th Cir.1988); see also Harman, 211 F.3d at 1179 ("the decision of whether to remand for further proceedings turns upon the likely utility of such proceedings[]"). Under the circumstances, the court is persuaded that benefits should be awarded. As the court concluded above, the record establishes that plaintiff meets the requirements for a finding of disability under the Grids. Moreover, under the circumstances, the court believes that a remand for benefits, instead of further proceedings, is necessary in this case to "improve the performance of the ALJs by discouraging them from reaching a conclusion first, and then attempting to justify it by ignoring competent evidence[.]" Varney, 859 F.2d at 1398 (internal quotation marks, brackets and citation omitted). The court is troubled by the ALJ's conflicting and what appears to be result-oriented treatment of the vocational evidence in this matter. For example, in his first decision, the ALJ assigned plaintiff a more restrictive RFC than in the instant decision, (compare AR at 20 with id. at 80 & 81), and determined that plaintiff was unable to perform her past work as a rice farmer. (See id. at 80) ("[W]ith a residual functional capacity to perform light work, the ALJ finds that the [plaintiff] is capable of performing her past relevant work as a sewing machine operator but not her past work as a farmer."). In the instant decision, the ALJ, inexplicably, imposed a less restrictive RFC and concluded that plaintiff was now — two years later — capable of performing her past employment as a rice farmer. (See id. at 20). The ALJ made his determination without citing or mentioning any medical evidence establishing that plaintiff's impairments had improved to such an extent that instead of being able to perform only light work, she was now capable of medium work. (See, generally, id. at 15-22). Aside from the fact that the ALJ failed to provide an adequate explanation for the change in plaintiff's RFC, the court is also troubled by the ALJ's result-driven analysis relating to the hypotheticals posed to the VE. The ALJ propounded four hypotheticals to the VE with various RFCs, to which the VE responded that if plaintiff had any of those RFCs, she would be unable to perform her past work as a rice farmer. (See AR at 299-303). Yet, the ALJ, again inexplicably, assessed a less restrictive RFC than any of the four propounded to the VE and found that plaintiff could perform her past job as a rice farmer. (Compare id. at 20 & 21 with id. at 299-303). Finally, as noted earlier, the AC vacated the ALJ's prior decision and remanded the matter for further proceedings based, in part, on the ALJ's error in determining that plaintiff's past work as a sewing machine operator — plaintiff's only other job apart from that as a rice farmer — constituted SGA.[9] (See AR at 93-95). Yet, in the instant decision, the ALJ made a substantively similar error in his determination that plaintiff's past work as a rice farmer was SGA. (See id. at 20). Indeed, given the AC'S remand order, the ALJ should have been particularly careful in his analysis of whether plaintiff's past work as a rice farmer constituted SGA. Instead, on remand, the ALJ failed to adequately consider whether plaintiff's past work was SGA and provided only a conclusory statement that plaintiff's work as a rice farmer constituted past relevant work. (See id. at 20-21). Where, as here, it is clear from the record that the ALJ reached a conclusion first and then attempted to justify it by ignoring competent evidence, see Varney, 859 F.2d at 1398, the court sees no need to return the case to the Commissioner to make another determination as to whether plaintiff's past work as a rice farmer constituted past relevant work. "Allowing the Commissioner to decide the issue again would create an unfair `heads we win; tails, let's play again' system of disability benefits adjudication." Benecke, 379 F.3d at 595. Plaintiff has already waited nearly seven years from the filing date of her SSI application for a disability determination. (See AR at 15 & 98); see also Benecke, 379 F.3d at 595 ("Remanding a disability claim for further proceedings can delay much needed income for claimants who are unable to work and are entitled to benefits, often subjecting them to tremendous financial difficulties while awaiting the outcome of their appeals and proceedings on remand.") (internal quotation marks and citation omitted). In short, a remand for the payment of benefits is warranted regardless of whether the ALJ might have (on remand) investigated vocational data regarding plaintiff's past work in Vietnam and articulated a valid basis for concluding that plaintiff's past work did constitute SGA based upon a comparison to other workers making a livelihood by performing similar work in plaintiff's community. See Varney, 859 F.2d at 1399 ("Certainly there may exist valid grounds on which to discredit a claimant's pain testimony[.]... But if grounds for such a finding exist, it is both reasonable and desirable to require the ALJ to articulate them in the original decision.") (emphasis added).[10] Based on the foregoing, IT IS ORDERED THAT Judgment shall be entered reversing the decision of the Commissioner denying benefits and remanding this matter to the Commissioner for the awarding of benefits. NOTES [1] The ALJ states in his decision that the supplemental hearing was held on October 26, 2004. (AR at 15). The hearing transcript, however, indicates that the hearing was held on October 20, 2004. (Id. at 288). [2] See 20 C.F.R. pt. 404, subpt. P, app. 1. [3] Residual functional capacity is what a claimant can still do despite existing exertional and nonexertional limitations. Cooper v. Sullivan, 880 F.2d 1152, 1155 n. 5 (9th Cir. 1989). "Between steps three and four of the five-step evaluation, the AU must proceed to an intermediate step in which the AU assesses the claimant's residual functional capacity." Massachi v. Astrue, 486 F.3d 1149, 1151 n. 2 (9th Cir.2007). [4] "Medium work involves lifting no more than 50 pounds at a time with frequent lifting or carrying of objects weighing up to 25 pounds. If someone can do medium work, we determine that he or she can also do sedentary and light work." 20 C.F.R. §§ 404.1567(c) & 416.967(c). [5] If a self-employed person operates a business on her own, any services rendered are significant and if the self-employed person works with others the services she renders will be significant if she contributes "more than half the total time required for the management of the business, or ... render[s] management services for more than 45 hours a month regardless of the total management time required by the business." 20 C.F.R. §§ 404.1575(b) & 416.975(b). [6] "The Commissioner issues Social Security Rulings [(`SSRs')] to clarify the Act's implementing regulations and the agency's policies. SSRs are binding on all components of the SSA. SSRs do not have the force of law. However, because they represent the Commissioner's interpretation of the agency's regulations, we give them some deference. We will not defer to SSRs if they are inconsistent with the statute or regulations." Holohan v. Massanari, 246 F.3d 1195, 1203 n. 1 (9th Cir.2001) (internal citations omitted). [7] Although plaintiff also contends that "SSR 03-3p directs a finding of `disabled'[,]" (Joint Stip. at 18), SSR 03-3p is inapplicable to plaintiff's disability claim because it applies to evaluations of disability for "individuals aged 65 or older[,]" SSR 03-3p, 2003 WL 22813114, at *1, and plaintiff was 62 years old at the time the ALJ issued the instant decision. (See AR at 16). [8] "A claimant's placement with the appropriate table is determined by applying a matrix of four factors identified by Congress — a claimant's age, education, previous work experience, and physical ability. For each combination of these factors, they direct a finding of either `disabled' or `not disabled' based on the number of jobs in the national economy in that category of physical-exertional requirements. If a claimant is found able to work jobs that exist in significant numbers, the claimant is generally considered not disabled." Lounsburry v. Barnhart, 468 F.3d 1111, 1114-15 (9th Cir.2006, as amended Nov. 7, 2006) (internal citation omitted). [9] Specifically, the AC found that plaintiff's earnings as a sewing machine operator fell below the level of SGA and, thus, the job could not be considered past relevant work. (See AR at 94). [10] In fight of the court's decision to award benefits, it is not necessary to reach plaintiff's remaining contentions. (See Joint Stip. at 12-34 & 40-42).

01-03-2023

10-30-2013

https://www.courtlistener.com/api/rest/v3/opinions/2812243/

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA MUSSA ALI, : : Plaintiff, : Civil Action No.: 13-2030 (RC) : v. : Re Document Nos.: 85, 88 : CARNEGIE INSTITUTION OF : WASHINGTON, : : Defendant. : MEMORANDUM OPINION GRANTING PLAINTIFF’S MOTION FOR LEAVE TO FILE SUPPLEMENTAL STATEMENT REGARDING FILING DATE, DENYING PLAINTIFF’S ALTERNATIVE REQUEST TO FILE NUNC PRO TUNC, & DENYING PLAINTIFF’S MOTION FOR RECONSIDERATION OR LEAVE TO AMEND I. INTRODUCTION Pro se Plaintiff Mussa Ali initiated this matter in September 2012 by filing suit against the Carnegie Institution of Washington (“Carnegie”) in the U.S. District Court for the District of Oregon. Mr. Ali alleged that he was erroneously omitted as an inventor on multiple U.S. patents co-owned by Carnegie and the University of Massachusetts (“UMass”), and he sought to correct inventorship and to recover more than $100,000 in related damages. After retaining counsel, Mr. Ali filed an amended complaint that added UMass as a defendant and that requested a portion of the proceeds that Defendants had received from the patents in question. The Oregon court dismissed UMass from the case on the basis of sovereign immunity, ruled that the court lacked personal jurisdiction over Carnegie, and transferred the case to this Court. This Court subsequently granted Carnegie’s motion to dismiss the amended complaint for failure to join a necessary party: UMass. Mr. Ali now seeks reconsideration of that dismissal, arguing that UMass is not a necessary party and that the Court’s finding to the contrary relies on the clearly erroneous assumption that UMass’s financial interests would be prejudiced if the case proceeded in its absence. Alternatively, Mr. Ali seeks leave to amend his complaint in an unspecified manner, perhaps by reinstating the first complaint he filed, which named only Carnegie as a defendant. For the reasons set forth below, the Court denies Mr. Ali’s motion for reconsideration and his request for leave to amend his complaint. II. FACTUAL BACKGROUND As explained in detail in this Court’s prior Memorandum Opinion, 1 Carnegie and UMass co-own five patents relating to methods of inhibiting the expression of a particular gene in a cell through a process called ribonucleic acid interference (“RNAi”). The patents were allegedly issued as a result of the collaboration between Dr. Andrew Fire and Dr. Craig C. Mello, the two lead inventors of the laboratories of Carnegie and UMass, respectively. See Def.’s Mot. Dismiss 4, ECF No. 73-1; Am. Compl. ¶ 19, ECF No. 4. Mr. Ali alleges that he made a critical contribution to the discovery of RNAi while employed at UMass in Dr. Mello’s laboratory, and that he should be named as a co-inventor on the five patents. See Am. Compl. ¶¶ 8‒20. Mr. Ali filed his original complaint in the U.S. District Court for the District of Oregon in September 2012. See Compl., ECF No. 1. He named only Carnegie as a defendant, sought to correct inventorship pursuant to 35 U.S. C. § 256, and demanded “more than $100,000” in damages for related claims of conversion, unfair competition, unjust enrichment, and fraud under Oregon state law. After retaining counsel, Mr. Ali filed an amended complaint against both Carnegie and UMass in December 2012. See generally Am. Compl. 1 The Court hereby incorporates by reference its earlier Memorandum Opinion. See generally Ali v. Carnegie Inst. of Washington, No. 13-cv-2030, 2014 WL 4260995, at *1–2 (D.D.C. Aug. 29, 2014). 2 In his Amended Complaint, Mr. Ali again asserted a claim under § 256 to be named a co- inventor of the patents at issue, and he also asserted two alternative claims for “Legal Damages.” In his first claim for legal damages, Mr. Ali states that if he was contractually obligated to assign his rights in the patents to UMass, then he seeks his share of the patent-related proceeds that have been received by UMass and divided between the named UMass inventors. See Am. Compl. ¶¶ 28–32. Alternatively, if Mr. Ali was not obligated to assign his rights, then his second claim for legal damages seeks a portion of the proceeds received by both UMass and Carnegie from the sale, license, or transfer of their patent rights. See Am. Compl. ¶¶ 33–36. In May 2013, the District Court of Oregon dismissed UMass from the case for lack of subject-matter jurisdiction, finding that the university was an arm of the state and entitled to sovereign immunity. See Op. & Order at 10, ECF No. 41. In the same decision, the court also provided Mr. Ali with leave to amend his complaint to include claims against UMass officials pursuant to Ex Parte Young, 209 U.S. 123 (1908), which Mr. Ali had invoked in his motion for jurisdictional discovery. Id. at 10 n.3. Mr. Ali chose instead to seek reconsideration of the dismissal and denial of discovery, which the court denied. See Op. & Order at 7–12, ECF No. 66. The court also ruled that it lacked personal jurisdiction over Carnegie and sua sponte transferred the case to this Court pursuant to 28 U.S.C. § 1406(a). See id. at 13–26. On August 29, 2014, this Court granted Carnegie’s motion to dismiss the case pursuant to Federal Rule of Civil Procedure 12(b)(7) for failure to join UMass, a necessary party. See generally Ali, 2014 WL 4260995. The Court explained that UMass was a required party due to its ownership interest in the patents, that it was entitled to sovereign immunity and could not be joined, and that the action could not proceed in equity and good conscience without UMass. Id. In response to Mr. Ali’s request for leave to file a second amended complaint naming UMass 3 officials as defendants, the Court observed that such an amendment would not be permitted as to the claims for financial damages, and that it was unclear whether Ex Parte Young would permit a plaintiff to sue state officials in their official capacities for correction of inventorship. Id. at *7. Nevertheless, the Court gave Mr. Ali until October 1, 2014, to seek leave to amend his complaint to include correction of inventorship claims against UMass officials in their official capacities. Order, Aug. 29, 2014, ECF No. 77. The Court subsequently extended the time for filing such an amendment to November 14, 2014, on Mr. Ali’s motion. See Order, Sept. 19, 2014, ECF No. 84. To date, Mr. Ali has not sought leave to amend his complaint to include correction of inventorship claims against UMass officials in their official capacities. Instead, on September 29, 2014, Mr. Ali filed the instant motion for reconsideration or, in the alternative, for leave to amend his complaint, possibly by reinstating his first complaint that named only Carnegie as a defendant. See generally Pl.’s Mot. Recons., ECF No. 85. III. ANALYSIS Mr. Ali argues that the Court’s determination that UMass was a necessary party was based on a clearly erroneous factual finding that UMass would be financially prejudiced if Mr. Ali prevailed in this matter and was named as a co-inventor. Id. at 2–4. He also claims that the Court erred by failing to find that he has no alternative forum in which to have his case heard on the merits. Id. at 5–6. Alternatively, if the Court still views UMass as a necessary party, Mr. Ali asks that he be granted leave “to remedy his amend complaint,” perhaps by reverting “back to the original complaint in which ONLY Carnegie was named as a defendant.” Id. at 9–10. Defendants, on the other hand, maintain that Mr. Ali’s motion should be denied as untimely under Rule 59(e), that it has no basis in fact or law, and that it improperly seeks reconsideration 4 of arguments that were previously considered by the Court or that could have been presented previously. See generally Def.’s Opp’n, ECF No. 86. The Court considers each argument in turn. A. Legal Standards for Reconsideration The Federal Rules of Civil Procedure provide three avenues for seeking reconsideration of judicial decisions. The first is Rule 54(b), which permits reconsideration of interlocutory orders. See Fed. R. Civ. P. 54(b) (“[A]ny order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does not end the action as to any of the claims or parties and may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities.”). Relief pursuant to Rule 54(b) is to be provided “as justice requires,” and may be warranted when a court has “patently misunderstood the parties, made a decision beyond the adversarial issues presented, made an error in failing to consider controlling decisions or data, or where a controlling or significant change in the law has occurred.” U.S. ex rel. Westrick v. Second Chance Body Armor, Inc., 893 F. Supp. 2d 258, 268 (D.D.C. 2012) (internal citation, quotation, and alteration omitted); see also Cobell v. Norton, 224 F.R.D. 266, 272 (D.D.C. 2004). “These considerations leave a great deal of room for the court's discretion and, accordingly, the ‘as justice requires' standard amounts to determining ‘whether [relief upon] reconsideration is necessary under the relevant circumstances.’” Lewis v. District of Columbia, 736 F. Supp. 2d 98, 102 (D.D.C. 2010) (quoting Cobell, 224 F.R.D. at 272). At the same time, a court's discretion under Rule 54(b) is “limited by the law of the case doctrine and subject to the caveat that where litigants have once battled for the court's decision, they should neither be 5 required, nor without good reason permitted, to battle for it again.” Singh v. George Washington Univ., 383 F. Supp. 2d 99, 101 (D.D.C. 2005) (citations omitted). Whereas Rule 54 governs reconsideration of interlocutory orders, Rules 59(e) and 60(b) dictate when a party may obtain reconsideration of a final judgment. Rule 59(e) permits a party to file a motion to alter or amend a judgment within 28 days of the entry of that judgment. Fed. R. Civ. P. 59(e). Such motions are disfavored, are entrusted to the district court's discretion, and “‘need not be granted unless the district court finds there is an intervening change of controlling law, the availability of new evidence, or the need to correct a clear error or prevent manifest injustice.’” Ciralsky v. CIA, 355 F.3d 661, 671 (D.C. Cir. 2004) (quoting Firestone v. Firestone, 76 F.3d 1205, 1208 (D.C. Cir. 1996)). Rule 60(b), on the other hand, allows a party to seek relief from a final judgment “within a reasonable time” after entry of the judgment, but only for specified reasons. See Fed. R. Civ. P. 60(b). Such reasons include, among other things, “mistake, inadvertence, surprise, or excusable neglect,” id. at (60)(b)(1), “newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b),” id. at (60)(b)(2), and “any other reason that justifies relief,” id. at 60(b)(6). The Rule “was intended to preserve ‘the delicate balance between the sanctity of final judgments and the incessant command of the court's conscience that justice be done in light of all the facts.’ It cannot be employed simply to rescue a litigant from strategic choices that later turn out to be improvident.” Smalls v. United States, 471 F.3d 186, 191 (D.C. Cir. 2006) (quoting Good Luck Nursing Home, Inc. v. Harris, 636 F.2d 572, 577 (D.C. Cir. 1980)). Accordingly, reconsideration pursuant to Rule 60 is a remedy that should be sparingly used. See Kramer v. Gates, 481 F.3d 788, 792 (D.C. Cir. 2007). 6 A motion for reconsideration filed outside the 28-day window provided by Rule 59(e) is typically viewed as a Rule 60(b) motion. See McMillen v. District of Columbia, No. 04-cv-2036, 2005 WL 3370820, at *1 n.1 (D.C. Cir. Dec. 13, 2005) (holding that motions for reconsideration filed within Rule 59(e)’s time limit are treated as Rule 59(e) motions, while those filed outside it are treated as motions under Rule 60(b)); Computer Professionals for Soc. Responsibility v. U.S. Secret Serv., 72 F.3d 897, 903 (D.C. Cir. 1996) (“An untimely motion under Rule 59(e) may be considered as a motion under Rule 60(b) if it states grounds for relief under the latter rule.”). Regardless of the Rule pursuant to which reconsideration is sought, “it is well-established that ‘motions for reconsideration,’ whatever their procedural basis, cannot be used as ‘an opportunity to reargue facts and theories upon which a court has already ruled, nor as a vehicle for presenting theories or arguments that could have been advanced earlier.” Estate of Gaither ex rel. Gaither v. District of Columbia, 771 F. Supp. 2d 5, 10 (D.D.C. 2011) (quoting SEC v. Bilzerian, 729 F. Supp. 2d 9, 14 (D.D.C. 2010)); id. at 10 n.4 (explaining that the same principle extends to motions under Rule 59(e), 60(b), and 54(b)). Additionally, the party seeking reconsideration bears the burden of establishing that such relief is warranted under the circumstances. Elec. Privacy Info. Ctr. v. U.S. Dep't of Homeland Sec., 811 F. Supp. 2d 216, 226 (D.D.C. 2011) (“The party seeking relief from a judgment bears the burden of demonstrating that it satisfies the prerequisites for such relief.”); Second Chance Body Armor, 893 F. Supp. 2d at 268; Niedermeier v. Office of Baucus, 153 F. Supp. 2d 23, 28 (D.D.C. 2001). Although Mr. Ali does not specify the Rule pursuant to which he seeks reconsideration, his invocation of “clear error,” see Pl.’s Mot. Recons. at 2, and his statement that his motion was due within 28 days of the entry of judgment, see Pl.’s Mot. for Extension of Time, Sept. 12, 2014, ECF No. 80, suggest that he seeks relief from the Court’s order of dismissal under Rule 7 59(e). Carnegie has treated the motion as one brought pursuant to Rule 59(e), and it argues that the motion is untimely as it was filed more than 28 days after entry of the Court’s order. See Def.’s Opp’n at 4 n.1. Mr. Ali has not disputed the characterization of his motion as one brought pursuant to Rule 59(e), see Pl.’s Reply, ECF No. 87, but he has asked the Court to extend the 28- day deadline or to otherwise excuse his delayed filing as the product of a mailing error, see Pl.’s Mot. for Extension of Time; Pl.’s Mot. for Leave to File, Nov. 17, 2014, ECF No. 88. 2 The Court will neither retroactively extend the time for filing Mr. Ali’s motion under Rule 59(e) nor deny it as untimely. Pursuant to Federal Rule of Civil Procedure 6(b), although courts can extend most filing deadlines for good cause shown, Rule 59(e) motions are an exception for which “[a] court must not extend the time to act . . .” Fed. R. Civ. P. 6(b)(2); see also Derrington-Bey v. D.C. Dep't of Corr., 39 F.3d 1224, 1225 (D.C. Cir. 1994) (“District courts do not have even the customary discretion given by Fed. R. Civ. P. 6(b) to enlarge the Rule 59(e) period.”); Ctr. for Nuclear Responsibility, Inc. v. U.S. Nuclear Regulatory Comm’n, 781 F.2d 935, 941 (D.C. Cir. 1986) (“[T]he District Court simply has no power to extend [Rule 59(e)’s] time limitation.”). This Court thus lacks the authority to extend the filing deadline for a Rule 59(e) motion. But as discussed above, the consequence of untimely filing of a Rule 59(e) motion in this circuit is not denial of reconsideration, but treatment of the motion as one under Rule 60(b). See McMillian, 2005 WL 3370820, at *1 n.1. 2 Mr. Ali’s motion for leave to file a supplemental statement regarding the mailing error (ECF No. 88) is hereby granted, but as explained below, the motion’s alternative request to file the motion for reconsideration nunc pro tunc, apparently so that the motion would comply with Rule 59(e)’s 28-day filing deadline, is denied. See Justice v. Town of Cicero, 682 F.3d 662, 664 (7th Cir. 2012) (holding that a judge may not backdate a late-filed Rule 59(e) motion and that granting leave to file such a motion nunc pro tunc is improper). 8 This Court need not determine under which Rule Mr. Ali’s motion was brought or should be considered, however, because as explained below, the Court finds that Mr. Ali’s motion should be denied regardless of whether it is treated as a motion for reconsideration pursuant to Rule 54(b), 59(e), or 60(b). 3 Mr. Ali has not shown an error in the Court’s decision to dismiss his complaint for failure to join a necessary party that would warrant reconsideration under any standard. B. The Court’s Finding that UMass would be Financially Prejudiced At the heart of Mr. Ali’s motion for reconsideration is his contention that the Court erred by assuming that UMass’s financial interests would be prejudiced if this action proceeded in its absence. See Pl.’s Mot. Recons. at 2. Mr. Ali argues that contrary to the Court’s “presupposition that UMass [policy] obligates UMass to pay an additional percentage or amount based on the number of UMass-affiliated co-inventors listed on the patents-in-suit,” UMass pays a set 3 Although the parties both appear to assume that the Court’s August 2014 Order of dismissal constitutes a final judgment, relief from which is governed by Rule 59(e) or 60(b), the issue is not as clear-cut as the parties seem to assume. “The district court ordinarily enters a final judgment only after it has disposed of all claims against all parties.” Capitol Sprinkler Inspection, Inc. v. Guest Servs., Inc., 630 F.3d 217, 221 (D.C. Cir. 2011). And certainly, the Court’s order dismissing Mr. Ali’s entire complaint for failure to join a necessary party did dispose of all claims. But the Order of dismissal also provided a limited period of time in which Mr. Ali could seek leave to amend that had not yet expired at the time that he filed the instant motion for reconsideration, and an order that expressly provides for leave to amend is not generally considered a final judgment. See 19 James W. Moore, Moore's Federal Practice § 201.14 (3d ed.2003) (discussing application of final judgment rule to pretrial orders, and explaining that “an order dismissing the complaint with leave to amend is not [final or] appealable unless the grounds of the dismissal make it clear that no amendment of the complaint could cure the defect in the plaintiff’s case”); see also Ciralsky v. CIA, 355 F.3d 661, 666 (D.C. Cir. 2004) (distinguishing between a final judgment in the form of a dismissal without prejudice of a case, and a non-final order dismissing a complaint without prejudice and with leave to amend). Given this ambiguity, and in light of Mr. Ali’s pro se status, the Court considers the possibility that Mr. Ali’s motion may fall under the auspices of Rule 54(b) governing reconsideration of an interlocutory decision, and the Court’s analysis will proceed on that basis as well. 9 percentage of its patent proceeds to the co-inventors, and that percentage is divided equally among the inventors. Id. at 3–4. He notes that this factual allegation was contained in paragraph 30 of his complaint, which states that under university policy, “[U]Mass would pay the co- inventors a percentage of all revenue realized by [U]Mass through exploitation of that invention . . . to be shared equally between inventors.” Am. Compl. ¶ 30. Mr. Ali has also provided a new exhibit to support his assertion: a heavily redacted e-mail from his former attorney, stating that “under UMass policy the University’s share is distributed 30% to the inventors pro rata.” May 2014 e-mail, Pl.’s Ex. 1, ECF No. 85. On these fact, Mr. Ali argues, it would make no difference financially to UMass if he were named a co-inventor and the university’s proceeds were divided among four inventors instead of three. See id. at 2–4. In opposition, Carnegie argues that Mr. Ali’s assertion that UMass would not be affected financially if he were named a co-inventor is contradicted by his own pleadings. Def.’s Opp’n at 4. Additionally, Carnegie contends that Mr. Ali fundamentally misunderstands the Court’s decision, which did not depend on potential financial prejudice to UMass, but rather considered such prejudice as one of many factors weighing in favor of finding UMass a necessary party. Def.’s Opp’n at 4–7. As an initial matter, Rules 54(b), 59(e), and 60(b) would each allow this Court to reconsider a decision premised on factual error. See Second Chance Body Armor, Inc., 893 F. Supp. 2d at 268 (holding that reconsideration under Rule 54(b) may be warranted when a court has “patently misunderstood the parties” or “made an error in failing to consider . . . data”); Ciralsky, 355 F.3d at 671 (holding that relief under Rule 59(e) “need not be granted unless the district court finds there is . . . a clear error” of fact or law); United Bhd. of Carpenters & Joiners of Am. v. Operative Plasterers’ & Cement Masons’ Int’l Ass’n of U.S. & Canada, 721 F.3d 678, 10 690 (D.C. Cir. 2013) (finding that district court did not abuse its discretion in granting reconsideration under Rule 60(b)(1) when its decision “turned . . . on [its] mistaken understanding of the record”). In this instance, however, Mr. Ali has failed to show that the Court’s decision was affected by any factual error, clear or otherwise. First, the e-mail from Mr. Ali’s attorney that he has attached to his motion shows that it was received by Mr. Ali months before this Court ruled on Carnegie’s motion to dismiss. See May 2014 e-mail, Pl.’s Ex. 1. The fact that Mr. Ali chose not to provide that document to the Court previously does not mean that it constitutes “new evidence that was not previously available” or “newly discovered evidence” that would support a motion for reconsideration. See, e.g., Bain v. MJJ Prods., Inc., 751 F.3d 642, 649 (D.C. Cir. 2014) (affirming denial of motion for reconsideration where “newly discovered” evidence was known to plaintiff prior to entry of judgment and plaintiff offered “no justification” for his failure to mention it to the court); Lans v. Gateway 2000, Inc., 110 F. Supp. 2d 1, 5 (D.D.C. 2000) (“[E]vidence in the possession of the party before the judgment was rendered . . . is not newly discovered evidence that affords relief.”) (internal quotation marks omitted); Stewart v. Panetta, 826 F. Supp. 2d 176, 177 (D.D.C. 2011) (explaining that reconsideration under Rule 54 may be premised on the “discovery of new evidence not previously available”) (emphasis added). Nor can the Court’s failure to consider evidence not before it constitute error. More to the point, however, the e-mail provides no new material facts. The e-mail from Mr. Ali’s attorney explains that under UMass policy, a percentage of the university’s patent-related income is distributed “to the inventors pro rata.” May 2014 e-mail, Pl.’s Ex. 1. But in its prior decision, this Court expressly considered—indeed, quoted twice verbatim—Mr. Ali’s factual allegation that UMass policy “would pay the co-inventors [who 11 assigned their rights to the university] a percentage of all revenue realized by UMass through exploitation of that invention . . . to be shared equally between inventors.” See Ali, 2014 WL 4260995, at *1, *5 (quoting Am. Compl. ¶ 30)). And while Mr. Ali argues that this fact makes the Court’s subsequent finding of financial prejudice to UMass clearly erroneous, his argument rests on a misreading of the Court’s analysis. Mr. Ali contends that if he is found to have assigned his rights, his “prospective addition as a co-inventor” would not prejudice UMass financially because the amount the university pays to its inventors is fixed and would not change. Pl.’s Mot. Recons. at 2–3. That may well be true. But the Court did not assume that the total percentage paid to co-inventors at UMass would increase simply because another co-inventor may be added to the patent. Instead, the financial prejudice to UMass that concerned this Court stemmed from Mr. Ali’s claim for damages, wherein he seeks not only to be included in future payouts but also to be compensated by UMass for several years of unpaid royalties. Put another way, the Court’s finding of financial prejudice stemmed not from the mathematical operation of UMass policy, but from Mr. Ali’s claim for damages premised on the alleged violation of that policy. As the Court explained, in addition to alleging a right to be recognized as a co-inventor and a contractual right to receive a percent of patent-related revenues, Mr. Ali “also seeks damages from UMass,” Ali, 2014 WL 4260995, at *3, and he “alleges that he ‘is entitled to a portion of all proceeds realized by [U]Mass as a consequence of . . . any and all of the Patents.’” Id. at *1 (quoting Am. Compl. ¶ 30). Far from making a limited request for prospective relief, Mr. Ali asserted entitlement to “a portion of all proceeds realized by [U]Mass,” Am. Compl. ¶ 31, or if he did not assign his rights to UMass, “to recover from [U]Mass and Carnegie a portion of the moneys they have secured” from the patents in question, id. at ¶ 36. If the latter, Mr. Ali 12 has acknowledged, “then he will be able to assign or license his right, title, and interest in the patents-in-suit without encumberance from UMass . . . [so] Ali’s inventorship stake could thus potentially damage the value of both Carnegie’s and UMass’[s] licenses and the licensing income they generate.” Pl.’s Opp’n Mot. to Dismiss at 23, ECF No. 75. It is thus clear from Mr. Ali’s own allegations and arguments that if he were to succeed in this suit, it would prejudice the financial interests of the absent sovereign, UMass. Undaunted, Mr. Ali suggests that his success in this matter need not harm UMass financially because the Court could fashion relief that would require the other UMass co- inventors to compensate him instead of UMass. Pl.’s Mot. Recons. at 4–5. He notes that “it is the UMass-affiliated co-inventors . . . who have been siphoning off Ali’s shares of the proceeds,” so the Court “could compel the said co-inventors to pay back Ali’s share of the proceeds to him,” or “fashion a judgment in which Ali would be entitled to a bigger share of the portion of money distributed among the UMass-affiliated co-inventors.” Id. As Carnegie correctly notes, however, Mr. Ali’s proposed alternatives would require this Court either to order non-party UMass to restructure its reimbursement contracts so that Mr. Ali could receive a greater share of future payouts, or to order the non-party co-inventors to pay money damages to Mr. Ali. See Def.’s Opp’n at 10–11. This Court, however, lacks the authority to issue a judgment that would bind a non-party. See Taylor v. Sturgell, 553 U.S. 880, 893 (2008) (“[O]ne is not bound by a judgment in personam in a litigation in which he is not designated as a party or to which he has not been made a party by service of process.”) (internal quotation marks omitted); Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102, 110 (1968) (“Of course, since the outsider is not before the court, he cannot be bound by the judgment rendered.”); see also Charles Alan Wright & Arthur R. Miller, et al., 7 Fed. Prac. & Proc. Civ. § 1608 (3d ed.) 13 (explaining that under Rule 19(b), courts should attempt to “promote judicial economy by avoiding going forward with actions in which the court may end up rendering hollow or incomplete relief because of the inability to bind persons who could not be joined”). Moreover, even if Mr. Ali’s alternative proposals were a viable means of shaping relief to avoid prejudice to UMass, they would nevertheless fail to warrant reconsideration of this Court’s judgment because such arguments could have been, but were not, presented to the Court prior to the entry of judgment. See Kittner v. Gates, 783 F. Supp. 2d 170, 173 (D.D.C. 2011) (deeming waived an argument that plaintiff could have but did not include “in her briefing on Defendants' Motion to Dismiss,” because “a motion for reconsideration may not . . . be used to raise arguments or defenses that could have been advanced during the original proceeding”). When opposing Carnegie’s motion to dismiss for failure to join UMass, Mr. Ali addressed each factor under Rule 19(b), including the second factor, which requires a court to consider whether “prejudice could be lessened or avoided by . . . shaping the relief.” Fed. R. Civ. P. 19(b)(2). The entirety of Mr. Ali’s argument on the subject consisted of a two-sentence assertion that this matter involves no prejudice, so “the second factor carries ‘little weight’ in balancing the Rule 19(b) factors with respect to Carnegie’s Rule 12(b)(7) motion.” Pl.’s Opp’n at 28. Far from arguing in favor of the means of shaping relief that he now proposes, Mr. Ali actually argued that the Court should give little attention to the possibility of shaping the requested relief to avoid prejudice. This strategic choice cannot be undone via a motion for reconsideration. Rule 60(b) does not provide “an opportunity for unsuccessful litigants to take a mulligan.” Kramer v. Gates, 481 F.3d 788, 792 (D.C. Cir. 2007); Mcmanus v. District of Columbia, 545 F. Supp. 2d 129, 134 (D.D.C. 2008) (“Although they might have, Plaintiffs did not make this argument in response to 14 [defendant’s] motion for sanctions, and their belated attempt to challenge the Court's grant of sanctions on this ground is therefore improper. Rule 60(b) may not be relied upon to rescue Plaintiffs from their poor strategic choices.”). And Rules 54 and 59 likewise do not afford reconsideration on the basis of arguments that could have been, but were not, previously presented to the court. Paleteria La Michoacana, Inc. v. Productos Lacteos Tocumbo S.A. De C.V., No. CV 11-1623 (RC), 2015 WL 456400, at *8 (D.D.C. Feb. 3, 2015) (“[I]t is well established in this Circuit that motions for reconsideration, whatever their procedural underpinnings, cannot be used as a vehicle for presenting theories or arguments that could have been advanced earlier.”) (internal quotation marks omitted); Fresh Kist Produce, LLC v. Choi Corp., 251 F. Supp. 2d 138, 140 (D.D.C. 2003) (“[A] Rule 59(e) motion to reconsider is not simply an opportunity to reargue facts and theories upon which a court has already ruled, nor is it a vehicle for presenting theories and arguments that could have been advanced earlier.”) (internal quotation marks and citations omitted). In short, Mr. Ali cannot utilize his motion for reconsideration to take a second bite at the proverbial apple, and his new arguments pertaining to the possibility of shaping relief are therefore unavailing. As a final matter, the Court observes that even if Mr. Ali’s claim of factual error had merit, and even if the Court could fashion relief at the financial expense of non-parties, Mr. Ali has still failed to establish a basis for reconsideration of the Court’s finding that the case could not proceed without UMass, because financial prejudice to UMass was only one factor in the Court’s analysis, and a secondary one at that. As explained in the prior Memorandum Opinion, UMass faced not only financial prejudice if Mr. Ali prevailed on his assignment-based damages claims, but also potential impairment of its ownership interests in the patents in question if he prevailed solely on his correction of inventorship claim. Ali, 2014 WL 4260995, at *3 15 (explaining that “UMass is a necessary party because it is a co-owner of the patents, and its interests would be highly prejudiced in its absence, even if the Court could afford partial relief to Plaintiff as to inventorship”). Moreover, the Court repeatedly emphasized that when determining whether the action should proceed without UMass, “sovereign immunity reigns supreme in the analysis.” Id. at *4; see also Republic of Philippines v. Pimentel, 553 U.S. 851, 867 (2008) (holding that “where sovereign immunity is asserted, and the claims of the sovereign are not frivolous, dismissal of the action must be ordered where there is a potential for injury to the interests of the absent sovereign”) (emphasis added). And although the Court detailed the potential financial prejudice to UMass posed by Mr. Ali’s claims for damages, it did so in the context of explaining that it would be unfair to force Carnegie to defend this suit alone when, in fact, Mr. Ali’s claims derive from his period of employment with UMass, implicate a potential contract with UMass, and do not include allegations that would allow him to recover money damages from Carnegie. Id. at *5. In other words, it was not only the financial prejudice to an absent sovereign that governed the Court’s Rule 19 analysis, but also the likely prejudice to UMass’s patent-ownership interests and to Carnegie if it was forced to defend the suit alone despite the fact that “UMass’s relationship with Plaintiff is much more central to the case than Carnegie’s.” Id. (explaining that “it would be highly prejudicial to Carnegie to force it to vigorously defend a suit and pay attorney’s fees in a case” where the plaintiff alleged that he was entitled to money damages exclusively from a non-party); see also Op. & Order at 6 (“Ali alleges that he has an agreement with UMass, but he does not allege any separate agreement that would entitle him to a financial benefit from Carnegie. Therefore, if Ali is named a co-inventor of some or all of the patents-in- suit and he is entitled to compensation from UMass, Ali cannot receive that compensation in this 16 suit unless UMass is a party-defendant.”). Mr. Ali’s arguments are simply insufficient to disturb this Court’s finding that, in light of the many factors bearing on the decision of whether UMass is a necessary party, 4 the case could not in equity and good conscience proceed without UMass. C. The Availability of an Alternative Forum Mr. Ali’s final argument in favor of reconsideration asserts that the Court should have rejected Carnegie’s position that Mr. Ali had access to an alternative forum in the Massachusetts state courts. While acknowledging that the Court’s treatment of the fourth Rule 19(b) factor was “largely neutral,” Mr. Ali nevertheless contends that the Court should have rejected Carnegie’s alternative forum proposal as unworkable and implausible. Pl.’s Mot. Recons. at 5. Though the precise contours of Mr. Ali’s argument are less than clear, it appears that he takes issue with the Court’s apparent acceptance of Carnegie’s argument that he should be required to go to state court to vindicate his claims when state court judges are incapable of correcting the inventorship of an issued patent. See id. at 5–6. If the Court had properly rejected Carnegie’s argument and recognized that Mr. Ali had no alternative forum available to him, he reasons, the Court may have found that this case could proceed without UMass. There are two major flaws in Mr. Ali’s argument. First and foremost, his argument that no alternative forum is available to him was fully briefed in his opposition to Carnegie’s motion to dismiss, see Pl.’s Opp’n at 30–32, and duly considered in this Court’s prior Memorandum 4 The decision of whether to proceed without a required party “must be based on factors varying with the different cases, some such factors being substantive, some procedural, some compelling by themselves, and some subject to balancing against opposing interests.” Republic of Philippines v. Pimentel, 553 U.S. 851, 863 (2008) (quoting Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102, 119 (1968)). The factors are not rigid, and “the district court has substantial discretion in considering which factors to weigh and how heavily to emphasize certain considerations in deciding whether the action should go forward.” Kickapoo Tribe of Indians of Kickapoo Reservation in Kansas v. Babbitt, 43 F.3d 1491, 1495 (D.C. Cir. 1995). 17 Opinion, Ali, 2014 WL 4260995, at *8. Mr. Ali’s argument for reconsideration does nothing more than repeat those same arguments previously considered by the Court, and as such, it provides no basis for reconsideration. Capitol Sprinkler, 630 F.3d at 226–27 (district courts act within the scope of their discretion in denying “reconsideration” under Rule 54(b) where the motion raises no arguments not already rejected on the merits); State of N.Y. v. United States, 880 F. Supp. 37, 38 (D.D.C. 1995) (“A Rule 59(e) motion to reconsider is not simply an opportunity to reargue facts and theories upon which a court has already ruled.”); Hampton v. Vilsack, 791 F. Supp. 2d 163, 166 (D.D.C. 2011) (denying reconsideration under 60(b) where “Plaintiff's instant motion merely repeats his prior arguments on this point,” because “[a] motion for reconsideration is not simply an opportunity to reargue facts and theories upon which a court has already ruled”) (internal quotation marks omitted). Second, Mr. Ali mischaracterizes the Court’s analysis. The Court did not “accept” Carnegie’s assertion of an available alternative forum for Mr. Ali’s claims. In actuality, the Court said that “[t]here may or may not be an alternative forum for Plaintiff’s claims,” that the factor was “inconclusive,” and that “it is unclear whether he can sue UMass in state court for damages, and/or whether the statute of limitations has run on his state law claims.” Ali, 2014 WL 4260995, at *8. The Court explained, however, that even if Mr. Ali had no alternative forum and no other remedy available for his claims, that was not enough “to persuade the Court that dismissal was no longer warranted,” given “the weighty competing interest of preserving . . . sovereign immunity.” Id. at *18, *19 n.13. In short, the Court expressly foreclosed the possibility that the lack of an alternative forum would alter the Court’s decision that this action could not proceed in equity and good conscience without UMass. There is thus no merit to Mr. Ali’s contention that such a finding would have changed the Court’s decision. 18 In sum, Mr. Ali’s motion provides no basis for reconsidering the dismissal of his complaint for failure to join a necessary party, and his request for reconsideration is therefore denied. 5 D. Request for Leave to File Second Amended Complaint 6 In the conclusion section of Mr. Ali’s motion for reconsideration, he includes an alternative request for relief in the form of leave “to remedy his amended complaint to address the concern of this Court, for example by re-amending his complaint back to the original complaint in which ONLY Carnegie was named as a defendant.” Pl.’s Mot. Recons. at 9–10. Typically, leave to amend a complaint “shall be given freely when justice so requires.” See Fed R. Civ. P. 15(a). In deciding whether to allow a party to amend a complaint, courts may consider “undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by 5 Mr. Ali’s motion includes a footnote that appears to invoke the possibility of a due process issue under the 14th Amendment. See Pl.’s Mot. Recons. at 3 n.5. The footnote concludes, however, by observing that for the purpose of this case, “this Court doesn’t need to go there and or entertain that possibility.” Id. The Court takes Mr. Ali at his word and declines to address an unnecessary constitutional question, the nature of which is not clearly identified in Mr. Ali’s motion. 6 If this Court’s Order of dismissal constitutes a final judgment subject to reconsideration under Rule 59(e) or 60(b), then Mr. Ali’s request for leave to amend must be denied outright given that his motion for reconsideration has been denied. Once a final judgment has been entered, a court cannot permit an amendment unless the plaintiff first satisfies” the “more stringent standard[s]” of Rule 59(e) or Rule 60(b). See Ciralsky v. CIA, 355 F.3d 661, 673 (holding that district court properly concluded that plaintiff’s motion to amend his complaint was moot because reconsideration of dismissal without prejudice was not warranted); see also W. Wood Preservers Inst. v. McHugh, 292 F.R.D. 145, 147 (D.D.C. 2013) (“It is well established that ‘where a district court is presented with a motion for leave to amend following a dismissal, the court considers the motion for leave to amend only after consideration of a party’s motion to amend or alter the dismissal.’” (quoting DeGeorge v. United States, 521 F. Supp. 2d 35, 40–41 (D.D.C. 2007)). For the purpose of analyzing Mr. Ali’s request for leave to amend, the Court thus assumes without deciding that the Court’s order of dismissal did not constitute a final judgment and that Mr. Ali’s motion for reconsideration was brought pursuant to Rule 54(b). 19 virtue of allowance of the amendment, futility of amendment, etc.” Foman v. Davis, 371 U.S. 178, 182 (1962). “An amended complaint is futile if it merely restates the same facts as the original complaint in different terms, reasserts a claim on which the court previously ruled, fails to state a legal theory or could not withstand a motion to dismiss.” Robinson v. Detroit News, Inc., 211 F. Supp. 2d 101, 114 (D.D.C. 2002). Additionally, request for leave to amend may be denied if a plaintiff fails to comply with Local Rule 15.1, which dictates that a motion for leave to amend “shall be accompanied by an original of the proposed pleading as amended.” Local Rule 15.1; see also Johnson v. District of Columbia, 49 F. Supp. 3d 115, 122 (D.D.C. 2014) (denying leave to amend due to plaintiff’s failure to attach her proposed amended complaint); Belizan v. Hershon, 434 F.3d 579, 583 (D.C. Cir. 2006) (affirming denial of oral motion for leave to amend for failure to comply with Rule 15(a) and Local Rule 15.1). In this case, Mr. Ali’s general request for leave to amend in an unspecified manner is insufficient to satisfy the requirements of Rule 15(a). See U.S. ex rel. Williams v. Martin-Baker Aircraft Co., 389 F.3d 1251, 1259 (D.C. Cir. 2004) (holding that dismissal of complaint with prejudice was appropriate given plaintiff’s “failure to articulate to the district court anything more than a bare request to amend his complaint,” and explaining that a request for leave to amend “without any indication of the particular grounds on which amendment is sought—does not constitute a motion within the contemplation of Rule 15(a)”). In addition, his one-sentence request for leave to file a second amended complaint, unaccompanied by any such proposed pleading, fails to comply with Local Rule 15.1. Given that this Court cannot review Mr. Ali’s proposed second amended complaint and has no way to assess the merits of his “bare request to amend,” and in light of his failure to comply with Rule 15(a) and Local Rule 15.1, his general request for leave to amend must be denied. 20 Even if this Court were inclined to interpret Mr. Ali’s suggestion that he might re-instate his first complaint as a request for leave to do the same, a grant of leave to amend would still be inappropriate. Mr. Ali has offered no argument whatsoever as to how reinstating the first complaint—which is premised on substantially the same factual allegations and once again would have Carnegie as the sole defendant opposing Mr. Ali’s claims to correct inventorship and for related damages—would affect this Court’s decision that UMass is a necessary party without which this case must not proceed. See Greggs v. Autism Speaks, Inc., 987 F. Supp. 2d 51, 54 (D.D.C. 2014) (explaining that a court may deny a motion to amend if such amendment would be futile, for example, if it “merely restates the same facts as the original complaint in different terms, reasserts a claim on which the court previously ruled, fails to state a legal theory or could not withstand a motion to dismiss” (quoting Robinson, 211 F. Supp. 2d at 114)). Additionally, such an amendment exceeds the limited scope of leave to amend set forth in the Court’s Order, which constrained Mr. Ali to seeking leave “to name UMass officials in their official capacities,” and instructed him that if he wished to do so, he must “address whether this Court would have personal jurisdiction over these officials.” Order, Aug. 29, 2014, ECF No. 78. Mr. Ali has not argued that this Court’s prior grant of leave was too narrow or otherwise explained his disregard for the limitations of the Court’s August 2014 Order. Instead, he has declined to seek leave to amend in the manner permitted by both this Court and by the Oregon District Court, and the deadline for such an amendment has long since come and gone. See Order, Sept. 19, 2014, ECF No. 84 (giving Mr. Ali until November 14, 2014 to seek leave to file a second amended complaint); see also Foman v. Davis, 371 U.S. 178, 182 (1962) (citing “undue delay” and “repeated failure to cure deficiencies by amendments previously allowed” as reasons for which a court might deny leave to amend). 21 The Court therefore denies Mr. Ali’s request for leave to amend his complaint. IV. CONCLUSION For the foregoing reasons, Mr. Ali’s motion for leave to file a supplemental statement regarding the filing date of his motion for reconsideration is GRANTED, his alternative request for leave to file nunc pro tunc is DENIED, and his motion for reconsideration or, in the alternative, to amend his complaint is DENIED. An order consistent with this Memorandum Opinion is separately and contemporaneously issued. Dated: June 26, 2015 RUDOLPH CONTRERAS United States District Judge 22

01-03-2023

06-26-2015

https://www.courtlistener.com/api/rest/v3/opinions/2499867/

257 F. Supp. 2d 651 (2003) TOKIO MARINE & FIRE INSURANCE CO., LTD. and Marubeni Corporation, Plaintiffs, v. M/V SAFFRON TRADER, its engines machinery, tackle, etc., in rem, v. The Sanko Steamship Co., Ltd., in personam, Defendants. No. 02 Civ. 5369(SAS). United States District Court, S.D. New York. March 24, 2003. *653 Lawrence B. Brennan, New York City, for Plaintiffs. Garth S. Wolfson, New York City, for Defendant The Sanko Steamship Co., Ltd. OPINION AND ORDER SCHEINDLIN, District Judge. Tokio Marine & Fire Insurance Co., Ltd. ("Tokio Marine") and Marubeni Corporation ("Marubeni") bring this admiralty and maritime action to recover damages for cargo shipped from the United States to Japan. Plaintiffs claim that the carrier of the cargo breached the Charter Party and Bills of Lading. Plaintiffs move to compel arbitration and stay these proceedings. For the reasons set forth below, plaintiffs' motion is granted. I. BACKGROUND Tokio Marine is a Japanese corporation that insures cargo. Complaint ("Compl") ¶ 4. Marubeni is a Japanese corporation that engages in international trade. Id. ¶¶ 5-6. The Sanko Steamship Co., Ltd. ("Sanko") is an ocean carrier and owner of the vessel M/V Saffron Trader ("Saffron Trader"). Id. ¶ 7. All parties have a place of business or principal place of business in Tokyo, Japan. Id. ¶¶ 4-5, 7. A. Factual Allegations On August 4, 2000, Sanko and Marubeni entered into a Charter Party for the shipment of yellow corn from Tacoma, Washington to Kashima, Japan. See Memorandum of Law in Support of Plaintiffs' Motion to Compel Arbitration ("Pl. Mem.") at 1-2; Charter Party, Ex. 6 to 1/6/03 Affidavit of Lawrence B. Brennan, attorney for plaintiffs ("Brennan Aff."). The Charter Party has a "New York Produce Exchange Arbitration Clause", which provides "[t]hat should any dispute arise between Owners and Charters, the matter in dispute shall be referred to [arbitration in] New York." Pl. Mem. at 2. On December 31, 2000, Sanko issued Bills of Lading, which incorporated the Charter Party's arbitration clause. See Compl. ¶ 19; Bill of Lading No. 002, Ex. 7 to Brennan Aff. Marubeni was the owner of the cargo and holder of the Bills of Lading. Compl. *654 ¶ 13. Tokio Marine was the insurer of Marubeni's cargo. Id. ¶ 14. On January 16, 2001, Sanko delivered the cargo to Kashima, Japan and Marubeni discovered that the 42,809 metric tons of corn were damaged. Id. ¶¶ 12, 15. As a result, Tokio Marine and Marubeni suffered a loss of $62,572.23. Id. ¶ 17. B. Procedural Background On July 12, 2002, Tokio Marine and Marubeni brought this action seeking damages for defendants' alleged failure to deliver the cargo in good condition pursuant to the terms of the Charter Party and Bills of Lading. Id. ¶ 15. The Complaint consists of an in rem claim against the Saffron Trader and an in personam claim against Sanko. Tokio Marine and Marubeni request that the Saffron Trader be arrested and that final judgment against defendants be entered in the amount due plaintiffs. In the alternative, plaintiffs request that the Court compel arbitration pursuant to the Federal Arbitration Act ("FAA").[1] Tokio Marine and Maurbeni moved to compel arbitration and stay the current proceedings on January 6, 2003. See PL Mem. Sanko opposes the motion, but does not dispute the validity of the Charter Party's arbitration clause. Instead, Sanko contends that Tokio Marine and Maurbeni waived their right to arbitration by bringing suit in federal court. See Sanko's Memorandum in Opposition to Motion to Compel Arbitration at 4-5. II. LEGAL STANDARD Pursuant to the FAA, "a district court must stay proceedings if satisfied that the parties have agreed in writing to arbitrate an issue or issues underlying the district court proceeding." McMahan Sec. Co. v. Forum Capital Mkts. L.P., 35 F.3d 82, 85 (2d Cir.1994). See 9 U.S.C. § 3 (2001). However, the FAA requires a court to determine whether an arbitration agreement has been waived, and thereby unenforceable. See Doctor's Assocs., Inc. v. Distajo, 66 F.3d 438, 456 (2d Cir.1995) (describing the waiver defense as a "statutorily mandated inquiry in § 3 cases"). "`[T]here is a strong presumption in favor of arbitration[, and] waiver of the right to arbitrate is not to be lightly inferred.'" Thyssen, Inc. v. Calypso Shipping Corp., 310 F.3d 102, 104-05 (2d Cir.2002) (alterations in original) (quoting Coca-Cola Bottling Co. v. Soft Drink and Brewery Workers Union Local 812, 242 F.3d 52, 57 (2d Cir.2001)). "[A]ny doubts concerning whether there has been a waiver are resolved in favor of arbitration." Leadertex, Inc. v. Morganton Dyeing & Finishing Corp., 67 F.3d 20, 25 (2d Cir.1995). "The mere filing of a complaint does not constitute a waiver [because the] essential test is whether the pursuit of a remedy other than arbitration has worked substantial prejudice to the other party." Commercial Metals Co. v. International Union Marine Corp., 294 F. Supp. 570, 573 (S.D.N.Y.1968) (citing Chatham Shipping Co. v. Fertex S.S. Corp., 352 F.2d 291, 293 (2d Cir.1965)).[2] A waiver determination is *655 highly fact specific and no bright line rule is applied, but three factors are considered: "(1) the time elapsed from when the litigation was commenced until the request for arbitration; (2) the amount of litigation to date, including motion practice and discovery; and (3) proof of prejudice." Louis Dreyfus Negoce S.A. v. Blystad Shipping & Trading Inc., 252 F.3d 218, 229 (2d Cir.2001). Although an extensive amount of delay between the commencement of an action and request for arbitration may suggest waiver, "delay in seeking arbitration does not create a waiver unless it prejudices the opposing party." Leadertex, 67 F.3d at 25. Similarly, the amount of litigation that occurs before an arbitration request will result in waiver only when substantive litigation prejudices the opposing party. See Thyssen, 310 F.3d at 105; Cotton v. Slone, 4 F.3d 176, 179 (2d Cir.1993). Two types of prejudice are possible: substantive prejudice and prejudice due to excessive cost and time delay. "`Prejudice can be substantive, such as when a party loses a motion on the merits and then attempts, in effect, to relitigate the issue by invoking arbitration, or it can be found when a party too long postpones [its] invocation of [its] contractual right to arbitration, and thereby causes [its] adversary to incur unnecessary delay or expense.'" Thyssen, 310 F.3d at 105 (quoting Kramer v. Hammond, 943 F.2d 176, 179 (2d Cir.1991)). III. DISCUSSION Tokio Marine and Marubeni did not waive the arbitration agreement by bringing an action in this Court. The three waiver factors establish that plaintiffs are entitled to arbitrate their claim. First, no time elapsed from the commencement of the litigation and the time when arbitration was requested. Arbitration was requested at the outset of litigation in the Complaint, which asks the Court to "enter an order compelling the defendants [to] submit to New York Arbitration." Compl. ¶ 21. Although the actual motion to compel arbitration was submitted five months after commencement of the action, a delay of a few months, without prejudice, is not dispositive. See Thyssen, Inc. v. M/V Markos N, No. 97 Civ. 6181, 1999 WL 619634, at *8 (S.D.N.Y. Aug. 16, 1999) (finding no waiver where party waited two years from the commencement of the case before seeking arbitration), aff'd, Thyssen, 310 F.3d at 106. As discussed below, Sanko was not prejudiced by any delay. Second, the parties have not conducted any significant litigation in this case. No pre-trial schedule has been set nor has a trial date been determined. Consequently, the parties have not conducted extensive discovery or engaged in any trial preparation. In addition, only three pleadings have been submitted: the Complaint, Answer, and Third-Party Complaint. The extremely limited activity of filing a complaint, without more, does not suggest a waiver of the arbitration agreement. See Eastern Fish Co. v. South Pacific Shipping Co., 105 F. Supp. 2d 234, 240 (S.D.N.Y.2000) (finding that minimal litigation occurred where the "complaint and answer are essentially the only pleadings that have been exchanged [and][l]ittle discovery has been conducted"). The inconsequential proceedings to date have not negatively affected Sanko's legal position. Finally, Sanko cannot show that it would be prejudiced if this dispute is arbitrated. Sanko has not suffered prejudice due to unnecessary expense or delay because there has been no delay nor costly litigation. Although Sanko may *656 have to maintain actions against potential indemnitors in court while arbitrating with plaintiffs, forcing a party to litigate in more than one forum "is not the type of prejudice that supports a finding of waiver." Louis Dreyfus, 252 F.3d at 229-30 ("Prejudice does not refer to enforcing a bargained-for agreement, even where such enforcement will obligate a party to litigate in more than one forum."). Prejudice occurs when a "party's opponent forces it to litigate an issue and later seeks to arbitrate that same issue." Id. (internal quotation marks and citations omitted). Tokio Marine and Marubeni are not seeking to relitigate any issue and Sanko is not prejudiced. Furthermore, the Complaint gave Sanko notice of the likelihood of arbitration and plaintiffs' motion does not create any "inherent unfairness" that would justify a finding of prejudice. Doctor's Assocs., Inc. v. Distajo, 107 F.3d 126, 134 (2d Cir. 1997) ("[P]rejudice as defined by our cases refers to ... inherent unfairness....").[3] IV. CONCLUSION For the foregoing reasons Tokio Marine and Marubeni's motion to compel arbitration and stay these proceedings is granted. A conference is scheduled in the third party action for April 4, 2003 at 4:00 p.m. SO ORDERED. NOTES [1] On December 6, 2002, Sanko brought a Third-Party Complaint seeking indemnification from Gowell Shipping Co., S.A. and Taisei Shoji Co., Ltd. [2] More specifically, a plaintiff in an admiralty action does not automatically waive the right to arbitration by bringing in rem and in personam claims in court. See 9 U.S.C. § 8. Admiralty actions commonly include a request for relief from a court and a request for arbitration because "where there is an arbitration clause in a contract, in rem proceedings serve to provide a plaintiff with security while the in personam claim awaits arbitration." Thyssen, 310 F.3d at 106. Section 8 enables a plaintiff who wins arbitration but is unable to recover against the owner of the vessel to recover against the vessel itself. See id. at 107. [3] Sanko also argues that this suit cannot be arbitrated because plaintiffs did not seek arbitration within the one year limitations period contained in the United States Carriage of Goods by Sea Act. See 46 App.U.S.C. § 1303(6) (2002). The parties dispute whether Sanko granted plaintiffs an extension of time to bring suit. Nevertheless, Sanko's time-bar defense is an issue for the arbitrators, not the Court. See Shearson Lehman Hutton, Inc. v. Wagoner, 944 F.2d 114, 121 (2d Cir.1991) (acknowledging "the rule that it is up to the arbitrators, not the court, to decide the validity of time-bar defenses"); Government of India v. Cargill, Inc., 867 F.2d 130, 133 (2d Cir.1989); Conticommodity Servs., Inc. v. Philipp & Lion, 613 F.2d 1222, 1226 (2d Cir. 1980); British Ins. Co. of Cayman v. Water St. Ins. Co., 93 F. Supp. 2d 506, 520-21 (S.D.N.Y.2000).

01-03-2023

10-30-2013

https://www.courtlistener.com/api/rest/v3/opinions/1480175/

29 F. Supp. 1022 (1939) CALVINO v. PAN-ATLANTIC S. S. CORPORATION et al. (RYAN STEVEDORING CO., Inc., Third Party Defendant). District Court, S. D. New York. October 20, 1939. Herman B. Schell, of New York City, for plaintiff. Alexander, Ash & Jones, of New York City (Lawson R. Jones and Joseph M. Meehan, both of New York City, of counsel), for third-party defendant Ryan Stevedoring Co., Inc. Barry, Wainwright, Thacher & Symmers, of New York City (John C. Crawley, of New York City, of counsel), for defendants. GODDARD, District Judge. This matter comes before the Court on two motions; one by the Ryan Stevedoring Company, Inc., the third party defendant, and the other by plaintiff, Calvino, both of which substantially amount to motions to dismiss the third-party complaint *1023 served under Rule 14 of the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c. The steamship, Bellingham, owned and operated by the Pan-Atlantic Steamship Corporation and the Waterman Steamship Corporation, was being discharged by the Ryan Stevedoring Company, Inc. at Pier 45, North River, and on June 23, 1939, Calvino, a longshoreman employed by the Ryan Stevedoring Company, Inc. fell into one of her holds and was injured. He brought suit against the Pan-Atlantic Steamship Corporation and the Waterman Steamship Corporation for damages alleging that he sustained the injuries as a result of a defective hatch cover. The Pan-Atlantic Steamship Corporation and the Waterman Steamship Corporation obtained an ex-parte order from Judge Clancy to serve a third-party complaint under Rule 14 of the Federal Rules of Civil Procedure, alleging that these companies had engaged the Ryan Stevedoring Company, Inc. to discharge the vessel and that Calvino was its employee at the time of the injury, and that the work being done at the time was under the direction of the Ryan Stevedoring Company, Inc., which was in control of the hatch and the men working around the hatch, and had selected and placed the hatch boards thereon; and if there was any negligence committed in the selection and placing of the hatch boards or otherwise, it was due to the negligence of the Ryan Stevedoring Company, Inc. The relief demanded in the third-party complaint is that the Ryan Stevedoring Company, Inc. be held liable to the original plaintiff for any damages to which he may be entitled to recover. The motions made by Calvino and by the Ryan Stevedoring Company, Inc. to dismiss the third-party complaint are made on the ground that the Longshoremen's and Harbor Workers' Compensation Act, 33 U.S.C.A. § 901 et seq., limits the liability to the Ryan Stevedoring Company, Inc. towards the plaintiff, their employee, to the amount of compensation to which he may be entitled, and that § 905 provides that this liability shall be exclusive and in place of any liability at law or in admiralty. It is clear that as the third-party complaint now stands it should be dismissed, for it seeks to make the Ryan Stevedoring Company, Inc. liable to Calvino for any damages he may recover, and a suit of this character is not permitted under the Longshoremen's & Harbor Workers' Compensation Act. There is authority for a recovery in the way of recoupment or indemnity by the Steamship Companies against Calvino's employer, the Ryan Stevedoring Company, Inc. See Westchester Lighting Co. v. Westchester County Small Estates Corporation, 278 N.Y. 175, 15 N.E.2d 567; Rederil v. Jarka Corporation, D.C., 26 F. Supp. 304. Rule 14 of the Federal Rules of Civil Procedure provides that a third-party complaint may be served upon any person who is or may be liable to the original defendant for all or part of the original plaintiff's claim. If the steamship companies are in a position to allege a claim by way of recoupment or indemnity against the Ryan Stevedoring Company, Inc., they will be permitted to do so. Accordingly, the two motions to dismiss the third-party complaint are granted with leave, however, to the Pan-Atlantic Steamship Corporation and the Waterman Steamship Corporation, to serve an amended third-party complaint within ten days. Settle order on notice.

01-03-2023

10-30-2013

https://www.courtlistener.com/api/rest/v3/opinions/4160695/

By order of the Bankruptcy Appellate Panel, the precedential effect of this decision is limited to the case and parties pursuant to 6th Cir. BAP LBR 8024-1(b). See also 6th Cir. BAP LBR 8014-1(c). File Name: 17b0002n.06 BANKRUPTCY APPELLATE PANEL OF THE SIXTH CIRCUIT IN RE: RICK ST. GEORGE, ┐ Debtor. │ ___________________________________________ │ │ Nos. 16-8017/8018 DANIEL M. MCDERMOTT, United States Trustee, > Plaintiff-Appellee, │ │ │ v. │ │ RICK ST. GEORGE, │ │ Defendant-Appellant. │ ┘ Appeal from the United States Bankruptcy Court for the Northern District of Ohio at Cleveland. No. 14-16075; Adv. No. 15-01063—Arthur I. Harris, Judge. Decided and Filed: April 17, 2017 Before: DELK, HARRISON, AND PRESTON, Bankruptcy Appellate Panel Judges. _________________ COUNSEL ON BRIEF: Lee R. Kravitz, Cleveland, Ohio, for Appellant. Amy L. Good, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee. _________________ OPINION _________________ MARIAN F. HARRISON, Bankruptcy Appellate Panel Judge. Rick St. George (“debtor”) filed this appeal from the bankruptcy court’s order granting additional time for the United States Trustee (“UST”) to file a complaint objecting to discharge of the debtor, and from Nos. 16-8017/8018 In re St. George Page 2 the bankruptcy court’s judgment on the UST’s complaint, denying the debtor a discharge under 11 U.S.C. § 727(a)(3) and (a)(5). STATEMENT OF ISSUE Whether the bankruptcy court erred in granting the UST’s second request for additional time to file a complaint objecting to discharge, and if this was error, whether the bankruptcy court’s judgment denying discharge should be reversed. JURISDICTION AND STANDARD OF REVIEW The United States District Court for the Northern District of Ohio has authorized appeals to the Panel, and no party has timely elected to have this appeal heard by the district court. 28 U.S.C. § 158(b)(6), (c)(1). A final order of the bankruptcy court may be appealed as of right pursuant to 28 U.S.C. § 158(a)(1). For purposes of appeal, a final order “ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.” Midland Asphalt Corp. v. United States, 489 U.S. 794, 798, 109 S. Ct. 1494, 1497 (1989) (citations and internal quotations omitted). A judgment determining dischargeability is a final order. Trudel v. U.S. Dep’t of Educ. (In re Trudel), 514 B.R. 219 (B.A.P. 6th Cir. 2014). In this case, the order granting additional time to file a dischargeability complaint was an interlocutory order that became final once the bankruptcy court entered the final order denying the debtor’s discharge. Equitable determinations, such as whether cause exists to extend the filing deadline for dischargeability complaints, are reviewed for abuse of discretion. LPP Mortg., Ltd. v. Brinley, 547 F.3d 643, 647 (6th Cir. 2008) (citation omitted). See also In re Nowinski, 291 B.R. 302, 305 (Bankr. S.D.N.Y. 2003) (citations omitted) (The determination of whether cause exists to extend the filing deadline set by Federal Rule of Bankruptcy Procedure 4004(b) rests within the bankruptcy court’s discretion.). “An abuse of discretion occurs only when the [bankruptcy] court ‘relies upon clearly erroneous findings of fact or when it improperly applies the law or uses an erroneous legal standard.’” Bank One, N.A. v. Bever (In re Bever), 300 B.R. 262, 264 (B.A.P. 6th Cir. 2003) (quoting Corzin v. Fordu (In re Fordu), 209 B.R. 854, 857–58 (B.A.P. 6th Cir. 1997)). Nos. 16-8017/8018 In re St. George Page 3 An abuse of discretion is defined as a “definite and firm conviction that the [court below] committed a clear error of judgment.” Soberay Mach. & Equip. Co. v. MRF Ltd., Inc., 181 F.3d 759, 770 (6th Cir. 1999); Bowling v. Pfizer, Inc., 102 F.3d 777, 780 (6th Cir. 1996)). The question is not how the reviewing court would have ruled, but rather whether a reasonable person could agree with the bankruptcy court’s decision; if reasonable persons could differ as to the issue, then there is no abuse of discretion. See Washington v. Sherwin Real Estate, Inc., 694 F.2d 1081, 1087 (7th Cir. 1982); see also In re Carter, 100 B.R. 123, 126 (1989). Mayor of Baltimore v. West Virginia (In re Eagle-Picher Indus. Inc.), 285 F.3d 522, 529 (6th Cir. 2002) (quoting Barlow v. M.J. Waterman & Assocs., Inc. (In re M.J. Waterman & Assocs., Inc.), 227 F.3d 604, 607-08 (6th Cir. 2000)). FACTS The debtor filed a Chapter 7 petition on September 23, 2014, and the meeting of creditors was held on October 30, 2014. The debtor was questioned for approximately two and a half hours. A significant portion of the questioning was done by the UST. The Chapter 7 trustee (“trustee”) adjourned the initial meeting until November 13, 2014, so that documents could be produced, and again to December 11, 2014, for the same reason. On December 10, 2014, the UST filed a motion to extend the time to object to discharge. The debtor did not oppose the motion, and the UST was granted an extension until February 27, 2015. On December 15, 2014, the trustee filed notice that the meeting of creditors was concluded based on the debtor’s production of documents. On February 23, 2015, the UST filed a motion pursuant to Federal Rule of Bankruptcy Procedure 2004 to examine the debtor and to require the debtor to produce documents. That same date, the UST filed a second motion to extend the time for objecting to discharge, requesting an additional 75 days. As cause for the second motion, the UST asserted that the debtor had failed to provide many of the requested documents to the trustee. The UST also asserted that the additional information provided had raised further concerns. Accordingly, the UST stated that more time was needed to review all the information. The bankruptcy court granted the motion for the 2004 examination. The debtor objected to the second request for additional time and filed a motion to vacate the 2004 examination order. On March 24, 2015, the Nos. 16-8017/8018 In re St. George Page 4 bankruptcy court held a hearing on both. No evidence was presented at the hearing. In fact, no one from the UST’s office appeared at the first call of the docket, and the bankruptcy court contacted the UST’s office to request that someone attend the hearing. When the UST’s representative did appear, this was the only statement of cause given: [E]vidently, we have just now received the documentation that we requested, and additional documentation that we did request raised additional concerns in the U.S. Trustee’s mind regarding the Debtor. (Hearing Tr. 10:21-11:2, Bankr. Case ECF No. 66, March 24, 2015). In ruling, the bankruptcy court stated: I’m troubled by the apparent lack of communication and sort of waiting until the end of the first extension to simply file another extension for 60 days. On the other hand, I think the Trustee’s office, U.S. Trustee’s office should be given a brief period of time from the denial of their request for – until May 13th. That time I’m not going to allow, but I’ll do a short order today, probably go on the docket today, and we’re at March 24th. I would say April 3rd, which is – I think that’s 10 days. In any event, whatever number of days it is, April 3rd is a Friday, and I’ll give the U.S. Trustee until April 3rd to file a discharge action – an objection to the Debtor’s discharge, adversary, or a 707 Motion. I do note that this is not a typical Chapter 7 case. The fees, it looks like a $5,000 initial fee by Debtor’s counsel is unusually large, and I think it’s reflective of the fact that this is not a typical case. (Hearing Tr. 17:6-18:7, Bankr. Case ECF No. 66, March 24, 2015). After the ruling and while still on the record at the hearing, the trustee asked the bankruptcy court to reconsider and allow the UST more time to file a complaint, stating that “this is not a usual case.” (Hearing Tr. 21:1-5, Bankr. Case ECF No. 66, March 24, 2015). The trustee acknowledged that the initial 341 examination was fairly lengthy, but he asserted that there was never a meaningful opportunity to question the debtor about the considerable amount of documents that were provided. The trustee gave the impression that questions were raised by matching the bank statements with a check register. The bank statements had been provided earlier and made available to the UST. The check register was provided to the trustee when he met with the debtor at his home in November 2014. Originally, the trustee stated that everything he received from the debtor prior to the conclusion of the meeting of creditors was shared with Nos. 16-8017/8018 In re St. George Page 5 the UST. Later, the trustee clarified that he had not shared this check register. The trustee stated that “[p]erhaps, I should have copied [the check register] and sent it to the U.S. Trustee’s office. I was anticipating the U.S. Trustee would enumerate everything that they still needed.” (Hearing Tr. 22:22-23:2, Bankr. Case ECF No. 66, March 24, 2015). The trustee admitted that he and the UST should have pushed things forward but they “were all somewhat distracted with, you know, other obligations.” (Hearing Tr. 24:3-5, Bankr. Case ECF No. 66, March 24, 2015). The bankruptcy court went on to state: But what I see here is that this one has gone on not just for the first 60 day extension, but now a request for a second 60 day extension. And for whatever reason, there didn’t seem to be much going on during the first 60 day extension to justify the second one, which is why I’m only giving enough time basically to say, okay, your Motion for 60 days is denied, but I'll give you 10 days to get a Complaint or a 707 Motion together. (Hearing Tr. 31:3-15, Bankr. Case ECF No. 66, March 24, 2015). Despite further argument from the trustee and the debtor, the bankruptcy court confirmed his decision to give the UST until April 3, 2015, to object to discharge, entering the order later that day. The bankruptcy court took the motion to vacate the order granting a 2004 examination under advisement but granted it later that same day. On April 2, 2015, the UST filed a dischargeability complaint against the debtor. On March 9, 2016, an evidentiary hearing on the UST’s complaint was held, after which the bankruptcy court denied the debtor’s discharge based on 11 U.S.C. § 727(a)(3) and (a)(5). Thereafter, the debtor filed a notice of appeal from the order granting the UST’s second request for additional time to object to discharge and from the denial of the debtor’s discharge.1 DISCUSSION For cases filed under Chapter 7, the deadline to file a complaint objecting to discharge is 60 days after the first date set for the creditors meeting. See Fed. R. Bankr. P. 4004(a). Under Federal Rule of Bankruptcy Procedure 4004(b), “[o]n motion of any party in interest, after notice 1 Previously, on April 7, 2015, the debtor filed a notice of appeal from the order granting the UST’s second extension of time to object to discharge. The appeal was dismissed after determining that an interlocutory appeal was not warranted because the issue involved a question of fact rather than law. Nos. 16-8017/8018 In re St. George Page 6 and a hearing, the court may for cause extend the time to object to discharge.” Because discharge is the most important element of a debtor’s “fresh start,” a debtor has an interest in the prompt resolution of discharge issues. In re Vinson, 509 B.R. 128, 133 (Bankr. S.D. Ohio 2013) (citation omitted). Accordingly, “extensions of the deadline to challenge a debtor’s discharge should be rarely granted and . . . cause for such a request should be narrowly construed. . . .” Id. “When seeking relief under Rule 4004(b)(1), it is the burden of the moving party to demonstrate that cause exists.” 421 Chestnut Partners, LP v. Aloia (In re Aloia), 496 B.R. 366, 380 (Bankr. E.D. Pa. 2013) (citation omitted). The following factors provide a framework for evaluating a request for an extension: (1) whether the creditor has received sufficient notice of the deadline and the information to file an objection; (2) the complexity of the case; (3) whether the creditor has exercised diligence; (4) whether the debtor has refused in bad faith to cooperate with the creditor; and (5) the possibility that proceedings pending in another forum will result in collateral estoppel of the relevant issues. In re Chatkhan, 455 B.R. 365, 368 (Bankr. E.D.N.Y. 2011) (citations omitted). See also In re Gandy, Bankr. No. 11-30369, 2013 WL 3216130, at *2 (Bankr. E.D. Tenn. June 25, 2013) (recognizing Chatkhan factors as “analytical framework”). Moreover, “[k]nowledge of the deadline coupled with the failure to diligently seek discovery is, absent unusual circumstances, fatal to an extension motion.” In re Nowinski, 291 B.R. at 306. In applying these factors to the present case, the key factor is the UST’s failure to exercise diligence. Even the bankruptcy court questioned the UST’s inaction. The UST attended the meeting of creditors and questioned the debtor extensively. The meeting of creditors was adjourned based on the trustee’s need for additional documentation to be provided. According to the minutes of the final meeting of creditors, the meeting was concluded on December 11, 2014, because the documents were provided. The UST’s first motion for additional time was filed on December 10, 2014, presumably because the UST was also waiting on the production of these documents. The second motion for additional time was filed four days before the first extension deadline or 116 days after the initial meeting of creditors. It was at this time that the UST filed its 2004 examination motion as well. The UST provided no definitive explanation why no action occurred during the first extension of 60 days. The bankruptcy court noted that the UST did not Nos. 16-8017/8018 In re St. George Page 7 know why nothing happened during this time. Furthermore, the UST failed to explain why nothing was done during the 29 days between the second motion for additional time and the date of the hearing. A representative of the UST only appeared at the hearing upon the bankruptcy court’s request, and the UST did not present any evidence to support the second request to extend the deadline, even though it was the UST’s burden to defend against the debtor’s objection and to show cause for the request. The record in this case demonstrates a total lack of diligence on the part of the UST. See In re Mendelsohn, 202 B.R. 831, 832 (Bankr. S.D.N.Y. 1996) (no cause where creditor failed to seek a 2004 examination and moved for an extension of time on last day to file objections to discharge); In re Leary, 185 B.R. 405, 406 (Bankr. D. Mass. 1995) (cause absent where creditor waited until ten (10) days prior to expiration of the deadline to pursue requested 2004 examinations); In re Dekelata, 149 B.R. 115, 117 (Bankr. E.D. Mich. 1993) (creditors waiting until 11 days before complaint deadline to request a 2004 examination failed to establish requisite cause to extend deadline); Littell v. Littell (In re Littell), 58 B.R. 937, 938 (Bankr. S.D. Tex. 1986) (motion to extend time to object to discharge denied where creditors failed to explain why they did not obtain information needed from debtor at first creditors’ meeting or conduct a 2004 examination earlier, so they could have timely filed a complaint). As to the other factors, to the first query, whether the UST received sufficient notice of the deadline and the information to file an objection, the answer is yes. On the second factor, the complexity of the case, the bankruptcy court’s only finding was that the case must not be typical because of the significant retainer paid to the debtor’s attorney. This alone is insufficient to support a finding that the case was complex. Moreover, there was no proof that the fourth factor, whether the debtor in bad faith failed to cooperate in providing information, was met. There was no testimony to show that the debtor acted in bad faith, and in fact, the trustee stated that he received most of the documents needed from the debtor. The UST did not present proof that the debtor failed to cooperate or what specific documents the debtor failed to provide upon request. The final factor, the possibility of other proceedings, would not be applicable to this case. Looking at these factors, the UST failed to meet its burden to show cause for an additional extension. This Panel appreciates the position of the bankruptcy court, but without Nos. 16-8017/8018 In re St. George Page 8 some showing of cause, the UST was not entitled to a second, albeit brief, extension of time to file a complaint objecting to discharge. In doing so, the bankruptcy court abused its discretion. In turn, the judgment in favor of the UST on the complaint was in error regardless of the merits of the UST’s case. CONCLUSION For the reasons stated, the bankruptcy court’s order granting additional time for the UST to file a complaint pursuant to 11 U.S.C. § 727(a) is REVERSED. The judgment in favor of the UST on the complaint objecting to discharge is REVERSED, and this case is REMANDED to the bankruptcy court with instructions to dismiss adversary proceeding #15-01063.

01-03-2023

04-17-2017

https://www.courtlistener.com/api/rest/v3/opinions/1952664/

269 B.R. 543 (2001) Andre AGASSI, Agassi Enterprises, Inc., Joe Montana, Big Sky, Inc., Monica Seles, MS Basenet, Inc., Eldrick "Tiger" Woods and ETW Corp., Plaintiffs, v. PLANET HOLLYWOOD INTERNATIONAL, INC. and All Star Cafe International, Inc., Defendants. No. 00-1052-JJF. United States District Court, D. Delaware. November 13, 2001. *544 *545 Kevin Gross of Rosenthal, Monhait, Gross & Goddess, Wilmington, Delaware, Of Counsel: Richard A. Chesley and Susan L. Winders of Jones, Day, Reavis & Pogue, Chicago, Illinois, for Plaintiffs. Pauline K. Morgan and M. Blake Cleary of Young, Conaway, Stargatt & Taylor, LLP, Wilmington, Delaware, Of Counsel: Laurence Greenwald, Robin E. Keller of Stroock & Stroock & Lavan LLP, New York City, for Defendants. MEMORANDUM OPINION FARNAN, District Judge. Pending before the Court is a Motion For Partial Summary Judgment (D.I.12) filed by Plaintiffs, Andre Agassi, Agassi Enterprises, Inc., Joe Montana, Big Sky, Inc., Monica Seles, MS Basenet, Inc., Eldrick "Tiger" Woods and ETW Corp. By their Motion, Plaintiffs seek attorney's fees and related expenses from Defendants, Planet Hollywood International, Inc. and All Star Cafe International Inc., as a result of Defendants' alleged breach of the executory endorsement contracts (the "Celebrity Contracts") between Plaintiffs and Defendants for the promotion of a chain of sports-theme restaurants known as the Official All Star Cafe. Defendants have also filed a Cross-Motion For Partial Summary Judgment (D.I.17) requesting the Court to conclude that Plaintiffs' claims for attorney's fees and rejection damages are barred by Defendants' confirmed Plan of Reorganization. For the reasons discussed, Plaintiffs' Motion For Partial Summary Judgment will be granted in part and denied in part, and Defendants' Cross-Motion For Summary Judgment will be denied. BACKGROUND Defendants, along with several subsidiaries, joint venture partners and franchisees, own and operate distinctive movie, sports and entertainment-based theme restaurants and retail merchandise stores throughout the United States, Europe and Canada. In the early 1990s, Defendants and their founder, Robert Earl, sought to promote a new chain of restaurants, the Official All Star Cafe. To promote the Official All Star Cafe, Defendants solicited the services of certain celebrity athletes, including Andre Agassi, Monica Seles, Joe Montana and Eldrick "Tiger" Woods (the "Athletes"). In April 1996, Plaintiffs Andre Agassi, Joe Montana and Monica Seles, through their respective service corporations, entered into the Celebrity Contracts with Defendants. Thereafter, in December 1996, Plaintiff Eldrick "Tiger" Woods, through his service corporation, entered into a similar Celebrity Contract. Each of the Celebrity Contracts contained an indemnity provision which provided, in pertinent part, that: Planet Hollywood and ASC International (collectively, the "Indemnitors"), jointly and severally, shall indemnify [the Plaintiffs] and their respective affiliates, designees/estate and authorized representatives (collectively, the "Indemnitees") for any and all expenses, damages, suits, judgments, claims, actions or other liabilities (including, without limitation, reasonable attorney's fees) arising from or in any way relating to the *546 financing, promotion or operation of the restaurants, including but not limited to . . . ASC International's breach or threatened breach of its obligations hereunder. (Ex. A-C, ¶ 17, Ex. D, ¶ 16). On October 12, 1999 (the "Petition Date"), Defendants voluntarily filed a petition for relief pursuant to Chapter 11 of the Bankruptcy Code. By Order dated October 13, 1999, this Court, sitting in bankruptcy, set December 13, 1999 (the "Bar Date"), as the filing deadline for claims arising prior to the Petition Date, excluding certain enumerated exceptions.[1] Timely Proofs of Claim were received by Defendants from the following individuals and/or entities: Plaintiff Joe Montana, Plaintiff Joe Montana and his wife, Jennifer Montana, Plaintiff Big Sky, Inc., the service company for Plaintiff Joe Montana, Plaintiff MS Basenet, Inc., the service company for Plaintiff Monica Seles, Plaintiff ETW Corp., the service company for Plaintiff Tiger Woods, and Plaintiff Agassi Enterprises, Inc., the service company for Plaintiff Andre Agassi. The Proof of Claim filed by Plaintiff Joe Montana asserts a general unsecured, nonpriority claim of $92,372.83 for the alleged value of memorabilia provided by Plaintiff Montana to Defendants. An itemized list of memorabilia and the Celebrity Contract is attached to this claim. The Proof of Claim filed by Joe and Jennifer Montana asserts unliquidated damages based upon claims for breach of contract, fraud, misrepresentation and violations of federal and state security laws and regulations. The Proof of Claim filed by Plaintiff Big Sky, Inc. mirrors the claims filed by Plaintiff Montana, individually, and Plaintiff Joe Montana and Jennifer Montana, jointly. None of these Proofs of Claim specifically assert a right to indemnification or attorney's fees under the Celebrity Contracts. With regard to the Proof of Claim filed by Plaintiffs MS Basenet, Inc. and ETW Corp., both Proofs of Claim assert an unliquidated amount for Defendants' alleged breach of the Favored Nations provision in the relevant Celebrity Contracts and seek as damages the difference between the aggregate more favorable compensation given to another celebrity and that provided under the relevant Celebrity Contracts. Copies of the relevant Celebrity Contracts are attached to both of these Proofs of Claim. However, like the Montana Proofs of Claim discussed above, neither of these Proofs of Claim specifically assert a right to indemnification or attorney's fees under the Celebrity Contracts. As for Plaintiff Agassi Enterprises, Inc., two Proofs of Claim were filed, an original and an Amended and Restated Proof of Claim. The Amended and Restated Proof of Claim annexes the relevant Celebrity Contract and asserts an unsecured, nonpriority claim in an unliquidated amount based upon three grounds: (1) breach of the Favored Nations clause in the relevant Celebrity Contract, (2) indemnification incurred by Agassi Enterprises in connection with the Debtors' breach of the relevant Celebrity Contract, and (3) all other claims arising under the Agassi Agreement. In January 2000, after the Bar Date for claims expired, the Court confirmed Defendant's Plan of Reorganization. The Plan became effective on May 9, 2000. *547 Section 9.2 of the Plan addresses barred claims. In pertinent part, Section 9.2 provides: Bar to Rejection Damages. If the rejection of an executory contract or unexpired lease by the Debtors results in damages to the other party or parties to such contract or lease, a Claim for such damages, if not previously evidenced by a Filed proof of Claim or barred by a Final Order, shall be forever barred and shall not be enforceable against the Debtors, Reorganized PHI, the other Reorganized Debtors or their properties or agents, successors, or assigns unless a proof of Claim relating thereto is Filed with the Bankruptcy Court within thirty (30) days after the later of (i) the entry of a Final Order authorizing such rejection and (ii) the Effective Date, or within such shorter period as may be ordered by the Bankruptcy Court. (D.I.17, Ex. 2). In connection with the Plan, Defendants sought to assume the Celebrity Contracts at issue. Pursuant to a stipulation among the parties, this issue was reserved for a later determination by the Court. By Memorandum Opinion and Order dated November 21, 2000, the Court denied Defendants' motion to assume the Celebrity Contracts on the grounds that the Celebrity Contracts were personal service contracts which were not assignable absent the celebrities' consent. In re Planet Hollywood International, Inc., No. 99-3612(JJF), at 30-33 (D.Del. Nov. 21, 2000). Consistent with this ruling, the Court granted Plaintiffs' motion for relief from the automatic stay to permit them to pursue further action against Defendants with respect to the Celebrity Contracts. Shortly thereafter, Plaintiffs' counsel sent a letter to Defendants' counsel confirming the termination of the Celebrity Contracts and demanding Defendants to immediately cease using Plaintiffs' names and likenesses, return Plaintiffs' career memorabilia, and reimburse Plaintiffs for documented attorney's fees and costs arising in connection with the litigation over the assumption of the Celebrity Contracts. Plaintiffs allege that despite this letter, Defendants continued to wrongfully utilize Plaintiffs' names, likenesses and memorabilia, and failed to reimburse Plaintiffs for their attorney's fees. As a result, Plaintiffs filed the instant action against Defendants for breach of contract, misappropriation, and violations under the Lanham Act, 15 U.S.C. § 1125. As relief, Plaintiffs request, among other things, reimbursement for their attorney's fees. In addition, Plaintiffs also filed a motion for a temporary restraining order and preliminary injunction against Defendants enjoining them from using Plaintiffs' names, likenesses, and other memorabilia. The Court granted Plaintiffs the requested injunctive relief and ordered Defendants to gather all of Plaintiffs' memorabilia in Defendants' possession for collection by a representative of Plaintiffs. Following the Court's order granting Plaintiffs' request for injunctive relief, Plaintiffs filed the instant Motion For Partial Summary Judgment seeking attorney's fees under the Celebrity Contracts. Defendants filed a Response To Plaintiffs' Motion For Partial Summary Judgment And Cross-Motion For Partial Summary Judgment (D.I.17), and Plaintiffs filed a Reply In Support Of Its Motion For Partial Summary Judgment (D.I.20). In addition, Defendants filed a Memorandum In Response To Plaintiffs' Reply Memorandum In Support Of Its Motion For Partial Summary Judgment (D.I.25) to address several issues raised in Plaintiffs' Reply Memorandum. Accordingly, the instant Motion is fully briefed and ripe for the Court's review. *548 STANDARD OF REVIEW Rule 56(c) of the Federal Rules of Civil Procedure provides that a party is entitled to summary judgment if a court determines from its examination of "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any," that there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). In determining whether there is a triable dispute of material fact, a court must review all of the evidence and construe all inferences in the light most favorable to the non-moving party. Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir.1976). To defeat a motion for summary judgment, Rule 56(c) requires the non-moving party to: do more than simply show that there is some metaphysical doubt as to the material facts. . . . In the language of the Rule, the non-moving party must come forward with "specific facts showing that there is a genuine issue for trial." . . . Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is "no genuine issue for trial." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). Accordingly, a mere scintilla of evidence in support of the non-moving party is insufficient for a court to deny summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). DISCUSSION By their Motion For Partial Summary Judgment, Plaintiffs contend that they are entitled to reimbursement of their attorney's fees arising from or relating to Defendants' breach of the Celebrity Contracts. Specifically, Plaintiffs contend that because the Court concluded that the Celebrity Contracts were personal service contracts not capable of assumption under Section 365(c), the Celebrity Contracts were deemed rejected by Defendants by operation of law under the Plan. Because rejection of a contract under Section 365(g) of the Bankruptcy Code constitutes a breach of that contract, Plaintiffs contend that Defendants indemnification obligations were triggered under the relevant Celebrity Contracts thereby making Defendants liable for the attorney's fees incurred by Plaintiffs. In response, Defendants raise three arguments. First, Defendants contend as a threshold matter, that some of the Plaintiffs did not file Proofs of Claim and/or the Proofs of Claim that were filed were deficient. Second, Defendants contend that even if the Proofs of Claim were filed and not deficient, none of the Plaintiffs are entitled to attorney's fees incurred in litigating bankruptcy issues such as whether the Celebrity Contracts were capable of assumption. Third, Defendants contend that, to the extent that any Plaintiffs are entitled to damages as a result of Defendants' breach by operation of the Bankruptcy Code and the Court's ruling on the assumption issue, Plaintiffs' claims are general, unsecured claims in Defendants' bankruptcy cases. The Court will examine the parties' arguments in turn. I. Whether Plaintiffs' Claims Are Barred By The Failure To File Individual Proofs of Claim And/Or By Deficiencies In The Proofs Of Claim That Were Timely Filed As a threshold matter, Defendants contend that Plaintiffs are barred under Section 9.2 of the Plan from pursuing their claims because they either did not file *549 individual Proofs of Claim, or the Proofs of Claim that were filed were deficient. Specifically, with regard to Plaintiffs Seles, Woods and Agassi, Defendants contend that none of these Plaintiffs filed individual Proofs of Claim in Defendants bankruptcy cases. As for the Proofs of Claim that were filed, Defendants contend that they are deficient, because they fail to assert a right to indemnification for legal fees and expenses. Accordingly, Defendants contend that the Proofs of Claim that were filed are insufficient to allow Plaintiffs to pursue their claims for attorney's fees and other rejection damages. After reviewing the record in light of the applicable law, the Court is not persuaded by Defendants' arguments. Defendants seek to draw a distinction between Plaintiffs' service companies and Plaintiffs as individuals. However, in the circumstances of this case, the Court is not persuaded that such a distinction is warranted. In its November 21, 2000 Memorandum Opinion and Order, the Court rejected a similar argument by Defendants in which they sought to create a distinction between Plaintiffs and their service companies for the purposes of arguing that the Celebrity Contracts were not personal service contracts. In rejecting Defendants' attempt to sever the Athletes from their respective service companies, the Court observed that even Defendants' counsel acknowledged that the service companies were only placed in between the Athletes and Defendants for the purposes of protecting the Athletes from tax and other liabilities. In re Planet Hollywood, No. 99-3612 at 30 & n. 6. Accordingly, the Court concluded that the Celebrity Contracts were appropriately characterized as personal in nature, despite the fact that they were formally entered into by the Athletes' respective service companies. In the context of the instant dispute, the Celebrity Contracts form the basis for the Proofs of Claim at issue, and therefore, the Court declines to draw a distinction between the service company and its representative Athlete such that the individual Athlete would be precluded from pursuing his or her claim for rejection damages under the Celebrity Contracts. Indeed, Defendants have not offered the Court any contrary legal authority suggesting that it would be appropriate to limit or apportion any recovery of fees between the individual Athlete and his or her service company. Accordingly, absent any contrary authority and in light of the Court's previous ruling that the Celebrity Contracts are personal service contracts, the Court concludes that the Athletes are not precluded from pursuing their claims on the basis that the Proofs of Claim at issue were filed by the Athlete's service companies and not by the individual Athletes. To the extent that Defendants contend that the Proofs of Claim are otherwise deficient because they fail to expressly state a claim for attorney's fees or "rejection" damages, the Court likewise rejects Defendants' argument. First, at least three of the claims, those filed by Plaintiffs Agassi Enterprises, Inc., Big Sky, Inc. and Joe Montana expressly contemplate damages for breach of contract, which in the Court's view, embraces a claim for damages under the indemnity clauses in the respective Celebrity Contracts. Indeed, the Amended and Restated Proof of Claim filed by Plaintiff Agassi Enterprises seeks "Damages incurred by Creditor in connection with Debtor's breach of the Agreement, and all other claims arising under the Agreement." (D.I.17, Ex. 8) (emphasis added). Similarly, the Proof of Claim filed by Plaintiffs Big Sky, Inc. and Joe and Jennifer Montana refer to claims for breach *550 of contract in an uncertain amount of damages. (D.I.17, Ex. 4, 5). Thus, in the Court's view, these Proofs of Claim are sufficient on their face to embrace the attorney's fees and other rejection damages claims at issue. As for the Proofs of Claim filed by Plaintiffs MS Basenet, Inc. and ETW Corp., Defendants correctly point out that on their face, these Proofs of Claim refer only to the "Favored Nations" provisions of the Celebrity Contracts. However, the claims based on the "Favored Nations" provisions are, in essence, breach of contract claims, and both Proofs of Claim contain a copy of the respective Celebrity Contracts containing the indemnification provision. Accordingly, in these circumstances, the Court concludes that the Proofs of Claim filed by Plaintiffs MS Basenet, Inc. and ETW Corp. are appropriately construed to include claims for indemnification of attorney's fees and other rejection damages resulting from Defendants' breach of the Celebrity Contracts as provided for in the respective Celebrity Contracts. In the alternative, the Court concludes that, even if the existing Proofs of Claim filed by Plaintiffs MS Basenet, Inc. and ETW Corp. are insufficient to embrace claims for indemnification of attorney's fees and other rejection damages, Plaintiffs Seles and Woods have filed informal proofs of claim for attorney's fees and rejection damages. The Court of Appeals for the Third Circuit recognizes the validity of informal proofs of claim if five elements are satisfied. Specifically, an informal proof of claim must (1) be in writing; (2) contain a demand by the creditor on the estate; (3) express an intent to hold the debtor liable for the debt; (4) be filed with the bankruptcy court; and (5) be justified in light of the facts and equities of the case. See e.g. In re Petrucci, 256 B.R. 704, 706 (Bankr.D.N.J.2001); Hatzel & Buehler, Inc. v. Station Plaza Associates, L.P., 150 B.R. 560 (Bankr.D.Del.1993). In the circumstances of this case, the Court concludes that Plaintiffs' Objection To The Omnibus Motion Pursuant To Section 365 Of The Bankruptcy Code For Authority To Assume Or Reject As Applicable, Certain Executory Contracts And Leases, And A Related Request For Relief From The Automatic Stay To Terminate Agreements And Repossess Property (the "Objection") satisfies the criteria for an informal proof of claim. The Plaintiffs' Objection is a document in writing filed with the Bankruptcy Court. The document expressly states that Plaintiffs seek relief from the automatic stay to "enforce their termination rights" under the Celebrity Contracts. By the terms of the Celebrity Contracts, these termination rights include the right to attorney's fees and other damages, and thus, the Court concludes that Plaintiffs' Objection both makes a demand on the Debtor-Defendants' estate and evidences an intent to hold the estate liable as required for an informal proof of claim. Further, in light of the particular circumstances in this case, the Court concludes that it would be equitable to allow Plaintiffs Seles, Woods, MS Basenet Inc. and ETW Corp. to proceed based on this informal proof of claim. Indeed, Plaintiffs contend, and Defendants have not disputed, that the attorney's fees in this case are not divisible among the individual Plaintiffs because the legal work done in this case was not to the benefit of one particular Plaintiff, but for the benefit of all Plaintiffs. In addition, the Court observes that Plaintiffs communicated their intent to collect attorney's fees from Defendants on numerous occasions prior to the expiration of the applicable bar date. Specifically, Plaintiffs' counsel advised Defendants by *551 letter on November 28, 2000, that Plaintiffs sought attorney's fees in connection with the Celebrity Contracts, and on December 15, 2000, Plaintiffs filed the instant action expressly seeking attorney's fees arising from Defendants' breach of the Celebrity Contracts. While the Court understands that these documents in and of themselves may be insufficient to constitute informal proofs of claim because they were not filed in the Bankruptcy Court, the Court believes that coupled with the Plaintiffs' Objection, they suggest circumstances in which it would be equitable to allow Plaintiffs Seles, Woods, MS Basenet, Inc. and ETW Corp. to proceed with their claims. Accordingly, given the facts and circumstances of this particular case, the Court concludes that Plaintiffs' Seles, Woods, MS Basenet, Inc. and ETW Corp. have filed informal proofs of claims sufficient to permit them to pursue their claims for attorney's fees and rejection damages. Having concluded that Plaintiffs are not precluded under Section 9.2 of the Plan from pursuing their claims for attorney's fees and rejection damages, the Court will deny Defendants' Cross-Motion For Summary Judgment insofar as it seeks to bar Plaintiffs' claims for rejection damages and attorney's fees, and turn to the issue of whether Plaintiffs are entitled to reimbursement of their attorney's fees under the Celebrity Contracts. II. Whether Plaintiffs Are Entitled To Reimbursement Of Their Attorney's Fees As A Matter Of Law Under The Celebrity Contracts By their Motion, Plaintiffs contend that they are entitled to attorney's fees under the indemnification provision of the respective Celebrity Contracts as a result of Defendants' breach by operation of law of the Celebrity Contracts. In support of their argument, Plaintiffs rely on both legal arguments under contract law and equitable arguments based on Defendants' alleged frivolous filing of the assumption motion and Defendants' alleged willful disregard of the Court's November 21, 2000 Order resolving the assumption issue. In response to Plaintiffs' arguments, Defendants contend that Plaintiffs are not entitled to attorney's fees incurred in litigating bankruptcy issues such as whether the celebrity contracts were capable of assumption. In addition, Defendants contend that to the extent that Plaintiffs are permitted to recover any attorney's fees, Plaintiffs claims constitute general unsecured claims. As for Plaintiffs' equitable argument, Defendants contend that the Court should ignore the argument under D. Del. L.R. 7.1.3(c)(2), because it is a newly raised argument in Plaintiffs' Reply Memorandum. In the alternative, Defendants contend that their assumption motion was not frivolous and that they did not violate the Court's November 21, 2000 Order. A. Whether Plaintiffs Are Entitled To Attorney's Fees Related To The Litigation Of Bankruptcy Issues The parties agree that as a result of the Court's November 21, 2000 Order concluding that the Celebrity Contracts were personal service contracts not capable of assumption under Section 365(c) of the Bankruptcy Code, Defendants could not assume the Celebrity Contracts. Because Defendants could not assume the Celebrity Contracts, the parties also agree that the Celebrity Contracts were deemed rejected by Defendants under Section 9.1 of the Plan. The parties further agree that pursuant to Section 365(g) of the Bankruptcy Code, the rejection of an executory contract constitutes a breach of the contract. *552 Pursuant to the terms of the Celebrity Contracts, Plaintiffs are entitled to reasonable attorney's fees "arising from or in any way relating to the financing promotion or operation of the restaurants, including but not limited to . . . [Defendant's] breach or threatened breach of its obligations hereunder." (Ex. A-C, ¶ 17, Ex. D, ¶ 16) (emphasis added). With the exception of their argument that Plaintiffs' claims are barred under Section 9.2 of the Plan, Defendants apparently do not contest that Plaintiffs have a contractual right to receive indemnification for their attorney's fees. However, Defendants disagree as to the scope of the attorney's fees recoverable by Plaintiffs. Specifically, Defendants contend that Plaintiffs are not entitled to recover attorney's fees incurred in litigating bankruptcy issues. In contrast, Plaintiffs contend that they are entitled to all reasonable attorney's fees incurred in enforcing their rights under the Celebrity Contracts, including issues litigated in the Bankruptcy Court.[2] After considering the parties' arguments in light of the applicable law, the Court agrees with Defendants that Plaintiffs are not entitled to recover attorney's fees they incurred litigating bankruptcy issues in this case. Attorney's fees are not independently recoverable under the Bankruptcy Code, but they may be recovered in bankruptcy proceedings under state law if the parties' contractual arrangement provides for the recovery of attorney's fees. See e.g. In re Sokolowski, 205 F.3d 532, 535 (2d Cir.2000). Although the Court has been unable to locate any cases on point in this Circuit, several courts have clarified this principle holding that "where the litigated issues involve not basic contract enforcement questions, but issues peculiar to federal bankruptcy law, attorney's fees will not be awarded absent bad faith or harassment by the losing party." In re Fobian, 951 F.2d 1149, 1153 (9th Cir.1991); see also In re Sokolowski, 205 F.3d at 535 (2d Cir.2000) (citing Fobian, 951 F.2d at 1152); In re Child World, Inc., 161 B.R. 349, 354 (Bankr.S.D.N.Y. 1993). Plaintiffs contend that the Celebrity Contracts provide for the collection of attorney's fees that are "in any way" related to Defendants' breach of the Celebrity Contracts, and Plaintiffs direct the Court to two cases, In re Martin, 761 F.2d 1163, 1168 (6th Cir.1985) and In re Exchange Resources, 214 B.R. 366, 371 (Bankr. D.Minn.1997), in support of their proposition that they are entitled to all reasonable attorney's fees, including those arising in connection with the bankruptcy litigation. However, the Court is not persuaded by the rationale of these cases and believes that neither case entirely supports Plaintiffs' position. For example, in Exchange Resources, the court addressed a tenant's right to recover attorneys fees under an unexpired, nonresidential lease resulting from the tenant-debtor's failure to pay rent. 214 B.R. at 368-369. The court recognized that in most circumstances, the recovery of attorney's fees requires a breach by the tenant and that "[t]he recovery of attorney's fees, then, is logically limited to those accrued in legal proceedings *553 to address the breach." Id. at 370. In this case, however, the Court cannot properly characterize Plaintiffs' expenses in litigating the assumption issue as expenses designed to address a breach by Defendants, and therefore, the Court does not find Exchange Resources to be particularly instructive in this case. The Court's view of the Martin case is similar. In Martin, the court addressed the question of recovery of attorney's fees under Section 523(d) of the Bankruptcy Code. 761 F.2d at 1167-1168. While the Martin court recognized that attorney's fees could be recoverable if the loan agreement so provided, the court's analysis was directed to fees incurred to collect on the note. In other words, the situation in Martin, like the situation in Exchange Resources was predicated on actions taken to address the debtors' breach. In this case, however, the Court cannot conclude that the expenses incurred by Plaintiffs for attorney's fees to address the assumption issue were expenses designed to address Defendants' breach of the Celebrity Contracts. Indeed, it was the resolution of the assumption issue that led to Defendants' breach by operation of law and thus, the attorney's fees expended by Plaintiffs on the assumption issue were actually expended prior to Defendants' breach.[3] In sum, the Court concludes that the bankruptcy litigation pertaining to the assumption issue involved distinct federal issues under the bankruptcy code which are separate and apart from contractual enforcement issues like those discussed in Martin and Exchange Resources. As such, the Court concludes that attorney's fees are not warranted absent bad faith or harassment by Defendants. Fobian, 951 F.2d at 1153. Plaintiffs, in their Reply Brief, contend that Defendants have acted in bad faith because their assumption motion was frivolous and they willfully disregarded the Court's November 21, 2000 Order. However, the Court is not persuaded by Plaintiffs' arguments. The issues raised in Defendants' assumption Motion involved sophisticated legal issues that required substantial discovery by the parties, an evidentiary hearing before the Court, and ultimately, an extensive analysis by the Court on the issues. Accordingly, the Court cannot conclude that Defendants' assumption motion was filed in bad faith. Similarly, in these circumstances, the Court cannot conclude that Defendants' willfully violated the Court's November 21, 2000 Order such that Plaintiffs would be entitled to legal fees in connection with the underlying bankruptcy litigation relevant to this case. The Court's November 21, 2000 Order implemented its rulings on the legal issue of assumption and granted Plaintiffs' request for relief from the automatic stay. The Court did not direct Defendants to take a particular action or refrain from a particular action as a result of that Order. Indeed, Plaintiffs did not request a temporary restraining Order until *554 the commencement of this action. While the practical implication of the Court's order was to terminate the Celebrity Contracts and concomitantly Defendants' right to use the Athletes' names and likenesses under the Celebrity Contracts, and while it may well have been both logical and prudent for Defendants to cease using the Athletes' names and likenesses given the Court's rulings, the Court cannot conclude in these circumstances that Defendants' conduct amounted to a willful disregard of a directive of the Court. Accordingly, the Court cannot conclude that Defendants willfully violated the Court's November 21, 2000 Order such that Plaintiffs would be entitled to attorney's incurred as a result of the assumption motion. Although Plaintiffs are not entitled to attorney's fees resulting from the litigation of the bankruptcy issues in this case, Plaintiffs are, as the Court noted above, entitled to reasonable attorney's fees incurred in connection with Defendants' breach of the agreements under the indemnification provision of the Celebrity Contracts. As such, the Court will turn to the remaining issue raised by the parties concerning the status of these claims. B. Whether Plaintiffs' Claims For Attorney's Fees Incurred As A Result Of Defendants' Breach Of The Celebrity Contracts Are Properly Considered General Unsecured Claims Defendants contend that any claims for attorney's fees arising out of Defendants' breach by operation of law of the Celebrity Contracts constitute general unsecured claims in Defendants' bankruptcy cases. Plaintiffs response to this argument is limited to its argument based on Defendants' alleged inequitable conduct in pursuing the assumption motion and defying the Court's November 21, 2000 Order. However, the Court has concluded that Defendants' conduct did not amount to bad faith, and Plaintiffs have not offered the Court any other legal basis to conclude that Plaintiffs' claims for attorney's fees should not be characterized as general unsecured claims. Accordingly, the Court concludes that any claims by Plaintiffs for attorney's fees related to non-bankruptcy matters resulting from Defendants' breach by operation of law of the Celebrity Contracts constitute general unsecured claims in Defendants' bankruptcy case. CONCLUSION For the reasons discussed, Defendants' Cross-Motion For Summary Judgment will be denied, and Plaintiffs' Motion For Partial Summary Judgment will be granted in part and denied in part. Plaintiffs will be precluded from recovering attorney's fees related to the bankruptcy litigation in this case, but permitted to recover as a general unsecured claim other attorney's fees incurred in connection with Defendants' breach of the Celebrity Contracts in accordance with the respective indemnification provisions of the Celebrity Contracts. An appropriate Order will be entered. NOTES [1] By Order of Chief Judge Robinson of the United States District Court for the District of Delaware, the bankruptcy case designated, In re Planet Hollywood, et al., Case No. 99-3612, was reassigned to Judge Walrath of the United States Bankruptcy Court for the District of Delaware. [2] In their Reply Brief, Plaintiffs suggest that they are entitled to "all attorney's fees and related expenses incurred due to Defendants' breach of the Celebrity Contracts." (D.I. 20 at 13). Defendants seize on this point in their Response To Plaintiff's Reply Memorandum and contend that Plaintiffs are attempting to expand the relief they are seeking. Regardless of whether Plaintiffs were, in fact, attempting to expand the relief sought, the Court observes that the express contractual language limits recovery to "reasonable" attorneys' fees, and therefore, the Court concludes that any attorney's fees award is governed by the reasonableness standard. [3] In Plaintiffs' Opening Memorandum, they refer only to Defendants' breach by operation of law as a result of the resolution of the assumption issue. However, in Plaintiffs' Reply Memorandum, they refer to Defendants' bankruptcy filing as a breach, in and of itself, of the Celebrity Contracts in which Defendants "agreed not to declare bankruptcy." (D.I. 20 at 2, 4). Clauses in an executory contract that result in a breach of the contract solely due to the bankruptcy filing of a party are considered "ipso facto" clauses which are unenforceable under the Bankruptcy Code. See Child World, Inc., 161 B.R. at 353. Accordingly, the Court is not inclined at this juncture to consider Defendants' initial bankruptcy filing as a breach such that attorney's fees incurred in connection with the assumption motion can be considered fees incurred to address Defendants' breach of the Celebrity Contracts.

01-03-2023

10-30-2013

https://www.courtlistener.com/api/rest/v3/opinions/4555613/

Nebraska Supreme Court Online Library www.nebraska.gov/apps-courts-epub/ 08/14/2020 08:07 AM CDT - 397 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TYLER F. v. SARA P. Cite as 306 Neb. 397 Tyler F., appellant, v. Sara P., appellee. Geoffrey V., as next friend of J.F., a minor child, appellee and cross-appellant, v. Sara P., appellee and cross-appellee, and Tyler F., appellant and cross-appellee. ___ N.W.2d ___ Filed July 10, 2020. Nos. S-19-513, S-19-514. 1. Paternity: Appeal and Error. In a filiation proceeding, questions con- cerning child custody determinations are reviewed on appeal de novo on the record to determine whether there has been an abuse of discretion by the trial court, whose judgment will be upheld in the absence of an abuse of discretion. 2. Statutes. Statutory interpretation presents a question of law. 3. Judgments: Appeal and Error. When reviewing questions of law, an appellate court has an obligation to resolve the questions independently of the conclusion reached by the trial court. 4. Appeal and Error: Words and Phrases. Plain error exists where there is an error, plainly evident from the record, which prejudicially affects a substantial right of a litigant and is of such a nature that to leave it uncorrected would cause a miscarriage of justice or result in damage to the integrity, reputation, and fairness of the judicial process. 5. Appeal and Error. An appellate court may, at its option, notice plain error. 6. Paternity: Acknowledgments: Rescission: Time. In Nebraska, a pater- nity acknowledgment operates as a legal finding of paternity after the rescission period has expired. 7. Paternity: Acknowledgments. Paternity may be established by a properly executed acknowledgment, and establishment of paternity by acknowledgment is the equivalent of establishment of paternity by judi- cial proceeding. 8. Parental Rights: Child Custody: Paternity: Acknowledgments: DNA Testing. A father whose paternity is established by a final, voluntary - 398 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TYLER F. v. SARA P. Cite as 306 Neb. 397 acknowledgment has the same right to seek custody as the child’s biological mother, even if genetic testing shows he is not the biologi- cal father. 9. Paternity: Acknowledgments: DNA Testing. DNA testing which later shows the identified individual is not the child’s biological father is insufficient to set aside a properly executed acknowledgment of paternity. 10. Paternity: Acknowledgments: Parent and Child. An acknowledgment legally establishes paternity and grants the individual named as father the legal status of a parent to the child regardless of genetic factors. 11. Paternity: Statutes. Paternity proceedings are purely statutory, and because the statutes regarding paternity proceedings modify the common law, they must be strictly construed. 12. Statutes: Appeal and Error. Statutory language is to be given its plain and ordinary meaning, and an appellate court will not resort to inter- pretation to ascertain the meaning of statutory words which are plain, direct, and unambiguous. 13. Statutes: Legislature: Intent. Components of a series or collection of statutes pertaining to a certain subject matter are in pari materia and should be conjunctively considered and construed to determine the intent of the Legislature, so that different provisions are consistent, har- monious, and sensible. 14. Paternity: Parties: Acknowledgments. A previous paternity determina- tion, including a properly executed and undisturbed acknowledgment, must be set aside before a third party’s paternity may be considered. 15. Paternity. A party seeking to establish paternity must first set aside an existing determination. 16. Acknowledgments: Proof. In order to set aside an unrevoked acknowl- edgment, the moving party has the burden to show the acknowledge- ment was a result of fraud, duress, or material mistake. 17. Paternity: Acknowledgments. A party executing an acknowledgment of paternity has a duty to exercise reasonable diligence in the execution of the acknowledgment to ensure that it was grounded in fact. 18. Words and Phrases. Reasonable diligence means appropriate action where there is some reason to awaken inquiry and direct diligence in a channel in which it will be successful. Appeals from the District Court for Lancaster County: Kevin R. McManaman, Judge. Affirmed in part, and in part reversed and remanded for further proceedings. Andrea L. McChesney, of McChesney Family Law Office, for appellant. - 399 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TYLER F. v. SARA P. Cite as 306 Neb. 397 Joel Bacon and Tara L. Gardner, of Keating, O’Gara, Nedved & Peter, P.C., L.L.O., for appellee Geoffrey V. Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, Papik, and Freudenberg, JJ. Funke, J. The district court awarded joint legal and physical custody of J.F. to Sara P., Tyler F., and Geoffrey V. Tyler appealed and assigned various errors. Geoffrey then cross-appealed. We conclude that the district court did not err in finding that Sara failed to meet her burden to set aside the notarized acknowl- edgment of paternity executed by Tyler and Sara at the time of J.F.’s birth. We further conclude that the trial court committed plain error in considering Geoffrey’s paternity complaint while failing to give proper legal effect to Tyler’s acknowledgment of paternity. We therefore affirm the court’s denial of Sara’s counterclaim to set aside Tyler’s acknowledgment of paternity; reverse the district court’s award of joint legal and physical custody of J.F. to Sara, Tyler, and Geoffrey; and remand the cause for further proceedings. BACKGROUND Sometime around November 2007, Tyler and Sara were dat- ing and engaged in sexual intercourse. Sara gave birth to J.F. in August 2008. Sara continually represented to Tyler that he was the father of J.F., and Tyler signed an acknowledgment of paternity at the hospital when J.F. was born and is listed as J.F.’s father on the birth certificate. Sara also engaged in sexual intercourse with Geoffrey around November 2007. Sara contends she believed Tyler was J.F.’s father because of information she received from her physician about her due date. At one point during the pregnancy, however, she contacted Geoffrey about the pos- sibility that he might be the father and, about 8 to 9 months after J.F.’s birth, Geoffrey and Sara had discussions about genetic testing to determine paternity. Sara testified that she - 400 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TYLER F. v. SARA P. Cite as 306 Neb. 397 always had a “gut feeling” that J.F. might not be Tyler’s bio- logical child and that this “gut feeling” that “maybe he could be [Geoffrey’s existed] when [Sara] was pregnant, when [J.F.] was born [and] when [J.F.] started really looking like him.” It is undisputed she did not tell Tyler about Geoffrey’s pos- sible paternity. Following J.F.’s birth, Tyler and Sara shared parenting responsibilities despite ceasing their romantic relationship, even through Sara’s move to Oklahoma in 2013. At the time of Sara’s move, J.F. was in the middle of his first year of preschool and the parties agreed J.F. would continue to attend school in Nebraska and reside with Tyler. After the school year, in the summer of 2014, Sara indicated to Tyler that she wanted J.F. to stay with her and attend kindergarten in Oklahoma. Extending from the parties’ disagreement concerning J.F.’s schooling, Tyler filed a complaint to establish paternity, cus- tody, and parenting time under case No. CI 14-2745, currently under appeal as case No. S-19-513. In his complaint, Tyler sought joint legal and physical custody of J.F., as well as an order determining paternity. Tyler alleged in this complaint that he “believes he is the biological father of [J.F.] and has always held himself out as such,” that Sara “has always held [Tyler] out as [J.F.’s] biological father,” and that Tyler “is listed and acknowledged on [J.F.’s] birth certificate.” In Sara’s answer and counterclaim, she alleged that Tyler is not J.F.’s biological father and that he has no standing to request custody of J.F. As such, Sara sought, in part, that the district court dismiss Tyler’s complaint, declare Tyler not to be the biological father of J.F., and award Sara sole physical and legal custody. During the proceedings, the court ordered DNA testing that showed Tyler was not J.F.’s biological father. Following receipt of the testing results, Sara amended her answer and counter- claim, seeking, among other things, an order rescinding Tyler’s acknowledgment of paternity on the ground of mutual mistake and disestablishing paternity. - 401 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TYLER F. v. SARA P. Cite as 306 Neb. 397 Shortly after the DNA test excluded Tyler as the biological father, Sara reached out to Geoffrey and told him she believed he was the father. Geoffrey then filed a motion to intervene in Tyler’s case, seeking intervention as the “biological father of [J.F.]” However, the court denied Geoffrey’s motion because Geoffrey provided no basis to avoid the 4-year statute of limitations under Neb. Rev. Stat. § 43-1411 (Reissue 2016) and did not allege he was unaware of J.F.’s birth or the possibility of paternity. Thereafter, Geoffrey filed a complaint to establish pater- nity under case No. CI 15-119, currently under appeal as case No. S-19-514, seeking that physical and legal custody be placed with Sara subject to his and Tyler’s visitation rights. Geoffrey’s complaint acknowledged Tyler as J.F.’s legal father, referenc- ing Tyler’s acknowledgment of paternity, and explained that Geoffrey was not made aware he was J.F.’s biological father until October 2014, when Sara told him about the results of Tyler’s DNA test. The complaint’s caption listed “Geoffrey [V.], as next friend of [J.F.], a minor child,” as plaintiff. However, the text of the complaint and the signature line at the end of the complaint described only Geoffrey, individually, without mentioning his status as next friend of J.F. Geoffrey also noted that genetic testing established Tyler was not the biologi- cal father and alleged that Tyler’s belief he was the biological father was “based on the material mistake of fact based on the representations of Sara . . . at the time [J.F.] was conceived and born.” Geoffrey claimed, “The presumption that . . . Tyler . . . is the father of [J.F.], through his signed Acknowledgment of Paternity, has been rebutted through genetic testing and the records of the Nebraska Department of Health and Human Services should be corrected.” Tyler filed an answer to Geoffrey’s complaint. In his answer, Tyler requested the court dismiss the complaint insofar “as the matter has already been decided in Case No. CI14-2745.” The answer did not specifically raise any statute of limita- tions defenses. - 402 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TYLER F. v. SARA P. Cite as 306 Neb. 397 The court consolidated cases Nos. CI 14-2745 and CI 15-119, held a trial, and entered an order in January 2016. The court determined that Geoffrey had standing to act in the capacity of next friend of J.F., that Tyler is the father of J.F. by reason of the acknowledgment of paternity, and that Geoffrey is the father of J.F. by reason of biological testing. The court found Sara failed to meet her burden to establish mutual mistake and denied her motion to set aside Tyler’s acknowledgment. The court, therefore, considered the rights and interests of Tyler, Geoffrey, and Sara in making custody, parenting time, and child support determinations. The court awarded legal and physical custody of J.F. to Tyler, subject to visitation with Geoffrey and Sara, until December 31, 2016, at which time all three parties were awarded joint legal and physical custody. The court also calculated child support by considering the incomes of Tyler, Geoffrey, and Sara and ordered Geoffrey and Sara to pay child support until December 31, when all support obligations were to cease. Tyler appealed, assigning the district court erred in finding that Geoffrey had standing to bring his claim as next friend of J.F. and in deviating from the child support guidelines in set- ting child support. Geoffrey cross-appealed and assigned that the court erred in concluding he had not raised a claim in his individual capacity and, to the extent the appellate court might conclude Tyler’s paternity acknowledgment had to be set aside before determining that Geoffrey had paternity, that the court erred in evaluating the material mistake of fact question from Sara’s perspective. The Nebraska Court of Appeals reversed the district court’s order. 1 First, the Court of Appeals determined Geoffrey lacked standing to raise any claims on J.F.’s behalf, as J.F.’s next friend, because J.F. was in the custody of Sara, his biologi- cal mother, and Tyler, his legal father, and thus not without a guardian. However, the appellate court found that the trial 1 Tyler F. v. Sara P., 24 Neb. Ct. App. 370, 888 N.W.2d 537 (2016). - 403 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TYLER F. v. SARA P. Cite as 306 Neb. 397 court failed to address whether Geoffrey was also bringing his claims in his individual capacity. As such, the cause was remanded to the district court for determination of whether Geoffrey also brought his claims in his individual capacity and whether such individual claims are barred by the statute of limitations. On remand, the district court found that Geoffrey had brought his claims in both his individual capacity and as J.F.’s next friend due to the language and intended beneficiary of the complaint. The court then found that Geoffrey’s individual claims were not barred by the statute of limitations, because Tyler waived the defense by failing to assert it in his answer or another responsive pleading. The court found that even if Tyler had not waived the statute of limitations, it was tolled because Geoffrey alleged he was not made aware he was J.F.’s biological father until October 2014 and Tyler’s answer did not sufficiently deny this allegation. Similarly, the court deter- mined that res judicata did not bar Geoffrey’s claims due to the court’s denial of Geoffrey’s motion to intervene, because Tyler failed to raise it as an affirmative defense and because even if he had, res judicata was inapplicable to the instant case. Given the court’s finding that Geoffrey also brought his claims in his individual capacity, the court reinstated its previous order “with the caveat that the order applies to [Geoffrey] individ­ ually rather than as next friend of J.F.” ASSIGNMENTS OF ERROR Tyler assigns, restated, that the district court erred in (1) finding Geoffrey brought his claims in his individual capac- ity, (2) finding Tyler waived the statute of limitations defense, (3) finding the statute of limitations was tolled, (4) finding Geoffrey’s claims were not barred by the denial of his motion to intervene, (5) failing to find Geoffrey’s claims were time- barred, and (6) deviating from the child support guidelines in the custody award. On cross-appeal, Geoffrey assigns, contingent on a find- ing of plain error in the district court’s conclusion that Tyler’s - 404 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TYLER F. v. SARA P. Cite as 306 Neb. 397 paternity acknowledgment did not have to be set aside before the district court could determine whether Geoffrey had pater- nity, that the court erred in failing to set aside Tyler’s paternity acknowledgment. STANDARD OF REVIEW [1] In a filiation proceeding, questions concerning child custody determinations are reviewed on appeal de novo on the record to determine whether there has been an abuse of discre- tion by the trial court, whose judgment will be upheld in the absence of an abuse of discretion. 2 [2,3] Statutory interpretation presents a question of law. 3 When reviewing questions of law, an appellate court has an obligation to resolve the questions independently of the conclu- sion reached by the trial court. 4 ANALYSIS Acknowledgment of Paternity Before reaching the assigned errors, we first address the question of whether the district court committed plain error in determining it unnecessary to set aside Tyler’s paternity acknowledgment before considering Geoffrey’s complaint to establish paternity. [4,5] Plain error exists where there is an error, plainly evi- dent from the record, which prejudicially affects a substantial right of a litigant and is of such a nature that to leave it uncor- rected would cause a miscarriage of justice or result in damage to the integrity, reputation, and fairness of the judicial process. 5 An appellate court may, at its option, notice plain error. 6 2 State on behalf of Kaaden S. v. Jeffery T., 303 Neb. 933, 932 N.W.2d 692 (2019). 3 Fetherkile v. Fetherkile, 299 Neb. 76, 907 N.W.2d 275 (2018). 4 Id. 5 See, In re Application No. OP-0003, 303 Neb. 872, 932 N.W.2d 653 (2019); Osantowski v. Osantowski, 298 Neb. 339, 904 N.W.2d 251 (2017). 6 Mays v. Midnite Dreams, 300 Neb. 485, 915 N.W.2d 71 (2018). - 405 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TYLER F. v. SARA P. Cite as 306 Neb. 397 When J.F. was born, Tyler and Sara signed a notarized acknowledgment of paternity in which they attested that Tyler was J.F.’s biological father. Although Sara’s amended answer and counterclaim sought to set aside this acknowledgment fol- lowing the court-ordered DNA test that showed Tyler was not J.F.’s biological father, the district court declined to do so, find- ing Sara failed to meet her burden to prove a material mistake of fact had occurred. As such, the court found the acknowledg- ment remains in effect. However, the court went on to deter- mine that it could consider Geoffrey’s simultaneous claim of paternity without setting aside Tyler’s acknowledgment. The court then found that both Tyler and Geoffrey were the fathers of J.F. and that Sara retained the position of mother under the paternity statutes. [6] In Nebraska, a paternity acknowledgment operates as a legal finding of paternity after the rescission period has expired. 7 The proper legal effect of a signed, notarized acknowledgment of paternity is a finding that the individual who signed as the father is in fact the legal father. 8 Neb. Rev. Stat. § 43-1409 (Reissue 2016) establishes this legal effect and provides: The signing of a notarized acknowledgment, whether under section 43-1408.01 or otherwise, by the alleged father shall create a rebuttable presumption of paternity as against the alleged father. The signed, notarized acknowl- edgment is subject to the right of any signatory to rescind the acknowledgment within the earlier of (1) sixty days or (2) the date of an administrative or judicial proceeding relating to the child, including a proceeding to establish a support order in which the signatory is a party. After the rescission period a signed, notarized acknowledgment is considered a legal finding . . . . 7 In re Adoption of Jaelyn B., 293 Neb. 917, 883 N.W.2d 22 (2016); Cesar C. v. Alicia L., 281 Neb. 979, 800 N.W.2d 249 (2011). 8 Cesar C., supra note 7. - 406 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TYLER F. v. SARA P. Cite as 306 Neb. 397 [7] Relatedly, in describing child support obligations of the parents, Neb. Rev. Stat. § 43-1402 (Reissue 2016) refers to “[t]he father of a child whose paternity is established either by judicial proceedings or by acknowledgment as hereinafter pro- vided . . . .” We have explained that this language in § 43-1402 contemplates that paternity may be established by a properly executed acknowledgment and that establishment of paternity by acknowledgment is the equivalent of establishment of pater- nity by judicial proceeding. 9 [8] Reading §§ 43-1402 and 43-1409 together, the provi- sion in § 43-1409 that an acknowledgment is a “legal finding” means that a properly executed acknowledgment legally estab- lishes paternity in the person named in the acknowledgment as the father. 10 A father whose paternity is established by a final, voluntary acknowledgment has the same right to seek custody as the child’s biological mother, even if genetic testing shows he is not the biological father. 11 Here, it is undisputed that the acknowledgment of paternity signed by Tyler and Sara was properly executed. Additionally, there is no evidence that either party to the acknowledgment sought to rescind it within the statutory rescission period. The acknowledgment remained in full force and effect at the time of Tyler’s paternity action and legally determined Tyler’s pater- nity of J.F. As such, upon finding that the notarized acknowl- edgment of paternity had been properly signed, the court should have treated Tyler’s paternity as having been legally established and treated this action as one solely to determine issues of custody and support as between two legal parents, and not one to establish paternity. 12 [9,10] In her answer and counterclaim, Sara alleged Tyler was neither the legal nor the biological father of J.F. As a 9 See id. 10 See id. 11 In re Adoption of Jaelynn B., supra note 7. 12 See Cesar C., supra note 7. - 407 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TYLER F. v. SARA P. Cite as 306 Neb. 397 result, she sought DNA testing to confirm her allegations. However, the Legislature has established that a properly exe- cuted acknowledgment of paternity cannot be set aside merely by DNA testing which later shows the identified individual is not the child’s biological father. 13 While § 43-1412.01 provides that “[a]n individual may file a complaint for relief and the court may set aside a final judgment . . . or any other legal determination of paternity if a scientifically reliable genetic test . . . establishes the exclusion of the individual named as a father in the legal determination,” it further clarifies that “[a] court shall not grant relief from determination of paternity if the individual named as father . . . completed a notarized acknowledgment of paternity . . . .” We have found that this provision provides further support for the conclusion that an acknowledgment legally establishes paternity and grants the individual named as father the legal status of a parent to the child regardless of genetic factors. 14 Because Tyler’s acknowl- edgment remained in full force and effect and established his paternity of J.F. regardless of genetic factors, the trial court had no basis to order the DNA testing. That is not to say an acknowledgment cannot be challenged and set aside, but the grounds for doing so are limited. Section 43-1409 explains that a properly executed acknowledgment “may be challenged only on the basis of fraud, duress, or material mistake of fact with the burden of proof upon the challenger.” Therefore, under the statutory scheme, before Sara could challenge paternity and subject Tyler to genetic test- ing, she needed to overcome the acknowledgment establishing Tyler was J.F.’s legal father by showing fraud, duress, or mate- rial mistake. 15 Following the inappropriately ordered DNA test, Sara amended her answer and counterclaim to seek to set aside 13 See, Neb. Rev. Stat. § 43-1412.01 (Reissue 2016); Cesar C., supra note 7. 14 In re Adoption of Jaelyn B., supra note 7. 15 See, id.; Cesar C., supra note 7. - 408 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TYLER F. v. SARA P. Cite as 306 Neb. 397 the acknowledgment of paternity. Sara claimed both parties thereto had been under a material mistake of fact due to her being informed of an “erroneous due date by her treating phy- sician.” Sara specifically alleged that her projected due date was August 11, 2008, from which she believed Tyler was the father based upon a 9-month gestation period, but that this due date was incorrect and that labor was induced several days earlier. In its order declining to set aside the acknowledgment, the court correctly considered the issue without concern to the results of the DNA test. The court found that there was clear evidence Sara knew of the possibility Tyler was not the father during and following pregnancy and that even though Tyler was under the mistaken belief he was J.F.’s biological father, it was Sara’s burden as the challenger to show a mate- rial mistake on her part, which she did not. Because the court declined to set the acknowledgment aside, it remains in full force and effect. Geoffrey’s Determination of Paternity Geoffrey’s complaint to establish his paternity of J.F. alleges that Geoffrey did not know he was J.F.’s father until Sara informed him that DNA testing excluded Tyler as J.F.’s bio- logical father. Regardless of whether that allegation is sup- ported by the record, as noted above, the court had no basis to order this test, due to the application of the acknowledgment of paternity. 16 Further, Geoffrey’s complaint fails to move for Tyler’s acknowledgment of paternity to be set aside. Instead, Geoffrey argues, and the district court agreed, that a determination that Tyler has paternity of J.F. is of no consequence when deter- mining whether Geoffrey has paternity of J.F. However, this proposition is at odds with Nebraska’s paternity and related statutes and the Nebraska Child Support Guidelines as cur- rently constructed. 16 See id. - 409 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TYLER F. v. SARA P. Cite as 306 Neb. 397 [11-13] We have recognized that paternity proceedings are purely statutory and that because the statutes regarding paternity proceedings modify the common law, they must be strictly construed. 17 Statutory language is to be given its plain and ordinary meaning, and an appellate court will not resort to interpretation to ascertain the meaning of statutory words which are plain, direct, and unambiguous. 18 Components of a series or collection of statutes pertaining to a certain subject matter are in pari materia and should be conjunctively consid- ered and construed to determine the intent of the Legislature, so that different provisions are consistent, harmonious, and sensible. 19 Actions to determine paternity and parental support are gov- erned by Neb. Rev. Stat. §§ 43-1401 through 43-1418 (Reissue 2016 & Cum. Supp. 2018). Throughout these statutes, the Legislature has used language which recognizes the possibil- ity of only a singular paternity determination. For example, § 43-1402 describes “[t]he father of a child whose paternity is established,” “[t]he mother of a child,” and “each parent” in explaining support liability for a child. (Emphasis supplied.) Section 43-1403 describes possible county obligations of sup- port “[i]n case of the neglect or inability of the parents, or either of them, to support a child . . . .” (Emphasis supplied.) Section 43-1404 designates the “liability of the father or mother of a child for its support” in explaining the discharge of support obligations. (Emphasis supplied.) Section 43-1405 uses the singular “the father” language several times in describing the discharge of support liability by settlement. (Emphasis supplied.) Section 43-1407 identifies “[t]he father of a child” in its explanation of liability for birth, pregnancy, and medi- cal expenses. (Emphasis supplied.) Section 43-1410 explains, “Any judicially approved settlement or order of support made 17 State on behalf of B.M. v. Brian F., 288 Neb. 106, 846 N.W.2d 257 (2014). 18 In re Application No. OP-0003, supra note 5. 19 Id. - 410 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TYLER F. v. SARA P. Cite as 306 Neb. 397 by a court having jurisdiction in the premises shall be bind- ing on the legal representatives of the father or mother in the event of his or her death . . . .” (Emphasis supplied.) Section 43-1412(3), in explaining a court’s continued jurisdiction of a paternity action to order support and court costs, states: If a judgment is entered under this section declaring the alleged father to be the father of the child, the court shall retain jurisdiction of the cause and enter such order of support, including the amount, if any, of any court costs and attorney’s fees which the court in its discretion deems appropriate to be paid by the father . . . . (Emphasis supplied.) Statutes under Nebraska’s Parenting Act 20 use similar lim- iting language. Section 43-2922(12) describes the existence of only two parents and defines “[j]oint physical custody” as “mutual authority and responsibility of the parents regarding the child’s place of residence and the exertion of continuous blocks of parenting time by both parents over the child for significant periods of time.” (Emphasis supplied.) This “both parents” language is used in other parts of the Parenting Act, including the following sections: § 43-2924(2), in describing the applicability of the Parenting Act for custody determina- tions; § 43-2929(4), in explaining that both parents continue to have parental rights regardless of a custody determina- tion in a parenting plan unless the rights are terminated; and § 43-2937(4), in describing when court-ordered mediation or alternative dispute resolution is required under the Parenting Act. Relatedly, § 43-2930(1) lists permissible information a child information affidavit may include when certain cir- cumstances are present, including “criminal no-contact orders against either parent.” (Emphasis supplied.) The language of § 43-2932 considers the existence of only two parents in the requirements under subsection (1)(a)(iv) that a court develop 20 See Neb. Rev. Stat. §§ 43-2920 to 43-2943 (Reissue 2016, Cum. Supp. 2018 & Supp. 2019). - 411 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TYLER F. v. SARA P. Cite as 306 Neb. 397 a parenting plan if “a parent . . . has interfered persistently with the other parent’s access to the child;” under subsection (1)(b)(iv) of additional permissible limitations of a parenting plan, including “[r]estraints on the parent from communica- tion with or proximity to the other parent or the child;” and under subsection (3) that the “parent found to have engaged in the behavior . . . has the burden of proving” the rights granted under the parenting plan “will not endanger the child or the other parent.” (Emphasis supplied.) We are mindful that following the U.S. Supreme Court’s decision in Obergefell v. Hodges, 21 our courts are now hear- ing cases involving two legal mothers or two legal fathers. But our current parentage statutes have not changed, and these statutes are still gender based, so the language of our opinion is necessarily gender based as well. In other words, Nebraska’s statutory scheme on parentage accommodates only two parents and primarily refers to one mother and one father. Here, the trial judge recognized three legal parents (one mother and two fathers), and that is simply not suppported by Nebraska law. The Nebraska Child Support Guidelines also use language which assumes the existence of only a singular paternity deter- mination, including the identifiers “both parents,” “either par- ent,” and “both parties.” 22 Though Nebraska’s judicial branch has revised its child support guidelines to be gender neu- tral, even the revised guidelines still accommodate just two legal parents. [14] In considering the plain language of our paternity and related statutes, the Legislature’s use of the singular “the father” indicates an intention that there can only be one pater- nity designation at a time, and the use of “both parents,” 21 Obergefell v. Hodges, ___ U.S. ___, 135 S. Ct. 2584, 192 L. Ed. 2d 609 (2015). 22 See, e.g., Neb. Ct. R. § 4-201; Neb. Ct. R. §§ 4-203, 4-204, 4-206, and 4-215 (rev. 2020); Neb. Ct. R. § 4-214 (rev. 2016). - 412 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TYLER F. v. SARA P. Cite as 306 Neb. 397 “either parent,” “either party,” and “both parties” supports this reading. Accordingly, we hold that a previous paternity determination, including a properly executed and undisturbed acknowledgment, must be set aside before a third party’s pater- nity may be considered. To find that one paternity determination has no effect on subsequent claims of paternity would render our decision in Cesar C. v. Alicia L. 23 inconsequential. In Cesar C., we deter- mined that a mother’s request for DNA testing of the acknowl- edged father to determine whether he was actually the child’s biological father should have been denied by the trial court because the acknowledgment of paternity was undisturbed and properly executed. As such, there was already a determination of paternity of the child at issue and there could not be another action to determine paternity without first setting aside the acknowledgment. 24 [15] Our holding in Cesar C. applies to the instant case because just like the mother in Cesar C., Sara sought another paternity determination even though an acknowledgment remained applicable, the court failed to give adequate weight to the undisturbed acknowledgment and inappropriately ordered DNA testing for the purposes of establishing the child’s pater- nity, and the DNA test established the legal father was not the child’s biological father. Herein, Geoffrey then filed a com- plaint to establish his paternity based upon the DNA results communicated to him by Sara and did not seek to set aside the acknowledgment. If the paternity statutes allow for another party to establish simultaneous paternity without setting aside a properly executed acknowledgment of paternity, the DNA tests in Cesar C. and in this case would not be prohibited because they would provide a basis for a third party to seek such a simultaneous paternity ruling. However, in line with our opinion in Cesar C. and as analyzed above, the paternity 23 Cesar C., supra note 7. 24 Id. - 413 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TYLER F. v. SARA P. Cite as 306 Neb. 397 statutes require that a party seeking to establish paternity must first set aside an existing determination. Other courts have come to this same conclusion. 25 In Barr v. Bartolo, 26 the Pennsylvania Superior Court analyzed whether an undisturbed previous support order barred a subsequent determination of paternity in a third party. Under Pennsylvania law, the entry of a court order for support of a child necessarily determines the alleged father’s paternity. 27 As such, the support order judicially determined paternity in the husband and the court held that the previous determination barred relitigation of paternity without striking that first determination. 28 In Sinicropi v. Mazurek, 29 the Michigan Court of Appeals considered what effect an unrevoked acknowledgment of pater- nity would have on an action to establish paternity. The trial evidence indicated that the biological father was seeking to establish his paternity of the minor child after the legal father had previously executed an unrevoked acknowledgment of paternity. 30 In granting the biological father’s complaint to establish paternity, the trial court effectively ruled that the child had two legal fathers. 31 On appeal, the appellate court reversed and held that an order of filiation cannot be entered if a proper acknowledgment of parentage was previously executed and has not been revoked. 32 The court further held that an unre- voked acknowledgment already legally established paternity and conferred the status of natural and legal father upon the man executing the acknowledgment, which in turn entitled him 25 Barr v. Bartolo, 927 A.2d 635 (Pa. Super. 2007); Sinicropi v. Mazurek, 273 Mich. App. 149, 729 N.W.2d 256 (2006). 26 Barr, supra note 25. 27 Id. 28 Id. 29 Sinicropi, supra note 25. 30 Id. 31 Id. 32 Id. - 414 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TYLER F. v. SARA P. Cite as 306 Neb. 397 to seek custody or parenting time if desired and obligated him to pay support if appropriate. 33 In accordance with all of the above, the district court committed plain error in considering Geoffrey’s complaint to establish his paternity of J.F. when Tyler’s acknowledgment remained in place and established Tyler as J.F.’s father. Geoffrey’s Cross-Appeal In his cross-appeal, Geoffrey acknowledges the possibil- ity that the district court committed plain error in finding his paternity without seeking to set aside Tyler’s acknowledgment of paternity. As such, Geoffrey assigns the district court erred in failing to set aside the acknowledgment. Geoffrey claims the court incorrectly limited its consideration of whether a material mistake of fact occurred to Sara’s perspective, instead of con- sidering it from his perspective. We note that Geoffrey did not independently move the court to set aside Tyler’s acknowledgment. Instead, his complaint to establish paternity merely referenced Sara’s allegation that Tyler’s belief that he was the biological father was based on a material mistake of fact. Specifically, Geoffrey alleged: Genetic testing was completed establishing that Tyler . . . is not the father of [J.F.] [Tyler’s] belief that he was the father of [J.F.] was based on the representa- tions of Sara . . . , and . . . said reliance was based on the material mistake of fact based on the representations of Sara . . . at the time [J.F.] was conceived and born. The presumption that . . . Tyler . . . is the father of [J.F.], through his signed Acknowledgment of Paternity, has been rebutted through genetic testing and the records of the Nebraska Department of Health and Human Services should be corrected. As a result, we consider Sara’s prayer in her amended answer that the district court rescind Tyler’s acknowledgment 33 Id. - 415 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TYLER F. v. SARA P. Cite as 306 Neb. 397 of paternity. Specifically, in the “Affirmative Defenses” section of her amended answer, Sara alleges: [J.F.] was born at the Bryan LGH Medical Center East in August of 2008. [Sara] was initially informed of an erro- neous due date by her treating physician. The initial due date was projected to be on August 11, 2008. Based on the due date provided to [Sara], she mistakenly believed that Tyler . . . was the father of [J.F.] based on a 9 month gestation period. However, the anticipated due date was incorrect and labor was induced [several days earlier]. Accordingly, the parties hereto were under a material mis- take of fact as [to] the biological father of [J.F.] Additionally, under a section titled “Counterclaim: Custody,” Sara alleged: “The Acknowledgment of Paternity executed by [Tyler and Sara] herein was executed under a material mis- take of fact precipitated by an inaccurate due date provided to [Sara]. To the extent the Acknowledgment of Paternity is rescinded the legal determination of paternity should be set aside.” [16] As explained above, in order to set aside an unrevoked acknowledgment, the moving party has the burden to show the acknowledgment was a result of fraud, duress, or material mistake. 34 Sara, as the challenging party, had the duty to show that the acknowledgment resulted from a material mistake as she claimed. 35 In our review, we therefore evaluate the district court’s decision not to set aside the acknowledgment based upon Sara’s allegation that there was a material mistake of fact in the execution of the acknowledgment by Tyler and Sara as the executing parties, and not from Geoffrey’s perspective as a nonexecuting party. In seeking to set aside Tyler’s paternity, Sara alleged only that she was under a material mistake of fact that Tyler was the biological father because her treating physician projected her 34 § 43-1409. 35 See id. - 416 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TYLER F. v. SARA P. Cite as 306 Neb. 397 due date to be on August 11, 2008, when J.F. was actually born several days earlier. Based upon this projected due date, Sara calculated a 9-month gestation period and allegedly believed Tyler was the biological father. The record contradicts Sara’s allegation that she was under the mistaken belief as to J.F.’s biological father because she was told this incorrect due-date projection. If Sara received an incorrect projection of her due date, the due date was no longer at issue when J.F. was born, as Sara herself indicated when she testified Tyler should have known he was not the biological father due to J.F.’s date of birth. The record also demonstrates that Sara knew of the possibil- ity Geoffrey was the biological father during her pregnancy. Sara contacted Geoffrey about this possibility during the preg- nancy and again 8 to 9 months after J.F.’s birth. Sara testified that she always believed that Geoffrey, instead of Tyler, might be J.F.’s biological father. Geoffrey and Sara talked soon after J.F. was born about performing genetic testing to determine whether Geoffrey was the father, but neither took any fur- ther action. [17,18] It is clear that Sara knew Geoffrey could be J.F.’s biological father, even after being told the projected due date, and she communicated such possibility to Geoffrey. Due to this known possibility, Sara had a duty to exercise reason- able diligence in the execution of the acknowledgment of Tyler’s paternity to ensure that it was grounded in fact. 36 We have explained that reasonable diligence “‘means appropri- ate action where there is some reason to awaken inquiry and direct diligence in a channel in which it will be successful.’” 37 However, there is no evidence in the record that Sara exer- cised such reasonable diligence beyond her communications 36 See Alisha C. v. Jeremy C., 283 Neb. 340, 808 N.W.2d 875 (2012). 37 Id. at 346, 808 N.W.2d at 881. See, also, DeVaux v. DeVaux, 245 Neb. 611, 514 N.W.2d 640 (1994) (superseded by statute on other grounds as stated in Alisha C., supra note 36). - 417 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports TYLER F. v. SARA P. Cite as 306 Neb. 397 with Geoffrey. As such, the district court did not err in finding Sara failed to meet her burden and denying her motion to set aside Tyler’s acknowledgment. Considering all of the above, the district court’s finding that Sara, and Geoffrey in support of Sara’s motion, failed to show the alleged material mistake of fact is supported by the record. Accordingly, the district court’s denial of Sara’s motion to set aside Tyler’s acknowledgment of his paternity of J.F. is affirmed. CONCLUSION The district court did not err in finding that Sara failed to meet her burden to set aside the notarized acknowledgment of paternity executed by Tyler and Sara at the time of J.F.’s birth. Additionally, a previous paternity determination, includ- ing a properly executed and undisturbed acknowledgment of paternity, must be set aside before a third party’s paternity may be considered. As a result, the district court committed plain error considering Geoffrey’s paternity complaint while fail- ing to give proper legal effect to Tyler’s acknowledgment of paternity. Accordingly, we affirm the court’s denial of Sara’s counterclaim to set aside Tyler’s acknowledgment of paternity; reverse the district court’s award of joint legal and physical custody of J.F. to Sara, Tyler, and Geoffrey; and remand the cause for further proceedings. Affirmed in part, and in part reversed and remanded for further proceedings.

01-03-2023

08-14-2020

https://www.courtlistener.com/api/rest/v3/opinions/2986152/

Petition for Writ of Mandamus Denied and Memorandum Opinion filed August 23, 2013. In The Fourteenth Court of Appeals NO. 14-13-00737-CV IN RE PETROLEUM WORKERS UNION OF THE REPUBLIC OF MEXICO, Relator ORIGINAL PROCEEDING WRIT OF MANDAMUS MEMORANDUM OPINION On August 21, 2013, relator Petroleum Workers Union of the Republic of Mexico filed a petition for writ of mandamus in this Court. See Tex. Gov’t Code Ann. §22.221; see also Tex. R. App. P. 52. In the petition, relator asks this Court to order the Honorable Sylvia Matthews, presiding judge of the 281st District Court of Harris County, to set aside her August 16, 2013 order denying its motion to compel. Relator also requests that we order Judge Matthews to rule, in response to a pending motion for reconsideration, that Mexican law applies to the issue of authority to bind relator to certain agreements. On this record, relator has not established its entitlement to the extraordinary relief of a writ of mandamus. Accordingly, we deny relator’s petition for writ of mandamus and also deny relator’s related emergency motion to stay proceedings. PER CURIAM Panel consists of Justices Frost, Busby, and Donovan. 2

01-03-2023

09-23-2015

https://www.courtlistener.com/api/rest/v3/opinions/3847931/

Defendant was indicted on the charges of murder and manslaughter for the killing of Mrs. Katherine Rodgers in Lawrence County, near New Castle, Pennsylvania. He was convicted of murder in the first degree and the sentence of life imprisonment was imposed. A motion *Page 89 for a new trial was refused and this appeal followed. The only assignment of error is that there was sufficient medical and other testimony to require an acquittal on the principal defense of insanity. The question of defendant's mental condition at the time of the killing was for the jury. It was submitted to them upon a charge which fully and fairly stated the law. We have examined the record carefully and find all the ingredients of murder in the first degree present. The judgment and sentence of the court below are affirmed and the record is remitted for the purpose of execution in accordance therewith.

01-03-2023

07-06-2016

https://www.courtlistener.com/api/rest/v3/opinions/1918363/

101 B.R. 542 (1987) Charles CHRISTY and Tracy L. Christy, Plaintiffs, v. HEIGHTS FINANCE CORPORATION, Defendant. No. 86-1280. United States District Court, C.D. Illinois. May 18, 1987. Kevin D. Schneider, Westervelt Johnson Nicoll & Keller, Peoria, Ill., for plaintiffs. James S. Brannon, Peoria, Ill., for defendant. ORDER MIHM, District Judge. The Plaintiffs in this case filed a Complaint against Heights Finance Corporation, alleging a violation of the Federal Truth-In-Lending Act, 15 U.S.C. § 1638(a)(10), and the regulations promulgated thereunder, 12 C.F.R., § 226.18(m). The Defendant filed a Motion to Dismiss, and the Court has reviewed the briefs and heard oral argument on the issues raised in the Motion to Dismiss. Prior to filing the Complaint against Heights Finance, the Plaintiffs filed a petition for relief under Chapter 7 of Title 11 of the United States Code in the case of In re Christy, Case No. 86-80613, United States Bankruptcy Court for the Central District of Illinois. The Defendant contends that the alleged cause of action in this lawsuit vested in the bankruptcy trustee on the date that the Plaintiffs filed their petition in bankruptcy. Because the trustee *543 has not abandoned the cause of action, the Plaintiffs lack standing to sue. The Defendant also argues that the Plaintiffs' alleged Truth-In-Lending Act claim is either a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(B), (C), and (O), or it is a matter arising in or related to a proceeding pursuant to Title 11 of the United States Bankruptcy Code, because it materially affects the value of the estate or a claim against the estate. In either case, the bankruptcy court has exclusive jurisdiction over this claim because of the relationship of the claim to the case in the bankruptcy court. As its final ground for dismissal, the Defendant argues that it filed a proof of claim in the bankruptcy proceeding based upon the debt involved in the transaction underlying the Plaintiffs' Truth-In-Lending claim. The Defendant indicates that it also filed a petition for relief from the automatic stay, and the Plaintiffs filed a Motion to Avoid Security Interest in the bankruptcy case. However, neither the Plaintiffs nor the trustee raised the Truth-In-Lending Act claim in these bankruptcy proceedings. The Defendant suggests that the Court should find that the claim is barred under the principles of res judicata because it is a compulsory counterclaim that was not raised. In response, the Plaintiffs cite the Seventh Circuit case of In re Smith, 640 F.2d 888 (7th Cir.1981), for the proposition that a Truth-In-Lending Act claim can be claimed by debtors in bankruptcy as exempt property under § 522(a) of the Bankruptcy Code, 11 U.S.C. § 522(a). In addition to this case citation, the Plaintiffs have submitted a copy of a pleading filed in their bankruptcy case which indicates that they have amended their Schedule B4 to claim as exempt the "possible T.I.L. claim against Heights Finance Corp." in the amount of $1,000. Turning first to the issue of whether the Plaintiffs lack standing to assert the Truth-In-Lending Act claim, the Court finds that the Plaintiffs are the proper parties to assert this claim. The Seventh Circuit in In re Smith, 640 F.2d 888 (7th Cir.1981), made it clear that debtors in a bankruptcy can claim as exempt a possible Truth-In-Lending Act claim, and the Plaintiffs have provided documentation which shows that that is exactly what they did. The Defendant argues that the Smith case is not controlling on this issue, however, because Smith does not address the issue of whether the trustee must abandon the property pursuant to § 554 of the Bankruptcy Code, 11 U.S.C. § 554. According to the Defendant, under § 541 of the Bankruptcy Code, 11 U.S.C. § 541, even exempt property is property of the estate and it only becomes property of the debtor outside of the bankruptcy proceedings after the trustee has abandoned it under § 554. The Court believes that the Defendant's interpretation of the Bankruptcy Code is incorrect, because a trustee need not abandon exempt property in order for it to cease being property of the estate. The Bankruptcy Code differs from the prior Bankruptcy Act in that, under § 541 of the Code, the estate includes all legal and equitable interests of the debtor, including property that is exempt. Under the prior Bankruptcy Act, exempt property was not considered property of the estate, and the estate had to challenge a debtor's claim of exemption in order to receive the property into the estate. Under present bankruptcy law, all legal and equitable interests of the debtor are part of the estate as of the filing of the bankruptcy petition, and the Bankruptcy Code places the burden on the debtor to follow the procedures which exempt property from the estate. In the present case, there is no indication that any party before the bankruptcy court or the bankruptcy trustee ever challenged the Truth-In-Lending claim exempted by the debtors. Under Rule 4003 of the bankruptcy rules, a trustee or creditor is given 30 days after the conclusion of the meeting of creditors or the filing of any amendment to the list of exemptions to file objections to the list of property claimed as exempt by the debtor. Nothing in the record indicates that any objections were ever filed. Thus, by virtue *544 of the passage of time and the operation of this rule, the Truth-In-Lending Act claim became exempt property and is no longer part of the bankruptcy estate. Therefore, the Motion to Dismiss based upon the standing issue is DENIED. The Defendant also claims that the Truth-In-Lending Act claim was a compulsory counterclaim in the bankruptcy proceeding on the underlying debt, and it is barred in this Court because it was not raised earlier. In the case of Valencia v. Anderson Brothers Ford, 617 F.2d 1278 (7th Cir.1980), rev'd on other grounds, 452 U.S. 205, 101 S. Ct. 2266, 68 L. Ed. 2d 783 (1981), a suit brought under the Truth-In-Lending Act, the Seventh Circuit stated that the defendant creditor's claims for the debt involved in the lending transaction was not a compulsory counterclaim under Federal Rule of Civil Procedure 13(a). The court explained that the sole connection between a Truth-In-Lending Act claim and a debt counterclaim is the initial execution of the loan document. The court added that this connection is insignificant in light of the fact that the Truth-In-Lending Act claim and debt counterclaim raise different legal and factual issues governed by different bodies of law. According to the court: "A TILA suit for inadequate disclosure, such as the instant case, can often be resolved by an examination of the face of the loan document. A debt counterclaim, on the other hand, can raise the full range of state law contract issues. (Footnote omitted). The two claims do not, as the Fifth Circuit [in Plant v. Blazer Financial Services, Inc., 598 F.2d 1357 (5th Cir.1979)] held, spring from the same `aggregate of operative facts.' Plant, 598 F.2d at 1361. The rights and obligations of the parties with respect to the two claims hinge on different facts and different legal principles." 617 F.2d at 1291-92. The United States Supreme Court reversed the Seventh Circuit's decision in Valencia, but the Supreme Court's decision focused upon the Seventh Circuit's interpretation of the statutory language of the Truth-In-Lending Act and did not address the compulsory counterclaim issue. See also, Basham v. Finance America Corp., 583 F.2d 918 (7th Cir.1978), cert. denied, DeJaynes v. General Finance Corp., 439 U.S. 1128, 99 S. Ct. 1046, 59 L. Ed. 2d 89 (1979) and First National Bank v. Childs, 444 U.S. 825, 100 S. Ct. 47, 62 L. Ed. 2d 32 (1979) (in determining whether the time barred Truth-In-Lending Act claim could still be brought by the debtors as a recoupment claim against the creditor, the court stated, "The TILA claim is not directed at or an answer to the underlying debt." 583 F.2d at 928). This case is factually different from Valencia because the Defendant is asserting that the Truth-In-Lending Act claim was a compulsory counterclaim under Rule 13(a) in the action brought by Heights Finance in the bankruptcy case on the underlying debt. However, this Court does not believe that the procedural posture of the case would change the outcome that the Seventh Circuit reached in Valencia. Based upon the above-cited Seventh Circuit cases, the Court finds that the Truth-In-Lending Act claim was not a compulsory counterclaim that the debtors (or the bankruptcy trustee) were required to bring in the bankruptcy suit on the underlying debt in order to avoid the bar of res judicata. Moreover, the claim is not so closely related to the proceedings in the bankruptcy that the bankruptcy court has jurisdiction over this matter. The Plaintiffs, who have claimed the Truth-In-Lending Act claim as exempt property, are entitled to bring that claim in this lawsuit. The Court orders that the Defendant's Motion to Dismiss is DENIED. During the proceedings on this Motion to Dismiss, the Plaintiffs filed a Motion for Summary Judgment, based upon this Court's prior ruling in the case of Gilstrap v. Heights Finance Corp., No. 85-1385 (C.D.Ill., August 28, 1986, Mihm J.) 1986 WL 27587. Although the Defendant has filed a response to a similar Motion for Summary Judgment in another Truth-In-Lending Act case, the Court orders the Defendant to respond to the Plaintiffs' Motion for Summary Judgment within 14 *545 days, and the Plaintiffs will have 10 days thereafter to file a reply.

01-03-2023

10-30-2013

https://www.courtlistener.com/api/rest/v3/opinions/3517147/

This suit had been instituted in the chancery court, and, on motion of the defendant, that court transferred the action to the circuit court, but at the same time entered an order allowing an interlocutory appeal from its said order of transfer. The defendant has moved here to dismiss the appeal, since it is not within the statute, section 14, Code 1930 (chap. 151, Laws 1924), allowing such appeals. It was distinctly held in Warner v. Hogin, 148 Miss. 562,114 So. 347, that an order of transfer is not appealable, and we also held in Love v. Love, 158 Miss. 785, 131 So. 280, 281, that an order on a motion which involves nothing but a step in procedure is not appealable, because it does not "settle all the controlling principles involved in the cause." Appellee relies on Robertson v. F. Goodman Dry Goods Co.,115 Miss. 210, 76 So. 149, as to which it is enough to say that that case was decided before the present amendment to the governing statute was enacted. We reaffirm the later holding in Warner v. Hogin, supra. Appeal dismissed.

01-03-2023

07-05-2016

https://www.courtlistener.com/api/rest/v3/opinions/2816556/

NONPRECEDENTIAL DISPOSITION To be cited only in accordance with Fed. R. App. P. 32.1    United States Court of Appeals For the Seventh Circuit  Chicago, Illinois 60604    Submitted June 26, 2015*  Decided July 13, 2015    Before    DIANE P. WOOD, Chief Judge    JOEL M. FLAUM, Circuit Judge    DAVID F. HAMILTON, Circuit Judge    No. 14‐3707    WENDY B. ADELSON,    Appeal from the United States      Plaintiff‐Appellant,  District Court for the Northern District    of Illinois, Eastern Division.    v.      No. 07 C 7208  OCWEN FINANCIAL    CORPORATION, et al.,  Charles R. Norgle,    Defendants‐Appellees.  Judge.    O R D E R  Eight  years  ago  Wendy  Adelson,  a  Michigan  homeowner,  sued  Ocwen  Loan  Servicing, LLC, and other companies involved with her home mortgage in a Michigan  court;  her  complaint  raised  only  state‐law  claims.  She  soon  found  herself  litigating  in  Chicago, however, after the defendants (for simplicity we disregard all but Ocwen and  HSBC Bank USA) removed the suit to federal court in Michigan and then engineered its                                                    * After examining the briefs and record, we have concluded that oral argument is  unnecessary.  The  appeal  is  therefore  submitted  on  the  briefs  and  record.  See FED.  R.  APP. P. 34(a)(2)(C).  No. 14‐3707    Page 2    transfer to the Northern District of Illinois, the site of multidistrict litigation involving a  host of claims against Ocwen. Since then Adelson’s suit, which principally alleges that  Ocwen’s irregular handling of her loan resulted in an unlawful foreclosure action, has  been  dormant.  The  reason  for  the  lack  of  action  appears  to  be  because  the  presiding  judge  believes  that  Adelson’s  suit  was  extinguished  by  another  of  the  MDL  cases,  a  successful  class  action  in  which  she  was  a  class  member.  This  was  incorrect,  as  we  explain  below.  Adelson,  trying  to  get  her  suit  back  on  track,  filed  what  she  labeled  a  motion  under  Federal  Rule  of  Civil  Procedure  60(b).  The  district  judge  denied  her  motion, prompting this appeal. But there is no final judgment in her individual lawsuit,  and so we dismiss the appeal.      I      Adelson bought her home in Lake Orion, Michigan, in 2006 with financing from  Sebring Capital Partners, a now‐defunct residential‐mortgage lender. Shortly thereafter  Sebring  closed  its  doors,  but  not  before  it  assigned  Adelson’s  note  and  mortgage  to  another financial institution. Adelson got wind of the assignment when Ocwen entered  the  picture  and  told  her  that  it  would  be  collecting  future  payments.  According  to  Adelson,  Ocwen  refused  to  disclose  the  name  of  the  institution  now  holding  her  note  and  mortgage.  Frustrated  by  the  lack  of  transparency,  Adelson  ceased  making  payments,  and  within  months  HSBC  showed  its  hand  by  initiating  foreclosure  proceedings.    Adelson  hired  counsel  and  sued  Ocwen  and  HSBC.  Her  state‐court  complaint  includes  a  number  of  claims,  all  arising  under  Michigan  law,  including  breach  of  contract,  wrongful  foreclosure,  violations  of  consumer‐protection  statutes,  and  intentional infliction of emotional distress. The complaint attributes the loan arrearage  to  Ocwen’s  malfeasance  and  alleges  that  HSBC  breached  the  loan  and  mortgage  contracts  by  moving  to  foreclose.  As  relief  her  suit  seeks  primarily  to  enjoin  the  foreclosure proceeding and quiet title to her home.      Ocwen  and  HSBC,  invoking  the  diversity  jurisdiction,  removed  the  suit  to  the  Eastern  District  of  Michigan.  After  filing  an  answer,  the  defendants  sought  transfer  to  Chicago,  where  three  years  earlier  the  Judicial  Panel  on  Multidistrict  Litigation  had  consolidated  for  pretrial  proceedings  numerous  lawsuits  (the  number  eventually  reached 93) accusing Ocwen of violating federal or state consumer‐protection statutes.  Adelson’s suit was assigned case number 07 C 7208 in the Northern District of Illinois,  where  she  hired  local  counsel.  Judge Norgle,  who  presided  over  the  MDL,  denied  No. 14‐3707    Page 3    Adelson’s  motion  to  remand  the  suit  to  Michigan  state  court.  That  would  be  the  last  entry on the docket for the next six years.      Meanwhile,  in  another  of  the  MDL  suits  against  Ocwen,  the  plaintiffs  sought  class  certification.  The  class  complaint’s  lengthy  list  of  claims  all  centered  on  Ocwen’s  alleged  practice  of  charging  and  collecting  late  fees  even  when  loan  payments  were  timely or the collection of late fees was statutorily barred. That litigation, case number  04 C 2714, did not involve HSBC or the other defendants in Adelson’s state suit other  than Ocwen and its affiliates. Adelson was a member of the putative class.      The  class  action  was  certified  and  settled  in  late  2010.  Under  the  terms  of  the  settlement, which is governed by Illinois contract law, Ocwen agreed to forgive some of  the  late  fees  it  had  charged.  In  exchange,  class  members  released  all  claims  against  Ocwen “arising out of, or related to, the facts and/or claims alleged in the MDL Actions  arising out of state or federal law.” (The settlement agreement defines “MDL Actions”  to include Adelson’s lawsuit.) The release expressly excepts “statutory or common law  rights against foreclosure, whether asserted in the form of a claim or defense.” Adelson  did not opt out or otherwise object to the settlement, and so in early 2012 she received  from  Ocwen  a  credit  for  late  fees  previously  charged  to  her  loan  account.  Although  Adelson’s acquiescence in the class settlement had the effect of releasing some (but not  all)  of  the  claims  in  her  individual  lawsuit,  no  entry  to  that  effect  was  made  on  the  docket in No. 07 C 7208.      Three years later Adelson filed under No. 07 C 7208 the “Rule 60(b) motion” that  precipitated  this  appeal.  In  that  motion,  she  sought  to  vacate,  solely  as  to  her,  the  judgment in the class action, a step that she apparently believes is necessary before she  is  entitled  to  move  forward  with  her  individual  suit  against  Ocwen  and  HSBC.  (According to counsel for Ocwen, this motion came “only after foreclosure proceedings  were restarted.”) Adelson asserted that she had not received notice of the settlement, an  omission for which she faulted her attorney. Only Ocwen responded to this motion. The  company implicitly seconded Adelson’s suspicion that her individual suit against it was  ended by the class settlement. Ocwen opposed the motion on the ground that Adelson’s  allegations did not warrant relief under Rule 60(b).      The  district  court  denied  the  motion.  Adelson’s  assertion  of  excusable  neglect  under  Rule 60(b)(1), the  court reasoned, is untimely. The court  also  rejected  Adelson’s  contention that she had established “extraordinary circumstances” under Rule 60(b)(6).  The  court  then  declared  that  the  release  included  in  the  class  settlement  precludes  No. 14‐3707    Page 4    further  litigation  of  “all  claims  that  were  or  could  have  been  brought  against  Defendants based on the allegations in her complaint.”    II    Adelson filed a notice of appeal from this ruling, asserting that the district court  abused  its  discretion  in  denying  her  “Rule 60(b)  motion.”  Before  we  can  evaluate  the  court’s ruling, however, we must ensure that our jurisdiction is secure, an obligation we  bear even if the parties do not bring the issue to our attention. See Minn. Life Ins. Co. v.  Kagan, 724 F.3d 843, 846 (7th Cir. 2013).    As we assess our jurisdiction, we are confronted first with the question whether  to treat Adelson’s submission as a motion in the class action, or as one in her individual  lawsuit. The parties have paid little attention to that detail. They focus their contentions  instead on facts relating to the class settlement, not on the facts of Adelson’s underlying  lawsuit.  At  the  same  time,  the  parties  have  consistently  acted  as  though  Adelson’s  motion was filed in her individual suit. That motion bears the name and docket number  of  the  lawsuit  originating  in  Michigan  state  court,  and  none  of  the  defendants—in  particular those who were not part of the class action—ever hinted that the case name  or number is incorrect. Neither did the district court question the form of the motion. In  this court the appellees—who, Adelson points out, purport to be all of the defendants  she named in her state complaint—frame their jurisdictional statement as if this appeal  is from the denial of a postjudgment motion in Adelson’s individual suit.      We see no reason not to take Adelson’s motion at face value, especially since its  form went unchallenged by the  defendants and the district court. Cf. Wheeler v. Talbot,  770  F.3d  550,  552  (7th  Cir.  2014).  This  approach  makes  good  procedural  sense:  By  its  own  terms  Rule 60(b)  applies  only  to  parties  and  their  legal  representatives.  Absent  class  members  such  as  Adelson  are  treated,  with  limited  exceptions  inapplicable  here,  as  non‐parties  to  a  class  action.  See Devlin  v.  Scardaletti,  536  U.S.  1,  9–10  (2002).  In  accordance  with  that  treatment,  it  has  long  been  the  general  rule  that  some  form  of  participation  in  the  litigation  is  necessary  before  an  unnamed  class  member  can  seek  relief  under  Rule  60(b).  See In  re  Four  Seasons  Sec.  Litig.,  525  F.3d  500,  504  (10th  Cir.  1975);  6A  FED.  PROC.,  L.  ED.  § 12:358  (Westlaw  database  updated  2015);  cf. Devlin,  536  U.S.  at  9,  14  (holding  that  absent  class  member  who  objects  to  class  settlement  may  appeal  only  “the  District  Court’s  decision  to  discard  his  objections”).  Neither  party  contends  that  Adelson  participated  in  the  class  litigation,  or  that  there  is  any  other  reason  to  disregard  Rule  60(b)’s  plain  terms.  If  Adelson  wants  now  to  exclude  herself  No. 14‐3707    Page 5    from  the  class  settlement,  she  would  need  to  take  different  procedural  steps.  For  example,  she  might  consider  a  motion  under  Rule  6(b)  to  extend  the  time  to  opt  out.  See FED. R. CIV. P. 6(b); In re Am. Express Fin. Advisors Sec. Litig., 672 F.3d 113, 129–30 (2d  Cir. 2011).    Unless  there  is  a  final  judgment  in  Adelson’s  individual  lawsuit,  it  was  premature  to  invoke  Rule  60.  Although  an  appeal  from  the  denial  of  a  motion  under  Rule 60(b)  may  be  taken  separately  from  an  underlying  decision,  the  rule  allows  a  district court to relieve a party only from a final decision. See Mintz v. Caterpillar Corp.,  No.  14‐1881,  2015  WL  3529396,  at  *5  (7th  Cir.  June  5,  2015).  The  defendants  hint  that  they believe that the class settlement had the effect of barring Adelson’s individual suit  in toto;  Adelson  (who  is  acting  pro  se)  appears  to  share  that  assumption.  And  well  she  might: the district court’s order denying Adelson’s motion conveys the same message.    But  that  message  cannot  withstand  scrutiny.  The  defendants  and  the  district  court  did  not  cite  any  authority  for  their  understanding  that  the  class  settlement  released  all  defendants  from  all  claims  in  Adelson’s  lawsuit.  The  class  settlement  is  a  written  document  that  we  may  interpret  for  ourselves.  See Stanek  v.  St. Charles  Cmty.  Unit Sch. Dist. #303, 783 F.3d 634, 642 (7th Cir. 2015). That document does not foreclose  entirely the claims in Adelson’s individual suit, even though it purports to resolve some  of them. As to Ocwen, Adelson appears to have abandoned a significant portion of her  claims  by  not  timely  opting  out  of  the  settlement.  But  the  release  expressly  exempts  claims  asserted  in  opposition  to  foreclosure,  and  Ocwen  has  never  developed  any  argument  that  all  of  Adelson’s  claims  against  the  company  (in  particular  those  for  wrongful foreclosure and breach of contract) fall outside this exemption. Moreover, as  we  have  noted,  Adelson’s  state  complaint  principally  sought  to  stop  the  mortgage  foreclosure. The foreclosure action was brought by HSBC and another defendant named  in  Adelson’s  state  complaint.  Neither  is  a  defendant  in  the  class  action.  It  is  inconceivable  that  settling  the  class  claims against  Ocwen  extinguished  Adelson’s  suit  against other defendants not involved in the class action and not affiliated with Ocwen.  At  a  minimum,  Adelson’s  entire  suit  continues  to  pend  against  the  remaining  defendants.    We  thus  lack  appellate  jurisdiction.  The  judgment  in  the  class  action  does  not  fully resolve Adelson’s individual suit and thus essentially functions much like an order  authorizing  an  amended  pleading  that  dismisses  some  but  not  all  claims,  see FED.  R.  CIV. P. 15(a); Taylor v. Brown, No. 12‐1710, 2014 WL 9865341, at *5 (7th Cir. June 2, 2015),  or  an  order  dismissing  some  but  not  all  parties  to  a  suit  without  an  accompanying  No. 14‐3707    Page 6    certification  under  Federal  Rule  of  Civil  Procedure  54(b),  see Morton  Int’l,  Inc.  v.  A.E.  Staley Mfg. Co., 460 F.3d 470, 480 n.12 (3d Cir. 2006), or partial summary judgment, see  FED. R. CIV. P. 56(a). No matter how Adelson labeled her motion, in substance she was  trying to move her stalled lawsuit forward; she was not seeking review of a supposed  final judgment in that action. The case involving  Ocwen and its codefendants that the  court  transferred  from  Michigan  to  the  Northern  District  of  Illinois  remains  pending,  and  the  parties  and  the  district  court  should  get  about  the  business  of  resolving  it,  whether by commencing discovery and motion practice in Chicago, or by suggesting to  the  JPML  that  the  case  be  returned  to  the  Eastern  District  of  Michigan.  See 28  U.S.C.  § 1407(a); M.D.L. Rules 10.1(b), 10.3. The litigation is unfinished, and the district court  will have to decide how much or how little is left of Adelson’s claims against Ocwen.    APPEAL DISMISSED.

01-03-2023

07-13-2015

https://www.courtlistener.com/api/rest/v3/opinions/2986167/

August 22, 2013 JUDGMENT The Fourteenth Court of Appeals IRVIN HOLLIS FERREE, Appellant NO. 14-12-00286-CR V. THE STATE OF TEXAS, Appellee ________________________________ This cause was heard on the transcript of the record of the court below. Having considered the record, this Court holds that there was no error in judgment. The Court orders the judgment AFFIRMED, and that this decision be certified below for observance.

01-03-2023

09-23-2015

https://www.courtlistener.com/api/rest/v3/opinions/3517160/

Appellee brought this action in the circuit court of Hancock county against appellants, Gulf Coast Motor Express Company, Inc., and C.C. Couvillon, to recover damages for an injury received by him as the result of a collision between a motor freight truck driven by Couvillon and a passenger automobile in which appellee was traveling. Appellee averred in his declaration that the freight truck was engaged about the business of appellant, the Motor Express Company; was being driven by its servant, Couvillon, and through the negligence of the latter the injury occurred. There was a verdict and judgment in the sum of eight thousand dollars. Appellants made a motion for a new trial, one ground of which was that the verdict was excessive. The court stated that the motion would be sustained on that ground unless appellee entered a remittitur reducing the amount to five thousand dollars. Appellee entered such remittitur, and judgment was entered accordingly. From that judgment appellants prosecute this appeal. On July 1, 1934, Couvillon was driving a truck with trailer attached, going east on United States highway 90 in Hancock county. Appellee was in a passenger automobile with others, going west on the same highway. The evidence for appellee, which was believed by the jury, showed that the collision and injury was caused by the negligence of the driver, Couvillon. Appellee was knocked unconscious and his right collarbone was broken. He was taken to a hospital in Bay St. Louis, and the following day removed to the Charity Hospital in the city of New Orleans. Dr. Wolfe of the Bay St. Louis hospital testified that he had a broken collarbone and five other wounds in which it was necessary to take nineteen stitches; that as a result of the wounds scar tissue had formed, causing keloids, which resulted in some discoloration and discomfort, and which might be permanent. Appellee testified that the broken collarbone was in a cast for about two months, during which time he received *Page 656 treatment at the Charity Hospital in New Orleans, that the cast was removed, but shortly afterwards the collarbone broke again, necessitating another cast for two months or more, and that as a result of the injuries he was totally incapacitated for any kind of work for a period of about six months. Appellants' main contentions are (1) that the Motor Express Company had not been brought into court by proper process for trial at the term at which the cause was tried; (2) that a relation of master and servant did not exist between the Motor Express Company and Couvillon, but that Couvillon was an independent contractor, for whose tort the Motor Express Company was not liable; and (3) that the verdict, although reduced from eight thousand to five thousand dollars, was excessive. The other questions argued are not of sufficient merit to call for a discussion by the court. We will consider the above questions in the order stated. It may be conceded for the purposes of decision that the efforts by process to get the Motor Express Company into court for trial at the term at which the cause was tried were abortive; still by its own action it voluntarily made itself a party for trial at that term. The Motor Express Company made a motion to quash the process for various reasons. The court overruled the motion; thereupon the Motor Express Company moved the court to either continue the case for the term or set it for trial at a later day in that term. The court made an order on the motion, setting it for a later day in that term. It was accordingly tried; the trial beginning on the day it was set. Section 2999, Code of 1930, provides as follows: "Where the summons or citation, or the service thereof, is quashed on motion of the defendant, the case may be continued for the term, but defendant shall be deemed to have entered his appearance to the succeeding term of the court." *Page 657 Under the statute, the motion to quash was an appearance for the succeeding term of the court. If nothing else had been done, there might have been merit in the contention that the cause was not triable at the term at which it was tried, but, when the Motor Express Company entered its motion to either continue the case or set it for a day during that term, that was tantamount to a general appearance. The Motor Express Company was in court, at least after that, for trial either at that term or some subsequent term. The Motor Express Company was a Louisiana corporation engaged in transporting and delivering, as a common carrier for hire, freight by motortrucks along certain highways, one of which was United States highway 90 from New Orleans to Mobile. The freight was accumulated by the shippers at a depot in the city of New Orleans and there loaded on trucks for various destinations. Couvillon owned a truck and trailer; he was under contract with the Motor Express Company and served the territory between New Orleans and Mobile, and was so engaged when the collision occurred, resulting in appellee's injury. The Motor Express Company issued waybills covering the freight in its own name, and directed Couvillon to deliver it to the consignees; the latter was charged by the company with the amount due on all C.O.D. packages, for which he in turn accounted to the company. He was authorized to accept freight for the Motor Express Company anywhere along the route, deliver it to the consignees, and collect regular freight charges thereon, fixed by the company. Couvillon's compensation was a certain per cent of all freight charges received. The Motor Express Company had freight agents at Biloxi and Pascagoula, in this state, whose duty it was to receive and distribute freight on its account. In many respects the Motor Express Company had substantial control over the means and methods used by Couvillon in carrying freight for it. He was therefore *Page 658 a servant and not an independent contractor. Texas Co. v. Mills,171 Miss. 231, 156 So. 866; Gulf Refining Co. v. Nations,167 Miss. 315, 145 So. 327; McDonald v. Hall-Neely Lumber Co.,165 Miss. 143, 147 So. 315. An independent contractor is one rendering services in the course of his occupation representing the will of his employer as to the results alone, and not as to the means of accomplishing those results. The verdict is large, but we cannot say that it is so large as to evince passion and prejudice on the part of the jury, especially in view of the fact that the trial judge considered and passed on this question requiring appellee to reduce the verdict from eight thousand to five thousand dollars or submit to a new trial. The judgment of the trial court on such a question should and has material influence with this court. Affirmed.

01-03-2023

07-05-2016

https://www.courtlistener.com/api/rest/v3/opinions/3517161/

The appellee is the beneficiary in two life insurance policies issued by the appellant to Charles D. Askew, each in the sum of $1,000 and both of which contained this clause: "Upon due proof that the death of the Insured resulted solely from bodily injuries caused directly, exclusively and independently of all other causes by external, violent and purely accidental means, subject to the terms and conditions hereinafter stated, the Society agrees to increase the amount payable as stated on the face hereof, to Two Thousand Dollars. "This increased amount of insurance in case of accidental death shall be payable upon receipt of due proof *Page 352 that the death of the Insured occurred while this policy was in full force and effect, and resulted solely from bodily injuries, caused directly, exclusively and independently of all other causes by external, violent and purely accidental means, provided that death shall ensue within 90 days from the date of such injuries and shall not be the result of or be caused directly or indirectly by self-destruction, sane or insane, disease or illness of any kind, physical or mental infirmity." On May 26, 1941, the insured fell, breaking his hip, and died on July 5, 1941. The appellant paid the $2,000 absolutely due under the policies on the death of the insured, but denied liability for the additional $2,000 agreed to be paid therein on the happening of the events set forth in the clause thereof hereinabove set out, for the collection of which this action was brought. When the appellee rested her case the appellant did likewise, introducing no evidence. A request by the appellant for a directed verdict was denied, but a similar request by the appellee was granted and there was a verdict and judgment accordingly. In support of its contention that the appellee's request for a directed verdict should have been denied and that its request therefor should have been granted, the appellant says that the appellee did not meet her burden of proving (a) that the insured's fall was caused by accidental means, and (b) that his death was not the result of nor caused by disease or illness. The first of these contentions will be pretermitted and the evidence bearing thereon will not be set out. The evidence discloses as to the second that in 1936 a ruptured brain blood vessel resulted in the insured's having a stroke of apoplexy, and being paralyzed on his right side, from which he became permanently disabled and since which to his death the appellant made him payments under total disability clauses in the policies. After this stroke the insured's physical condition grew worse and he suffered and was suffering at the time of his fall with hardening of the arteries, high blood pressure *Page 353 and a valvular heart disease from which his death might be expected at any moment. What the immediate cause of his death was does not appear. In order for the appellee to here recover, the policy requires her to prove that the death of the insured resulted from his broken hip and not from the active disease with which he was suffering and from which alone his death might have occurred at any time. This she failed to do. Had the evidence disclosed that the insured was suffering with a latent disease which was put actively in motion by the breaking of his hip, a different question would have been presented. United States F. G. Co. v. Hood, 124 Miss. 548, 87 So. 115, 15 A.L.R. 605. The appellant's request for a directed verdict should have been granted. Reversed and judgment here for the appellant.

01-03-2023

07-05-2016

https://www.courtlistener.com/api/rest/v3/opinions/2987339/

Affirmed and Majority and Concurring Opinions filed March 28, 2013. In The Fourteenth Court of Appeals NO. 14-11-00440-CR JACKIE LEE HALEY, Appellant V. THE STATE OF TEXAS, Appellee On Appeal from the 25th District Court Colorado County, Texas Trial Court Cause No. 10-118-CR CONCURRING OPINION I respectfully concur. I agree in all regards with the majority’s analysis of Issues Nos. 1 and 3–6. I agree with the disposition of the cause. However, with regard to Issue No. 2, I would hold that the admission of the State’s expert testimony (Logan) was error, but harmless error. I. IT WAS ERROR TO ADMIT THE OPINIONS OF THE STATE’S EXPERT BARRY LOGAN, PH.D. The State presented Barry Logan, Ph.D. as an expert witness. Dr. Logan opined that appellant “was under the influence of and affected by his methamphetamine use at the time that he was involved in this crash.” The majority opinion characterizes the methodology used by Dr. Logan to reach this opinion as (1) comparing data on subjects known to have methamphetamine in their blood whose data became known to Logan because they were arrested or injured, or fatally injured another; and (2) correlating the relationship between the level of methamphetamine found and the circumstances of the incident that brought the subject to his attention. Actually, that was Dr. Logan’s methodology for his case studies, not for formulating opinions in this case. To formulate his opinion, Dr. Logan used one piece of information about appellant: appellant’s blood concentration of methamphetamine. Dr. Logan compared appellant’s blood concentration of methamphetamine with the average blood concentration of the study subjects. Of note, appellant’s blood concentration fell within the range of blood concentration of Dr. Logan’s study subjects (.01– 2.24); it was higher than the average. Other than comparing appellant’s blood concentration to the average of the studies he conducted or was aware of, Dr. Logan made no effort to show that appellant was similar in any way to the subjects studied. Dr. Logan himself conceded that nothing in the available “scientific data” would allow him to testify about the specific effects that appellant would have been experiencing as a result of methamphetamine. There is no threshold above which blood concentration of methamphetamine is generally accepted to affect behavior or driving behavior. Dr. Logan was nevertheless willing to give the opinion that appellant had to be affected because his concentration was so far above what is considered a therapeutic range. In short, Dr. Logan’s methodology is a guess—an educated 2 guess, but a guess. Applying these facts to law, then, Dr. Logan’s methodology for converting appellant’s .8 blood concentration of amphetamine into an opinion about the effects of that amphetamine on appellant at the time of the crash fails significant Kelly factors: There is no evidence that the methodology is accepted in the scientific community. Even Dr. Logan testified that it is difficult to correlate specific effects with blood concentration. Nothing in Dr. Logan’s testimony about his case studies supports a per se correlation between concentration of methamphetamine and effects on driving. There is no evidence that the methodology is supported by the literature. The literature discussed at trial memorializes case studies—observational studies of known positive methamphetamine and known illegal driving behavior—to determine whether there is a relationship. There are no control groups and few study subjects who tested positive for methamphetamine alone, as appellant did. Nothing in the studies or the literature discussed at trial endorses Dr. Logan’s methodology for comparing dissimilar subjects with known criteria to appellant. There is no evidence that the methodology is capable of having a rate of error; Dr. Logan acknowledges that his case studies have no rate of error. See Kelly v. State, 824 S.W.2d 568, 573 (Tex. Crim. App. 1992). Further, Dr. Logan’s opinion about appellant that related back to the time of the crash is fundamentally flawed because it is not founded on any information about time of ingestion, height, weight, absorption, elimination, time of crash, or time of blood test. See Mata v. State, 46 S.W.3d 902, 909 (Tex. Crim. App. 2001) (describing retrograde extrapolation as the method to estimate a level of blood- alcohol at the time of driving based upon a computation of absorption derived from, among other things, contents of food in the stomach, gender, height, weight, amount consumed, and time of consumption); see also DeLarue v. State, 102 3 S.W.3d 388, 401 (Tex. App.—Houston [14th Dist.] 2003, pet ref’d) (holding it was error to admit “marijuana evidence as it related to appellant’s intoxication and resultant behavior” where the State did not quantify the presence of marijuana, show when the marijuana was introduced into his system, show he was “under the influence” at the time of the accident, or show causation between appellant’s behavior and the presence of marijuana). In summary, Dr. Logan could not and would not opine about how the methamphetamine affected appellant. But as to whether appellant was affected by the methamphetamine, the essence of Dr. Logan’s opinion was, “How could he not be?” That is not a scientific opinion. II. THE ERROR IN ADMITTING DR. LOGAN’S TESTIMONY WAS HARMLESS Under Rule 44.2(b) of the Texas Rules of Appellate Procedure, we review the trial court’s erroneous evidentiary rulings for harm, disregarding non- constitutional errors that do not affect the defendant’s “substantial rights.” TEX. R. APP. P. 44.2(b). We may not reverse for non-constitutional error if, after examining the record as a whole, we have fair assurance that the error did not have a substantial and injurious effect or influence in determining the jury’s verdict, or had but a slight effect. See Casey v. State, 215 S.W.3d 870, 885 (Tex. Crim. App. 2007); Johnson v. State, 967 S.W.2d 410, 417 (Tex. Crim. App. 1998). I would conclude that we have fair assurance that this error did not have a substantial and injurious effect or influence in determining the jury’s verdict. The record as a whole leaves no doubt that Dr. Logan’s testimony, at most, had a slight effect on the jury’s verdict. Appellant was indicted for manslaughter, recklessly causing the death of the three victims “while driving eastbound on the Interstate 10 freeway after ingesting 4 methamphetamine and fail[ing] to properly control his vehicle.” Initially, appellant testified that he ingested an unknown synthetic substance1 to allow him to stay awake and drive all night. However, appellant later acknowledged that he did not say anything to the doctor at the emergency room about the unknown substance because he knew he was on methamphetamine. And the hospital records confirm that appellant tested positive for amphetamine. The jury also heard that appellant had a prior conviction for a methamphetamine-related offense. In fact, they saw the judgment for that offense: conspiracy to manufacture and distribute methamphetamine. The toxicologist testified about the generally-accepted effects of methamphetamine; that is, the initial stimulant effect of the drug and the subsequent depressant effect. She also testified about the characteristics ordinarily exhibited by someone in each of these phases. The toxicologist testified that accepted therapeutic levels of methamphetamine are .02 to .05 mpl and that anything above that level is considered “abusive.” Finally, she testified that she tested appellant’s blood and found a concentration of .8 mpl. It was undisputed that appellant caused the crash when he veered out of his lane at 65 miler per hour, crossed the median, and drove into oncoming cars. Eyewitnesses described the event and the lack of a precipitating obstacle in the road. They also indicated that they did not see appellant undertake any effort to brake or correct the tractor trailer he was driving. The medical personnel described appellant as unusually or alarmingly calm, with a “very flat” demeanor, but not in shock. Appellant displayed no physical reaction when the trooper on scene told him that three individuals had died as a result of the accident, and such reaction is atypical. 1 Unchallenged testimony at trial established that methamphetamine is a synthetic substance. 5 Appellant presented his theory that coughing caused him to blackout, and the blackout had nothing to do with methamphetamine. However, the jury also heard that immediately at the scene of the crash appellant said nothing of coughing; instead he stated that he must have blown a tire. Only later at the hospital did he describe coughing. With regard to Dr. Logan’s testimony, the State urged his credentials and studies, the defense urged a lack of reliability and speculation, and Dr. Logan himself admitted the limited value of his studies and the limited nature of his opinions. Much of Dr. Logan’s testimony about methamphetamine was duplicative of the toxicologist’s testimony. Thus, a review of the record as a whole shows that the toxicologist placed appellant’s blood concentration of methamphetamine at four times the abusive threshold level. Appellant previously had been incarcerated for manufacturing methamphetamine and knew he should not drive after consuming the drug. Moreover, appellant’s reliance on the tussive-syncope theory of blackout is inconsistent with his initial explanation of the crash. In fact, even during trial appellant’s testimony about what he took and whether he knew it to be methamphetamine was inconsistent. On this record, I would hold that Dr. Logan’s opinion did not have a substantial and injurious effect or influence in determining the jury’s verdict. /s/ Sharon McCally Justice Panel consists of Justices Boyce, McCally, and Mirabal.2 (Mirabal, J., majority). Publish — Tex. R. App. P. 47.2(b). 2 Senior Justice Margaret Garner Mirabal sitting by assignment. 6

01-03-2023

09-23-2015

https://www.courtlistener.com/api/rest/v3/opinions/2986169/

Order filed August 22, 2013 In The Fourteenth Court of Appeals ____________ NO. 14-13-00573-CV ____________ GILJOY TECHNOLOGY, INC. AND GILBERT CRUZ, Appellants V. THE CITY OF HOUSTON, Appellee On Appeal from the 281st District Court Harris County, Texas Trial Court Cause No. 2011-33288A ORDER The notice of appeal in this case was filed June 11, 2013. To date, the filing fee of $175.00 has not been paid. No evidence that appellant Gilbert Cruz has established indigence has been filed. See Tex. R. App. P. 20.1. Therefore, the court issues the following order. Appellants are ordered to pay the filing fee in the amount of $175.00 to the Clerk of this court on or before September 6, 2013. See Tex. R. App. P. 5. If appellants fail to timely pay the filing fee in accordance with this order, the appeal will be dismissed. PER CURIAM

01-03-2023

09-23-2015

https://www.courtlistener.com/api/rest/v3/opinions/2695389/

[Cite as White Assoc. Architects, Inc. v. Ohio Dept. of Transp., 2011-Ohio-2734.] Court of Claims of Ohio The Ohio Judicial Center 65 South Front Street, Third Floor Columbus, OH 43215 614.387.9800 or 1.800.824.8263 www.cco.state.oh.us WHITE ASSOC. ARCHITECTS, INC. Plaintiff v. OHIO DEPARTMENT OF TRANSPORTATION Defendant Case No. 2010-09868-AD Deputy Clerk Daniel R. Borchert ENTRY OF DISMISSAL {¶ 1} On August 12, 2010, plaintiff, William Philip White, filed a complaint against defendant, Department of Transportation. A review of the form complaint revealed the damage to the vehicle in question was paid by White Assoc. Architects, Inc. This entity also paid the filing fee. The plaintiff in this case is White Assoc. Architects, Inc. On January 19, 2011, plaintiff entity was ordered to obtain counsel to proceed with this claim, to file a notice of appearance, and an amended complaint with this court or face dismissal of this case. Plaintiff entity has not complied with the court order. Accordingly, plaintiff entity’s case is DISMISSED, without prejudice, pursuant to Civ.R. 41. The court shall absorb the court costs of this claim. ________________________________ DANIEL R. BORCHERT Deputy Clerk Entry cc: Case No. 2010-09868-AD -2- ENTRY White Assoc. Architects, Inc. William Philip White 345 Longfellow Avenue Worthington, Ohio 43085 DRB/laa Filed 3/10/11 Sent to S.C. reporter 5/27/11

01-03-2023

08-02-2014

https://www.courtlistener.com/api/rest/v3/opinions/2569771/

1 F. Supp. 2d 294 (1998) HONESS 52 CORP., Plaintiff, v. The TOWN OF FISHKILL, The Town Board of the Town of Fishkill and The Planning Board of the Town of Fishkill, Defendants. No. 97 Civ. 6724 (WCC). United States District Court, S.D. New York. April 6, 1998. *295 Cuddy & Feder & Worby, White Plains, NY (Joshua J. Grauer, of counsel), for Plaintiff. Martin, Clearwater & Bell, New York City (Gregory J. Radomisli, of counsel), for Defendants. OPINION AND ORDER WILLIAM C. CONNER, Senior District Judge. This civil rights action arises out of a dispute between plaintiff Honess 52 Corp. and the Town of Fishkill (the "Town"), the Town Board of the Town of Fishkill (the "Town Board"), and the Planning Board of the Town of Fishkill (the "Planning Board")—collectively, the "Defendants" — over development of property owned by Plaintiff (the "Property"). In its complaint, Plaintiff alleges that the defendants arbitrarily and capriciously deprived it of a constitutionally protected property interest in *296 violation of its substantive due process rights. Plaintiff seeks redress for the defendants' alleged conduct pursuant to 42 U.S.C. § 1983 and on various state law grounds. Defendants now move, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, to dismiss the federal claims for failure to state a claim upon which relief can be granted. Defendants also seek dismissal of the pendent state claims pursuant to 28 U.S.C. § 1367(c)(3). For the reasons discussed below, Defendants' motion is granted. BACKGROUND For purposes of the motion to dismiss, the Court must accept as true the facts alleged in the complaint and appended documents. See Hertz Corp. v. City of New York, 1 F.3d 121, 125 (2d Cir.1993); Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 47 (2d Cir.1991) (discussing Fed.R.Civ.P. 10(c)). To the extent, however, that the allegations in the complaint are contradicted by annexed documents, the Court need not accept the allegations as true. See International Customs Assocs., Inc. v. Ford Motor Co., 893 F. Supp. 1251, 1255 n. 2 (S.D.N.Y.1995); Sazerac Co. v. Falk, 861 F. Supp. 253, 257 (S.D.N.Y.1994). In setting out the facts underlying this dispute, the complaint reaches back in time some thirty years. The long and convoluted story begins in 1965, at which time the Town's Zoning Ordinance permitted construction of approximately 337 residential dwelling units as of right on the Property. In 1966, the Town Board amended the Zoning Ordinance to allow only 31 units (the "1966 Zoning Amendment"). This amendment was never incorporated, in writing, into the book containing the Zoning Ordinance. In 1972, Green Mountain Estates, Inc. ("Green Mountain"), one of Plaintiff's several predecessors in interest, purchased the Property and met with the Planning Board to discuss development of 500 condominium units on the Property. It was not until this meeting that Green Mountain learned of the 1966 Zoning Amendment. In early 1973, Green Mountain filed a rezoning petition to permit construction of up to 500 units (the "1973 Rezoning Petition"). The Town Board denied the petition. Green Mountain subsequently commenced an Article 78 proceeding in the Supreme Court of the State of New York seeking to annul and set aside the denial of the 1973 Rezoning Petition and to declare the 1966 Zoning Amendment unconstitutional. In its March 7, 1974 decision, the state court (Justice Joseph Hawkins) ruled that the Town Board had improperly denied the 1973 Rezoning Petition but that the record did not permit a ruling on the constitutionality of the 1966 Zoning Amendment. The court referred the matter back to the Town Board for reconsideration of the 1973 Rezoning Petition. (See March 7, 1974 Decision, attached to Compl. as Exh. A.) In February 1975, almost one year after the state court's opinion had issued, the Town Board again denied Green Mountain's 1973 Rezoning Petition. Accordingly, Green Mountain renewed its Article 78 proceeding, seeking to have this second denial set aside and to have the 1966 Zoning Amendment declared unconstitutional. In a decision dated December 4, 1975, Justice Hawkins again concluded that the record was insufficient to determine the constitutional issues. However, given the "protracted delay" and failure to compile an adequate record that had ensued on the previous remand to the Town Board, the court ordered a trial. (See December 4, 1975 Decision, attached to Compl. as Exh. B.) After a four-day bench trial before Justice James Caruso, the state court declared the 1966 Zoning Amendment unconstitutional and ordered the Town Board to rezone the Property. The court also recommended that the parties reach an agreement as to the number of units that would be permitted on the Property. (See July 21, 1976 Decision, attached to Compl. as Exh. C.) In 1977, Green Mountain and the Town entered into a Stipulation of Settlement which was "so ordered" by the state court (the "1977 Stipulation"). The Stipulation set forth the rights and obligations of the respective parties and their successors with respect to the development of the Property. Specifically, the parties agreed that 337 residential units would be permitted on the Property, a *297 right that was to "remain constant and unimpaired until the year ending December 31, 2000," at which time the Stipulation would terminate. (1977 Stipulation, attached to Compl. as Exh. E, ¶¶ 1, 3.) However, the Town Board retained the right ... to determine the zoning in relation to the subject parcel in the future so long as said determination is not discriminatory as to this parcel and is part of a comprehensive plan of rezoning or redesignation for the area that encompasses East of the Fishkill Bridge and South of the Fishkill Creek .... [The Town Board also] shall have a right to make determinations in relation to the site plan ordinances and rules, subdivision regulations, road, drainage and sewer specifications so long as said determinations are not discriminatory against the property. (Id. ¶¶ 3, 5.) The Stipulation provided that it would run with the land as a permanent covenant and would bind the parties' assigns and successors. (See id. ¶¶ 3, 9, 10-11.) For a decade after entering the 1977 Stipulation, Green Mountain, which had bought the Property as an investment, was unsuccessful in finding a joint venture partner to develop the Property or a purchaser to buy it outright. Finally, in 1987, Ridgeview Associates ("Ridgeview"), which would become one of Plaintiff's several predecessors in interest, purchased the Property in reliance on representations by the Town and its representatives that the 1977 Stipulation was in full force and that no zoning change would be necessary to build a 337-unit residential development on the Property. Prior to the purchase, Ridgeview had posted a letter of credit in the amount of $824,000 to cover its share of the municipal sewer system upgrades that would be needed for a 337-unit development (the "Sewer LOC"). In October 1987, pursuant to the Zoning Ordinance, Ridgeview submitted an application to the Planning Board for site plan approval of a 337-unit condominium development on the Property (the "1987 Site Plan Application"). Toward the end of that month, the Planning Board, acting pursuant to the New York State Environmental Quality Review Act, N.Y. Envtl. Conserv. Law § 8-0101 et seq. ("SEQRA"), determined that an Environmental Impact Statement ("EIS") was required before it could act on Ridgeview's application. Despite its belief that the 1987 Site Plan Application was exempt from SEQRA, Ridgeview submitted a draft EIS in December 1987. After a July 1988 public hearing on the draft EIS, the Town issued a sight draft against the Sewer LOC in the amount of $660,000 which was allocated toward sewer improvements in contemplation of a 337-unit development. A few months thereafter, Ridgeview submitted a final EIS for review by the Planning Board. In April 1989, after several public meetings, the Planning Board adopted environmental findings pursuant to SEQRA (the "SEQRA Findings") and conditionally granted Ridgeview preliminary site plan approval (the "1989 Preliminary Site Plan Approval"). The Preliminary Site Plan Approval set out some ten pages of conditions that Ridgeview would have to satisfy before receiving final approval. It also excerpted provisions of the 1977 Stipulation pertaining to the respective rights of the parties in developing the Property. (See 1989 Preliminary Site Plan Approval, attached to Compl. as Exh. H.) The Planning Board made clear that it still had environmental concerns regarding the proposed development, and indicated that the 1977 Stipulation prevented an optimal response to these concerns: [T]he Planning Board must point out that its ability to review the subject project in the normal manner pursuant to [SEQRA] was severely hampered by the Stipulation of Settlement. That is, for example, lower density alternatives were not analyzed due to the possible legal right of [Ridgeview] to 337 dwelling units on the subject property. Wherever possible, the Planning Board has, however, sought some form of mitigation of the impacts associated with the project, within the constraints to the Planning Board of the Stipulation of Settlement. Given this legal right to 337 dwelling units, greater mitigation than has been and will be required by the Planning Board cannot occur. Only if the total number of dwelling units is decreased, can *298 further mitigation than that required by the Planning Board take place. (SEQRA Findings, attached to Compl. as Exh. G.) In June 1989, third parties (citizens of Dutchess County) commenced an Article 78 proceeding challenging the validity of the 1977 Stipulation and seeking to overturn the 1989 Preliminary Site Plan Approval. The Preliminary Site Plan Approval was stayed pending the outcome of the litigation; nevertheless, the Town issued another sight draft in an amount constituting the remainder of the funds available under the Sewer LOC. In April 1990, the state court (Justice Judith Hillery) dismissed the action, finding that the 1977 Stipulation was binding and that, with respect to the issue of unit density, the 1987 Site Plan Application was exempt from SEQRA. The following June, the Planning Board granted Ridgeview final site plan approval, subject to several conditions (many of which required approvals from the Town Board) and a one-year time period within which to satisfy the conditions (the "1990 Final Site Plan Approval"). Over the course of the following year, Ridgeview and its successor in interest, H.B.R., Inc. ("HBR"), sought to satisfy the conditions. By May 1991, it became apparent to HBR that it would not be able to satisfy all of the conditions, in part because of alleged delays by the Town Board. The following month, the Planning Board granted HBR an indefinite extension of the period for compliance with the conditions. In August 1991, the Property was taken over by the Federal Deposit Insurance Corporation (the "FDIC") as receiver for HBR's parent company. Shortly thereafter, the Town Board adopted a local law requiring the Town Board's approval of any extensions of time (within which to satisfy conditions contained in a final site plan approval) granted by the Planning Board. Despite the Planning Board's prior extension of the 1990 Final Site Plan Approval, the Town Board required the FDIC to submit another extension application. At a January 1992 meeting between the FDIC and the Planning Board to discuss the extension application, members of the Planning Board stated that the FDIC should review the 1990 Final Site Plan Approval to consider a reduction in unit density. The following month, the Town Board considered the extension application, noted the same "issues" identified by the Planning Board at the January meeting, and voted to postpone consideration of the application. About six weeks later, the Town Board again met to discuss the extension application. Plaintiff alleges that "the Town Board publicly feigned a recommendation to the Planning Board that the Extension Application be granted, yet privately requested that the Planning Board deny the Extension Application at its April 9, 1992 meeting." (Compl. ¶ 100.) The FDIC appeared at the April 9 meeting and, allegedly in an attempt to avoid a denial of its extension application, requested that the Planning Board postpone consideration of the application and suggested a meeting to discuss possible modifications to the 1990 Final Site Plan Approval. At a meeting later that month, the FDIC and the Town discussed a proposed agreement whereby the FDIC would alter the 1990 Final Site Plan Approval by reducing the density of development in exchange for an approved preliminary site plan which could be modified by a subsequent developer. At a subsequent meeting, the Town indicated to the FDIC that posting a $250,000 letter of credit to secure the Property's pro rata share of water district improvements proposed by the Town would enhance the Town Board's willingness to enter the proposed agreement with the FDIC. In August 1992, the FDIC began discussions with Plaintiff regarding sale of the Property. In July 1993, after extensive discussions with the Town and prior to acquiring the Property, Plaintiff confirmed with the Town in writing that the Sewer LOC had been drawn down by the Town and that sewer capacity for 337 residential units had been made available to the Property. After acquiring the Property, "Plaintiff soon learned that an application [to build] 337 units would only have encountered ... powerful and successful resistance," *299 (Compl. ¶ 114), and "came to believe that it had no choice but to seek permission to construct only" 172 dwelling units on the Property, (id. ¶ 113). At a March 1994 meeting to discuss Plaintiff's proposed 172-unit development (the "1994 Subdivision Application"), the Chairman of the Planning Board expressed concern that 172 units was still "a major density." (Id. ¶ 116.) "[I]n response to continued Town of Fishkill intransigence," Plaintiff modified its 1994 Subdivision Application by reducing the density of development to 150 units. (Id. ¶ 117.) The Chairman referred to this reduction as "a step in the right direction." (Id. ¶ 118.) In June 1995, Plaintiff submitted a Preliminary Plat Application which sought approval for 146 dwelling units. The Planning Board referred the application to various state and municipal agencies for their review. At a September 1995 meeting, the Planning Board again expressed concern over the density of the development proposed in the Preliminary Plat Application. "[I]n response to the continued pressure," Plaintiff again revised the subdivision plans to include only 130 units. (Id. ¶ 125.) After reviewing the revised proposal, the Chairman of the Planning Board stated that Plaintiff's application was "headed in the right direction" and that Plaintiff could "proceed with a further detailed plan." (Id. ¶ 127.) Several times during the course of the next year, Plaintiff's engineers, architects, and planners met or discussed with the Planning Board and other Town officials the detailed subdivision plans being prepared to ensure compliance with state and local laws and regulations. After an October 1996 meeting with the Planning Board, Plaintiff submitted a revised Preliminary Plat Application and detailed subdivision plans. The revised application sought approval for 131 dwelling units. Pursuant to directions of the Planning Board, Plaintiff again revised its subdivision plans to reduce the development density to 130 units. At a February 1997 meeting, the Planning Board deemed the Preliminary Plat Application complete and scheduled a public hearing for March 27. At the hearing, several members of the public voiced objections to the proposed subdivision development. In May 1997, the Planning Board "announced that compliance with SEQRA was required," notwithstanding prior representations by the Town that SEQRA was not required for the less dense project. (Id. ¶ 145.) The Planning Board refused to approve or disapprove the Preliminary Plat Application until Plaintiff submitted an EIS for the 1994 Subdivision Application. Plaintiff responded by demanding that the Town Clerk, pursuant to Section 276(8) of the Town Law of the State of New York, issue a default approval certificate in light of the Planning Board's failure to act on the Preliminary Plat Application within 62 days of the March 27, 1997 public hearing. The Town Clerk refused. Accordingly, on July 23, 1997, Plaintiff commenced an Article 78 proceeding in the Supreme Court of the State of New York. In that state court proceeding, Plaintiff sought an order compelling the Town Clerk to issue a default approval certificate on the ground that its Preliminary Plat Application was not subject to SEQRA requirements. On March 11, 1998, Justice Hillery dismissed the action, finding that the Preliminary Plat Application is subject to SEQRA on all issues other than unit density, and thus that Plaintiff must submit an EIS before the Planning Board can act on the application. Before this most recent state court proceeding had been resolved, Plaintiff commenced the instant action on September 10, 1997 seeking redress for Defendants' allegedly unconstitutional conduct. Plaintiff claims that Defendants, through decades of obstruction and delay, have violated its substantive due process rights by arbitrarily and capriciously depriving it of a constitutionally protected property interest in constructing a 337-unit development on the Property. The complaint also contains pendent state law causes of action for unjust enrichment, prima facie tort, and breach of contract. Defendants counter by arguing that Plaintiff has failed to state a cognizable claim for violation of due process, and accordingly that the entire complaint should be dismissed. DISCUSSION I. Standard of Review When faced with a Rule 12(b)(6) motion to dismiss, "a court's task in determining the *300 sufficiency of a complaint is `necessarily a limited one.'" Hamilton Chapter of Alpha Delta Phi, Inc. v. Hamilton College, 128 F.3d 59, 62 (2d Cir.1997) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S. Ct. 1683, 40 L. Ed. 2d 90 (1974)). The issue is not whether a plaintiff will or might ultimately prevail on its claim, but whether it is entitled to offer evidence in support of the allegations in the complaint. Id. Dismissal is warranted under Rule 12(b)(6) only if it appears beyond doubt that the plaintiff can prove no set of facts, consistent with its complaint, in support of its claim that would entitle it to relief. See id. at 62-63 (citing Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957)). In ruling on such a motion, the Court must accept as true all factual allegations in the complaint, and must draw all reasonable inferences in favor of the plaintiff. Id. at 63 (citing Hospital Bldg. Co. v. Trustees of Rex Hosp., 425 U.S. 738, 740, 96 S. Ct. 1848, 48 L. Ed. 2d 338 (1976)). However, "if the allegations of a complaint are contradicted by documents made a part thereof, the document controls and the court need not accept as true the allegations of the complaint." Sazerac Co. v. Falk, 861 F. Supp. 253, 257 (S.D.N.Y.1994); accord International Customs Assocs., Inc. v. Ford Motor Co., 893 F. Supp. 1251, 1255 n. 2 (S.D.N.Y.1995). Moreover, "[a] complaint which consists of conclusory allegations unsupported by factual assertions fails even the liberal standard of Rule 12(b)(6)." De Jesus v. Sears, Roebuck & Co., 87 F.3d 65, 70 (2d Cir.), cert. denied, ___ U.S. ___, 117 S. Ct. 509, 136 L. Ed. 2d 399 (1996); accord Kern v. City of Rochester, 93 F.3d 38, 44 (2d Cir. 1996), cert. denied, ___ U.S. ___, 117 S. Ct. 1335, 137 L. Ed. 2d 494 (1997). II. Substantive Due Process In assessing a substantive due process claim in the context of land use regulation, the Court must be "mindful of the general proscription that federal courts should not become zoning boards of appeal" to review non-constitutional land use determinations by local legislative and administrative bodies. Crowley v. Courville, 76 F.3d 47, 52 (2d Cir.1996) (citing Zahra v. Town of Southold, 48 F.3d 674, 679-80 (2d Cir.1995)). Given this concern, a plaintiff asserting a substantive due process claim based on a government land use decision must sufficiently allege (1) that it has a constitutionally protected property interest, and (2) that the defendants arbitrarily or irrationally deprived it of that property interest. See id. at 52; Southview Assocs., Ltd. v. Bongartz, 980 F.2d 84, 97, 101 (2d Cir.1992). Before engaging in this due process analysis, however, the Court must determine whether Plaintiff's claim is ripe, and thus whether subject matter jurisdiction exists. A. Ripeness "A claim is not ripe for adjudication if it rests upon `contingent future events that may not occur as anticipated, or indeed may not occur at all.'" Texas v. United States, ___ U.S. ___, 118 S. Ct. 1257, 1258, 140 L. Ed. 2d 406 (1998) (quoting Thomas v. Union Carbide Agric. Prods. Co., 473 U.S. 568, 581, 105 S. Ct. 3325, 87 L. Ed. 2d 409 (1985)). Ripeness doctrine's basic rationale "is to prevent the courts, through premature adjudication, from entangling themselves in abstract disagreements." Thomas, 473 U.S. at 580-81. A plaintiff need not "await the consummation of threatened injury to obtain preventative relief"; rather, a "claim is ripe if the perceived threat due to the putatively illegal conduct of the [defendants] is sufficiently real and immediate to constitute an existing controversy." Valmonte v. Bane, 18 F.3d 992, 999 (2d Cir.1994) (citing Blum v. Yaretsky, 457 U.S. 991, 1000, 102 S. Ct. 2777, 73 L. Ed. 2d 534 (1982)). In determining whether a matter is ripe for review, courts "evaluate both the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration." Texas, 118 S.Ct. at 1258 (quoting Abbott Lab. v. Gardner, 387 U.S. 136, 149, 87 S. Ct. 1507, 18 L. Ed. 2d 681 (1967)); see also AMSAT Cable Ltd. v. Cablevision of Conn. Ltd. Partnership, 6 F.3d 867, 872 (2d Cir.1993). With respect to the first factor, a federal court may review a land use decision by a municipal agency only if that agency has reached a "final decision." Southview Assocs., 980 F.2d at 95-97. The *301 rationale behind the finality requirement is that a court cannot determine whether a plaintiff has been deprived of property, arbitrarily or otherwise, until it has a final decision before it. See id. at 97. A final decision is "a definitive position on the issue that inflicts an actual, concrete injury." Williamson County Regional Planning Comm'n v. Hamilton Bank, 473 U.S. 172, 193, 105 S. Ct. 3108, 87 L. Ed. 2d 126 (1985). Unless such a final decision has been reached, a plaintiff's substantive due process claim is not ripe. Defendants contend that Plaintiff's claim is not ripe because the Planning Board has not yet denied or approved the Preliminary Plat Application. They argue that a final decision cannot be reached until Plaintiff submits an EIS pursuant to SEQRA. Plaintiff counters that Defendants' delays and intransigence demonstrate that they have in effect reached a "final decision" not to recognize Plaintiff's asserted right to develop the Property (beyond, perhaps, a fraction of the density to which Plaintiff claims entitlement). Asserting that Defendants have no intention of acting on the Preliminary Plat Application before Plaintiff's rights under the 1977 Stipulation expire at the end of 2000, Plaintiff argues that any further attempts to gain Defendants' approval would be futile. The Second Circuit appears to have recognized a futility exception to the final decision requirement in land use cases. See Southview Assocs., 980 F.2d at 98-99 & n. 8 (citing Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1012 n. 3, 112 S. Ct. 2886, 120 L. Ed. 2d 798 (1992); MacDonald, Sommer & Frates v. Yolo County, 477 U.S. 340, 350 n. 7, 106 S. Ct. 2561, 91 L. Ed. 2d 285 (1986); and Kinzli v. City of Santa Cruz, 818 F.2d 1449, 1454, modified, 830 F.2d 968 (9th Cir.1987)). Under this exception, certain procedures that a plaintiff normally would be required to pursue in order to receive a final determination may be excused if the plaintiff can demonstrate, by more than mere allegations, that they would be futile. See Del Monte Dunes at Monterey, Ltd. v. City of Monterey, 920 F.2d 1496, 1501 (9th Cir.1990); Kinzli, 818 F.2d at 1454. Although the Second Circuit has not directly addressed the contours of the futility exception in the land use context, this Court is persuaded that Plaintiff's complaint sufficiently demonstrates a justiciable controversy. The crux of the complaint is that Plaintiff is "entitle[d] to approval of an Application for 337 units pursuant to the 1977 Stipulation," (Compl. ¶ 161), and that Defendants' actions demonstrate that no such approval will be forthcoming before the expiration of Plaintiff's rights under the 1977 Stipulation. In light of the allegations of obstruction and delay, Plaintiff has sufficiently shown that the due process issue is "fit for review." AMSAT, 6 F.3d at 872. In addition, withholding review arguably would work a "hardship" on Plaintiff, whose rights under the 1977 Stipulation expire at the end of the year 2000. See Texas, 118 S.Ct. at 1258; AMSAT, 6 F.3d at 872. Therefore, the Court finds that Plaintiff's substantive due process claim is ripe for adjudication. B. Property Interest It is well-settled that a constitutionally protected property interest arises only if there is an "entitlement" to the relief sought by the property owner. See Zahra, 48 F.3d at 680 (citing Board of Regents v. Roth, 408 U.S. 564, 576-77, 92 S. Ct. 2701, 33 L. Ed. 2d 548 (1972)); Gagliardi v. Village of Pawling, 18 F.3d 188, 192 (2d Cir.1994). In the land use context, the entitlement test is applied "with considerable rigor" in order to prevent federal courts from becoming substitutes for state courts in their review of local land use decisions. RRI Realty Corp. v. Incorporated Village of Southampton, 870 F.2d 911, 918 (2d Cir.1989).[1] *302 Of course, "`[p]roperty interests ... are not created by the Constitution.'" Brady v. Town of Colchester, 863 F.2d 205, 212 (2d Cir.1988) (quoting Roth, 408 U.S. at 577). Rather, constitutionally protected property interests arise from "independent source[s] such as state law." Roth, 408 U.S. at 577. Under certain circumstances, a protected property interest may be conferred by contract. See Walentas v. Lipper, 862 F.2d 414, 418 (2d Cir.1988) (citing S & D Maintenance Co. v. Goldin, 844 F.2d 962, 966 (2d Cir. 1988)). However, not all contract disputes give rise to a cause of action under § 1983. "There is a distinction between the breach of an ordinary contract right and the deprivation of a protectible property interest within the meaning of the due process clause." Id. Whether a dispute implicates state law contract issues or federal constitutional issues is determined by application of the entitlement test. See id. at 419. Within the Second Circuit, the contours of the entitlement test have varied over the years. As first enunciated in the land use context, the entitlement test focused on "whether, absent the alleged denial of due process, there is either a certainty or a very strong likelihood that the application would have been granted." Yale Auto Parts, Inc. v. Johnson, 758 F.2d 54, 59 (2d Cir.1985). Of importance to the Court in Yale Auto Parts was whether a local zoning board of appeals would have granted the plaintiffs' application if it had "properly exercised [its] wide discretion." Id. Because the board was authorized to consider a multitude of factors in making its determination, the Court found that "there is no assurance that if [it] had properly exercised [its] discretion [it] would have issued the requested certificates." Id. One year later, in Sullivan v. Town of Salem, the Court revisited the Yale Auto Parts formulation. There, the Court stated: By [the Yale Auto Parts] standard we did not intend to remove from constitutional protection every application for a license or certificate that could, under any conceivable version of facts, be the subject of discretionary action .... On the contrary, our standard was intended to be a tool capable of measuring particular applications to determine if the applicant had a legitimate claim of entitlement based on the likelihood that without the due process violation that application would have been granted. 805 F.2d 81, 85 (2d Cir.1986). In Sullivan, the municipal defendants conceded that the ground on which local officials refused to issue certificates of occupancy was not based on any legal authority. See id. ("No question was raised as to matters over which the building official might have discretionary authority, such as the quality of construction of the houses, their compliance with the subdivision plan, or whether they satisfied building code and zoning requirements.") Therefore, if the houses at issue did in fact meet all applicable requirements, the municipal defendants would have been without discretion to refuse to issue certificates. Accordingly, the Court reversed a grant of summary judgment and remanded to the district court "for further proceedings to determine whether in fact the houses did meet all applicable requirements" and whether the certificates were refused solely on the impermissible ground. Id.; see also Brady, 863 F.2d at 213-15 (reversing a grant of summary judgment and remanding for factual determinations as to whether the municipal defendants improperly denied a certificate of occupancy and revoked a building permit; whether defendants possessed discretion, and thus whether plaintiffs had a protected property interest, were issues of material fact). In Dean Tarry Corp. v. Friedlander, the Court distinguished Sullivan on the ground that in Sullivan, "the unlawful requirement preventing approval of the builder's application came out of thin air." 826 F.2d 210, 213 (2d Cir.1987). In Dean Tarry, by contrast, the "broad discretion" exercised by the defendant planning board was, "as in Yale Auto Parts, ... embodied in the governing law ...." Id. The Court found that this wide discretion "prevented [plaintiff's] expectation of success from rising to the level of certainty required to give rise to a cognizable property right." Id. In RRI Realty Corp. v. Incorporated Village of Southampton, the Court attempted to reconcile the varying formulations of the entitlement *303 test. The Court stated that "[t]he fact that [an application] could have been denied on non-arbitrary grounds defeats [a] federal due process claim." 870 F.2d 911, 918 (2d Cir.1989) (emphasis added). Noting the policy reasons for applying the entitlement test "with considerable rigor," the Court continued: Application of the test must focus primarily on the degree of discretion enjoyed by the issuing authority, not the estimated probability that the authority will act favorably in a particular case .... Even if in a particular case, objective observers would estimate that the probability of issuance was extremely high, the opportunity of the local agency to deny issuance suffices to defeat the existence of a federally protected property interest. The `strong likelihood' aspect of Yale Auto Parts comes into play only when the discretion of the issuing agency is so narrowly circumscribed that approval of a proper application is virtually assured; an entitlement does not arise simply because it is likely that broad discretion will be favorably exercised. Id. (emphasis added); accord Crowley v. Courville, 76 F.3d 47, 52 (2d Cir.1996); Zahra v. Town of Southold, 48 F.3d 674, 680 (2d Cir.1995); Walz v. Town of Smithtown, 46 F.3d 162, 168 (2d Cir.1995); Gagliardi v. Village of Pawling, 18 F.3d 188, 192 (2d Cir.1994); Southview Assocs., Ltd. v. Bongartz, 980 F.2d 84, 101-102 (2d Cir.1992) (opinion of Oakes, C.J.). In accordance with this departure from the Sullivan Court's focus on an applicant's chances of success in a particular case, the RRI Realty Court also took issue with the suggestion in Sullivan and Brady that the existence of a protected property interest is a question of fact: "Since the entitlement analysis focuses on the degree of official discretion and not on the probability of its favorable exercise, the question of whether an applicant has a property interest will normally be a matter of law for the court." RRI Realty, 870 F.2d at 918; accord Gagliardi, 18 F.3d at 192. The variety of formulations of the entitlement test is reflected in the parties' legal memoranda. Plaintiff invokes Sullivan in arguing that because its Preliminary Plat Application (allegedly) satisfies all applicable regulations, Defendants possess no discretion with respect to the application. (See Pl.'s Mem. of Law in Opp. to Defs.' Mot. to Dismiss Compl. at 33-37; Aff. of Joshua Grauer, dated Feb. 6, 1998, ¶ 6.) Plaintiff contends that Defendants' delay in approving the application is due solely to their dissatisfaction with the number of units that Plaintiff seeks to develop — an element of the application over which Defendants have no discretion. As Justice Hillery held in 1990, in determining whether SEQRA was applicable to the 1977 Stipulation: "the [Town's] approval for Ridgeview [Plaintiff's predecessor in interest] to construct 337 units on the Honess Mountain parcel was exclusively a ministerial act based on the [1977 Stipulation] and did not involve the exercise of discretion as to the number of allowable units ...." (April 17, 1990 Decision, attached to Compl. as Exh. I, at 14.) Defendants contend that this language merely reflects the proposition, conceded by Defendants, that they did not have any discretion with respect to the number of units that would be constructed on the Property. But, Defendants argue, the 1977 Stipulation and Justice Hillery's two decisions explicitly stated that they retained discretion in other areas. Reviewing the terms of the 1977 Stipulation in her 1990 decision, Justice Hillery found that the document "reserv[ed] unto the Town of Fishkill the right to make determinations concerning site plan ordinances and rules, subdivision regulations, drainage and sewer specifications" and "the right to grant site approval for this project." (April 17, 1990 Decision at 4, 12.) In her more recent decision, Justice Hillery revisited the content of the 1977 Stipulation and elaborated on her earlier decision: This Court agrees with [the Planning Board] that the only issue exempt from SEQRA review under the 1977 stipulation of settlement is the maximum number of dwelling units permissible on the [Property]. Contrary to [Honess'] reading of the stipulation of settlement, its terms bifurcate the issues of maximum dwelling unit count from site plan review of all other aspects of any proposed project.... [T]he *304 1977 stipulation imposed no mandate on the Town Board of the Town of Fishkill to approve any and all development applications up to a maximum of 337 clustered dwelling units. Rather, the stipulation reserved the Town of Fishkill's right to exercise its discretionary review of all aspects of proposed development on the subject property, with the exception of the number of dwelling units permissible up to a maximum of 337 units. Specifically, paragraph 5 of the stipulation retains [the Town's] "right to make determinations in relation to the site plan ordinances and rules, subdivisions regulations, road, drainage and sewer specifications so long as said determinations are not discriminatory against the property." (March 11, 1998 Decision at 7-8 (emphasis added).) Given this discretion in several areas, Defendants argue that even without improper consideration of the unit density, approval of the Preliminary Plat Application would not be assured. In addition to the language of the 1977 Stipulation and the decisions of Justice Hillery, relevant provisions of the New York Town Law support Defendants' contention. Under Sections 276 and 277 of that law, a local planning board is vested with the authority to weigh the evidence, resolve conflicting inferences, and exercise its discretion in approving or denying approval of a subdivision plat. See Cedarwood Land Planning v. Town of Schodack, 954 F. Supp. 513, 524 (N.D.N.Y.1997); In re North Greenbush Dev. Corp. v. Fragomeni, 226 A.D.2d 854, 857, 640 N.Y.S.2d 911, 913-14 (3d Dep't 1996); In re M & M Partnership v. Sweenor, 210 A.D.2d 575, 576-77, 619 N.Y.S.2d 802, 803 (3d Dep't 1994); Thomas v. Brookins, 175 A.D.2d 619, 620, 572 N.Y.S.2d 557, 557 (4th Dep't 1991); In re Currier v. Planning Bd. of Town of Huntington, 74 A.D.2d 872, 872, 426 N.Y.S.2d 35, 36 (2d Dep't), aff'd, 52 N.Y.2d 722, 436 N.Y.S.2d 274, 417 N.E.2d 568 (1980); see also N.Y. Town Law §§ 276, 277 (McKinney Supp.1997-98). Given this broad discretion, which would of course be limited by the 1977 Stipulation with respect to unit density, Plaintiff's substantive due process claim must fail. As shown above, in keeping with the mandate that federal courts should not function as zoning boards of appeal to review local land use determinations, the Second Circuit has shifted from an entitlement analysis that focuses on the probability of approval in a particular case to one that focuses on the extent of the local authority's discretion. Here, by virtue of state law the Planning Board possesses the authority to consider a host of factors in assessing Plaintiff's Preliminary Plat Application and to exercise its discretion in evaluating those criteria. Although the 1977 Stipulation limits this discretion with respect to unit density, it does not require the Planning Board to approve any particular application. The Board remains free to determine whether a given application meets the various criteria which it is authorized to consider. Accordingly, Plaintiff has not demonstrated a protected property interest and thus has failed to state a cognizable substantive due process claim.[2] Plaintiff's allegation that its application complies with all applicable regulations and other standards is no more than a conclusory assertion that, but for the alleged denial of due process, its application would be granted. See De Jesus v. Sears, Roebuck & Co., 87 F.3d 65, 70 (2d Cir.1996) ("A complaint which *305 consists of conclusory allegations unsupported by factual assertions fails even the liberal standard of Rule 12(b)(6)."); accord Kern v. City of Rochester, 93 F.3d 38, 44 (2d Cir. 1996). Moreover, this assertion is premature. The sufficiency of Plaintiff's application is a determination for the Planning Board to make within its sound discretion, and the soundness of the Planning Board's ultimate decision — including whether its determinations are "discriminatory against the [P]roperty" in violation of 1977 Stipulation, or are otherwise arbitrary in violation of state law — is a matter for the state courts. It should be emphasized that the Court does not pass judgment on Plaintiff's allegations of arbitrary or improperly motivated conduct on the part of Defendants. Even if a defendant engages in improper conduct, a substantive due process claim will not lie in the absence of a protected property interest. See RRI Realty, 870 F.2d at 918-19 ("as Yale Auto Parts demonstrates, the plaintiff may be deemed not to have a protected property interest in the requested permit, even in a case where the denial of the permit is arbitrary"; defendant's discretion to deny plaintiff's permit application "deprived [plaintiff] of a property interest in the permit, regardless of how unlawful under state law the ultimate denial may have been"); Yale Auto Parts, 758 F.2d at 59-60 ("there can be no question that, according to the complaint, the defendants engaged in egregious misconduct .... However, the undisputed record is equally clear that plaintiffs were not entitled to a ... certificate of location approval as a matter of right"; "[o]ur research has failed to reveal any instance in which the absence of a fundamentally fair procedure has been held actionable under § 1983 in the absence of a showing that it deprived the plaintiff of a property or liberty interest recognized by law"). The Court also notes its concern with the allegations that Defendants appropriated several hundred thousand dollars by drawing down letters of credit posted by Ridgeview, Plaintiff's predecessor in interest, for sewer improvements in contemplation of a 337-unit development. These allegations, however, implicate questions of state law such as unjust enrichment. Resolution of such issues is the province of the state courts. Therefore, as sympathetic as this Court may be with Plaintiff's allegations of the prolonged runaround Plaintiff and its predecessors have received from Defendants, the Court has no alternative but to dismiss the § 1983 claims and remit Plaintiff to state court for appropriate relief. III. Pendent Claims Pursuant 28 U.S.C. § 1367(c)(3), a district court may decline to exercise supplemental jurisdiction over a claim where the court has dismissed all claims over which it has original jurisdiction. In such situations, courts ordinarily should decline to exercise supplemental jurisdiction: "Certainly, if the federal claims are dismissed before trial, even though not insubstantial in a jurisdictional sense, the state claims should be dismissed as well." United Mine Workers v. Gibbs, 383 U.S. 715, 726, 86 S. Ct. 1130, 16 L. Ed. 2d 218 (1966); accord Maric v. St. Agnes Hosp. Corp., 65 F.3d 310, 314 (2d Cir.1995); Castellano v. Board of Trustees, 937 F.2d 752, 758 (2d Cir.1991). Here, having dismissed the § 1983 claim, the Court declines to exercise jurisdiction over the remaining pendent state claims. CONCLUSION For the reasons discussed above, Defendants' motion to dismiss is granted and the complaint is dismissed in its entirety. An appropriate judgment shall be entered by the Clerk of the Court. SO ORDERED. NOTES [1] The Second Circuit has noted that in the land use context, the entitlement test "balances the need for local autonomy, with recognition of constitutional protection at the very outer margins of municipal behavior. It represents an acknowledgment that decisions on matters of local concern should ordinarily be made by those whom local residents select to represent them in municipal government — not by federal courts. It also recognizes that the Due Process Clause does not function as a general overseer of arbitrariness in state and local land use decisions; in our federal system, that is the province of the state courts." Zahra, 48 F.3d at 680. [2] See Deepwells Estates Inc. v. Incorporated Village of Head of the Harbor, 973 F. Supp. 338, 349 (E.D.N.Y.1997) (no protected property interest in subdivision plat where New York Village Law granted local planning board discretionary approval powers); Cedarwood, 954 F.Supp. at 524-25 (no protected property interest in subdivision plat where New York Town Law § 276 granted local planning board discretionary approval powers); Orange Lake Assocs., Inc. v. Kirkpatrick, 825 F. Supp. 1169, 1178 (S.D.N.Y.1993) (same), aff'd, 21 F.3d 1214 (2d Cir.1994); see also Crowley, 76 F.3d at 52 (no protected property interest in variance where zoning regulations granted zoning board with discretionary approval powers); RRI Realty, 870 F.2d at 919 (no protected property interest in building permit where village code granted architectural review board discretionary approval powers); Dean Tarry, 826 F.2d at 213 (no protected property interest in site plan where zoning ordinance, which was subsequently invalidated, granted planning board discretionary approval power); Yale Auto Parts, 758 F.2d at 59-60 (no protected property interest in zoning certificate where state law granted zoning board of appeals discretionary approval powers).

01-03-2023

10-30-2013

https://www.courtlistener.com/api/rest/v3/opinions/2818789/

In the United States Court of Appeals For the Seventh Circuit ____________________  No. 14‐1351  CHARLES S. HOWLETT,  Plaintiff‐Appellant,  v.  JEFFREY HACK, et al.,  Defendants‐Appellees.  ____________________  Appeal from the United States District Court for the  Southern District of Indiana, Indianapolis Division.  No. 1:12‐cv‐00475‐TWP‐MJD — Tanya Walton Pratt, Judge.  ____________________  ARGUED JANUARY 7, 2015 — JULY 21, 2015  ____________________  Before WOOD, Chief Judge, and POSNER and EASTERBROOK,  Circuit Judges.  WOOD, Chief Judge. In the early hours of October 25, 2009,  the Indianapolis Metropolitan Police Department received a  911  call  reporting  that  someone  had  broken  into  Jeffrey  Hack’s  house.  Officer  Steven  Beasley  responded  to  the  call  and  eventually  arrested  Hack’s  neighbor,  Charles  Howlett.  Howlett was later charged with a variety of offenses related  to  the alleged break‐in,  but  a jury  ultimately  acquitted  him.  2   No. 14‐1351  He  then  filed  this  suit,  alleging  false  arrest  and  malicious  prosecution on the part of Beasley, the City of Indianapolis,  Hack,  and  several  others.  The  district  court  granted  sum‐ mary  judgment  to  all  of  the  defendants.  Howlett  now  ap‐ peals,  though  only  with  respect  to  Beasley,  the  City,  and  Hack.  We  affirm  the  district  court’s  resolution  of  all  claims  against Beasley and the City as well as the federal malicious‐ prosecution claim against Hack. We conclude, however, that  the  court  should  have  relinquished  supplemental  jurisdic‐ tion  over  the  state‐law  claims  against  Hack,  and  so  we  re‐ mand for that limited purpose.  I  On  October  25,  2009,  the  Indianapolis  Police  received  a  call about a break‐in and assault at 418 South Butler Avenue.  Officer  Beasley  was  quickly  dispatched  to  the  scene  and  spoke to Jeffrey Hack, the alleged victim of the assault. Hack  told  Beasley  that  he  had  been  asleep  in  his  home  when  his  neighbor, Charles Howlett, woke him up suddenly, grabbed  and threatened him, and eventually thrust a hand down the  front  of  Hack’s  pants.  Hack  guessed  that  Howlett  had  en‐ tered the house by prying open a bathroom window, and he  told  Beasley  that  Howlett  did  not  have  permission  to  enter  the  home  (through  the  window  or  otherwise).  After  Hack  punched  Howlett,  Howlett  quickly  left  through  the  bath‐ room  window.  Hack  described  Howlett  as  rather  tall  and  wearing a white t‐shirt and tan pants.  Beasley then walked across the street to Howlett’s home,  but Howlett did not answer the door. After an unidentified  person  gave  Beasley  Howlett’s  cell  phone  number,  Beasley  called and the two spoke briefly. Howlett promised to return  home.  Beasley  recalls  that  Howlett  also  added,  without  No. 14‐1351  3  prompting, that  he did not enter Hack’s bathroom or “g[e]t  into his neighbor’s pants,” though Howlett now says that he  never made these statements. When Howlett returned to his  home  and  met  Beasley,  he  denied  breaking  into  Hack’s  house. Howlett was wearing a tan collared shirt, not a white  t‐shirt.  Nevertheless, Hack  identified  Howlett  as  the  person  who had entered his home and assaulted him. Beasley, who  had  never  met  either  man  before,  arrested  Howlett  for  the  offenses  of  residential entry  and invasion of privacy. A few  days later, the Marion Superior Court determined that there  was probable cause for the arrest, and Howlett was formally  charged with burglary, criminal confinement, residential en‐ try, intimidation, and battery. After a jury trial held on April  14, 2010, he was acquitted of all charges.   Howlett then filed this suit under 42 U.S.C. § 1983 in the  district court, alleging that Beasley, the City of Indianapolis,  Hack,  and  three  other  people  violated  his  rights  under  the  Fourth  and  Fourteenth  Amendments  to  the  Constitution  by  arresting  and  maliciously  prosecuting  him;  he  also  asserted  the  latter  two  theories  as  free‐standing  state‐law  claims.  (Howlett also alleged that Beasley withheld exculpatory evi‐ dence,  that  Hack  and  the  others  retaliated  against  him,  and  that all the defendants were engaged in a conspiracy, but he  does  not  pursue  these  claims  on  appeal.)  The  district  court  had  jurisdiction  over  Howlett’s  federal  claims  under  28  U.S.C.  §  1331;  his  state‐law  claims  fell  within  the  court’s  supplemental jurisdiction. 28 U.S.C. § 1367.   The court granted summary judgment to all the defend‐ ants on the false‐arrest allegations, finding that the two‐year  statute  of  limitations  in  Indiana  Code  §  34‐11‐2‐4  barred  these  claims.  It  granted  summary  judgment  to  the  defend‐ 4   No. 14‐1351  ants  on  Hack’s  state‐law  malicious‐prosecution  claims  be‐ cause  1)  Hack  had  not  established  that  there  was  a  lack  of  probable  cause,  2)  the  civilian  defendants  did  not  initiate  a  prosecution  or  cause  one  to  be  started,  and  3)  Beasley  and  the City had absolute immunity under Indiana Code § 34‐13‐ 3‐3(6).  The  court  also  found  that  Hack’s  malicious‐ prosecution claim under § 1983 had to be dismissed: it failed  on the merits with respect to all defendants, and with respect  to the civilians, it was also barred because an adequate rem‐ edy  exists  under  state  law.  Hack  has  appealed  the  district  court’s decision in favor of Beasley, the City, and Hack, only  with regard to his malicious‐prosecution claims (under both  federal  and  state  law)  and  false‐arrest  claims  (under  state  law).  II  A  Because this appeal comes to us from a grant of summary  judgment,  we  take  a  fresh  look  at  the  case,  construing  all  facts  and  reasonable  inferences  in  favor  of  the  nonmoving  party. See Love v. JP Cullen & Sons, Inc., 779 F.3d 697, 701 (7th  Cir.  2015).  We  begin  with  Howlett’s  claims  against  Officer  Beasley and the City.  False Arrest   Under  Indiana  law,  a  false‐arrest  claim  accrues  once  the  complaining  party  is  detained  pursuant  to  legal  process,  such as an arraignment. See Johnson v. Blackwell, 885 N.E.2d  25, 30–31 (Ind. Ct. App. 2008) (citing Wallace v. Kato, 549 U.S.  384 (2007)). Howlett filed this lawsuit on April 11, 2012, ap‐ proximately two and a half years after his October 28, 2009,  arraignment.  The  district  court  noted  that  Indiana’s  statute  No. 14‐1351  5  of limitations for personal injury tort claims requires suits to  be  filed  within  two  years  after  the  cause  of  action  accrues.  See  IND.  CODE  §  34‐11‐2‐4(a).  A  quick  look  at  the  relevant  dates convinced it that Howlett’s false‐arrest claim was time‐ barred.   Howlett  argues  that  a  different  statute  of  limitations,  which governs actions against public officers and sets a five‐ year limitations period, should apply. See IND. CODE § 34‐11‐ 2‐6  (“An  action  against:  (A)  a  sheriff;  (B)  another  public  of‐ ficer; or  (C)  the  officer  and the officer’s sureties on  a public  bond; growing out of a liability incurred by doing an act in  an  official  capacity,  or  by  the  omission  of  an  official  duty,  must  be  commenced within  five  (5)  years  after  the  cause  of  action accrues.”). Beasley is certainly a public officer for this  purpose.  Indiana  defines  a  public  officer  as  an  “individual  [who]  holds  a  position  for  which  duties  are  prescribed  by  law  to  serve  a  public  purpose,”  and  the  taking  of  an  oath,  while not required, “is a strong indicator” of a person’s sta‐ tus  as  a  public  officer.  Barrow  v.  City  of  Jeffersonville,  973  N.E.2d 1199, 1204 (Ind. Ct. App. 2012); see also Blake v. Kat‐ ter, 693 F.2d 677, 680 (7th Cir. 1982) (finding that police offic‐ ers are public officers and applying § 34‐11‐2‐6’s predecessor  statute to claims of civil rights violations against police offic‐ ers).  Beasley’s  duties  are  prescribed  by  the  Indiana  Code  at  section  5‐2‐1‐17;  they  include  serving  public  purposes  such  as  “preserv[ing]  the  peace,  maintain[ing]  order,  and  pre‐ vent[ing]  the  unlawful  use  of  force  or  violence.”  IND.  CODE  § 5‐2‐1‐17(b)(1).  Beasley  is  required  by  Indiana  law  to  “take  an appropriate oath of office.” IND.  CODE § 5‐2‐1‐17(c)(1). Fi‐ nally, Beasley was acting in an official capacity when he ar‐ rested Howlett.  6   No. 14‐1351  The  argument  that  the  public‐officer  statute  applies  is  thus  not  a  frivolous  one.  Both  this  statute  and  the  general  tort statute appear to apply to facts before us. Howlett urges  that  the  former,  §  34‐11‐2‐6,  is  meant  to  encompass  all  ac‐ tions  against  public  officers  acting  in  their  official  capacity,  while the latter, § 34‐11‐2‐4, applies to all other personal in‐ jury  suits  (i.e.,  those  taken  against  non‐public  officers).  The  language of § 34‐11‐2‐6 is broad, and there is no hint that its  wide coverage should be curtailed by shorter statutes of lim‐ itations provided for specific types of claims. Rather, § 34‐11‐ 2‐6 might have been meant to create a uniform statute of lim‐ itations  for  all  suits—including  those  for  personal  injury  claims—when those suits are filed against public officers.   We acknowledge that at least two decisions have applied  the  two‐year  statute  of  limitations  to  false‐arrest  actions  brought against police officers. See Serino v. Hensley, 735 F.3d  588, 591 (7th Cir. 2013); Johnson, 885 N.E.2d at 30. Neither of  these cases, however, discussed the possible applicability of  the five‐year limitations period; rather, the courts simply as‐ sumed  that  the  two‐year  personal  injury  statute  was  appli‐ cable. And although we have recognized that Wilson v. Gar‐ cia, 471 U.S. 261 (1985), overruled our 1982 decision in Blake,  to  the  extent  that  Blake  looked  to  Indiana’s  five‐year  statute  of limitations for a federal § 1983 claim, see Coopwood v. Lake  Cnty. Cmty. Dev. Dep’t, 932 F.2d 677, 679 (7th Cir. 1991), we  have  suggested that the five‐year statute  might be  the  right  one to use for state‐law claims. See Campbell v. Chappelow, 95  F.3d 576, 580 n.4 (7th Cir. 1996). Fortunately, we do not have  to resolve this issue, because Howlett’s state‐law claim, even  if  we  assume  for  the  sake  of  argument  that  it  is  not  time‐ barred, cannot withstand summary judgment.  No. 14‐1351  7  For a claim of false arrest to succeed under Indiana law,  there  must  be  an  “absence  of  probable  cause.”  Row  v.  Holt,  864  N.E.2d  1011,  1016  (Ind.  2007).  Howlett  therefore  had  to  raise a genuine issue of fact on the question whether Beasley  had  probable  cause  to  arrest  him.  He  has  not  done  so.  An  officer has probable cause for an arrest when “at the time of  the arrest the facts and circumstances within the knowledge  of the officer[] and of which [he] had reasonably trustworthy  information were sufficient to warrant a prudent man of rea‐ sonable caution in believing that the arrestee had committed  or  was  committing  an  offense.”  Smith  v.  State,  271  N.E.2d  133,  136  (Ind.  1971);  see  also  Riggenbach  v.  State,  397  N.E.2d  953, 954–55 (Ind. 1979).  It is undisputed that Hack, the alleged victim, positively  identified  Howlett  as  his  assailant.  Beasley  was  entitled  to  rely on this identification. See Capps v. State, 229 N.E.2d 794,  796  (Ind.  1967)  (“A  police  officer  may  base  his  belief  that  there is reasonable and probable cause for arresting a person  on  information  received  from  another.”);  see  also  Askew  v.  City  of  Chicago,  440  F.3d  894,  895  (7th  Cir.  2006)  (“[A]llegations by eyewitnesses supply probable cause when  the  statements,  if  true,  show  that  a  crime  has  occurred.”).  There could be a problem if a reasonable officer would have  known that the accuser is acting out of malice or because of a  grudge. See Askew, 440 F.3d at 895. But there is no indication  that  Beasley  knew  or  should  have  known  that  Hack  made  his accusations because he harbored ill will toward Howlett.  The discrepancies about the color and type of shirt How‐ lett  was  wearing  at  the  time  of  the  incident  do  not  create  a  question of material fact for probable‐cause purposes. These  are minor details that can be disregarded. Id. at 896 (discuss‐ 8   No. 14‐1351  ing discrepancies in the type of weapon the alleged assailant  was  wielding).  In  any  case,  as  we  have  noted,  Beasley  did  not arrest Howlett solely on Hack’s description. Whether the  alleged criminal was wearing a tan, collared shirt or a white  t‐shirt at the time of the break‐in is too insignificant to negate  the  conclusion  that,  taking  into  consideration  all  that  was  known  to  Beasley,  Beasley  had  probable  cause  to  arrest  Howlett.  The  district  court  was  correct  to  grant  summary  judgment to Beasley, and to the City as Beasley’s employer,  on this claim.   Malicious Prosecution  Indiana law recognizes the tort of malicious prosecution.  See, e.g., City of New Haven v. Reichhart, 748 N.E.2d 374, 378– 79  (Ind.  2001).  The  Indiana  Tort  Claims  Act,  however,  shields  government  employees  such  as  Beasley  and  entities  such as the City from these claims. See IND. CODE § 34–13–3– 3(6)  (“A  governmental  entity  or  an  employee  acting  within  the scope of the employee’s employment is not liable if a loss  results from … [t]he initiation of a judicial or an administra‐ tive  proceeding.”);  see  also  Serino,  735  F.3d  at  595.  As  a  re‐ sult, Howlett’s state‐law malicious‐prosecution claim against  Beasley and the City necessarily fails.  Howlett  also  alleged  a  federal  claim  of  malicious  prose‐ cution, based on his Fourth Amendment rights. Such a claim  is  not  actionable  if  there  is  an  adequate  state‐law  remedy.  Newsome v. McCabe, 256 F.3d 747, 750–51 (7th Cir. 2001). Be‐ cause the Indiana Tort Claims Act immunizes governmental  entities  and  their  employees  from  malicious‐prosecution  suits, there is no adequate state remedy and Howlett is enti‐ tled  in  principle  to  pursue  his  federal  claim.  See  Julian  v.  Hanna,  732  F.3d  842,  845–49  (7th  Cir.  2013).  Nevertheless,  No. 14‐1351  9  “[f]ederal  courts  are  rarely  the  appropriate  forum  for  mali‐ cious  prosecution claims” because there  is  no “federal right  not  to  be  summoned  into  court  and  prosecuted  without  probable cause.” Ray v. City of Chicago, 629 F.3d 660, 664 (7th  Cir. 2011) (quoting Tully v. Barada, 599 F.3d 591, 594 (7th Cir.  2010)).  Thus,  in  a  §  1983  malicious‐prosecution  suit,  the  “plaintiff must allege a violation of a particular constitution‐ al  right,  such  as  the  right  to  be  free  from  unlawful  seizures  under the Fourth Amendment, or the right to a fair trial un‐ der  the  Due  Process  Clause.”  Welton  v.  Anderson,  770  F.3d  670, 673 (7th  Cir. 2014) (quoting Serino, 735 F.3d  at 592) (al‐ teration and quotation marks omitted).   Howlett  cannot  rely  on  his  allegedly  unlawful  seizure,  not only because the arrest was proper (because it was sup‐ ported by probable cause) but also because a warrantless ar‐ rest  “cannot  serve  as  the  basis  for  a  malicious  prosecution  action.”  Serino,  735  F.3d  at  593–94  (explaining  that  a  mali‐ cious prosecution must involve “a deprivation of liberty pur‐ suant to legal process” and that a person who has been arrest‐ ed without a warrant is subject to legal process only once he  is arraigned). Howlett does not allege any post‐arraignment  constitutional violation. His complaints against Beasley deal  primarily with alleged falsehoods and a failure to investigate  that  occurred  before  the  arraignment,  and  even  before  the  arrest.  Even  if  we  understood  Howlett  to  be  alleging  that  Beasley  lied  or  withheld  evidence  in  order  to  have  Howlett  charged  (thus  perhaps  implicating  the  due  process  right  to  fair proceedings), nothing in the present record would allow  such  allegations  to  withstand  summary  judgment.  Howlett  has not shown either a lack of probable cause or the presence  of  malice,  both  of  which  are  necessary  for  an  Indiana  mali‐ cious‐prosecution claim. See Welton, 770 F.3d at 674 (even if  10   No. 14‐1351  plaintiff  has  properly  pleaded  a  constitutional  violation,  he  still must show the elements of a state‐law claim, which un‐ der Indiana law includes malice and lack of probable cause).  We already have explained why probable cause existed here.  A plaintiff may show malice through “evidence of personal  animosity … a complete lack of probable cause or a failure to  conduct  an  adequate  investigation.”  Id.  (quoting  Golden  Years  Homestead,  Inc.  v.  Buckland,  557  F.3d  457,  462  (7th  Cir.  2009)).  Howlett  showed  nothing  of  the  kind.  Finally,  Beasley’s investigation was adequate: he spoke with both the  victim  and  the  accused,  and  he  had  the  victim  identify  his  assailant  in person. Summary judgment was  thus appropri‐ ate on this claim.   B  Next, we address Howlett’s claims against Hack. The on‐ ly  federal  claim  against  Hack  is  for  malicious  prosecution.  Unlike  Beasley  and  the  City,  Hack  is  not  immune  from  a  state‐law malicious‐prosecution suit. Indiana Code § 34–13– 3–3(6) immunizes only governmental entities and employees  from  these  suits;  for  all  other  defendants,  the  state  permits  malicious‐prosecution  suits  to  proceed.  See  Reichhart,  748  N.E.2d at 378–79. But this poses an insurmountable problem  for  Howlett:  because  he  is  entitled  to  pursue  his  malicious‐ prosecution  claim  in  state  court,  he  has  an  adequate  state‐ law  remedy  and  may  not  proceed  with  his  federal  §  1983  claim. See Newsome, 256 F.3d at 750–51.  This  resolves  all  of  Howlett’s  federal  claims.  What  re‐ main are his state‐law false‐arrest and malicious‐prosecution  claims  against  Hack.  In  a  situation  like  this  one,  where  the  state‐law claims have not been the focus of the litigation, the  better practice is for the district court to relinquish its juris‐ No. 14‐1351  11  diction  over  them.  See  28  U.S.C.  §  1367(c)(3);  Williams  Elec‐ tronics Games, Inc. v. Garrity, 479 F.3d 904, 907 (7th Cir. 2007)  (describing the “presumption that if the federal claims drop  out before trial, the district court should relinquish jurisdic‐ tion over the state‐law claims”). The district court offered no  reason for declining  to dismiss  the  remaining  supplemental  claims.  In  our  view,  that  is  what  should  have  happened.  Once the judgment is revised to show that these claims were  dismissed without prejudice, Howlett will be free to seek to  pursue them in state court.   III  We  conclude  with  a  few  words  about  Howlett’s  request  that we  certify  two state‐law issues to the Indiana Supreme  Court. He would like us to ask that court to rule on whether  §  34‐11‐2‐4  or  § 34‐11‐2‐6  governs  the  statute  of  limitations  for false‐arrest claims against police officers, and on whether  the filing of a criminal case by a prosecutor effectively bars a  malicious‐prosecution  claim  against  persons  (including  po‐ lice officers) who supplied information that led to the prose‐ cution.  These  questions  do  not,  however,  meet  the  criteria  for certification found in Circuit Rule 52.   The present case does not turn on the answers to either of  those questions. See State Farm Mut. Auto. Ins. Co. v. Pate, 275  F.3d 666, 672 (7th Cir. 2001). The statute of limitations ques‐ tion  is  not  dispositive,  because  Howlett’s  false‐arrest  claim  against  Beasley  and  the  City  fails  because  probable  cause  supported  the  arrest,  and  because  we  are  directing  the  dis‐ trict  court  to  relinquish  jurisdiction  over  the  claim  against  Hack.  We  were  able  to  resolve  most  of  the  malicious‐ prosecution claims without having to delve into the issue of  whether  persons  who  supply  information  to  a  prosecutor  12   No. 14‐1351  can be liable for malicious prosecution. Finally, we have en‐ sured  that  Howlett  may  pursue  his  remaining  state‐law  claims against Hack in state court. We see no reason to bur‐ den  the  Indiana  Supreme  Court  with  such  matters,  and  we  therefore deny Howlett’s request for certification.  IV  In  summary,  we  conclude  that  even  if  Howlett’s  state‐ law false‐arrest claim against Beasley and the City is timely,  it  was  properly  dismissed  because  Beasley  had  probable  cause  to  arrest  Howlett.  Beasley  and  the  City  are  immune  from Howlett’s state‐law malicious‐prosecution claim. How‐ lett’s § 1983 malicious‐prosecution claim against Beasley and  the City cannot survive summary judgment because Howlett  did not allege a separate constitutional injury and, even if he  did, he has not submitted evidence that Beasley acted out of  malice  or  lacked  probable  cause.  Howlett  cannot  maintain  his § 1983 malicious‐prosecution claim against Hack because  Howlett has an adequate state remedy. Finally, we decline to  certify any questions to the Indiana Supreme Court.   We  therefore  AFFIRM  the  judgment  of  the  district  court  granting  summary  judgment  to  the  defendants  in  all  re‐ spects  but  one.  We  REMAND  the  case  to  the  district  court  with instructions to change the dismissal of Howlett’s state‐ law claims against Hack to one without prejudice, so that he  may pursue them in state court.

01-03-2023

07-21-2015

https://www.courtlistener.com/api/rest/v3/opinions/2994069/

In the United States Court of Appeals For the Seventh Circuit No. 98-1008 CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, and HOWARD MCDOUGAL, trustee, Plaintiffs-Appellees, v. WINTZ PROPERTIES, INC., a Minnesota corporation, Defendant-Appellant, and GEORGE L. WINTZ, individually and as president of Wintz Properties, Incorporated, Appellant. Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 97 C 873--George W. Lindberg, Judge. Argued June 2, 1998--Decided September 8, 1998 Before FLAUM, MANION, and DIANE P. WOOD, Circuit Judges. MANION, Circuit Judge. Wintz Properties, a business belonging to a multiemployer pension fund under ERISA, withdrew from the Central States, Southeast and Southwest Areas Pension Fund, but failed to pay the accompanying withdrawal liability required by the statute. That prompted the Fund to sue Wintz in federal court over the nonpayment; the district court ordered Wintz to pay. Still Wintz failed to make payment, choosing instead to pay other creditors. The continued non-payment prompted the district court to issue a contempt judgment of close to $1 million against Wintz (the company) and George Wintz (its president) personally, an order that both have appealed. We ordered the parties to brief the issue of this court’s jurisdiction over what at first glance appears to be a nonfinal order to make interim payments to the Fund. After reviewing the parties’ arguments and the full record, we have determined that we have jurisdiction over Wintz’s appeal and affirm the district court’s contempt order. I. Wintz Properties became a defendant in this case after one of George Wintz’s other companies (Wintz Freightways, Inc.) went out of business and stopped contributing to Central States’ multiemployer pension trust fund. The Fund determined that the defunct company had effected a complete withdrawal from the trust, a determination that imposes "withdrawal liability" on the withdrawing company. Because Wintz Freightways obviously couldn’t pay the Fund, the Fund followed the money over to Wintz Properties (and still other companies owned by Wintz that the parties and the district court refer to as the "Wintz Controlled Group")./1 The Fund’s determination that Wintz Freightways withdrew from the Fund was significant under ERISA/2 because while an employer may withdraw from a fund, it pays a penalty if it does. The penalty is called "withdrawal liability"; it means the employer is liable to the plan for unfunded, vested pension benefits as determined by the Fund’s trustee. See 29 U.S.C. sec.sec. 1381-83. The employer may contest the amount demanded by the trustee, but only through mandatory arbitration procedures. 29 U.S.C. sec. 1401. In the meantime, while arbitration is pending, the employer has no choice under the law but to keep to its schedule of installment payments. See Chicago Truck Drivers, Helpers & Warehouse Union Pension Fund v. Century Motor Freight, Inc., 125 F.3d 526, 534 (7th Cir. 1997). If the arbitrator ultimately sides with the employer that it owes no withdrawal liability, then whatever has been paid is refunded. In this case the Fund’s trustee determined that under ERISA (which sets out formulas for these things), Wintz’s withdrawal liability amounted to $2,958,136.71, payable to the Fund. Wintz did not pay that amount, nor make any installment payments toward the figure, prompting the Fund to file suit in district court; shortly afterward, the Fund filed a motion for a preliminary injunction ordering Wintz to pay. Wintz’s initial theory seemed to be that it did not owe withdrawal liability because it had not withdrawn from the Fund in the first place. But instead of simply defending the Fund’s suit on that basis at arbitration, Wintz filed counterclaims against the Fund, charging it with making an unlawful assessment under ERISA, violating a duty of good faith and fair dealing under the statute, as well as a duty to investigate whether a withdrawal actually had occurred. (Some of these may not be counterclaims so much as "defense[s] masquerading as . . . positive claim[s] for relief." Automatic Liquid Packaging, Inc. v. Dominik, 852 F.2d 1036, 1038 (7th Cir. 1988).) After holding hearings on the Fund’s motion for a preliminary injunction, the court granted the motion under the heading "Order to Compel Payments." While on appeal Wintz argues that the order was too ambiguous to be enforceable, it is hard to imagine how it could be any more clear: The Defendants . . . are jointly and severally ordered to (a) pay all past due payments as set forth in the schedule of payments attached to the Pension Fund’s June 17, 1996 Notice and Demand for payment of withdrawal liability on or before June 30, 1997, and (b) pay all future interim withdrawal liability payments on a timely basis or post a bond (as set forth in ERISA and the regulations promulgated thereunder) to guarantee such payments. Still Wintz did not pay--not after the Fund’s notice and demand for payment, not after receiving service of the Fund’s suit, not after being ordered to pay by the district court. Only now the reason for Wintz’s nonpayment shifted. In more hearings before the district court on the Fund’s motion to show cause why Wintz should not be held in contempt for failing to pay, Wintz argued that it did not pay because financially the company was crippled. That strategy might have worked except for two circumstances: Wintz himself invoked the Fifth Amendment rather than testifying about the company’s condition and why it did not comply with the court’s order (invoking the Fifth Amendment in a civil context invites an inference that the witness’ testimony would be adverse to his interests, see Baxter v. Palmigiano, 425 U.S. 308, 318 (1976)), and discovery in the case revealed that Wintz was still somewhat liquid. In fact, the company was paying other creditors instead of the Fund, and George Wintz himself seemed able to pay some of his personal creditors (such as credit card companies). After discovering that Wintz was paying other creditors but not the Fund, the court held Wintz (the company) and George Wintz (personally) in contempt for disobeying its previous order compelling payment, and entered a contempt judgment against both Wintz and its president (jointly and severally) in the amount of $978,041.42. The bulk of this sanction ($959,698.31) reflected the amount Wintz had paid other creditors instead of the Fund since the court issued its order compelling payments. The remainder consisted of attorneys’ fees and costs incurred in preparing and prosecuting the contempt petition. Wintz appeals the entire contempt sanction; it claims the sanction was an improper means of enforcing the district court’s previous order compelling Wintz to pay the Fund. II. Wintz’s principal argument is that it should not have been sanctioned and held in contempt for failing to pay the interim withdrawal liability installment payments that ERISA requires and that the district court’s order commands. Wintz challenges only the court’s enforcement of the order to pay the withdrawal liability through a contempt sanction; it does not challenge the order itself (as we have noted, ERISA unequivocally establishes a "pay now, arbitrate later" scheme). Before we consider Wintz’s arguments attacking the contempt sanction, we must determine whether we have jurisdiction over it. "Whether a judgment of civil contempt is appealable at the time entered, rather than later, at the windup of the entire case in the court of first instance, depends on the appealability of the underlying order, the order the judgment of civil contempt is intended to coerce the contemnor to obey." In re Rimsat, Ltd., 98 F.3d 956, 963 (7th Cir. 1996); see also Cleveland Hair Clinic, Inc. v. Puig, 106 F.3d 165, 167 (7th Cir. 1997) ("An adjudication of civil contempt used to enforce a judicial order is not appealable if the underlying order is itself not appealable."). We asked the parties to discuss our jurisdiction in their briefs, and each side has responded that we have jurisdiction over the contempt finding, but for different reasons. Wintz argues that we have jurisdiction because the underlying order was appealable as a final decision under 28 U.S.C. sec. 1291. The Fund tells us that we have jurisdiction because the underlying order is a preliminary injunction appealable under sec. 1292(a)(1). We consider each possibility because a third exists which would divest us of jurisdiction and require dismissal of Wintz’s appeal-- namely, that the underlying district court order is neither a "final decision" nor an injunction, but rather is an order partly but not wholly adjudicating the Fund’s complaint (much like an order awarding partial summary judgment). We first tackle Wintz’s theory that the contempt finding is appealable because the order it disobeyed (the order compelling payments) is a final decision that disposed of the underlying litigation initiated by the Fund. This is a rather surprising position given Wintz’s concession that at the time it filed this appeal its own counterclaims against the Fund remained. Only "final decisions" are appealable under sec. 1291, and the presence of the counterclaims made the court’s order compelling payment decidedly nonfinal. See Alonzi v. Budget Construction Co., 55 F.3d 331, 333 (7th Cir. 1995). Nor were the counterclaims dismissed by implication when the court ordered Wintz to pay, because it is possible for the Fund to violate the technical provisions of ERISA even though it is correct that an employer owes it money. The only way the court’s order could have achieved finality under sec. 1291 was through Rule 54(b), id., which allows courts to issue final and appealable orders dismissing fewer than all claims, but Wintz did not seek nor did the court apply a designation of finality under this rule. While acknowledging that at the time of this appeal its claims (since dismissed) were pending in the district court, Wintz tells us that some of our cases compel us to treat the order as final and appealable despite its seeming incompleteness here. For example, in Trustees of Chicago Truck Drivers v. Central Transport, Inc., 935 F.2d 114 (7th Cir. 1991), we were faced with a similar case in which an employer stopped making payments to a union pension fund. After the Fund filed suit seeking interim payments pending arbitration, the district court ordered the company to pay but over the Fund’s protests the court refused to hold the company in contempt for the nonpayment. The Fund appealed that decision, prompting us to consider our jurisdiction over the court’s order compelling payment. We ultimately concluded that we had jurisdiction because the court’s order essentially wrapped up the case before it: The Fund obtained a judgment compelling [the company] to pay its accrued liability and to make future payments as they become due. The order was entered on the form appropriate to civil judgments. Such an order is final and appealable under 28 U.S.C. sec. 1291. It is the end of the case. . . . [T]he complaint asked for one thing, money, and the entire litigation has been concluded. The definition of a final decision is one wrapping up the case and leaving "nothing for the court to do but execute the judgment," which is exactly what this decision does. Jurisdictional rules should be clear, and we think it best to simplify the subject by holding that the terminating order of any suit seeking "interim payments" under sec. 1399(c)(2) is a final decision, appealable under 28 U.S.C. sec. 1291. Id. at 116-17 (internal citation omitted). If this case simply involved a fund’s pursuit for interim payments and a district court’s order compelling those payments, we would have no trouble relying on Central Transport, as well as Trustees of the Chicago Truck Drivers, Helpers & Warehouse Workers Union Pension Fund v. Rentar Industries, Inc., 951 F.2d 152 (7th Cir. 1991), a later case applying the Central Transport holding. We would agree with Wintz that an order compelling payment to the Fund is a "terminating order" under sec. 1399(c)(2) because there is nothing left for the court to do but execute the judgment. But at the time of this appeal the district court had Wintz’s counterclaims (three of them) to deal with, and while it was likely at that point that the court’s award in favor of the Fund spelled doom for those claims, it was not necessarily so. (One of the counterclaims alleged a breach of good faith and fair dealing, and it is at least theoretically possible for the Fund to have been entitled to the monies it sought but to have gone about collecting that money in an unlawful way under ERISA.) The district court’s order also neglected to address the Fund’s claim for liquidated damages and interest; both the Supreme Court and this court have held that a decision is not final where pre- judgment interest has yet to be determined. See Osterneck v. Ernst & Whinney, 489 U.S. 169 (1989); Mercer v. Magnant, 40 F.3d 893, 896 (7th Cir. 1994). Nor (unlike in Central Transport) was the district court’s order entered on a form appropriate to civil judgments. In short, while it is accurate to interpret Central Transport as holding that orders compelling ERISA withdrawal liability payments sought by the Fund can be final and appealable under sec. 1291, they are not automatically appealable such that we utterly ignore the rules disrupting finality that we apply in every other case. The district court’s order was not a final decision under sec. 1291, meaning we have jurisdiction over Wintz’s appeal only if the Fund is correct that the order was an injunction enforceable through contempt and appealable as an interlocutory decision "without regard to finality" under 28 U.S.C. sec. 1292(a)(1). Ford v. Neese, 119 F.3d 560, 562 (7th Cir. 1997). On its face the underlying order compelling interim payments to the Fund looks like an injunction. The order instructs Wintz to do something--pay the Fund what the statute requires-- which after all is the point of an injunction; "[i]n effect, the injunction wrote statutory prohibitions into a decree enforceable by contempt." Szabo v. U.S. Marine Corp., 819 F.2d 714, 718 (7th Cir. 1987). Wintz’s principal argument on appeal is that the order could not have been an injunction because it did not comply with Rule 65(d) of the Federal Rules of Civil Procedure, which requires that an injunction "shall describe in reasonable detail, and not by reference to the complaint or other document, the act or acts sought to be restrained." Fed. R. Civ. P. 65(d). We think the order was crystal clear and self-contained, but at this point Wintz’s failure to appeal the grant of the injunction makes elaboration unnecessary. "Not having appealed from the grant of the injunction," Wintz "cannot argue that it is too vague to be enforced . . . or that it violates Rule 65(d) of the Federal Rules of Civil Procedure," Szabo, id., both of which occupy a considerable portion of Wintz’s briefs on appeal. Put another way, Rule 65 is not jurisdictional in the way Wintz wants it to be-- "in the sense that its requirements are nonwaivable, so that any [technical] failure to comply with those requirements would make the injunction a nullity even if no party had ever objected." Chicago & Northwestern Trans. Co. v. Railway Labor Executives’ Assoc., 908 F.2d 144, 149 (7th Cir. 1990). Wintz’s further problem is that even if we sided with the company and decided that the injunction in this case was unenforceably vague or violated Rule 65(d), it would not necessarily follow that we have jurisdiction under Wintz’s preferred "final decision" route. As we discussed earlier, the likely result in that case would be that we have no jurisdiction at all. See Bates v. Johnson, 901 F.2d 1424, 1428 (7th Cir. 1990) ("Until the judge enters an injunction . . . there is nothing before us on appeal."). We need not follow this detour any longer. The parties treated the underlying order as an injunction at the time it was entered, and that is how we will treat it here. We acknowledge that during one of the hearings the district court went to some lengths not to call its order to compel payments an injunction, instead labeling it an order requiring "interim interim payments." From the record, it appears the court was careful in how it referred to its order so that it could avoid wading through the balancing test courts must apply before issuing injunctions. See, e.g., Gateway Eastern Railway Co. v. Terminal Railroad Assoc. of St. Louis, 35 F.3d 1134, 1137 (7th Cir. 1994); see also Fed. R. Civ. P. 65. But "[n]omenclature does not determine whether an order is a preliminary injunction" and thus appealable under sec. 1292(a)(1). Doe v. Village of Crestwood, Il., 917 F.2d 1476, 1477 (7th Cir. 1990). If nomenclature were important, in this case the name attached to the order ("Order to Compel Payments") could not have been more facially insistent, and therefore, injunctive. Accordingly, we have jurisdiction over the company’s appeal from the district court’s contempt sanction and proceed to Wintz’s arguments against it. In truth we are somewhat hesitant to call the district court’s contempt judgment anything but a second injunction to pay the Fund. It is true that the judgment contains a dollar amount, but it looks to be less than the accrued installment payments (approximately $200,000 a month) owed but not paid to the Fund. At oral argument the Fund’s attorney informed us that the contempt sanction in this case would be refunded to Wintz if the arbitrator rules in the company’s favor (if Wintz loses in arbitration, then the amount it pays under the contempt order would be credited toward its withdrawal liability). Contempt sanctions typically are not credits toward liability or refunded, nor for that matter are they paid to an opponent rather than the court. But the parties and the district court refer to the judgment as a contempt sanction, probably because the judgment is entered against George Wintz (personally, along with the Fund) even though he was not a named party in the underlying litigation. At least as to Mr. Wintz, we agree that the judgment is indeed a sanction, so for that reason and ease of reference we will treat it that way. Wintz’s primary argument against the contempt judgment (which we review to determine if the court abused its discretion, United States v. Torres, 142 F.3d 962, 969 (7th Cir. 1998)) appears to be that the district court’s underlying injunctive order was so ambiguous as to be unenforceable through contempt. This sounds similar to Wintz’s argument that the injunction was vague and violated Rule 65(d), both discussed above and dismissed at this point as tardy. But perhaps Wintz is arguing that the order compelling payments was so absurdly non- directive that it gave Wintz no notice of what was expected, and thus no notice even that it should be clarified or appealed, until of course the district court sanctioned Wintz for disobeying it. We have nearly opened up a can of worms, because if that were the case the underlying order would be a nullity (thus divesting an appellate court of jurisdiction to review it in the first instance). Chicago & Northwestern Trans. Co., 908 F.2d at 149; see also Die Seamless Cylinder Int’l, Inc. v. General Fire Extinguisher Corp., 14 F.3d 1163, 1166 (7th Cir. 1994) ("It may seem a considerable paradox that if the judge’s error is so flagrant as to make his order void, the appellate court loses jurisdiction. But a void order has no bite, and Article III precludes an appeal from a harmless order."). There is no obligation to obey an injunctive nullity, Bates, supra, so we concede it would be strange to make a party obey a contempt citation enforcing the nullity. We need not open the can of worms because the district court’s order compelling payments was not hopelessly defective or ambiguous in any of the ways forwarded by Wintz. It is true that the district court’s order makes reference to a schedule of delinquent payments attached to the Fund’s notice and demand mailed to Wintz, and in that sense is not completely self-contained. At most this amounts to a violation of Rule 65(d) (since waived, see above); it does not transform an otherwise valid injunction into a nullity. Setting this point aside, Wintz makes it sound as if the parties had been quibbling over the amount the company owed. In fact, Wintz refused to pay anything at all, a wholesale disregard of ERISA’s "pay now, arbitrate later" scheme, Chicago Truck Drivers Pension Fund, 125 F.3d at 534, and a decision that forced the Fund to seek payment in court. The court ordered Wintz to pay, and Wintz even returned to court to clarify the order. Based on our review of the parties’ exchanges before the district court judge, we find it unreasonable for Wintz to argue at this point that it had no idea what the order demanded. Wintz also contends that the district court improperly sanctioned the company for paying other creditors. From Wintz’s perspective, at most the district court’s underlying order compelling payments was a judgment that had to get in line behind other judgments outstanding against the company. Wintz is correct that the district court based the amount of the sanction on what Wintz had paid to other creditors instead of the Fund. But nothing in the order itself deprives Wintz of the right to pay other creditors, even before the company paid the Fund, so long as the Fund is paid. This is not a case wherein Wintz violated an injunction because it had no money whatsoever; it obviously was paying several creditors except the one entity entitled to Wintz’s money under the terms of the court order. Nor is this a case wherein the evidence before the district court highlighted extenuating circumstances preventing the Fund from doing what ERISA requires. When it came time for Wintz to present those circumstances, Wintz’s president, George Wintz, appeared before the district court but refused to answer questions under the Fifth Amendment of the United States Constitution. That was his right, but the court was entitled to draw a negative inference from his refusal to speak, and in turn his refusal to pay. The remainder of Wintz’s arguments do not excuse its failure to comply with the court’s injunction and pay the Fund. Contrary to Wintz’s invitation, we will not wade through the record to determine whether paying the Fund would force the company into bankruptcy. We have already observed that Wintz has managed to pay other creditors instead of the Fund, but in all events federal judges "have no equitable power to excuse interim payments." Central Transport, Inc., 935 F.2d at 119. In enacting ERISA, Congress decided that interim payments were mandatory--no excuses--because the "stakes" are safer in the interim if they are held by the Fund. Funds don’t go out of business the way thinly capitalized employers do, id., meaning they can readily refund the payments to a company like Wintz if an arbitrator rules against them. All that remains is Wintz’s argument that the district court should not have held its president, George Wintz, personally in contempt in addition to his company. The order compelling payments was not simply directed at Wintz Properties, but at the corporations’ "officers" as well. George Wintz is the sole officer and shareholder of Wintz Properties, making the underlying injunction applicable to him, and his company’s failure to comply with it his problem, too. III. ERISA makes it clear that an employer withdrawing from a multiemployer pension fund must pay withdrawal liability to the Fund, and our cases make it equally clear that interim payments must be made pending arbitration. See Chicago Truck Drivers, supra. Wintz refused to make those payments, prompting the district court to issue an injunction followed by a finding of contempt. We affirm the contempt judgment. The Fund asks us to award it attorneys’ fees and costs incurred in defending against Wintz’s appeal, and in this case we will do so. Section 1132(g)(2) of ERISA requires a court to award reasonable attorneys’ fees and costs to a fund that must obtain a judgment in order to collect delinquent contributions to a multiemployer fund, which is exactly what the Fund had to do in the district court. See also Chicago Truck Drivers, 125 F.3d at 535 (affirming an award of attorneys’ fees and costs "because [the employer] precipitated the plan’s suit in the district court by unlawfully failing to make any installment payments pending arbitration."). The law should be clear enough by now to avoid the necessity of a suit like the Fund’s, and an appeal like Wintz’s, which is part of the reason the Fund’s fees and costs are properly attributed to Wintz. Finally, we take note that since filing this appeal Wintz has added two more to our docket relating to successive district court orders to pay the Fund. Not (unfortunately) on their own motion to consolidate, but instead on our own suggestion, the parties wisely agreed to suspend briefing on those cases until the opinion in this case was decided. We are confident that Wintz will carefully review those appeals (and subsequent ones like them) to determine whether they remain viable in light of our decision today. AFFIRMED. FOOTNOTES /1 As gleaned from the record, it appears that one of the companies principally owned by George Wintz, Wintz Freightways, contributed to the union pension fund before it merged with Central States Xpress, Inc., an Indiana corporation. Following the merger, Xpress failed to continue making payments to the Fund, and soon afterward was placed into involuntary bankruptcy by its creditors and went out of business. The Fund determined that for the purposes of ERISA, Wintz’s other companies (called the Wintz Controlled Group) constituted a single employer and were financially responsible for Xpress’ withdrawal from the pension fund. /2 As amended by the Multiemployer Pension Plan Amendments Act of 1980, 29 U.S.C. sec. 1381 et seq.

01-03-2023

09-24-2015

https://www.courtlistener.com/api/rest/v3/opinions/2994073/

In the United States Court of Appeals For the Seventh Circuit No. 99-1292 United States of America, Plaintiff-Appellee, v. Marla Lynn Cones, Defendant-Appellant. Appeal from the United States District Court for the Northern District of Indiana, South Bend Division. No. 3:97-CR-2(02)RM--Robert L. Miller, Jr., Judge. Argued October 1, 1999--Decided October 28, 1999 Before Cudahy, Easterbrook, and Kanne, Circuit Judges. Easterbrook, Circuit Judge. Customs officials intercepted a package originating in Vietnam and containing 248 grams of heroin bound for "Porsche Jones" in Elkhart, Indiana. The drug had been placed inside a book. Agents made a controlled delivery. No one was home when the agents first attempted to deliver the package, and they left a standard Postal Service notice. On the second attempt, again no one was there, but a note instructed the Postal Service to "Leave Package for Porsche Jones between door!" The agents did just that, then watched. Three hours later, Marla Cones (whose nickname is "Porche") arrived, learned that the note directing the Postal Service to redeliver the parcel had been removed, and quickly left. Her car, driven by Azibuike Iroh, performed a series of maneuvers that seemed calculated to detect or evade surveillance. Iroh drove Cones to see the friend to whose home the package had been delivered. A half hour after the initial visit to the mailbox, the car returned and Cones retrieved the parcel. When the car drove away a second time, the driver again attempted to elude pursuit--but failed. Cones and Iroh were arrested and charged with heroin smuggling. A jury found Iroh guilty, and we affirmed last year. United States v. Doe, 149 F.3d 634 (7th Cir. 1998). Cones was convicted by the judge following a bench trial. Iroh and Cones each asserted that the other was solely responsible for the drugs. Neither persuaded the trier of fact; judge and jury concluded that Cones and Iroh were partners in crime. The package was mailed to a friend’s apartment, where few knew that Cones would receive mail, and it bore a variation of her name that could not have been widely known. Still, Cones contends, the evidence was insufficient. She maintains that she arranged for the package to go to a friend’s place only because some mail had been stolen recently from her own mailbox. She blames Iroh for duping her into acting as a conduit for drugs--which Cones insists that Iroh ordered. What evidence was there, she inquires, that she knew the package contained drugs? There was plenty of evidence. Drug dealers don’t mail narcotics to strangers without prior arrangement. Cones was no stranger to the drug trade; she was carrying a small amount of crack cocaine when arrested. She obtained the package in a manner that suggests knowledge that the contents were illicit. Why visit a friend’s house twice, with evasive driving before and after retrieving the parcel, if she thought that the package contained only a book? Why did she think that Iroh would order a book from Vietnam to be delivered to an alias at a third party’s house? Normal people would be more than a little suspicious. (Cones knew that the package was not addressed to her right name and told her friend to write "Porsche Jones" on the postal slip.) What is more, this is not the first time a "book" had arrived from Vietnam. Near the time of the first, Iroh gave Cones some $5,000. A trier of fact sensibly could infer that Cones knew that the first package contained drugs and that the second was likely to do so too. Cones offers three objections to her sentence. The first two are frivolous. The district court’s conclusion that Cones committed perjury at trial, and the consequent enhancement for obstruction of justice, is well supported by the evidence--so well supported that her lawyer did not object, dooming the appellate contest by forfeiture as well as by the district court’s findings. Likewise with the district court’s decision not to reduce her offense level for playing a minor role. Cones was held responsible only for the drugs in the second package from Vietnam, and she was not a minor participant in that transaction. United States v. Mojica, 185 F.3d 780, 790-91 & n.10 (7th Cir. 1999); United States v. Brown, 136 F.3d 1176, 1185-86 (7th Cir. 1998); United States v. Burnett, 66 F.3d 137, 140 (7th Cir. 1995). But her third objection is more substantial. Guideline 2D1.1(c) provides a base offense level of 26 for a person who is responsible for between 100 and 400 grams of "any mixture or substance containing a detectable amount" of heroin. Two extra levels for obstruction of justice produced a total offense level of 28, and a sentencing range of 78 to 97 months for a person with a criminal history category of I. The district court decided to depart upward six levels on the ground that the substance in the book, which was 71% heroin, was of "unusually high purity." See sec.2D1.1 Application Note 9: Trafficking in controlled substances, compounds, or mixtures of unusually high purity may warrant an upward departure, except in the case of pcp or methamphetamine for which the guideline itself provides for the consideration of purity (see the footnote to the Drug Quantity Table). The purity of the controlled substance, particularly in the case of heroin, may be relevant in the sentencing process because it is probative of the defendant’s role or position in the chain of distribution. Since controlled substances are often diluted and combined with other substances as they pass down the chain of distribution, the fact that a defendant is in possession of unusually pure narcotics may indicate a prominent role in the criminal enterprise and proximity to the source of the drugs. As large quantities are normally associated with high purities, this factor is particularly relevant where smaller quantities are involved. Level 34 has a sentencing range of 151 to 188 months’ imprisonment, and the judge chose the bottom of this range--which is 54 months higher than the top of the range for level 28. Cones wants us to hold that the departure is unauthorized. The district judge’s rationale for the extra six levels is that 250 grams of 70% pure heroin would produce 2.5 to 5.8 kilograms of heroin at traditional street-level purities, which run from 3% to 7%. A person responsible for between 1 and 3 kilograms of heroin has a base offense level of 32; the 3-10 kilogram range draws a base offense level of 34. The district court’s six-level departure put Cones in the equivalent of level 32, on the ground that she received the equivalent of 2.5 kilos of street-purity heroin. The question we must consider is whether a conversion to street-level purity is an authorized reason for departure. A judge may depart from the Guidelines when "there exists an aggravating or mitigating circumstance of a kind, or to a degree, not adequately taken into consideration by the Sentencing Commission". 18 U.S.C. sec.3553(b). See also Koon v. United States, 518 U.S. 81 (1996). Drug purity cannot reasonably be described as a circumstance that the Commission has overlooked or inadequately considered. Both the relevant statutes and the Guidelines use the formula "mixture or substance containing a detectable amount" of a given drug. E.g., 21 U.S.C. sec.841(b)(1)(A)(i). The possibility of converting to a uniform purity--whether 100% purity or "street- level" purity--was considered and deliberately rejected. See United States v. Marshall, 908 F.2d 1312 (7th Cir. 1990) (en banc), affirmed under the name Chapman v. United States, 500 U.S. 453 (1991); United States v. Neal, 46 F.3d 1405 (7th Cir. 1995) (en banc), affirmed, 516 U.S. 284 (1996). When defendants who sold a highly dilute drug objected that the "detectable amount" approach greatly magnifies their punishment compared with people who sell a more concentrated drug, both this court and the Supreme Court responded in the cases just cited that this outcome is the result of deliberate choices by Congress and the Sentencing Commission. Statutes and Guidelines allow conversion to a uniform purity for pcp and methamphetamine, and the Guidelines now allow a conversion for lsd, which reinforces the conclusion that for other drugs Congress and the Commission have rejected a common-purity approach. For the same reasons that Chapman and Neal preclude reducing the effective quantity at defendants’ behest on the ground that the drugs had been diluted to street level, we now hold that judges should not increase the effective quantity at prosecutors’ behest on the ground that street-level purity is the superior measure. Chapman and Neal do not depend on whose ox is being gored. For drugs other than lsd, pcp, and methamphetamine, the sentence must be calculated without an adjustment to a uniform purity level. Application Note 9 does not invite district judges to disregard the rule that the entire mixture or substance must be weighed without regard to purity. The Note makes a different point: that higher purity often is associated with a higher position in the distribution network, which may justify a higher sentence. Higher-ups do more damage to society, and the drugs found in their possession when arrested may be only a small fraction of the drugs that have passed through their hands. Moreover, people higher in the chain often are harder to detect and prosecute. Greater social harm, and a lower probability of detection, both justify higher sentences in order to maintain deterrence. Guideline 3B1.1 provides directly for an enhancement when evidence establishes that the defendant was an organizer, leader, manager, or supervisor. If the criminal activity involved five or more persons, or was otherwise extensive, the offense level goes up by 3 or 4; otherwise the increase is 2 levels. Application Note 9 permits an increase when it is not possible to establish a supervisory role in the conventional way, and the position in the organization must be inferred from the purity of the drug. Like other courts of appeals, we think that this is the only function of Application Note 9: a higher sentence is appropriate only when purity "is probative of the defendant’s role or position in the chain of distribution." United States v. Iguaran-Palmar, 926 F.2d 7, 10 (1st Cir. 1991) (dictum); United States v. Mendoza, 121 F.3d 510, 515 (9th Cir. 1997). The note does not authorize courts to substitute a uniform-purity approach for the contrary method deliberately adopted by Congress and the Sentencing Commission. What is more, when higher purity implies a higher role in a criminal organization, departure should be limited to the number of levels that could be awarded under sec.3B1.1; otherwise a less formal method of proof would undermine the decision to cap at 4 the number of offense levels that may be assigned to bigwigs. An original source of drugs might receive a greater adjustment, we suggested in Marshall, 908 F.2d at 1324, but few defendants in heroin or cocaine prosecutions fit that description. Perhaps there are rare cases in which an increase under sec.3B1.1 could be coupled with a departure under Application Note 9, for a total of more than 4 levels, though this smacks of double counting, but we need not decide today whether cases such as United States v. Rodriguez, 63 F.3d 1159, 1168-69 (1st Cir. 1995), which allow this duplication, are persuasive. Our point is that departure should reflect the considerations identified in Application Note 9 rather than judicial disagreement with the Guidelines’ failure to calculate sentences based on a purity-adjusted measure of drug quantity. This conclusion is compatible with our decision to affirm a six-level departure for Iroh. His only argument was that departure for purity is never proper, a line of argument rejected as at odds with Application Note 9. See Doe, 149 F.3d at 640. Cones has made a different and better argument than her co-defendant. Did Cones occupy a prominent or especially dangerous role in the chain of distribution? We need not remand to find out, because the district court has addressed this question already. After quoting the passage in Application Note 9 that mentions "a prominent role in the criminal enterprise and proximity to the source of the drugs", the judge continued: "There isn’t any evidence to tell me that that describes you. There isn’t any evidence to tell me that that describes Mr. Iroh. . . . I simply do not know." At oral argument, the prosecutor also disclaimed any contention that Cones was hard to apprehend; to the contrary, he implied that every member of a distribution chain deserves a higher sentence (because breaking a single link breaks the chain) and that Cones deserves extra harsh treatment because recipients of drugs mailed to this country are espe cially easy to catch. (The proposition that sentences should rise the easier the defendant is to apprehend gets things backwards.) The district judge made it clear that his only reason for adjusting Cones’s sentence was a belief that drug quantities as a rule should be converted to street-level purity. As Koon said, however, departures must be limited to unusual cases, ones not handled by the Guidelines’ general rules. There is nothing at all unusual about Cones’s case, and the district judge’s reason would apply to a large portion of all federal drug prosecutions. Cones’s conviction is affirmed, but her sentence is vacated, and the case is remanded with instructions to resentence her within the range for level 28.

01-03-2023

09-24-2015

https://www.courtlistener.com/api/rest/v3/opinions/2819800/

In the United States Court of Appeals For the Seventh Circuit ____________________ Nos. 14-3013, 14-3105 UNITED STATES OF AMERICA, Plaintiff-Appellee, v. SINOVEL WIND GROUP CO., LTD., Defendant-Appellant. ____________________ IN RE SINOVEL WIND GROUP CO., LTD., Petitioner. ____________________ Appeal from and Petition for Writ of Mandamus to the United States District Court for the Western District of Wisconsin No. 13-cr-84-bbc — Barbara B. Crabb, Judge. ____________________ ARGUED APRIL 1, 2015 — DECIDED JULY 23, 2015 ____________________ 2 Nos. 14-3013, 14-3105 Before WOOD, Chief Judge, FLAUM, Circuit Judge, and KENNELLY, District Judge. * WOOD, Chief Judge. In June 2013, the United States deliv- ered a criminal summons to the office of Sinovel Wind Group (USA) Company in Texas. It did so in order to serve process on Sinovel Wind Group Company, a Chinese corpo- ration and the owner of 100% of the shares of Sinovel Wind Group (USA). (To avoid confusion, we refer to the subsidiary Sinovel USA and the parent as Sinovel.) The summons re- vealed that Sinovel had been indicted in the Western District of Wisconsin for crimes including criminal copyright in- fringement and trade secret theft. Sinovel contested jurisdic- tion and moved to quash service of the summons. Conclud- ing that Sinovel USA was the alter ego of Sinovel and that service on Sinovel USA was proper, the district court denied Sinovel’s motion. Sinovel appealed (No. 14-3013), and short- ly thereafter filed a petition for a writ of mandamus in this court (No. 14-3105), asking us to direct the district court to vacate its order refusing to quash service of process. We con- clude that we have no jurisdiction to hear Sinovel’s appeal. We also conclude that this case does not meet the high standards for issuance of a writ of mandamus. Sinovel will be free to raise all relevant arguments on appeal from final judgment, should it be convicted and wish to pursue the matter. I A grand jury in the Western District of Wisconsin indict- ed Sinovel and three individuals in June 2013 on charges of * Hon. Matthew F. Kennelly of the Northern District of Illinois, sit- ting by designation. Nos. 14-3013, 14-3105 3 conspiracy to commit trade secret theft, wire fraud, trade se- cret theft, and criminal copyright infringement. See 18 U.S.C. §§ 371, 1343, 1832(a)(2), 2319; 17 U.S.C. § 506(a)(1)(A). The charges arose from Sinovel’s alleged scheme to steal (among other things) computer source code from a company called AMSC, formerly known as American Superconductor; the pilfered code was allegedly going to be used to assist in op- erating Sinovel’s wind turbines. FBI reports indicate that the government served a summons on Sinovel USA’s registered agent in Dover, Delaware, in June 2013; it also mailed a summons to Sinovel USA’s office in Houston via FedEx and served Sinovel USA’s registered agent in Austin. (Sinovel USA was incorporated in Delaware and registered to trans- act business in Texas.) In August 2013, Sinovel specially appeared in the district court to file a motion pursuant to Federal Rule of Criminal Procedure 12 to quash service of the summonses, complaint, and indictment. The record indicates that the individual de- fendants do not reside in the United States and are not ex- pected to appear; they have not been served and play no part in either proceeding before us. We thus have nothing further to say about them. Sinovel argued that the government had not complied with Rules 4 and 9, because service of process on Sinovel USA and its registered agents was not equivalent to service on Sinovel itself. The magistrate judge to whom the case was assigned was unpersuaded; he concluded that Sinovel USA was the alter ego of Sinovel under Delaware law and thus that service upon Sinovel USA sufficed for service upon Si- novel. Sinovel filed objections to the magistrate judge’s order denying the motion to quash service, along with a motion 4 Nos. 14-3013, 14-3105 for reconsideration. The district court rejected the objections and denied the motion. It decided three critical points: first, the facts alleged demonstrated that Sinovel USA was not in- dependent of Sinovel; second, Delaware law governed the question whether Sinovel USA was Sinovel’s alter ego for service of process purposes; and third, under Delaware law, alter ego status had been proven. Sinovel filed a notice of appeal from this interlocutory ruling in September 2014. It also filed a petition for a writ of mandamus directly with this court. We instructed the parties to address the question of appellate jurisdiction in their con- solidated briefs, along with the merits. The two proceedings have been consolidated for decision. II We have jurisdiction over appeals from all final decisions of the district courts. 28 U.S.C. § 1291. Criminal defendants, like others, must ordinarily wait for a final judgment before they may bring an appeal. The “core application” of section 1291 “is to rulings that terminate an action.” Gelboim v. Bank of Am. Corp., 135 S. Ct. 897, 902 (2015). There is, however, a “small class” of decisions that “finally determine claims of right separable from, and collateral to, rights asserted in the action, too important to be denied review and too independ- ent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated.” Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546 (1949). The Su- preme Court has imposed three requirements for a collateral order to be appealable: the decision must be conclusive; it must resolve important questions separate from the merits; and it must be effectively unreviewable on appeal from the eventual final judgment in the underlying action. Mohawk Nos. 14-3013, 14-3105 5 Indus., Inc. v. Carpenter, 558 U.S. 100, 106 (2009). The Court has stressed that the orders qualifying for appeal under this doctrine comprise a “small category,” Swint v. Chambers Cty. Comm’n, 514 U.S. 35, 42 (1995), and that the collateral order doctrine “must never be allowed to swallow the general rule that a party is entitled to a single appeal, to be deferred until final judgment has been entered.” Mohawk, 558 U.S. at 106 (quotations omitted). Sinovel argues that its appeal ticks all the boxes that Co- hen and other cases require for appellate jurisdiction. Recog- nizing the Court’s recent warning in Mohawk against expand- ing the set of appealable collateral orders, it urges nonethe- less that its case fits the bill. We are unconvinced. The “small class” of non-final orders that may be appealed is to be po- liced carefully. Cohen, 337 U.S. at 546. Sinovel’s position would lead to the opposite result: there would be no princi- pled way to avoid the conclusion that every denial of a mo- tion to quash service of process is appealable. Such an out- come would be inconsistent with the Court’s guidance. See Will v. Hallock, 546 U.S. 345, 350 (2006) (“[W]e have meant what we have said; although the Court has been asked many times to expand the ‘small class’ of collaterally appealable orders, we have instead kept it narrow and selective in its membership.”). Sinovel realizes the challenge before it, and so it has tried to craft a narrower rule into which its case would fit. Here is its proposal: denials of motions to quash service in cases in which the moving party is “a foreign, par- tially state-owned corporation … [and] prosecutors have plainly failed to comply with the unambiguous require- ments of [Criminal Rule 4]” are appealable. That is a mouth- ful, but even if we were to find this anything but jury-rigged, there can be no denying that this would create a new catego- 6 Nos. 14-3013, 14-3105 ry of appealable collateral orders—precisely what the Su- preme Court has strongly discouraged. Sinovel otherwise rests its position mainly on what it contends is the practical unreviewability of the district court’s denial of its motion to quash after a judgment on the merits. That overstates the case considerably. It is true that the district court’s ruling has eliminated the option of avoid- ing the proceeding altogether, but Sinovel never had such a right. (This is not like double jeopardy, or the immunity doc- trines whose purpose is to avert an unauthorized proceed- ing.) This is, in effect, a branch of personal-jurisdiction law. People routinely raise personal-jurisdiction objections at the district-court level, their argument is rejected, and they ar- gue on appeal that the district court erred. If the appellate court agrees with them, the judgment is set aside. That is just what would happen if Sinovel is convicted after a trial and if it decides to take an appeal. If the court of appeals concludes that the district court should have granted the motion to quash, it will set aside the judgment. Even if all this is true, Sinovel argues, there is an excep- tion for cases in which the importance of the particular value at stake is sufficiently great that an immediate appeal must be allowed to protect that value. See Mohawk, 558 U.S. at 107 (“[T]he decisive consideration is whether delaying review until the entry of final judgment ‘would imperil a substantial public interest’ or ‘some particular value of a high order.’”) (quoting Hallock, 546 U.S. at 352–53). This is such a case, Si- novel continues, because the litigation imperils the foreign relations of the United States and will harm comity between the United States and China. It emphasizes that the govern- ment of China has a minority (18%) stake in Sinovel; if Si- Nos. 14-3013, 14-3105 7 novel must endure proceedings in a U.S. court, the Chinese government’s dignity will be adversely affected. A big problem with this argument is the fact that the For- eign Sovereign Immunities Act (FSIA) in the United States does not recognize any special rights for foreign-government ownership of less than a majority of the shares (or their equivalent). See 28 U.S.C. § 1603(b)(2); Dole Food Co. v. Pat- rickson, 538 U.S. 468, 480 (2003) (“[A] foreign state must itself own a majority of the shares of a corporation if the corpora- tion is to be deemed an instrumentality of the state under the provisions of the FSIA.”). The FSIA codifies the line Con- gress has drawn to trigger protections for foreign sovereign interests. China’s stake in Sinovel is not over that line. Sinov- el (which did not cite the FSIA in either its opening or reply brief) has offered no reason for us in essence to confer sover- eign immunity on entities that fall outside the scope of the statute. We raised this problem at oral argument, where Sinovel conceded that the rules applying to foreign sovereigns are not (at least technically) applicable to it. It argued instead that China’s stake in Sinovel warrants at least “a thumb on the scale” in favor of appellate jurisdiction over the district court’s denial of the motion to quash. But Sinovel has point- ed to no rule to that effect. It cites Samantar v. Yousuf, 560 U.S. 305 (2010), in support of its argument that the FSIA’s lan- guage does not necessarily exclude entities it does not men- tion from its protections. Samantar, however, dealt with the question whether a foreign official could invoke the protec- tions of the FSIA and thereby obtain immunity from suit. No, the Court replied: the term “foreign state” is defined in the statute, and officials are not mentioned. Id. at 315–16. It 8 Nos. 14-3013, 14-3105 reached that result despite the fact that it recognized some residual federal common law of foreign sovereign immunity. Id. at 324. If Samantar helps anyone, it helps the government in this case, not Sinovel. We see no reason why a foreign corporation in which a foreign government has a minority stake is entitled to a “thumb on the scale” for jurisdictional purposes. There are other reasons to take issue with Sinovel’s posi- tion that requiring it to stand trial will harm U.S. foreign re- lations and that it is up to the courts to save the day. Among them is the fact that the decision to prosecute a foreign cor- poration represents the assessment of the Executive Branch, through the Department of Justice, that the proceeding fur- thers U.S. interests. It is not up to the courts to monitor the extent of Justice’s consultations with the Department of State, the Office of the U.S. Trade Representative, the Com- merce Department, or any other interested entity, although we are aware that such consultations often take place. See, e.g., Lori B. Morgan & Helaine S. Rosenbaum, U.S. Depart- ment of Justice Antitrust Enforcement Policy, 34 HARV. INT’L L.J. 192, 197 (1993) (“[T]he DOJ analyzes enforcement situations to avoid prosecutions which conflict with the laws of foreign governments, performs a balancing test of competing na- tional interests, and considers possible effects on the United States’ foreign relations.” (citations omitted)); see also DEP’T OF JUSTICE AND FED. TRADE COMM’N, ANTITRUST ENFORCEMENT GUIDELINES FOR INTERNATIONAL OPERATIONS § 3.2 (1995), available at http://www.justice.gov/atr/antitrust- enforcement-guidelines-international-operations (“In cases where the United States decides to prosecute an antitrust ac- tion, such a decision represents a determination by the Exec- Nos. 14-3013, 14-3105 9 utive Branch that the importance of antitrust enforcement outweighs any relevant foreign policy concerns.”). Sinovel has not provided us the kind of compelling rea- son we would need to override the government’s assessment here. It argues, for example, that the government neglected to employ the procedures spelled out in a judicial assistance agreement between the United States and China to serve process in this case. That fact, if it is so, does not tell us that the Department failed to consider the effect of this prosecu- tion on the government’s relations with China, let alone that it will affect or has affected those relations. Furthermore, Si- novel does not explain what difference it would have made if the government had tried to follow the agreement in order to serve process on Sinovel in China. The agreement says that if the United States asks China to serve a document, China “shall use its best efforts” to do so—but that China “shall not be obligated to effect service of a document which requires a person to appear as the accused.” Judicial Assis- tance Agreement, China-U.S., at 8, June 19, 2000, T.I.A.S. No. 13,102. Sinovel offers no reason for us to assume that failure to initiate this optional method of service has disrupted in- ternational relations, nor why an earlier opportunity to pre- sent its arguments to a U.S. court would repair such a rup- ture. Sinovel’s other arguments fare no better. It contends that criminal proceedings against it in Wisconsin could interfere “with ongoing civil litigation in Chinese courts” over the same dispute. Sinovel supports its argument with citations to a press release and an article from WindPower Monthly about lawsuits that AMSC has filed against Sinovel in China. Since oral argument, it has also filed several supplemental 10 Nos. 14-3013, 14-3105 letters informing us of the progress of the Chinese litigation. Yet Sinovel does not detail how those lawsuits could be af- fected by the eventual outcome of the criminal case here, even in its latest submission detailing the “complete victory” Sinovel had recently achieved against AMSC in the Chinese courts. These lawsuits, we are told, have been pending since 2011; Sinovel was indicted in 2013, and yet we have no evi- dence thus far about any effect that the Chinese litigation has had on this case or on relations between the United States and China. It is also worth noting that Sinovel will have an opportunity to present those cases to the district court and argue for whatever recognition and enforcement may be due to them. Sinovel also says that courts must guard against the ex- traterritorial expansion of federal service of process, but it appeals again to comity for this point. We note that the topic of extraterritorial service is addressed in Federal Rule of Criminal Procedure 4(c)(2), which says that “[a] warrant may be executed, or a summons served, within the jurisdic- tion of the United States or anywhere else a federal statute au- thorizes an arrest” (emphasis added). In other words, it is Congress that makes the judgments about service of process outside the country; the courts’ responsibility is to ensure that the operative rules are followed. Sinovel has made other arguments supporting its effort to obtain review under the collateral order doctrine, but in the end they do not carry the day. It is not enough to show, as we may assume Sinovel did, that the district court conclu- sively decided the issue of service of process, and that this question is separate from the merits. It must also show effec- tive unreviewability after final judgment, and it has not. We Nos. 14-3013, 14-3105 11 therefore dismiss appeal no. 14-2013 for want of appellate jurisdiction. III Sinovel also argues that we have jurisdiction over its peti- tion for a writ of mandamus. That is correct: jurisdiction ex- ists under the All Writs Act, 28 U.S.C. § 1651(a). But that peti- tion fares no better than Sinovel’s appeal, for slightly differ- ent but related reasons. We may issue a writ of mandamus “only in extraordinary circumstances … to confine an inferior court to a lawful ex- ercise of its prescribed jurisdiction or to compel it to exercise its authority when it is its duty to do so.” In re Hijazi, 589 F.3d 401, 407 (7th Cir. 2009) (quoting Allied Chem. Corp. v. Daiflon, Inc., 449 U.S. 33, 35 (1980)). In assessing the question whether a writ should issue, we consider whether the party asking for the writ has no other adequate remedy to attain her desired relief; whether that party has demonstrated that her right to the writ is “clear and indisputable”; and whether this kind of intervention is appropriate under the circum- stances. Cheney v. U.S. Dist. Court, 542 U.S. 367, 380–81 (2004) (quotations omitted). Before we turn to the merits, we note that the govern- ment contends that Sinovel has waived its mandamus argu- ment. It complains that Sinovel merely incorporated its ear- lier mandamus brief from the companion case into its brief on appeal. The government is correct that Sinovel’s presenta- tion is, to put it charitably, spare. It used just three sentences of a 53-page brief to address mandamus. But that overlooks the fact that there is considerable overlap between the points Sinovel made in an effort to justify an interlocutory appeal 12 Nos. 14-3013, 14-3105 and the points it must make to earn mandamus relief. We decline to rest our decision on waiver and turn to the merits. Our reasons for rejecting a collateral-order appeal have their counterpart for this part of the case. Sinovel argues in its mandamus petition that the district court’s order declin- ing to quash service of process was clearly erroneous, and then it leaps to the conclusion that it has no other recourse but mandamus. Waiting for a final judgment is not an op- tion, it insists, because this case is “unique.” Yet Sinovel’s ar- guments explaining why mandamus “is the only adequate remedy” merely repeat its belief that action now by this court (and by this Sinovel can mean only action in its favor, which is obviously not guaranteed) would avert damage to U.S.-China relations. That argument fares no better to sup- port mandamus than it did to support an immediate appeal. The mandamus cases Sinovel cites that have anything to do with foreign defendants in the U.S. courts are distin- guishable. Rather than prove Sinovel’s point, they show that we are willing to issue writs of mandamus only in the most unusual circumstances. E.g., Abelesz v. OTP Bank, 692 F.3d 638, 651 (7th Cir. 2012) (case was extraordinary because Hol- ocaust survivors’ claims against Hungarian banks for expro- priation of property had “appreciable foreign policy conse- quences” with “astronomical” potential damages of $75 bil- lion, and issue of personal jurisdiction was “crystal” clear); Hijazi, 589 F.3d at 407–12 (in an archetypal standoff, foreign defendant never appeared in United States to answer charg- es, his country of residence refused to extradite him, and dis- trict court refused to rule on his motions to dismiss). No such compelling reason for immediate action exists here; to the contrary, we are confident that, should it come to this, Nos. 14-3013, 14-3105 13 Sinovel will have an adequate remedy in an appeal after fi- nal judgment. One other matter requires our attention. Sinovel asks us to certify to the Delaware Supreme Court the question whether a showing of fraud is required under Delaware law for piercing of the corporate veil. Because we do not have jurisdiction over Sinovel’s appeal and we have found that the standards for mandamus are not met, we must decline this request. IV The district court’s denial of Sinovel’s motion to quash service of process is not an appealable order under the col- lateral order doctrine. We thus DISMISS Sinovel’s appeal, No. 14-3013, for want of appellate jurisdiction. In No. 14-3105, we conclude that the requirements for issuance of a writ of mandamus have not been met, and so we DENY Sinovel’s pe- tition.

01-03-2023

07-23-2015

https://www.courtlistener.com/api/rest/v3/opinions/4555615/

Nebraska Supreme Court Online Library www.nebraska.gov/apps-courts-epub/ 08/14/2020 08:08 AM CDT - 380 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. STREET Cite as 306 Neb. 380 State of Nebraska, appellee, v. Chad K. Street, appellant. ___ N.W.2d ___ Filed July 10, 2020. No. S-19-307. 1. Sentences: Restitution: Appeal and Error. The rule that a sentence will not be disturbed on appeal absent an abuse of discretion is applied to the restitution portion of a criminal sentence just as it is to any other part of the sentence; sentences within statutory limits will be disturbed by an appellate court only if the sentence complained of was an abuse of judicial discretion. 2. Restitution. Restitution is purely statutory, and a court has no power to issue such an order in the absence of enabling legislation. 3. Sentences: Restitution. Restitution ordered by a court pursuant to Neb. Rev. Stat. § 29-2280 (Reissue 2016) is a criminal penalty imposed as a punishment for a crime and is part of the criminal sentence imposed by the sentencing court. 4. ____: ____. Restitution, like any other part of the sentence, involves discretion. 5. Restitution. The appropriateness of an order of restitution is necessarily a subjective judgment and not a mathematical application of factors. 6. Restitution: Appeal and Error. On appeal, an appellate court does not endeavor to reform the trial court’s order. Rather, the appellate court reviews the record made in the trial court for compliance with the statu- tory factors that control restitution orders. 7. Restitution. Restitution is limited to the direct loss resulting from that offense of which the defendant has been convicted. 8. Restitution: Damages. Under Neb. Rev. Stat. § 29-2281 (Reissue 2016), before restitution can be properly ordered, the trial court must consider (1) whether restitution should be ordered, (2) the amount of actual damages sustained by the victim of a crime, and (3) the amount of restitution a criminal defendant is capable of paying. - 381 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. STREET Cite as 306 Neb. 380 9. Sentences: Restitution: Evidence. In accordance with Neb. Rev. Stat. § 29-2281 (Reissue 2016), the restitution “shall be supported by evi- dence which shall become a part of the court record,” but a sentencing court has broad discretion as to the source and type of evidence and information that may be used. 10. ____: ____: ____. The evidence supporting restitution must provide meaningful information from which the sentencing court can meaning- fully consider the various statutory factors set forth in Neb. Rev. Stat. §§ 29-2280 through 29-2289 (Reissue 2016). 11. Criminal Law: Statutes. Penal statutes are to be given a strict construc- tion which is sensible. 12. Statutes. In the absence of anything indicating to the contrary, statutory language is to be given its plain and ordinary meaning. 13. Restitution: Damages. “Actual damages” under criminal restitution statutes are not governed by the strict rules of damages applicable to civil cases. 14. ____: ____. Restitution for actual damages or actual loss are meant to make the victim whole by returning the victim to the position the victim was in before the defendant’s actions. 15. Statutes: Legislature: Intent. The intent of the Legislature may be found through its omission of words from a statute as well as its inclu- sion of words in a statute. 16. Statutes: Appeal and Error. An appellate court is not permitted to read additional words into a clear and unambiguous statute. 17. Statutes: Legislature: Intent. Components of a series or collection of statutes pertaining to a certain subject matter are in pari materia and should be conjunctively considered and construed to determine the intent of the Legislature, so that different provisions are consistent, har- monious, and sensible. 18. Statutes. To the extent there is a conflict between two statutes, the spe- cific statute controls over the general statute. 19. Statutes: Words and Phrases. The word “may,” when used in a statute, will be given its ordinary, permissive, and discretionary meaning unless it would manifestly defeat the statutory objective. 20. Restitution. Under the plain language of Neb. Rev. Stat. § 29-2282 (Reissue 2016), reasonable replacement value is the measure of restitu- tion only “if return or repair is impossible, impractical, or inadequate.” 21. Sentences: Restitution. It is a matter within the discretion of the sen- tencing court to determine the proper measure of restitution in order to return the victim as much as possible to the position the victim was in before the defendant’s actions. - 382 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. STREET Cite as 306 Neb. 380 22. Restitution: Proof. The State does not bear a strict burden of proof with regard to restitution. 23. Sentences: Restitution: Evidence. In reviewing restitution as part of the sentence in a criminal case, the question is whether there is com- petent evidence in the record, as opposed to mere guess or conjecture, which reasonably supports the court’s calculation of the amount of the victim’s loss. 24. Restitution: Evidence. Restitution will be upheld if calculated by use of reasonable methods; therefore, when the defendant does not present contradictory evidence, the court does not err in relying on a victim’s competent estimates of loss. 25. Sentences: Restitution. Under Neb. Rev. Stat. § 29-2281 (Reissue 2016), ability to pay is a consideration that the sentencing court must weigh against the defendant’s obligations to the victim for the crime or crimes committed; it is neither exclusive of other factors nor controlling of the discretion of the court. 26. ____: ____. The certainty and precision prescribed for the criminal sentencing process applies to criminal sentences containing restitution ordered pursuant to Neb. Rev. Stat. § 29-2280 (Reissue 2016). 27. Sentences. In imposing a sentence, the sentencing court should state with care the precise terms of the sentence to be imposed. 28. Appeal and Error: Words and Phrases. Plain error exists where there is an error, plainly evident from the record but not complained of at trial, which prejudicially affects a substantial right of a litigant and is of such a nature that to leave it uncorrected would cause a miscarriage of justice or result in damage to the integrity, reputation, and fairness of the judicial process. 29. Sentences: Restitution: Appeal and Error. It is plain error for a sen- tence of restitution to fail to specify whether the restitution is to be made immediately, in specified installments, or within a specified period of time. 30. Sentences. A sentence pronounced upon a defendant is controlling over a later erroneous written sentence. Petition for further review from the Court of Appeals, Moore, Chief Judge, and Pirtle and Welch, Judges, on appeal thereto from the District Court for Lancaster County, Darla S. Ideus, Judge, on appeal thereto from the County Court for Lancaster County, Thomas E. Zimmerman, Judge. Judgment of Court of Appeals affirmed and remanded with directions. - 383 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. STREET Cite as 306 Neb. 380 Matt Catlett, of Law Office of Matt Catlett, for appellant. Douglas J. Peterson, Attorney General, and Matthew Lewis for appellee. Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, Papik, and Freudenberg, JJ. Freudenberg, J. NATURE OF CASE The defendant appeals an order of restitution. He asserts that the county court erred by ordering restitution of a damaged vehicle in the amount of the cost of repairing the vehicle with- out knowing whether those repair costs exceeded the vehicle’s fair market value before the defendant’s crime. The defendant also asserts that he is unable to pay the amount ordered. We affirm the sentence as pronounced, but remand the matter with directions to modify the written judgment to conform to the pronounced sentence. BACKGROUND Chad K. Street pleaded to and was convicted of one count of leaving the scene of an accident and one count of reckless driving. The charges stemmed from an incident in the early morning hours of February 20, 2017. Street crashed into the victim’s unoccupied vehicle that was parked on the street in front of the victim’s home. Street then fled the scene by foot, leaving behind his own vehicle, which had been thrown onto its side. As part of the sentence, the State sought restitution under Neb. Rev. Stat. §§ 29-2280 through 29-2289 (Reissue 2016). At the sentencing hearing, the State adduced evidence that the victim’s vehicle, a 2005 Chevy Equinox with roughly 79,000 miles, had been in good condition before the accident. After the accident, it was no longer operational. The vehicle was towed to a body shop. The victim later found out from the body shop that the vehicle was “totaled.” There was no evidence explaining what “totaled” meant. - 384 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. STREET Cite as 306 Neb. 380 An estimator at the body shop prepared an estimate for the vehicle’s repair to bring it back to its preaccident condition. The estimator testified that the vehicle had been “hit hard in the left rear.” According to the estimate, it would cost $10,347.70 to repair the vehicle so that it was in the same condition as it was before Street hit it. The victim could not recall the vehicle’s purchase price. No evidence was presented as to the vehicle’s estimated fair mar- ket value before the incident. Concerning his ability to pay any restitution, Street testi- fied that he rents an apartment through Veterans Affairs. He testified that he pays a portion of the rent and that Veterans Affairs pays the other portion. Street did not describe the amount of his contribution. Street receives $1,017 in dis- ability benefits each month. He pays $35 to $45 per month for his cell phone and about $50 per month for cigarettes. He testified that he voluntarily sends his wife, with whom he is separated, $300 per month to help support their 3-year-old daughter. The State presented evidence that over the prior 18 months, Street had posted five different bonds in a total amount of $2,400. Defense counsel argued at the sentencing hearing that the State had failed to meet its burden of proof for restitution because it had failed to present evidence of the vehicle’s market value. According to defense counsel, civil principles should apply such that “actual damages” under § 29-2281 for a vehicle are the lesser of either the repair costs or the vehicle’s reduction in value. Thus, without evidence of the vehicle’s fair market value before the incident, there was insufficient evidence from which the court could calculate actual damages for purposes of restitution under § 29-2280. Defense counsel also asserted the evidence that the vehicle was “totaled” demonstrated that under § 29-2282(3), “return or repair is impossible, impractical, or inadequate.” Finally, defense counsel argued that Street was indigent and would be unable to pay any restitution. - 385 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. STREET Cite as 306 Neb. 380 The county court ordered restitution in the amount of $10,347.70, the cost of repairing the vehicle. The court rea- soned that the language of the restitution statutes did not set forth a civil standard requiring that the restitution be in the amount of the vehicle’s fair market value before the crime if repairing the vehicle would cost more than it had been worth. Since there was no evidence presented by the parties as to the market value of the vehicle before the crime, the court explained, “the only number that I’ve got is the number that’s contained in . . . the estimate.” The court ordered any bonds that had been forfeited to be reinstated to the victim. The court calculated that by the time those bonds were applied, Street would owe approximately $9,000 in restitution. The court explained that while it did not “have a lot to go on in terms of what [Street] could afford,” his voluntary payment of $300 for his daughter’s care and his recent bond payments indicated that he “ought to be able to handle $300 a month toward restitution.” At that rate, it would take Street about 21⁄2 years to pay the balance of the restitution fully. The court pronounced from the bench that the restitution be paid in the amount of $300 per month until paid in full. The monthly payment and term were not described in the sentencing order, however. The sentencing order merely pro- vides that Street pay a total of $10,347.70 to the victim. Street appealed to the district court, assigning that the county court erred in ordering restitution. Street argued that there was insufficient evidence to support the order of restitu- tion because there was no evidence of the vehicle’s fair mar- ket value before the accident. Defense counsel also asserted that the evidence the vehicle was “totaled” meant the cost of repairing the vehicle exceeded its value. Lastly, Street argued that because Street was indigent and the payment resulted in Street’s income falling below the federal poverty threshold, the evidence was insufficient to show he had a reasonable ability to pay. The district court found the order - 386 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. STREET Cite as 306 Neb. 380 of restitution was supported by the evidence and not contrary to law. Street appealed to the Nebraska Court of Appeals, assigning that the district court erred in affirming the restitution compo- nent of the county court’s sentence because there was insuffi- cient evidence of actual damages to warrant the restitution and because Street is not capable of paying the restitution ordered. The Court of Appeals affirmed. 1 The Court of Appeals held that the amount of the order of restitution was supported by the evidence of the repair cost of the vehicle. Further, it held that the county court’s determination that Street was capable of paying $300 per month in restitution conformed to the law, was supported by competent evidence, and was neither arbitrary, capricious, nor unreasonable. We granted Street’s petition for further review. ASSIGNMENTS OF ERROR On further review, Street assigns that the Court of Appeals erred in finding no error in the district court’s affirmance of the restitution component of the county court’s sentence because (1) there was insufficient evidence of actual damages to war- rant the restitution and (2) Street is not capable of paying the restitution ordered. STANDARD OF REVIEW [1] The rule that a sentence will not be disturbed on appeal absent an abuse of discretion is applied to the restitution por- tion of a criminal sentence just as it is to any other part of the sentence; 2 sentences within statutory limits will be disturbed by an appellate court only if the sentence complained of was an abuse of judicial discretion. 3 1 State v. Street, No. A-19-307, 2019 WL 7369234 (Neb. App. Dec. 31, 2019) (selected for posting to court website). 2 See State v. McCulley, 305 Neb. 139, 939 N.W.2d 373 (2020). 3 Id. - 387 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. STREET Cite as 306 Neb. 380 ANALYSIS [2,3] Restitution is purely statutory, and a court has no power to issue such an order in the absence of enabling legis- lation. 4 Restitution ordered by a court pursuant to § 29-2280 is a criminal penalty imposed as a punishment for a crime and is part of the criminal sentence imposed by the sentenc- ing court. 5 [4-6] Restitution, like any other part of the sentence, involves discretion. 6 The appropriateness of an order of restitution is necessarily a subjective judgment and not a mathematical application of factors. 7 On appeal, we do not endeavor to reform the trial court’s order. Rather, we review the record made in the trial court for compliance with the statutory factors that control restitution orders. 8 The rule that a sentence will not be disturbed on appeal absent an abuse of discretion is applied to the restitution por- tion of a criminal sentence just as it is to any other part of the sentence. 9 A judicial abuse of discretion exists only when the reasons or rulings of a trial judge are clearly untenable, unfairly depriving a litigant of a substantial right and denying a just result in matters submitted for disposition. 10 Sections 29-2280 through 29-2289 govern a trial court’s authority to order restitution for actual damages sustained by the victim of a crime for which the defendant is convicted. Section 29-2280 provides in relevant part that “[a] sentenc- ing court may order the defendant to make restitution for the actual physical injury or property damage or loss sustained by 4 State v. McMann, 4 Neb. Ct. App. 243, 541 N.W.2d 418 (1995). 5 State v. McCulley, supra note 2. 6 Id. 7 See id. 8 Id. 9 Id. 10 State v. Ralios, 301 Neb. 1027, 921 N.W.2d 362 (2019). - 388 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. STREET Cite as 306 Neb. 380 the victim as a direct result of the offense for which the defend­ ant has been convicted.” (Emphasis supplied.) Section 29-2281, in turn, provides in full: To determine the amount of restitution, the court may hold a hearing at the time of sentencing. The amount of restitution shall be based on the actual damages sustained by the victim and shall be supported by evi- dence which shall become a part of the court record. The court shall consider the defendant’s earning ability, employment status, financial resources, and family or other legal obligations and shall balance such considera­ tions against the obligation to the victim. In considering the earning ability of a defendant who is sentenced to imprisonment, the court may receive evidence of money anticipated to be earned by the defendant during incar- ceration. A person may not be granted or denied proba- tion or parole either solely or primarily due to his or her financial resources or ability or inability to pay restitu- tion. The court may order that restitution be made imme- diately, in specified installments, or within a specified period of time not to exceed five years after the date of judgment or defendant’s final release date from impris- onment, whichever is later. Restitution payments shall be made through the clerk of the court ordering restitu- tion. The clerk shall maintain a record of all receipts and disbursements. (Emphasis supplied.) Section 29-2282 elaborates in relevant part: In determining restitution, if the offense results in damage, destruction, or loss of property, the court may require: (1) Return of the property to the victim, if pos- sible; (2) payment of the reasonable value of repairing the property, including property returned by the defendant; or (3) payment of the reasonable replacement value of the property, if return or repair is impossible, impractical, or inadequate. - 389 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. STREET Cite as 306 Neb. 380 [7,8] Under these statutes, restitution is limited to the direct loss resulting from that offense of which the defendant has been convicted. 11 Under § 29-2281, before restitution can be properly ordered, the trial court must consider (1) whether restitution should be ordered, (2) the amount of actual dam- ages sustained by the victim of a crime, and (3) the amount of restitution a criminal defendant is capable of paying. 12 [9,10] In accordance with § 29-2281, the restitution “shall be supported by evidence which shall become a part of the court record,” but a sentencing court has broad discretion as to the source and type of evidence and information that may be used. 13 This evidence must provide meaningful informa- tion from which the sentencing court can meaningfully con- sider the various statutory factors set forth in §§ 29-2280 through 29-2289. 14 Actual Damages Street asserts that without evidence of the market value of the vehicle before he hit it, the sentencing court had insuffi- cient evidence to determine that the repair cost of the vehicle represented the “actual damages” and “actual . . . property damage or loss.” 15 He further asserts that under § 29-2282, the amount of restitution must correspond to the “reasonable replacement value” of the property if repair is “impractical,” and that the victim’s testimony the vehicle was “totaled” dem- onstrated that repair was “impractical.” We disagree with these arguments, and we find that the evidence of the repair costs was meaningful information from which the court determined 11 See, State v. Escamilla, 237 Neb. 647, 467 N.W.2d 59 (1991); State v. Kelly, 235 Neb. 997, 458 N.W.2d 255 (1990); State v. Arvizo, 233 Neb. 327, 444 N.W.2d 921 (1989). 12 State v. McCulley, supra note 2. 13 See id. 14 See id. 15 See §§ 29-2280 and 29-2281. - 390 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. STREET Cite as 306 Neb. 380 the amount of restitution and that the amount so ordered was not an abuse of discretion. [11,12] Penal statutes are to be given a strict construction which is sensible. 16 In the absence of anything indicating to the contrary, statutory language is to be given its plain and ordinary meaning. 17 The terms “actual damages” or “actual property damage or loss” are not defined by the restitution statutes. We agree with the State that the plain and ordinary meaning of “actual damages” or “actual property damage or loss” does not require an assessment of the damaged prop- erty’s prior fair market value when it can be repaired to its former condition. [13,14] “Actual damages” under criminal restitution statutes are not governed by the strict rules of damages applicable to civil cases. 18 Thus, for example, other jurisdictions have rejected the contention that for the amount of the victim’s medical expenses to be ordered as restitution, the State must demonstrate the services were medically necessary or that the amounts charged were reasonable. 19 Restitution for actual dam- ages or actual loss are meant to make the victim whole 20 by returning the victim to the position the victim was in before the defendant’s actions. 21 Although at least one other jurisdic- tion has held that restitution should not exceed the reasonable market value of the property before the damage, 22 elsewhere it has been held that compensation may include an amount over 16 See State v. Sundling, 248 Neb. 732, 538 N.W.2d 749 (1995). 17 See State v. Valentino, 305 Neb. 96, 939 N.W.2d 345 (2020). 18 See, e.g., People v. Johnson, 780 P.2d 504 (Colo. 1989). 19 Matter of J.R., 907 S.W.2d 107 (Tex. App. 1995). See, also, In re Doe, 146 Idaho 277, 192 P.3d 1101 (Idaho App. 2008). 20 See, e.g., Huml v. Vlazny, 293 Wis. 2d 169, 716 N.W.2d 807 (2006); Tumlison v. State, 93 Ark. App. 91, 216 S.W.3d 620 (2005). 21 See State v. Anderson, 215 Wis. 2d 673, 573 N.W.2d 872 (Wis. App. 1997). 22 See State v. Casto, 22 Kan. App. 2d 152, 912 P.2d 772 (1996). - 391 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. STREET Cite as 306 Neb. 380 and above the actual value of the interest that is the subject of the case. 23 [15,16] Recently, in State v. McBride, 24 the Court of Appeals rejected the argument that in relation to the fraudulent sale of a vehicle, the sentencing court did not base its restitution order on “actual damages” to the victim or the “reasonable replacement value” of the fraudulently transferred property when it utilized the purchase price of the vehicle purchased 5 months before without considering its depreciation. The Court of Appeals reasoned that the restitution statutes “do not specifically refer to depreciation or market value.” 25 “Nor do the statutes address the manner in which actual damages are to be calculated other than the amount of restitution must be supported by evidence which shall become part of the court record.” 26 This is true. And as we have said many times, the intent of the Legislature may be found through its omission of words from a statute as well as its inclusion of words in a statute. 27 We are not permitted to read additional words into a clear and unambiguous statute. 28 [17,18] Actual damages in restitution should be read in con- junction with the more specific statute, § 29-2282. Components of a series or collection of statutes pertaining to a certain subject matter are in pari materia and should be conjunc- tively considered and construed to determine the intent of the Legislature, so that different provisions are consistent, har- monious, and sensible. 29 And to the extent there is a conflict between two statutes, the specific statute controls over the 23 See Tumlison v. State, supra note 20. 24 State v. McBride, 27 Neb. Ct. App. 219, 927 N.W.2d 842 (2019). 25 Id. at 227, 927 N.W.2d at 849. 26 Id. 27 Stewart v. Nebraska Dept. of Rev., 294 Neb. 1010, 885 N.W.2d 723 (2016). 28 See id. 29 State v. Hernandez, 283 Neb. 423, 809 N.W.2d 279 (2012). - 392 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. STREET Cite as 306 Neb. 380 general statute. 30 While we do not find ambiguity or conflict, it is apparent that the specifically listed options in § 29-2282 of “(1) [r]eturn of the property to the victim, if possible; (2) pay- ment of the reasonable value of repairing the property, includ- ing property returned by the defendant; or (3) payment of the reasonable replacement value of the property, if return or repair is impossible, impractical, or inadequate,” all represent restitu- tion for the victim’s “actual damages” or “actual property dam- age or loss.” [19] There is nothing in § 29-2282 indicative of a mandatory tier system for these three options, given that the three options listed are preceded by the word “may.” The word “may,” when used in a statute, will be given its ordinary, permissive, and discretionary meaning unless it would manifestly defeat the statutory objective. 31 In the event that the property can be found and has been damaged, the list indicates a discretionary preference for return and repair of the property rather than pay- ment of reasonable replacement value. [20,21] Under the plain language of § 29-2282, reasonable replacement value is the measure of restitution only “if return or repair is impossible, impractical, or inadequate.” But we disagree with Street’s contention that these terms are necessar- ily bound by concepts of “fair market value”—which, again, is found nowhere in the statutory scheme. The determina- tion of whether return or repair is “impossible, impractical, or inadequate,” like other sentencing factors, is left to the sound discretion of the sentencing court. It is a matter within the discretion of the sentencing court to determine the proper measure of restitution in order to return the victim as much as possible to the position the victim was in before the defend­ ant’s actions. 30 Id. 31 Spaghetti Ltd. Partnership v. Wolfe, 264 Neb. 365, 647 N.W.2d 615 (2002), disapproved on other grounds, ML Manager v. Jensen, 287 Neb. 171, 842 N.W.2d 566 (2014). - 393 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. STREET Cite as 306 Neb. 380 [22,23] Moreover, the State does not bear a strict burden of proof with regard to restitution. 32 In reviewing restitution as part of the sentence in a criminal case, the question is whether there is competent evidence in the record, as opposed to mere guess or conjecture, 33 which reasonably supports the court’s calculation of the amount of the victim’s loss. The evidence of the vehicle’s repair costs was competent evidence supporting the court’s decision to assess restitution in that amount. If Street had wished the court at sentencing to consider instead the vehicle’s fair market value before the crime as the amount of restitution, Street was free to pre­ sent evidence on the vehicle’s fair market value and make that argument. 34 [24] Restitution will be upheld if calculated by use of rea- sonable methods; therefore, when the defendant does not pre­ sent contradictory evidence, the court does not err in relying on a victim’s competent estimates of loss. 35 We hold that the county court’s determination that restitution should be in the amount equal to the repair costs of the damaged vehicle was not clearly untenable and did not unfairly deprive Street of a substantial right or a just result. As such, neither the district court nor the Court of Appeals erred in concluding that the county court did not abuse its discretion in its calculation of the amount of the victim’s “actual damages.” Ability to Pay [25] We next address Street’s argument that the county court abused its discretion by ordering him to pay restitution in an amount exceeding his ability to pay. We recently explained in State v. McCulley 36 that ability to pay is not a necessary 32 See State v. Anderson, supra note 21. 33 See State v. Lucas, 234 N.C. App. 247, 758 S.E.2d 672 (2014). 34 See People v. Tidwell, 33 Ill. App. 3d 232, 338 N.E.2d 113 (1975). 35 See State v. McClelland, 381 Mont. 164, 357 P.3d 906 (2015). 36 State v. McCulley, supra note 2. - 394 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. STREET Cite as 306 Neb. 380 prerequisite to an order of restitution for actual damages sus- tained by the victim of a crime for which the defendant is convicted. Under § 29-2281, ability to pay is a consideration that the sentencing court must weigh against the defendant’s obligations to the victim for the crime or crimes committed; 37 it is neither exclusive of other factors nor controlling of the discretion of the court. 38 As we noted in McCulley, the weight accorded to ability to pay in determining the amount of restitution at sentencing is distinct from how it is treated in subsequent proceedings to enforce compliance with a restitution order. Section 29-2284 describes the possible consequences for a defendant who has been placed on probation or paroled and who failed to comply with a restitution order, and it states that “[p]robation or parole may not be revoked unless noncompliance with the restitution order is attributable to an intentional refusal to obey the order or a failure to make a good faith effort to comply with the order.” Further, § 29-2285 allows the court to “adjust or waive payment of the unpaid portion thereof or other restitution or modify the time or method of making restitution,” if the court finds that the “circumstances upon which it based the imposi- tion or amount and method of payment or other restitution ordered no longer exist or that it otherwise would be unjust to require payment or other restitution as imposed.” The county court endeavored to produce a payment plan that the evidence indicated Street would be able to pay. Even if we assume that Street is correct that he is unable to pay $300 per month in restitution, that fact does not render the court’s order an abuse of discretion. We hold that the court did not abuse its discretion in ordering restitution in the amount of $10,347.70, reduced to approximately $9,000 upon the appli- cation of bonds funds, to be paid at a rate of $300 per month. Neither the district court nor the Court of Appeals erred in 37 See id. 38 See id. - 395 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. STREET Cite as 306 Neb. 380 concluding that the county court did not abuse its discretion in its consideration of Street’s ability to pay this sentence of restitution. Plain Error [26,27] We do, however, find plain error in the county court’s failure to specify in the written sentencing order, as it did in its oral pronouncement, whether the restitution was to be made immediately, in specified installments, or within a specified period of time. The certainty and precision prescribed for the criminal sentencing process applies to criminal sen- tences containing restitution ordered pursuant to § 29-2280. 39 In imposing a sentence, the sentencing court should state with care the precise terms of the sentence to be imposed. 40 [28,29] Plain error exists where there is an error, plainly evident from the record but not complained of at trial, which prejudicially affects a substantial right of a litigant and is of such a nature that to leave it uncorrected would cause a miscar- riage of justice or result in damage to the integrity, reputation, and fairness of the judicial process. 41 In State v. Esch, 42 we held that it is plain error for a sentence of restitution to fail to specify whether the restitution is to be made immediately, in specified installments, or within a specified period of time. 43 We explained that “although § 29-2281 offers options, one option must be ordered.” 44 [30] We have also held that it is plain error if a written judgment is not made to conform to the pronounced judg- ment, and in such circumstances, we have modified the written 39 State v. Collins, 1 Neb. Ct. App. 596, 510 N.W.2d 330 (1993). 40 State v. Temple, 230 Neb. 624, 432 N.W.2d 818 (1988). 41 State v. Sierra, 305 Neb. 249, 939 N.W.2d 808 (2020). 42 State v. Esch, 290 Neb. 88, 858 N.W.2d 219 (2015). 43 See, also, State v. Mettenbrink, 3 Neb. Ct. App. 7, 520 N.W.2d 780 (1994); State v. McGinnis, 2 Neb. Ct. App. 77, 507 N.W.2d 46 (1993). 44 State v. Esch, supra note 42, 290 Neb. at 97, 858 N.W.2d at 225. - 396 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. STREET Cite as 306 Neb. 380 judgment to conform to the pronounced sentence. 45 A sen- tence pronounced upon a defendant is controlling over a later erroneous written sentence. 46 We accordingly remand the matter to the Court of Appeals with directions to remand the matter to the district court with directions to remand the matter to the county court with direc- tions to conform Street’s sentence to reflect the county court’s oral pronouncement. CONCLUSION For the foregoing reasons, we affirm the pronounced sen- tence of restitution and remand the matter to the Court of Appeals with directions to remand the matter to the district court with directions to remand the matter to the county court with directions to conform Street’s sentence to reflect the county court’s oral pronouncement. Affirmed and remanded with directions. 45 See State v. Thomas, 229 Neb. 635, 428 N.W.2d 221 (1988). 46 See, State v. Olbricht, 294 Neb. 974, 885 N.W.2d 699 (2016); State v. Thomas, supra note 45. See, also, State v. Newman, 300 Neb. 770, 916 N.W.2d 393 (2018).

01-03-2023

08-14-2020

https://www.courtlistener.com/api/rest/v3/opinions/2825244/

In the United States Court of Appeals For the Seventh Circuit ____________________ No. 14-2843 CHICAGO TEACHERS UNION, LOCAL NO. 1, AMERICAN FEDERATION OF TEACHERS, AFL-CIO, Plaintiffs-Appellants, v. BOARD OF EDUCATION OF THE CITY OF CHICAGO, Defendants-Appellees. ____________________ Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:12-cv-10311 — Sara L. Ellis, Judge. ____________________ ARGUED MARCH 31, 2015 — DECIDED AUGUST 7, 2015 ____________________ Before KANNE and ROVNER, Circuit Judges, and SPRINGMANN, District Judge. ROVNER, Circuit Judge. In the ongoing pursuit to improve the quality of the Chicago Public Schools (CPS), the Chicago Board of Education (“Board”) has implemented various The Honorable Theresa L. Springmann, of the Northern District of Indiana, sitting by designation. 2 No. 14-2843 systems and processes to improve the quality of education for children. One process involves reconstituting schools that the Board deems to be deficient. Such a reconstitution or “turnaround,” as it is known colloquially, involves removing and replacing all administrators, faculty, and staff from a selected school and relieving the local school council of certain duties. Then, the Board either contracts with a third party to operate the school, assigns the school to the Board’s Office of School Improvement, or turns it over to one of the nineteen geographic networks that make up the next layer of leadership in the Chicago School Board system.1 I. The Illinois School Code provides that a school may be subject to turnaround if it has been on probation for at least one year and has failed to make adequate progress in correcting deficiencies. 105 ILCS 5/34-8.3(d)(4). Pursuant to the collective bargaining agreement between the Chicago Teachers Union and the Board, tenured teachers affected by reconstitution are placed in a reassigned teachers’ pool where they continue to receive a full salary and benefits for one school year. If a tenured teacher does not find a new position within that year, she is honorably terminated unless her time in the pool is extended. Probationary appointed teachers, other teachers, and para-professionals are not placed in the reassigned teachers’ pool but are eligible for the cadre pool where they can receive substitute assignments 1 District-run schools in CPS are organized into 19 geographic networks, which provide administrative support, strategic direction, and leadership development to the schools within each Network. Each network is headed by a Chief of Schools, also called a Network Chief. No. 14-2843 3 for which they are paid per assignment. Tenured teachers who are not reassigned within a year are also eligible for the cadre pool. Teachers in the cadre pool continue to receive health benefits for one year and receive a higher rate of payment than those in the ordinary substitute pool. Between 2004 and 2011, the Board reconstituted sixteen CPS schools. In autumn 2011, the Board began considering which schools would be subject to a new round of reconstitution. Oliver Sicat, the head of CPS’ portfolio office, led the process, at the end of which the CPS CEO, Jean Claude Brizard, made final recommendations to the Board, all of which were accepted. The CEO initially identified 226 schools that had been on probation for at least one year—the baseline eligibility for turnaround under Illinois law.2 He then reduced the list to seventy-four schools by removing schools that met the objective criteria of a composite Illinois Standard Achievement Test (ISAT) score above the network average for elementary schools or a five-year graduation rate above network average for high schools. Brizard was responsible for selecting the final ten schools for turnaround and presenting those selections to the Board for a vote. The district court described this process as 2 The district court referred to 226 schools eligible for turnaournd in 2012. On appeal, the Board clarified that there were 226 schools rated at the lowest academic level, level three, and thus eligible for turnaround in 2012. There were also, however, an additional twenty-four schools rated at academic level two that had been on probation for a year or more and thus also were eligible for turnaround under Illinois law. The Board eliminated all but one of these level two schools from consideration for turnaround. We will continue to use the number 226 for simplicity. 4 No. 14-2843 “qualitative” and the Board asserted that the CEO used “subjective criteria.” According to Ryan Crosby, the Manager of School Performance at the relevant time, the decisions were not made on the basis of a written policy or on one particular set of factors. Nevertheless, Crosby testified that the CEO and other participants in the decision- making considered factors such as academic performance, performance trends, leadership, whether the school was over or under utilized, proximity to and effect on other schools, school culture, facilities, safety, parent and community input, and input from CPS staff. The meeting participants who analyzed each school in sessions called “deep dives” included CEO Brizard, Chief Portfolio Officer Sicat, Network Chiefs, the Chief Academic Officer, Noemi Donoso, and Board staff responsible for areas such as safety, transportation, facilities, academic performance and special education. R. 63-3, pp. 54, 62 (ID#869, 877); R. 69-3, Declaration of Denise Little, app. ex. 4, pp.2-3 (ID#1201-02); R. 69-3, Declaration of Harrison Peters, app. ex. 3, pp.2-3 (ID#1196-97). Some of the factors considered in evaluating a school’s candidacy for turnaround are decidedly objective. A school’s academic trends, for example, are measured by its performance points score. Performance points are calculated by considering, among other things, standardized test scores, school attendance rates, academic progress, and improvement over time in comparison with other schools in the same geographic network. For high schools, the dropout rate, “freshman on track” rate, and success in advanced placement programs are also included in the performance points.3 The Board gave particular weight to improvements 3 In 2008, the school district began measuring the freshman on-track rate, No. 14-2843 5 trends. A school that was on probation but improving was much less likely to be selected. Individual employees’ performance ratings, years of service, and performance of students in a teacher’s individual classroom were not taken into account. At a February 2012 Board briefing, the CEO recommended ten schools for turnaround—two high schools and eight elementary schools. The briefing set forth the detailed rationale for selecting each school and included the factors listed above. Some schools received even more detailed attention. Casals, which was considered a “priority school” was slated for turnaround because it had an overall low performance, and student achievement was growing at a slower pace when compared with similar students at other schools, despite having received much assistance during its five years on probation. The briefing also set forth CPS’s response to community feedback it had received in opposition to the proposed turnaround at Casals. The Board voted to authorize the reconstitution of all ten schools as recommended. On June 30, 2012, the Board terminated all teachers and staff from those ten schools. The ten schools were located exclusively on the south and west sides of Chicago where African Americans make up 40.9% of tenured teachers. No schools were selected for turnaround on the north side, where only 6.5% of tenured teachers are a measurement developed by the University of Chicago. The measurement looks at course grades and credits in the first year of high school and students are considered on-track at the end of their freshman year if they accumulated at least five course credits and failed no more than one semester course in a core subject during the school year. http://cps.edu/News/Press_releases/Pages/PR1_08_27_2014.aspx 6 No. 14-2843 African American. Of the tenured teachers displaced because of reconstitution, 51% were African American, despite comprising just 27% of the overall teaching population within CPS. In hard numbers, 213 African- American employees were displaced. The racial demographics at the ten reconstituted schools varied as shown in the table below. School % African-American teachers Smith 88.6 Woodson 85 Stagg 83.7 Fuller 81 Herzl 75.6 Chicago Vocational 75 Tilden 57.4 Piccolo 39.1 Marquette 26.7 Casals 26.7 Board’s brief, p.13. Plaintiffs Donald J. Garrett Jr., Robert Green, and Vivonell Brown, Jr., three African-American tenured teachers affected by the turnarounds, and the Chicago Teachers Union, Local No. 1, filed suit against the Board, alleging that the Board’s decision to reconstitute these ten No. 14-2843 7 schools was racially discriminatory. Plaintiffs sought to certify a class of: All African American persons employed by the Board of Education of the City of Chicago as a teacher or para-professional staff, as defined in the labor agreement between the Chicago Teachers Union and the Board of Education, in any school or attendance center subjected to reconstitution, or “turnaround,” on or after the 2012 calendar year. R. 63, p.2 (ID#817). 4 The proposed class consists of African-American staff in the following positions: 32 para-professionals, 11 probationary appointed teachers, 163 tenured teachers, and 7 teachers with no tenure status. As of the briefing for this appeal, half of the 32 para-professionals displaced by the 2012 turnarounds were currently active employees, 7 of the 11 probationary appointed teachers were current employees, and 122 of the 163 tenured teachers were currently active CPS teachers. Board’s brief, pp.11-12. African-American teachers and para-professionals displaced in the 2012 turnarounds also include teachers who have retired, who are on leaves of absence, and those no longer employed by the Board. The named plaintiffs sought class certification under Federal Rules of Procedure 23(b)(2), (b)(3) and/or (c)(4). The 4To avoid confusion, our references are to the district court docket cites with both individual record page numbers, and for ease of location, a page identification number (ID#) from the continuously paginated district court record. 8 No. 14-2843 district court denied class certification on May 27, 2014. Although it found that the class met the requirements for numerosity, typicality, and adequacy of representation, the district court found that the plaintiffs had not met their burden of establishing a common issue by a preponderance of the evidence. It also found that plaintiffs had not adequately shown that common questions of law or fact predominated over individual claims as required by 23(b)(3), and that there was no basis for issue certification under Federal Rule of Civil Procedure 23(c)(4). II. The purpose of class action litigation is to avoid repeated litigation of the same issue and to facilitate prosecution of claims that any one individual might not otherwise bring on her own. The district court’s task below was to determine if the plaintiffs-appellants presented a scenario in which judicial efficiency would be served by allowing their claims to proceed en masse through the medium of a class action rather than through individual litigation. Our analysis is not free-form, but rather has been carefully scripted by the Federal Rules of Civil Procedure. For this reason, the civil procedure rules on class actions are the best place to begin. Before we turn to those rules, however, we note that this case comes to us from a district court order denying the certification of the class. Chicago Teachers Union, Local 1 v. Bd. of Ed., No. 12 C 10311, 301 F.R.D. 300, 304 (N.D.Ill. May 27, 2014), hereinafter “Order.” Our review of such a decision is deferential. CE Design Ltd. v. King Architectural Metals, Inc., 637 F.3d 721, 723 (7th Cir. 2011). “We review class certification orders for abuse of discretion. Abuse of discretion results when a district court commits legal error No. 14-2843 9 or makes clearly erroneous factual findings.” Reliable Money Order, Inc. v. McKnight Sales Co., Inc., 704 F.3d 489, 498 (7th Cir. 2013). Deferential review can and must also be exacting. “A class may only be certified if the trial court is satisfied, after a rigorous analysis, that the prerequisites” for class certification have been met. CE Design, 637 F.3d at 723. The decision to certify a class or not can cause a considerable tilt in the playing fields of litigation and therefore is not one to take lightly. See id. The party seeking certification bears the burden of demonstrating that certification is proper by a preponderance of the evidence. Messner v. Northshore Univ. HealthSystem, 669 F.3d 802, 811 (7th Cir. 2012). A. Because a class action is an exception to the usual rule that only a named party before the court can have her claims adjudicated, the class representative must be part of the class and possess the same interest and suffer the same injury. Wal-Mart Stores v. Dukes, 131 S. Ct. 2541, 2550 (2011). The general gate-keeping function of Federal Rule 23(a) ensures that they are. All class actions, no matter what type, must meet the four explicit requirements of Federal Rule of Civil Procedure 23(a): (1) the class is so numerous that joinder of all members is impracticable (numerosity); (2) there are questions of law or fact common to the class (commonality); (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class (typicality); and 10 No. 14-2843 (4) the representative parties will fairly and adequately protect the interests of the class (adequacy of representation). Fed. R. Civ. P. 23(a) (parentheticals ours). In addition to meeting these requirements of Rule 23, a class action must meet the requirements of one of the four categories in Rule 23(b). Rule 23(b) sets forth the various requirements for class actions depending on, among other things, the type of relief sought. In this case, the plaintiffs sought certification under Rule 23(b)(2), (b)(3), and/or (c)(4), the requirements of which we will discuss after addressing the threshold requirements of 23(a). On appeal, the only remaining contested factor from Rule 23(a) is commonality—whether “there are questions of law or fact common to the class.” Fed. R. Civ. P. 23(a)(2). Although a court need only find a single common question of law or fact (Wal-Mart, 131 S. Ct. at 2556), the mere occurrence of all plaintiffs suffering as a result of a violation of the same provision of law is not enough. Id. at 2551; Suchanek v. Strum Foods, Inc., 764 F.3d 750, 755 (7th Cir. 2014). The claims must depend upon a common contention that is capable of class-wide resolution. Wal-Mart, 131 S. Ct. at 2551. In this context, class-wide resolution means that determining the truth or falsity of the common contention will resolve an issue that is central to the validity of each claim. Id. at 2551. The majority in Wal-Mart summed this up by stating: What matters to class certification ... is not the raising of common ‘questions'—even in droves—but, rather the capacity of a classwide proceeding to generate common answers apt to No. 14-2843 11 drive the resolution of the litigation. Dissimilarities within the proposed class are what have the potential to impede the generation of common answers. Id. at 2551 (emphasis in original) (citing Nagareda, Class Certification in the Age of Aggregate Proof, 84 N.Y.U.L.Rev. 97, 131–132 (2009)). In Wal-Mart, a proposed class of all of the 1.5 million women who work or worked at the company alleged that the company discriminated against them on the basis of gender by denying them equal pay or promotions. The Supreme Court reversed the certification of the class, finding that the plaintiffs could not bear the burden of demonstrating commonality when the employment decisions complained of by the plaintiffs resulted from millions of individual decisions made by low-level decision- makers who had been given full discretion over such matters. “Without some glue holding the alleged reasons for all those decisions together, it will be impossible to say that examination of all the class members’ claims for relief will produce a common answer to the crucial question why was I disfavored.” Id. at 2552 (emphasis in original). That “glue,” the Wal-Mart majority explained, could be something such as a biased employment testing procedure or a general policy of discrimination established by top managers, but the facts of the case provided neither. Id. at 2553. To the contrary, as the court noted, the only relevant corporate policy was one forbidding discrimination and a policy of delegating employment decisions to local managers. Id. at 2554. 12 No. 14-2843 The Board argues that the facts here align with those in Wal-Mart—that is that the decision to reconstitute the schools was not made pursuant to a central uniform policy or even by a single decision-maker, but rather was based on “subjective, qualitative factors that were not uniformly applied.” Board’s brief, p.19. And indeed the district court found that the “turnaround policy, to the extent there was one, was not well-defined or uniformly applied,” and therefore, “Plaintiffs’ proposed class fail[ed] to meet the commonality requirement.”) Order, p.11. The district court concluded that if the turnaround decision had been made based solely on an objectively measurable criteria applied across the board, it could find a common issue, but because the decisions were made using qualitative, subjective, case- by-case review, commonality failed. Order, p.10-11. Before we delve into the questions of whether first, the review was really case-by-case and second, whether subjective review dooms commonality, we should unpack the process through which a school was selected for reconstitution. Recall that the process of identifying schools for reconstitution consisted of three steps. First, the CEO identified all of the schools eligible by state law for reconstitution due to poor past performance, that is, the school had been on probation due to low academic performance for at least one year. 105 ILCS 5/34-8.3(d). Then the CEO reduced that list of 226 schools to 74 schools by removing those that met the objective criteria of a composite ISAT score above the network average for elementary schools, or a five-year graduation rate above network average for high schools. The third step is the one that the district court focused on most: in this step the CEO and other high-level board members attended a series of No. 14-2843 13 meetings in which they discussed the types of information that the group would consider concerning schools eligible for reconstitution, and then analyzed that information. The first question we ask, therefore, is if the latter subjective steps (assuming they are indeed subjective and individualized) destroy the alleged commonality created by the first clearly-objective steps. The Board and the district court’s reasoning assume that they do. But this cannot be so. Suppose hypothetically that after the objective first and second steps, all of the schools remaining on the list had 100% African-American teachers, and no schools with white teachers remained on the list. We could undoubtedly conclude that the objective factors had a disparate impact on African-American teachers. Suppose that the Board went on to evaluate those 74 schools with all African-American teachers in a subjective, case-by-case manner to narrow the list from 74 to 10—all of which still were made up of African-American teachers. The introduction of subjective, case-by-case criteria would not alleviate the disparate impact of the initial objective criteria. Surely we would say that the plaintiffs could allege that there was sufficient commonality to establish a class. Every one of those teachers could answer the question, “why was I disfavored?” by pointing to the initial objective criteria that impacted only African-American teachers. This is why the plaintiffs point to Connecticut v. Teal to argue that a discriminatory intermediate step taints the entire process. Id., 457 U.S. 440 (1982). In Teal, the employer required those seeking a promotion to take a test. Id. at 443–44. Although objective on its face, the test eliminated far more African-Americans than white candidates. Ultimately, the employer (faced with the lawsuit, 14 No. 14-2843 it seems) promoted a disproportionately high number of African Americans to supervisor positions. The court determined that despite the fact that the bottom-line result was non-discriminatory, the plaintiffs established a prima facie showing of a discriminatory impact. Id. at 455–56. It is true that Teal was not a class certification case, but to the extent the Board asks us to ignore the impact of the objective steps of the test, it is directly on point, particularly because “class determination generally involves consider- ations that are enmeshed in the factual and legal issues comprising the plaintiff’s cause of action.” Comcast Corp. v. Behrend, 133 S. Ct. 1426, 1432 (2013). Teal helps to answer the question of whether a class can be certified where the alleged class of plaintiffs claims they were all harmed similarly in an early step of the process even if, under Wal- Mart, they cannot point to sufficient glue to bind their claims under a later part of the process. Teal instructs that an early discriminatory process can taint the entire process, and indeed our hypothetical demonstrates why this must be so. And it certainly is more efficient to answer the question “did these early discriminatory processes have a disparate impact on race” just one time rather than over and over again in multiple separate lawsuits. In short, if the plaintiffs allege that the objective criteria in the first two steps narrowed the pool in such a way as to have a disparate impact on African-American teachers (and indeed they do), then this is the glue that binds the claims together without regard to the later, subjective step.5 5 The defendants also claim that the plaintiffs waived this argument by failing to raise it below. We conclude that the argument was not waived, No. 14-2843 15 But even if, when evaluating the propriety of class certification, we were to ignore these initial objective steps in deciding which schools would be reconstituted, we would still have to conclude that the district court erred in applying the law of the Wal-Mart case to these facts. The Wal-Mart decision simply does not preclude class certification where subjective decision-making and discretion is alleged. The district court, however, seemed to read Wal-Mart to say that certification of a class is not possible when the acts complained of are based on subjective discretionary factors made by multiple decision-makers. Our post-Wal-Mart decision in McReynolds, however, makes clear that this is not so. McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 672 F.3d 482 (7th Cir. 2012). In McReynolds, 700 African- American brokers accused Merrill Lynch of racial discrimination in pay by structuring team work and account distribution policies in such a way that had a disparate negative impact on African-American brokers. The “teaming” policy allowed brokers to form teams to share clients and commissions. Once formed, the team could decide whom to admit as a new member. Brokers could still work alone, but membership in a team was an undisputed advantage. Under the account distribution policy, when a broker left the employ of Merrill Lynch, the other brokers but rather a relevant response to the district court’s conclusion that the subjective criteria in the latter steps of the process defeated commonality. Once the district court separated the steps and determined that the subjective one doomed class certification, the plaintiffs were entitled to direct the court’s attention back to the objective aspects of the process, and demonstrate how a discriminatory step in a chain of events can affect the ultimate outcome. 16 No. 14-2843 within the branch office could compete for the accounts left behind by the exiting broker. According to company policy, the managers were to award the accounts based on the competing brokers’ records of revenue generated for the company and the number and investments of clients retained. It turned out that team members tended to choose other team members who were most like themselves, and thus white brokers (who were the vast majority) seldom chose African-American colleagues for their teams. And without the help of the teams, African Americans did not generate as much revenue or attract and retain as many clients as white brokers, thus reducing their chances of winning account distribution competitions. McReynolds, 672 F.3d at 488. Merrill Lynch, like Wal-Mart, delegated discretion over decisions that influence compensation—including decisions involving the teaming and account distribution policies—to 135 lower-level directors. On its face, these facts sound similar to those in the Wal-Mart case where the Supreme Court found no commonality in the claims. This court found, however, that although the local lower-level managers had a measure of discretion with regard to teaming and account distribution, the exercise of that discretion was influenced by the two company-wide policies—one authorizing brokers rather than managers to form and staff teams, and the other basing account distributions on past success—that allegedly exacerbated racial discrimination. Id. at 489. We held that this established sufficient commonality for a class certification such that the question as to whether these policies created a disparate impact on African Americans could be resolved most efficiently in one claim. Id. at 491. In No. 14-2843 17 doing so, we noted that if, instead, Merrill Lynch had delegated to local management the decision to allow teaming, the case would more closely resemble Wal-Mart. Id. at 489-90. In contrast, just a few months later in Bolden v. Walsh Constr. Co., we reversed a grant of class certification where the facts fell on the other side of the line—reflecting discretionary decisions more in line with the Wal-Mart decision rather than McReynolds. Id. 688 F.3d 893 (7th Cir. 2012). In Bolden, twelve African-American plaintiffs alleged that Walsh Construction tolerated racial discrimination in assigning overtime work and in working conditions. Id. at 894-95. They asked the district court to certify two different classes of African-American employees, covering all of Walsh’s 262 projects in the Chicago area going back several years. This court overturned the certification of the class finding that the sites all had different superintendents, different policies, different working conditions, and ranged in the amount, if any, of discriminatory practices. Id. at 896, 898. Just as in Wal-Mart, Walsh had a company-wide non- discrimination policy and granted discretion to superintendents to assign work and address discrimination that occurred on the site. Id. at 898. Thus the Supreme Court’s Wal-Mart decision and ours in McReynolds and Bolden together demonstrate that a company-wide practice is appropriate for class challenge even where some decisions in the chain of acts challenged as discriminatory can be exercised by local managers with discretion—at least where the class at issue is affected in a common manner, such as where there is a uniform policy or process applied to all. The Fourth Circuit (relying heavily on 18 No. 14-2843 this Circuit’s interpretation of Wal-Mart) summed it up well by noting that Wal-Mart did not set out a per se rule against class certification where subjective decision- making or discretion is alleged. Rather, where subjective discretion is involved, Wal-Mart directs courts to examine whether all managers exercise discretion in a common way with some common direction. Thus, to satisfy commonality, a plaintiff must demonstrate that the exercise of discretion is tied to a specific employment practice, and that the subjective practice at issue affected the class in a uniform manner. Scott v. Family Dollar Stores, Inc., 733 F.3d 105, 113 (4th Cir. 2013) (internal citations omitted), cert. denied, 134 S. Ct. 2871 (2014). And indeed, even the district court acknowledged that “if a general policy that is enforced at the corporate level rather than by individual supervisors is claimed to be discriminatory, even if some discretion exists, commonality may be found.” Order p.9. In short, subjective, discretionary decisions can be the source of a common claim if they are, for example, the outcome of employment practices or policies controlled by higher-level directors, if all decision-makers exercise discretion in a common way because of a company policy or practice, or if all decision-makers act together as one unit. The Board maintains that no single criteria was used in the third step to narrow the field of seventy-four schools to ten, but this is not an entirely accurate description. More No. 14-2843 19 precisely, one could say that each of the twenty-six schools chosen for reconstitution was chosen after being considered individually. This does not mean that a different selection criteria was used. For example, suppose a company has decided to reduce its workforce by cutting the lowest performing 25% of workers. To evaluate performance, it looks to sales, evaluations, work ethic, and peer reviews. The CEO terminates one worker because her sales numbers are low, another because her evaluations from her supervisor are sub-par, and yet another because of high absenteeism. Although it is true that each employee was terminated for different reasons, it is not true that a different set of criteria were used for each. In fact, the employer implicitly considered each factor for each employee, even if only some of the performance criteria ultimately determined the employee’s fate. In this case, the Board tells us that after the objective, numerical calculations in steps one and two, it considered a number of factors. Those factors were discussed in a series of meetings that included a small group of key people with information about the various factors considered. The group included the Board Chief Academic Officer, the Chief Portfolio Officer, Network Chiefs, and representatives from Board departments in charge of transportation, facilities, safety, and special education. In its brief, the Board describes the numerous factors considered in the various schools, but they could be boiled down to the following broader categories: academic performance, performance trends, leadership, whether the school was over or under utilized, proximity to and effect on other schools, school culture, facilities, safety, parent and 20 No. 14-2843 community input, and input from CPS staff. See Board’s brief, pp.5-11. We know that this small group of decision- makers, even during the third and subjective stage of decision-making, used these same criteria to assess each school because they told us so again and again. See, e.g., Id. at p.4 (“Selecting the schools for turnaround in 2012 involved a lengthy recommendation process that considered the academic performance of schools that were eligible for turnaround, whether those schools’ performance improved over time, and whether measures that had been implanted in the school were working.”); Id. at p.6 (“selecting the schools that would be reconstituted from those 74 schools was a qualitative process guided by subjective criteria that various stakeholders were asked to consider. For example, … transportation, facilities, safety and special education … planned school actions such as closures and phase-outs.”); Id. at p.7 (“These discussions included not only the academic performance of schools … but also issues such as leadership and the culture of a school, gang boundaries, overall performance, the condition and utilization of facilities and the observable teaching in a particular building.”); Id. at p.8 (committee considered improvement while on probation and school culture); Id. at p.9 (“The briefing noted that the selection process considered information involving school culture, safety, facility quality, community feedback and targeted input from CPS staff.”). See also R. 53-2, Deposition of Ryan Crosby, p.28 (ID#859). (“There was not one set of factors that necessarily made a—each—in every school that was recommended for reconstitution and appropriate candidate [sic] but things such as the academic culture of the school, whether or not quality instruction was being provided, whether or not there was good leadership in the No. 14-2843 21 school, the—in general as I said, the academic trends of the school, the quality of implementation of programs that were in existence.”). Id. at pp. 28-29 (ID#859-60) (describing academic trends as comprised of academic standardized test scores, the attendance rate, dropout rate, “freshman on track” record, enrollment and success in advanced placement classes, and a standardized academic progress assessment); Id. at p.62 (ID#877) (“input from community members and the chiefs—the network chiefs of schools based on their feedback provided to the portfolio office.”); Id. at 75 (ID#878) (enrollment and utilization data); Id. at p.79 (ID#882), (location was one of the factors considered); R. 74- 1, Crosby Dep. p.71-72 (ID#1604-05) (“talking with Network Chiefs, in talking with community members about what was going on in the schools to identify from that list of 80 what were a likely set of possible actions.”); R. 69-3, Declaration of Denise Little, app. ex. 4, p.3 (ID#1202), (factors considered included “academic performance … leadership at the schools, the culture of a school, gang boundaries, overall performance, the condition of and underutilization of facilities and the observable teaching in a particular building”); R. 69-3, Declaration of Harrison Peters, app. ex. 3, p.3 (ID#1197) (factors considered included “academic performance … leadership at the schools, the culture of the school, gang boundaries, overall performance, the condition of and utilization of facilities and the observable teaching in a particular building,” and input from parents); R. 69-3, February Board Member Briefing, p.4 (ID#1208) (“school culture, climate, safety, facility quality, community feedback and targeted information from CPS staff.”). The Board goes on to state that there was a “specific, unique rationale for each turnaround decision” (Board’s 22 No. 14-2843 brief, p.10), but the examples they offer come from the same set of criteria that they identified as applicable to all schools. We can boil these criteria down to the following ten categories: (1) academic performance, (2) performance trends, (3) leadership, (4) whether the school was over or under utilized, (5) proximity to and effect on other schools, (6) school culture, (7) facilities, (8) safety, (9) parent and community input, and (10) input from CPS staff. For example, the Board states that Fuller and Woodson were selected to provide support for a nearby school that was closing—criteria #5 on our list. At Smith, the local school council had asked for better options—criteria #9 on our list. The Board chose Casals because of its culture of complacency and poor quality instruction—criteria #6 and #3. We could continue through each school, but need not. It is clear that the Board applied the same set of criteria to all of the schools evaluated for reconstitution. In this way, the scenario in this case is worlds away from that in Wal-Mart where a court could have no way of knowing why each of the thousands of individual managers made distinct decisions regarding promotions and pay in millions of employment decisions. Likewise, in Jamie S. the task of identifying disabled students who might need educational services fell to countless school district employees making highly individualized decisions about the need for services in individual students. Jamie S. v. Milwaukee Pub. Schs., 668 F.3d 481, 496 (7th Cir. 2012); but see Id. at 504 (Rovner, J. dissenting) (“I believe that notwithstanding the inherently child specific nature of child-find inquiries, a class action based on a truly systemic child-find failure may be viable.”) Here we have one decision-making body, led by a CEO with ultimate authority to recommend schools to the No. 14-2843 23 Board, using one set of factors to analyze the need for turnaround in each school. 6 When a small group of decision- makers sits together in a room comparing and contrasting the success of schools in order to evaluate their ultimate fate, the concept of a uniform criteria and single-decision maker merge. They are of one mind, using one process. In short, we do not have myriad actions of individual managers. Here we have one decision-making body, exercising discretion as one unit, with the ultimate decision in the hands of one single person, CEO Brizard. R. 53-2, p.62 (ID#877). Decisions by myriad low-level managers are different than decisions made by a single lead decision-maker or a few concentrated top-level managers as lower-level employees do not set policies for the entire company; whereas, when high-level personnel exercise discretion, resulting decisions affect a much larger group, and depending on their rank in the corporate hierarchy, all the employees in the company. Consequently, discretionary authority exercised by high-level corporate decision- makers, which is applicable to a broad segment of the corporation's employees, is more likely to satisfy the commonality requirement than the discretion exercised by low-level managers in Wal-Mart. Scott, 733 F.3d at 114. 6 The Board voted to approve all recommendations for reconstitution. 24 No. 14-2843 The plaintiffs have demonstrated commonality by asserting that a uniform employment practice (the set of criteria used to evaluate the school) used by the same decision-making body to evaluate schools was discriminatory. Wal-Mart, 131 S. Ct. at 2551, 2554. See also, Bolden, 688 F.3d at 899, (“Walmart observes that it may be possible to contest, in a class action, the effect a single supervisor’s conduct has on many employees.”). And in fact, the district court noted the same thing, when it said that “if a general policy that is enforced at the corporate level rather than by individual supervisors is claimed to be discriminatory, even if some discretion exists, commonality may be found.” Order, p. 9 (citing McReynolds, 672 F.3d at 488–91, and Scott, 733 F.3d at 114.) Yet the district court lost track of this principle when finding that the plaintiffs had not met their burden of establishing commonality because the selection process was qualitative and lacked uniformity. Order, p.10. The district court erred, therefore, when it stated that “[t]he Court could not resolve whether the Board’s turnaround policy was discriminatory as applied to all class members ‘in one stroke,’ for it would have to examine the rationale behind the decision to turn around each of the ten schools and compare those reasons to the decisions not to pursue the remaining sixty-three.” Order, p.11. This is not so. The court need only resolve whether the “same conduct or practice by the same defendant gives rise to the same kind of claims from all of the class members.” Suchanek, 764 F.3d at 756. And just as in McReynolds, whether employment practices “cause racial discrimination … are issues common No. 14-2843 25 to the entire class and therefore appropriate for class-wide determination.” McReynolds, 672 F.3d at 489. B. Having concluded that the plaintiffs demonstrated sufficient commonality to fulfill the threshold requirements for a class action elucidated in Federal Rule 23(a), we now turn to the plaintiffs request for certification under Federal Rule 23(b)(2). Rule 23(b)(2) permits class certification if “the party opposing the class has acted or refuses to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.” Fed. R. Civ. P. 23(b)(2); Lewis v. City of Chicago, 702 F.3d 958, 962 (7th Cir. 2012). Colloquially, 23(b)(2) is the appropriate rule to enlist when the plaintiffs’ primary goal is not monetary relief, but rather to require the defendant to do or not do something that would benefit the whole class. Not surprisingly, “civil rights cases against parties charged with unlawful, class- based discrimination are prime examples” of Rule 23(b)(2) classes. Amchen Prods., Inc. v. Windsor, 521 U.S. 591, 614 (1997). In this case, the plaintiffs sought a declaratory judgment that the Board’s turnaround policies violated Title VII, 42 U.S.C. §§ 1981, 1983, and prospective injunctive relief including a moratorium on turnarounds and the appointment of a monitor to evaluate and oversee any new turnaround process. R 63-1, p.21 (ID#841). The 23(b)(2) class does not seek any money or individual relief.7 7 There is some confusing language in the plaintiffs’ initial brief requesting class certification in the district court in which, after asking 26 No. 14-2843 The district court held that a 23(b)(2) class could not be certified because “[a]lthough Plaintiffs’ request for a declaration that the turnaround policy violates federal law would apply class-wide, it would merely be a prelude to further relief, which would be inherently individualized.” Order, p.16. The order pointed out that no single injunction could provide relief without establishing a system for providing individualized relief to each class member “either placing class members in specific jobs based on their qualifications and openings or providing them with back pay and front pay if no position was available.” Id. at 17. The district court erred, however, by misunderstanding the nature of the relief sought. The proposed 23(b)(2) class did not seek individual relief such as reinstatement or individually calculated damages in the form of back pay and front pay. 8 It asked only that the court issue a declaration that the Board’s turnaround practice violated Title VII and for declaratory and injunctive relief only, the plaintiffs make an off- handed and unexplained comment that “the assessment of backpay for these individuals is ‘generally applicable to the class.’” R. 63-1, p.18 (ID# 842). The plaintiffs’ reply brief in the district court, however, makes clear that its 23(b)(2) class seeks declaratory and injunctive relief and that “[a]ny additional relief to the (b)(2) class will be incidental to, and flow from, the declaratory relief sought. Calculating this relief will be ‘mechanical, formulaic’—and thus appropriate for a 23(b)(2) class,” R. 83, pp.19-21 (ID#1780-1782), citing Johnson v. Meriter Health Servs. Emp. Ret. Plan, 702 F.3d 364, 372 (7th Cir. 2012). See also, footnote 8, infra. 8 To the extent that any monetary relief is “incidental to the injunctive or declaratory relief” it could be included in a Rule 23(b)(2) class, if “it appear[s] that the calculation of monetary relief will be mechanical, formulaic, a task not for a trier of fact but for a computer program.” Johnson, 702 F.3d at 372. No. 14-2843 27 42 U.S.C. §§ 1981 & 1983, and for prospective injunctive relief including a moratorium on turnarounds and the appointment of a monitor to evaluate and oversee any new turnaround process. We agree with the district court that to the extent that “each individual class member would be entitled to a different injunction or declaratory judgment against the defendant,” 23(b)(2) certification would not be appropriate. Johnson, 702 F.3d at 369–70 (emphasis in original). But the 23(b)(2) plaintiffs here seek the same declaratory and injunctive relief for everyone. This class- wide relief is different from the individual equitable and monetary relief the plaintiffs seek through their Rule 23(b)(3) class action, including reinstatement and front pay. The Board replicated the district court’s error in its briefing before this court, spending several paragraphs describing the complexities required for providing individualized relief. See Board’s brief, pp.26-27 (describing the difficulties in reinstating teachers with various experience, certifications, and damages). But this is all frolic and detour. An order enjoining the board from reconstituting schools would provide the exact relief that the 23(b)(2) class requests. A moratorium would prevent a recurrent violation (see Milwaukee Police Ass’n v. Jones, 192 F.3d 742, 747 (7th Cir. 1999)) and would provide prospective relief against an allegedly discriminatory practice. Wal-Mart, 131 S. Ct. at 2552, n. 7. Group relief is particularly appropriate because the Board did not individually assess any of the putative class members in the process of reconstituting the school and displacing the teachers. Each was displaced because of the Board’s uniform reconstitution policies and practices. 28 No. 14-2843 Moreover, the fact that the plaintiffs might require individualized relief does not preclude certification of a class for common equitable relief. Pella Corp. v. Saltzman, 606 F.3d 391, 395 (7th Cir. 2010); Arreola v. Godinez, 546 F.3d 788, 801 (7th Cir. 2008); Allen v. Int’l Truck and Engine Corp., 358 F.3d 469, 471–72 (7th Cir. 2004). “It is routine in class actions to have a final phase in which individualized proof must be submitted.” Suchanek, 764 F.3d at 756. See also Johnson, 702 F.3d at 369 (In a 23(b)(2) class action, “a declaration is a permissible prelude to a claim for damages.”). The district court conceded that “[p]laintiffs’ request for a declaration that the turnaround policy violates federal law would apply class-wide.” Order, pp.16-17. This should have ended the matter and convinced the court to certify the 23(b)(2) class. But the district court became distracted by the issue of individual relief for teachers and staff—matters that can be resolved in a 23(b)(3) proceeding. See Johnson, 702 F.3d at 371 (“Once declaratory relief is ordered, all that is left is a determination of monetary relief, and that is the type of proceeding for which (b)(3) is designed.”). In McReynolds, for example, when the court certified a 23(b)(2) class of African- American financial advisors, it did so because it concluded that it would be more efficient to evaluate the plaintiffs’ claims regarding the disparate impact of the policies on a class-wide basis rather than in 700 individual lawsuits. McReynolds, 672 F.3d at 490–91. This was true despite the fact that if the claims of disparate impact prevailed, it might be necessary for the court to hold hundreds of separate trials to determine which class members were actually adversely affected by one or both of the practices and if so what loss each class member sustained. Id. at 491. “But at least,” the court concluded, “it No. 14-2843 29 wouldn’t be necessary in each of those trials to determine whether the challenged practices were unlawful.” Id. This case is no different. It may be necessary to hold separate hearings to determine to what relief each class member or sub-class is entitled (both in terms of reinstatement and money damages), but the question as to whether the reconstitution process discriminates against African Americans, either by disparate impact or treatment, can be adjudicated class-wide. Likewise, a declaratory order that the turnaround process did or did not violate federal law would resolve the issue for all class members. And a moratorium on turnaround would also provide relief for all class members. For this reason, the Kartman v. State Farm Mut. Auto. Ins. Co., 634 F.3d 883 (7th Cir. 2011) case to which the defendant points does not help. In Kartman, the plaintiffs dressed up what was really a claim for money damages (in the form of insurance payments) in injunctive clothing by asking that the court order the insurance company to evaluate their hail- damaged roofs under a uniform and objective standard. Id. at 889. This court found that the insurance company’s “approach to hail-damage estimating (if it was inconsistent) might be evidence tending to show that the insurer underpaid some hail-damage claims. But it does not independently establish liability or support a separate injunctive remedy.” Id. at 891. In contrast, a determination of liability in this case (i.e. a finding that the reconstitution practice discriminated against African Americans) might require later determinations of individual relief, but would resolve all questions of liability. 30 No. 14-2843 Indeed, this case follows the exact contours of the Wal- Mart decision which conscribed the boundaries of 23(b)(2) as follows: Rule 23(b)(2) applies only when a single injunction or declaratory judgment would provide relief to each member of the class. It does not authorize class certification when each individual class member would be entitled to a different injunction or declaratory judgment against the defendant. Similarly, it does not authorize class certification when each class member would be entitled to an individualized award of monetary damages. Wal-Mart, 131 S. Ct. at 2557 (emphasis in original). Here we have a proposed Rule 23(b)(2) class asking for the same injunction and declaratory relief for all. By refusing to certify the class, the district court erred in its assessment of the legal requirements of Rule 23(b)(2) and its assessment of the 23(b)(2) class’s request. C. As we just described, a 23(b)(2) class cannot seek money damages unless the monetary relief is incidental to the injunctive or declaratory relief. Wal-Mart, 131 S. Ct. at 2557. The plaintiffs siphoned that portion of the complaint that requested monetary relief and individual remedies into a request for 23(b)(3) class certification. Federal Rule 23(b)(3) allows for class certification when “questions of law or fact common to the class members predominate over any questions affecting individual members” and “when a class action is superior to other available methods for fairly and No. 14-2843 31 efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). The latter superiority requirement is not at issue here. The district court instead found that common claims did not predominate, as “[t]he selection process involved a qualitative review, and the [c]ourt would need to delve into how each of the ten schools was evaluated in comparison to the other schools considered but not selected.” Order, p.18. To some extent the question of commonality that we dissected at length above, and the question of predominance overlap: To gain class-action certification under Rule 23(b)(3), the named plaintiff must demonstrate, and the District Court must find, that the questions of law or fact common to class members predominate over any questions affecting only individual members. This predominance requirement is meant to test whether proposed classes are sufficiently cohesive to warrant adjudication by representation, but it scarcely demands commonality as to all questions. In particular, when adjudication of questions of liability common to the class will achieve economies of time and expense, the predominance standard is generally satisfied even if damages are not provable in the aggregate. Comcast Corp. v. Behrend, 133 S. Ct. 1426, 1436–37 (2013) (internal citations omitted). Our earlier discussion of commonality leads us to the conclusion that the district court also erred when determining that the plaintiffs failed to meet their burden of proving predominance when it concluded 32 No. 14-2843 that the process of choosing schools to reconstitute was different for each school. The lower court reasoned that “there were specific facts and issues as to why each of the ten schools was selected for turnaround in 2012.” Order, p.18. This is true, but as we discussed at length above, however, each school was evaluated for its performance under the same set of criteria, analyzed by the same committee, and ultimately subject to the decision-making authority of one person. As the plaintiffs point out, they all suffered the same injury at the same time as the result of the same selection process by the same central decision-maker. Common issues of fact and law predominate in particular when adjudication of questions of liability common to the class will achieve economies of time and expense. See Comcast Corp., 133 S. Ct. at 1437. “Rule 23(b)(3), however, does not require a plaintiff seeking class certification to prove that each element of her claim is susceptible to classwide proof. What the rule does require is that common questions predominate over any questions affecting only individual class members.” Amgen Inc. v. Connecticut Retirement Plans and Trust Funds, 133 S. Ct. 1184, 1196 (2013) (internal citations omitted). In this case, the key question upon which all of the litigation rises or falls can be answered for every plaintiff: was the selection process discriminatory? This is a good time to issue the reminder that “Rule 23(b)(3) requires a showing that questions common to the class predominate, not that those questions will be answered, on the merits, in favor of the class.” Id., 133 S. Ct. 1184 (2013). “[T]he office of a Rule 23(b)(3) certification ruling is not to adjudicate the case; rather, it is to select the No. 14-2843 33 ‘method’ best suited to adjudication of the controversy ‘fairly and efficiently.’” Id. at 1191. Consequently, we can take no position as to whether the plaintiffs will be able to demonstrate that the selection process was indeed discriminatory either in treatment or impact. The only answer we provide today is that it will certainly be efficient and fair to answer the question once for all plaintiffs rather than in piecemeal litigation. If the selection process is determined to be discriminatory, individualized remedies and damages may have to be determined for each plaintiff or perhaps for subclasses of plaintiffs, such as tenured teachers, non- tenured teachers and the like. But as we noted above, this does not prevent certification of the class. As the district court correctly noted “the fact that damages may be individualized in this case would not preclude certification.” Order, p.18, citing Butler v. Sears Roebuck & Co., 727 F.3d 796, 801 (7th Cir. 2013). Given these considerations, the plaintiffs have met the requirements for certification of the class under Rule 23(b)(3). One single question would trigger a liability finding for both the 23(b)(2) and 23(b)(3) class: did the policies and process behind the 2012 reconstitution unlawfully discriminate against African-American teachers and staff? And the answer to this question would eliminate the need for repeat adjudication of this question for determinations of damages or individual injunctive relief. D. Finally, Rule 23(c)(4) permits the court to certify particular issues for resolution as a class action. Because we 34 No. 14-2843 conclude that the class can be certified under both Rule 23(b)(2) and 23(b)(3), we have no need to consider whether the district court should have considered certification of one particular issue. Nor must we consider the Board’s argument that plaintiffs Garrett, Green, and the Chicago Teacher’s Union are not appropriate class representatives, as the Board failed to appeal from the district court’s finding of adequacy of representation. For the foregoing reasons, the district court order is reversed and remanded for further consideration consistent with this opinion.

01-03-2023

08-11-2015

https://www.courtlistener.com/api/rest/v3/opinions/2825247/

In the United States Court of Appeals For the Seventh Circuit ____________________  No. 14‐2009  WESTFIELD INSURANCE COMPANY,  an Ohio corporation,  Plaintiff‐Appellee,  v.  SCOT VANDENBERG, et al.,  Defendants‐Appellants.  ____________________  Appeal from the United States District Court for the  Northern District of Illinois, Eastern Division.  No. 1:12‐cv‐00040 — Harry D. Leinenweber, Judge.  ____________________  ARGUED DECEMBER 9, 2014 — DECIDED AUGUST 6, 2015  ____________________  Before POSNER, RIPPLE, and KANNE, Circuit Judges.  RIPPLE, Circuit Judge. Scot Vandenberg was injured when  he  fell  from  the  upper  deck  of  a  yacht  anchored  in  Lake  Michigan.  He  filed  suit  in  Illinois  state  court,  alleging  that  the  owners  and  operators  of  the  yacht  were  negligent.  He  eventually settled with the defendants. Under the settlement  agreement,  the  defendants  agreed  to  pay  Mr. Vandenberg  $25 million  through  the  assignment  of  their  claims  against  2  No. 14‐2009  their  insurers.  Westfield  Insurance  Company  (“Westfield”)  was  the  insurance  provider  for  Rose  Paving  Company  (“Rose Paving”),  one  of  the  defendants.  Westfield  disputed  that  its  insurance  policies  with  Rose  Paving  covered  the  yacht accident and brought a declaratory judgment action in  the  district  court.  Mr. Vandenberg,  as  the  assignee  of  Rose Paving,  opposed  the  action.  The  district  court  granted  Westfield’s motion for judgment on the pleadings; it decided  that  the  Westfield  policies  did  not  provide  coverage  for  Mr. Vandenberg’s  injury.  Mr. Vandenberg  asks  that  we  review  that  determination.  We  now  hold  that  the  accident  occurring  on  the  yacht  is  not  covered  by  the  insurance  policies and accordingly affirm the district court’s judgment.    I  BACKGROUND  A.  In September 2009, Mr. Vandenberg was attending a five‐ hour cruise on a chartered yacht when he fell from the upper  deck.  The  accident  occurred  when  he  turned  to  respond  to  someone calling his name and, as he shifted his weight, the  bench  upon  which  he  was  sitting  tipped  over.  The  bench  was not secured to the deck, nor did the upper deck have a  railing.  The  fall  left  Mr.  Vandenberg  paralyzed  from  the  chest down. The yacht was owned by RQM, Inc. (“RQM”), a  closely  held  corporation  owned  by  Michael  Rose,  Carl  Quanstrom,  and  Alan  Rose.  Mr.  Vandenberg  alleged  that  Rose  Paving,  a  company  run  by  Alan  Rose,  was  a  booking  agent  that  maintained  a  marketing  relationship  for  the  chartering of the yacht.  No. 14‐2009  3 At the time of the accident, Rose Paving was insured by  Westfield  under  a  commercial  general  liability  (“CGL”)  policy  and  by  an  umbrella  policy  (collectively  “the  policies”).  The  application  for  the  CGL  policy  listed  as  insureds Rose Paving Co., Rose Paving & Seal  Coating  Inc.,  1 and  Bridgeview  Investments.   This  application  included  a  “schedule of hazards,” which listed “concrete construction,”  2 “Contractors Executive Supervisors,” and “subcontractors.”   The  application  also  asked  whether  the  applicant  owned,  hired,  or  leased  any  watercraft.  Rose  Paving  marked  the  3 “no”  box.   The  umbrella  section  of  the  application  similarly  asked  whether  the  applicant  owned  or  leased  a  watercraft.  Rose Paving did not answer that question.  The  insurance  contract  included  “common  policy  decla‐ rations”  applicable  to  both  the  CGL  and  umbrella  policies,  which  listed  Rose  Paving’s  business  as  “concrete  construc‐ 4 tion.”   The  CGL  policy  declarations  also  contained  a  “gen‐ eral liability schedule,” which listed the premises and opera‐ tions covered by the contract and included “contractors” and  “subcontracted  work—in  connection  with  construction,  re‐ 5 construction, repair or erection of buildings.”  The CGL and                                                    1 Bridgeview  Investments  was  listed  as  an  additional  insured  in  its  capacity as the manager or lessor of Rose Paving’s business premises.  2 R.56‐2 at 49.  3 Id. at 50.   4 R.56‐1 at 54. 5  Id.  at  60.  The  CGL  policy  declarations  determine  the  scope  of  both  policies. Although the umbrella policy did not contain a similar liability  (continued…)  4  No. 14‐2009  umbrella  policies  further  provided  that  Westfield  would  be  legally  obligated  to  pay  for  damages  “to  which  this  insur‐ 6 ance applies.”  They then listed certain exclusions, including  liability that “aris[es] out of the ownership, maintenance, use  or  entrustment  to  others of any … watercraft owned or op‐ 7 erated  by  or  rented  or  loaned  to  any  insured.”   Finally,  the  policies  provided  that,  by  accepting  coverage,  Rose  Paving  agreed that “[t]he statements in the Declarations are accurate  and complete,” that “[t]hose statements are based upon rep‐ resentations” Rose Paving made to Westfield, and that West‐ field “issued th[e] policy in reliance upon [those] representa‐ 8 tions.”     B.  Before Westfield filed this declaratory action, the parties  had commenced several actions, the particulars of which are  9 not  pertinent  to  our  decision  today.   Mr. Vandenberg                                                                                                                (…continued)  schedule,  it  applied  only  if  Westfield  had  been  “obligated  to  pay  the  ‘retained  limit’”  under  the  CGL  policy.  R.56‐2  at  25;  see  also  id.  at  29  (“‘Retained  limit’  means  the  available  limits  of  ‘underlying  insurance’  scheduled in the Declarations … .”).  6 R.56‐1 at 68 (CGL policy); R.56‐2 at 13 (umbrella policy).  7 R.56‐1 at 78; R.56‐2 at 15.  8 R.56‐1 at 86; R.56‐2 at 25.  9  To  summarize  briefly,  in  March  2010,  Mr. Vandenberg  filed  an  action  against  RQM  in  the  Circuit  Court  of  Cook  County,  Illinois,  seeking  to  recover  money  damages  for  his  injuries.  In  August  2010,  RQM  filed  a  maritime action in federal court seeking exoneration from liability for the  (continued…)  No. 14‐2009  5 ultimately  entered  into  a  settlement  agreement  with  the  defendants,  disposing  of  the  then‐pending  state  court  and  maritime actions. Under this agreement, Rose Paving, along  with  Carl  Quanstrom,  Michael  Rose,  Alan  Rose,  Dough Management,  and  Location  Finders  International,  agreed  to  pay  $25  million,  to  be  satisfied  solely  through  an  assignment of their rights of recovery under their insurance  policies.  Rose Paving,  Michael  Rose,  and  Alan  Rose  agreed  to  pay  an  additional  $300,000  directly,  and  RQM’s  insurer  agreed  to  pay  $2  million.  The  settlement  agreement  was  accepted  by  the  Circuit  Court  of  Cook  County,  Illinois,  on  October 10, 2012.                                                                                                                (…continued)  accident or a limitation of liability to the value of the yacht. The district  court  enjoined  Mr.  Vandenberg  from  pursuing  his  claims  against  RQM  and  ordered  the  parties  to  refrain  from  filing  additional  lawsuits.  Mr. Vandenberg  then  dismissed  his  first  state  court  action.  In  August  2011,  Mr. Vandenberg  filed  a  second  suit  in  the  Circuit  Court  of  Cook  County, Illinois. He alleged that the defendants were negligent because  they failed to provide railing or other protection on the top deck, allowed  Mr. Vandenberg to access the top deck of the yacht, failed to warn about  the lack of railings, and “[a]llowed a bench to be placed inches from the  rear of the unrailed top deck.” R.56‐1 at 41. The district court overseeing  RQM’s  maritime  action  ordered  Mr.  Vandenberg  to  stay  his  state  court  action.  Mr.  Vandenberg  also  provided  Westfield  with  an  unfiled  amended  complaint  five  months  before  settlement.  The  amended  complaint  included allegations that Rose Paving negligently owned, maintained, or  used an unstable bench. The stay imposed by the district court in RQM’s  maritime  action  prevented  Mr. Vandenberg  from  filing  the  amended  complaint.  6  No. 14‐2009  In January 2012, Westfield filed this declaratory action. It  sought  a  determination  that  it  owed  no  duty  under  Rose Paving’s  insurance  policies  to  defend  or  to  indemnify  any  of  the  defendants  in  the  state  court  action.  Westfield  alleged  that  the  policies  did  not  cover  the  underlying  accident  because  the  operation  of  a  seventy‐five‐foot  yacht  fell outside the scope of the risks and liabilities for which the  policies  provided  coverage.  Alternatively,  Westfield  maintained  that  the  “watercraft  exclusion”  barred  coverage  and  that  Rose Paving’s  conduct  released  Westfield  from  contractual liability under the policies.  Westfield  filed  a  motion  for  judgment  on  the  pleadings.  Mr. Vandenberg, as the assignee of Rose Paving, responded  with  a  combined  response  and  cross‐motion  for  summary  judgment.  The  district  court  granted  Westfield’s  motion  for  judgment  on  the  pleadings  and  denied  Mr.  Vandenberg’s  motion for summary judgment. The court concluded that the  insurance  policies  covered  only  Rose  Paving’s  construction  business.  The  court  relied  on  the  business  description  provided  in  the  common  policy  declarations,  the  “schedule  of  hazards”  listed  in  the  application,  and  Rose  Paving’s  representation  that  it  did  not  own,  hire,  or  lease  any  watercraft.  The district court later denied  Mr. Vandenberg’s motion  to  alter  the  judgment  under  Federal  Rule  of  Civil  Procedure 59(a).  Mr.  Vandenberg  now  appeals  the  court’s  No. 14‐2009  7 decision  granting  Westfield’s  motion  for  judgment  on  the  10 pleadings.     II  DISCUSSION  Mr.  Vandenberg  asks  us  to  review  the  district  court’s  decision on the scope of the Westfield insurance policies. He  maintains that the policies provide coverage for his injuries  because  of  the  broad  terms  employed  in  the  text.  More  precisely,  he  takes  the  view  that,  because  the  Westfield  policies  do  not  exclude  expressly  accidents  such  as  the  one  on  the  yacht,  the  accident  and  his  injuries  are  covered.  Westfield  responds  that  the  policies  apply  only  to  Rose  Paving’s  construction  business  and,  in  the  alternative,  that  the accident falls under the watercraft exclusion contained in  11 the policies.   The  interpretation  of  an  insurance  policy  is  a  matter  of  state  law.  See  Koransky,  Bouwer  &  Poracky,  P.C.  v.  Bar  Plan  Mut.  Ins.  Co.,  712  F.3d  336,  341  (7th  Cir.  2013).  Because  the  parties  agree  that  Illinois  law  applies,  we  look  to  the                                                    10  The  district  court  had  jurisdiction  pursuant  to  28  U.S.C.  §  1332.  We  have jurisdiction under 28 U.S.C. § 1291.  11  Westfield  also  maintains  that  it  never  breached  its  duty  to  defend  Rose Paving because it filed a declaratory action and that it is not bound  by the settlement because the settlement was overtly collusive, breached  multiple  policy  conditions,  and  forfeited  coverage.  Because  we  decide  that Westfield prevails under its first two theories, we do not address its  remaining contentions.  8  No. 14‐2009  decisions  of  the  Supreme  Court  of  Illinois  for  guidance.  See  id. We review de novo the district court’s decision granting a  Rule 12(c) motion for judgment on the pleadings. See Matrix  IV, Inc. v. Am. Nat’l Bank & Tr. Co., 649 F.3d 539, 547 (7th Cir.  2011).  For  the  reasons  set  out  more  fully  below,  we  agree  with  the  district  court  that  the  policies  do  not  provide  coverage  for  Mr.  Vandenberg’s  accident.  We  also  conclude  that  Rose  Paving’s  use  of  the  yacht  was  excluded  from  coverage by the policies’ watercraft exclusion.    A.  We  first  address  the  scope  of  the  Westfield  insurance  policies.  Mr.  Vandenberg  makes  two  major  arguments  to  support  his  interpretation  of  the  policies.  First,  he  submits  that  the  business  designation,  on  its  own,  is  insufficient  to  limit  the  scope  of  the  policies.  Second,  he  contends  that,  under  Illinois  law,  an  insurer  must  “expressly  exclude”  a  risk from the insurance policy if the insurer does not intend  12 to  insure  against  that  particular  risk.   He  therefore  maintains  that  because  the  Westfield  policies  do  not  expressly  exclude  non‐construction‐related  injuries,  the  policies provide coverage.  Under  Illinois  law,  “[a]n  insurance  policy  is  a  contract,  and  the  general  rules  governing  the  interpretation  of  other  types of contracts also govern the interpretation of insurance  policies.” Hobbs v. Hartford Ins. Co. of the Midwest, 823 N.E.2d  561,  564  (Ill.  2005).  When  interpreting  an  insurance  policy,                                                    12 Appellant’s Br. 26.  No. 14‐2009  9 “our  primary  objective  is  to  ascertain  and  give  effect  to  the  intention of the parties, as expressed in the policy language.”  Id.;  accord  Crum  &  Forster  Managers  Corp.  v.  Resolution  Tr.  Corp.,  620  N.E.2d  1073,  1078  (Ill.  1993)  (“[T]he  primary  function  of  the  court  is  to  ascertain  and  enforce  the  intentions of the parties as expressed in the agreement.”). To  achieve that goal, we “must construe the policy as a whole,  taking  into  account  the  type  of  insurance  for  which  the  parties have contracted, the risks undertaken and purchased,  the  subject  matter  that  is  insured  and  the  purposes  of  the  entire  contract.”  Crum  &  Forster  Managers  Corp.,  620  N.E.2d  at  1078;  accord  Oakley  Transp.,  Inc.  v.  Zurich  Ins.  Co.,  648  N.E.2d  1099,  1106  (Ill.  App.  Ct.  1995)  (noting  that  “an  insurance policy is not to be interpreted in a factual vacuum  and  without  regard  to  the  purpose  for  which  the  insurance  was written”).  After  reviewing  the  insurance  application  and  the  terms  of  the  policies,  we  conclude  that  the  district  court  correctly  determined  that  Westfield  and  Rose  Paving  intended  to  enter  into  an  insurance  agreement  under  which  Westfield  provided  coverage  only  for  Rose  Paving’s  construction‐ related  business.  We  begin  with  the  actual  text  of  the  policies.  In  that  respect,  we  first  note  that  the  policies’  “common policy declarations” list Rose Paving’s business as  13 “concrete  construction.”   The  “general  liability  schedule”  also  explains  that  Westfield  is  providing  coverage  for  work  done “in connection with construction, reconstruction, repair                                                    13 R.56‐1 at 54.  10  No. 14‐2009  14 or  erection  of  buildings.”   The  policies  thus  reflect,  explicitly,  the  parties’  intent  to  insure  only  Rose  Paving’s  construction business.  The  situation  before  us  today  is  closely  akin  to  the  one  before  the  Appellate  Court  of  Illinois  in  Heritage  Insurance  Co.  v.  Bucaro,  428  N.E.2d  979  (Ill.  App.  Ct.  1981).  There,  the  court determined that similar representations were sufficient  to  limit  the  scope  of  an  insurance  policy.  The  court  determined  that  the  underlying  insurance  policy  did  not  cover  automobile  acquisitions  because  “[t]he  activities  enumerated in  the  policy concern[ed] operations relating  to  automobile  dismantling.”  Id.  at  982  (emphasis  in  original).  The  court  relied  on  the  description  of  hazards,  which  “include[d]  salvage  or  junking  of  parts,  and  store  operations,” and that the policy listed the insured’s business  as “Automobile Dismantling.” Id. at 981. “Due to the limited  nature of the policy purchased,” the court concluded that it  was “implausible to assume that protection was expected for  liability  of  the  type  that  has  been  created  here.”  Id.  at  982.  The  Illinois  court’s  methodology  and  conclusion  reinforces  our  view  of  the  proper  interpretation  of  the  Westfield  policies.  The  insurance  application  also  supports  our  interpretation.  See  Dash  Messenger  Serv.,  Inc.  v.  Hartford  Ins.  Co.  of  Ill.,  582  N.E.2d  1257,  1263  (Ill.  App.  Ct.  1991)  (relying  on the insurance application to determine the risks for which  the  parties  contracted);  see  also  A.D.  Desmond  Co.  v.  Jackson  Nat’l  Life  Ins.  Co.,  585  N.E.2d  1120,  1122  (Ill.  App.  Ct.  1992)                                                    14 Id. at 60.  No. 14‐2009  11 (“When, as in this case, an insurance policy is issued which  makes  the  application  for  insurance  part  of  the  policy,  the  application  becomes  and  is  construed  as  part  of  the  entire  insurance contract.”). The policies at issue here provide that  Rose Paving  agreed  that  “[t]he  statements  in  the  Declarations  are  accurate  and  complete,”  that  “[t]hose  statements  are  based  upon  representations”  Rose  Paving  made to Westfield, and that Westfield “issued th[e] policy in  15 reliance  upon  [those]  representations.”   Rose  Paving  stated  in  its  application  that  it  was  engaged  in  the  construction  business.  Consistent  with  that  representation,  the  parties  listed in the schedule of hazards the risks that they intended  to  cover,  including  “concrete  construction,”  ”Contractors  16 Executive  Supervisors,”  and  “subcontractors.”   Rose  Paving’s  representations  in  the  insurance  application  therefore  reinforce  our  construction  of  the  text  of  the  insurance  policies  and  our  conclusion  that  the  parties  did  not intend to cover an accident occurring on the yacht.  Mr.  Vandenberg  submits  that  it  is  inappropriate  to  rely  on  the  business  designation  in  the  insurance  contract.  We  need  not  determine  whether,  in  all  cases,  Illinois  courts  would  consider  a  business  designation  contained  in  an  insurance policy, standing alone, to be a sufficient indication  of  party  intent  to  circumscribe  the  scope  of  an  insurance  agreement.  Here,  our  decision  need  not  rely  solely  on  the  business designation. As we have noted earlier, the business  designation  and  the  general  liability  schedule  contained  in                                                    15 R.56‐1 at 86; R.56‐2 at 25.  16 R.56‐2 at 49.  12  No. 14‐2009  the  contract,  as  well  as  the  incorporated  representations  in  the  insurance  application,  express,  uniformly,  the  parties’  intent  to  limit  the  scope  of  the  insurance  policies  to  Rose  Paving’s known business, construction. See Heritage Ins. Co.,  428  N.E.2d  at  981–82  (holding  that,  because  the  description  of hazards included only “Automobile Dismantling” and the  business  of  the  insured  was  listed  as  “Automobile  Dismantling,”  “it  is  evident  that  the  policy  provides  coverage  only  for  occurrences  arising  out  of  specified  activities  [automobile  dismantling]  taking  place  on  the  insured  premises”).  The  district  court  correctly  recognized  that Rose Paving “operated multiple independent businesses  (paving  and  yacht  charters),  purchased  insurance  for  only  one of those businesses (paving), and later sought coverage  17 for  a  different  business  (yacht  charters).”   In  this  case,  therefore,  the  business  designation  contained  in  the  insurance contract, when read with the other evidence of the  parties’  intent,  substantiates  forcefully  that  the  parties  entered  into  an  agreement  to  insure  only  Rose  Paving’s  construction business.  Nor can we accept Mr. Vandenberg’s contention that the  policies  provide  coverage  for  any  and  all  liabilities  unless  they  are  explicitly  excluded.  In  assessing  this  submission,  our task is, of course, to determine the intent of the parties,  as  expressed  by  the  insurance  policy.  See  Hobbs,  823  N.E.2d  at  564;  Crum  &  Forster  Managers  Corp.,  620  N.E.2d  at  1078.  Here,  we  believe  that  the  text  and  structure  of  the  policies  makes  clear  that  the  parties  intended  to  insure  against  the                                                    17 R.89 at 10.  No. 14‐2009  13 risks  of  operating  a  construction  company.  If  the  parties  intended  to  exclude  a  risk  associated  with  running  such  a  business,  we  would  expect  them  to  have  recited  that  exclusion in the contract. A policy does not need to exclude  from  coverage  liability  that  was  not  contemplated  by  the  parties  and  not  intended  to  be  covered  under  their  agreement. See Dash Messenger Serv., Inc., 582 N.E.2d at 1263  (noting that an insurer should expressly exclude a risk from  coverage  “if  an  insurer  does  not  intend  to  insure  against  a  risk  likely  to  be  inherent  in  the  insured’s  business”  (emphasis  added)).  Because  Rose Paving’s  policies  were  manifestly  designed  to  cover  only  its  construction  business,  however,  we  would  not  expect  those  policies  to  address  risks  not  18 inherent in that business.  To hold otherwise would require                                                    18 Other courts, when faced with analogous circumstances, have adopted  similar interpretations. See Steadfast Ins. Co. v. Dobbas, No. CIV. S‐05‐0632  FCD  JFM,  2008  WL  324023,  at  *6  (E.D.  Cal.  Feb.  5,  2008)  (holding  that,  because  the  policy  describes  the  business  of  the  insured  as  “Railroad  Contractor”  and  “[t]he  Declarations  page  tailored  for  this  particular  policy  limited  the  coverage  of  the  policy  based  upon  the  business  description,” the “policy unambiguously provide[d] coverage … only for  injuries  relating  to  the  business  of  ‘Railroad  Contractor’”  (emphasis  in  original));  Gemini  Ins.  Co  v.  S  &  J  Diving,  Inc.,  464  F.  Supp.  2d  641,  650  (S.D.  Tex.  2006)  (holding  that  the  insurance  policy  applied  “only  to  marine  survey  operations”  and  not  to  the  company’s  involvement  with  an outdoor rock concert because it would be unreasonable “to conclude  that  the  policy  covers  any  and  all  activity,  not  specifically  excluded,  when  the  insured  negotiated  as,  and  described  itself  to  be,  a  marine  operation”); Cooper v. RLI Ins. Co., No. CV 9403617128, 1996 WL 367721,  at *8 (Conn. Super. Ct. June 3, 1996) (holding that the CGL policy “does  not  provide  coverage  for  accidents  associated  with  business  activity  different  from  the  business  activity  for  which  coverage  was  initially  sought”);  cf.  Phila.  Indem.  Ins.  Co.  v.  1801  W.  Irving  Park,  LLC,  No.  11  C  (continued…)  14  No. 14‐2009  the  parties  to  conjure  up  and  exclude  explicitly  any  and  all  activities  in  which  Rose  Paving  might  engage.  Such  a  speculative exercise in hypotheticals would be nonsensical.  In  sum,  Mr.  Vandenberg  has  not  provided  a  cogent  rationale  to  support  his  conclusion  that  Westfield  and  Rose Paving  intended  to  enter  into  an  insurance  contract  of  endless  scope,  covering  any  and  all  businesses  operated  by  Rose  Paving.  Construing  the  policies  as  a  whole,  we  conclude that both Westfield and Rose Paving intended that  the  insurance  policies  provide  coverage  only  for  Rose  Paving’s  construction‐related  business.  Accordingly,  the  policies  do  not  provide  coverage  for  Mr.  Vandenberg’s  19 injury on the yacht.                                                                                                                 (…continued)  1710,  2012  WL  3482260,  at  *5  (N.D.  Ill.  Aug.  13,  2012)  (holding  that  the  insurance  policy  provided  coverage  because  the  insured  “was  a  single  entity  that  performed  multiple  services  as  a  part  of  its  condominium  development business—which was a named insured on the Policies”).  19  Mr.  Vandenberg  also  submits  that,  because  the  umbrella  policy  does  not have the same limitations as the CGL policy, it was intended to apply  beyond Rose Paving’s construction business. He relies on the absence of  a business description in the separate umbrella policy document. But, as  Westfield  points  out,  the  identification  of  Rose  Paving’s  business  is  contained  in  a  document  labeled  “common  policy  declarations”  that  summarizes  the  entire  agreement.  R.56‐1  at  54.  Specifically,  the  document  states  that  “this  policy  consists  of  the  following  coverage  parts”  and  lists  the  “commercial  umbrella  coverage  part.”  Id.  Mr. Vandenberg  fails  to  invite  our  attention  to  any  documentation  that  would  support  a  determination  that  Westfield,  through  the  umbrella  policy,  intended  to  insure  activities  beyond  Rose  Paving’s  construction  business.  No. 14‐2009  15   B.  The  policies’  watercraft  exclusion  provides  an  independent  basis  for  affirming  the  district  court’s  judgment.  The  Westfield  policies  exclude  from  coverage  “‘[b]odily  injury’  …  arising  out  of  the  ownership,  maintenance,  use  or  entrustment  to  others  of  any … watercraft owned or operated by or rented or loaned  20 to  any  insured.”   In  his  state  court  complaint,  Mr. Vandenberg  alleged  that  Rose  Paving  negligently  had  “[f]ailed  to  provide  railing  or  equivalent  protection  of  the  top  deck  peripheral  areas  which  were  accessible  to  passengers,”  “[f]ailed  to  prevent  SCOT VANDENBERG … from accessing the top deck of the  yacht,”  “[a]llowed … SCOT  VANDENBERG[]  to  access  areas  of  the  top  deck  which  did  not  have  railings  or  equivalent  protection,”  “[f]ailed  to  warn … SCOT  VANDENBERG[]  of  the  lack  of  railings  or  equivalent  protection on the top peripheral areas of the top deck,” and  “[a]llowed  a  bench  to  be  placed  inches  from  the  rear  of  the  21 unrailed top deck.”                                                     20 Id. at 78; R.56‐2 at 15.  21 R.45‐1  at  8–9.  In  his  unfiled  amended  complaint,  Mr.  Vandenberg  alleged  that  Rose  Paving  negligently  “[p]rovided  a  wobbly  bench  to  be  used  by  SCOT  VANDENBERG  from  which  he  fell.”  R.13‐1  at  4.  However,  an  insurer’s  duty  to  defend  is  limited  to  those  allegations  contained  in  the  operative  complaint.  See  Mass.  Bay  Ins.  Co.  v.  Unique  Presort  Servs.,  Inc.,  679  N.E.2d  476,  478  (Ill.  App.  Ct.  1997)  (“It  is  well  settled  that  the  allegations  of  the  complaint  are  dispositive  of  the  insurer’s  duty  to  defend  and  not  the  findings  of  the  underlying  (continued…)  16  No. 14‐2009  Mr. Vandenberg  submits  that,  under  Illinois  law,  the  negligent maintenance, ownership, and use of the bench was  a  concurrent  cause  of  his  injuries  and,  therefore,  the  watercraft  exclusion  does  not  preclude  coverage.  Westfield  maintains that the watercraft exclusion bars coverage under  the  policies  because  the  use  of  the  yacht  was  intertwined  inextricably with all theories of recovery.   We  have  recognized  previously  that,  under  Illinois  law,  an  insurance  policy  does  not  provide  coverage  for  claims  that  are  “intertwined”  with  an  excluded  liability.  See  Nautilus  Ins.  Co.  v.  1452‐4  N.  Milwaukee  Ave.,  LLC,  562  F.3d  818, 822 (7th Cir. 2009). In Nautilus, we addressed whether a  claim  seeking  compensation  for  property  damage  was  barred  by  the  insurance  policy’s  contractor‐subcontractor  exclusion. See id. at 821–23. We concluded that “the presence  of  an  alternative  theory  of  relief … is  insufficient  to  trigger  coverage”  when  the  plaintiff  does  not  allege  an  “injury  independent  of  the”  injury  sustained  as  a  result  of  the  excluded liability. Id. at 823. Thus, we found it determinative                                                                                                                (…continued)  litigation.”); Oakley Transp., Inc. v. Zurich Ins. Co., 648 N.E.2d 1099, 1102  (Ill.  App.  Ct.  1995)  (noting  that  a  “court  must  ordinarily  confine  its  inquiry  to  a  comparison  of  the  allegations  of  the  underlying  complaint  and the relevant provisions of the insurance policy in determining a duty  to defend”). Indeed, the Appellate Court of Illinois recently decided that  Mr. Vandenberg’s unfiled complaint should not be considered under the  doctrine of “true but unpleaded facts.” See Md. Cas. Co. v. Dough Mgmt.  Co.,  No.  1‐14‐1520,  2015  WL  4002569,  at  *9  (Ill.  App.  Ct.  June  30,  2015).  The  court  held  “that  the  self‐serving  allegations  in  an  unfiled  amended  complaint  cannot  be  presumed  true  and  are  not  the  type  of  facts  intended to be covered by the true but unpleaded facts doctrine.” Id.  No. 14‐2009  17 that  “the  statutory  claims  in  the  underlying  complaints  [sought] recovery for the same loss as all the other claims— the  property  damage  arising  out  of  the  faulty  excavation  performed  by  [the  defendant’s]  contractors  and  subcontractor—and  coverage  for  that  property  damage  is  excluded  by  the  contractor‐subcontractor  exclusion.”  Id.  at  822 (emphasis in original).  In reaching our conclusion in Nautilus, we relied, in part,  on the decision of the Supreme Court of Illinois in Northbrook  Property & Casualty Co. v. Transportation Joint Agreement, 741  N.E.2d  253  (Ill.  2000).  In  Northbrook,  the  court  held  that  a  policy  exclusion  bars  coverage  for  injuries  associated  with  excluded  conduct,  even  if  a  plaintiff  proceeds  under  an  alternative  theory  of  recovery  that  implicates  the  excluded  conduct only indirectly. The Illinois court explained:  The  policy  excludes  injuries  arising  from  the  school  districts’  use  or  operation  of  a  motor  vehicle.  Allegations  that  the  school  districts  inadequately planned and inspected bus routes  or  failed  to  warn  bus  drivers  of  potential  hazards  along  the  routes  are  nothing  more  than  rephrasings  of  the  fact  that  the  students’  injuries  arose  from  the  school  districts’  use  or  operation  of  a  motor  vehicle.  Contrary  to  the  appellate  court’s  holding,  the  students’  complaints  failed  to  allege  that  the  injuries  arose  from  events  wholly  independent  of  any  negligent  operation  of  the  bus.  Northbrook  therefore  has  no  duty  to  defend  the  school  districts in the underlying lawsuits.  18  No. 14‐2009  Id.  at  254–55  (citation  omitted)  (internal  quotation  marks  omitted).  Thus,  in  order  to  succeed,  the  allegations  in  Mr. Vandenberg’s  complaint  must  be  “wholly  independent  22 of  any  negligent  operation  of  the  [watercraft].”   Id.  at  254  (internal quotation marks omitted).                                                    22  The  decisions  of  the  Appellate  Court of  Illinois  reflect  the  distinction  between dependent and independent claims. Compare Mass. Bay Ins. Co.,  679 N.E.2d at 479 (“In this case, the underlying plaintiffs’ count XXVII is  specifically  dependent  upon  the  fact  that  their  injuries  occurred  in  a  vehicle  accident.  This  drug‐testing  regulation  would  not  apply  to  the  underlying plaintiffs’ negligence action if their injuries had been caused  by  some  instrumentality  other  than  a  vehicle.  Thus,  the  negligence  alleged  in  count  XXVII  is  inextricably  intertwined  with  the  policy’s  excluded instrumentality, namely, the vehicle.”), with Mount Vernon Fire  Ins. Co. v. Heaven’s Little Hands Day Care, 795 N.E.2d 1034, 1043 (Ill. App.  Ct.  2003)  (“[W]e  find  after  reviewing  the  allegations  in  the  underlying  complaint that the victim’s death resulted from nonvehicular conduct on  the part of Heaven’s Little Hands and its employees. The allegations in  the complaint assert multiple theories of negligence including a failure to  maintain a proper census of the children attending the day‐care facility.  Had Leon kept an accurate head count of the children inside the van or if  someone  inside  Heaven’s  Little  Hands  had  noticed  Tyrelle’s  absence  soon after the van in question had arrived at the day care facility, Tyrelle  would not have died. In short, the van is the situs, rather than the cause,  of  Tyrelle’s  death.”),  and  Louis  Marsch,  Inc.  v.  Pekin  Ins.  Co.,  491  N.E.2d  432, 437 (Ill. App. Ct. 1985) (“Thus if a trier of fact concluded that Marsch  had  failed  in  its  duty  to  Chizmar  under  the  Road  Construction  Injuries  Act,  the  fact  that  the  dump  truck  was  the  instrumentality  which  ultimately injured  Chizmar  would  be  but  one  of  two  concurrent causes  of  the  injury,  one  excluded  under  the  Aetna  policy,  the  other  not  so  excluded.  If  the  liability  of  an  insured  arises  from  negligent  acts  which  constitute  non‐auto‐related  conduct,  the  policy  should  be  applicable  regardless of the automobile exclusion or the fact that an automobile was  involved in the occurrence.”), and U.S. Fid. & Guar. Co. v. State Farm Mut.  Auto.  Ins.  Co.,  437  N.E.2d  663,  666  (Ill.  App.  Ct.  1982)  (“In  the  present  (continued…)  No. 14‐2009  19 The Appellate Court of Illinois recently reaffirmed these  principles  and  applied  them  to  the  same  state  court  complaint  at  issue  here.  In  Maryland  Casualty  Co.  v.  Dough  Management  Co.,  No.  1‐14‐1520,  2015  WL  4002569  (Ill.  App.  Ct.  June  30,  2015),  the  court  addressed  whether  an  identically  worded  watercraft  exclusion  in  an  insurance  contract  barred  coverage  for  the  injuries  that  Mr. Vandenberg sustained on the yacht. See id. at *7. In that  action,  Maryland  Casualty  Co.,  the  insurer  that  had  provided  coverage  to  Dough  Management,  maintained  that  it  had  no duty to  defend or indemnify Dough Management  under  its  insurance  policy.  See  id.  at  *2–3.  The  court  noted  that  the  “policy  specifically  exclude[d]  coverage  for  any  bodily  injury  ‘arising  out  of  the  ownership,  maintenance,  use, or entrustment to others of any … watercraft owned or  operated  by  or  rented  or  loaned  to  any  insured.’”  Id.  at  *7  (second alteration in original). The court concluded that “the  Vandenbergs  only  alleged  [in  their  state  court  complaint]  that  the  insureds  failed  to  properly  maintain  the  yacht  by  failing  to  provide  a  railing  on  the  top  deck,  allegations  that  fall squarely under the watercraft exclusion.” Id. “Therefore,  based  on  the  personal  injury  complaint,”  the  court  continued, “the Vandenbergs’ claims are excluded under the  CGL policy.” Id.                                                                                                                (…continued)  case,  the  complaint  alleges  negligent  acts  which  are  potentially  within  the coverage of the policy, such as the failure to adequately supervise the  children  and  the  negligent  operation  of  the  day  care  center.  These  alleged acts are separate and distinct from any allegations relating to the  negligent operation of the automobile.”).  20  No. 14‐2009  With the  guidance  of  the Appellate Court of  Illinois,  we  reach the same conclusion. Mr. Vandenberg fell from the top  deck  of  the  yacht  after  the  bench  on  which  he  was  sitting  tipped over. Because the top deck of the yacht did not have a  railing, he fell a substantial distance, resulting in his injuries  and  paralysis.  In  his  state  court  complaint,  Mr. Vandenberg  recognized  that  his  injury  would  not  have  occurred  if  Rose Paving  had  provided  a  railing  or  prevented  him  from  accessing  the  top  deck  of  the  yacht.  Thus,  the  accident  and  Mr. Vandenberg’s  resulting  injuries  were  not  “wholly  independent  of”  the  negligent  operation,  maintenance,  or  use  of  the  yacht.  Northbrook  Prop.  &  Cas.  Co.,  741  N.E.2d  at  254  (internal  quotation  marks  omitted).  Mr. Vandenberg’s  injuries  therefore  come  under  the  policies’  watercraft  exclusion, and the policies do not provide coverage.    Conclusion  The judgment of the district court is affirmed.  AFFIRMED

01-03-2023

08-11-2015

https://www.courtlistener.com/api/rest/v3/opinions/2825249/

In the United States Court of Appeals For the Seventh Circuit ____________________ No. 14-3790 UNITED STATES OF AMERICA, Plaintiff-Appellee, v. JEFFREY P. TAYLOR, Defendant-Appellant. ____________________ Appeal from the United States District Court for the Northern District of Indiana, Hammond Division. No. 11 CR 00112 — Rudy Lozano, Judge. ____________________ ARGUED MAY 22, 2015 — DECIDED AUGUST 6, 2015 ____________________ Before EASTERBROOK, WILLIAMS, and HAMILTON, Circuit Judges. WILLIAMS, Circuit Judge. Jeffrey Taylor appeals several special conditions of the probation he received after his sex- ually explicit displays on a web camera and conversations in an internet chatroom with what he thought to be a thirteen- year-old girl. We agree with him that the record does not support a ban on viewing legal adult pornography. Adult pornography did not facilitate or lead to Taylor’s offense 2 No. 14-3790 here, and there is no evidence or finding that viewing oth- erwise legal pornography would increase the likelihood he would recidivate. In light of his use of his computer to at- tempt to contact a young teenage girl, however, we affirm the imposition of a condition that requires Taylor to make his internet-capable devices available for inspection, even without any reasonable suspicion that he has committed a new crime. Finally, we agree with Taylor that the special conditions as currently worded contain an overly broad complete ban on knowing contact with minors. I. BACKGROUND Taylor’s case has been before our court twice. During his most recent appeal, we summarized Taylor’s offense conduct as follows: On August 2, 2006, Taylor entered an online chat room and began a conversation with “elliegirl1234.” “Ellie” identified herself as a 13–year–old girl from Lafayette, Indiana. Taylor responded that he was 37 and from Lo- gansport. The conversation quickly became graphic as Taylor described his physique and asked whether Ellie had engaged in sexual acts with her boyfriend. Taylor wanted to see Ellie [] masturbate in front of a webcam; he asked her whether she had a webcam, but she indi- cated that she did not. Taylor then turned on his webcam and masturbated in front of it so that Ellie could see. Taylor and Ellie conversed online on multiple occasions over the next two weeks. The conversations were always sexual in nature. On August 14 the conversation turned to arranging a meeting in person, and Taylor asked Ellie to fantasize about what would happen if the two met. Taylor expressed some concern about meeting in person because he “could go to jail.” (In an earlier conversation, he had referred to Ellie as “jailbait.”) During this online No. 14-3790 3 chat, Taylor masturbated a second time in front of his webcam so that Ellie could see. Ellie was not a 13–year–old girl but an online identity as- sumed by law-enforcement personnel working on a joint federal-state sting operation targeting child sex offend- ers. One of the investigators used a picture of herself from when she was 15 or 16 to help create the chat-room profile. United States v. Taylor, 777 F.3d 434, 437 (7th Cir. 2015). A jury convicted Taylor of violating 18 U.S.C. § 2422(b), although we overturned that conviction on appeal because his conduct did not constitute “sexual activity” under that statute. United States v. Taylor, 640 F.3d 255, 259-60 (7th Cir. 2011). The government then charged Taylor for the same conduct under a different statute, this time 18 U.S.C. § 1470, which punishes the transfer or attempted transfer of obscene material to a person under the age of sixteen years through a means of interstate commerce. A jury found Taylor guilty, and he received a sentence of three years of probation. (The judge recognized that Taylor had already served more than four years in custody on the overturned conviction, which exceeded the United States Sentencing Guidelines’ recom- mendation for the new conviction.) The district court en- tered final judgment on August 15, 2012. Taylor filed his notice of appeal the next day. On Septem- ber 25, 2014, while his appeal was pending, he filed a motion asking the district court to modify the conditions of his pro- bation. The district court granted in part and denied in part this request in an order dated December 22, 2014. That same day, Taylor filed a notice of appeal of the district court’s or- der modifying the probation conditions. About a month lat- er, we upheld Taylor’s conviction on appeal. United States v. 4 No. 14-3790 Taylor, 777 F.3d 434 (7th Cir. 2015). Taylor contests in this ap- peal certain special conditions imposed in the December 22, 2014 order that modified the conditions of his probation. II. ANALYSIS A. Jurisdiction to Modify Special Conditions An initial question is whether the district court had juris- diction to enter the December 22, 2014 order modifying Tay- lor’s conditions of probation. Because the district court’s or- der came after Taylor filed his notice of appeal of his crimi- nal conviction, one might wonder whether the district court had the authority to modify the conditions of Taylor’s proba- tion as it did. See Griggs v. Provident Consumer Disc., Co., 459 U.S. 56, 58 (1982) (per curiam) (“The filing of a notice of ap- peal is an event of jurisdictional significance—it confers ju- risdiction on the court of appeals and divests the district court of its control over those aspects of the case involved in the appeal.”). The government and Taylor both took the po- sition during briefing that the district court had the authori- ty, by virtue of 18 U.S.C. § 3563(c), to modify Taylor’s condi- tions of probation even though the appeal of his conviction was pending in our court. Nonetheless, we must fulfill our independent obligation to ensure that federal courts have subject-matter jurisdiction throughout the proceedings. See United States v. Beard, 745 F.3d 288, 291 (7th Cir. 2014). The statute at issue, 18 U.S.C. § 3563(c), provides that “[t]he court may modify, reduce, or enlarge the conditions of a sentence of probation at any time prior to the expiration or termination of the term of probation … .” The question is whether the words “at any time” in the statute give the dis- No. 14-3790 5 trict court the authority to enter the order modifying the conditions of probation when it did. After the oral argument in this case, we considered an analogous situation in United States v. Ramer, 787 F.3d 837 (7th Cir. 2015) (per curiam). There, a defendant was convict- ed of conspiracy to commit wire fraud and sentenced to for- ty-two months’ imprisonment and three years of supervised release. Id. at 838. One special condition of supervised re- lease ordered the payment of restitution “at a rate of not less than $100 per month.” The defendant filed an appeal, argu- ing that the restitution order should have been premised on his ability to pay. While briefing was taking place in our court, the district court amended its judgment to condition the defendant’s restitution payment obligation on the de- fendant’s ability to pay. Id. Our first question was whether the district court had ju- risdiction to revise the judgment since the defendant had al- ready filed his notice of appeal. We recognized that ordinari- ly, filing a notice of appeal means the district court no longer has jurisdiction. Id. (citing United States v. Brown, 732 F.3d 781, 787 (7th Cir. 2013) and United States v. McHugh, 528 F.3d 538, 540 (7th Cir. 2008)). But we recognized there are excep- tions. Id. (collecting cases). We assessed whether another ex- ception to the general rule existed in 18 U.S.C. § 3583(e)(2), which provides that district courts may “modify, reduce, or enlarge the conditions of supervised release, at any time pri- or to the expiration or termination of the term of supervised release.” Id. Consistent with the First Circuit’s decision in United States v. D’Amario, 412 F.3d 253 (1st Cir. 2005), we held that Congress’s use of “at any time” in 18 U.S.C. § 3583(e)(2) meant that the district court retained jurisdiction to modify 6 No. 14-3790 the defendant’s conditions of supervised release even while his appeal was pending. Ramer, 787 F.3d at 838-39. Ramer resolves the jurisdictional issue for us and means that the district court had jurisdiction to modify Taylor’s conditions of probation. The statute at issue for Taylor, 18 U.S.C. § 3563(c), contains the exact same language allowing for modification “at any time” as does 18 U.S.C. § 3583(e)(2), the supervised release provision at issue in Ramer; the only difference is that one applies to conditions of probation and the other to conditions of supervised release. That difference is not material here, so the district court had jurisdiction to modify Taylor’s conditions of probation as it did. That is certainly not to say that the district court can make any change it wishes after a notice of appeal has been filed. See, e.g., Brown, 732 F.3d at 787 (district court lacked ju- risdiction to recalculate guidelines range after notice of ap- peal filed); McHugh, 528 F.3d at 540 (district court lacked au- thority to make non-clerical change to sentence after notice of appeal filed); see also In re Teknek, LLC, 563 F.3d 639, 650 (7th Cir. 2009). Griggs remains the law, and we remind liti- gants to keep in mind Federal Rule of Criminal Procedure 37, which governs timely motions for relief that the district court lacks authority to grant because of a pending appeal (in the civil context, the rule is Federal Rule of Civil Proce- dure 62.1), as well as our Circuit Rule 57.1 In light of our de- 1Circuit Rule 57 of the United States Court of Appeals for the Sev- enth Circuit provides: A party who during the pendency of an appeal has filed a motion under Fed. R. Civ. 60(a) or 60 (b), or any other rule that permits the modification of a final judgment, should request the district court to indicate whether it is No. 14-3790 7 cision in Ramer that the district court had the authority to make the modification it did, no Circuit Rule 57 request was needed here. B. Challenges to Special Conditions of Probation Satisfied that there is no jurisdictional impediment to proceeding, we turn to the three special conditions of proba- tion that Taylor challenges. Special conditions of probation must be reasonably related to (1) the defendant’s offense, history, and characteristics; (2) the need to reflect the seri- ousness of the offense, promote respect for the law, and pro- vide just punishment for the offense; (3) the need for ade- quate deterrence; (4) the need to protect the public from fur- ther crimes of the defendant; and (5) the need to provide the defendant with treatment. 18 U.S.C. § 3563(b); see United States v. Angle, 598 F.3d 352, 360-61 (7th Cir. 2010) (super- vised release). Moreover, a special condition must not cause a greater deprivation of liberty than is reasonably necessary to achieve the goals of deterrence, protection of the public, and rehabilitation. United States v. Goodwin, 717 F.3d 511, 522 (7th Cir. 2013). We review the district court’s decision to im- pose a special condition for an abuse of discretion. See United States v. Baker, 755 F.3d 515, 523 (7th Cir. 2014). 1. Viewing or Accessing Adult Pornography The first special condition of probation that Taylor chal- lenges bars him from viewing adult pornography and from inclined to grant the motion. If the district court so indi- cates, this court will remand the case for the purpose of modifying the judgment. A party dissatisfied with the judgment as modified must file a fresh notice of appeal. 8 No. 14-3790 knowingly visiting any place where adult pornography is sold or available for viewing. The condition reads: The defendant shall not knowingly view or listen to any form of pornography which contains adults engaging in sexual intercourse, oral sex, sex with objects or animals, acts of masturbation, or the lascivious exhibition of geni- talia. Additionally, the defendant shall not knowingly patronize or visit any such establishment or internet site/location where the above materials are sold, or available for viewing. This condition is not limited to child pornography, which is illegal to possess. Instead, it bars Taylor from accessing adult pornography that is otherwise legal. Cf. United States v. Cary, 775 F.3d 919, 926 (7th Cir. 2015) (discussing condition im- posed upon defendant, who failed to register as a sex of- fender, from viewing “illegal pornography” and noting it did not prohibit him from viewing legal adult pornography). “Adult pornography, unlike child pornography, enjoys First Amendment protection, and so we must be especially cautious when considering a ban on possessing adult por- nography.” United States v. Shannon, 743 F.3d 496, 500 (7th Cir. 2014). On several occasions, we have vacated conditions banning a defendant from viewing sexually explicit materi- als involving only adults because they were too vague or overbroad. See, e.g., United States v. Adkins, 743 F.3d 176 (7th Cir. 2014); Shannon, 743 F.3d at 501; United States v. Kappes, 782 F.3d 828, 853-54 (7th Cir. 2015). Taylor does not contend that the modified condition is vague. Indeed, the district court had modified the condition to alleviate vagueness concerns. As initially imposed, it had read: “The defendant shall not view or listen to any form of pornography, sexually stimulating material, or sexually ori- No. 14-3790 9 ented material or patronize locations where such material is available.” We also note here that while Taylor did not ex- plicitly challenge that condition in his previous appeal, the government asserts to us that our review of Taylor’s appeal of the current condition is for abuse of discretion. So even were there an argument that our standard of review should be different because Taylor did not explicitly appeal the pre- vious condition, the government has not made any such ar- gument. Cf., e.g., United States v. Webster, 775 F.3d 897, 902 (7th Cir. 2015) (finding government waived any objection that an objection should be considered waived by arguing that we should review for plain error). Taylor maintains that the condition is overbroad. It is true that both Taylor’s crime and adult pornography have to do with sexual activity. But there is no evidence that viewing or listening to adult pornography in any way led Taylor to commit the crime here, or has led him to commit any other crime, nor is there any evidence in the record that viewing or listening to adult pornography would make the repeat of Taylor’s crime or similar crimes any more likely. The district court also did not find that there was any relationship be- tween Taylor’s viewing of adult pornography and the likeli- hood of recidivism. When the Third Circuit confronted a condition that banned adult pornography, and found that “nothing on this record suggests that sexually explicit mate- rial involving only adults contributed in any way to [the de- fendant’s] offense, nor is there any reason to believe that viewing such material would cause [the defendant] to reoffend,” that court vacated the condition. United States v. Voelker, 489 F.3d 139, 151 (3d Cir. 2007). 10 No. 14-3790 Here, the district court and government justify the ban on the basis that Taylor created adult pornography by mastur- bating in front of the web camera. In instituting the ban, the court said, “Taylor created pornography by sending videos of himself masturbating to a person he believed was a 13 year old girl, and requested that she engage in the same ac- tivity.” But the sexual images in this case, which were of Tay- lor himself, were not facilitated by or motivated by his access to adult pornography. And there is no suggestion that his offense had anything to do with his viewing of adult por- nography. Again, there is no finding or suggestion in the record that Taylor would engage in similar conduct or reoffend if he simply viewed legal adult pornography, which is what the condition bars him from doing. See Shannon, 743 F.3d at 502 (vacating condition barring the viewing of adult pornography in light of vagueness concerns and because the “sentencing court did not point to anything in the record suggesting that viewing sexually explicit material involving only adults would cause Shannon to reoffend”); United States v Perazza-Mercado, 553 F.3d 65, 78 (1st Cir. 2009) (“[T]he im- position of the ban on the possession of adult pornography as a condition of supervised release, without any explana- tion and without any apparent basis in the record, consti- tutes an error that is plain.”). We are not saying a court could never impose a special condition prohibiting the possession of even legal adult por- nography; there may be times when a sentencing court is justified in imposing such a condition. See Shannon, 743 F.3d at 502 (collecting cases). Here, however, the record does not justify the ban. As a result, we find the district court abused its discretion when it imposed the condition, and, like the No. 14-3790 11 Third Circuit did with the special condition in Voelker, we vacate this special condition of Taylor’s probation. 2. Inspection of Internet-Capable Devices The next condition Taylor challenges concerns the proba- tion office’s ability to monitor his internet use. The condition provides: The defendant may not use the internet to access social chat-rooms in which users conduct conversations with other third-party chatroom users. This does not include informational chats used by websites to provide custom- er service or answers to frequently asked questions. Pri- or to accessing an internet capable device, the defendant shall provide notice to the probation department of the type and location of such device. To verify compliance with this condition, upon request, the defendant shall make available for inspection by the probation depart- ment, any such internet capable device. Taylor proposed the first two sentences in his request for modification, so any challenge to that part of the special condition is waived. See United States v. Mantas, 274 F.3d 1127, 1130 (7th Cir. 2001). Taylor had also proposed that the condition state, “If the probation officer has reasonable sus- picion to believe that the defendant has accessed a social chatroom, the probation officer may have access to the de- fendant’s personal computer to verify compliance with this condition.” The district court rejected this language, and Taylor renews on appeal his argument that a probation of- ficer should only be allowed to access Taylor’s personal computer upon reasonable suspicion that Taylor had violat- ed a probation condition or committed a crime. We disagree. While Taylor argues that there is no evi- dence that he has used a computer to access illegal material, 12 No. 14-3790 he used his computer to commit the offense in question. Specifically, while on his computer, he accessed an online chat room and then transferred obscene material to someone he thought was under the age of sixteen. As the district court stated, “Taylor’s conviction stems entirely from his conduct on a computer.” The nature of Taylor’s offense means that the district court did not abuse its discretion when it imposed a condi- tion that allows the probation department to check Taylor’s internet-capable devices even without reasonable suspicion. See Kappes, 782 F.3d at 863 (allowing court to impose condi- tion allowing periodic, unannounced inspection of computer and internet-capable devices where defendant had thou- sands of images of child pornography on his computer). That Taylor’s crime was solely the result of his activity on a computer makes his case materially different from our deci- sion in Goodwin, 717 F.3d 511, to which he points. There we struck down an internet monitoring and computer search condition where there was no evidence that a computer had played any role in the defendant’s convictions and no indica- tion that he had used a computer to commit any crime. Id. at 523. The opposite is true here. We have cautioned, however, against the imposition of overly broad search conditions as conditions of supervised release or probation. See United States v. Farmer, 755 F.3d 849 (7th Cir. 2014); Goodwin, 717 F.3d at 523. In Farmer, we recog- nized that 18 U.S.C. § 3583(d)(3) provides that a court may order as a condition for a person required to register under the Sex Offender Registration and Notification Act that the person submit his person, property, computer, and other items to search by a probation officer “with reasonable sus- No. 14-3790 13 picion concerning a violation of supervised or unlawful conduct by the person … .” Taylor’s condition is even broad- er than that, as no reasonable suspicion is required. We reit- erate the importance, when sentencing courts consider im- posing a special condition like this one, that such “broad search and seizure authority” be “connected to [the defend- ant’s] offense, history, and personal characteristics.” Goodwin, 717 F.3d at 523. In light of the nature of Taylor’s offense, we find the authority was sufficiently connected here, and we uphold this special condition. 3. Direct Contact with Minors Taylor also challenges a third special condition, this one concerning contact with persons under the age of 18. It reads: The defendant shall have no knowing direct contact with a person under the age of 18, no indirect contact with a person under the age of 18 through another person or through a device (including a telephone, computer, ra- dio, or other means) and the defendant must reasonably avoid and remove himself from situations in which he would have any other form of contact with a minor. The defendant shall not be in any area in which persons un- der the age of 18 are likely to congregate, such as school grounds, child care centers, sport centers for youth sports, or playgrounds. We disagree with the suggestion that no ban is necessary because the conduct took place in 2006, and, according to Taylor, there is no evidence of any present risk to minors. The record reflects that in addition to the conduct for which he was convicted, Taylor contemplated meeting what he thought to be a thirteen-year-old girl in person. Fear of ar- rest, transportation logistics, and the uncertainty of whether 14 No. 14-3790 the girl would have sexual intercourse with him meant that Taylor did not set up a meeting in this case, but his state- ments in the internet chatroom suggest that he would have been open to meeting if transportation could be arranged. Some restriction on contact with minors while Taylor was on probation for this offense was justified. That said, the special condition imposed here is quite broad and, indeed, broader upon modification than at its ini- tial imposition. As initially imposed on August 15, 2012, the special condition of probation concerning contact with mi- nors had included the sentence, “This provision does not en- compass persons under the age of 18 with whom the de- fendant must deal in order to obtain ordinary and usual commercial services.”2 The modified condition at issue, however, does not. As currently written, the special condition does not con- tain any exceptions to the bar on having any “knowing di- rect contact with a person under the age of 18.” While the government suggests that the final sentence (the bar on be- ing in areas where minors are likely to congregate) limits the first sentence, that is not how the plain language of the spe- 2The complete special condition as initially imposed read: The defendant shall not frequent places where children under the age of 18 congregate, nor associate or have verbal, written, telephonic, or electronic communication with any person under the age of 18, without the per- mission of the probation officer. This provision does not encompass persons under the age of 18 with whom the defendant must deal in order to obtain ordinary and usual commercial services. No. 14-3790 15 cial condition reads. Rather, the first sentence, with its abso- lute bar on any knowing contact with minors, stands alone. After the district court issued the modification order in this case, we expressed concerns about another similar broad no-contact-with-minors condition. We said in United States v. Thompson, 777 F.3d 368, 376 (7th Cir. 2015), that “’contact,’ being undefined, could be understood to mean being served by a waitress, paying a cashier, sitting next to a girl (a stranger) at a baseball game, replying to a girl asking direc- tions, or being shown a friend’s baby girl—or his own baby, for that matter.” Were he in any of these situations, Taylor would seem to be having the “knowing direct contact with a person under 18” that is barred by his conditions of proba- tion. We later suggested that a condition that, unlike the ab- solute bar here, included exceptions for contact with non- related minors in the course of normal commercial business, in the presence of an adult approved by probation, and in other cases of unintentional or incidental contact, could be upheld. Kappes, 782 F.3d at 859-60. As written, the condition is too broad and is an abuse of discretion. We are already remanding Taylor’s case in light of another condition, and on remand the district court should reinstitute the normal commercial business excep- tion, the removal of which appears to be an oversight. Other circuits have ruled that associational conditions of probation and supervised release do not apply to casual, chance, or in- advertent meetings. See United States v. MacMillen, 544 F.3d 71, 76 (2d Cir. 2008); United States v. Loy, 237 F.3d 251, 269 (3d Cir. 2001); see also Arciniega v. Freeman, 404 U.S. 4, 4 (1971) (per curiam). Depending on the circumstances, we might rule that way if Taylor was said to violate his probation for 16 No. 14-3790 doing one of the things we discussed in Thompson. It is also true, though, that “should [a defendant] deliberately seek out such contacts, they would cease to be ‘casual’ or ‘una- voidable’ and would fall within the condition’s scope.” Loy, 237 F.3d at 269. An explicit exception for instances of unin- tentional and incidental contact would make things clearer. Cf. Kappes, 782 F.3d at 859. On remand the district court can also bear in mind our discussion in Kappes concerning bans on non-incidental contact with minor males as well as fe- males, where there was no evidence that either of the de- fendants was bisexual, which raised concerns as to whether they were overbroad. Id. at 859-60. Taylor has not suggested to us or to the district court any specific family members or children of friends with whom he wishes to have contact. In light of the soon-coming end to Taylor’s probation and the remand we are already order- ing, if Taylor has specific minor family members with whom he seeks contact, he may ask the court to modify this condi- tion, and the court can consider his request. See Kappes, 782 F.3d at 859 (stating that any violation of right to familial as- sociation is not yet ripe in light of twenty-year sentence and stating defendant could petition court for modification if he or family member had minor children); 18 U.S.C. § 3583(e)(2). Finally, we note that Taylor did not raise in his opening brief a vagueness or other specific challenge to the condi- tion’s bar on being “in any area in which persons under the age of 18 are likely to congregate, such as school grounds, child care centers, sport centers for youth sports, or play- grounds.” Cf. MacMillen, 544 F.3d at 76 (upholding similar special condition); United States v. Webster, 775 F.3d 897, 904 No. 14-3790 17 (7th Cir. 2015) (stating arguments not made in opening brief waived). III. CONCLUSION Taylor’s sentence is VACATED and his case is REMANDED for further proceedings consistent with this opinion. 18 No. 14-3790 EASTERBROOK, Circuit Judge, concurring. I join my col- leagues’ opinion but add a few words about jurisdiction. The district court modified the terms of Taylor’s proba- tion while his direct appeal was pending in this court. Apart from any questions about jurisdiction, that was imprudent. Taylor was challenging both his conviction and his sentence, and one aspect of this court’s decision concerned a term of probation. United States v. Taylor, 777 F.3d 434, 442–44 (7th Cir. 2015). Only one court at a time should address a subject; parallel litigation adds needless complications. Altering a judgment that is on appeal creates the prospect of wasting the district judge’s time, the appellate judges’ time, or both. I agree with my colleagues that, under United States v. Ramer, 787 F.3d 837 (7th Cir. 2015), the district court had ju- risdiction to proceed. Ramer holds that 18 U.S.C. §3583(e)(2), which states that a district court may modify a term of su- pervised release “at any time”, implies that the district court may act while an appeal is pending, notwithstanding the norm that only one court at a time has jurisdiction. See, e.g., Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 58 (1982) (a notice of appeal “divests the district court of its control over those aspects of the case involved in the ap- peal”); United States v. McHugh, 528 F.3d 538 (7th Cir. 2008). The statute governing probation, 18 U.S.C. §3563(c), says the same thing as §3583(e)(2), so Ramer logically covers pro- bation as well as supervised release. But I do not find Ramer persuasive. It does not consider the possibility that “at any time” refers to how long after a judgment a court may act, rather than which court has authority to act. No. 14-3790 19 Before the Sentencing Reform Act of 1984, district courts could modify sentences long after they had been imposed. See, e.g., United States v. Addonizio, 442 U.S. 178 (1979), dis- cussing the old version of Fed. R. Crim. P. 35. Until Rule 35’s adoption, “[t]he beginning of the service of the sentence in a criminal case end[ed] the power of the court even in the same term to change it.” United States v. Murray, 275 U.S. 347, 358 (1928). The 1984 Act moves back toward a system of de- terminate sentencing, amending Rule 35 to allow a district court to modify a sentence only on remand from a court of appeals, or in response to a motion by the prosecutor based on assistance in other defendants’ cases. Change also is pos- sible under retroactive amendments to the Guidelines, and Rule 35 has been amended to allow correction of technical gaffes within 14 days of a sentence’s imposition. The 1984 Act left in place, however, the two statutes I have mentioned, which treat probation and supervised release as special situ- ations, because they entail ongoing monitoring that may last long after release from prison. To say that the 14-day limit does not apply to probation and supervised release is not at all to say that a district court may act while the same judgment is being contested on ap- peal. Nothing in the text of §3563(c) or §3583(e)(2) speaks to jurisdiction, and the Supreme Court insists that jurisdictional rules be set out in jurisdictional terms. Rules about time for action do not affect jurisdiction. See Eberhart v. United States, 546 U.S. 12 (2005) (holding this about Fed. R. Crim. P. 33 in particular); see also, e.g., United States v. Kwai Fun Wong, 135 S. Ct. 1625 (2015); Henderson v. Shinseki, 562 U.S. 428 (2011); Dolan v. United States, 560 U.S. 605 (2010). (The rare excep- tions to this norm rest on historical practice. See John R. Sand & Gravel Co. v. United States, 552 U.S. 130 (2008); Bowles v. 20 No. 14-3790 Russell, 551 U.S. 205 (2007). A district court’s authority to modify terms of release while an appeal is pending does not have the support of established practice.) The panel in Ramer did not discuss the difference be- tween timing rules and jurisdictional rules, and that omis- sion is understandable. The parties had not discussed juris- diction in their briefs; the panel did so on its own, without calling for submissions from the parties. The parties have not briefed jurisdiction in this appeal either. And United States v. D’Amario, 412 F.3d 253 (1st Cir. 2005), which Ramer followed, preceded Eberhart and other cases in the last decade that dis- tinguish timing rules from jurisdictional rules. (D’Amario al- so did not cite pre-2005 decisions about this topic. The mod- ern doctrine begins with Zipes v. Trans World Airlines, Inc., 455 U.S. 385 (1982).) Nor did Ramer discuss the effect of its holding on other rules and statutes that allow a district court to modify a judgment. Take Fed. R. Civ. P. 60(b), some parts of which al- low a judgment to be modified years after its entry. Or take Fed. R. Crim. P. 12(b)(2) and Fed. R. Civ. P. 12(h), both of which say that a district court may dismiss a case “at any time” after concluding that subject-matter jurisdiction is missing. The civil and criminal rules contain many more “any time” references. (The phrase “at any time” appears 14 times in the criminal rules and 19 times in the civil rules.) I had supposed, until Ramer, that such rules do not affect the allocation of jurisdiction between trial and appellate courts. Indeed, one of the “at any time” references appears in Fed. R. Crim. P. 36, which we held in McHugh does not permit a district court to act while an appeal on the same subject is pending. Ramer upsets this understanding, though No. 14-3790 21 perhaps accidentally. It does not discuss any of these rules and, though it cites McHugh, does not recognize that McHugh concerns an “at any time” clause. So although I am content to follow Ramer today, I do not view the issue as closed. We appear to have an intra-circuit conflict that needs a fresh look with the benefit of briefs. 22 No. 14-3790 HAMILTON, Circuit Judge, concurring in part and dissent- ing in part. I agree with my colleagues: (a) that the district court had jurisdiction to decide whether to modify Taylor’s conditions of probation, at least under 18 U.S.C. § 3563(c) and United States v. Ramer, 787 F.3d 837 (7th Cir. 2015); (b) that the condition of probation for inspection of internet- capable devices is appropriate; and (c) that the condition on contact with minors needs correction. I respectfully dissent, however, from Part II-B-1 of the majority opinion vacating the condition restricting Taylor’s access to otherwise legal adult pornography. When first setting conditions of probation for an offend- er, a district court exercises its sentencing discretion. When the district court here first imposed conditions of probation on Taylor, he did not even bother to appeal them. See United States v. Taylor, 777 F.3d 434 (7th Cir. 2015) (dealing with oth- er issues). Taylor later moved under § 3563(c) to modify sev- eral conditions. He did not show any change in circumstanc- es, but he raised new legal arguments based on intervening decisions by our court, and in particular on the scope of the prohibition on access to adult pornography. The district judge took Taylor’s arguments seriously and modified the conditions, including the adult pornography condition, in light of our intervening decisions. Taylor argues now, and my colleagues agree, that the adult pornography prohibition must be removed entirely. As all acknowledge, our review of the district court’s actions is only for abuse of discretion, e.g., United States v. Serrapio, 754 F.3d 1312, 1318 (11th Cir. 2014); United States v. Wyss, 744 F.3d 1214, 1218 n.2 (10th Cir. 2014), the same standard we apply more often to decisions on whether to modify condi- No.14-3790 23 tions of supervised release. E.g., United States v. Neal, 662 F.3d 936, 938 (7th Cir. 2011); United States v. Evans, 727 F.3d 730, 732 (7th Cir. 2013). I see no abuse of discretion here. First, I am not persuad- ed that Taylor had a right to have the district court start over from scratch on whether the condition should be imposed at all. When it was imposed in 2012, there was no objection or appeal. While the district court had the power to revisit the question, I do not see a duty to do so, except to the extent the terms of the condition were sharpened to comply with our intervening case law. As for whether the adult pornography condition should have been imposed in the first place, there is empirical evi- dence weighing both for and against imposing such a condi- tion on an offender like Taylor. See United States v. Siegel, 753 F.3d 705, 709 (7th Cir. 2014). The district court recognized this uncertainty and discussed Siegel. In the end, the court decided to stick with its original, unappealed decision to impose the condition, but to tailor it more narrowly in light of our decision in United States v. Adkins, 743 F.3d 176 (7th Cir. 2014). Surely the district court’s discretion is especially broad when addressing an offender’s motion to remove entirely an existing condition of probation he had not previously chal- lenged. Neither Adkins nor this offender’s motion required the district judge to revisit on the offender’s demand the question whether to impose any restriction at all on his ac- cess to adult pornography. I would affirm the decision to deny the removal of the modified condition as well within the court’s discretion.

01-03-2023

08-11-2015

https://www.courtlistener.com/api/rest/v3/opinions/2995005/

In the United States Court of Appeals For the Seventh Circuit No. 98-3760 United States OF AMERICA, Plaintiff-Appellee, v. Gregory Swan, Defendant-Appellant. Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 97 CR 105-3--Charles R. Norgle, Sr., Judge. Argued December 10, 1999--Decided August 10, 2000 Amended April 25, 2001 Before Easterbrook, Rovner, and Diane P. Wood, Circuit Judges. Diane P. Wood, Circuit Judge. From 1987 until 1994, Gregory Swan worked for the City of Chicago. During the last two years of that period, his specific job was for 13th Ward Alderman John Madrzyk. Unfortunately for the City, neither Madrzyk nor Swan had its best interests at heart. This case is Swan’s appeal from his convictions for participating in a racketeering conspiracy in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO), mail fraud, theft of funds, extortion, money laundering, obstructing the IRS, failing to file tax returns, and using a false social security card. The district court sentenced him to five years’ imprisonment on counts 1 (racketeering), 2 (racketeering conspiracy), 5 and 6 (theft of funds), 7 and 14 (extortion), and 8 (money laundering). He received 12 months on counts 3 and 4 (mail fraud), 9 (obstructing the IRS), 10, 12, and 13 (failure to file tax returns), and 15 and 16 (use of a false Social Security card). All counts were to run concurrently with each other. In addition, the court ordered three years of supervised release and ordered Swan to pay $100,000 in restitution. Swan’s appeal challenges the jury instructions used to convict him on the RICO count; the sufficiency of the evidence against him for conviction on the RICO charges and the mail fraud charges; and the district court’s admission of evidence of his gambling and failure to complete work that others had hired and paid him for. We affirm all but Swan’s conviction on count 1. I Swan and Madrzyk cheated the City in a number of ways. The two of them created four "ghost jobs" enabling Swan, his son (Greg Swan), his girlfriend (Sharon Nova), and another friend (David Sipich) to receive paychecks and benefits from the City of Chicago without doing any actual work. Madrzyk received a kickback from each of the ill-gotten paychecks. Swan and Madrzyk also referred people and companies who came to Madrzyk seeking City assistance such as rezoning and inspection help to Swan’s "consulting" firm. These people then paid a "consulting fee" to the firm, notwithstanding the fact that neither Swan, the firm, nor Madrzyk did anything more for them than the Alderman was required to do as part of his position. Swan attempted to cover up these schemes by failing to report his income from the ghost jobs and the consulting fees to the IRS. By 1994, as Swan became more desperate, he lied to federal agents about the sources of his income and began to use false social security numbers for various purposes. He also stopped using bank accounts in a desperate effort to eliminate the paper trail related to his income, and he used other people as intermediaries for his illegal gains. II Eventually, of course, federal authorities caught up with him and brought the charges now before us. Swan, Madrzyk, and two others were charged in a superseding indictment with violations of 18 U.S.C. sec.sec. 1962(c) (RICO), 1962(d) (RICO conspiracy), 1341 (mail fraud), 1951 (extortion), 1956 (money laundering), 666 (theft of funds), and 2 (aiding and abetting various counts), as well as 26 U.S.C. sec.sec. 7212 (obstructing the IRS) and 7203 (failure to file tax returns) and 42 U.S.C. sec. 408 (use of a false Social Security card). (Madrzyk eventually pleaded guilty and testified against Swan under a grant of immunity.) To violate RICO sec. 1962(c), a person employed by or associated with an enterprise that is engaged in, or that conducts activities that affect interstate or foreign commerce, must conduct or participate, directly or indirectly, in the conduct of that enterprise’s affairs through a pattern of racketeering activity or collection of unlawful debt. In order to have conducted or participated in the enterprise’s affairs under section 1962(c), the person charged must have had "some part in directing those affairs." Reves v. Ernst & Young, 507 U.S. 170, 179 (1993). In other words, she must have participated in the operation or management of the enterprise itself. See id. at 183; Goren v. New Vision Int’l. Inc., 156 F.3d 721, 727-28 (7th Cir. 1998). Reves also held that "[a]n enterprise might be ’operated’ or ’managed’ by others ’associated with’ the enterprise who exert control over it . . . ." 507 U.S. at 184. Overlooking this requirement of control (perhaps mistakenly relying on pre-Reves jurisprudence), the government insisted upon and the court permitted the following jury instruction on count 1: The terms "conduct" and "participate in the conduct of the affairs of the enterprise" include the performance of acts, functions or duties which are necessary to or helpful in the operation of the enterprise. There was no additional instruction requiring a finding of operation or management of the enterprise. The court gave that instruction over Swan’s objection. Swan both objected and asked the court to instruct the jury that the simple giving of directions and performance of tasks necessary or helpful to the organization, without more, was insufficient. The court rejected his position because it thought that Reves applied only to civil RICO prosecutions and thus that Swan’s proposed instruction did not correctly state the law. We review the trial court’s jury instructions with deference, analyzing them as a whole to determine if theyaccurately state the law. See United States v. Kelly, 167 F.3d 1176, 1178 (7th Cir. 1999). Even if we find that a jury instruction was erroneous, we will reverse only if we believe that the instruction confused the jury and therefore prejudiced the defendant. See id. at 1179. In this case, it is plain that the RICO jury instruction was deficient. We reiterate: "simply performing services for an enterprise, even with knowledge of the enterprise’s illicit nature, is not enough to subject an individual to RICO liability under sec. 1962(c)." Goren, 156 F.3d at 728. The instruction the court gave could not have given the jury any idea that it needed to find that Swan participated in the management or operation of the enterprise. The government argues that any error in the instruction was harmless and thus does not justify reversal. While we have no problem with the general proposition that harmless error analysis applies to jury instructions, see Neder v. United States, 527 U.S. 1, 18 (1999), we do not agree that this particular error could be called harmless. To affirm the RICO conviction here, we would have to find that it was "clear beyond a reasonable doubt that a rational jury would have found the defendant guilty absent the error." Id.; see also Lanier v. U.S., 205 F.3d 958, 964 (7th Cir. 2000). That we find impossible to do on this record. It is true that the jury found Swan guilty of conspiring to violate sec. 1962(c) when it convicted him on the charge in count 2 of violating 18 U.S.C. sec. 1962(d). But this did not supply the missing finding relating to participation in the management or operation of the enterprise--a finding that the jury had no need to make under the court’s instruction--for the simple reason that a sec. 1962(d) conspiracy conviction does not require the jury to find that the defendant was an operator or manager of the enterprise. See Brouwer v. Raffensperger, 199 F.3d 961, 967 (7th Cir. 2000). To convict Swan on count 2, the jury needed only to find that he knowingly agreed to facilitate the activities of those operators or managers to whom sec. 1962(c) can apply (such as someone like Madrzyk). See id. And the facts established by the record (that Swan received a ghost payroll check, took on clients referred to him by Alderman Madrzyk, failed to file tax returns, and used a false Social Security card) do not prove that he managed or operated the "enterprise" (which here was apparently the City of Chicago itself). Because the record does not contain overwhelming evidence that Swan managed or operated the enterprise, and because the jury was not fully informed as to the elements of a RICO violation, we reverse Swan’s conviction on count 1. This conclusion, we note, however, will have no effect on the amount of time Swan spends in prison, even though it will entitle him to a modest adjustment of the special assessment he must pay. Count 1 was grouped, for sentencing purposes, with counts 2, 5-6, and 8-16 under U.S.S.G. sec. 3D1.2. The offense level determined for the group depended not on count 1, but on count 8, money laundering, because U.S.S.G. sec. 3D1.3 provides that the offense level for the group is derived from the count with the highest offense level, which was money laundering at an offense level of 25. The total combined offense level is therefore not affected by reversal of the RICO charge. III Swan argues next that there was insufficient evidence to convict him of violating either the racketeering or the mail fraud counts. Because we are reversing his sec. 1962(c) conviction on other grounds, we address only the sufficiency of the evidence to support his mail fraud conviction. As we constantly observe, the governing standard of review makes success on such a claim exceedingly hard. We must draw all reasonable inferences in favor of the government, and we affirm if any rational fact finder could have determined that Swan was guilty beyond a reasonable doubt. See United States v. Yoon, 128 F.3d 515, 523 (7th Cir. 1997). A mail fraud violation occurs when someone "for the purpose of executing [a] scheme or artifice [to defraud] or attempting . . . to do [so]," places in the mails something to be delivered by a mail carrier. 18 U.S.C. sec. 1341; see United States v. Keane, 522 F.2d 534, 551 (7th Cir. 1975). Swan’s conviction rests on his use of the mails to defraud the Hinsdale Orthopedic Association. Around December 13, 1994, Blue Cross/Blue Shield mailed a check for $171 to Hinsdale Orthopedics to reimburse it for the medical services it rendered to Nova, Swan’s girlfriend. Swan had a hand in this mailing because he helped procure the "ghost" job for Nova that provided her with the Blue Cross/Blue Shield insurance policy. Swan did not have to mail the check himself to be guilty of mail fraud. He only needed to cause it to be mailed or to commit some act that would cause the mailing of the check to be reasonably foreseeable. See Keane, 522 F.2d at 551. When Swan got Nova the ghost job, which came with pay and benefits, it became reasonably foreseeable that Blue Cross/Blue Shield would reimburse medical institutions for her care. Swan claims that the check was not mailed "for the purpose of executing [the fraud]," as sec. 1341 requires. He points out that United States v. Maze, 414 U.S. 395, 402 (1974) held that mail fraud charges were not supported where the evidence showed that reimbursement checks had been mailed by banks to hotels after the defendant had already used stolen credit cards to obtain services from the hotels. But the point of Maze was that the defendant had already completed the fraud when he left the hotels. Whether or not the banks actually paid the hotel bills did not affect the defendant. Here, in contrast, the Blue Cross/Blue Shield check served an important purpose in furthering the fraud: without the check, the fraud would have been frustrated, because Hinsdale would simply have turned to Nova for payment. Nova would not have received fraudulently obtained medical services for free. She remained personally liable for the services she had received until the bill was paid by someone. The evidence of the Blue Cross/Blue Shield mailing was sufficient to form the basis for Swan’s mail fraud conviction. IV Swan’s final quarrel is with the district court’s decision to allow the government to present evidence of his gambling and of his failure to perform consulting services as promised. We review the trial court’s evidentiary decisions for abuse of discretion. See United States v. Garcia, 986 F.2d 1135, 1139 (7th Cir. 1993). Normally, evidence of prior bad acts is not admissible to show character traits and conformity with those traits. See Fed. R. Evid. 404(b). Such evidence is nonetheless admissible where (1) it is relevant to establish some matter in issue other than the defendant’s propensity to commit the crime, (2) it shows that the defendant actually committed the prior bad acts, and (3) its probative value is not substantially out weighed by the danger of unfair prejudice. See Fed. R. Evid. Rules 404(b), 403; United States v. Asher, 178 F.3d 486, 492 (7th Cir. 1999). The government argued that the evidence here was necessary to fill out the witnesses’ stories so that they would make sense to the jury (see, e.g., United States v. Gill, 58 F.3d 334, 337 (7th Cir. 1995)), and that the evidence helped to explain Swan’s intent and motive to commit the crimes. We do not find these grounds persuasive. This is not a case like United States v. Mobley, 193 F.3d 492 (7th Cir. 1999), in which the prosecution was allowed to introduce evidence of gambling because the defense made the question of cash flow relevant. Here, the references to Swan’s gambling were gratuitous. None of Swan’s fraudulent activity was inextricably related to his gambling or failure to perform contractual duties. Witnesses could have explained their relationships with Swan without mentioning that they met him while gambling, and they could have discussed their giving Swan money for services without adding that in the end he did not follow through. Moreover, the fact that Swan gambled did little to explain why he wanted to steal money. Most people want money for a variety of reasons, and the government did not attempt to show any special circumstances such as a large gambling debt hanging over Swan’s head that would have provided him with a particularly weighty motive to steal. The fact that Swan did not perform services for some clients may evidence intent to extort, but his actual taking of their money, also introduced into evidence, proved that intent. The non- performance of the services added little or nothing. Even though the admission of the evidence was probably error under Rules 404 and 403 of the Federal Rules of Evidence, we think it clear on this record that any error was harmless. See Garcia, 986 F.2d at 1139. The victims of Swan’s extortion testified against him; several witnesses testified that Swan set up the ghost jobs and paid Madrzyk kickbacks; and Madrzyk himself took the stand to testify against Swan. There was overwhelming evidence that Swan was part of a RICO conspiracy, and committed the fraudulent acts with which he was charged. V In sum, we Affirm all of Swan’s convictions with the single exception of the conviction under Count 1, which we Reverse. The case is Remanded to the district court for correction of the sentence and the special assessment inaccordance with this opinion.

01-03-2023

09-24-2015

https://www.courtlistener.com/api/rest/v3/opinions/2579713/

474 F. Supp. 2d 19 (2007) Ethel HURST, et al., Plaintiffs, v. The SOCIALIST PEOPLE'S LIBYAN ARAB JAMAHIRIYA, et al., Defendants. Civil Action No. 02-02147(HHK). United States District Court, District of Columbia. February 1, 2007. *20 *21 *22 Mark S. Zaid, Krieger & Zaid, PLLC, Washington, DC, Jonathan S. Abady, Richard D. Emery, Sarah Netburn, Emery Celli Brinckerhoff & Abady LLP, New York City, for Plaintiffs. Arman Dabiri, Law Offices of Arman Dabiri & Associates, P.L.L.C., Washington, DC, Dante Mattioni, Francis X. Kelly, Mattioni, Ltd., Philadelphia, PA, for Defendants. MEMORANDUM OPINION AND ORDER KENNEDY, District Judge. On December 21, 1988, Pan Am Flight 103 exploded 31,000 feet in the air over Lockerbie, Scotland, killing all 259 passengers on board and eleven people on the ground. Among those killed were U.S. citizens Walter Porter, Roger Eugene Hurst, John Mulroy and Bridget Concannon. Eleven of their family members bring this action,[1] individually and as personal representatives, against the Socialist People's Libyan Arab Jamahiriya, the Jamahiriya Security Organization ("JSO"), and the Libyan Arab Airline ("LAA") (collectively "Libya"), as well as two Libyan intelligence officials.[2] Plaintiffs seek to hold Defendants liable pursuant to the state-sponsored terrorism exception of the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. § 1605(a)(7), for violating the so-called Flatow Amendment, 28 U.S.C. § 1605 note, the Torture Victim Protection Act ("TVPA"), 28 U.S.C. § 1350 note, and the Anti-Terrorism Act ("ATA"), 18 U.S.C. § 2333(a), as well as for intentional infliction of emotional distress and civil conspiracy. Before the court are (1) Libya's motion to dismiss; (2) Defendant Al-Megrahi's motion to dismiss; and (3) Plaintiffs' motion for partial summary judgment against Al-Megrahi.[3] I. BACKGROUND A. Lockerbie Bombing Following the December 1988 explosion of Pan Am Flight 103 over Lockerbie, the United States and the United Kingdom indicted Al-Megrahi and Fhimah on charges that they planned and executed the bombing. By agreement between the United States, United Kingdom, and Libya, Al-Megrahi and Fhimah were criminally tried under Scottish law by a panel of three Scottish judges constituting the High Court of Justiciary at Camp Zeist in The Netherlands. On January 31, 2001, the Scottish panel unanimously convicted Al-Megrahi of the murders of all 270 victims for his role in the bombing. See Bonnington Decl., Ex. 3 ¶¶ 89-90 (Her Majesty's Advocate v. Al-Megrahi, *23 No. 1475/99 (High Court of Justiciary at Camp Zeist, Jan. 31.2001)) (hereafter "HCJ Opinion.").[4] The investigation following the bombing determined that the explosion was caused by a portable radio-cassette player packed in a brown Samsonite suitcase that was smuggled onto the plane. Id. ¶¶ 9, 15. The explosive device was constructed with a digital timer specially manufactured for, and purchased by, Libya. Id. ¶ 44. The suitcase was apparently brought to the LAA's facilities in Malta by Libyan agents who arranged to have the suitcase smuggled onto the Pan Am flight. Id. ¶ 39. Based on the evidence presented at his trial, the court concluded that Al-Megrahi traveled to Malta during December 7-9, 1988 and again during December 20-21, 1988. Id. ¶ 87. Al-Megrahi was a high-ranking member of the JSO and was "head of airline security" which put him in a position to be aware of security operations at airports where the LAA operated. Id. ¶ 88. Based on an identification ("albeit not absolute") by a Maltese shopkeeper, the court concluded that while in Malta Al-Megrahi purchased the clothing that surrounded the explosive device. Id. ¶¶ 88-89. The court also determined that Al-Megrahi associated with members of the JSO or Libyan military who purchased the types of timers that were used in the explosive device. Id. ¶¶ 88-89. Applying a "reasonable doubt" standard, the three-judge panel unanimously determined that Al-Megrahi was guilty. Id. ¶¶ 89-90. Al-Megrahi's conviction was unanimously affirmed by the Appeal Court of the High Court of Justiciary on March 14, 2002. See Bonnington Decl., Ex. 4 (Appeal against Conviction of Al-Megrahi v. Her Majesty's Advocate v., No. 104/01 (Appeal Court, High Court of Justiciary, March 14, 2002)). On August 15, 2003, the Chargé d'Affaires of the Permanent Mission of Libya to the United Nations issued a statement to the U.N. Security Council that Libya "[h]as facilitated the bringing to justice of the two suspects charged with the bombing of Pan Am 103 and accepts responsibility for the actions of its officials." United Nations Doc. S/2003/818. B. Procedural History In 1994 and 1996, the survivors of many victims of the Lockerbie bombing filed suits against Defendants, which were consolidated in one action in the Eastern District of New York (the "New York action"). Among those who filed suit were Siobhan Mulroy, daughter of John Mulroy, individually and as his representative, and Molena Porter, widow of Walter Porter, individually and as his representative. See Rein v. Socialist People's Libyan Arab Jamahiriya, 162 F.3d 748, 753 (2d Cir.1998). Plaintiffs here filed the present complaint in 2002, which was consolidated with the New York action and transferred to the Eastern District of New York. In 2002, Defendants settled with most of the plaintiffs in the New York action for a total of $2.7 billion, or $10 million per victim, to be paid to the representative of the victim's estate to settle all claims for "compensatory death damages." See Agreement of Proposed Settlement (Oct. 23, 2002) (hereinafter "Agreement").[5]*24 Plaintiffs in the present action, however, were excluded from that settlement. The Eastern District of New York determined that they were "not wrongful death beneficiaries under applicable state law" and thus were neither covered by, nor entitled to distribution from, the settlement. Rein v. Mulroy, ___ Fed.Appx. ___, 2005 WL 1528870, at *1 (2d Cir.2005) (affirming conclusion that James Mulroy, Mary Diamond, Gwennth Forde, Victoria Porter, Olga Husbands, Vernon Druses, and Randolph Porter ("the Objectors") were not included in the settlement). Accordingly, in September 2005, Plaintiffs' claims were remanded to this court. Before the court are (1) Libya's motion to dismiss for failure to state a claim, lack of personal jurisdiction, and to dismiss the claim of relief for punitive damages; (2) Defendant Al-Megrahi's motion to dismiss for lack of standing; and (3) Plaintiffs' motion for partial summary judgment against Al-Megrahi.[6] The court will consider each motion in turn. II. ANALYSIS A. Libya's Motion to Dismiss 1. The Foreign Sovereign Immunities Act and Flatow Amendment Plaintiffs assert causes of action against Libya based on the FSIA and the Flatow Amendment. As Libya correctly asserts, neither provision creates a cause of action against a foreign state. The FSIA, however, does provide a jurisdictional basis for Plaintiffs to pursue other causes of action against Libya if they satisfy its requirements. Although the FSIA generally provides foreign states with immunity from suit in U.S. courts, it enumerates several exceptions under which a foreign state may be sued. 28 U.S.C. §§ 1605, 1607. The so-called "state-sponsored terrorism exception," *25 added in 1996, abrogates a foreign state's immunity for personal injuries caused by terrorist acts committed by the state's officials or agents. 28 U.S.C. § 1605(a)(7).[7] This exception to immunity only applies if (1) a foreign state defendant has been specifically designated by the U.S. State Department as a "state sponsor of terrorism" at the time the incident occurred; (2) the foreign state is afforded a reasonable opportunity to arbitrate any claim based on acts that occurred in that state; and (3) either the victim or the claimant was a U.S. national at the time those acts took place. Id. § 1605(a)(7)(A-B). Five months after creating the state-sponsored terrorism exception, Congress enacted the. "Flatow Amendment," 28 U.S.C. § 1605 note, in recognition of the family of Alisa Flatow, a woman who died as the result of a terrorist bombing in Israel in 1995. See Flatow v. Islamic Republic of Iran, 999 F. Supp. 1, 12 (D.D.C. 1998). The Flatow Amendment provides U.S. nationals with a private cause of action for terrorism damages against individual officials, employees, and agents of designated foreign states acting in their personal capacities. 28 U.S.C. § 1605 note.[8] Neither the FSIA nor the Flatow Amendment, "nor the two considered in tandem," however, create a cause of action against a foreign state. Cicippio-Puleo v. Islamic Republic of Iran, 353 F.3d 1024, 1033 (D.C.Cir.2004). The FSIA state-sponsored terror exception is purely jurisdictional in that it "merely waives the immunity of a foreign state without creating a cause of action against it." Id. And "the Flatow Amendment only provides a private right of action against officials, employees, and agents of a foreign state, not against the foreign state itself." Id. Thus, Libya may be not be sued pursuant to the Flatow Amendment or the FSIA alone. Plaintiffs contend that another provision of the FSIA, § 1606, creates a cause of action against Libya. Plaintiffs are wrong. Section 1606 provides that where foreign states are otherwise subject to suit under § 1605 and § 1607, they "shall be liable in the same manner and to the same extent as a private individual under like circumstances." As the Supreme Court has made clear, neither § 1606 nor any other section of FSIA alone creates a cause of action against a foreign state. See First Nat'l City Bank v. Banco Para El Comercio Exterior de Cuba, 462 U.S. *26 611, 620, 103 S. Ct. 2591, 77 L. Ed. 2d 46 (1983) ("The language and history of the FSIA clearly establish that the Act was not intended to affect the substantive law determining the liability of a foreign state or instrumentality, or the attribution of liability among instrumentalities of a foreign state."); Roeder v. Islamic Republic of Iran, 195 F. Supp. 2d 140, 174 (D.D.C. 2002). Plaintiffs also assert that Libya should be held liable under the doctrine of respondeat superior for the acts of its agents. This position is also unsustainable. What Plaintiffs suggest is essentially an end-run around the Flatow Amendment's plain language, which is confined to suits against individuals. If Congress had intended to create respondeat superior liability for foreign states under the Flatow Amendment, it would have said so. See Cicippio 353 F.3d at 1035-36 (rejecting conclusion in Cronin v. Islamic Republic of Iran, 238 F. Supp. 2d 222, 231 (D.D.C. 2002) that a foreign state could be sued under the Flatow Amendment and FSIA on the theory of respondeat superior). Thus, neither the FSIA alone nor the Flatow Amendment provide a cause of action for Plaintiffs to sue a foreign state. The state-sponsored terror exception of the FSIA, however, does provide subject matter jurisdiction for Plaintiffs to pursue a cause of action against Libya under some other source of law in federal court, if they meet its requirements. Cicippio-Puleo, 353 F.3d at 1027. Here, Plaintiffs meet the requirements of § 1605(a)(7). Libya was designated as a sponsor of terrorism at the time of the incident. See 31 C.F.R. § 596.201; Price v. Socialist People's Libyan Arab Jamahiriya, 294 F.3d 82, 89 (D.C.Cir.2002).[9] All of the victims were U.S. citizens;[10] and Libya does not contend that it has been denied a chance to arbitrate its claims. As Plaintiffs have properly asserted subject matter jurisdiction pursuant to the state-sponsored terrorist exception to the FSIA, the court must proceed to determine whether they have asserted causes of action under other sources of law that may be properly brought against a foreign state.[11] 2. Other Causes of Action against Libya A suit against a state sponsor of terrorism pursuant to the FSIA "must *27 identify a particular cause of action arising out of a specific source of law," Acree v. Republic of Iraq, 370 F.3d 41, 59 (D.C.Cir. 2004), which may "includ[e] state law," Cicippio-Puleo, 353 F.3d at 1036. As the D.C. Circuit has explained, "generic common law cannot be the source of a federal cause of action. The shared common law of the states may afford useful guidance as to the rules of decision in a FSIA case where a cause of action arises from some specific and concrete source of law." Acree, 370 F.3d at 59. In this case, Plaintiffs assert claims against Libya for intentional infliction of emotional distress and civil conspiracy to commit wrongful, death and intentional infliction of emotional distress and seek damages for, economic loss, pain and suffering, and solatium. Libya contends that Plaintiffs have failed to plead these claims with the requisite particularity required by Cicippio-Puleo and Acree because they have "failed to identify and assert the law of a particular State on which they intend to rely." Libya's Mot. to Dismiss at 20. Libya's argument is without merit. Libya misconstrues this Circuit's pleading requirements under the FSIA: plaintiffs need not set forth their choice of law contentions in their complaint. Dammarell v. Islamic Republic of Iran, 370 F. Supp. 2d 218, 221 (D.D.C.2005) (noting that the court is "unaware of any law, either in the FSIA setting or out, that would require" plaintiffs to "include the choice of law determination in the Complaint itself"). Under Cicippio-Puleo and Acree, plaintiffs are required to identify "whether these claims are based in state law (or some other source of law), or whether they arise out of the common law or a particular statute," but they need not specify in the complaint a particular state out of which each claim arises. Dammarell, 370 F.Supp.2d at 221 (internal quotation marks omitted). In order to survive a motion to dismiss, a plaintiff must give a defendant "fair notice of what the plaintiff's claim is and the grounds upon which it rests." Id. at 223 (citing Modderno v. King, 82 F.3d 1059, 1063 (D.C.Cir.1996). She need not specify every theory under which she might proceed, however. See Hanson v. Hoffmann, 628 F.2d 42, 53 (D.C.Cir.1980) ("The liberal concepts of notice pleading embodied in the Federal Rules do not require the pleading of legal theories."). Choice of law is a legal determination that the court will make under its choice-of-law rules. See Jannenga v. Nationwide Life Ins. Co., 288 F.2d 169, 171 (D.C.Cir.1961) (observing that "federal courts will take judicial notice of the law of the several states . . . whether pleaded or not") (internal quotation marks omitted)); see also Shah v. Inter-Continental Hotel Chicago Operating Corp., 314 F.3d 278, 282 (7th Cir.2002) (holding that plaintiffs are not required to identify the federal or state law in a complaint, which may be discovered by interrogatories or through briefing); 8 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure 3d. § 1253 (2004). Here, Plaintiffs have set forth the events that occurred, the location of those events, the residences of the parties, and the common law causes of action under which they seek relief. Their allegations constitute a "short and plain statement" required by the federal rules, and no further notice is required. See Simpson v. Socialist People's Libyan Arab Jamahiriya, 362 F. Supp. 2d 168, 182-83 (D.D.C.2005) (denying a motion to dismiss where complaint specified causes of action for false imprisonment, intentional and/or negligent infliction of emotional distress, assault, battery, loss of consortium and solatium, and loss of prospective inheritance). Thus, the court concludes that the complaint adequately pleads claims for relief against *28 Libya which arise from the common laws of the applicable states.[12] 3. Personal Jurisdiction Libya also contends that the complaint should be dismissed because Plaintiffs do not have personal jurisdiction over Libya. Personal jurisdiction exists over a foreign state where the plaintiff establishes an exception to immunity pursuant to § 1605, and service of process is accomplished pursuant to § 1608. 28 U.S.C. § 1330(b); Price v. Socialist People's Libyan Arab Jamahiriya, 294 F.3d at 89. Plaintiffs meet the requirements of the state-sponsored terror exception, as discussed above, and they accomplished service of Libya with the original complaint in 2002 through diplomatic channels, pursuant to § 1608(a)(4). See Netburn Decl. of May 31, 2006, ¶ 5. As Plaintiffs have satisfied both requirements, the court concludes that personal jurisdiction over Libya has been established. 4. Punitive Damages Libya asserts that it may not be sued for punitive damages because it is a foreign state. Under the FSIA, a foreign state is expressly protected from liability for punitive damages, but an agency or instrumentality thereof, such as a commercial entity, may be held liable for punitive damages. 28 U.S.C. § 1606 (providing that "a foreign state except for an agency or instrumentality thereof shall not be liable for punitive damages"). If the core functions of the entity are governmental, it is considered the foreign state itself; if the functions are commercial, the entity is an agency or instrumentality and not the foreign state itself. Transaero, Inc. v. La Fuerza Aerea Boliviana, 30 F.3d 148, 153 (D.C.Cir.1994) (adopting categorical approach to distinction); Regier v. Islamic Republic of Iran, 281 F. Supp. 2d 87, 103 (D.D.C.2003) (determining that Iran's Ministry of Information and Security were engaged in core governmental functions and thus were part of the foreign state). Like Iran's Ministry of Information and Security, the JSO performs core governmental functions for the Libya concerning its security and intelligence and thus shares Libya's immunity from punitive damages. On this record, however, it is unclear whether the LAA's core functions are commercial or governmental. See Transaero, 30 F.3d at 153 (determining that Bolivian Air Force was part of foreign state). Thus, at this time, the court declines to decide whether punitive damages may be pursued against the LAA. B. Al-Megrahi's Motion to Dismiss Defendant Al-Megrahi has moved to dismiss on the principal grounds that (1) he cannot be sued in his personal capacity for claims under the ATA, 18 U.S.C. § 2333(a); and (2) Plaintiffs have no standing to bring their individual claims nor are they statutory beneficiaries entitled to proceeds of their relatives' estates. 1. The Anti-Terrorism Act The ATA generally provides for civil remedies for "any national of the United States injured in his or her person, property, or business by reason of an act of international terrorism or his or her estate, survivors, or heirs." 18 U.S.C. § 2333(a). Section 2337 provides, however that such actions may not be asserted *29 against "a foreign state, an agency of a foreign state, or an officer or employee of a foreign state or an agency thereof acting within his or her official capacity or under color of legal authority." 18 U.S.C. § 2337(b); see also Pugh; v. Socialist People's Libyan Arab Jamahiriya, 290 F. Supp. 2d 54, 60-61 (D.D.C.2003) (dismissing claims brought under ATA against Libya, its intelligence service, and individual defendants in their official capacities). Individuals may be sued under the ATA in their personal capacity, however. Pugh, 290 F.Supp.2d at 61. Al-Megrahi contends Plaintiffs cannot sue him in his personal capacity under the ATA because jurisdiction in this action over Libya is premised on Al-Megrahi acting in his official capacity. Al-Megrahi confuses the distinction between acting under official capacity and being sued in one's official capacity. An official may be sued in one's personal capacity for actions taken in one's official capacity without destroying sovereign immunity. Hafer v. Melo, 502 U.S. 21, 26, 112 S. Ct. 358, 116 L. Ed. 2d 301 (1991) (explaining how state officials may be sued in their personal capacities under 42 U.S.C. § 1983 for violations committed under color of law). The distinction turns on "the capacity in which the state officer is sued, not the capacity in which the officer inflicts the alleged injury." Id. When an officer is sued in his official capacity, it is usually as a means of suing the sovereign indirectly; where an officer is sued in his personal capacity, it seeks to hold him personally liable. See Kentucky v. Graham, 473 U.S. 159, 165-66, 105 S. Ct. 3099, 87 L. Ed. 2d 114 (1985) (explaining the distinction). Section 2337 was only intended to prevent suits against officers in their official capacity that are in effect seeking relief against the sovereign.[13] Here, however, Al-Megrahi is sued personally in order to seek remedies from him, not the foreign state. Individual defendants sued in their personal capacity are not insulated from suit under the ATA simply because a foreign state endorsed their terrorist acts. To conclude otherwise would render the ATA a nullity. Pugh v. Socialist People's Libyan Arab Jamahiriya, 2006 WL 2384915, at *7 (D.D.C. May 11, 2006) (concluding the same for the TVPA). Thus, Al-Megrahi may be sued in his personal capacity. See Acree, 370 F.3d at 59. 2. Standing Al-Megrahi contends that Plaintiffs do not have standing to bring this action under the TVPA, the ATA, or the Flatow Amendment because they are not the legal representatives of the decedents. He asserts that these causes of action only contemplate one "death suit" on behalf of the victim of the terrorist attack, and that he already settled that suit with the victims' representatives in the New York action. Plaintiffs rejoin, however, that they are not bringing this action on the victims' behalf, but rather for their own personal injuries as a result of the bombing. a. Torture Victims Protection Act The TVPA, 28 U.S.C. § 1350 note, was added to the Alien Tort Statute in 1992 to authorize a federal statutory cause of action on behalf of victims or their *30 representatives for acts of torture or extrajudicial killing. Pub.L. No. 102-256, 106 Stat. 73 at Historical and Statutory Notes to 28 U.S.C.A. § 1350; see also Ford v. Garcia, 289 F.3d 1283, 1286 (11th Cir.2002) (explaining that TVPA was passed following the 1980 torture and murder of three American nuns and a missionary in El Salvador by forces under two military leaders later sued under TVPA). The statute makes foreign individuals liable for money damages for torture or extrajudicial killings committed "under actual or apparent authority, or color of law." 28 U.S.C. § 1350 note. The language of the TVPA limits recovery to the actual victim of torture, "the individual's legal representative," or "a claimant in an action for wrongful death." Id. The TVPA provides a cause of action for both aliens and U.S. citizens to sue in federal court. See S.Rep. No. 102-249, p. 4 (1991); H.R.Rep. No. 102-367, p. 86 (1991). The plain language and the legislative history of the TVPA make clear that standing is limited to the victim herself or one bringing a claim on behalf of a direct victim. See Doe v. Qi, 349 F. Supp. 2d 1258, 1313 (N.D.Cal.2004) (reviewing history and concluding that TVPA only permits suits by or on behalf of victim). Thus, Plaintiffs are not entitled to recover under the TVPA for any injuries they sustained as a result of Al-Megrahi's acts. Moreover, Plaintiffs would not be entitled to sue Al-Megrahi on behalf of the victims under the TVPA. First, Plaintiffs concede that they do not have standing to assert wrongful death on behalf of the victims. See Pls.' Opp'n at 12. Second, claims under the TVPA on behalf of the victims appear to have been covered by the 2002 settlement of the New York action. See Rein v. Socialist People's Libyan Arab Jamahiriya, 995 F. Supp. 325, 331 (E.D.N.Y.1998) (noting that plaintiffs asserted claims under TVPA against Al-Megrahi in New York action which was later settled). Thus, the court dismisses any claim against al-Megrahi under the TVPA.[14] b. The Flatow Amendment and ATA Plaintiffs do have standing under both the ATA and the Flatow Amendment, however, to pursue claims against Al-Megrahi for the injuries that Plaintiffs themselves suffered as a result of the Lockerbie bombing. The ATA provides for recovery for personal injury to a U.S. national due to a terrorist act, but "does not specifically require that a plaintiff suffer physical harm prior to filing suit." Biton v. Palestinian Interim Self-Gov't Auth., 310 F. Supp. 2d 172, 182 (D.D.C.2004). The term "personal injury" may mean "[a]ny invasion of a personal right, including mental suffering," loss of consortium and solatium. Id. (concluding that wife could sue as a "principal victim" even where she could not sue as a survivor); see also Linde v. Arab Bank, PLC, 384 F. Supp. 2d 571, 589 (E.D.N.Y. 2005) (concluding that language and purpose of ATA indicates that it was intended to permit suit for non-physical injuries, such as emotional distress and loss of consortium, by family members of victims of acts of international terrorism).[15] *31 Similarly, the Flatow Amendment provides for a private cause of action for "personal injury" to a U.S. national and permits recovery for "economic damages, solatium, pain, and suffering, and punitive damages if the acts include" state-sponsored terrorism, airplane sabotage, and extrajudicial killing. 28 U.S.C. § 1605 note. Damages for "solatium" are generally defined as "the mental suffering and anguish of the beneficiaries . . . resulting from the death of the decedent." 25A C.J.S. Death § 187 (2006). As the death of a loved one due to terrorism or airplane sabotage could cause such mental suffering for several U.S. nationals — and not just the victim's legal representative — the Flatow Amendment necessarily contemplates actions by more than just a decedent's legal representative. See, e.g., Bettis v. Islamic Republic of Iran, 315 F.3d 325, 338 (D.C.Cir.2003) (explaining that claims for solatium under Flatow Amendment follow Restatement (Second) of Torts § 46 articulation of intentional infliction of emotional distress, which permits recovery for all immediate family members meeting the criteria). Moreover, the very purpose of the Flatow Amendment — to compensate victims of terrorism — contemplates recovery by family members precisely because "a terrorist attack — by its nature — is directed not only at the victims but also at the victims' families." Salazar v. Islamic Republic of Iran, 370 F. Supp. 2d 105, 115 n. 12 (D.D.C.2005) (concluding that family members of bombing victims could recover for intentional infliction of emotional distress); Jenco v. Islamic Republic of Iran, 154 F. Supp. 2d 27, 35 (D.D.C.2001) ("If the defendants' conduct is sufficiently outrageous and intended to inflict severe emotional harm upon a person which is not present, no essential reason of logic or policy prevents liability." (internal quotation marks omitted)). Thus, Plaintiffs are entitled to seek recovery for their own injuries under both the Flatow Amendment and the ATA. Al-Megrahi's contention that the claims under the Flatow Amendment and ATA are barred by the 2002 settlement in the New York action is unavailing. The settlement concerned only the injuries to the victims and/or their legal representatives. The Agreement specifically provides that it covers "compensatory death damages" for those entitled to recover "on behalf of the 270 decedents' estates." See Agreement at 1. Plaintiffs were not a party to that settlement and their claims for recovery were specifically excluded. See Rein v. Mulroy, ___ Fed.Appx. ___, 2005 WL 1528870, at *1 (2d Cir.2005) (concluding Plaintiffs were not entitled to distribution under settlement). Thus, Plaintiffs may proceed against Al-Megrahi under the ATA and the Flatow Amendment for their own injuries. C. Plaintiffs' Motion for Partial Summary Judgment Plaintiffs have moved for partial summary judgment against Al-Megrahi on the grounds that he has already been convicted by a court of competent jurisdiction of 270 counts of murder and thus that he should be estopped from denying responsibility for the deaths of the decedents. Under the doctrine of offensive collateral estoppel, or issue preclusion, a defendant may be prevented from relitigating identical issues that the defendant litigated and lost against another plaintiff. Jack Faucett Associates, Inc. v. AT & T, 744 F.2d 118, 124 (D.C.Cir.1984) (citing Parklane Hosiery Co. v. Shore, 439 U.S. 322, 99 S. Ct. 645, 58 L. Ed. 2d 552 (1979)). A district court, in its discretion, may only *32 apply preclusive effect to a judgment if (1) the issue was actually litigated, that is, contested by the parties and submitted for determination by the court; (2) the issue was actually and necessarily determined by a court of competent jurisdiction in the first trial; and (3) preclusion in the second action would not work an unfairness. See id. at 125. In these circumstances, however, the court must also consider the implications of giving preclusive effect to a foreign judgment, where comity generally precludes recognition unless there has been an opportunity for a full and fair trial in a foreign court of competent jurisdiction under a system of justice that does not offend United States public policy. Hilton v. Guyot, 159 U.S. 113, 202, 16 S. Ct. 139, 40 L. Ed. 95 (1895); Tahan v. Hodgson, 662 F.2d 862, 864 (D.C.Cir.1981).[16] Al-Megrahi contends that his conviction should not be given preclusive effect because (1) the court should apply the law of the jurisdiction where the judgment was rendered, and the conviction would not be given preclusive effect in Scottish courts; (2) international comity does not apply to criminal judgments; and (3) his trial was not fairly conducted. 1. Choice of Law As a threshold matter, the court must resolve the question of which law to apply in determining whether to give a foreign conviction preclusive effect. Ordinarily, a federal court applies federal law on claim and issue preclusion in non-diversity cases. See Blonder-Tongue Labs., Inc. v. Univ. of Ill. Found., 402 U.S. 313, 324 n. 12, 91 S. Ct. 1434, 28 L. Ed. 2d 788 (1971) (holding that federal courts will apply their own rule of claim preclusion). And in determining whether to recognize the judgment of a foreign nation, federal courts also apply their own standard in federal question cases. See Diorinou v. Mezitis, 237 F.3d 133, 139-40 (2d Cir. 2001); see also Restatement (Second) Conflict of Laws § 98 (1988) cmt. c (observing that in federal question cases, the recognition of foreign judgments is a matter of federal law). But see Alfadda v. Fenn, 966 F. Supp. 1317, 1329 (S.D.N.Y.1997) (reviewing conflicting cases and concluding that a federal court should normally apply either federal or state law, depending on the nature of the claim, to determine the preclusive effect of a foreign country judgment). Al-Megrahi contends that the court should apply the estoppel rules of the court in which he was adjudicated, and that under Scottish law, a criminal conviction would not have preclusive effect. The authority pertinent to this contention is contradictory: The Restatement states that "a foreign country judgment should ordinarily have no greater effect than it has in the country in which it was rendered," but then goes on to state: "However, no rule prevents a court in the United States from giving greater preclusive effect to a judgment in a foreign state than would be given in the courts of that state." Restatement (Third) Foreign Relations Law § 481, cmt. c. See also id. Reporters' Note 3. The majority of U.S. courts, however, have declined to follow the first part of this principle and instead follow domestic rules of preclusion, whether they apply those of the applicable federal or state court. See Restatement (Second) Conflict of Laws § 98 (1988) cmt. c. This court agrees with the majority of U.S. courts *33 that have addressed the issue and concludes that it is appropriate to apply federal standards in determining whether to give Al-Megrahi's conviction preclusive effect. 2. Preclusive Effect of Foreign Convictions The remaining question for this court, then, is one of first impression in this circuit: Whether to provide preclusive effect to a foreign criminal judgment in a civil suit. Generally speaking, a "criminal conviction is conclusive proof and operates as an estoppel on the defendants as to the facts supporting the conviction in a subsequent civil action." Hinton v. Shaw Pittman Potts & Trowbridge, 257 F. Supp. 2d 96, 100 (D.D.C.2003) (internal quotations marks and citation omitted); see also S.E.C. v. Bilzerian, 29 F.3d 689, 693 (D.C.Cir.1994) (precluding relitigation of facts underlying conviction for securities fraud in subsequent civil case).[17] Several federal courts have permitted the use of a foreign judgment to estop relitigation of an issue if the judgment satisfies (1) the Hilton requirements for recognition of a foreign judgment and (2) the requirements for collateral estoppel. See, e.g., Diorinou, 237 F.3d at 140 (applying Hilton and concluding that Greek ruling on custody was conclusive as to facts concerning controversy); Phillips USA, Inc. v. Allflex USA, Inc., 77 F.3d 354, 361 (10th Cir.1996) (applying Hilton and collateral estoppel to conclude that Australian judgment resolved factual issues against plaintiff and barred the claim); Pony Express Records, Inc. v. Springsteen, 163 F. Supp. 2d 465, 473 (D.N.J.2001) (determining that a United Kingdom judgment was "conclusive as to the issues tried upon the merits therein" because it satisfied the requirements of collateral estoppel and Hilton). Fewer courts have had occasion to determine whether a foreign conviction is conclusive evidence of the fact determined therein. See, e.g., Cooley v. Weinberger, 518 F.2d 1151, 1154 (10th Cir.1975) (holding that a woman's conviction in Iran of the willful homicide of her husband was sufficient to establish that she should be precluded from recovering social security benefits); Alfadda v. Fenn, 966 F. Supp. 1317, 1332 (S.D.N.Y.1997) (giving preclusive effect to French convictions on securities fraud and conspiracy claims). Although the D.C. Circuit has not reached the precise question of whether issue preclusion doctrine is applicable in a civil suit based on a foreign criminal judgment, it has applied a variant of the doctrine based on a foreign conviction in an administrative proceeding. Donnelly v. FAA, 411 F.3d 267, 271 (D.C.Cir.2005). In Donnelly, the Federal Aviation Administration revoked an airman's certification based on his conviction in Japan for attempting to import a controlled substance. Id. at 269. In determining that the conviction provided "substantial evidence" supporting the FAA's administrative revocation, the D.C. Circuit observed that "principles of comity suggest that [a foreign] judgment should be given weight as prima facie evidence of the facts underlying *34 it." Id. at 271. The court reasoned that the principles of Hilton and Tahan, while not directly on point — in that they dealt with the enforcement of a judgment, rather than its collateral use — were "persuasive": specifically, "that the merits of the case should not, in an action brought in this country upon the judgment, be tried afresh, as on a new trial or appeal, upon the mere assertion of the party that the judgment was erroneous in law or in fact if there has been opportunity for a full and fair trial abroad before a court of competent jurisdiction." Id. (quoting Tahan, 662 F.2d at 864; Hilton, 159 U.S. at 205-06, 16 S. Ct. 139) (internal quotation marks omitted). The court also observed that the burden falls on the party challenging the admission of such evidence to impeach the validity of the foreign verdict. Id. In Donnelly, the D.C. Circuit only approved of the use of a foreign criminal conviction to satisfy the lower standard of substantial evidence, not the higher burden of preponderance of the evidence. See Columbia Gas Transmission Corp. v. F.E.R.C., 448 F.3d 382, 385 (D.C.Cir.2006) (explaining that an administrative agency decision is reviewed for "substantial evidence," which "requires more than a scintilla, but . . . less than a preponderance of the evidence") (internal quotation marks omitted). However, the reasoning of the Donnelly decision — applying the principles of Hilton and estoppel — is equally apropos here. Thus, the court will proceed to determine whether the judgment meets the requirements for recognition of a foreign judgment and issue preclusion. 3. Preclusive Effect of Al-Megrahi Conviction The standards for issue preclusion and recognition of a foreign judgment share the same underlying principles and concerns. The Hilton standard permits federal courts to grant comity to foreign judgments where there has been an opportunity for a full and fair trial in a foreign court of competent jurisdiction after proper service or voluntary appearance by the defendant and under a judicial system which does not violate U.S. public policy. Tahan, 662 F.2d at 864. Collateral estoppel permits establishment of an issue as long as it has been (1) actually litigated and (2) necessarily determined by a court of competent jurisdiction in the first trial; (3) and that its use in the second trial not work an unfairness on the defendant. Jack Faucett, 744 F.2d at 124. In applying these overlapping concerns to Al-Megrahi's trial and conviction, the court concludes that the foreign judgment meets the standards for recognition and preclusion. Al-Megrahi was tried by the Scottish High Court in a trial lasting 84 days, in which the prosecution called 231 witnesses, 132 of whom were cross-examined by counsel for Al-Megrahi and Fhimah. In weighing the evidence, the court acknowledged that the identification of AlMegrahi by the shopkeeper was "not absolute" and that there were "uncertainties and qualifications." HCJ Opinion ¶ 88-89. Ultimately, however, the three judges concluded that there was "nothing in the evidence which leaves us with any reasonable doubt as to the guilt of [Al-Megrahi]." Id. Al-Megrahi appealed his conviction to five senior judges of the Scottish High Court of Justiciary, which heard argument on the appeal from January 23, 2002 to February 14, 2002. Bonnington Decl. ¶ 49; Ex. 4. The court of appeal found that none of the grounds asserted by Al-Megrahi were well-founded and rejected his appeal in a 200-page opinion issued on March 14, 2002. Id. Al-Megrahi contends that his conviction should not be granted preclusive effect in this suit, however, based on his assertions *35 that his trial was unfair and prejudicial.[18] He premises these assertions almost entirely on the observations of Professor Hans Koechler, "the official UN observer," Def.'s Opp'n at 10, and Professor Robert Black of the Edinburgh law school, both of whom observed the proceedings and have publicly raised concerns about the conduct of the trial. Koechler has pointed to (1) contradictory testimony regarding the time and weather when Al-Megrahi purchased the clothes in the suitcase in Malta; (2) the possibility that the suitcase was smuggled aboard the flight in London rather than in Malta; (3) the inconsistency of Fhimah's acquittal with Al-Megrahi's verdict; and (4) objections to the appeal process, including to the presence of representatives of the U.S. Department of Justice during proceedings. See Def.'s Opp'n at 11; Ex. J (Koechler's Report). For his part, Black contends that the case presented by the prosecution was a "very weak circumstantial one, and was further undermined by the additional prosecution concession that they had not been able to prove how the bomb that destroyed Pan Am 103 got into the interline baggage system and onto the aircraft." Def.'s Opp'n at 13; Ex. K (Lockerbie: a Satisfactory Process but a Flawed Result, 36 Case W. Res. J. Int'l L. 443, 443-44). Black raised many of the same issues as Koechler, including the (1) the reliability of the identification by a Maltese shopkeeper of Al-Megrahi as the purchaser of the clothes in the suitcase; (2) the contradictory evidence over whether there was an unaccompanied bag on the flight from Malta that could have been the explosive device. Id. Plaintiffs point out that Koechler, a philosophy professor in Austria, is neither a lawyer nor an expert on criminal procedure; that he was not the sole U.N. observer at the trial (but, rather, one of five); and that his report was "neither solicited nor published by the U.N." Pls.' Reply in Support of Mot. for Summ. J. (Pls.' Reply) at 25. They also point to the conclusions of Professor John P. Grant, an expert on Scottish law who also attended the proceedings, who explained that Koechler "failed to understand the nature of the adversarial proceedings" and "failed to appreciate the nature of criminal procedure under Scots law by criticizing the Appeal Court's failure to re-evaluate the evidence." The Lockerbie Trial: A Documentary History, 280, 434 (2004) (cited by Pls.' Reply at 25). Plaintiffs are less persuasive in attacking Black's concerns, dismissing them as "nothing more than a lawyer's argument of innocence," which were rejected by the Scottish High Court and Court of Appeals. Pls.' Reply at 26. The ultimate inquiry, however, is not whether this court or any other court would have reached the same conclusion as the trial court here, but rather, whether the process was adequate for purposes of recognition and preclusion by a U.S. court — that is, whether Al-Megrahi was provided with a fair and impartial trial with an opportunity to litigate the issue of his guilt, and whether this court is satisfied that these foreign proceedings were sufficiently free from prejudice to warrant their preclusive effect here. While both Koechler and Black have raised inconsistencies in the evidence at trial, such factual *36 disputes are best resolved by a trial court — in this case, a unanimous three-judge panel whose findings were upheld under appellate review. None of the issues raised by Koechler and Black suggest that the process itself Was unfair, or that it would be unjust to use the result against Al-Megrahi here. The system under which Al-Megrahi was tried was based upon long-standing traditions of international and Scottish law and was designed pursuant to an agreement with the United States and Libya. He was given a full and fair trial in which he litigated the central fact sought to be used against him here — his central role in the Lockerbie bombing — and it would not be unjust to use his conviction to estop his denial of that fact. With preclusive effect afforded to the facts surrounding Al-Megrahi's responsibility for the deaths of the 270 victims, Al-Megrahi is unable to provide evidence that would permit a reasonable jury to find in his favor. See Laningham, v. United States Navy, 813 F.2d at 1242. Accordingly, the court grants partial summary judgment in favor of Plaintiffs on the issue of whether Al-Megrahi is responsible for the deaths of Walter Porter, John Mulroy, Bridget Concannon and Roger Hurst, which resulted from Al-Megrahi's role in the terrorist attack on Pan Am Flight 103.[19] III. CONCLUSION For the foregoing reasons, it is this 1st day of February 2077 ORDERED that (1) Libya's motion to dismiss [# 24] is GRANTED in part with respect to claims against it for punitive damages; and DENIED in part with respect to is contentions regarding failure to state a claim and personal jurisdiction; (2) Al-Megrahi's motion to dismiss [# 19] is GRANTED in part with respect to claims under the TVPA, and DENIED in part with respect to the claims under the Flatow Amendment and the ATA; and (3) Plaintiffs' motion for partial summary judgment [# 20] is GRANTED in part as to the liability of Al-Megrahi for the deaths of the 270 victims of the bombing of Pan Am Flight 103 and is DENIED in part as to their claims for intentional infliction of emotional distress; and it is further ORDERED that on or before March 1, 2007, the parties shall file a case management report, which shall include a proposed case management plan with deadlines that shall govern the future proceedings in this action. If the parties are unable to agree, each shall file its own proposed case management plan and deadlines. NOTES [1] This action is brought by eleven relatives of these four victims: James Mulroy, brother of John Mulroy and Bridget Concannon; Mary Diamond, mother, and siblings Gwennth Forde, Victoria Porter, Olga Husbands, Vernon Druses, and Randolph Porter of Walter Porter; Ethel Hurst, mother, as well as siblings Spencer Hurst, Mitchell Hurst, and Sharon Hurst Duross of Roger Eugene Hurst. 3. [2] The individual defendants are Abdel Basset Ali Al-Megrahi and Lahem Khalif Fhimah, both Libyan citizens who were intelligence officials and employees of the LAA. The complaint also names John Does # 1-20 who are defined as "employees, agents, and/or representatives of the of the JSO who actively and knowingly participated in Libya's terrorist activities." First Am. Compl. ¶ 17. [3] Fhimah has declined to make an appearance in this action. [4] The court acquitted Al-Megrahi's co-defendant, Fhimah, due to "insufficient corroboration." Id. ¶ 85. [5] Plaintiffs submitted copies of the Agreement, as well as the individual settlements with Siobhan Mulroy, Molena Porter, and Bernadette Concannon, daughter and representative of Bridget Concannon. Pls.' Ltr. of Dec. 16, 2005, Exs. C-F. Plaintiffs indicated that they did not have a copy of the settlement related to Roger Hurst but represented that it was likely identical to the other releases as Defendants executed identical releases with all claimants. Id. at 2. [6] A motion to dismiss is appropriate "only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Martin v. Ezeagu, 816 F. Supp. 20, 23 (D.D.C.1993) (internal quotations omitted); see Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957) (observing that a complaint should not be dismissed "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief"). The court must construe the complaint in a light most favorable to the plaintiff and must accept as true all reasonable factual inferences drawn from well-pleaded factual allegations. In re United Mine Workers of Am. Employee Ben. Plans Litig., 854 F. Supp. 914, 915 (D.D.C.1994). In evaluating a Rule 12(b)(6) motion to dismiss, the court is limited to considering facts alleged in the complaint, any documents either attached to or incorporated in the complaint, matters of which the court may take judicial notice, EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624 (D.C.Cir.1997), and matters of public record, Marshall County Health Care Auth. v. Shalala, 988 F.2d 1221, 1226 n. 6 (D.C.Cir.1993). Summary judgment shall be granted if the pleadings, depositions, answers to interrogatories, admissions on file and affidavits show that there is no genuine issue of material fact in dispute and that the moving party is entitled to judgment as a matter of law. Fed. R.Civ.P. 56. Material facts are those "that might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). In considering a motion for summary judgment, the "evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Id. at 255, 106 S. Ct. 2505. But the nonmoving party's opposition must consist of more than mere unsupported allegations or denials and must be supported by affidavits or other competent evidence setting forth specific facts showing that there is a genuine issue for trial. Fed.R.Civ.P. 56(e); Celotex Corp. v. Catrett, 477 U.S. 317, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). The non-moving party is "required to provide evidence that would permit a reasonable jury to find" in its favor. Laningham v. United States Navy, 813 F.2d 1236, 1242 (D.C.Cir.1987). [7] The FSIA, enacted in 1976, was amended in 1996 as part of the comprehensive Antiterrorism and Effective Death Penalty Act ("AEDPA"), to provide for the state-sponsored terrorism exception. See Pub.L. No. 104-132, § 221(a), 110 Stat. 1214 (1996). The exception provides jurisdiction for a cause of action in which money damages are sought against a foreign state for personal injury or death that was caused by an act of torture, extrajudicial killing, aircraft sabotage, hostage taking, or the provision of material support or resources . . . for such an act if such act or provision of material support is engaged in by an official, employee, or agent of such foreign state while acting within the scope of his or her office, employment, or agency[.] 28 U.S.C. § 1605(a)(7). [8] Specifically, the Flatow Amendment provides: An official, employee, or agent of a foreign state designated as a state sponsor of terrorism . . . while acting within the scope of his or her office, employment, or agency shall be liable to a United States national or the national's legal representative for personal injury or death caused by acts of that official, employee, or agent for which the courts of the United States may maintain jurisdiction under section 1605(a)(7) of title 28, United States Code for money damages which may include economic damages, solatium, pain, and suffering, and punitive damages if the acts were among those described in section 1605(a)(7). 28 U.S.C. § 1605 note. [9] After Libya accepted responsibility and agreed to pay $2.7 billion in compensation to the families of the victims of the bombing of Pan Am Flight 103, as well as agreeing to stop its development of nuclear weapons, the United States, in 2006, removed its designation of Libya as a state sponsor of terrorism. See U.S. Department of State Press Release, "Rescission of Libya's Designation as a State Sponsor of Terrorism" (May 15, 2006), www. state.gov/r/pa/prs/ps/2006/66244.htm. [10] Al-Megrahi contends that Mulroy does not meet the requirements of the exception because he is not a U.S. citizen. Section 1605(a)(7) only requires that the claimant or the victim be a U.S. citizen, not both. See id. § 1605(a)(7)(B)(ii) (explaining that a court should "decline to hear a claim" where "neither the claimant nor the victim was a nation of the United States" as defined by immigration laws at the time of the alleged act). [11] In their Opposition, Plaintiffs assert for the first time a claim by Mulroy under the Alien Tort Statute ("ATS"), 28 U.S.C. § 1350, on the grounds that they asserted jurisdiction under the statute in their complaint, and they seek leave to amend if the claim was not sufficiently pleaded. The ATS does not provide jurisdiction over foreign states. Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 437-39, 109 S. Ct. 683, 102 L. Ed. 2d 818 (1989) (determining that the FSIA, and not the ATS, "provides the sole basis for obtaining jurisdiction over a foreign state in federal court"); Simpson v. Socialist People's Libyan Arab Jamahiriya, 362 F. Supp. 2d 168, 175 (D.D.C.2005). [12] Defendants do not contend that Plaintiffs have insufficiently plead facts that would state a claim for intentional infliction of emotional distress or civil conspiracy under the possible jurisdictions available under choice of law analysis — the law of the location where the event occurred (Scotland), the law of the forum (District of Columbia), or the law of domiciles of Plaintiffs (Florida, New York, Missouri, and St. Vincent, West Indies). [13] The legislative history of § 2337 indicates that it was intended merely to clarify that ordinary principles of sovereign immunity, as codified by the FSIA, would apply to foreign states and their instrumentalities. See Debra M. Strauss, Enlisting the U.S. Courts in a New Front: Dismantling the International Business Holdings of Terrorist Groups Through Federal Statutory and Common-Law Suits, 38 Vand. J. Transnat'l L. 679, 684 n. 16 (2005) (reviewing history). As the FSIA permits officers to be sued in their personal capacities, even for acts sanctioned by terrorist states, then § 2337 must permit such suits as well. See Acree, 370 F.3d at 59. [14] As Libya correctly asserts, it cannot be held liable under the TVPA, which only creates a cause of action against individuals, not states. See H.R.Rep. No. 102-367, p. 87 (1992) ("Only `individuals,' not foreign states, can be sued under the [TVPA]."); S.Rep. No. 102-249, p. 7-8. (1991) (similar). Although the complaint is not entirely clear on this point, to the extent that it could be read to assert such a claim, such a claim against Libya is impermissible. [15] As a British citizen, Mulroy may not bring a claim under the ATA personally, but he may bring one as his brother and sister's representative. Cf. Biton, 310 F.Supp.2d at 181 (recognizing that wife could not recover under ATA if husband not a U.S. national). Such a claim would be foreclosed, however, by the settlement with Al-Megrahi for the claims relating to his brother's and sister's deaths. [16] Reciprocity of recognition was once considered a requirement of the Hilton standard, but most jurisdictions have abandoned it. See Restatement (Third) of Foreign Relations Law § 481 comment d (1987); see also Tahan, 662 F.2d at 867-68 (suggesting that recognition of a judgment in U.S. court was no longer dependant on whether the foreign jurisdiction would recognize a U.S. judgment). [17] Al-Megrahi contends that foreign criminal judgments are not given preclusive effect in U.S. courts. In support of his contention, however, he cites authority for the proposition that foreign nations are not required to enforce the penal laws of other countries. See Lara A. Ballard, Note, The Recognition and Enforcement of International Criminal Court Judgments in U.S. Courts, 29 Colum. Hum. Rts. L.Rev. 143, 172 (1997) (observing that the "general rule of international law is that, in the absence of a treaty, sovereign states are not obligated to enforce each other's penal judgments"). However, Plaintiffs do not seek to enforce a judgment here; rather, they seek to estop Al-Megrahi's denial of certain facts that have been litigated and established elsewhere. [18] Al-Megrahi contends that FSIA discourages issue preclusion, citing Weinstein v. Islamic Republic of Iran, 175 F. Supp. 2d 13, 18 (D.D.C.2001). That decision, however, only indicated that preclusion should not be granted where a default judgment was rendered, because such use of a default would fail the requirements of collateral estoppel — namely, that the party had a full opportunity to litigate the issue. See id. at 18-19. As Al-Megrahi fully participated in the original proceeding that convicted him, such concerns are immaterial here. [19] Plaintiffs have also moved for partial summary judgment on their claim of intentional infliction of emotional distress on the grounds that Al-Megrahi's conduct was "extreme and outrageous." Pls.' Mot. For Summ. J. at 35. While the court has concluded that the conviction establishes the fact of his responsibility, based on federal issue preclusion law, the question of what constitutes intentional infliction is one that must be answered by reference to the applicable state or D.C. law that governs each individual claim. Accordingly, the court declines to award summary judgment until the parties have had the opportunity to fully brief the choice-of-law issues concerning the substantive claims.

01-03-2023

10-30-2013

https://www.courtlistener.com/api/rest/v3/opinions/2820240/

In the United States Court of Appeals For the Seventh Circuit ____________________ No. 15-1444 WILLIAM PRICE, Plaintiff-Appellant, v. CAROLYN W. COLVIN, Acting Commissioner of Social Security, Defendant-Appellee. ____________________ Appeal from the United States District Court for the Southern District of Illinois. No. 13-cv-1160-CJP — Clifford J. Proud, Magistrate Judge. ____________________ ARGUED JULY 8, 2015— DECIDED JULY 24, 2015 ____________________ Before POSNER, SYKES, and HAMILTON, Circuit Judges. POSNER, Circuit Judge. Price, who appeals from the deci- sion of the district court upholding the Social Security Ad- ministration’s 2013 denial of his claim for Supplemental Se- curity Income (benefits for low-income people who are aged, blind or disabled, Browning v. Colvin, 766 F.3d 702, 703 (7th Cir. 2014)), is an almost illiterate, mentally retarded (“intel- 2 No. 15-1444 lectually disabled” is the currently favored term, id.) 44-year- old who also suffers from psychiatric ailments. It appears that between 1988 and 2010 he received SSI benefits intermit- tently, but the record does not indicate what the basis for ad- judging him disabled was. In fact the record is a mess, which does not reflect well on the Social Security Administration’s ability to maintain records. All we know, so far as the past is concerned, is that he was adjudged disabled in 1988, 1991, and 2007, and that his benefits should have been terminated in 2005 because that year he was sent to prison for a felony sex offense and imprisonment for a felony automatically terminates entitlement to disability benefits, 20 C.F.R. § 404.468—a prison inmate doesn’t need an income. Yet how then to explain the third disability award, made in 2007 yet listing a termination date of 2006—and he was still in prison in 2007. The confusion is hopeless. There is no suggestion that the award of benefits in 1988 or 1991 was erroneous (and no explanation for why there were two awards) or that, had he not been sent to prison, his benefits might have been terminated on some other ground. This history creates a presumption that had it not been for his being sent to prison he would still be receiving the bene- fits stream that began in 1988. Paroled in 2010, he forthwith applied for the same bene- fits that he had received before he entered prison, and being turned down sought judicial relief, culminating in his appeal to us. Since his release from prison he has been under the care of a psychiatrist named Elbert Lee, who has diagnosed him with a major depressive disorder and antisocial personality disorder and has prescribed antidepressant and antipsychot- No. 15-1444 3 ic medicine to treat these conditions. Price has told Dr. Lee that he’s afraid of people and hears voices telling him that he’s no good. Two psychologists after examining Price’s file concluded that he takes great pains to avoid people (an ex- ample being that he shops for groceries at 1:00 a.m.), has made only a marginal adjustment to adult life, has a chronic mood disorder that manifests itself in depression, also has an anxiety disorder, an antisocial personality disorder and a learning disability, and his intellectual abilities are very modest—his only IQ score in the record is 65; an IQ below 70 is in the retarded zone. To top it all off he has an adjustment disorder (basically, going to pieces under stress). Yet the two psychologists thought that despite Price’s mental and psy- chiatric problems he is capable of work-related activity. One said he can follow simple, repetitive instructions but would have difficulty with persistence in the workplace, the other that his mental capacity is equal to performing simple tasks. A third psychologist agreed with the other two. All three are retained by the Social Security Administration to determine whether an applicant for benefits has mental problems. Only one of the three examined Price, however. The month after the psychologists’ evaluation, Price may have tried to kill himself by overdosing on his antipsychotic medication. He said he wasn’t trying to kill himself—that “he was having problems with sleep and he took too many to get sleep.” But in the emergency room, to which he was taken to deal with the overdose, his (future) wife (at the time his girlfriend) said he’d told her it was a suicide attempt, and he was admitted to the hospital involuntarily. Dr. Lee, concerned with Price’s condition, prescribed a variety of medications to treat his complaints of depression, paranoia, sleep problems, and hearing voices and thumping noises. 4 No. 15-1444 Attending counseling sessions at a behavioral health center, Price reported hearing voices (again), worrying that people would hurt him, and feeling like “less than a man” because he had “difficulty finding a job due to his criminal back- ground and parole status.” One of the counselors noted Price’s “lack of motivation and hope, being tearful, [and] changes in sleeping and eating patterns.” Price had two more relapses after his may-have-been at- tempted suicide. Reacting to a threat by his wife (who also has mental illness, is described in the record as “mentally unstable,” and like her husband has a criminal record) to leave him, he asked the counselor for “crisis intervention” and expressed “an overwhelming fear of what would hap- pen to him.” Several months later he called the police after arguing with his wife and asked to be taken to a hospital emergency room; they obliged him, but he was quickly dis- charged with instructions to see Dr. Lee. Price made some progress toward minimal normality as a result of the medications that Dr. Lee prescribed for him. But Lee described the three relapses of the preceding year (mainly 2011) as “mental breakdowns” and opined that Price’s mental problems would make him miss an average of three days a month from work were he employed—which would (the vocational expert at Price’s hearing testified) dis- qualify him from gainful employment. In counseling, Price reported having difficulty adjusting to life outside of prison—he said he’d been comfortable in prison because he had had a cell to himself and therefore hadn’t had to interact with other people—and also reported leaving a Wal-Mart in which he was shopping “because he felt someone was going to hurt him there.” A counselor who No. 15-1444 5 is certified as a qualified mental health professional (like the counselor we mentioned earlier) noted Price’s self-reported rating of the severity of his symptoms of mental disorder as 9.5 to 10 out of 10, which if accurate would tend to confirm the accuracy of the diagnoses of major depression, adjust- ment disorder compounded by anxiety and depression, and a learning disorder (presumably related to Price’s very low IQ). In the spring of the following year, 2012, Price had a fourth breakdown: after again arguing with his wife, he was found walking on the side of a highway. This dangerous ac- tivity somehow violated the terms of his parole, but alt- hough his parole officer reported that the violation was not serious enough to warrant revoking parole he had Price jailed for the next ten months “for [Price’s] own well-being” because of his mental instability. Price didn’t object to being jailed. He said: “I don’t think I’ll have any problems han- dling being here.” The acronym GAF (“Global Assessment of Functioning”) refers to a scale of 1 to 100 used by mental health clinicians and physicians to help determine how well a person is doing in adjusting to the psychological and other challenges of liv- ing; the higher the score, the better he’s doing. Criticized for subjectivity, the GAF is no longer widely used by psychia- trists and psychologists, but it was still in common use and frequently referred to in social security disability hearings during the period between Price’s release from prison on pa- role in 2010 and his hearing before the administrative law judge in 2013, and the judge recited Price’s scores. Remarka- bly, it may seem, when he was not in prison or jail his GAF scores were low (below 50), indicating poor adjustment. But 6 No. 15-1444 when he was jailed after the walk along the highway, his scores soared into the 50 to 68 range, which signifies only moderate difficulty in social or occupational functioning. This peculiar-seeming pattern was, however, consistent with Price’s antisocial personality (and with his insouciance— another manifestation of that personality—about being jailed for the trivial parole violation), since jail or prison requires minimum socializing. After his release from jail his GAF score quickly plummeted to 33. A counselor noted that Price was withdrawn, made poor eye contact, and experienced hallucinations and paranoid delusions, and concluded that Price was schizophrenic and his intellectual functioning borderline. One would think that such a combination of intellectual inadequacy and psychiatric abnormality would render a person incapable of gainful employment, and therefore total- ly disabled within the meaning of the social security disabil- ity statute and regulations. The administrative law judge, however, seconded by the magistrate judge, ruled that Price was not disabled. But the reasons they gave are unconvinc- ing. Cherry picking Price’s GAF scores, the administrative law judge zeroed in on his scores between 50 and 68 and concluded that they showed that Price was recovering from his various mental ailments. The judge overlooked the fact that the high scores, because attributable to Price’s being in jail, reinforced rather than undermined the diagnoses of an- tisocial personality disorder and paranoia. The judge ig- nored the plunge in Price’s GAF score to 33 after Price was released from jail, where he had felt safe (a symptom of his antisocial personality disorder), and discredited Dr. Lee’s No. 15-1444 7 testimony on the ground that it was based on what Price had told him—and how could Price (whom the judge on scanty evidence described as “manipulative”) be trusted? But psy- chiatric assessments normally are based primarily on what the patient tells the psychiatrist, so that if the judge were correct, most psychiatric evidence would be totally excluded from social security disability proceedings—a position we rejected in Adaire v. Colvin, 778 F.3d 685, 688 (7th Cir. 2015). Dr. Lee is reputable and based his testimony on Price’s 23 visits to him over the course of two years. His professional training and experience would have taught him how to dis- count exaggerated statements by his patients. The administrative law judge also discredited Dr. Lee’s opinion on the ground that Lee’s records showed that Price had improved with medication but that his opinion of Price’s mental state failed to acknowledge those improve- ments. But Price’s breakdowns during the course of his treatment by Dr. Lee were evidence that he did not improve significantly with medication. Similarly off center was the administrative law judge’s remark that “there is little evidence in the record from treat- ing sources” to support Price’s testimony that he has diffi- culty sleeping at night and as a result sleeps a great deal dur- ing the day. Price complained to Dr. Lee that he sleeps dur- ing the day, that his sleep cycle is reversed, and that his medication does not help him sleep; Dr. Lee believed him, and the administrative law judge had no reason to disbelieve him. As is common in social security disability proceedings, the administrative law judge inferred from Price’s ability to perform simple household chores, such as cooking food in a 8 No. 15-1444 microwave oven and mowing the lawn, that he could be gainfully employed. We’ve criticized casual inferences of ability to engage in gainful employment from ability to per- form simple household chores, Hughes v. Astrue, 705 F.3d 276, 278–79 (7th Cir. 2013), noting that it’s easier—especially for someone with an antisocial psychiatric disorder—to work in one’s own home, at one’s own pace, at one’s own choice of tasks, than to work by the clock under supervision in a place of business. Moreover, one of the counselors rated Price’s ability to prepare food and clean the house as “se- verely impaired” and another noted that Price’s auditory hallucinations “interfere with his daily life and routine.” Un- surprisingly, there is no evidence that he ever held a job when he was in prison or jail, and it has been many years since he had even sporadic employment. The administrative law judge used Price's denial that he had overdosed in an attempt to kill himself as a reason to discredit him. Although attempted suicide by overdose is often a cry for help rather than a serious attempt to kill one- self, the fact that one overdoses on pills for reasons other than to kill oneself is not proof of mental stability, as the judge seemed to think. He also thought it telling evidence against Price that he’d sought psychiatric treatment “in part, to get help in getting disability [benefits].” There is nothing wrong with seeking such benefits, and when the benefits sought are for a psychiatric disability the applicant must visit psychiatrists or other mental health experts in order to build a case for benefits. And finally the administrative law judge improperly be- littled the gravity of Price’s aversion to social interaction as a “not unreasonable” response to his spell on house arrest and No. 15-1444 9 his being a sex offender. But house arrest cannot explain his decision to shop for groceries at 1:00 a.m. in order to avoid people, when he had been given permission to shop for gro- ceries at any time of the day. And being a sex offender does not explain why Price suffered from auditory hallucinations before he was convicted of a sex offense. The magistrate judge essentially just summarized the administrative law judge’s findings, but made an unforced error when he said that the administrative law judge’s “de- tailed discussion of Dr. Lee’s records” included a reference to a statement by Dr. Lee “that plaintiff had three episodes of decompensation [mental breakdown] in the last fourteen months, an assertion which is clearly not supported by his rec- ords” (emphasis added). No, the records report the three breakdowns, which are three of the four that we noted earli- er in this opinion. What the administrative law judge had said was that Dr. Lee’s records did not show repeated and extended episodes of decompensation that would lead to an automatic finding of disability. He rightly did not cite this as a basis for giving Dr. Lee’s opinion little weight, because the form that Lee had filled out concerning Price’s condition asked just for the number of episodes of decompensation, not how long they lasted. The unavoidable conclusion is that the judgment of the district court must be and it therefore is reversed with direc- tions to remand the case to the Social Security Administra- tion for reconsideration of its denial of SSI benefits to Price.

01-03-2023

07-24-2015

https://www.courtlistener.com/api/rest/v3/opinions/2827388/

In the United States Court of Appeals For the Seventh Circuit ____________________ No. 14-3171 ROBERT E. SPIERER, et al., Plaintiffs-Appellants, v. COREY E. ROSSMAN, et al., Defendants-Appellees. ____________________ Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 1:13-cv-00991 — Tanya Walton Pratt, Judge ____________________ ARGUED FEBRUARY 25, 2015 — DECIDED AUGUST 14, 2015 ____________________ Before BAUER, FLAUM, and MANION, Circuit Judges. MANION, Circuit Judge. After a night of heavy drinking, Lauren Spierer, a twenty-year-old Indiana University student, left the apartment of a classmate and disappeared. Four years later, she remains missing. Lauren’s parents brought suit against three students who were with Lauren in the hours before her disappearance, alleging negligence and violations of Indiana’s Dram Shop Act. After some claims 2 No. 14-3171 were dismissed but before discovery was conducted, the defendants moved for summary judgment on the grounds that the plaintiffs could only speculate about whether the defendants were the proximate cause of any injury sustained. The district court agreed and granted summary judgment for the defendants. The plaintiffs have appealed, contesting both the dismissal of claims and the award of summary judgment for the defendants. We affirm. I. Background Because the district court granted summary judgment before general discovery was conducted, the facts are limited largely to those stated in the complaint. As alleged, the pleadings attempt to impose a measure of cohesion onto events spanning several hours and locations and involving various individuals—each of whom had been drinking alcohol, in some cases heavily. The result, by no fault of the plaintiffs, is that much of what we would like to know is missing, while much of what we do know defies apparent logic. What we know with certainty is that this case is a tragedy. On June 2, 2011, Jason Rosenbaum, a student at Indiana University, threw a party at his apartment. Among his guests were fellow students Lauren Spierer, Corey Rossman, and Michael Beth, who, by all appearances, were well-acquainted with each other. Rosenbaum served alcoholic drinks at his party, and Lauren—scarcely five feet tall and one hundred pounds—was among those served. She was not alone. For his part, Rossman drank heavily, and eventually he and Lauren left the party and went to his apartment which was located in the same complex. No. 14-3171 3 Rossman’s roommate, Michael Beth, had been at Rosenbaum’s party and returned to the apartment where he encountered the two. Despite the fact that Lauren was visibly intoxicated, Rossman encouraged her to join him at a bar named Kilroy’s that was located a few blocks from the apartment. He informed Beth that he wanted to have “three more drinks at the bar and then [he would] be feeling good.” Approximately one hour after leaving Rosenbaum’s party, Lauren and Rossman went to Kilroy’s where Lauren was observed stumbling and requiring Rossman’s assistance to walk. Disregarding her precarious condition, Rossman bought Lauren several drinks; eventually she lost her shoes and mobile phone. They remained at Kilroy’s until approximately 2:30 in the morning. After leaving Kilroy’s, the pair initially headed to Lauren’s apartment complex where they encountered other students outside the elevator on Lauren’s floor. Rossman got into a physical altercation with one of those students who took issue with him for failing to assist the visibly intoxicated Lauren into her apartment. Instead of escorting Lauren from the elevator to her apartment—a distance less than a hundred yards—the pair set off for his apartment where Rossman was observed en route carrying Lauren slung across his back. At around 3:30 in the morning, Michael Beth (Rossman’s roommate) returned to the apartment and was startled to find Rossman and Lauren there. At first, he suspected that they were burglars because the apartment had been the site of previous crimes. Instead, he encountered Lauren, who appeared even more intoxicated than she had been earlier in the evening. The pleadings suggest that Rossman went to 4 No. 14-3171 sleep at this point and that Beth was left alone with Lauren. In light of her condition—she was slurring her speech, for example—Beth tried to convince Lauren to sleep on the couch in the apartment. Lauren, however, wanted to go back to her apartment. For reasons that are not clear, instead of escorting Lauren back to her apartment, Beth brought her to Rosenbaum’s apartment, which had been the site of the party earlier that evening. Rosenbaum also grew concerned when he saw Lauren’s condition. He attempted to contact several of her friends for the purpose of arranging a ride back to her apartment but was unable to arrange transport. At this point, Beth left his apartment. Shortly afterwards, at approximately 4:30 a.m., Rosenbaum allowed Lauren to leave his residence on her own and briefly observed her walking in the direction of her apartment. He was the last known person to see Lauren alive. A security camera located along Lauren’s return route did not capture any images of her walking home. Despite four years of extensive searching, there is no credible information about what happened to Lauren after she left Rosenbaum’s apartment. Taking matters into their own hands, Lauren’s parents filed this suit, alleging that Rossman, Rosenbaum, and Beth were negligent, both at common law and by Indiana statute, for failing to fulfill their duty to care for Lauren in her incapacitated condition. Additionally, the plaintiffs brought a Dram Shop claim against Rossman and Rosenbaum for furnishing Lauren with alcohol despite knowing that she was intoxicated at the time. The defendants each filed motions to dismiss and discovery was stayed pending their resolution. The district No. 14-3171 5 court granted Beth’s motion and dismissed all claims against him. Also, it dismissed the claims for common law negligence against Rossman and Rosenbaum but denied their respective motions to dismiss the other claims. After the resolution of the motions to dismiss, the plaintiffs cast a wide net on discovery. To that end, they sought to conduct upwards of fourteen depositions, twelve of them of non-parties, in multiple locations, including New York, Boston, Detroit, and Chicago; they also issued subpoenas for an array of academic, disciplinary, telephone, and other records from various individuals. After the stay of discovery was lifted but before the parties exchanged initial disclosures, Rosenbaum moved for summary judgment (and was later joined by Rossman) on the grounds that the plaintiffs were unable to offer proof that the defendants were the proximate cause of any verifiable injury to Lauren—disappearance, by itself, is not legally deemed an injury, so proof of some injury was required to support their claims. The defendants also moved to quash the non-party subpoenas and to limit discovery to the issue of proximate cause, that is, to address only evidence related to whether the defendants’ actions caused severe injury or death to Lauren. A series of back-and-forth filings ensued that culminated with the district court upholding the magistrate judge’s decision to limit discovery to the issue of proximate causation. Additionally, because the plaintiffs had responded to defendants’ summary judgment motions, those motions were deemed ripe for adjudication and the district court granted summary judgment in favor of the defendants. 6 No. 14-3171 On appeal, the plaintiffs challenge three rulings: the decision to limit discovery, the grant of summary judgment, and the dismissal of the common law negligence claims. They argue that the summary judgment motions were premature and that the defendants failed to meet their burden to demonstrate the absence of material fact regarding causation. Additionally, the plaintiffs appeal the district court’s dismissal of the common law negligence claims, contesting its reading of Indiana law that no duty of care existed and that Lauren did not constitute a child to support a common law claim for loss of services of a child. We review these arguments. II. Analysis At the outset, we analyze two related issues that overlap due to some unique features of this litigation. The first is the decision by the magistrate judge (and adopted by the district judge) to suspend discovery pending the resolution of the summary judgment motions. This is a procedural issue that implicates the scope of a litigant’s right to conduct discovery. The second issue involves the actual resolution of the summary judgment motions and the respective burdens carried by the litigants. In short, whether a party can move for summary judgment prior to discovery and whether a party can support its burden absent such discovery are separate inquiries that run together due to particularities of this case. We review first whether the district court abused its discretion by failing to provide plaintiffs additional time for discovery. Davis v. G.N. Mortg. Corp., 396 F.3d 869, 885 (7th Cir. 2005). In the absence of a local rule or court order stating otherwise, Rule 56(b) allows a party to move for summary No. 14-3171 7 judgment at any time until 30 days after the close of discovery. No such rule or order exists here, so the defendants acted within their rights to move for summary judgment even though substantial discovery had not occurred. Fed. R. Civ. P. 56(b). But moving for pre-discovery summary judgment does not automatically mean that a court has to entertain the motion. Rule 56(d) allows the non- moving party to submit an affidavit or declaration requesting the court to defer or deny judgment in order to allow for appropriate discovery to address matters raised by the motion. Fed. R. Civ. P. 56(d). Here, the plaintiffs took an unusual course of action: they responded to the motion and filed a declaration under Rule 56(d) that included a boilerplate request for discovery without identifying specific evidence needed to respond to defendants’ motion. The magistrate judge found the declaration deficient because it was too general to notify the court of any actual evidence needed to respond to the motion. Still more problematic, the declaration, as composed, did not serve as a motion under Rule 56(d) for additional time to respond to the summary judgment motion. The magistrate judge held a hearing on whether to extend discovery and asked plaintiffs what type of discovery they needed. Plaintiffs’ counsel responded: “We’re not asking for anything to respond to summary judgment. We think that we are going to win … on the basis … that [the defendants] haven’t met their burden.” (Tr. at 24.) Further driving this point home, the plaintiffs argued that they needed extended discovery not to respond to defendants’ motions, but in order to file their own motion for summary judgment. (Court: “But you already told me that you don’t need any discovery to respond to 8 No. 14-3171 their summary judgment motions?” Plaintiffs’ Counsel: “But I need discovery, Judge, to file my own summary judgment motion.”) (Tr. at 70.) District courts have broad discretion in directing pretrial discovery and the rulings here were well within this discretion. Spiegla v. Hull, 371 F.3d 928, 944 (7th Cir. 2004). The only relevant discovery at issue here is that which might have been available to plaintiffs to respond to the summary judgment motions. The plaintiffs claimed not to need any and we take them at their word. Whatever other types of discovery the plaintiffs might have wanted is not at issue here. The more pressing issue on appeal is whether the award of summary judgment to defendants was proper—a ruling that we review de novo. Ball v. Kotter, 723 F.3d 813, 821 (7th Cir. 2013). The standard for summary judgment is well established: with the court drawing all inferences in the light most favorable to the non-moving party, the moving party must discharge its burden of showing that there are no genuine questions of material fact and that he is entitled to judgment as a matter of law. Chaib v. Indiana, 744 F.3d 974, 981 (7th Cir. 2014). If the moving party has properly supported his motion, the burden shifts to the non-moving party to come forward with specific facts showing that there is a genuine issue for trial. Cincinnati Life Ins. Co. v. Beyrer, 722 F.3d 939, 951 (7th Cir. 2013). Relying solely on citations to facts alleged in the complaint, the defendants brought their motions with no additional evidence. The plaintiffs are of the belief that summary judgment is impossible unless the moving party first submits evidence to meet their burden of production. No. 14-3171 9 No such evidence having been produced, they claim that the award of summary judgment was wrong as a matter of law. Plaintiffs’ argument is almost identical to the one that the Supreme Court rejected in Celotex Corp. v. Catrett, 477 U.S. 317 (1986), the seminal case outlining the respective obligations of the parties in summary judgment motions. Like here, the parties to that dispute contested whether, under Rule 56, the party seeking summary judgment was required to bring evidence in the form of affidavits or other materials to demonstrate the absence of a question about an issue of material fact. Id. The Court held that the moving party had no such burden because there existed “no express or implied requirement in Rule 56 that the moving party support its motion with affidavits or other similar materials negating the opponent’s claim.” Id. at 323 (emphasis in original). In their briefs, the plaintiffs refer repeatedly to the “burden of production” borne by the moving party and we suspect this phrase lies at the heart of their confusion. This phrase is used to signify the respective allocations of evidence that parties must present at a given stage of litigation. See, e.g., St. Mary’s Honor Center v. Hicks, 509 U.S. 502, 506 (1993) (citing McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973)); Director, Officer of Workers’ Compensation Programs, Dept. of Labor v. Greenwich Collieries, 512 U.S. 267, 272 (1994) (defining the burden of production under the Administrative Procedures Act as “a party’s obligation to come forward with evidence to support its claim.”). In Celotex, the Court surveyed Rule 56 and found nothing in that rule requiring the moving party to produce evidence. Of course, there can be no “burden of production” absent a 10 No. 14-3171 mandate to produce evidence. The actual requirement in Rule 56 is less specific: the moving party need only inform the court of the basis for the motion and identify supporting materials. Celotex, 477 U.S. at 323 (“[A] party seeking summary judgment always bears the initial responsibility of informing the district court of the basis of its motion, and identifying those portions of the ‘pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,’ which it believes demonstrate the absence of a genuine issue of material fact.”) (citing Fed. R. Civ. P. 56). That the moving party need not produce evidence does not give them an easy path to summary judgment, it only means that their burden is one of demonstration rather than production. The text of Rule 56 has been subject to various amendments (in 1987, 2009, and 2010) since the Celotex decision was handed down but none of these conflicts with the substance of the ruling in that case. Contrary to plaintiffs’ arguments, the only burden of production recognized in Rule 56 falls upon the nonmoving party once a basis for summary judgment has been established (and this can be initiated sua sponte by a court under Rule 56(f) with proper notice). The Advisory Committee Notes to the 2010 Amendments state that: “[s]ubdivision (c)(1)(B) [of Rule 56] recognizes that a party need not always point to specific record materials … And a party who does not have the trial burden of production may rely on a showing that a party who does have the trial burden cannot produce admissible evidence to carry its burden as to the fact.” See also, Ricci v. DeStefano, 557 U.S. 557, 586 (2009) (“[W]here the nonmoving party will bear the burden of proof at trial on a dispositive No. 14-3171 11 issue, the nonmoving party bears the burden of production under Rule 56 to designate specific facts showing that there is a genuine issue for trial.”) (internal quotation marks omitted). To be sure, it is a rare case in which a moving party can establish a basis for summary judgment without putting forth some evidence. But such cases exist, as evidenced by the one here. The defendants cited to the pleadings to contend that the plaintiffs would not be able to meet their burden of production at trial to demonstrate a verifiable injury to Lauren that was caused by the defendants’ actions and not other intervening factors. Given this set of facts, that was sufficient to meet their burden for summary judgment. Dram Shop Act and Negligence Per Se To be liable under the Indiana Dram Shop Act, a person must: (1) furnish alcohol to another person; (2) have actual knowledge that the person to whom the alcoholic beverage was furnished was visibly intoxicated at the time; and, (3) the intoxication of the person to whom the alcoholic beverage was furnished must be the proximate cause of the death, injury, or damage alleged in the complaint. I.C. § 7.1- 5-10-15.5. Negligence per se (sometimes called “legal negligence”) occurs when a violation of a statute or ordinance constitutes negligence as a matter of law. Erwin v. Roe, 928 N.E.2d 609, 616 (Ind. Ct. App. 2010) (an “unexcused violation of a statutory duty constitutes negligence per se ‘if the statute or ordinance is intended to protect the class of persons in which the plaintiff is included and to protect against the risk of the type of harm which has occurred as a result of its violation.’” 12 No. 14-3171 (quoting Kho v. Pennington, 875 N.E.2d 208, 212 (Ind. 2007)). Per se negligence can be distinguished from common law negligence because the former requires proof of violation of a statute or ordinance while the latter does not. The district court first reviewed these claims on the motions to dismiss which argued that the claims failed because the plaintiffs could not prove that Lauren was injured or deceased. Persons are presumed alive under Indiana law for seven years after their disappearance whereupon a presumption of death might arise from an unexplained absence. See Roberts v. Wabash Life Ins. Co., 410 N.E.2d 1377, 1382 (Ind. Ct. App. 1980); Prudential Ins. Co. of Am. v. Moore, 149 N.E. 718, 721 (Ind. 1925). The district court recognized this presumption but noted that a second avenue of proof was available to the plaintiffs: they could use direct or circumstantial evidence to show that the missing person was, in fact, deceased. Significantly, the district court ruled for the plaintiffs for one simple reason—during the pleadings stage of litigation, the court was bound to accept the factual assertion that Lauren had died. The judge noted: “it would be inappropriate for the Court to … make a finding as a matter of law that Lauren is presumed to be alive. The Spierers should be afforded the opportunity to present circumstantial evidence in order to prove that Lauren is deceased … .” App. Ex. at 30–31. This language should have signaled to plaintiffs that they were not likely to survive later stages of litigation merely on the strength of their allegations; sooner or later they would have to put forth evidence, whether direct or circumstantial, demonstrating a discrete injury to Lauren resulting from the actions of the defendants. No. 14-3171 13 Unsurprisingly, the defendants moved immediately for summary judgment in order to revisit the same issue—this time under the more stringent summary judgment standard. They cited to the pleadings to argue that there was no genuine issue of fact that Lauren was missing and therefore there was no evidence to allow a jury to determine what happened to her. Because of this, they claimed that the plaintiffs could not demonstrate proximate cause and their claims must fail. Instead of requesting discovery to address proximate cause, the plaintiffs argued that they had no burden to produce countervailing evidence because the earlier ruling that Lauren would not be presumed alive had a preclusive effect. (Tr. at 13–14.) They did submit an affidavit from a pharmacologist demonstrating that Lauren suffered that night from diminished mental and physical capacity as a result of her alcohol consumption, but these materials did not address the more relevant question of whether Lauren had suffered a verifiable injury sufficient to support the claims. Plaintiffs’ preclusion argument fails because the district court did not issue a ruling about whether Lauren was alive or not; it merely stated that it treated all of the facts in the complaint as true because it was required to do so on a motion to dismiss. Once the pleadings phase ended, the plaintiffs’ facts are no longer taken as true but must be substantiated by evidence if challenged. The pleadings in this case are clear enough—Lauren has been missing since leaving Rosenbaum’s apartment that night. The defendants had to do little more than cite to the pleadings to establish this fact. At that point, the burden shifted to the plaintiffs to 14 No. 14-3171 provide some evidence that Lauren sustained a distinct injury and that the defendants’ actions were the cause of this injury. The plaintiffs declined to produce evidence to offer any plausible account of what happened to Lauren after she was last seen. For this reason, the district court correctly granted summary judgment because the plaintiffs carried the burden of proving that the defendants (and not other causes) were the proximate cause of any injury to Lauren, and speculation cannot support a finding of proximate cause. Here, the specter of criminal actions by third parties hovers over this tragic case, and this is precisely the type of circumstance which breaks the causal chain under Indiana law. See Johnson v. Jacobs, 970 N.E.2d 666, 671 (Ind. Ct. App. 2011) (“A willful, malicious criminal act is an intervening act that breaks the causal chain between the alleged negligence and the resulting harm.”). On a motion for summary judgment, “facts must be viewed in the light most favorable to the nonmoving party only if there is a ‘genuine’ dispute as to those facts.” Scott v. Harris, 550 U.S. 372, 380 (2007). As it stands, there are no facts to present to a jury to determine the nature of the injury suffered by Lauren. Still more problematic, it remains pure speculation whether any injury was caused by the defendants’ actions or the criminal intervention of a third party. For this reason, the district court correctly granted summary judgment. “Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial.” Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). No. 14-3171 15 Common Law Negligence The district court also dismissed the common law negligence claims against all defendants for failing to state a claim capable of relief. We review these rulings de novo. AnchorBank, FSB v. Hofer, 649 F.3d 610, 614 (7th Cir. 2011). To survive a motion to dismiss under Rule 12(b)(6), a plaintiff must state enough facts that, when accepted as true, “state a claim for relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007) (discussing Fed. R. Civ. P. 12(b)(6)). To survive a motion to dismiss, the plaintiffs must allege facts that show that the defendants: (1) owed a duty to Lauren; (2) that they breached that duty; and, (3) that Lauren’s death was proximately caused by the breach. Witmat Dev. Corp. v. Dickerson, 907 N.E.2d 170, 173 (Ind. Ct. App. 2009). Indiana courts use a three-part balancing test to determine whether a duty exists when it has not been declared or otherwise articulated. Northern Indiana Public Service Co. v. Sharp, 790 N.E.2d 462, 465 (Ind. 2003). Specifically, courts consider: the relationship between the parties, the foreseeability of the occurrence, and public policy concerns. See Webb v. Jarvis, 575 N.E.2d 992, 995 (Ind. 1991). Opposing the motion to dismiss, the plaintiffs asserted four bases for a duty of care, none of which the district court accepted. On appeal, they narrow their focus to argue that the defendants owed a duty of care to Lauren once they voluntarily undertook to assist her at various points in the evening. 16 No. 14-3171 Indiana law recognizes a common law duty of care where “one party assumes such a duty either gratuitously or voluntarily. The assumption of such a duty creates a special relationship between the parties and a corresponding duty to act in the manner of a reasonably prudent person.” Yost v. Wabash College, 3 N.E.3d 509, 517 (Ind. 2014) (quotation omitted). Although the existence and extent of an assumed duty is generally a question of fact for the jury, it may be resolved as a matter of law if the designated evidence is insufficient to establish an injury. See Teitge v. Remy Const. Co. Inc., 526 N.E.2d 1008, 1014 (Ind. Ct. App. 1988). Here, the allegations establish that each defendant tried to assist Lauren in some way and that his assistance was found wanting. The critical question then is whether, as alleged, the assistance provided by the defendants created a legal duty to care for Lauren. Indiana courts have had few occasions to consider this question as the vast majority of assumption-of-duty cases relate to official or business obligations rather than the purely voluntary actions of social peers. The district court found the closest analogues in the cases of Lather v. Berg, 519 N.E.2d 755 (Ind. Ct. App. 1988), and Hawn v. Padgett, 598 N.E.2d 630 (Ind. Ct. App. 1992), which address whether persons can be held liable for failed attempts to prevent others from driving while drunk. In Lather, a group of teenage friends got drunk together before one announced his intention to drive home. The friends attempted to intervene to the point of taking his keys but relented when the prospective driver became increasingly belligerent; eventually they kicked him out of the house and threw the keys at him. While driving home, the driver engaged police in a high-speed chase before No. 14-3171 17 crashing into a patrol car and killing a police officer. The Indiana Court of Appeals upheld a grant of summary judgment for the defendant on the grounds that a person does not undertake to perform a legal duty owed to another unless he does so on behalf of and in lieu of that person. Lather, 519 N.E.2d at 766. “Liability does not arise in the situation when one undertakes to perform functions coordinate to—or even duplicative of—activities imposed by another by a legal duty, but rather the situation in which one actually undertakes to perform for the other the legal duty itself.” Id. (emphasis in original but internal quotation omitted). A simpler formulation of this is to say that Indiana courts do not recognize liability unless the actor, by assuming this duty, effectively displaces the other from performing the same action. Because the prospective driver never ceased attempting to regain possession of his keys, the defendant could not be deemed to act on behalf of or in lieu of the driver. Hawn involved similar facts. A group of friends drank alcohol together at a campsite until late in the evening when one of them sought to leave in his truck to buy cigarettes. The defendants, two female acquaintances, took his keys to prevent him from driving. After they were threatened and physically accosted by the prospective driver, the defendants threw his keys out of their tent. Shortly thereafter, the driver crashed into a tree, killing a passenger who had fallen asleep in the bed of the truck. Recognizing that “Indiana courts have shown great reluctance to require an individual to take any action to control a third party when there is no special relationship between them,” the Indiana Court of Appeals held that the defendants were not negligent as there was no 18 No. 14-3171 special relationship between the parties. Hawn 598 N.E.2d at 634. The plaintiffs counter with the case of Buchanan v. Vowell, 926 N.E.2d 515, 520–21 (Ind. Ct. App. 2010), which also involved drunk driving but with a distinct twist: rather than trying to prevent a drunk person from driving, the defendant in that case sought to aid the drunken person in her driving, with predictably tragic consequences. In this case, a mother and daughter drank alcohol together at a work event to such extent that the daughter was legally intoxicated. Instead of calling a cab, the two hatched a plan whereby each drove her own car home, but with the daughter in a lead car and the mother trailing behind as the two spoke to each other on their cell phones. On the way home, the daughter struck a pedestrian, causing severe injuries. The Indiana Court of Appeals reversed and held that the mother had assumed a duty of care to prevent the daughter from injuring others when she entered into an agreement with her to make sure she drove home successfully. In so holding, the Court distinguished both Lather and Berg because the defendants in those cases sought to intervene to prevent tortious behavior while the mother actively sought to encourage it. While recognizing the dissimilarities between the fact patterns and the one presented here, the analysis in those cases leaves little doubt that Indiana courts would not recognize an assumption of duty in this case. The court in Hawn offered the most specific formulation of when a duty of care arises based on one’s voluntary actions. Citing to Sports Inc. v. Gilbert, 431 N.E.2d 534, 538 (Ind. Ct. App. 1982), No. 14-3171 19 it recognized three factors that frequently accompany an assumption of duty over a third person. They are: (1) where one person is in need of supervision or protection (such as a child, intoxicated person, or business invitee); (2) from someone who is in a superior position to provide it (parent, supplier of alcohol, business owner, hospital) and (3) that person has a right to intervene or control the actions of the other person. See Hawn, 598 N.E.2d at 634. Lauren was in a vulnerable state and therefore in need of protection and the plaintiffs easily satisfy the first factor. But the second factor fails because defendants were classmates of Lauren and not in positions of superiority. While one could argue that, by providing Lauren with alcohol, Rossman and Rosenbaum assumed such responsibility, the courts in Lather and Hawn declined to impose liability in those cases where a group of social peers provided each other with alcohol. (This contrasts with the holding of Buchanan, which recognized the position of superiority of a mother to her daughter.) Additionally, each of the three defendants was apart from Lauren during important parts of the evening; Rossman was not present when Lauren returned to Rosenbaum’s apartment, while Rosenbaum and Beth had both parted ways with Lauren hours earlier with no indication that they would see her again that evening. That they express surprise (Beth) and concern (Rosenbaum) when they see her shows that they were not expecting to encounter her at that late hour, still less in that condition. There is simply no case where Indiana courts have recognized responsibility on the part of a person to ensure the safety of intoxicated persons with whom they have unexpectedly come into contact. To recognize a special 20 No. 14-3171 relationship based only on these factors would be to greatly expand the class of relationships subject to special duties under Indiana law. The third factor also favors the defendants. Despite Lauren’s visible intoxication, the facts do not establish that defendants had the right or ability to control her movement to such degree as to force her to remain in a certain place. Rossman escorted Lauren to her floor before bringing her to his apartment for reasons that are not clear. From there, Beth attempted to get Lauren to sleep on the couch but was unable to do so for reasons that are also not known. Rosenbaum attempted to arrange transport for Lauren, and it was only after he was unable to do so that Lauren departed. There is no indication that Rosenbaum compelled or even encouraged her to leave his apartment. Despite her diminished capacity, the pleadings demonstrate that Lauren left Rosenbaum’s apartment under her own volition and was not encouraged to leave. Because he was with Lauren the majority of the evening and bought drinks for her, Rossman was nearest to assuming a duty to care for her. But he also appears to have been intoxicated—so much so that it is questionable whether he could effectively take care of himself, still less another person. “Indiana courts have shown great reluctance to require an individual to take any action to control a third party when there is no special relationship between them.” Hawn, 598 N.E.2d at 633. We have found no decisions under Indiana law where persons were held liable for the actions of their social peers, absent additional factors not present here. To hold otherwise would be to extend the reach of negligence far beyond special relationships and into No. 14-3171 21 virtually all social relationships and situations where a risk of danger might be present. For these reasons, we agree with the district court that the plaintiffs have failed to state a plausible claim under Indiana law for common law negligence. Because we affirm the dismissal, we need not consider the plaintiffs’ claim under Indiana’s Child Wrongful Death Statute as that type of claim is functionally identical to one for common law negligence and would fail for the same reasons. See Ed. Wiersma Trucking Co. v. Pfaff, 643 N.E.2d 909, 911 (Ind. Ct. App. 1994). Likewise, we need not review the district court’s ruling that Lauren’s age precluded relief for the loss of services of a child under Indiana law. III. Conclusion For the reasons stated above, the judgment of the district court is AFFIRMED.

01-03-2023

08-14-2015

https://www.courtlistener.com/api/rest/v3/opinions/2826893/

In the United States Court of Appeals For the Seventh Circuit ____________________ No. 15-1145 ANDRE JACKSON, Petitioner-Appellant, v. MARC CLEMENTS, Warden, Dodge Correctional Institution, Waupun, WI Respondent-Appellee. ____________________ Appeal from the United States District Court for the Eastern District of Wisconsin. No. 2:14-cv-01182-WEC — William E. Callahan, Jr., Magistrate Judge. ____________________ SUBMITTED JUNE 15, 2015 — AUGUST 12, 2015 ____________________ Before FLAUM, RIPPLE, and MANION, Circuit Judges. PER CURIAM. Andre Jackson, currently a Wisconsin prisoner, appeals the district court’s denial of his petition for a writ of habeas corpus challenging his extradition from Illinois to Wisconsin. See 28 U.S.C. § 2241. But Mr. Jackson was no longer a pre-trial detainee when the district court ruled on the merits of his petition, and, thus, relief under 2 No. 15-1145 § 2241 was no longer available to him. Accordingly we vacate the judgment and remand for the district court to dismiss the petition as moot. Mr. Jackson was serving an eighteen month sentence in Illinois—the details of which are not contained in the record—when he was extradited to Wisconsin on a Governor’s Warrant of Arrest signed by the governor of Illinois. See 725 ILCS 225/7. He was wanted in Wisconsin on charges of identity theft. See WIS. STAT. § 943.203(2)(a). Once in Wisconsin, Mr. Jackson filed in the Northern District of Illinois a petition for a writ of habeas corpus under § 2241 challenging the extradition. The Illinois court transferred the petition to the Eastern District of Wisconsin because, by that time, Jackson’s custodian was in that district, making it the proper venue. See 28 U.S.C. § 2241(a); Braden v. 30th Judicial Cir. Ct. of Kentucky, 410 U.S. 484, 494–95 (1973); Moore v. Olson, 368 F.3d 757, 758 (7th Cir. 2004). Mr. Jackson’s petition argued that Wisconsin lacked authority to prosecute him because the extradition was invalid. Specifically, he complained that he was transferred to Wisconsin before a scheduled hearing in Illinois on the validity of the warrant in violation of the Uniform Criminal Extradition Act, which both Illinois and Wisconsin have adopted. See 725 ILCS 225/10; WIS. STAT. § 976.03; Cuyler v. Adams, 449 U.S. 433, 443 (1981); Coungeris v. Sheahan, 11 F.3d 726, 728 (7th Cir. 1993). The district court denied Mr. Jackson’s petition, finding that he had not shown any “special circumstances” necessitating relief under § 2241 before Mr. Jackson had exhausted state remedies. See Neville v. Cavanagh, 611 F.2d 673, 675 (7th Cir. 1979); United States ex rel. Parish v. Elrod, 589 F.2d 327, 329 (7th Cir. 1979). While No. 15-1145 3 analyzing the existence of special circumstances, the district court found that Mr. Jackson had been convicted on the Wisconsin charges, was currently serving a sentence there, and could pursue his claims on appeal or in a postconviction petition. Mr. Jackson filed a timely notice of appeal and request for a certificate of appealability. Although state pre-trial detainees who are detained pursuant to a state court process must secure a certificate of appealability, see 28 U.S.C. § 2253(c)(1)(A), Mr. Jackson is not challenging detention authorized by a state court. Instead, he is challenging detention authorized by the executive, and thus a certificate of appealability is not required. See Evans v. Circuit Court of Cook Cnty., Ill., 569 F.3d 665, 666 (7th Cir. 2009); Behr v. Ramsey, 230 F.3d 268, 270 (7th Cir. 2000). Mr. Jackson may therefore proceed to challenge the district court’s ruling directly. The appropriate vehicle for a state pre-trial detainee to challenge his detention is § 2241. See Braden, 410 U.S. at 488; Parish, 589 F.2d at 328. Because a pre-trial detainee is not yet “in custody pursuant to the judgment of a State court,” relief under 28 U.S.C. § 2254 is not available. See Jacobs v. McCaughtry, 251 F.3d 596, 597–98 (7th Cir. 2001). Mr. Jackson was therefore correct that a § 2241 petition was the appropriate means for a pre-trial detainee to challenge extradition. See Behr, 230 F.3d at 270–71. Mr. Jackson, however, was no longer a pre-trial detainee when the district court ruled on his habeas petition. Mr. Jackson represents that he was a pre-trial detainee when he filed his petition but acknowledges that he was subsequently convicted in Wisconsin of identity theft—the crime that 4 No. 15-1145 prompted the extradition. Once Mr. Jackson was convicted, the claims concerning his pre-trial confinement became moot. See Yohey v. Collins, 985 F.2d 222, 228–29 (5th Cir. 1993) (“[C]laims for federal habeas relief for pretrial issues are mooted by Yohey's subsequent conviction.”); Fassler v. United States, 858 F.2d 1016, 1018 (5th Cir. 1988); Thorne v. Warden, Brooklyn House of Det. for Men, 479 F.2d 297, 299 (2d Cir. 1973); Medina v. People of State of Cal., 429 F.2d 1392, 1393 (9th Cir. 1970). In order for federal courts to retain jurisdiction over a case, there must be an “actual, ongoing controvers[y],” and the absence of one renders a case moot and deprives the court of subject matter jurisdiction. Fed'n of Adver. Indus. Representatives, Inc. v. City of Chicago, 326 F.3d 924, 929 (7th Cir. 2003) (quoting Stotts v. Cmty. Unit Sch. Dist. No. 1, 230 F.3d 989, 990–91 (7th Cir.2000)); see also Damasco v. Clearwire Corp., 662 F.3d 891, 894 (7th Cir. 2011); Pakovich v. Verizon LTD Plan, 653 F.3d 488, 492 (7th Cir. 2011). Thus, when the district court issued its decision denying Mr. Jackson’s petition, it lacked jurisdiction to do so. The judgment is therefore vacated and the case remanded to the district court with instructions to dismiss the petition as moot.

01-03-2023

08-12-2015

https://www.courtlistener.com/api/rest/v3/opinions/2994077/

In the United States Court of Appeals For the Seventh Circuit No. 98-2137 William T. Divane, Jr., et al., Plaintiffs-Appellees, v. Krull Electric Co., Inc., Defendant, and John J. Curry, Jr., Respondent-Appellant. Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 95 C 6108--George W. Lindberg, Judge. Argued February 8, 1999--Decided December 28, 1999 Before Posner, Chief Judge, and Bauer and Kanne, Circuit Judges. Kanne, Circuit Judge. After a tortuous three- year road to trial, which cost plaintiffs over $40,000 in attorneys’ fees and costs (with only $14,000 originally in dispute), the plaintiffs, collectively known as Electric Insurance Trustees ("Trustees"), won a judgment at bench trial for $54,001.07. During post-judgment proceedings (based on pre-trial conduct), the district court imposed Rule 11 sanctions on John J. Curry, Jr., counsel to defendant Krull Electric Co. Curry appeals both the imposition of sanctions and the determination of the nature and amount of these sanctions, claiming that the court did not comply with Rule 11 of the Federal Rules of Civil Procedure and that the record does not contain evidence of sanctionable conduct. We find that the procedure employed by the district court effectively complied with the requirements of Rule 11(c)(1)(A) but find that the district court did not properly limit the amount of attorneys’ fees that it assessed as a sanction. For this reason, we affirm the sanction determination but vacate the award and remand to the district court for recomputation. I. History A. No. 95 C 2075 (Judge Kocoras Case) In April 1995, Trustees filed suit against Krull Electric to collect about $14,000 in delinquent fringe-benefit contributions. This delinquency arose in 1992 and 1993 and was discovered by a 1994 audit. Krull Electric filed a counterclaim alleging that Trustees had breached their fiduciary duties and violated various anti-discrimination laws. Trustees claimed that Krull Electric had been under-reporting hours worked each week by Tan Lee, an employee and the husband of Krull Electric President Pamela Lee, to minimize the amount they were required to contribute for Tan Lee to remain eligible for health benefits available to members of Local 134 of the International Brotherhood of Electrical Workers. Krull Electric was liable to Local 134’s employee-benefit plan for reimbursement of Lee’s health benefits under the "Owner-in-Fact" clause of a collective-bargaining agreement ("CBA") signed by Krull Electric and Local 134. On September 13, 1995, District Court Judge Charles Kocoras dismissed Krull Electric’s counterclaim because Krull Electric lacked standing to sue Trustees. Eight months later, on May 15, 1996, Krull Electric presented a motion to amend its answer and counterclaim and to remove certain admissions related to Pamela Lee’s knowledge of the "Owner-in-Fact" clause and Krull Electric’s status as a signatory to the CBA. The court denied these motions. In October 1995, Trustees filed a motion for summary judgment, and in November 1995, despite the fact that its counterclaim had been dismissed, Krull Electric filed a motion for summary judgment on its counterclaim. In support of its motion for summary judgment, Krull Electric claimed, inter alia, that it never received notice of the "Owner-in-Fact" clause and that it was not a party to the CBA. In all of the proceedings that followed, Krull Electric never again raised lack of notice again as a defense to Trustees’ claims. In April 1997, based on two evidentiary hearings, Magistrate Judge Joan Lefkow concluded that Krull Electric received notice of the "Owner-in-Fact" clause in 1992. Overruling Krull Electric’s objections, Judge Kocoras entered summary judgment for Trustees, which Krull Electric has appealed separately in Divane v. Krull Electric Co., No. 98-1276 (7th Cir. 1999). B. No. 95 C 6108 (Judge Lindberg Case) In 1995, Trustees filed a separate action against Krull Electric after Krull Electric stopped making required contributions to Trustees’ employee-benefit plan in 1994. On May 10, 1996, Krull Electric filed its answer and a counterclaim alleging that since it was no longer a signatory to the CBA, Krull Electric’s suit violated the Labor Management Relations Act ("LMRA"), 29 U.S.C. sec.sec. 141-187. The answer to Trustees’ claim refused to admit several statements that Krull Electric admitted in the companion litigation, including those statements which Judge Kocoras denied Krull Electric the opportunity to amend in 1996. The counterclaim was predicated on the contention that in October 1994, Local 134 determined that Krull Electric was no longer a signatory to the CBA, which Curry claims was supported by an affidavit he prepared for Pamela Lee. This answer and counterclaim were the first papers Curry submitted to the court (Krull Electric was initially represented by other counsel in the litigation before Judge Kocoras), and these filings constitute the basis for the sanctions eventually imposed by Judge George Lindberg. On May 24, 1996, Trustees deposed Pamela Lee, but Curry objected to all questions regarding the factual basis for Krull Electric’s counterclaim. Pamela Lee claimed she did not know what Local 134 might have decided in 1994 and, counterintuitively, that this information was privileged. After these events, Trustees’ counsel first orally warned Curry and Krull Electric that they would seek sanctions if Krull Electric’s counterclaim was factually unsupported. In July 1996, after an inquiry into Krull Electric’s finances revealed that Krull Electric had a net worth of just $5,000, Judge Lindberg instructed the parties to engage in settlement discussions since judgment could not possibly be collected. Trustees refused Krull Electric’s settlement offer, and Krull Electric’s counterclaim prevented Trustees from voluntarily dismissing their complaint. To force Krull Electric to dismiss its counterclaim, on September 13, 1996, Trustees’ counsel sent a motion to Curry requesting that he withdraw the counterclaim or correct its answer by October 4, 1996, pursuant to Rule 11(c)(1)(A) of the Federal Rules of Civil Procedure. Curry did not withdraw or correct Krull Electric’s pleading, so on October 17, 1996, Trustees filed a motion to dismiss, requesting that the court strike Krull Electric’s answer and enter sanctions against Curry in the amount of $500. The district court denied this motion, finding that the motion to strike was a Rule 12 motion and, by claiming Local 134 determined that Krull Electric was no longer a signatory to the CBA, Krull Electric raised a question of fact. On November 13, 1996, both parties seemingly agreed voluntarily to dismiss their claims with prejudice and a stipulation of dismissal. When asked about the nature of his party’s counterclaim at the hearing, Curry confused Krull Electric’s counterclaim with the counterclaim filed in the other litigation and, when corrected, responded, "Well, I don’t know what you are talking about." The parties ultimately could not agree to the language of a joint stipulation, so the case moved towards trial. On multiple occasions prior to trial, Curry summarized Krull Electric’s counterclaim as including allegations of sex discrimination and equitable estoppel despite the fact that the counterclaim did not contain such allegations. A bench trial commenced on November 12, 1997, and concluded on December 15, 1997. At trial, Curry did not support the factual claims in Krull Electric’s counterclaim with any evidence and claimed that the October 1994 determination by Local 134 was no longer legally relevant. On December 23, 1997, the court entered a judgment for Trustees in the amount of $54,001.37. At that time, Judge Lindberg granted Trustees leave to file a petition for attorneys’ fees and sanctions. On January 9, 1998, Trustees filed a motion for Rule 11 sanctions against Curry along with a petition for statutory attorneys’ fees. This motion was served on Krull Electric and Curry on the day it was filed. Curry and Krull Electric filed a motion to strike the motion for Rule 11 sanctions on the grounds that Trustees had not provided Krull Electric with the Rule 11(c)(1)(A) twenty-one day safe harbor, the motion for sanctions was untimely and the motion lacked specificity. On February 6, 1998, Curry and Krull Electric filed a brief in response to the motion for sanctions. On March 24, 1998, the court entered an order imposing sanctions against Curry requiring that Curry pay attorneys’ fees of $40,171.07 to Trustees and $5,000 to the court, or, if Krull Electric satisfied the entire judgment against it, only to pay the $5,000 fee to the court. The order was issued pursuant to Rule 11(b)(3) and based on Krull Electric’s failure to substantiate the statement raised in the counterclaim that Local 134 determined in October 1994 that Krull Electric was no longer a signatory to the CBA. The order also imposed sanctions pursuant to Rule 11(b)(4) based on Krull Electric’s failure to make admissions of fact in its answer that it had previously admitted in the litigation before Judge Kocoras. On April 3, 1998, Curry filed a motion under Rule 59(e) of the Federal Rules of Civil Procedure to amend the March 24, 1998, order. The court allowed Curry to supplement this motion with an additional memorandum in support of his motion. The court also allowed Trustees to file a response to the Rule 59(e) motion. However, on April 14, 1998, the court entered a memorandum order that vacated the prior order of sanctions and summarily imposed $33,292 in fees and $2,306.69 in costs on Curry as a sanction because it was "less likely than previously assumed" that Krull Electric would satisfy its judgment. Krull Electric appeared "less likely" to satisfy the judgment against it because it filed for bankruptcy on March 27, 1998. II. Analysis On appeal, Curry raises three issues: (1) whether the trial court abused its discretion by imposing sanctions in the manner that it did; (2) whether the trial court erred in holding that Curry violated Rule 11 in filing Krull Electric’s counterclaim; (3) whether the trial court abused its discretion in calculating the nature and amount of Rule 11 sanctions. We review a trial court’s decision to grant Rule 11 sanctions with deference. See Retired Chicago Police Ass’n v. Firemen’s Annuity and Benefit Fund, 145 F.3d 929, 933 (7th Cir. 1998). As we have stated, "because the trial court alone has an intimate familiarity with the relevant proceedings, its decision whether counsel has conducted the kind of inquiry required by Rule 11 and taken a position reasonable in light of the facts and governing law is reversible only when there has been an abuse of discretion." R.K. Harp Inv. Corp. v. McQuade, 825 F.2d 1101, 1103 (7th Cir. 1987). A. Violations of Rule 11(c) Curry’s primary argument is that, in its orders to impose sanctions, the trial court failed to follow the procedures required by Rule 11(c), which are designed to give Curry a full and fair opportunity to respond and show cause before sanctions are imposed. Under the 1993 amendments to Rule 11(c), sanctions proceedings may be initiated in two ways, by motion or at the initiative of the trial court. When sanctions are requested by a party’s motion, Rule 11(c)(1)(A) requires that two procedures be followed. First, the motion for sanctions must be made "separately from other motions or requests and [must] describe the specific conduct alleged to violate subdivision (b)." Fed. R. Civ. P. 11(c)(1)(A). Permitting a motion for sanctions to be made in conjunction with another motion constitutes an abuse of discretion. See Corley v. Rosewood Care Center, Inc., 142 F.3d 1041, 1058 (7th Cir. 1998). Second, to facilitate deterrence, the motion may not be presented to the court unless, within twenty-one days of service, the movant has not withdrawn or corrected the challenged behavior. Fed. R. Civ. P. 11(c)(1)(A). A court that imposes sanctions by motion without adhering to this twenty-one day safe harbor has abused its discretion. See id.; Johnson v. Waddell & Reed, Inc., 74 F.3d 147, 150-51 (7th Cir. 1996). Appellant claims that the district court abused its discretion by failing to abide by the terms of Rule 11(c)(1)(A) in three distinct ways: (1) by allowing Trustees to petition for sanctions post-judgment; (2) by allowing Trustees to petition for sanctions without allowing Krull Electric the twenty-one day safe harbor; and (3) by allowing Trustees to file a petition when a petition for sanctions was no longer timely. Curry initially contends that, since the purpose of Rule 11(c)(1)(A) is to deter claimants from filing frivolous motions and pleadings, delaying the decision to allow motions for sanctions until after judgment "completely defeats the interests" that the Rule hopes to promote. After judgment has been entered, imposition of sanctions cannot affect the prior filing of motions, because parties have no opportunity to correct their sanctionable conduct. However, Rule 11(c)(1)(A) does not specify any time period when a motion for sanctions must be filed, and we see no need to establish one. The decision to impose sanctions is left to the discretion of the trial court in light of the available evidence. In this case, the court found that "the lack of evidentiary support for defendant’s counterclaim could not have been determined until trial was completed." In such circumstances, the interest in deterring further frivolous post-judgment motions by the same litigants or in deterring future litigants may be promoted by a post- judgment request for sanctions. By themselves, the purposes of Rule 11(c)(1)(A) do not justify a broad rule that sanctions cannot be imposed as a result of a motion properly submitted to the court after a judgment. Rule 11(c)(1)(A) states that a sanctions motion "shall not be filed with or presented to the court unless, within twenty-one days after the service of the motion (or such period as the court may prescribe), the challenged paper, claim, defense, contention, allegation or denial is not withdrawn or appropriately corrected." We have previously held that this phrase contemplates a twenty-one day safe harbor, which a party may use to withdraw or correct its actions to avoid the imposition of sanctions. See Corley, 142 F.3d at 1058. The trial court acknowledged that Trustees’ most recent motion had been presented to the court simultaneously with its service on Krull Electric and Curry. However, because there was no way that Curry or Krull Electric could withdraw Krull Electric’s pleadings, the court found that "there is no need to allow any safe harbor period for defendant." The court additionally noted that "Curry received numerous oral and written warnings from opposing counsel during the pendency of this lawsuit regarding his sanctionable conduct along with oral and written demands for the withdrawal or correction of his answer and counterclaim." Curry asks us to adopt the approach of other circuits, which have held that a district court has abused its discretion by granting a motion for sanctions first submitted to it after the court granted a motion for summary judgment. In Barber v. Miller, 146 F.3d 707, 710-11 (9th Cir. 1998), the Ninth Circuit found it "abundantly clear" that repeated notice was given of a party’s violation of Rule 11(b). Id. at 710. Despite this notice, the appellee never served a motion on the appellant, and the Ninth Circuit found that this procedural defect was sufficient to cause the reversal of the imposition of sanctions. The Ninth Circuit noted that "[i]t would therefore wrench both the language and purpose of the amendment to [Rule 11(c)(1)(A)] to permit an informal warning to substitute for service of a motion." Id. Similarly, in Ridder v. City of Springfield, 109 F.3d 288, 295 (6th Cir. 1997), the Sixth Circuit reversed the district court’s imposition of sanctions where the motion for sanctions was not filed until the conclusion of the case by summary judgment. The district court imposed sanctions initiated by a party’s motion after the court granted that party’s motion for summary judgment without requiring the twenty-one day safe harbor, which the district court considered an "empty formality." The Sixth Circuit disagreed, finding that "sanctions under Rule 11 are unavailable unless the motion for sanctions is served on the opposing party for the full twenty-one day ’safe harbor’ period before it is filed with or presented to the court; this service and filing must occur prior to final judgment or judicial rejection of the offending contention." Id. at 297. We agree with both the Sixth and the Ninth Circuits that the twenty-one day safe harbor is not merely an empty formality. However, in Barber no motion for sanctions was ever filed, and in Ridder the motion for sanctions that was filed never complied with the twenty-one day safe harbor. In this case, Trustees served Curry with a motion for sanctions more than twenty-one days prior to submitting the motion to the court and more than twenty-one days prior to the rendering of a final judgment. Therefore, the precedent cited by Curry has no relevance to the case before us. The district court found that the twenty-one day safe harbor was a mere formality, and in addition, that Trustees had provided Curry with proper warning. Rather than accept the district court’s contention that the twenty-one day safe harbor is unnecessary on post-judgment motions for sanctions, we look to the record before us and take notice of the September 1996, service on Curry by Trustees. We are not bound by the district court’s reasoning and may affirm a grant of sanctions on any basis supported by the record and the law. See In re Volpert, 110 F.3d 494, 500 (7th Cir. 1997). On September 19, 1996, Trustees served Curry with a written motion to strike the counterclaim, and Trustees in a separate written motion informed Curry that they would move for Rule 11 sanctions on the counterclaim. On October 17, 1996, at the motion hearing, Trustees informed Curry that they would additionally move for sanctions based on Curry’s answer to Trustees’ complaint. At the same hearing, the district court addressed Trustees’ motion for Rule 11 sanctions. The district court felt that such a motion was premature, because the counterclaim raised questions of fact that still had adequate time to be discovered. By so ruling, Judge Lindberg effectively extended the safe harbor for Krull Electric and Curry until trial, by which time the factual basis for the answer and counterclaim would have been determined. As the district court noted, Rule 11(c)(1)(A) allows the court discretion to grant a party additional time to correct or withdraw its action. Although taking Trustees’ motion under advisement pending the resolution of the factual dispute would have been a more appropriate method to provide Curry with time, the court instead dismissed the motion as untimely while taking notice of Trustees’ fair warning to Curry. The court noted in its memorandum order for sanctions that "[Curry] received several oral and written warnings from opposing counsel during the pendency of this lawsuit regarding his sanctionable conduct along with oral and written demands for the withdrawal or correction of his answer and counterclaim." Having been provided with an additional year in which to substantiate Krull Electric’s factual claims with evidence, or in the alternative to correct or withdraw the counterclaim and answer, Curry failed to do either. In fact, on several instances, Curry seemed confused about the very nature of the counterclaim, confounding the LMRA claim in the present litigation with the counterclaims that were dismissed in the companion litigation. Rule 11(c)(1)(A) contemplates that the district court may allow a party more than twenty-one days to correct or withdraw its pleadings, and the fact that Judge Lindberg effectively gave Curry until the end of trial to do so does not vitiate the numerous effective warnings given by Trustees. We find that Trustees effectively complied with the twenty-one day safe harbor provision of Rule 11(c)(1) (A), and the dismissal of Trustees initial motion to sanction Curry as premature did not extinguish this effective notice. Therefore the district court did not abuse its discretion in granting Trustees’ motion for sanctions on this ground. Appellant also asserts that he was served with Trustees’ motion for sanctions on January 9, 1998. If the only effective notice of the motion’s pendency was given in 1996, Curry contends that we should estop action on the motion because it was not filed in a timely fashion. As we stated in Kaplan v. Zenner, 956 F.2d 149, 151 (7th Cir. 1992), motions for Rule 11 sanctions should be filed, "as soon as practicable after discovery of a Rule 11 violation." Curry uses our admonition to suggest that, if Trustees determined he violated Rule 11(b) in September 1996, they should have filed an independent motion for sanctions soon thereafter. By waiting one-and-one-half years to file, their motion should have been granted only in the exercise of the court’s equitable powers. Since Trustees raised no equitable considerations to explain such a delay, the motion should have been denied. Even though Kaplan addressed the imposition of Rule 11 sanctions before the 1993 amendments, in that case we addressed arguments that correspond to those made here. In Kaplan, the appellant had been named as a defendant in a civil RICO action in 1987. In 1988, he filed a motion to dismiss for failure to state a claim. This motion was granted, and the appellant played no further role in the litigation. Two years later, when the parties appeared in court to settle, the appellant moved for Rule 11 sanctions against the original plaintiff. The district court denied the appellant’s motion, finding that the motion for sanctions had not been brought in a timely fashion. We reversed, finding that plaintiff could have relied on our prior precedent in Szabo Food Serv. Inc. v. Canteen Corp., 823 F.2d 1073 (7th Cir. 1987), and for purposes of timely filing of a sanctions motion, "[r]easonableness is necessarily dictated by the specific facts and circumstances in a given case." Kaplan, 956 F.2d at 152. Here, no specific facts or circumstances indicate that Trustees wrongly delayed seeking Rule 11 sanctions. Immediately after Pamela Lee’s testimony, when it became apparent to Trustees’ counsel that the counterclaim lacked a factual basis, Trustees informed Krull Electric and Curry that they would file for sanctions if factual information to substantiate this claim did not emerge. Instead of waiting until trial, Trustees moved ahead with a motion for sanctions, serving Krull Electric in September 1996, and moving for sanctions before the court on October 17, 1996. As noted earlier, the court dismissed the motion then because sanctions would be premature before Krull Electric had an opportunity to prove the counterclaim. For this reason, Trustees waited until after trial to move again for sanctions. Curry’s timeliness argument against a motion for Rule 11 sanctions mirrors the common law doctrine of laches. To make a claim of laches, Curry must prove that Trustees’ delay unreasonably prejudiced Curry and Krull Electric. Having been granted additional time to amend or withdraw the pleadings, neither Curry nor Krull Electric was unreasonably prejudiced by the delay in filing the motion. Moreover, weighing the competing equities with regard to such a timeliness claim lies within the sound discretion of the trial court. We do not overrule such judgments lightly. Therefore, we find that the court did not abuse its discretion here in denying Curry’s equitable argument against the motion for sanctions. B. Findings of Fact Curry also argues that the district court erred in applying Rule 11 to Krull Electric’s counterclaim and answer. The application of Rule 11 to the facts and circumstances of a particular case is an exercise of the trial court’s discretion, which will be reviewed for abuse of discretion. See Johnson, 74 F.3d at 151. None of the findings of fact which underlie the imposition of sanctions will be set aside unless clearly erroneous. See Finance Investment Co. v. Geberit AG, 165 F.3d 526, 530 (7th Cir. 1998). Rule 11(b) mandates that an attorney who presents a pleading to the court certify that: to the best of [his or her] knowledge, information, and belief, formed after an inquiry reasonable under the circumstances . . . (3) the allegations and other factual contentions have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery [and] . . . (4) the denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably based on a lack of information or belief. Fed. R. Civ. P. 11(b) (emphasis added). To measure the reasonableness of a party’s inquiry into the factual bases of its claims, we look to a number of factors including: "whether the signer of the documents had sufficient time for investigation; the extent to which the attorney had to rely on his or her client for the factual foundation underlying the pleading, motion or other paper; whether the case was accepted from another attorney; the complexity of the facts and the attorney’s ability to do a sufficient pre-filing investigation; and whether discovery would have been beneficial to the development of the underlying facts." Brown v. Federation of State Medical Bds. of the United States, 830 F.2d 1429, 1435 (7th Cir. 1987). The district court found that Curry violated Rule 11(b)(3) in filing Krull Electric’s counterclaim because Curry never presented evidence to support any facts that could prove its counterclaim under the LMRA nor did Curry direct Krull Electric to withdraw or amend its counterclaim. The court made a factual determination that Curry could not have made a reasonable inquiry because the counterclaim never had any factual support. Curry does not argue that the facts presented as the basis for the counterclaim were supported in fact. Instead, he argues that the factual allegations made in the counterclaim were reasonable under the circumstances. Curry contends that the appropriate time to measure reasonableness of the inquiry is at the time of filing the pleading. He argues that, at the time pleadings were filed, many extenuating circumstances impeded his inquiry. Curry also argues that his abandonment of certain factual contentions in his counterclaim allow him to avoid Rule 11 sanctions, even though he failed to amend or correct the initial pleadings. For these reasons, Curry believes that the district court failed to apply the proper legal standards to his conduct and abused its discretion by imposing sanctions without making the requisite factual determinations. By focusing on the time of filing, Curry misunderstands what conduct constitutes the gravamen of the sanctions. Curry filed a counterclaim based upon facts that were supported only by an affidavit that he prepared for Pamela Lee. Lee later disavowed any knowledge of the October 1994 decision made by Local 134, which the court found was the factual basis for Krull Electric’s counterclaim. As the counterclaim’s lack of factual foundation became apparent to all parties involved, Trustees asked that the counterclaim be withdrawn so that their claim could be dismissed. By this time, Curry admits that he had abandoned the original factual basis of the counterclaim, the October 1994 termination of CBA signatory status, in favor of other arguments against Trustees. However, Curry and Krull Electric refused to withdraw or amend the counterclaim, imposing an additional year of meaningless proceedings on the court and Trustees. At the conclusion of these proceedings, Judge Lindberg found as a matter of fact that the factual contentions upon which the counterclaim (never amended or withdrawn) was based were unsupported and meritless. The court found that Curry had failed to perform a reasonable inquiry at any point throughout the proceedings to determine whether these pleadings should have been corrected or withdrawn. Failure to withdraw or amend a counterclaim that Curry knew lacked any factual basis demonstrates that Curry never performed a reasonable inquiry into Krull Electric’s counterclaim before presenting it to the court at trial. Curry’s abandonment of the facts that supported his counterclaim does not alleviate the need to sanction him; it compounds that need. We find no error in the district court’s findings of fact. The district court also found that Curry’s initial answer to Trustees’ claim violated Rule 11(b)(4) because Krull Electric had admitted many of the facts in prior litigation between the same parties that it denied knowledge of here. Curry contends that he lacked any basis on which to ascertain that the facts which Krull Electric admitted previously were accurate. He notes that Krull Electric moved to amend or withdraw certain of these admissions in the other litigation. The trial court found that Curry could not have reasonably believed that Krull Electric had a basis in fact to deny these contentions after admitting them in a related action. Curry does not cite any authority to suggest that such a finding of fact constitutes clear error. He claims that he had no way of procuring documents from prior counsel on which the prior admissions were based. Yet, Curry appended excerpts from the CBA to the answer, even though he claims that Krull Electric had not received a copy of it. In the counterclaim, he alleged that Trustees committed certain acts, even though Krull Electric denied knowledge of the Trustees’ identities in its attached answer. Krull Electric’s answer claimed that it had no knowledge of deposition testimony, of which it had a copy, because its transcript of the testimony could have been inaccurate. Based on these types of discrepancies, the court could have found that Krull Electric’s refusal to make certain admissions was patently unreasonable. We find no clear error in the district court’s findings of fact. C. Application of Sanctions Curry contends that Rule 11 was not intended to allow fee-shifting, so the district court’s sanction of all Trustees’ attorneys’ fees constituted an abuse of discretion. He also contends that the amount of sanctions awarded violates the Rule 11(c)(2) limitation of fees to those "incurred as a direct result of the violation." Finally, Curry argues that the sanctions constitute a financial hardship. The amount or form of a sanction is reviewable only for abuse of discretion. See Johnson v. A.W. Chesterton Co., 18 F.3d 1362, 1366 (7th Cir. 1994). Rule 11(c)(2) allows the imposition of attorneys’ fees against a party only if the sanctions were initiated by motion. Thus, Judge Lindberg would have abused his discretion if he imposed sanctions sua sponte, pursuant to Rule 11(c)(1)(B). However, as we have discussed, the district court imposed sanctions that were initiated by Trustees’ September 1996 motions, pursuant to Rule 11(c)(1)(A). For sanctions initiated by motion, we held, prior to the 1993 amendments to Rule 11, that attorneys’ fees may be used as a justifiable measure for Rule 11 sanctions. See Brandt v. Schal Assocs., 960 F.2d 640 (7th Cir. 1992). The 1993 amendments to Rule 11(c)(2) limited the amount of attorneys’ fees that may be imposed as a sanction, contemplating the award of reasonable attorneys’ fees and costs "incurred as a direct result of the violation," but endorsed the use of attorneys’ fees as a sanction. Fed. R. Civ. P. 11(c)(2). We therefore find no basis for the contention that the award of reasonable attorneys’ fees constitutes an abuse of discretion. Curry also claims that, because Krull Electric presented other affirmative defenses, a trial would have been necessary. For that reason, the district court’s blanket award of all attorneys’ fees included fees and costs that did not directly result from Curry’s sanctionable conduct and, therefore, was unreasonable. Rule 11(c)(2) expressly limits the award of attorneys’ fees to those that directly result from a party or attorney’s sanctionable conduct, and an award of sanctions should be the least severe that is adequate to serve the purposes of deterrence. See Johnson, 18 F.3d at 1366. Therefore, we examine Judge Lindberg’s decision to sanction Curry for the cost of all attorneys’ fees generated by this litigation with great care. The district court found that Curry’s sanctionable conduct "infected" the entire proceeding. Accordingly, the court sanctioned Curry by imposing on him the cost of all attorneys’ fees claimed by Trustees. We cannot accept the court’s suggestion that all Trustees’ legal expenses were costs directly resulting from Curry’s sanctionable activities. Trustees were the plaintiffs in the suit against Krull Electric and incurred legal expenses before Curry played any part in this litigation. Neither Curry nor Krull Electric could have engaged in sanctionable conduct before they were served with Trustees’ complaint in the matter before Judge Lindberg. Because the award of all attorneys’ fees wrongly includes fees even from the period before a complaint was filed against Krull Electric, the award necessarily includes attorneys’ fees that do not result directly from Curry’s sanctionable conduct. For this reason, the sanction imposed on Curry violates Rule 11(c)(2) and constitutes an abuse of discretion. Although we affirm the district court’s decision to impose sanctions, we reject the blanket award of attorneys’ fees. See Johnson, 18 F.3d at 1366 (finding that awarding attorneys’ fees may be a normal method to calculate sanctions, but "the deterrent purpose of the rule should be served by impos[ing] a sanction that fits the inappropriate conduct"). In 1993, Rule 11(c)(2) was amended to limit the extent that attorneys’ fees may be used as a measure of sanctions for exactly this reason. See Fed. R. Civ. P. 11, 1993 Amendment Advisory Committee’s Note ("Since the purpose of Rule 11 sanctions is to deter rather than to compensate, the rule provides that, if a monetary sanction is imposed, it should ordinarily be paid into the court as a penalty."). Although we understand the court’s desire to compensate Trustees, who have been ensnarled in months of litigation with a nearly insolvent adversary, the imposition of all attorneys’ fees against Curry is an inappropriate attempt to calculate a reasonable sum for purposes of deterrence. The district court is in the best position to determine which of a party’s legal costs are the direct result of sanctionable conduct, so a remand to the district court is necessary. We add a cautionary note, however, on remand. In using attorneys’ fees to determine the amount of sanctions, that amount must be limited to fees incurred as a direct result of the response and counterclaim filed by Curry. See Fed. R. Civ. P. 11(c)(2). As a matter of guidance, we note that these fees would naturally include any research conducted into the sole issue raised in Curry’s counterclaim, the purported LMRA violation, but they cannot include such activities as the cost of deposing witnesses like Pamela Lee, who Trustees would have deposed without regard to the frivolous counterclaim filed on her behalf by Curry. In addition, because Trustees noted that the denials made in the response were directly at odds with admissions made in other litigation between the parties, we see no reason why these sanctionable denials would directly cause Trustees to generate additional attorneys’ fees. III. Conclusion On appeal, Curry never convincingly argues that his conduct was not sanctionable. Instead, he focuses on the procedure that the district court used to impose sanctions and on the amount of sanctions imposed on him personally. Because we find that the record presents sufficient evidence for the imposition of Rule 11 sanctions and the district court effectively followed the notice procedures required by Rule 11(c)(1)(A), we AFFIRM the decision of the district court to impose sanctions. However, because we find that the amount of the sanction is inappropriate, we VACATE the award of attorneys’ fees and costs and REMAND to the district court to reconsider the appropriate amount of attorney’s fees to award as a sanction.

01-03-2023

09-24-2015

https://www.courtlistener.com/api/rest/v3/opinions/2824723/

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ) LEVI RUFFIN, ) ) Plaintiff, ) ) v. ) Civil Action No. 14-cv-761 (TSC) ) UNITED STATES, ) ) Defendant. ) ) MEMORANDUM OPINION Pending before the court is Defendant’s motion to dismiss, or in the alternative, motion to transfer. Upon consideration of the motion, the response and reply thereto, and for the following reasons, the court denies Defendant’s motion. I. BACKGROUND The following facts taken from the Complaint are assumed to be true on a motion to dismiss. Plaintiff Levi Ruffin was formerly an inmate at the United States Prison in Canaan, Pennsylvania (“USP Canaan”). (Compl. ¶ 10). During an appointment with a dental hygienist in May 2012, his dental treatment plan was updated to include a plan for extraction of a partially erupted wisdom tooth, tooth #32. In September 2012, he saw the Chief Dental Officer for USP Canaan, Dr. Rosalind Hartland, and complained of severe pain in his wisdom tooth on his right side. Dr. Hartland observed that tooth #32 had caries below the bone and that the tooth was impacted. She diagnosed Ruffin with “dental caries extending into pulp” and recommended removal of the tooth. (Id. ¶ 14). Dr. Hartland prescribed two medications for Ruffin to take in the interim, but Ruffin alleges it was not enough to adequately relieve his pain. (Id. ¶¶ 16-18). 1 Not having received the requested extraction, Ruffin complained repeatedly to USP Canaan Health Services about his dental pain, but received no additional treatment. (Id. ¶¶ 19- 20). In November 2012, two months after Dr. Hartland requested an oral surgeon perform the extraction, Ruffin’s name was approved to be put on a list for treatment by an outside specialist in oral surgery. (Id. ¶ 21). In the ensuing month, Ruffin filed two administrative grievances to attempt to get treatment. (Id. ¶¶ 22-24). The warden at USP Canaan responded to the second grievance by advising Ruffin that he was on a list for treatment by an outside specialist and was scheduled for an evaluation. Around the same time, Ruffin complained to a health administrator “that the hole in his mouth is stinking, bleeding daily, and could be infected.” (Id. ¶ 26). On December 13, 2012, Ruffin had another appointment with Dr. Hartland to receive unrelated fillings. He complained of pain in his tooth again, and Dr. Hartland diagnosed him with the same condition in tooth #32. (Id. ¶¶ 27-30). Dr. Hartland did not attempt to treat his pain or have the tooth removed, but offered Ruffin a 30-day pureed diet. (Id. ¶ 31). Ruffin declined, and a nurse allegedly hit the back of his hands with a clipboard. That same day, Ruffin filed an administrative appeal of his prior grievances. Around this same time, Ruffin was transferred to a different facility in Philadelphia. Ruffin saw a dentist at that facility, who diagnosed Ruffin’s tooth #32 as “bucally inclinded [sic] with curved root,” noted that Ruffin was “in severe pain,” and that he “was seen in another institution but was not able to get treatment.” (Id. ¶¶ 39-40). That dentist referred Ruffin for further treatment. Shortly after this appointment, in late January 2013 Ruffin filed another administrative appeal complaining that it had been two months since he was approved to see a specialist but he had not been treated and was still in pain. 2 Ruffin was later transferred back to USP Canaan, where on May 21, 2013 he was called to the dental clinic to have tooth #32 extracted. Ruffin, however, declined the extraction. He claims that because he was less than a month away from being released, he preferred to wait until his release so he could have the tooth extracted by a provider of his own choosing. (Id. ¶ 48). After he was released, he sought dental treatment, and had tooth #32 extracted at Water Brook Dental in Washington, D.C., on July 17, 2013. (Id. ¶ 52). Ruffin filed the instant Complaint in April 2014 against the United States for negligence in violation of the Federal Tort Claims Act (“FTCA”), and against Dr. Hartland for violating the Eighth Amendment of the U.S. Constitution. Defendants filed a motion to dismiss, or in the alternative to transfer the case to the Middle District of Pennsylvania. After Defendants filed their motion, Ruffin voluntarily dismissed Dr. Hartland from the case, leaving the FTCA claim against the United States as the sole remaining claim. The United States argues that the case should be transferred to the Middle District of Pennsylvania because the acts which gave rise to Ruffin’s claim occurred there, or, if the court retains the case in this district, that it should dismiss Ruffin’s claim for failure to state a claim upon which relief can be granted. II. LEGAL STANDARD a. Transfer A case may be transferred to another venue “[f]or the convenience of parties and witnesses, in the interest of justice . . . .” 28 U.S.C. § 1404(a). “Section 1404(a) is intended to place discretion in the district court to adjudicate motions for transfer according to an ‘individualized, case-by-case consideration of convenience and fairness.’” Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988) (quoting Van Dusen v. Barrack, 376 U.S. 612, 622 (1964)). 3 The moving party bears the burden of establishing that transfer of the action is proper. Devaughn v. Inphonic, Inc., 403 F. Supp. 2d 68, 71 (D.D.C. 2005). In deciding a motion to transfer venue under § 1404(a), a court must first determine whether the transferee district is one where the action “might have been brought,” 28 U.S.C. § 1404(a), and then must balance the private and public interests involved in the proposed transfer to determine “whether the defendant has demonstrated that considerations of convenience and the interest of justice support a transfer.” Barham v. UBS Fin. Servs., 496 F. Supp. 2d 174, 178 (D.D.C. 2007). b. Motion to Dismiss Pursuant to Rule 12(b)(6) “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks and citation omitted). “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (internal citation omitted). Although a plaintiff may survive a Rule 12(b)(6) motion even where “recovery is very remote and unlikely[,]” the facts alleged in the complaint “must be enough to raise a right to relief above the speculative level[.]” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007) (internal quotation marks and citation omitted). Moreover, a pleading must offer more than “labels and conclusions” or a “formulaic recitation of the elements of a cause of action[.]” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). If the facts as alleged, which must be taken as true, fail to establish that a plaintiff has stated a claim upon which relief can be granted, the Rule 12(b)(6) motion must be granted. See, e.g., Am. Chemistry Council, Inc. v. U.S. Dep’t of Health & Human Servs., 922 F. Supp. 2d 56, 61 (D.D.C. 2013). 4 III. ANALYSIS a. Transfer Before the court may transfer an action to another venue, the moving party must show that the plaintiff could have brought the action in the proposed transferee district. 28 U.S.C. § 1404(a); Devaughn, 403 F. Supp. 2d at 71 (citing Van Dusen, 376 U.S. at 622). Here, Ruffin does not contest that he could have brought his claim in the Middle District of Pennsylvania, because the “the act or omission complained of occurred” in that district. 28 U.S.C. § 1402(b); 28 U.S.C. § 1331. Defendant therefore satisfies the threshold inquiry. i. The Balance of Public and Private Interests The second step in considering whether to transfer a case requires the court to determine whether considerations of convenience and the interest of justice support transfer. In doing so, the court weighs a number of private interest and public interest factors. See Devaughn, 403 F. Supp. 2d at 72. 1. Private Interest Factors The court considers six private interest factors when deciding whether to transfer a case: (1) the plaintiff’s choice of forum; (2) the defendant’s choice of forum; (3) whether the claim arose elsewhere; (4) the convenience of the parties; (5) the convenience of the witnesses, particularly if important witnesses may actually be unavailable to give live trial testimony in one of the districts; and (6) the ease of access to sources of proof.” Sheffer v. Novartis Pharm. Corp., 873 F. Supp. 2d 371, 375 (D.D.C. 2012) (internal citations omitted). Courts ordinarily give substantial deference to the plaintiff’s choice of forum. Montgomery v. STG Int’l, Inc., 532 F. Supp. 2d 29, 33 (D.D.C. 2008). However, “where there is an insubstantial factual nexus between the case and the plaintiff’s chosen forum, deference to the plaintiff’s choice of forum is . . . weakened.” Fed. Hous. Fin. Agency v. First Tenn. Bank Nat’l 5 Ass’n, 856 F. Supp. 2d 186, 192 (D.D.C. 2012) (internal citations omitted). The United States argues that because all the acts which give rise to Ruffin’s claim occurred in Pennsylvania, Ruffin’s choice of forum should be given significantly less weight than is customary. While it is true that the purported negligence occurred in Pennsylvania, the court is cognizant of the difficulties that would be created for prisoners convicted in the District of Columbia if this analysis was rigidly applied. The District no longer has an operating prison, meaning all its prisoners are housed in institutions outside of the District of Columbia. If courts were never to give the District’s returning citizens’ choice of forum any weight in cases related to their incarceration, they would likely be routinely forced to litigate their claims in an unfamiliar and potentially distant forum. While it is true that Ruffin’s claim arose outside of this district, and the court will therefore not ascribe the usual deference to Ruffin’s choice of forum, it does believe Ruffin’s choice is entitled to at least some weight. Second, the court considers Defendant’s choice of forum. Defendant seeks to transfer the case to the Middle District of Pennsylvania, where the claims arose, and this factor favors transfer. It is worth noting, however, that the Middle District is not the only place where relevant events occurred. Ruffin was transferred to a facility in Philadelphia (in the Eastern District of Pennsylvania), and received dental treatment there. The third factor, where the claims arose, also favors transfer, for the reasons noted above, with the caveat, also noted above, that certain of the relevant events occurred outside of the Middle District. The fourth factor, the convenience of the parties, weighs slightly in favor of retaining the case in this district. It would be far more convenient for Ruffin to keep his case here. While Defendant claims that it would be inconvenient for it to litigate this “Pennsylvania case” in this district, the court is persuaded that the Department of Justice, which is 6 headquartered in the District of Columbia, and which is currently represented in this matter by counsel located in this district, is not unduly inconvenienced by having to litigate this matter in the District, as compared to a plaintiff who is currently incarcerated in D.C. jail pending trial having to litigate in the Middle District of Pennsylvania. The fifth factor, the convenience of the witnesses, is neutral. In considering this factor, the court considers “the availability of compulsory process to command the attendance of unwilling witnesses, and the cost of obtaining the attendance of willing witnesses.” Reiffin v. Microsoft Corp., 104 F. Supp. 2d 48, 53 (D.D.C. 2000). Neither party has alleged that any of its witnesses would be unwilling to testify in this district. See FC Inv. Grp. LC v. Lichtenstein, 441 F. Supp. 2d 3, 14 (D.D.C. 2006). As both parties make clear, there are some witnesses in the Middle District (those involved in Ruffin’s treatment) and some witnesses in this district (Ruffin’s family members and his dentist at Water Brook Dental). The court notes that there are also potential witnesses in a third district, the Eastern District of Pennsylvania, where Ruffin was also treated while incarcerated. The last private interest factor—the ease of access to sources of proof—is neutral, given the portable nature of modern discovery. Thayer/Patricof Educ. Funding, L.L.C. v. Pryor Res., Inc., 196 F. Supp. 2d 21, 36 (D.D.C. 2002) (“the location of documents, given modern technology, is less important in determining the convenience of the parties”). Ruffin claims that he already possesses all the relevant documents in this district, which Defendant disputes. Even if Defendant is correct that Ruffin’s claim to have all the relevant documents is incorrect, and evidence remains to be gathered in the Middle District, it would not be particularly difficult for that evidence to be brought to this district. 7 2. Public Interest Factors The court now considers the public interest factors: “(1) the transferee forum’s familiarity with the governing laws and the pendency of related actions in that forum; (2) the relative congestion of the calendars of the potential transferee and transferor courts; and (3) the local interest in deciding local controversies at home.” Foote v. Chu, 858 F. Supp. 2d 116, 123 (D.D.C. 2012) (citing Ravulapalli v. Napolitano, 773 F. Supp. 2d 41, 56 (D.D.C. 2011)). Under the FTCA, claims are analyzed “in accordance with the law of the place where the act or omission occurred.” 28 U.S.C. § 1346(b)(1). The Supreme Court has “consistently held that § 1346(b)’s reference to the ‘law of the place’ means law of the State—the source of substantive liability under the FTCA.” FDIC v. Meyer, 510 U.S. 471, 478 (1994). The parties agree that the acts or omissions occurred in Pennsylvania, and that Pennsylvania law applies, but they differ on the impact of Pennsylvania law in this case. Defendant argues that since Pennsylvania negligence law applies, and the Middle District has greater familiarity with the governing laws, this factor favors transfer. Ruffin argues that the court has to apply the “whole” law of the state, including choice of law rules. Therefore, “in exercising jurisdiction over Defendant United States under the FTCA, this Court must apply the choice of law provision belonging to ‘the place where the act of omission occurred.’” Raflo v. United States, 157 F. Supp. 2d 1, 8 (D.D.C. 2001) (citing Richards v. United States, 369 U.S. 1, 6-7 (1962)). Ruffin argues that under Pennsylvania’s choice of law provisions, D.C. negligence law would apply because D.C. has a greater interest than Pennsylvania in Ruffin’s claims. While the parties dispute which state has a greater interest in Ruffin’s case, they omit the first step in Pennsylvania’s (and many other jurisdictions) choice of law analysis—whether there is a conflict between the competing laws at all. “[T]he first step in a choice of law analysis under 8 Pennsylvania law is to determine whether [an actual] conflict exists between the laws of the competing states. If no [actual] conflict exists, further analysis is unnecessary. . . An actual conflict exists if there are relevant differences between the laws.” McDonald v. Whitewater Challengers, Inc., 2015 PA Super 104, at *5 (Pa. Super. Ct. Apr. 29, 2015) (internal quotation marks and citations omitted). Neither party cites the standard for negligence in Pennsylvania or compares that standard to D.C. law to determine whether a conflict exists. It appears there does not. Compare Toogood v. Owen J. Rogal, D.D.S., P.C., 824 A.2d 1140, 1145 (Pa. 2003) (“to prevail in a medical malpractice action, a plaintiff must ‘establish a duty owed by the physician to the patient, a breach of that duty by the physician, that the breach was the proximate cause of the harm suffered, and the damages suffered were a direct result of the harm.’”) (internal citation omitted) with D.C. v. Wilson, 721 A.2d 591, 597 (D.C. 1998) (explaining in a medical malpractice case that “‘[i]n an action for negligence, the plaintiff has the burden of proving [, by a preponderance of the evidence,] the applicable standard of care, a deviation from that standard by the defendant, and a causal relationship between the deviation and the plaintiff’s injury.’”) (internal citation omitted). Both jurisdictions also require expert testimony in medical malpractice cases. See Toogood, 824 A.2d at 1145; Wilson, 721 A.2d at 597. Because there appears to be no conflict, the parties’ analyses of the competing states’ interests in this case is unnecessary. This means the first public interest factor is neutral because familiarity with the governing laws is the same where those laws appear to be identical.1 1 The court further notes that federal courts frequently apply the law of states outside their jurisdiction, meaning this factor would not weigh heavily in favor of transfer even were this court to apply Pennsylvania law. See Essroc Cement Corp. v. CTI/D.C., Inc., 740 F. Supp. 2d 131, 142 (D.D.C. 2010) (applying Pennsylvania law); Bortell v. Eli Lilly & Co., 406 F. Supp. 2d 1, 6 (D.D.C. 2005) (same). 9 The second factor, the relative congestion of the calendars of the transferee and transferor courts, is neutral. Ruffin notes that the Middle District has more cases per judge, but Defendant points out that the median time from filing to disposition is similar in both districts. Neither party has made a compelling showing that the congestion in one or the other court warrants tipping the scales in either direction. The parties dispute the third public interest factor, the importance of deciding local controversies at home. Defendant is correct that for purposes of this factor, cases “should be resolved in the forum where the people ‘whose rights and interests are in fact most vitally affected by the suit’” are located. Trout Unlimited v. U.S. Dep’t of Agric., 944 F. Supp. 13, 20 (D.D.C. 1996) (citing Adams v. Bell, 711 F.2d 161, 167 n.34 (D.C. Cir. 1983)). But Defendant overstates the Middle District of Pennsylvania’s interest in this case. Unlike in Trout, which involved quintessentially local issues of water rights, environmental regulation, and local wildlife, Pennsylvania has a less distinct (although not insubstantial) interest in the adequacy of dental care in its federal prisons—especially for inmates, like Ruffin, whose crimes occurred not in Pennsylvania, but in the District of Columbia, and who are in Pennsylvania only to serve their sentences. While Defendant discounts any interest this district may have in Ruffin’s suit, Ruffin is correct that the District has at least some interest in providing a local forum for its returning citizens to litigate claims regarding mistreatment during incarceration. To find otherwise would be to discount any interest the District may have over the treatment of its own citizens who, while in prison, are always located in jurisdictions outside of the District. Both forums have some local ties to Ruffin’s case, and this factor does not weigh in favor of either side. After weighing the various factors applicable to a transfer motion, the court finds that the public and private interests are basically even. Both parties have an interest in litigating in their 10 chosen forums, witnesses are located in both forums, and both forums have some interest in the case. Because traditionally the plaintiff’s choice of forum is given deciding weight (and in this case Ruffin has a compelling interest in litigating in this district), and because a “tie” means Defendant as the moving party has failed to carry its burden, the court, in its discretion will deny the motion to transfer. b. Motion to Dismiss Defendant argues that Ruffin has failed to state a claim upon which relief may be granted, arguing that “[a]llegations alone do not present a genuine issue of material fact,” “[c]onclusory statements unsupported by any specific facts are insufficient to raise a genuine issue of fact,” and “Plaintiff failed to set forth any evidence, aside from his own conclusory allegations, that the Defendant failed to conform her conduct to the requisite standard or was negligent. Plaintiff failed to establish any causal link between the alleged behavior and any injury.” (Def. Mot. 23). Defendant also claims that each element of Ruffin’s negligence claim must be proven by expert testimony, and failure to do so requires judgment for the United States. As Ruffin correctly points out, whether or not there is a genuine issue of material fact is a question for summary judgment, not a motion to dismiss. At this stage, Ruffin’s Complaint need only “contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 678 (internal quotation marks and citation omitted). Defendant’s allegation that Ruffin has failed to set forth sufficient evidence to prove his claim is irrelevant at this stage, for “as a general principle of civil procedure, factual proof of a claim is not demanded at the pleading stage and is instead only sought once the litigation progresses to the discovery stage of litigation.” Wilson v. Gov’t of D.C., 269 F.R.D. 8, 14 (D.D.C. 2010). Perhaps 11 recognizing these distinctions, Defendant fails to even reference its motion to dismiss in its reply, and instead focuses exclusively on its motion to transfer. Ruffin has set forth factual allegations which, if assumed to be true, are sufficient to survive a motion to dismiss. Under either Pennsylvania or D.C. law, Ruffin’s negligence claim requires him to show duty, breach, and causation. Whether or not Ruffin’s treating physicians owed him a duty is a legal question.2 See In re Sealed Case, 67 F.3d 965, 968 (D.C. Cir. 1995). Ruffin sets forth allegations that Dr. Hartland and/or other prison officials or treating physicians breached their alleged duty by repeatedly refusing to extract his tooth and not providing proper treatment while his condition remained ongoing. Ruffin alleges that he repeatedly filed administrative grievances and appeals to address the situation, to no avail. Finally, Ruffin alleges that as a result of Defendant’s breach, Ruffin suffered severe pain and mental anguish for almost a year. This is a short and plain statement that puts Defendant on notice of Ruffin’s claims, which is all that is required at this stage of the proceedings. IV. CONCLUSION For the foregoing reasons, the court denies the United States’ motion to dismiss, or in the alternative to transfer. An appropriate Order accompanies this Memorandum Opinion. Date: July 31, 2015 Tanya S. Chutkan TANYA S. CHUTKAN United States District Judge 2 Other courts have held (and Defendant does not dispute) that “physicians owe the same standard of care to prisoners as physicians owe to private patients generally,” District of Columbia v. Mitchell, 533 A.2d 629, 648 (D.C. 1987), and “federal courts have construed [18 U.S.C. § 4042] to include the duty to provide adequate medical care to all federal inmates.” Hill v. Lamanna, No. 03-323, 2007 WL 777007, at *12 (W.D. Pa. Mar. 12, 2007); see also Jones v. United States, 91 F.3d 623, 625 (3d Cir. 1996). 12

01-03-2023

08-11-2015

https://www.courtlistener.com/api/rest/v3/opinions/2994921/

In the United States Court of Appeals For the Seventh Circuit No. 00-1391 FE A. VELASCO, M.D., Plaintiff-Appellant, v. ILLINOIS DEPARTMENT OF HUMAN SERVICES, Defendant-Appellee. Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 99 C 4314--Suzanne B. Conlon, Judge. Argued September 26, 2000--Decided April 12, 2001 Before COFFEY, RIPPLE, and ROVNER, Circuit Judges. COFFEY, Circuit Judge. On June 30, 1999, Dr. Fe A. Velasco, a Filipino-American woman, filed a four-count complaint alleging that the Illinois Department of Human Services’ decision to terminate her employment violated a number of federal employment laws. Specifically, Velasco asserted race and gender discrimination under Title VII (Count One), race discrimination under 42 U.S.C. sec. 1981 (Count Two), retaliation under Title VII and 42 U.S.C. sec. 1981 (Count Three), and a violation of the Americans with Disabilities Act (ADA) (Count Four). On August 16, 1999, the Illinois Department of Human Services filed a motion to dismiss the first two counts of Velasco’s complaint, alleging that: (1) Velasco’s Title VII race and gender discrimination claims (Count One) were untimely as they were filed more than 90 days after she received a right-to-sue letter; and (2) that the Eleventh Amendment immunized the Department of Human Services from Velasco’s 42 U.S.C. sec. 1981 claims (Count Two). The district court granted the defendant’s motion and dismissed counts one and two of Velasco’s complaint. On December 3, 1999, the Department also moved for summary judgment on counts three and four of Velasco’s complaint, contending: (1) that it had a legitimate, nondiscriminatory reason for discharging Velasco; and (2) that Velasco was not a "qualified individual with a disability" under the ADA. The district court granted summary judgment to the Department with respect to counts three and four, and dismissed Velasco’s complaint. We affirm. I. BACKGROUND A. Factual History In 1986, the Illinois Department of Human Services hired Fe Velasco, M.D., as a forensic psychiatrist at the Elgin Mental Health Center (Elgin) to treat primarily those patients who either had been adjudged mentally incompetent to stand trial or had been acquitted of criminal charges by reason of insanity. On August 15, 1997, Velasco volunteered to be Elgin’s Medical Officer of the Day (MOD) during the evening shift and was, therefore, the only physician on duty at Elgin from 4:00 p.m. until midnight. As the MOD, Velasco was responsible for attending to all medical emergencies at the facility. That evening, at approximately 8:00 p.m., a patient in the Wines building began choking on food, and, at 8:04 p.m. a "Code Blue" alert was announced over Elgin’s voice page system./1 Velasco, as the MOD, was obligated to respond immediately to the Code Blue and provide medical treatment to the patient. At the time of the Code Blue, she was sitting in the Elgin Medical Building, but claims that she did not hear the announcement./2 In any event, Velasco became aware of the emergency minutes later (at 8:08 p.m.) when her personal pager directed her to call an extension in the Wines Building. Upon calling, Velasco spoke with nurse Paul Bute and learned that he had performed the Heimlich maneuver (without success) on a choking patient. Despite being informed by Bute that the patient was gasping for air, Velasco did not immediately respond to the emergency, but instead asked Bute to "keep her updated on the situation" because "she was in the middle of her lunch." Meanwhile, paramedics from St. Joseph’s Hospital arrived at approximately 8:14 p.m. and left with the patient at approximately 8:25. p.m./3 Velasco, according to her own deposition testimony, was only a "five minute" walk away, but did not arrive at the Wines building until after the paramedics had departed with the patient, some twenty minutes after the Code Blue page was initially activated. Although the patient was released from St. Joseph’s Hospital a few hours later that evening, Velasco did not actually visit the patient until 1:35 a.m. the next morning. Dr. Stephen Dinwiddie, who as the Elgin Medical Director supervises all medical professionals employed at Elgin, met with Velasco on Monday, August 18, 1997. During the meeting, Dr. Dinwiddie informed Velasco that he had ordered an internal investigation of the Code Blue incident referenced above. Dr. Dinwiddie further advised Velasco that if the investigation concluded that she did not provide a timely response to the choking patient, she should consider resigning rather than facing charges of neglect of duty which could result in termination of her employment. Almost one month later, on September 11, 1997, the Elgin internal investigation office submitted a report to Dr. Dinwiddie that stated: There appears to be no dispute that Dr. Velasco was not present on the unit, and did not seek nor attend to the patient, from the beginning of the choking episode to the time of the transfer to St. Joseph’s. Neither is this (her non- attendance) refuted in any of the statements completed by staff interviewed subsequent to the incident. Based on this report, Dr. Dinwiddie sent a letter to Darek Williams, the Elgin Director of Human Resources, recommending that Velasco’s employment be terminated. According to Dr. Dinwiddie’s letter, his recommendation to discharge Dr. Velasco was based on the following: That when "Dr. Velasco was called and told of the acute choking situation, she said that she was in the ’middle of dinner and to keep her updated.’" That when "she arrived on the Unit after the patient had been transported . . . she wrote a note which has a date, but no time, thus potentially obscuring her role in this incident." That the patient returned at 10:15 but that Dr. Velasco "did not examine the patient in person until" 1:35 a.m. the next morning, "according to her progress note." Dr. Velasco’s failure to respond to the emergency call that the patient was choking in a timely way. Dr. Velasco had been disciplined twice for serious offenses, in particular and most recently, for failing to go to another patient who was exhibiting seizure symptoms. Under the terms of a master agreement negotiated by the American Federation of State County and Municipal Employees (AFSCME), no Elgin employee could be disciplined or discharged without first being afforded a hearing allowing the employee the opportunity to rebut any charges of wrongdoing. After reviewing Dr. Dinwiddie’s report, Darek Williams scheduled a pre- disciplinary hearing for November 21, 1997, to consider whether Velasco’s employment at Elgin should be terminated. Shortly before this pre- disciplinary hearing, however, an AFSCME representative contacted Williams and secured a continuance of the hearing because Velasco had been placed on medical leave. Velasco was placed on medical leave on November 18, 1997, after calling Elgin’s timekeeper and stating that she had checked into a hospital for depression./4 In support of Velasco’s request for medical leave, on January 23, 1998, Dr. E.A. Perakis, a psychiatrist, submitted a letter to Elgin’s human resources director stating that Velasco had been under his care since November 18, 1997, at which time he had advised her to take a medical leave of absence. Some months later, on May 12, 1998, Dr. Perakis submitted a letter stating: Dr. Velasco has been under my care since November 18, 1997 and has been treated for symptoms of severe depression. During the past two years, she has struggled with poor concentration, decreased energy levels, tearfulness, and a severely depressed mood. She has not been able to function at a level which would enable her to practice psychiatry. I do not feel that [Velasco] was in any condition to function adequately in her duties as a psychiatrist nor to function sufficiently while in any other kind of demanding job that would utilize her skill level. I would definitely consider the patient to have been totally disabled during this period. Prior to Dr. Perakis’ May 12, 1998 letter, no one at Elgin had been informed that Velasco had a disability which required accommodation. In fact, Dr. Velasco never completed a "Request for Reasonable Accommodation" form for her disability. While Dr. Velasco applied for continuing medical leave, Dr. Edith Hartman became aware that Velasco’s staff privileges would expire in August 1998./5 On July 8, 1998, Dr. Hartman wrote Velasco and warned: Please be advised that your membership in the Medical Staff Organization, and your privileges as Physician Specialist C will expire on August 28, 1998. In response, Velasco wrote a letter to Dr. Hartman on July 12, 1998, stating: Thank you for your kind consideration. I am requesting the application for renewal of membership in the Medical Staff organization be sent to my residence as I am still medically unfit to return back to work. One month later, on August 12, 1998, Velasco submitted an application to renew her staff privileges at Elgin. On the application, Velasco responded "No" to the question "Do you have any physical or mental condition which could impact on your ability to carry out any assigned duties?" despite the fact that she: (1) had admitted only a month before in her letter to Dr. Hartman that she was "medically unfit to return back to work"; and (2) was currently on medical leave. On August 20, 1998, the Credentials Committee allowed Velasco’s staff privileges at Elgin to lapse because of her unresolved personnel and health issues. On August 20, 1998, more than one year after the Code Blue incident occurred, Elgin management sent a notice to Velasco, stating: Elgin Mental Health Center is contemplating imposing disciplinary action upon you. (See attached memo [alleging misconduct in handling the "Code Blue" emergency of August 15, 1997]) According to AFSCME Master Contract, you will have an opportunity in which to respond to these charges. Therefore a conference has been rescheduled for you on August 26, 1998 at 2:00 p.m. in Conference Room 113 of the Administration Building. At the August 26 conference, you may be represented by your bargaining unit representative. Velasco requested that the hearing, now scheduled more than one year after the incident, be delayed due to her continuing health problems, but her request was denied. On the date of the hearing, Dr. Dinwiddie appeared on behalf of Elgin management, recited the results of the internal investigation report, and argued for her discharge. As Velasco neither attended the hearing nor requested that an AFSCME official appear on her behalf, Dr. Dinwiddie’s arguments and allegations went unchallenged and Velasco was discharged effective on October 25, 1998. B. Procedural History Dr. Velasco originally filed charges with the Equal Employment Opportunity Commission (EEOC) and the Illinois Department of Human Rights (IDHR) alleging race and gender discrimination under Title VII of the Civil Rights Act of 1964, 42 U.S.C. sec.2000e, et seq., in March 1998. Shortly thereafter, on May 18, 1998, Velasco received a right-to-sue letter from the EEOC and IDHR. Almost two months later, on August 14, 1998, she filed a two-count complaint in federal court alleging race discrimination and Title VII gender discrimination. On January 26, 1999, Velasco moved (without reciting a reason) to voluntarily dismiss her first complaint pursuant to Fed. R. Civ. P. 41, and the trial judge granted her motion. On February 22, 1998, only one month after dismissing her first complaint, Velasco filed new charges with the EEOC and IDHR alleging retaliation and disability discrimination, but not race discrimination. She received a right-to- sue letter dated April 28, 1999, in response to these charges. On June 30, 1999, Velasco filed her second complaint and alleged race and gender discrimination under Title VII despite the fact that she had not made an allegation of race discrimination in her February 1999 complaint to the EEOC and IDHR. Thus, the second complaint was filed over one year after the EEOC’s May 1998 right-to-sue letter authorizing a suit based on race discrimination. On August 16, 1999, the Department filed a motion to dismiss alleging that: (1) the race and gender discrimination under Title VII claims in Count One were filed more then 90 days after the right-to-sue letter was issued and were, therefore, untimely; and (2) that the Eleventh Amendment immunized the Department, an agency of the state of Illinois, from liability under 42 U.S.C. sec. 1981. The district court granted the defendant’s motion and dismissed the Title VII race and gender discrimination claims in Count One and the section 1981 claims in Count Two. On December 3, 1999, the Department moved for summary judgment on the remaining counts (alleging violation of the ADA and discriminatory retaliation) contending that: (1) the department had a legitimate nondiscriminatory reason for discharging Velasco; and (2) Velasco was not a "qualified individual with a disability" under the ADA. The district court granted the Department’s motion on January 14, 2000, and dismissed Velasco’s remaining claims. Velasco appeals. II. DISCUSSION We review de novo the district court’s decision to grant both a motion for summary judgment and a motion to dismiss, accepting all facts and inferences in a light most favorable to Velasco. Vukadinovich v. Board of Sch. Trustees, 978 F.2d 403, 408 (7th Cir. 1992), cert. denied, 510 U.S. 844 (1993). Summary judgment is appropriate whenever "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). "If no reasonable jury could find for the party opposing the motion, it must be granted." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A. ADA Claim Whatever the merits of Velasco’s ADA claim were before she filed her suit, the Supreme Court’s recent decision in Board of Trustees of the Univ. of Alabama v. Garrett, 121 S. Ct. 955 (2001) bars her ADA claim under the Eleventh Amendment. We are, of course, bound to follow the holdings of our nation’s highest court. United States v. Gillespie, 974 F.2d 796, 804 (7th Cir. 1992) ("[O]ur obligation is to follow Supreme Court precedent, not contract or expand it . . . ."). Given that the Garrett decision is directly on point, we need not address this issue any further. B. Title VII Retaliation Claim Dr. Velasco contends that the district court improperly granted summary judgment on her claim of retaliation under Title VII. On appeal, Dr. Velasco argues that a factual question exists as to whether she was terminated in retaliation for her decision to file charges of race and sex discrimination against the Illinois Department of Human Services. We disagree. As is well known, Title VII prohibits an employer from taking adverse employment action or discriminating against an employee merely because the employee . . . has opposed any practice made an unlawful employment practice by this subchapter, or because he has made a charge, testified, assisted or participated in any manner in an investigation, proceeding or hearing under this subchapter. 42 U.S.C. sec. 2000e-3(a). Thus, it is unlawful for an employer to discharge an employee simply because that employee has filed a charge under Title VII. Juarez v. Ameritech Mobile Communications, Inc., 957 F.2d 317, 321 (7th Cir. 1992). 1. Burden-Shifting Analysis Dr. Velasco employed the burden-shifting approach originally espoused in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973) in resisting the Department’s motion for summary judgment on her retaliation claim. In the present case, the Department concedes that Dr. Velasco can set forth a prima facie case that she engaged in protected activity by filing charges of discrimination with the EEOC, and shortly thereafter, suffered an adverse employment action, namely being discharged./6 Under McDonnell Douglas’ indirect, burden-shifting approach, this concession forces the Department to articulate a nondiscriminatory reason for terminating Velasco’s employment which, if taken as true, would support the conclusion that there did exist a nondiscriminatory reason for her discharge. St. Mary’s Honor Ctr. v. Hicks, 509 U.S. 502, 513 (1993). The Department asserts that Velasco was terminated because she failed to timely respond and supply medical attention during a life-threatening Code Blue emergency while serving as the Elgin MOD on August 15, 1997. Importantly, we have recently decided that an employer that claims that a physician’s actions have endangered patients has articulated a non- discriminatory explanation for discharge that satisfies this burden of production. Bekker v. Humana Health Plan, Inc., 229 F.3d 662 (7th Cir. 2000). As we are of the opinion that a doctor endangers persons entrusted to her care if and when she fails to timely respond to medical emergencies, we hold that the Department has satisfactorily articulated a non-discriminatory reason for terminating Velasco’s employment. As the Department has asserted a non- discriminatory justification, the burden now shifts to Dr. Velasco to prove by a preponderance of the evidence that the Department’s proffered reason was merely a pretext for discrimination. To demonstrate pretext, Velasco must demonstrate that the Department’s articulated reason for her discharge either: (1) has no basis in fact; (2) did not actually motivate her discharge; or (3) was insufficient to motivate her discharge. Collier v. Budd Co., 66 F.3d 886, 892 (7th Cir. 1995). Upon review of the record, we are convinced that the Department’s asserted reason for her discharge was supported by an adequate factual basis. It is undisputed that a medical emergency occurred on August 15, 1997, when a Code Blue page announced an emergency in the Wines Building. It is further undisputed that another hospital employee, Jean Cattron, who was in the same building as Velasco at the time of the Code Blue call not only heard the call, but responded to the alert and assisted the patient prior to the arrival of paramedics. The record demonstrates that Velasco, by her own admission, did not arrive in the building until after paramedics had left with the patient. Finally, Velasco admits she advised a nurse attending to the patient during the life-threatening emergency that she was on her "lunch break." We also hold that Dr. Velasco has failed to demonstrate that her handling of the Code Blue incident did not "actually motivate" her discharge or was "insufficient to motivate" her discharge. Collier, 66 F.3d at 892. Dr. Velasco asserts that the temporal proximity between the time she filed a charge of discrimination (September 2, 1997) and Dr. Dinwiddie’s recommendation to terminate her employment (October 14, 1997) creates a question of fact as to whether the Department discharged her in retaliation for filing a discrimination claim. Dr. Velasco’s reliance on the temporal proximity between her complaint and discharge is misplaced because Dr. Dinwiddie became concerned about Dr. Velasco’s mishandling of the Code Blue incident well before Velasco filed a discrimination charge. In fact, on August 18, 1997, Dr. Dinwiddie told Velasco that she should consider resigning rather than proceeding through disciplinary proceedings that would likely result in her termination. C. Race Discrimination Dr. Velasco’s final argument is that the district court erred in dismissing her race discrimination claim as being untimely. A plaintiff must file an action for race discrimination within 90 days of receiving a right-to-sue letter. Irwin v. Dep’t of Veterans Affairs, 498 U.S. 89, 96 (1990). Dr. Velasco received a right-to-sue letter on May 18, 1998, and timely filed her first complaint against the Department alleging race and gender discrimination under Title VII on August 14, 1998. On January 26, 1999, however, Velasco moved to voluntarily dismiss her first complaint pursuant to Fed. R. Civ. P. 41, and the court granted her motion. When Velasco filed new charges with the EEOC on February 22, 1998, she alleged retaliation and disability discrimination, but did not re-assert charges of race discrimination. Consequently, the April 28, 1999 right-to-sue letter she received in response to her February charges authorizes her to file a suit for "retaliation and disability discrimination" but not race discrimination. Thus, the only authorization Dr. Velasco has ever received to bring the claim of race discrimination contained in her second complaint was conferred on May 18, 1998, over one year prior to her filing of the second complaint. Her race discrimination count is clearly not timely. See generally Brown v. Hartshorene Pub. Sch. Dist. #1, 926 F.2d 959, 961 (10th Cir. 1991) ("Courts have specifically held that the filing of a complaint that is dismissed without prejudice does not toll the statutory filing period of Title VII. See Price v. Digital Equip. Corp., 846 F.2d 1026, 1027 (5th Cir. 1988) (per curiam); Wilson v. Grumman Ohio Corp., 815 F.2d 26, 28 (6th Cir. 1987) (per curiam). We agree."). The district court’s decision is AFFIRMED. /1 Code Blue is the highest, most urgent call used at the Elgin facility and signifies a life- threatening medical emergency. Elgin’s "voice page system" is a series of loud speakers contained in almost every building at Elgin, including the Medical Building where Velasco was seated at the time that the Code Blue was announced. /2 Jean Cattron, another Elgin employee, stated in a subsequent investigation that she (Cattron) was in the Medical Building and heard the Code Blue announced over the loud speakers. /3 Dr. Velasco alleges that the paramedics transferred the patient at 8:15 p.m. not 8:25 p.m., but offers no support for this contention. More importantly, she does not dispute that the paramedics, arriving from a separate medical treatment facility, responded to the emergency and transferred the patient to St. Joseph’s Hospital before she arrived on the scene. /4 Due to Velasco’s numerous requests, her medical leave was eventually extended through November 4, 1998, and she never returned to work at Elgin. /5 "Staff Privileges" at a hospital allow a licensed doctor to practice medicine at a particular institution. As the Chair of the Elgin Credentials Committee during all times relevant to this appeal, Dr. Hartman reviewed requests from doctors to obtain or renew staff privileges at Elgin. /6 To establish a prima facie case of retaliation under Title VII, Velasco must prove that (1) she engaged in statutorily protected expression; (2) she suffered an adverse action by her employer; and (3) there is a causal link between the protected expression and the adverse action. Adusumilli v. City of Chicago, 164 F.3d 353, 362 (7th Cir. 1998).

01-03-2023

09-24-2015

https://www.courtlistener.com/api/rest/v3/opinions/1597211/

583 F.Supp. 86 (1984) UNITED STATES of America, Plaintiff, v. Alejandrina TORRES, et al., Defendants. No. 83 CR 494, 1-4. United States District Court, N.D. Illinois, E.D. January 16, 1984. *87 *88 Daniel K. Webb, U.S. Atty., Joseph H. Hartzler, Asst. U.S. Atty., Chicago, Ill., for plaintiff. Michael E. Deutsch, Dennis Cunningham, Melinda Power, David C. Thomas, Chicago, Ill., for defendants. Memorandum LEIGHTON, District Judge. In this superseding eight-count indictment, Alejandrina Torres, Edwin Cortes, Alberto Rodriguez, and Jose Rodriguez, are charged with seditious conspiracy and related offenses against the United States. They move to suppress evidence which government agents obtained as a result of electronic surveillances purportedly authorized by Title III of the Omnibus Crime Control and Safe Streets Act of 1968, 18 U.S.C. §§ 2510-2520. The parties have been heard; they have filed written submissions; and oral summations have been made by their counsel. Orally from the bench, the court made its findings of fact, reached conclusions of law, and entered an order which, in part, sustained the motion to suppress. This memorandum summarizes the procedural background of this case, including the motions to suppress, and makes more explicit and definite the court's oral findings and conclusions. I A. The Procedural Background Defendants were all arrested on the same day, June 29, 1983, in the City of Chicago; and thereafter, at a preliminary hearing before a magistrate of this court, bail was set for Alejandrina Torres at $5 million cash and for each of the other defendants, cash bail of $10 million. On July 6, 1983 a one-count indictment was returned, charging that between June 14, 1975 and June 29, 1983, the exact dates being unknown to the Grand Jury, defendants and one William Morales wilfully and knowingly became members of and participants in a conspiracy formed by a clandestine group "known as the Fuerzas Armadas de Liberacion Nacional Puertorriquena (Armed Forces of Puerto Rican National Liberation) or FALN." The indictment alleged that between June 14, 1975 and November 25, 1979, as a part of the conspiracy, "the conspirators would seek to achieve their goals and thereby oppose ... the authority of the government of the United States by means of force, terror and violence, including the construction and planting of explosive and incendiary devices at banks, stores, office buildings and government buildings,..." *89 located in the metropolitan area of the City of Chicago. Each defendant was arraigned; this Court set a schedule for the pretrial conference and the filing of pretrial motions under local criminal rules. On July 29, 1983, Jose Rodriguez moved for reduction of his bond; and in answering his allegations, the government made a written submission in which it disclosed that in the course of its investigations of defendants and this case, applications for, and renewals of, authorizations had been made to the Chief Judge of this court for orders which permitted the interception of wire and oral communications at two locations in the City of Chicago: Apartment 505, 736 West Buena and Apartment 211, 1135 West Lunt. It was also revealed that authorizations, both originals and renewals, were obtained which enabled special agents of the Federal Bureau of Investigation to install devices that could visually monitor and record all activities that took place in the two apartments, where, during the period in question, defendants or some of them, enjoyed an expectation of privacy. All of the orders were issued pursuant to the purported authority of Sections 2518(4)(c) of Title III of the Omnibus Crime and Safe Streets Act of 1968, 18 U.S.C. Sections 2510-2520. After learning of these aural and visual interceptions, but in accordance with a previously set schedule, defendants Torres, Cortes, and Alberto Rodriguez filed a 99-page motion to dismiss the indictment, supported by appendices totaling 65 pages in which they reviewed the history of the relation between the United States and Puerto Rico during the period between 1898 and 1974. This review covered what defendants described as the struggle for independence of Puerto Rico. They argued that they are not domestic criminal accuseds to be prosecuted in this case; they are prisoners of war to whom this court should afford P.O.W. status. But if this court did not agree, defendants contended that their case should be transferred to a competent international tribunal. Or in the alternative, they argued that this court should compel the government to produce all records and logs of FBI surveillance, investigations, and counterintelligence concerning them and groups of Puerto Ricans who had struggled for the independence of their native island. Defendants requested the court to grant them a hearing, if their motion to dismiss were not granted, "and order the suppression of all illegally obtained evidence."[1] The remaining defendant, Jose Rodriguez, proceeding on a schedule for himself, filed a motion requesting that this court hear evidence and "suppress electronic surveillance." He alleged he was relying on the ground that authorizations for interception of wire and oral communications in the two apartments were issued without the probable cause required by 18 U.S.C. §§ 2518(3)(a), (b), (d) and by the Fourth Amendment to the Constitution of the United States; that the initial applications and the renewals were not in compliance with the specific requirements of 18 U.S.C., §§ 2518(1)(c) and 4(c). Further, he alleged that the applications and their subsequent renewals were based on allegations which were false at the time they were presented to the Chief Judge and that those making the original and renewal applications knew of the falsity and acted with reckless disregard of the truth. He further alleged that the surveillances conducted by agents of the government in the two apartments, pursuant to the authorizations, both original and renewals, violated the orders issued by the Chief Judge, and contravened constitutional prohibitions against general searches. For these reasons, he asked this court to enter an order suppressing all electronic surveillance intercepted by agents of the government in this case. Earlier, the court had *90 ordered that in this multi-defendant prosecution, a motion filed by one defendant would inure to the benefit of all defendants unless a defendant particularly disclaimed the advantage of that motion. A date was set for hearing of both that portion of the motion by Torres, Cortes, and Alberto Rodriguez for suppression of evidence, and the motion of Jose Rodriguez to suppress electronic surveillance. This setting was with the understanding that defendants' motions would be heard first, and depending on the court's ruling or rulings, the case would proceed to trial. Accordingly, on Monday, January 9, 1984, the cause was before the court; the motions were called for hearing. Counsel for the parties made opening statements that delineated the scope of the motions to suppress and the items of evidence which defendants were contending had to be excluded from use by the government. Their counsel stated that they were seeking to suppress not only the wire and oral communications which government agents had intercepted in the two apartments, but were also raising legal questions that challenged the right of the government to procure court orders that authorized its agents to install devices by which they could visually monitor and record all activities that took place in the apartments. Defendants' lawyers asserted that Section 2510(4) of the Omnibus Crime Act defines "intercept" as "the aural acquisition of the contents of any wire or oral communication," a term which many courts have construed to mean coming into possession through the sense of hearing as distinguished from the sense of sight, the principal characteristic of visual monitoring. Thus, with the objectives of defendants' motions to suppress delineated, the court heard the parties; and from the evidence makes the following findings. B. The Facts On January 18, 1983, an assistant United States attorney for this district applied to the Chief Judge of this court for an order pursuant to § 2518 of Title 18, United States Code, authorizing the Federal Bureau of Investigation of the Department of Justice to intercept wire and oral communications from a telephone (312) 528-9075 subscribed to by Luis Berrios in Apartment 505, 736 West Buena, Chicago, Illinois. The application was under oath and stated there was probable cause to believe that the apartment had been and will be used by Edwin Cortes, Alejandrina Torres, and others yet unknown in connection with the commission of certain offenses, particularly conspiracy to oppose by force the government of the United States, in violation of 18 U.S.C. § 2384. According to the application, the facts which supported the belief of probable cause were contained in a 67-page affidavit of a special agent of the Federal Bureau of Investigation to which were appended 11 multi-paged exhibits. As authority for the application, the assistant United States attorney referred to terms defined in § 2510 of Title 18, United States Code, and requested that additionally, the Chief Judge include in the "[o]rder the authorization for special agents of the Federal Bureau of Investigation to install in Apartment 505, 736 West Buena, Chicago, Illinois, devices that will visually monitor and record the activity taking place in furtherance of the above-described purposes." It was further requested of the Chief Judge "that Special Agents of the Federal Bureau of Investigation be authorized to surreptitiously enter the [apartment in question], ... and at night if necessary, ... for the purpose of installing, concealing, adjusting and ... removing oral interception and visual observation devices" utilized pursuant to the order. The supporting affidavit to the exhibits described the experiences of the special agent as an investigative officer of the United States, particularly his investigations of crimes of violence in New York City, other locations, and in the Chicago metropolitan area, between 1975 and 1980. Affiant stated that he investigated the criminal activities of a terrorist group which calls itself the Fuerzas Armadas Liberacion Nacional Puertorriquena (translated as armed forces of Puerto Rican national *91 liberation) or FALN. He said he had personally participated with, and had knowledge of activities of other FBI investigators, those of the United States Secret Service, the Chicago Police Department, and the Illinois Department of Law Enforcement, Division of Criminal Investigation, in connection with the FALN, details of which he described in his affidavit. Based on information he had acquired from such sources, the agent said there was probable cause to believe that "Edwin Cortes, Alejandrina Torres, and others as yet unknown," had committed and were then committing offenses involving conspiracy to oppose by force the government of the United States, in violation of Title 18, United States Code § 2384. He stated there was probable cause to believe that Apartment 505, 736 West Buena, Chicago, Illinois, had been and would, in the future, be used by Edwin Cortes and Alejandrina Torres, and others as yet unknown, in connection with commission of offenses against the United States. The agent then from personal knowledge, and other sources, described what he said was an overview of the FALN; it was a clandestine organization composed of individuals who have dedicated themselves to "liberating Puerto Rico from United States control." Based on what he knew personally, and from results of FBI investigations, the agent averred that "[t]he FALN is responsible for over 130 bombing and incendiary attacks, armed takeovers and a series of armed robberies," incidents that spanned the period of October 26, 1974, when the group claimed credit for five bombings in downtown New York City, and the end of 1982. The event which gave affiant and other agents of the FBI important information concerning this clandestine organization was the April 4, 1980 arrest in Evanston, Illinois of 11 FALN members who had assembled for the purpose of robbing an armored truck making a pick-up at Northwestern University. This arrest led to the conviction and life imprisonment of one of the 11 in New York, conviction of the remaining 10 in Illinois state court for armed violence and weapons offenses, and the conviction of those 10 in a prosecution in this court, 80 CR 736, for which they were sentenced on February 18, 1980 to terms of incarceration ranging from 55 to 90 years. One of these individuals, Freddie Mendez, later agreed to cooperate with the government, and subsequently provided what the agent said was a wealth of reliable information concerning the FALN, including details of the behavior of FALN members, and their mode of operation. With this information, affiant and other agents learned of the plans, purposes and objectives of the organization, together with the identity of certain individuals involved. Mendez told affiant about the operation by the FALN of what its members called "safe houses," premises in which apartments were rented under assumed names and in which bombings, robberies, and armed takeovers were discussed and planned; places where bombs and incendiary devices were manufactured and people trained for these activities. Mendez, in his various debriefings, told agents of the government about the details of training and indoctrination of members of the organization; he gave federal agents details about FALN activities in several "safe houses". The Evanston arrest of the 11 FALN members directly led to the discovery of five "safe houses" and one garage in 3 states: Illinois, Wisconsin, and New Jersey. The affiant swore that Mendez also gave him, and other FBI agents, information concerning Edwin Cortes and Alejandrina Torres. Cortes had been identified by FBI investigation as being an associate of three other FALN members; Mendez had informed FBI agents that Cortes told him personally he wanted to join the FALN and frequently discussed terrorist actions. Mendez knew Cortes to own and often carry a revolver; he believed Cortes to be a likely candidate for FALN recruitment, if he was not already a member. As to Alejandrina Torres, Mendez told affiant that she was the stepmother of an *92 incarcerated FALN member, Carlos Torres, with whom she had repeated contacts while he was an inmate in an Illinois penitentiary. Her primary function, according to Mendez, was to serve as a link between him, when he was in prison, and FALN members who were active outside prison walls. Mendez told FBI agents of conversations he had with Alejandrina Torres concerning FALN plans to procure the release of incarcerated FALN members. Mendez, in various conversations told affiant that Torres was familiar with FALN jail breakout plans and she was knowledgeable in the various code words known only to members of the FALN. Her knowledge of these code names was extensive and included code words that were used to refer to well-known FALN members, those incarcerated, and some who were at liberty. Mendez said that in various visits with Torres, he saw her handle papers by grasping them between the sides of her index and middle fingers, a method of holding papers he was taught by an FALN leader as the way to avoid putting fingerprints on documents. Concerning the apartment at 736 West Buena Street in Chicago, the special agent stated that on September 1, 1981, it was rented to a person identifying himself as Luis Berrios; and on August 16, 1982, the lease was renewed for one year. Investigation revealed there was no person by the name of Louis Berrios listed at that address as a registered voter; no Illinois auto license was known to exist in that name; nor was there any motor vehicle registered in Illinois to that name at that address. According to the agent, rent for the apartment was paid by money orders purchased from a currency exchange. Investigation by FBI agents disclosed that the money orders were purchased by the defendant Edwin Cortes, a fact established by a photograph taken of him at the currency exchange. Throughout the time in question, Cortes lived with his wife and children at 5147 South Paulina in Chicago; the Buena Street address is 4200 North in the City of Chicago. During the same period of time, defendant Alejandrina Torres lived at 1305 North Hamlin with her husband and children, on a street located 3800 West in Chicago. Beginning with the period December 7 through 20, 1981, the special agent said that members of the Chicago Terrorist Task Force began what he described were "intense physical surveillances" of Edwin Cortes. This involved his being followed by agents of the government from his place of employment at 5060 South State Street, Chicago, to the central and northern parts of the city. He was seen using public transportation and engaging in furtive conduct which the special agent said was characteristic of FALN members when they engaged in clandestine activities. These surveillances culminated in Cortes being seen entering the apartment at 736 West Buena Street on a number of occasions during the period September 7, 1982 through January 8, 1983. During that same time, Alejandrina Torres was observed entering the Buena Street apartment. She was seen driving a Ford Pinto registered in her name, and from her home address. Pen register records for the telephone 528-9075 in the apartment were monitored; they disclosed a pattern of use which furnished the basis for agents of the government to believe that the telephone was used by Torres and Cortes for clandestine purposes. The manner of dress and clothing of both Cortes and Torres were observed by FBI agents and, their conduct conformed to the information furnished by Freddie Mendez concerning the behavior of FALN members. The special agent's affidavit went on to state that the subjects of his investigation took great care to ensure that their criminal activities remain shielded from law enforcement scrutiny; these individuals did not confide in anyone, they used disguises, and false identities, and took great pains to prevent law authorities from gaining possession of useful physical evidence of their crimes. He said that the use of search warrants, pen registers, were ineffective. *93 Mendez, said the agent, had advised government investigators that FALN members routinely studied photographs of agents, police officers, and of prosecutors in order to know their enemies; they were heavily armed and weapons trained. The agent said "[a]ccordingly, normal investigative procedures have been tried and have failed, all reasonably appear to be unlikely to succeed if tried or to be too dangerous." He then reviewed the necessity of telephone company assistance, and the need for authorized surreptitious entry into the apartment; and he assured the Chief Judge that the electronic surveillance would be conducted in such a way as to minimize the interceptions. He swore to the belief that the activity to be electronically covered was continually criminal and conspiratorial; that the evidence sought will be obtained on a continuing basis, following the first interception; and "shall continue until communications are intercepted which reveal the manner in which Edwin Cortes, Alejandrina Torres, and others as yet unknown, participate directly or indirectly in the criminal conduct described...." The Chief Judge issued the order as applied for, including the authority for visual monitoring and recording of the activity taking place in Apartment 505, 736 West Buena Street, Chicago, Illinois. Thereafter, four applications were made to renew the order, the last one on May 18, 1983. Each renewal application was under oath and supported by the affidavit of an FBI agent to which were appended exhibits. Each supporting affidavit referred to the government's prior request for court authority to conduct the interception of wire and oral communications in the apartment; and each detailed the acts of Alejandrina Torres and Edwin Cortes in the apartment, including telephone calls they made and received there. Some of the applications appended transcripts of telephone conversations which disclosed plans Torres and Cortes were discussing about forcing the release from incarceration of an FALN member who was then in an Illinois penitentiary, and one who was in federal custody in the Leavenworth Penitentiary in Kansas. The affidavits described how Torres and Cortes were actually engaged in assembling explosives in the Buena apartment; and one exhibit, consisting of a photograph taken by the visual monitor camera in the apartment, showed Torres and Cortes in the process of assembling explosives. One supporting affidavit stated that agents had made a surreptitious entry into the apartment and saw items of explosives which they inventoried, inspected, but left untouched. In two instances, affidavits described how information that had been obtained from electronic surveillance of the apartment enabled the government to prevent the forcible release from prison of two FALN members. In response to each renewal application, the Chief Judge entered the orders requested and authorized continued interception of wire and oral communication in the Buena apartment; he also authorized continued installation of visual monitoring and recording devices. On April 5, 1983, another sworn application was made to the Chief Judge for authority "to intercept oral communications of Edwin Cortes, Alejandrina Torres, and others yet unknown" in Apartment 211, 1135 Lunt Avenue, Chicago. An Assistant United States Attorney said the apartment had been and would be used "by Edwin Cortes, Alejandrina Torres, and others as yet unknown" in connection with the commission of certain criminal offenses, among them, opposing by force the government of the United States in violation of Title 18, United States Code, § 2384. The reason for seeking authority to intercept only "oral," rather than the "wire and oral" communications of the named individuals in the apartment, was the absence of a telephone in those premises. The application, as did the one for the Buena Street address, asked that special agents of the Federal Bureau of Investigation be authorized to install in the Lunt Avenue apartment "devices that will visually monitor and record the activity taking place in furtherance of the above-described purposes." It was supported by an FBI agent's affidavit to which was appended nine exhibits, five of them photographs *94 that detailed what government agents had observed through surveillance of Cortes and Torres in and around the Buena Street and Lunt Avenue apartments. The special agent told the Chief Judge that the "oral communications" to be intercepted "will concern the construction and placing of explosive devices, the criminal activities of the members of a violent terrorist group calling itself the FALN, the planning of armed robberies (affecting commerce) to finance this group's criminal activities, the conspiracy to oppose by force the authority of the government of the United States, the precise nature and scope of the illegal activities, and the identity of co-conspirators involved in the commission of these offenses." Affiant then went on to describe conversations that had been intercepted at the Buena Street apartment, and the relation they seemed to bear on the criminal activities of the FALN. Although the Lunt Avenue apartment had been rented by a man identifying himself as John Bell, FBI investigation revealed there was no verifiable evidence that such an individual existed: he was not registered as a voter in the City of Chicago; records of the Illinois Secretary of State did not show issuance of a license or registration of an automobile in that name or at that address; Illinois Bell Telephone records did not show a telephone assigned to John Bell at 1135 Lunt Avenue, Chicago. Surveillance of Alejandrina Torres on March 31, 1983, led agents of the Federal Bureau of Investigation to evidence which reasonably indicated that she was paying the rent for the apartment. Acting on the application thus supported, the Chief Judge issued the order authorizing interception of "oral communications" in the Lunt Avenue apartment, including a provision which allowed agents of the government to install devices that could visually monitor and record the activities taking place in those premises. This order was renewed twice thereafter, the last time on June 3, 1983; each renewal application was supported by an affidavit to which were appended exhibits. In each instance, the renewal application was granted and a renewed order was issued. In none of the applications, nor in any of the supporting affidavits, is there any claim by any government agent that Alberto Rodriguez or Jose Rodriguez were ever seen in or near the Buena Street apartment. These two defendants do not claim any possessory or proprietary interest in those premises; they never arranged for their use, or ever had anything to do with acquiring the right to any of the facilities they contained. The government does not contend otherwise. As to the Lunt Avenue Address, these two defendants do not claim, nor does the government assert, that they had or have any proprietary or possessory interest in the apartment there. However, on one occasion, April 17, 1983, an oral conversation between Alberto and Jose Rodriguez was intercepted in the apartment. On three occasions, April 10, 19, and 24, 1983, in that apartment, oral conversations between Alberto Rodriguez and Edwin Cortes were intercepted by government agents. In fact, none of the six affidavits filed in support of the two original and four renewal applications mention the names of Alberto and Jose Rodriguez. The electronic surveillances of the two apartments continued from January 18, 1983, when the original Buena Street court authorization was obtained, to June 29, 1983, when defendants were arrested. Between these two points of time, without limitation as to time of day or mode as to their use, the government maintained devices that enabled its agents "to visually monitor and record the activity taking place in" the two apartments. As a result of the visual surveillance, approximately 130 hours of video tapes contained in 52 separate reels were obtained by the government which recorded the activities of defendants, or some of them, within the privacy of the apartments. II A. The Issues From these facts, the contentions and arguments of the parties present the following issues. *95 1. Whether, and if so to what extent, Alberto Rodriguez and Jose Rodriguez have standing to challenge the legality and the constitutionality of the electronic surveillance conducted by agents of the government in either the Buena Street or the Lunt Avenue apartments.[2] 2. Whether the affidavits filed by the government in support of the original and renewed applications for orders that authorized electronic surveillance in the Buena Street and Lunt Avenue apartments complied with the requirements of 18 U.S.C. § 2518(1)(c), established the probable cause which the Chief Judge had to determine under 18 U.S.C. §§ 2518(3)(a), (b), (d), and met the requirements of the Fourth Amendment to the United States Constitution. 3. Whether defendants made the required substantial preliminary showing that false statements, necessary to the finding of probable cause, were knowingly, intentionally, or with reckless disregard for the truth, included by affiants in their affidavits, thus entitling them to a hearing under Franks v. Delaware, 438 U.S. 154, 155-56, 98 S.Ct. 2674, 2676-2677, 57 L.Ed.2d 667 (1978). 4. Whether Title III of the Omnibus Crime Control and Safe Streets Act of 1968, 18 U.S.C. §§ 2510-2520, authorizes a federal judge to enter orders permitting agents of the government to visually monitor and through video electronic devices record activities taking place in apartments in which defendants, or some of them, enjoyed an expectation of privacy. B. The Law 1. As to the issue of standing. In essence, standing involves the question whether a litigant is entitled to have the court decide the merits of the dispute, or of particular issues. Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 2204, 45 L.Ed.2d 343 (1975). Article III of the federal Constitution requires the party who invokes a court's authority to "show that he personally has suffered some actual or threatened injury as a result of the putatively illegal conduct ...," Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91, 99 S.Ct. 1601, 1607, 60 L.Ed.2d 66 (1979); that the injury "fairly can be traced to the challenged action" and "is likely to be redressed by a favorable decision." Valley Forge, etc. v. Americans United, etc., 454 U.S. 464, 465, 472, 102 S.Ct. 752, 758, 70 L.Ed.2d 700 (1982). In a case like this one, the Constitution and Section 2518(10) of Title 18 permit only an "aggrieved person" to move for suppression of evidence. Alderman v. United States, 394 U.S. 165, 171, 89 S.Ct. 961, 965, 22 L.Ed.2d 176 (1969); United States v. Dorfman, 542 F.Supp. 345, 359 n. 6 (N.D.Ill.1982). For this reason, it is generally held that a defendant, seeking to suppress evidence procured through interception of wire and oral communication, must be a party to the communications which the government seeks to use at trial, or that the conversations took place on his premises. Alderman v. United States, supra at 171, 89 S.Ct. at 965; United States v. King, 478 F.2d 494, 506 (9th Cir.1973); United States v. Ceraso, 355 F.Supp. 126, 127 (M.D.Pa.1973). However, as to the Buena Street apartment, neither Alberto nor Jose Rodriguez claims that the interceptions took place on his premises. Nor do they claim, or can show, that any conversation of theirs was intercepted in that apartment. Therefore, these two defendants lack standing to challenge the validity of the oral and wire intercepts at that address *96 because neither of them is "an aggrieved person" within the meaning of 18 U.S.C., Section 2518(10)(a). United States v. Jabara, 618 F.2d 1319, 1326 (9th Cir.1980). This is not true of the interceptions in the Lunt Avenue apartment, even though Alberto and Jose Rodriguez do not claim any proprietary or possessory interest in the premises. Their conversations were overheard in that apartment by agents of the government. A defendant whose conversations are overheard through electronic devices has standing to challenge the order that authorized the interceptions. See United States v. Fury, 554 F.2d 522, 526 (2d Cir.1977); cf. In Re Flanagan, 533 F.Supp. 957, 960 (E.D.N.Y. 1982). Therefore, Alberto Rodriguez and Jose Rodriguez have standing to challenge the validity of the Lunt Avenue interceptions, to the extent that their conversations were overheard. Despite this fact, and contrary to their arguments, these two defendants do not have the right to attack the validity of the Buena Street interceptions on the theory that they were illegal; and that, the Lunt Avenue authorizations were tainted by what government agents heard at the Buena Street address. Only defendants who are overheard in an earlier interception are "aggrieved persons" entitled to assert that a later interception was tainted by an earlier one. United States v. Lanese, 385 F.Supp. 525, 527 (N.D.Ohio 1974); United States v. Williams, 565 F.Supp. 353, 365 (N.D.Ill.1983); cf. United States v. Dorfman, 690 F.2d 1217, 1228-29 (7th Cir. 1982). 2. As to the issue of compliance with 18 U.S.C. §§ 2518(1)(c) and probable cause. Sections 2518(1) and subsection (1)(c) of the Omnibus Crime Control and Safe Streets Act require that each application for an order authorizing or approving the interception of a wire or oral communication shall include "a full and complete statement as to whether or not other investigative procedures have been tried and failed or why they reasonably appear to be unlikely to succeed if tried or to be too dangerous...." 18 U.S.C., §§ 2518(1)(c). The purpose of these sections "is not to foreclose electronic surveillance until every other imaginable method of investigation has been successfully attempted, but simply to inform the issuing judge of the difficulties involved in the use of conventional techniques." United States v. Pacheco, 489 F.2d 554, 565 (5th Cir.1974). Furthermore, the statute contemplates that "the showing be tested in a practical and common sense fashion." United States v. Alfonso, 552 F.2d 605, 611 (5th Cir.1977); S.Rep. No. 1097, 90th Cong., 2d Sess., 1968 U.S.Code Cong. & Admin.News, pp. 2112, 2190. In the face of these principles, defendants argue that the initial Buena and Lunt applications contained only inflammatory statements intimating why other procedures were not possible; and that the supporting affidavits did not fully describe what other investigative techniques had been tried and had failed. They argue that the affidavits contained only conclusionary or boilerplate allegations unsupported by factual circumstances. Thus, according to defendants, the requirements of Title III were not met. It is true that boilerplate recitations of difficulties in gathering usable evidence for the prosecution of a criminal case are not a sufficient basis for granting a wiretap order. United States v. Kerrigan, 514 F.2d 35, 38 (9th Cir.1975). But as the court of appeals for this circuit recognized in United States v. Anderson, 542 F.2d 428, 431 (7th Cir.1976), "the government's burden of establishing its compliance with [subsection 2518(1)(c)] is not great." And quoting from United States v. Armocida, 515 F.2d 29, 38 (3d Cir.1975), the court said: To support a finding that normal investigative procedures are unlikely to be successful, we interpret the congressional directions as only requiring that there exist a factual predicate in the affidavit. *97 The affidavits in this case did not consist of boilerplate recitations; in fact, each contained the necessary factual predicate. Affiants, in apparent good faith, stated their concern about the alternative investigative procedures they considered useless by referring to the facts and circumstances each described under oath. They pointed to the conduct of FALN members, their attitudes toward each other, and the efforts they take "to prevent law enforcement authorities from gaining possession of useful physical evidence." Affiants excluded the efficacy of search warrants and pen registers; they referred to the fact that the use of grand jury investigation in cases involving the FALN, both in Chicago and New York, have been unsuccessful because witnesses refuse to testify and refuse to produce physical evidence. Each affiant stated that members of the organization willingly serve substantial contempt sentences in order to frustrate the work of grand juries. On these sworn allegations, the Chief Judge's findings that the government had complied with the requirements of 18 U.S.C. 2518(1)(c) were correct. In Re DeMonte, 674 F.2d 1169, 1174 (7th Cir. 1982); see United States v. Inendino, 463 F.Supp. 252, 260 (N.D.Ill.1978). The remaining question, as to the issue under discussion, is whether the supporting affidavits established the probable cause which the Chief Judge had to determine under the Fourth Amendment and 18 U.S.C. 2518(3)(a), (b), and (d). Defendants contend that the authorizations and extensions for the interceptions in the Buena Street and Lunt Avenue apartments were issued without the probable cause required by the Constitution and the statute in question. They argue that probable cause is that modicum of information within an affiant's knowledge which would reasonably lead him to believe that criminal activity is afoot. They insist that the initial Buena application contained only claims of the affiant in general terms referring to slim facts that pointed more to innocent behavior on the part of Edwin Cortes and Alejandrina Torres than to indications of criminal activities. Then turning their attention to the initial Lunt Avenue application, defendants argue that if the Buena Street surveillances were not supported by probable cause, then the Lunt apartment interceptions were even more lacking in such support. They contend that absolutely no facts existed from which government agents could have reasonably believed there was criminal activity afoot, thus warranting the intrusion of electronic surveillance at the Lunt Avenue address. They point out that prior to the application, Edwin Cortes had visited Lunt only once, and Alejandrina Torres once for only a matter of minutes. No telephone existed in the Lunt apartment; yet on the basis of such evidence, the agent who furnished the supporting affidavit concluded that probable cause existed to believe that Cortes and Torres were conspiring at that location to oppose by force the government of the United States. In considering defendants' contentions and arguments, this court bears in mind that "[few] threats to liberty exist which are greater than that posed by the use of eavesdropping devices." Berger v. New York, 388 U.S. 41, 63, 87 S.Ct. 1873, 1885, 18 L.Ed.2d 1040 (1967). It must be mindful of the fact that "[w]herever a man may be, he is entitled to know that he will remain free from unreasonable searches and seizures." Katz v. United States, 389 U.S. 347, 359, 88 S.Ct. 507, 515, 19 L.Ed.2d 576 (1967). However, the test to which the affidavits in question must be subjected is "the totality of circumstances analysis that traditionally has informed probable cause determinations." Illinois v. Gates, ___ U.S. ___, 103 S.Ct. 2317, 2332, 76 L.Ed.2d 527 (1983). "In dealing with probable cause, as the very name implies, we deal with probabilities. These are not technical; they are the factual and practical considerations of everyday life on which reasonable and prudent men, not legal technicians, act." Brinegar v. United States, 338 U.S. 160, 175, 69 S.Ct. 1302, 1310, 93 L.Ed. 1879 (1949). *98 Accordingly, in determining whether the orders issued in this case were based on probable cause, this court must review the applications and affidavits and determine whether they reveal facts and circumstances within the affiant's personal knowledge, or of which he had reasonably trustworthy information, sufficient to warrant a man of reasonable caution to believe that criminal activity was afoot. United States v. Dorfman, 542 F.Supp. 345, 359 (N.D.Ill. 1982). Probable cause is to be gleaned from a common-sense reading of the affidavits in their entirety, informed by indices of reliability that courts have traditionally found worthy of respect. United States v. Hyde, 574 F.2d 856, 863 (5th Cir.1978). Having reviewed the affidavits, and guided by the decided cases, this court observes that affiants and other agents began the physical surveillances of Edwin Cortes and Alejandrina Torres in December 1981 with a good deal of information gained from extensive FBI investigations of FALN criminal activities in New York City and Chicago, Illinois. From these investigative sources, they had learned of the clandestine activities and conduct of FALN members. Then after the April 4, 1980 arrest in Evanston, Illinois of 11 members of the organization, and their subsequent criminal prosecutions, Alfredo (also known as Freddie) Mendez came forward and cooperated with FBI agents; he furnished them with details about FALN modes of operation, particularly their use of "safe-houses" for the purpose of storing and manufacturing explosives to be used in terrorist activities, all in furtherance of Puerto Rico independence. More importantly, Mendez gave the agents information about Cortes and Torres, information which according to the affidavits, was checked against information which FBI agents had gained from other investigations. Thus, affiants had a background of knowledge on which to base their assertions of a reasonable belief that Edwin Cortes and Alejandrina Torres, in and about the two apartments, were engaged in conspiracies with persons unknown, to commit crimes against the United States. Therefore, this court concludes that the affidavits in this case clearly established the probable cause which the Chief Judge had to determine under 18 U.S.C. Section 2518(3)(a), (b), (d); and that the allegations met the requirements of the Fourth Amendment. United States v. Cortese, 568 F.Supp. 119, 126 (M.D.Pa. 1983); see United States v. Geller, 560 F.Supp. 1309, 1321 (E.D.Pa.1983). 3. As to the issue of defendants' compliance with the requirements of Franks v. Delaware. It is well established that for a defendant to go behind the face of a warrant affidavit and attempt to prove it contained perjury, or reveals a reckless disregard for the truth, he must make a substantial preliminary showing that a knowingly or intentionally made false statement, or one made with reckless disregard for the truth, was included by the affiant in the warrant affidavit, and that the allegedly false statement was necessary to the finding of probable cause. To mandate an evidentiary hearing, the challenger's attack must be more than conclusionary and must be supported by more than a mere desire to cross examine. There must be allegations of deliberate falsehood or of reckless disregard for the truth and those allegations must be accompanied by an offer of proof. Franks v. Delaware, 438 U.S. 154, 155-56, 171, 98 S.Ct. 2674, 2676-2677, 2684, 57 L.Ed.2d 667 (1978). Franks requires three elements: (1) a false statement, (2) which is made by the affiant with knowledge of the falsity, or with reckless disregard for the truth, and (3) that is material, meaning that without the false statement, the affidavit would not have been sufficient to establish probable cause. United States v. Balistrieri, 551 F.Supp. 275, 277 (E.D.Wis.1982). It also limits the kind of falsity which may be the subject of a challenge. While the decision requires that the warrant affidavit be "truthful," *99 [t]his does not mean "truthful" in the sense that every fact recited in the warrant affidavit is necessarily correct, for probable cause may be founded upon hearsay and upon information received from informants, as well as upon information within the affiant's own knowledge that sometimes must be garnered hastily. But surely it is to be "truthful" in the sense that the information put forth is believed or is appropriately accepted by the affiant as true. United States v. Dorfman, 542 F.Supp. 345, 365 (N.D.Ill.1982); and see Franks, 438 U.S. at 165, 98 S.Ct. at 2681. These limits and elements from Franks v. Delaware were known by defendants and their counsel. Indeed, on the day the motions to suppress came for hearing, the government filed a memorandum in which it insisted that before defendants can be given a hearing, and be permitted to go behind the face of the affidavits in this case, they should be required to make an offer of proof and establish a substantial showing "that a false statement knowingly or intentionally, or with reckless disregard for the truth, was included by affiant in the warrant affidavit, and that the allegedly false statement was necessary to the finding of probable cause." When counsel for defendants responded, he said it was their theory that Alfredo (Freddie) Mendez on whom the affiants had relied for certain information concerning defendants was a liar, and had lied to the affiants. Because of this fact, he said that defendants had issued a subpoena for Mendez requiring the government to produce him so that he could be interrogated in open court. When asked to make an offer of the proof that would show that any of the affiants had "knowingly or intentionally, or with reckless disregard for the truth..." included false statements in the affidavits, no counsel for any of the defendants could make such an offer. This court then ruled from the bench, and reiterates here, that defendants did not make the substantial preliminary showing required by Franks v. Delaware, one which would have entitled them to a hearing on the truth of the statements in the affidavits. "[A]llegations that ... an informant whose story was recited by an affiant was lying, are insufficient to require a Franks hearing, since the falsity or recklessness alleged is not that of the affiant but that of the third party." United States v. McDonald, 723 F.2d 1288, 1293 (7th Cir.1983), quoting United States v. Dorfman, 542 F.Supp. 345, 366 (N.D.Ill.), aff'd., 690 F.2d 1217 (7th Cir.1982). 4. As to the issue of video surveillance. This issue is important to the interests of the government in this prosecution, to the statutory and constitutional rights of the defendants, and to the public. It presents a question which, in the context of these motions to suppress, has never been decided by any federal court. The issue necessarily involves an inquiry into the right of the government to ask for, and the power of a federal court to grant, orders under which FBI agents can surreptitiously enter an apartment where identifiable persons enjoy an expectation of privacy and there install video electronic devices that enable them, without limitation, to visually monitor and record all activities. This court approaches the resolution of the issue by examining the relevant portions of 18 U.S.C. §§ 2510-2520, commonly called Title III of the Omnibus Crime Control and Safe Streets Act of 1968. First, it is worth observing that "the protection of privacy was an overriding congressional concern [in enacting Title III]," Gelbard v. United States, 408 U.S. 41, 48, 92 S.Ct. 2357, 2361, 33 L.Ed.2d 179 (1972), "a comprehensive scheme for the regulation of wiretapping and electronic surveillance." Id. at 46, 92 S.Ct. at 2360. This congressional solicitude for the safeguarding of privacy was clearly expressed in the Senate Committee Report on Title III. It was there said that "Title III has as its dual purpose (1) protecting the privacy of wire and oral communications, and (2) delineating on a uniform basis the circumstances and conditions under which the interception of wire and oral communications may be authorized." S.Rep. No. 1097, 90th *100 Cong.2d Sess. 66 (1968), reprinted in [1968] U.S.Code Cong. & Admin.News, pp. 2112, 2153; United States v. Clemente, 482 F.Supp. 102, 106 (S.D.N.Y.1979). In short, Title III represents an attempt by Congress to establish a system of electronic surveillance subject to rigorous safeguards. United States v. Tortorello, 480 F.2d 764, 773 (2d Cir.1973), cert. denied, 414 U.S. 866, 94 S.Ct. 63, 38 L.Ed.2d 86 (1973); cf. Jandak v. Village of Brookfield, 520 F.Supp. 815, 819 (N.D.Ill.1981). It is consistent with these safeguards that Section 2510(4) of the Act defines "intercept" as the "aural acquisition of the contents of any wire or oral communication through the use of any electronic, mechanical or other device." The term "aural" when literally translated means to come into possession through the sense of hearing. United States v. Seidlitz, 589 F.2d 152, 157 n. 17 (4th Cir.1978); Smith v. Wunker, 356 F.Supp. 44, 46 (S.D.Ohio 1972); see United States v. New York Telephone Company, 434 U.S. 159, 98 S.Ct. 364, 54 L.Ed.2d 376 (1977). Therefore, by its strict language, the Act refers only to devices which intercept through the sense of hearing. This construction is not an original analysis of the statute. In fact, before this case arose, two state courts had examined Title III and in dicta pointed out that "18 U.S.C. §§ 2510-2520 and its progeny, the state wiretapping statutes, did not encompass videotaping or any means of electronic visual surveillance ...," People v. Teicher, 90 Misc.2d 638, 395 N.Y.S.2d 587, 591 (1977); and that "title III deals only in the aural acquisition of the contents of any wire or oral communication. As the language and legislative history of that statute makes clear, it was never intended to address the use of video surveillance equipment (citations omitted)." People v. Teicher, 52 N.Y.2d 638, 439 N.Y.S.2d 846, 853, 422 N.E.2d 506, 513 (1981). Commentators in at least three established legal publications expressed the same views. For example, in Note, Recent Development, Judicial Acceptance of Videotape As Evidence, 16 Am.Crim.L.Rev. 183, 185 (Fall 1978), the author, speaking of Title III, states that it "governs the aural acquisition of communications, but ... does not govern the seizure of visual images." In another Note, Electronic Visual Surveillance and the Right of Privacy: When Is Electronic Observation Reasonable?, 35 Wash. & Lee L.Rev. 1043, 1047 n. 32 (1978), the writer explains that "[e]lectronic visual surveillance was clearly not contemplated by the draftsman of Title III."; and that "[v]ideotape surveillance, however, incorporates the added intrusion of the seizure of visual images in addition to the seizure of aural impressions, thus creating an extreme invasion where one has a justifiable expectation of privacy." Id. at 150. In Hodges, Electronic Visual Surveillance and the Fourth Amendment: The New Arrival of Big Brother? 3 Hastings Const.L.Q. 261 (1976), the author, after studying Title III, states categorically that it applies only to listening devices; it does not authorize the use of hidden cameras. The legislative history of the statute confirms these conclusions. When the Judiciary Committee reported its consideration of the Omnibus Crime Control and Safe Streets Act of 1968, it told the Senate that "Title III prohibits all wiretapping and electronic surveillance by persons other than duly authorized law enforcement officials engaged in the investigation of specified types of crimes after obtaining a court order...." 1968 U.S.Code Cong. & Adm. News 2112, 2113. Thus, the Committee was recommending the enactment of a restrictive and prohibitive statute. Then, in analyzing particular sections of its recommendations, the Committee said that "Paragraph IV defines `intercept' to include the aural acquisition of the contents of any wire or oral communication by any electronic, mechanical, or other device. Other forms of surveillance are not within the proposed legislation." Id. at 2178. And courts that have spoken on the subject have said, from varying contexts, that provisions of Title III are to be strictly construed in order to carry out the purpose of the Congress and make certain that privacy of the individual is protected as so provided. *101 United States v. Brodson, 528 F.2d 214, 216 (7th Cir.1975); see United States v. Jones, 542 F.2d 661, 671 (6th Cir.1976); United States v. Sellaro, 514 F.2d 114, 122-23 (8th Cir.1973); cf. United States v. King, 478 F.2d 494, 505 (9th Cir.1973); Jandak v. Village of Brookfield, 520 F.Supp. 815, 820 (N.D.Ill.1981). However, despite existence of this catalogue of certainty concerning the meaning of Title III, and the litany of judicial pronouncements that its provisions are to be strictly construed, two assistant United States attorneys on January 18 and April 5, 1983, appeared before the Chief Judge of this court and made sworn initial applications for orders authorizing interception of wire and oral communications in Apartment 505, 736 W. Buena Street and interception of oral communications in Apartment 211, 1136 W. Lunt Avenue, and also requested authorization for FBI agents to install electronic devices so they could visually monitor and record all activities taking place within the two apartments. Thereafter, on six occasions between February 17 and June 3, 1983, the same attorneys, and a third assistant United States attorney, applied for and obtained renewal orders, each including provisions that permitted FBI agents to engage in visual monitoring and recording of all activities, without any restriction. The authorization of the Attorney General's designate required by 18 U.S.C. § 2516(1) made no mention of visual monitoring; it only gave the United States Attorney for this district the authority to apply to a federal judge of competent jurisdiction for orders that would permit the interception of wire and oral communications. Section 2518(1) of Title III requires that "[e]ach application for an order authorizing or approving the interception of a wire or oral communication under this chapter shall be made in writing upon oath or affirmation to a judge of competent jurisdiction and shall state the applicant's authority to make such application." 18 U.S.C. § 2518(1). None of the assistant United States attorneys who made the applications stated to the Chief Judge under oath that he had authority from a designate of the Attorney General to apply for an order permitting visual monitoring. Instead, each stated that "[t]his application seeks authorization to intercept wire and oral communications of...."[3] This lack of statutory compliance appeared from the evidence admitted during the hearing of the motions to suppress. To meet some of the questions that arose, the government produced, and offered in evidence, a copy of the transcript of proceedings before the Chief Judge on Tuesday, January 18, 1983 at 4:45 p.m., the occasion of the initial Buena Street application. This document disclosed that when it was presented, the clerk called it "In the matter of the application of the United States for an order authorizing the interception of wire and oral communications." After the Assistant United States Attorney and the special agent of the Federal Bureau of Investigation had identified themselves, and after a preliminary colloquy between court and counsel, the following transpired: *102 THE COURT: The statute involved says nothing about "visual" interception. I understand that a camera is involved here or something of that nature? MR. REIDY: That is correct, Judge. THE COURT: Any precedent on that, at all? MR. REIDY: Yes, the case law, that I have reviewed with respect to that matter—the statute is also silent, for example, with respect to the make of surreptitious entry [sic], the Courts have held that, in the conduct of one of these Title 3's [sic], that the Court has the authority in order to effectuate that—an order under the All Writs Act—to order that. And, also, there is case law supporting the use of visual cameras, in the same context. So there is case law, although the statute is silent on it. After a further colloquy during which the Chief Judge expressed satisfaction with the showing of probable cause, the order applied for was issued. The "case law" to which allusion had been made by the Assistant United States Attorney was not cited or disclosed; but in this proceeding, its extent has been revealed. It consists of a memorandum opinion of United States District Judge Robert Ernest Keeton of the District of Massachusetts in Application of Order Auth. Interception, etc., 513 F.Supp. 421 (D.Mass.1980). And because of the importance the government attaches to this citation, the court will give it careful attention. Apparently, the occasion reported was an application by the United States "for an order authorizing interception of oral communications in accordance with Title III ..., and for simultaneous videotape surveillance." 513 F.Supp. at 422. The application sought authorization for surreptitious entry into a private dwelling and the implantation of monitoring devices "within the dwelling, subject to the limitations of the proposed authorization." 513 F.Supp. at 422. The nature of the government's request led Judge Keeton to observe that "[t]he proposed surveillance is extraordinarily intrusive." 513 F.Supp. at 422. But he found that the supporting affidavits established probable cause to believe that violations of federal narcotic laws were ongoing in the subject dwelling; and that certain prerequisites of Title III had been met by the government. However, Judge Keeton recognized that "[t]hese circumstances present an issue unresolved in statutes and precedents, as to whether the court may properly authorize video surveillance as well as oral interceptions." 513 F.Supp. at 422. He pointed out that while Title III provided "in stated circumstances for `interceptions' of `oral communication,' 18 U.S.C. § 2518, makes no explicit reference to video surveillance." 513 F.Supp. at 422. Judge Keeton then stated the government's arguments: they were that the Fourth Amendment to the United States Constitution, Rule 41, Fed.R.Crim.P., and the court's inherent authority under the All Writs Act, 28 U.S.C. § 1651, were statutory and constitutional bases for an order authorizing video surveillance. "In substance, if not explicitly," Judge Keeton said, "the government [was contending] that it need not comply with the strict conditions that Title III imposes in relation to applications for a court order authorizing oral interception." 513 F.Supp. at 422. He did not answer the government's argument or contention. Instead, Judge Keeton observed that given the statute and its legislative history, the views that might be urged upon a court to which an application for video surveillance is made, fall into three categories: (1) the absence of any provisions in Title III regarding video surveillance implies that no strictures like those of Title III are to be imposed, and the court may authorize video surveillance as long as it is not forbidden by the Fourth Amendment, the Rules of Criminal Procedure, and precedents; (2) the absence of provisions in Title III for video surveillance implies that video surveillance is forbidden; (3) the absence of any provisions in Title III regarding video surveillance unanswered *103 by Title III, with the consequence that courts must of necessity fashion answers to all such questions in light of whatever guidance is available in the constitution, in laws, and in judicial decisions. He rejected the first and second of these views, saying that they "give little if any weight to the concern that Congress manifested, in enacting Title III, that investigative methods be chosen with due regard both for investigating effectively and for safeguarding individual rights." 513 F.Supp. 422. Judge Keeton said that "[w]hen Congress had not directly addressed and answered a question, courts— including lower courts, until the Supreme Court has spoken—in answering, by necessity should nevertheless be guided by the aims, principles and policies that manifestly underlie enacted statutes." (citations omitted). After reaching this conclusion, Judge Keeton explained that when the government made its application, it had been disclosed that the authorization from the Attorney General's designate, in compliance with Title III, "referred only to `interception' of `oral communications' even though the application sought an order for video surveillance as well." 513 F.Supp. 423. He insisted that the government attorney procure from the Attorney General's designate express authorization for the application that sought an order permitting agents of the government to engage in videotape surveillance. The authorization was procured. Then Judge Keeton took into account that in the application made before him, the government proposed an order in which its agents would be directed that the video surveillance component be turned on after it has been determined from the audio component that communications involving illegal activities or illegal activity itself, within the scope of the proposed investigation, is taking place and that the video component remain on only as long as and under the same constraints as are imposed on oral interception for the purpose of minimizing the intrusion consistently with the requirements of Title III. With these restrictions, he ruled that "[i]n these distinctive circumstances and with these special provisions for minimizing intrusion, the application will be allowed and the proposed order will be entered." 513 F.Supp. at 423. It is important to notice that this ruling was not made in an adversary proceeding; it was ex parte, a term that anciently has been said to imply an examination in the presence of one of the parties and the absence of the other. Lincoln v. Cook, 2 Scam. (Ill.) 62. Judge Keeton did not have before him a proceeding like the motions to suppress now before this court. For this reason, the memorandum in Application of Order Auth. Interception, etc. cannot be said to constitute "case law," as the Assistant United States Attorney told the Chief Judge, because that term ordinarily means the body of jurisprudence formed by adjudged cases, instances in which two parties present a controversy to a judge for decision. Moreover, Judge Keeton did not hold, nor did he intend to decide, that under Title III he had authority to approve videotape surveillance by government agents. But even if the memorandum in Application of Order Auth. Interception, etc. were considered to be "case law," it is obvious that the matter before Judge Keeton, and the way it was handled by counsel for the government, differed greatly from what took place, not once but on eight occasions, before the Chief Judge of this court. At the outset of the application, it was disclosed to Judge Keeton, that the Attorney General's designate had not authorized any application under Title III for video surveillance. It has been held "that primary or derivative evidence secured by wire interceptions pursuant to a court order issued in response to an application which was, in fact, not authorized by one of the statutorily designated officials must be suppressed ... upon a motion properly made ...." United States v. Giordano, 416 U.S. 505, 508, 94 S.Ct. 1820, 1823, 40 *104 L.Ed.2d 341 (1974); see Annot. 64 A.L.R. Fed. 115. Thus, Judge Keeton was given the opportunity, at least to his satisfaction, to remedy this statutory defect by ordering that proper authorization for the application be obtained from a designate of the Attorney General. More importantly, the order that the government proposed to Judge Keeton contained specific provisions for minimizing the intrusion that video surveillance represents. This was to be accomplished by agents of the government not using the video component until the audio component had disclosed criminal activity within the dwelling in question. After Judge Keeton became satisfied that these restrictions made the government's proposal consistent with the requirements of Title III, he granted the application and issued the order. Nothing of the kind happened in the case at bar. The lack of statutory authorization was not corrected because this fact was not disclosed to the Chief Judge of this court; and the proposed orders did not contain restrictions which, assuming this was legally possible, may have made the applications and orders consistent with Title III. As a consequence, the orders under attack in these motions to suppress had all the force of general warrants, "a general exploratory rummaging in a person's belongings." Coolidge v. New Hampshire, 403 U.S. 443, 467, 91 S.Ct. 2022, 2038, 29 L.Ed.2d 564 (1971). For these reasons, this court must reject the government's argument that Application of Order Auth. Interception, etc., 513 F.Supp. 421 (D.Mass.1980), is authority for the proposition that video surveillance can be authorized by a federal judge on the application of the government under Title III of the Omnibus Crime Control and Safe Streets Act of 1968. The court also rejects the government's argument, the one it made before Judge Keeton and asserts here, that the Fourth Amendment, Rule 41, Fed.R.Crim.P., and the inherent power of federal courts under the All Writs Act, are statutory and constitutional bases for the orders authorizing visual monitoring in the two apartments. First, the Fourth Amendment provides that warrants to search shall not issue but upon probable cause "supported by Oath or affirmation ... particularly describing the place to be searched, or the persons or things to be seized." An order for video surveillance requires scrutiny under the guidance of this amendment, Kinoy v. Mitchell, 331 F.Supp. 379, 382 (S.D.N.Y. 1971); but the orders under attack in this case, in those parts that authorized visual monitoring, did not particularly describe what was to be seized through the capture of visual images. As to Rule 41, at least one commentator on the law has observed that it "appears to have been intended to cover only tangible property"; not intangibles such as intercepted oral communications and visual images. See Note, Electronic Visual Surveillance, etc., 65 Wash. & Lee L.Rev. 1043, 1054 n. 85 (1978). Assuming, however, that the rule covers intangible property, there are in this court's judgment, insurmountable difficulties in the government's argument. Rule 41(c) requires that the warrant "shall command the officer [to whom it is delivered] to search, within a specified period of time not to exceed 10 days, the person or place named for the property specified. The warrant shall be served in the daytime, unless the issuing authority, by appropriate provision in the warrant, and for reasonable cause shown, authorizes its execution at times other than daytime." Subparagraph (d) of the rule, which governs execution and return with inventory, requires that "[t]he officer taking property under the warrant shall give to the person from whom or from whose premises the property was taken a copy of the warrant and a receipt for the property taken or shall leave the copy and receipt at the place from which the property was taken." It is clear that nothing done by agents of the government, when they executed the orders in question, conformed to the requirements of Rule 41. Finally, as to the All Writs Act, its "provision does not enlarge or expand the jurisdiction *105 of the courts but merely confers ancillary jurisdiction where jurisdiction is otherwise granted and already lodged in the court." United States v. First Federal Savings & Loan Ass'n, 248 F.2d 804, 808 (7th Cir.1957); the statute presupposes existing complete jurisdiction "and does not contain a new grant of judicial power." Hyde Construction Company v. Koehring Company, 348 F.2d 643, 648 (10th Cir. 1965). The government's argument on this point consists of that common fallacy in logic: begging the question, because it assumes that Title III gives a federal judge the authority to issue an order for visual surveillance when it does not. Therefore, this court concludes that Title III of the Omnibus Crime Control and Safe Streets Act of 1968, 18 U.S.C. §§ 2510-2520, does not authorize a federal judge to enter orders permitting agents of the government to visually monitor and through video electronic equipment record all activities taking place in apartments in which defendants, or some of them, enjoyed an expectation of privacy. The evidence obtained by the government through the video surveillance was "unlawfully intercepted"; it does not accord with any authorization under Title III, it is not protected by any law enacted by Congress; and it was acquired in violation of defendants' constitutional rights. The Supreme Court has said that "[t]he words `unlawfully intercepted' are themselves not limited to constitutional violations, and we think Congress intended to require suppression where there is failure to satisfy any of those statutory requirements that directly and substantially implement the congressional intention to limit the use of intercept procedures to those situations clearly calling for the employment of this extraordinary investigative device." United States v. Giordano, 416 U.S. 505, 527, 94 S.Ct. 1820, 1832, 40 L.Ed.2d 341 (1974). III Accordingly, defendants' motions to suppress are granted with respect to the visual monitoring in Apartment 505, 736 West Buena Street and Apartment 211, 1135 West Lunt Avenue, Chicago, Illinois from January 18 to June 29, 1983. However, their motions are denied with respect to the audio tapes used in those locations. The portions of the surveillance orders that authorized interceptions of wire and oral communications are severable from the paragraph in each that purported to authorize visual monitoring. United States v. Cox, 462 F.2d 1293, 130 (8th Cir.1972); United States v. Cook, 657 F.2d 730, 735 (5th Cir. 1981); cf. United States v. Riggs, 690 F.2d 298, 300 (1st Cir.1982); United States v. Suquet, 547 F.Supp. 1034 (N.D.Ill.1982); and see 2 W. LaFave, Search and Seizures: a Treatise on the 4th Amendment, 4.6(f) at 111-12. So ordered. NOTES [1] The petition to dismiss was denied; and the court's reasons were stated from the Bench, an order was entered, accordingly. [2] The issue of standing was first raised as to Jose Rodriguez when the government answered his motion to suppress electronic surveillance. In his reply, he stated what is the only asserted defense position on this issue. Alberto and Jose Rodriguez are similarly situated as to the facts and circumstances in this case; and Alberto Rodriguez has not disclaimed the argument on this issue made by counsel for Jose Rodriguez at the time oral presentations were made on behalf of all the defendants. Therefore, the court assumes that the position of these two defendants is the same on the issue of standing. [3] After this fact was revealed during hearing of the motions to suppress, counsel for the government, who was one who had appeared before the Chief Judge, offered in evidence five letters. The earliest was dated January 19, 1983, the day after the initial Buena Street order was entered, telling the United States Attorney that pursuant to an instrument of delegation, he was being given authority "to obtain a court order authorizing the use of closed circuit television in the above investigation." The other letters, dated February 17, March 18, and April 5, 1983, were of the same tenor. The fifth, was dated January 11, 1984, while this court was hearing motions, telling counsel for the government that either on January 17 or 18, 1983, the designated Assistant Attorney General had approved a telephonic request from the United States Attorney in this district for authority to seek a court order approving the use of closed circuit television "in the FALN investigation involving Edwin Cortes." Over defendants' objections, this court admitted the letters in evidence. However, it does not intend that either its ruling or any remark made from the Bench be construed as any finding of fact concerning these letters or the reaching of any conclusion of law as to their legal sufficiency to meet the requirements of 18 U.S.C. §§ 2516(1) and 2518(1).

01-03-2023

10-30-2013

https://www.courtlistener.com/api/rest/v3/opinions/1882696/

792 F.Supp. 485 (1992) Jackie Ray BEASLEY, Plaintiff, v. William DUNCIL, et al, Defendants. William Anthony WAGNER, et al, Plaintiffs, v. The Honorable Gaston CAPERTON, Defendant. Ella HUNLEY, et al, Plaintiffs, v. Joseph J. SKAFF, et al, Defendants. Civ. A. Nos. 2:91-0543, 2:92-0001 and 5:92-0053. United States District Court, S.D. West Virginia, Charleston and Beckley Divisions. May 28, 1992. *486 Jackie Ray Beasley, pro se. Jan L. Fox, Deputy Atty. Gen., Mary Beth Kershner, Asst. Pros. Atty., Charleston, W.Va., for defendants in Civ. A. No. 2:91-0543. William Anthony Wagner and James William Berry, pro se. Daniel F. Hedges, Appalachian Research & Defense Fund, Inc., Charleston, W.Va., for Hunley. Thomas R. Michael, Michael & Kupec, Clarksburg, W.Va., for Eaton. Jan L. Fox, Deputy Atty. Gen., Charleston, W.Va., for defendants in Civ. Nos. 2:92-001 and 5:92-0053. MEMORANDUM OPINION AND ORDER HADEN, Chief Judge. The above referenced actions were previously referred to the Honorable Jerry D. Hogg, United States Magistrate Judge, for submission to this Court of a Report-Recommendation. Magistrate Judge Hogg submitted a Report-Recommendation and recommended that the above three cases be consolidated for joint resolution since they are controlled by the same legal principles. Pending are motions to dismiss. It is ORDERED that these actions are combined for purposes of this Memorandum Opinion and Order. It is further ORDERED that the above referenced civil actions are dismissed and stricken from the docket of the Court since under the laws and regulations of West Virginia there is not liberty right implicated when an inmate is removed from a community based work release program. Each Plaintiff has filed a complaint alleging that his or her termination from participation in the West Virginia work release program violated due process of law guaranteed by the Fifth and Fourteenth Amendments of the United States Constitution. Each Plaintiff was administratively transferred from a work release center to a more restrictive correctional environment without an administrative hearing. Each Plaintiff asserts that there is a liberty right in work release and as such due process protections apply prior to termination from such a program. The Court previously dismissed as frivolous the action brought by Jackie Ray Beasley. The United States Court of Appeals for the Fourth Circuit reversed this Court's dismissal. Beasley v. Duncil, 952 F.2d 395 (table) (unpublished) (4th Cir. 1991). The matter was remanded for this Court to consider "whether West Virginia grants a liberty right in work release, and if so, whether due process was afforded." Id. at p. 3. Absent a state created liberty right, assignment to a work release center is within the discretion of prison officials and a hearing prior to termination is not required. Altizer v. Paderick, 569 F.2d 812 (4th Cir.) cert. denied, 435 U.S. 1009, 98 S.Ct. 1882, 56 L.Ed.2d 391 (1978); Gaston v. Taylor, 946 F.2d 340 (4th Cir.1991) (en banc). Statutory authority for the establishment of work and study release centers in West Virginia is set forth in W.Va.Code, § 25-1-3, which provides as follows: "The commissioner is hereby authorized to establish work and study release units as extensions and subsidiaries of those state institutions under his control and authority. Such work and study release units may be coeducational and may be managed, directed and controlled as provided for in this article. This statute authorizes the commissioner of the division of corrections to establish work and study release units as extensions and subsidiaries of those state institutions under his control and authority." (Emphasis added). Authority to transfer inmates is embodied in W.Va.Code, § 25-1-16 which provides as follows: "The state commissioner of public institutions [corrections] shall have authority to cause the transfer of any patient or inmate from any state institution or facility to any other state or federal institution or facility which is better fitted for the care or treatment of such patient or inmate, or for other good cause or reason." (Emphasis added). *487 Based upon this statutory authority, the division of corrections adopted policy directives relating to administrative returns from work release. Policy directive 664.04 provides in relevant part: "(1) Inmates may be administratively returned to the appropriate institution upon authorization by the commissioner or his designee. (2) Justification for return may include: ... (C) other individual needs as deemed appropriate by the inmate and/or the division of corrections." Based upon these statutory enactments and regulations, the Court concludes that West Virginia does not grant a liberty right in work release. All the language is discretionary and not mandatory in nature and as such no liberty right is created. See Paoli v. Lally, 812 F.2d 1489 (4th Cir.) cert. denied, 484 U.S. 864, 108 S.Ct. 184, 98 L.Ed.2d 137 (1987). Moreover, a similar statutory scheme establishing work release was found not to create a state liberty right. Gaston v. Taylor, supra. Accordingly, the Court concludes that there is no state created liberty right to work release in West Virginia. It is unnecessary to determine whether due process was afforded each of the Plaintiffs when work release was revoked since no liberty interests were at stake. The Court ORDERS that the above referenced civil actions are dismissed, pursuant to Rule 12(b)(6), Federal Rules of Civil Procedure, for failure to state a claim upon which relief can be granted.

01-03-2023

10-30-2013

https://www.courtlistener.com/api/rest/v3/opinions/2127854/

697 F.Supp. 752 (1988) Hal DAVID, et al., Plaintiffs, v. SHOWTIME/THE MOVIE CHANNEL, INC., Defendant. No. 85 Civ. 9017 (CHT). United States District Court, S.D. New York. October 18, 1988. *753 Paul, Weiss, Rifkind, Wharton & Garrison (Jay Topkis, Allan Blumstein, David E. Nachman, David S. Nalven, of counsel), Bernard Korman (Ross Charap, I. Fred Koenigsberg, of counsel), New York City, for plaintiffs. Weil, Gotshal & Manges (R. Bruce Rich, Kenneth L. Steinthal, Suzanne E. Hawkins, of counsel), New York City, for defendant. OPINION TENNEY, District Judge. Plaintiffs, individual members of the American Society of Composers, Authors and Publishers ("ASCAP") bring this copyright infringment action under the Copyright Act, 17 U.S.C. § 101 et seq. (1983), against defendant Showtime/The Movie Channel, Inc. ("SMC"). Defendant neither contests the validity of plaintiffs' copyrights nor denies that Showtime and The Movie Channel both broadcast the works at issue in this dispute. Rather, SMC interposes various affirmative defenses. *754 The court has before it two motions brought by plaintiffs. The first seeks class certification pursuant to Fed.R.Civ.P. ("Rule") 23 or alternatively under Rule 23.2. The second, brought under Rule 56(c), seeks to strike or dismiss six affirmative defenses. For the reasons stated below, plaintiffs' motion for class certification is granted; plaintiffs' motion to dismiss the defenses is granted in part and denied in part. BACKGROUND SMC provides television programming to thousands of cable television system operators through Showtime and The Movie Channel, its two cable television services. Both services transmit programming to cable system operators, who in turn broadcast the programs via cable directly to individual subscribers. The bulk of SMC's programming transmissions consist of motion pictures created for theatrical release, many of which contain plaintiffs' musical compositions. SMC was created in 1983 from the merger of Showtime and The Movie Channel. Prior to 1980, both entities had been licensed by ASCAP to transmit plaintiffs' copyrighted works. These licenses terminated on December 31, 1979.[1] Upon their termination, ASCAP advised both cable services that it preferred not to negotiate with them for new licenses. ASCAP's intent was to license the cable system operators directly with respect to broadcasts of music in programming furnished to the cable operators by services such as Showtime and The Movie Channel. It appears that ASCAP encouraged the two cable services not to make written applications for a determination of fees. ASCAP apparently believed that these would have interfered with negotiations with the cable operators. In fact, neither Showtime nor The Movie Channel elected to follow the procedures set forth in the consent decree. The negotiations between ASCAP and the cable operators lasted two years but were in vain. Sometime in 1982 or 1983, after failing in its attempt to license the cable operators directly, ASCAP returned to both Showtime and The Movie Channel in an effort to resume the prior licensing relationships. The parties entered into negotiations that lasted two years but they did not conclude in any written agreements. During these negotiations, SMC still chose not to invoke its right to a license by the procedures specified in the consent decree. During these efforts at renewing their agreements, ASCAP apparently treated both Showtime and The Movie Channel as if they were licensed. Accordingly, neither company was deemed to be a copyright infringer and hence no legal action was taken. Both parties agreed that in the event the negotiations were unsuccessful, the issue of a reasonable fee would be submitted to the Rate Court in accordance with the procedure set forth in the consent decree. According to ASCAP, its agreement to treat both Showtime and The Movie Channel as licensed during the negotiation period was conditioned on both companies' agreement to apply any prospective fee rate retroactively back to January 1, 1980, the date after the previous licenses had expired. ASCAP claims that this agreement was to apply regardless of whether the parties agreed on a fee or whether a fee was imposed by the Rate Court. Showtime and The Movie Channel claim that they had agreed to pay a fee back to January 1, 1980 only if the direct negotiations were successful. SMC further claims that it never relinquished its right to assert a statute of limitations defense in any Rate Court proceeding. *755 On April 4, 1984, SMC made written application to ASCAP to become officially licensed once again. Subsequent to this written application, SMC, on September 12, 1984, instituted a fee determination proceeding in the Rate Court, pursuant to the consent decree. The application sought a prospective fee determination and a retroactive fee rate back only to April 4, 1981, rather than back to the date the cable services ceased to be licensed, January 1, 1980. In essence, SMC took the position that it would not pay fees for the performance of ASCAP music from January 1, 1980, to April 3, 1981. In response to SMC's application, ASCAP wrote a letter dated April 9, 1984, in which it stated that ASCAP would be willing to continue treating the cable services as fully licensed from January 1, 1980, provided that the two services confirmed their "continued willingness" to pay any subsequently determined fees back to that date. Defendant's Memorandum of Law in Opposition to Plaintiff's Motion for Summary Judgment ("Def. Mem.") at 8 (quoting ASCAP's letter dated April 4, 1984). SMC claims that this was the first time that ASCAP took the position that in a Rate Court proceeding, the time period for submission was to be retroactive to January 1, 1980, irrespective of any possible statute of limitations defense. Id. In an April 13, 1984, response, SMC wrote that it had never agreed to waive its statute of limitations defenses in any subsequent rate proceeding. The rate proceeding was assigned to Judge William C. Conner, who referred the matter to Magistrate Michael H. Dolinger. ASCAP was granted interim relief effective April 4, 1984, but it also moved to dismiss the retroactive portion of SMC's application. Magistrate Dolinger granted that motion. See Memorandum and Order of Magistrate Dolinger, dated July 8, 1986, attached as Exhibit B to the Affidavit of Allan Blumstein, sworn to July 22, 1987 ("Blumstein Aff."). Magistrate Dolinger ruled that under the terms of the consent decree, the Rate Court had no jurisdiction to determine a retroactive fee. Id. at 7.[2] Plaintiffs commenced this action on November 15, 1985. Due to the Copyright Act's three-year statute of limitations, plaintiffs' complaint seeks damages for copyright infringement only from November 15, 1982, until April 4, 1984, the date SMC became officially licensed by virtue of its written application to ASCAP. Plaintiffs now move for class certification and for partial summary judgment seeking dismissal of the six affirmative defenses claimed by SMC. These defenses are that: (1) plaintiffs have failed to state a claim upon which relief can be granted; (2) Showtime and The Movie Channel did not "publicly perform" the copyrighted works within the meaning of the Copyright Act; (3) Showtime and The Movie Channel were licensed because of alleged agreements with ASCAP; (4) SMC was licensed due to its application to the Rate Court; (5) and (6) plaintiffs are estopped from charging infringement because of ASCAP's alleged conduct. DISCUSSION A. Class Certification Plaintiffs move pursuant to Rule 23 or alternatively under Rule 23.2 for an order certifying this litigation as a class action. In certifying and managing a class action the court is afforded substantial discretion. Fink v. National Sav. and Trust Co., 772 F.2d 951, 960 (D.C.Cir.1985). At the outset, the court rejects the proposition that Rule 23.2 may be invoked by plaintiffs. Rule 23.2 was designed to facilitate class actions brought by unincorporated associations on their own behalf. The accompanying notes of the advisory committee suggest that Rule 23.2 was adopted to give *756 "entity treatment" to representatives of the membership of an unincorporated association when for formal reasons it cannot sue or be sued as a jural person under Rule 17(b). See Rule 23.2 advisory committee's notes. Here, plaintiffs are bringing suit on behalf of themselves as individual members of ASCAP. Plaintiffs concede that only individual members of ASCAP are entitled to bring this action. Plaintiffs' Memorandum in Support of its Motion for Summary Judgment ("Pl.Mem.") at 2 n. 1. Therefore, because ASCAP is not suing for itself, Rule 23.2 is inapplicable. Rule 23, however, is appropriate for this motion but in resolving a motion for class certification a court must undertake a rigorous analysis of Rule 23. General Tel. Co. v. Falcon, 457 U.S. 147, 161, 102 S.Ct. 2364, 2372, 72 L.Ed.2d 740 (1982). The burden of establishing that all of the requirements of Rule 23 have been met falls directly on the party seeking class certification. Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 162, 94 S.Ct. 2140, 2145, 40 L.Ed. 2d 732 (1974). The requirements of Rule 23 are as follows: the plaintiffs must demonstrate (1) that the action satisfies all four of the threshold requirements enumerated in Rule 23(a); and (2) that the action falls within one of the three categories of Rule 23(b). 1. Rule 23(a) Rule 23(a) provides: (a) Prerequisites to a Class Action. One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class. (a) Numerosity To establish numerosity, plaintiffs must show that the proposed class is so massive that joinder would be impracticable. No magic number or set standard exists regarding this requirement. See 7A C.A. Wright, A.R. Miller & M.K. Kane, Federal Practice and Procedure § 1762 at 153 (1986); In re Data Access Sys. Sec. Litig., 103 F.R.D. 130, 137 (D.N.J.1984). Rather, a court should utilize a common sense approach. Wolgin v. Magic Marker Corp., 82 F.R.D. 168, 171 (E.D.Pa.1979). Defendant cannot seriously dispute plaintiffs' estimate that their size "number[s] in the many hundreds, if not thousands." Plaintiffs' Memorandum in Support of its Motion for Class Certification at 5. The existence of such a large number of individuals renders joinder a judicial impracticality. Defendant's argument that class certification should be denied because the proposed class may be overbroad is unpersuasive because at an early stage of litigation a court may view the class broadly and reduce it in the future, if necessary. See General Tel., 457 U.S. at 160, 102 S.Ct. at 2372; Avagliano v. Sumitomo Shoji America, Inc., 103 F.R.D. 562, 573 (S.D.N. Y.1984). Moreover, the individual plaintiffs are scattered over the United States constituting geographical dispersion. This further supports plaintiffs' claim that they have fulfilled the numerosity requirement. See Avagliano, 103 F.R.D. at 580. Accordingly, the court finds that plaintiffs have satisfied this aspect of class certification. (b) Common Questions of Law and Fact The court's examination of plaintiffs' compliance with Rule 23(a)(2) is limited by the Supreme Court's admonition not to consider the merits of the sustantive claims. Eisen, 417 U.S. at 177-78, 94 S.Ct. at 2152-53. The key inquiry of Rule 23(a)(2) is whether the plaintiffs' claims arise from a common nucleus of facts. Such cases are considered particularly appropriate for class action treatment. See In re Caesars Palace Sec. Litig., 360 F.Supp. 366, 398 (S.D.N.Y.1973). Numerous questions of both fact and law are common to the class including whether defendant violated the federal copyright laws and the measure of any *757 damages. Defendant contends that there are differences among the plaintiffs. Certainly each individual plaintiff possesses an individual copyright upon which the claim will be based. These differences, however, are merely collateral to the gravamen of this dispute: the negotiation and licensing processes between SMC and ASCAP on behalf of all potential members of the class. Incidental differences do not defeat commonality. In re Alcoholic Beverages Litig., 95 F.R.D. 321, 324 (E.D.N.Y.1982). Accordingly, the court finds that plaintiffs have satisfied this part of the test. (c) Typicality The typicality requirement of Rule 23(a)(3) is met if the named plaintiffs share the same basic characteristics with those of the proposed class so as to avoid interclass conflicts. Typicality is present if all of the claims are based upon the same course of conduct and are based upon a similar legal theory. Bruce v. Christian, 113 F.R.D. 554, 558 (S.D.N.Y.1986). Each potential or named plaintiff claims to hold a valid copyright which, it is alleged, defendant broadcast without providing appropriate compensation. Therefore, there exists a congruence of interests between all of the plaintiffs both named and proposed, and the court finds the typicality requirement satisfied. (d) Adequacy of Representation Under Rule 23(a)(4) the plaintiffs must demonstrate that they, in conjunction with their counsel, will fully and completely safeguard the interests of the class. This requirement entails the court's examination of: (1) the quality of plaintiffs' counsel; and (2) whether the named plaintiffs share the same interests with the proposed class. Fisher v. Plessey Co. Ltd., 103 F.R.D. 150, 157 (S.D.N.Y.1984). With respect to the adequacy of plaintiffs' counsel, there is little doubt they possess the requisite legal talent to litigate their case. Furthermore, the record is devoid of any evidence of a conflict of interest between the named plaintiffs and the proposed class. Therefore, the court concludes this part of the test has been satisfied. 2. Rule 23(b) In addition to the requirements of Rule 23(a), a class action must satisfy one of the three parts of Rule 23(b). Plaintiffs have relied on Rule 23(b)(1) and, therefore, must demonstrate that individual litigation by members of the class would either: (1) create a risk of inconsistent adjudication, subjecting an opponent of the class to inconsistent judicial directives; or (2) burden the interests of the members of the class who are not actual parties to the litigation. Denenberg v. Blum, 93 F.R.D. 131, 133 (S.D.N.Y.1982). If the claims in this action were litigated in piecemeal fashion, there would be a risk of inconsistency in the formulation of individual remedies, the differences between which might appear arbitrary. See Dale Electronics, Inc. v. R.C.L. Electronics, Inc., 53 F.R.D. 531, 537 (D.N. H.1971). The court concludes, therefore, that plaintiffs have fulfilled this part of the test. B. Affirmative Defenses Interposed by SMC 1. The Alleged Failure to State a Claim The standard for dismissal under Rule 12(b)(6) is well settled. "[A] complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957); see Meyer v. Oppenheimer Management Corp., 764 F.2d 76, 80 (2d Cir.1985). Moreover, for the purposes of deciding such a motion, well pleaded allegations are accepted as true and are examined in the light most favorable to the plaintiff. Scheur v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974); Dahlberg v. Becker, 748 F.2d 85, 88 (2d Cir.1984), cert. denied, 470 U.S. 1084, 105 S.Ct. 1845, 85 L.Ed.2d 144 (1985). SMC has not pressed its first affirmative defense in any of its briefs, or at oral argument; accordingly, the court will not dwell on this issue. Suffice it to say that under *758 the preceding analysis, plaintiffs' allegations set out a valid legal claim and SMC's first affirmative defense is dismissed. 2. The Assertion That SMC Did Not "Publicly Perform" the Works Under the Copyright Act, plaintiffs would be entitled to compensation from SMC only if SMC "publicly performed" the relevant works. 17 U.S.C. § 106(4) (1983). Neither side disputes that Showtime and The Movie Channel both broadcast television programming containing plaintiffs' copyrighted works to cable system operators. SMC's second affirmative defense asserts only that SMC's actions did not constitute a "public performance" of plaintiffs' music as contemplated by the statute. SMC argues that since its signals went not to the viewing public but to local cable television operators for retransmission, it cannot be liable for copyright infringement. Def.Mem. at 26. Therefore, the issue before the court is whether the transmission of copyrighted material to an intermediary for ultimate transmission to the public falls within the scope of the Copyright Act. The court's analysis must begin, of course, with the Copyright Act itself. Although it does not address this issue directly, the language of the Act supports plaintiffs' contentions that the activities of Showtime and The Movie Channel constituted public performances. Under the Act, to "perform" a work means: to recite, render, play, dance, or act it, either directly or by means of any device or process or, in the case of a motion picture or other audiovisual work, to show its images in any sequence or to make the sounds accompanying it audible. 17 U.S.C. § 101 (1983). It is readily apparent that both Showtime and The Movie Channel at least "performed" works in the manner described by the statute. The statute also states, however, that to perform a work "publicly" means: to transmit or otherwise communicate a performance or display of the work ... to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times. Id. § 101 (emphasis added). The decision of how broadly to construe the emphasized language should be guided by a determination of Congressional intent through an examination of the Copyright Act's legislative history. See Chevron U.S.A., Inc. v. National Resources Defense Council, Inc., 467 U.S. 837, 843 n. 9, 104 S.Ct. 2778, 2781 n. 9, 81 L.Ed.2d 694 (1984). The House Report accompanying the statute suggests that the concept of "public performances" should be interpreted broadly. For example, it states: Under the definitions of "perform," "display," "publicly," and "transmit" in section 101, the concepts of public performance and public display cover not only the initial rendition or showing, but also any further act by which that rendition or showing is transmitted or communicated to the public. Thus, for example: a singer is performing when he or she sings a song; a broadcasting network is performing when it transmits his or her performance (whether simultaneously or from records); a local broadcaster is performing when it transmits the network broadcast; a cable television system is performing when it retransmits the broadcast to its subscribers; and any individual is performing whenever he or she plays a phonorecord embodying the performance or communicates the performance by turning on a receiving set. H.R.Rep. No. 94-1476, 94th Cong., 2d Sess. 63, reprinted in 1976 U.S.Code Cong. & Admin.News 5659, 5676-77 (emphasis added). The preference for an expansive reading of the Copyright Act is also evident in the Report's discussion of the meaning of the term "transmit," in which it states: The definition of "transmit" — to communicate a performance or display "by any device or process whereby images or sound[s] are received beyond the place from which they are sent" — is broad *759 enough to include all conceivable forms and combinations of wired or wireless communications media, including but by no means limited to radio and television broadcasting as we know them. Each and every method by which the images or sounds comprising a performance or display are picked up and conveyed is a "transmission," and if the transmission reaches the public in [any] form, that case comes within the scope of [the Copyright Act]. H.R.Rep. No. 1476 at 64 (quoting 17 U.S.C. § 101), reprinted in 1976 U.S.Code Cong. & Admin.News at 5678 (emphasis added). At the time the accompanying reports were drafted, Congress apparently did not anticipate the eventual proliferation of organizations such as SMC who "broadcast" their programs to the public indirectly, through local cable companies who pass the signal along to their individual customers. Nevertheless, in recognition of rapid technological developments in the copyright area, courts have interpreted the Copyright Act flexibly to reduce the need for frequent Congressional amendments. See, e.g., Midway Mfg. Co. v. Artic Int'l, Inc., 704 F.2d 1009, 1011 (7th Cir.) (finding video games to be "audio-visual" works within the meaning of the statute), cert. denied, 464 U.S. 823, 104 S.Ct. 90, 78 L.Ed.2d 98 (1983); Stern Electronics, Inc. v. Kaufman, 669 F.2d 852, 856 (2d Cir.1982) (stating that the output product of video games is "fixed" and, therefore, subject to copyright protection, even though each player's participation creates a unique set of sounds and sights). With this in mind, it seems apparent from the scope of the examples provided in the legislative history that Congress intended the definitions of "public" and "performance" to encompass each step in the process by which a protected work wends its way to its audience. Moreover, it would strain logic to conclude that Congress would have intended the degree of copyright protection to turn on the mere method by which television signals are transmitted to the public. Aside from the artificially narrow interpretation it would require, SMC's argument ignores SMC's fundamental role in determining how and when the works in this case were used. To the copyright holders — the beneficiaries of the statutory scheme — SMC is a programming originator who intended to broadcast the protected works to the public for a profit. SMC was not and is not, as it would have to be to claim exemption from the Copyright Act, "passive, merely retransmitting exactly what it receives, [exercising] no control over the content or selection of [another broadcaster's] primary transmission...." Eastern Microwave, Inc. v. Doubleday Sports, Inc., 691 F.2d 125, 129 (2d Cir. 1982), cert. denied, 459 U.S. 1226, 103 S.Ct. 1232, 75 L.Ed.2d 467 (1983), see 17 U.S.C. § 111(a)(3) (1983). SMC alone decided which movies to show and when to show them. It made little difference to the copyright holders whether SMC intended to route the protected work to the public's living rooms through a local cable company or through a transmitter atop a mountain. In either case, SMC would be transmitting the copyright holders' works to the public and benefitting by those acts. Therefore, the court holds that SMC's transmission of the works in this case constituted "public performances" within the meaning of the Copyright Act.[3]See WGN Continental Broadcasting Co. v. United Video, Inc., 693 F.2d 622, 625 (7th Cir.1982) (holding that "the *760 Copyright Act defines `perform or display ... publicly' broadly enough to encompass indirect transmission to the ultimate public"); Hubbard Broadcasting, Inc. v. Southern Satellite Systems, Inc., 593 F.Supp. 808, 813 (D.Minn.1984) (stating that "under the broad definitions found in § 101 of the Copyright Act, a transmission is a public performance whether made directly or indirectly to the public and whether the transmitter originates, concludes or simply carries the signal"), aff'd, 777 F.2d 393 (8th Cir.1985), cert. denied, 479 U.S. 1005, 107 S.Ct. 643, 93 L.Ed.2d 699 (1986). The court is mindful that the standards for granting summary judgment are stringent. Rule 56(c) provides that summary judgment may be granted only when the record reveals that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." See Knight v. United States Fire Ins. Co., 804 F.2d 9, 11 (2d Cir.1986), cert. denied, 480 U.S. 932, 107 S.Ct. 1570, 94 L.Ed.2d 762 (1987). In ascertaining whether an issue of material fact does actually exist, the court is obligated to resolve all doubts and all inferences in favor of the nonmoving party. Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88, 106 S.Ct. 1348, 1356-57, 89 L.Ed.2d 538 (1986). Even under this standard, however, SMC's second affirmative defense fails; accordingly, it is dismissed. 3. SMC's Contention That There Was a Contract With ASCAP SMC's third affirmative defense asserts that the parties are bound by a series of oral communications amounting to two oral contracts, one with Showtime the other with The Movie Channel. According to SMC, ASCAP agreed to treat both companies as licensed. Therefore, Showtime and The Movie Channel were authorized to perform the works and SMC cannot be held liable for copyright infringement. (a) The Legal Standards Governing Contract Formation New York law recognizes that oral contracts can result in enforceable obligations. See Jemzura v. Jemzura, 36 N.Y.2d 496, 503-04, 369 N.Y.S.2d 400, 408, 330 N.E.2d 414, 420 (1975). However, it is the law of New York, as adopted by the Second Circuit, that [t]o consummate an enforceable agreement, the parties must not only believe that they have made a contract, they must also have expressed their intent in a manner susceptible of judicial interpretation. If essential terms of an agreement are omitted or are phrased in too indefinite a manner, no legally enforceable contract will result. Brookhaven Housing Coalition v. Solomon, 583 F.2d 584, 593 (2d Cir.1978) (citations omitted). To be enforceable, an agreement must be definite and explicit enough so that a court may determine the intent of the parties "to a reasonable degree of certainty." Best Brands Beverage, Inc. v. Falstaff Brewing Corp., 842 F.2d 578, 587 (2d Cir.1987). (b) The Alleged Agreements There are two alleged agreements, which the court will discuss in turn. The first was between ASCAP and Showtime. Plaintiffs claim that Showtime agreed to pay fees back to the start of January 1, 1980, but only if the fees were negotiated privately between the parties, not through a Rate Court determination. Showtime further claims that according to the understanding, if the parties were forced to submit their claims to the Rate Court, Showtime could assert a statute of limitations defense. The negotiations between ASCAP and Showtime have been exhaustively reflected in the extensive deposition testimony taken pursuant to the Rate Court proceeding.[4] Showtime's negotiating representative, Michael H. Gerber, testified as follows: *761 Q. You had mentioned that the prior agreement with ASCAP had expired, I believe at the end of 1979. And my question is whether as of 1982 you had an understanding as to whether Showtime was licensed to perform works in the ASCAP repertory for any of the years 1980, 1981 and 1982? A. I didn't have an understanding with ASCAP that we were licensed or not licensed. We had an understanding that we were negotiating in good faith, and that while we were negotiating in good faith, there was nothing to worry about. * * * * * * Q. What was the time period at issue in those negotiations? * * * * * * A. It was always the general understanding that the scope of the negotiations covered a going-back arrangement as well as a going-forward arrangement. Q. When you say going back, do you mean going back to the time period immediately subsequent to the expiration of the prior agreement? A. Yes. It would have been from 1980, '81, '82, and then going forward for some perhaps 3 to 5 years. * * * * * * Q. Did you have any understanding as to what time period, and that is fees for what time period, would be submitted for litigation, in the event that you could not reach a negotiated settlement? * * * * * * A. I always have an understanding in my own mind. My position always was that when two businessmen get together and try and strike a deal, since it is an arm's length free market that is ultimately determining what the price is between the two of us, I was always willing to go back to the beginning of the retroactive period and tie it in from a retroactive deal to a going-forward deal, as one ball of wax. And I always felt that as a matter of negotiation, if we were able to resolve it on an amicable basis, that is the time frame within which I was willing to do that. On the other hand, I was also very much committed to the fact that if a third party was going to tell us what rate we were required to pay, then that issue would encompass the period going back through the statute of limitations and not beyond that, since I always felt that I should not have to pay more to my supplier than he would be entitled to if he sued me in a court. Blumstein Aff., Ex. D at 32, 41, 62-63. The above deposition testimony, in light of the standards governing summary judgment, adequately supports SMC's claim that there was a mutual understanding regarding some type of agreement. Plaintiffs claim there was no enforceable contract because an essential aspect of the agreement, namely the "duration" of it, was inconclusive. The court is cognizant that "definiteness as to material matters is of the very essence in contract law. Impenetrable vagueness and uncertainty will not do...." Joseph Martin, Jr. Delicatessen, Inc. v. Schumacher, 52 N.Y. 2d 105, 109, 436 N.Y.S.2d 247, 249, 417 N.E.2d 541, 543 (1981). It is true that duration is often considered a material term. See Ginsberg Machine Co. v. J. & H. Label Processing Corp., 341 F.2d 825, 828 (2d Cir.1965). Nevertheless, the question of the "essentiality" of a particular term is relative. Id. Moreover, duration is generally considered a material term when referring to a contract's future performance. See 22 N.Y.Jur.2d Contracts, § 25 at 439-40 (1982). The thrust of the agreement was to set prospective fees and there was no dispute as to at least one aspect of the agreement's retroactive application. Therefore, the court finds that the failure to resolve the disputed term pertaining to how far back the retroactivity would extend was not essential to the formation of a valid contract and, hence, was not material.[5] *762 The second alleged agreement was between ASCAP and The Movie Channel. Immediately following the expiration of The Movie Channel's license on December 31, 1979, negotiations commenced between ASCAP and The Movie Channel to renew the license. The testimony reveals that there was an agreement between both parties. See Blumstein Aff., Ex. F (testimony of Benson H. Begun, representative of The Movie Channel). Plaintiffs concede there was a contract but claim that the oral agreement has been or should be rescinded by operation of law. According to plaintiffs, SMC reneged on the agreement by requesting the Rate Court to set a retroactive fee only for the period covered by the statute of limitations period rather than back to January 1, 1980. It appears that SMC could technically be found to have "breached" the agreement entered into between ASCAP and The Movie Channel. However, rescission is a remedy usually employed by an injured party only when monetary damages are not adequate, see 22 N.Y.Jur.2d Contracts § 416 at 336-37, something plaintiffs have not established in this case. There is no application before the court to rescind the alleged agreement; therefore, the court is not passing on the factual questions underlying this issue. Nevertheless, for the purposes of denying the motion to strike SMC's third affirmative defense, the court finds the claim of rescission to be without merit. 4. SMC's Contentions That its Performances of Plaintiffs' Works Were Authorized SMC pleads several affirmative defenses in which it asserts that its performances of plaintiffs' works during the period of alleged infringement were authorized. Plaintiffs claim that SMC should be estopped from claiming any type of authorization by virtue of its previous conduct in the licensing process. For the reasons articulated below, the court rejects plaintiffs' estoppel arguments but dismisses SMC's fourth affirmative defense for failure to state a legally cognizable claim. (a) Issue Preclusion Generally, a party to a legal proceeding may not relitigate issues previously determined in other litigation to which he or she was a party. See Index Fund, Inc. v. Hagopian, 677 F.Supp. 710, 716 (S.D.N.Y.1987). For this rule of issue preclusion to apply: (1) the issues in both proceedings must be identical, (2) the issue in the prior proceeding must have been actually litigated and actually decided, (3) there must have been a full and fair opportunity for litigation in the prior proceeding, and (4) the issue previously litigated must have been necessary to support a valid and final judgment on the merits. Gelb v. Royal Globe Ins. Co., 798 F.2d 38, 44 (2d Cir.1986) cert. denied, 480 U.S. 948, 107 S.Ct. 1608, 94 L.Ed.2d 794 (1987). The court is not convinced that the authorization issue was ever before Magistrate Dolinger. But even if it were, plaintiffs do not, and could not on this record, contend that the issue was "actually litigated." Moreover, considering that Magistrate Dolinger merely decided that he had no jurisdiction to determine retroactive rates, resolution of the authorization issue was hardly "necessary" to the outcome of those proceedings. Therefore, there can be no issue preclusion based upon this theory. (b) Judicial Estoppel Plaintiffs also rely on a related but disfavored theory of "judicial estoppel" to support their argument. See Pl.Mem. at 14-15. This doctrine, also commonly referred to as "preclusion against inconsistent positions," prevents a party who benefits from the assertion of a certain position from subsequently adopting a contrary position in any other litigation. See Horger v. New York University Medical Center, 642 F.Supp. 976, 980 (S.D.N.Y.1986). The doctrine conflicts with liberal federal approaches to proceedings prior to judgment, which favor, for example, alternative pleading *763 and liberality in granting permission to change positions. See 1B J. Moore, J. Lucas & T. Currier, Moore's Federal Practice ¶ 0.405[8] at 243 (2d ed. 1988) [hereinafter "Moore's"]. Accordingly, it has not been widely embraced in the Second Circuit.[6] Instead, it has been discussed only in extreme cases in which the inconsistent positions have been the product of fraud or other deliberately misleading conduct and those in which the consequences of the inconsistency would have undermined the integrity of the judicial process. Compare Sperling v. United States, 692 F.2d 223, 227-29 (2d Cir.1982) (Van Graafeiland, J., concurring) (advocating application of the doctrine to case in which habeas petitioner had obtained previous appellate relief with misleading assurances to the court about the continued vitality of a related conviction and life sentence, which he subsequently attacked in the new petition before the court), cert. denied, 462 U.S. 1131, 103 S.Ct. 3111, 77 L.Ed.2d 1366 (1983), with Horger v. New York University Medical Center, 642 F.Supp. 976, 980-81 (S.D.N.Y. 1986) (refusing to apply the doctrine to medical malpractice case in which plaintiff challenged the necessity of a surgical procedure when he had successfully convinced a prior jury in litigation against his employer that the surgery had been a necessary and proper treatment for his injuries, because the court found that plaintiff "may have" relied on misinformation provided by his employer's doctors in asserting the earlier position); see also 1B Moore's ¶ 0.405[8] at 243 (explaining that federal courts "have been somewhat cautious in their approach to the doctrine"). Assuming, without deciding, that the doctrine has any vitality in this circuit, plaintiffs fail in their attempt to apply it to the facts in this case. Initially, plaintiffs must rely on the dubious proposition that SMC's mere filing of a license application for only a three-year period was tantamount to an affirmative statement to the Rate Court that its use of the works during this period of time was unauthorized. In advancing this argument, plaintiffs also ignore the fact that any assertion of fact, if one occurred at all, occurred when SMC filed its license application with ASCAP, not when it subsequently asked the Rate Court merely to establish a fair fee for the period already specified in the license application. See Pl.Mem. at 4. Therefore, SMC's selection of the three-year period, even if it could be characterized as an affirmative assertion, did not occur in the Rate Court, where it would have had to have taken place to warrant application of the doctrine. Plaintiffs fail to consider the fact that ASCAP's own conduct precipitated SMC's actions. SMC's failure to take any steps to apply for a renewal license in 1980 supports its allegation that it refrained from doing so at ASCAP's urging. It appears that ASCAP never obtained any type of tolling agreement from SMC, even when the duration of the ultimately failed negotiations with local operators approached and then exceeded three years. See 17 U.S.C. § 507(b) (1983). SMC now claims that it never waived its right to assert a statute of limitations defense in any Rate Court proceeding. See Def. Mem. at 22. Regardless of whether the evidence will bear out that claim, limiting the period of its application to the preceding three years merely preserved that defense. Absent ASCAP's request not to file in 1980, SMC would not have had to try to obtain an unprecedented retroactive license. When the renewed negotiations with ASCAP stalled, SMC found itself in the untenable position of performing ASCAP's works pursuant to an unwritten agreement, the terms of which were beginning to be disputed by ASCAP. Accordingly, SMC initiated the formal licensing procedure to eliminate that uncertainty. It was under no duty to file for a retroactive license, but elected to do so, apparently to protect itself from any infringement claims during the period in which it was theoretically vulnerable. There is no evidence *764 that SMC intended to mislead ASCAP or the court when it sought retroactive relief. In this context, SMC can scarcely be accused of playing "fast and loose with the courts," as plaintiffs claim. See Pl.Mem. at 15 (quoting Selected Risks Insurance Co. v. Kobelinski, 421 F.Supp. 431, 434 (E.D.Pa.1976) and Scarano v. Central Railroad Co., 203 F.2d 510, 513 (3d Cir. 1953)). Moreover, Magistrate Dolinger's limited ruling, that he had no jurisdiction to set a retroactive fee, conferred no benefit on SMC. Therefore, there is no basis to apply the doctrine in this case.[7] (c) SMC's Failure to State a Claim in its Fourth Affirmative Defense Although the court finds no legal barrier to SMC's assertion of its authorization defenses, they must have some basis in logic. SMC's fourth affirmative defense, in which it claims that it was "effectively licensed" by virtue of its retroactive application to ASCAP, fails even this basic test. Under Magistrate Dolinger's ruling, the retroactive application is presently no more than a legal nullity. Moreover, recognition of the subsequent filing of an application for a "retroactive" license as a defense for prior infringing conduct would eviscerate the protections inherent in the copyright scheme. Accordingly, the court dismisses this affirmative defense. 5. SMC's Estoppel Defenses SMC's fifth and sixth affirmative defenses, which the court will consider together, assert that plaintiffs should be estopped from claiming infringement by virtue of ASCAP's conduct. The discussion below applies only to Showtime because there was an actual contract between ASCAP and The Movie Channel. Under the law of New York, the elements of a claim for promissory estoppel are: "(1) a clear and unambiguous promise; (2) a reasonable and foreseeable reliance by the party to whom the promise is made; and (3) an injury sustained by the party asserting the estoppel." Marine Transport Lines, Inc. v. International Organization of Masters, Mates & Pilots, 636 F.Supp. 384, 391 (S.D. N.Y.1986); see Restatement of Contracts (Second) § 90 (1981) cited in Reprosystem, B.V. v. SCM Corp., 727 F.2d 257, 264 (2d Cir.), cert. denied, 469 U.S. 828, 105 S.Ct. 110, 83 L.Ed.2d 54 (1984). The court is aware that promissory estoppel is not to be lightly applied. The doctrine has "a relatively limited scope." Philo Smith & Co. v. United States Life Corp., 554 F.2d 34, 36 (2d Cir.1977); see Esquire Radio & Electronics, Inc. v. Montgomery Ward & Co., Inc., 804 F.2d 787, 794 (2d Cir.1986). For the purposes of deciding this motion for summary judgment, the court has construed all inferences and facts in SMC's favor. Even under this analysis, however, the record would support a defense of estoppel. Although there was no written promise of any type between ASCAP and Showtime, there appears to have been an understanding that as long as both parties negotiated, ASCAP or its members would not sue. Whether the understanding contemplated Showtime paying back to January 1, 1980, or only for three years is the disputed issue. The circumstances of the instant case indicate that the elements of estoppel have been demonstrated sufficiently by SMC so as to prevent the court from striking it prior to trial. Moreover, since ASCAP explicitly gave permission to Showtime to continue broadcasting during the pendency of the negotiations with the local cable system, it appears quite possible that the estoppel defense will be successful at trial. See, e.g., National Business Lists, Inc. v. Dun & Bradstreet, Inc., 552 *765 F.Supp. 89, 98 (N.D.Ill.1982). Therefore, there is certainly no basis to deprive defendant of the right to introduce evidence more fully substantiating this defense at trial. CONCLUSION It is indeed unfortunate that this case is before the court at all. Both sides recognize that a sum of money is owed, and ASCAP will most likely receive from SMC overdue but acceptable compensation for the broadcast of the works at issue. Nevertheless, instead of simply negotiating a fair figure, as reasonable businesses might, the parties have regrettably turned the matter over to their attorneys, who have enmeshed it in an unnecessary legal battle. The nature of this dispute is relatively straightforward: SMC used and obtained the benefit of ASCAP members' works who understandably expect reasonable compensation. Adorning that basic concept with debatable legal issues hardly alters the underlying equities. Accordingly, the court sees little benefit to either side in clinging to the lawsuit as the mechanism for determining a reasonable figure.[8] Nevertheless, the court is obliged to resolve the motions before it. Accordingly, for the foregoing reasons, plaintiffs' motion to certify the litigation as a class action is granted. The motion to dismiss defendant's affirmative defenses is granted as to the first, second and fourth defenses. The motion is denied as to the third, fifth and sixth defenses. So Ordered. NOTES [1] Upon the expiration of these licenses, Showtime and The Movie Channel could have continued being licensed by making written applications to ASCAP. See United States v. ASCAP, No. 13-95 (S.D.N.Y. March 14, 1950). In addition, if they could not come to an agreement with ASCAP, they could have applied to this Court (the "Rate Court") for determination of a reasonable fee, pursuant to a consent decree previously entered into by ASCAP and the Department of Justice. Id. [2] Under the reasoning of Magistrate Dolinger's decision, the consent decree as currently worded would not appear to allow retroactive relief. This court, which retains jurisdiction over the decree, however, has the power to modify it to achieve substantial justice. See Matarese v. LeFevre, 801 F.2d 98, 106 (2d Cir.1986), cert. denied, 480 U.S. 908, 107 S.Ct. 1353, 94 L.Ed.2d 523 (1987); 11 C.A. Wright & A.R. Miller, Federal Practice and Procedure §§ 2863-64 (1973 & Supp.1988). [3] SMC correctly notes that the Second Circuit declined to reach this issue in Eastern Microwave, Inc. v. Doubleday Sports, Inc., 691 F.2d 125, 127 n. 5, cert. denied, 459 U.S. 1226, 103 S.Ct. 1232, 75 L.Ed.2d 467 (1983). SMC also asserts, however, that the Eastern Microwave court questioned the Seventh Circuit's reasoning in WGN Continental Broadcasting Co. v. United Video, Inc., 693 F.2d 622, 625 (7th Cir.1982), in which the court held that retransmissions by cable companies to other cable companies were "public performances." See Def.Mem. at 29. SMC's assertion is undermined by the Second Circuit's subsequent decision in National Ass'n of Broadcasters v. Copyright Royalty Tribunal, 809 F.2d 172 (2d Cir.1986), in which the court cited the WGN decision in noting that "[c]able retransmissions are recognized as public performances under § 106(4)." Id. at 179 n. 9. [4] Both parties have agreed that any discovery taken in that action may be utilized in this litigation. See Blumstein Aff., Ex. C (Letter from David E. Nachman, Esq., to Kenneth L. Steinthal, Esq., dated March 5, 1987). [5] Moreover, even if the disputed term were material, there is a disputed issue of fact as to what the parties actually agreed upon. Therefore, the court could not strike the defense but would have to await resolution of the factual issue at trial. [6] In fact, it is not entirely clear that the doctrine is recognized in this circuit at all. See United States v. Bedford Assocs., 713 F.2d 895, 904 (2d Cir.1983); Universal City Studios, Inc. v. Nintendo Co., 578 F.Supp. 911, 920-21 & n. 3 (S.D.N.Y. 1983), aff'd, 746 F.2d 112 (2d Cir.1984). [7] In addition, SMC's claim that it was not licensed by ASCAP was apparently a legal conclusion of its counsel, see Pl.Mem. at 14, who could reasonably have not anticipated the magistrate's decision and this resultant lawsuit. Therefore, it would be inappropriate to apply the doctrine in this context. See Konstantinidis v. Chen, 626 F.2d 933, 940 (D.C.Cir.1980) (holding that the doctrine should not apply to a case in which the "major failing is the absence of clairvoyance") (quoting Johnson Service Co. v. Transamerica Insurance Co., 485 F.2d 164, 175 (5th Cir.1973)), discussed in Horger, 642 F.Supp. at 981; 1B Moore's ¶ 0.405[8] at 243 (stating that "in the absence of clear fraud the assertion of a legal conclusion or opinion will not result in preclusion"). [8] Although this case has been prosecuted as a copyright infringement, it is essentially an action for breach of contract or unjust enrichment. Accordingly, if this court were called upon to determine a "reasonable" figure at this point, it would probably be guided by the rates in effect before this controversy arose.

01-03-2023

10-30-2013

https://www.courtlistener.com/api/rest/v3/opinions/4165790/

IN THE COURT OF APPEALS OF IOWA No. 16-2076 Filed May 3, 2017 IN THE INTEREST OF J.H., Minor Child, J.H., Father, Petitioner-Appellee, A.H., Mother, Respondent-Appellant. ________________________________________________________________ Appeal from the Iowa District Court for Dubuque County, Thomas J. Straka, Associate Juvenile Judge. A mother appeals from the termination of her parental rights. AFFIRMED. Taryn R. Purcell of Clemens, Walters, Conlon, Runde & Hiatt, L.L.P., Dubuque, for appellant. Patricia M. Reisen-Ottavi of Ottavi Law Firm, Dubuque, for appellee. Victoria D. Noel of Mayer, Lonergan & Rolfes, Clinton, for minor child. Considered by Danilson, C.J., and Vogel and Vaitheswaran, JJ. 2 DANILSON, Chief Judge. A mother appeals from the termination of her parental rights to her child on the petition of the child’s father alleging the mother abandoned the child pursuant to Iowa Code section 600A.8(3)(b) (2016). The mother contends the juvenile court erred in finding she abandoned the child, and argues termination of her parental rights is not in the child’s best interest. We conclude there is clear and convincing evidence the mother abandoned the child and termination is in the child’s best interest. We therefore affirm. I. Background Facts & Proceedings. The child, J.H., was born in 2006 and was ten years old at the time of the termination hearing. The mother and father were never married, and they separated shortly after J.H. was born. Initially, the parties informally agreed J.H. would live with the mother and the father would have visitation. However, due to the mother’s husband’s interference in visitation, the father filed an action seeking physical care in 2010. A decree placing physical care with the father and providing visitation to the mother was entered on April 18, 2011. In 2013, the department of human services (DHS) became involved with the mother’s family because it was learned the mother’s husband was using and dealing illegal substances in the family home, one of the children in the home tested positive for illegal substances, and there were concerns of domestic violence. The mother’s parental rights to her two other children were terminated in 2015 because the mother could not protect her children by honoring a no- contact order and staying away from her husband. 3 A founded child abuse assessment was also completed with respect to J.H. in 2013. The assessment identified the mother’s husband as the responsible person for denial of critical care stemming from his use of illegal substances in J.H.’s presence. J.H.’s father subsequently placed limitations on the mother’s exercise of visitation, requiring that she not take J.H. to her home or any place where the mother’s husband may be. The father offered visitation with J.H. at the father’s home, at the home of the mother’s parents, and at the home of the father’s parents. The mother testified she felt “uncomfortable” visiting J.H. at the father’s home. Therefore, at the time of the October 28, 2016 termination hearing, the mother had visited J.H. only twice since December 2014. The mother had not seen J.H. at all since the fall of 2015—approximately one year prior to the termination hearing. Although the mother was provided with J.H.’s basketball schedule, the mother did not attend any games. The mother also made only sporadic attempts to communicate with the father and J.H. The father testified the mother would sometimes go thirty days without making contact. The father further testified in the year preceding the termination hearing, there would be gaps of as long as ninety days in communication with the mother “Sporadic” also describes of the mother’s effort to provide financial support. The mother was ordered to pay the father $80 per month in child support, but made inconsistent payments by way of automatic withholding during periods when she was employed. Over the period of about five years between 4 the 2011 decree and the 2016 termination hearing, the mother paid approximately $4300 in child support.1 The father is remarried. J.H.’s stepmother testified at the termination hearing she and J.H. have a good relationship. The stepmother shares in the responsibility of parenting J.H., and has developed a bond with J.H. The stepmother testified she would like to adopt J.H. if the mother’s parental rights are terminated. The guardian ad litem (GAL) provided a report to the court in which she stated J.H. expressed great fear of the mother’s husband. J.H. also expressed fear about the possibility of going to live with the mother if something happened to the father. The GAL also reported that “after the interview, it was very clear [J.H.’s] desire in this case, which is for the court to grant the termination of parental rights for [the] mother and to be adopted by [the] stepmother.” At the time of the termination hearing, the mother was living in a family friend’s apartment. The mother has mental-health issues including depression, anxiety, and ADHD, which she does not manage with medication as recommended. The mother acknowledged her husband was abusive and her children were afraid of him, and yet she repeatedly violated the no-contact order and kept her husband in the children’s lives. The mother testified she is no longer in contact with her husband, but remains married to him. The mother reported she has a new paramour and is considering living with him in the future. The mother testified her new paramour has prior criminal charges and has had 1 This included $642.35 in 2011, $1005.53 in 2012, $281.50 in 2013, $1602 in 2014, $258.04 in 2015, and $518.11 in 2016. 5 his parental rights to a child terminated, but she does not know what the criminal charges are or the reasons for the termination. As to visitation with J.H., the mother testified: Q. What do you believe to have been the longest block of time that you went without—between seeing or visiting with [J.H.]? . . . . A. Probably, like, a year and a half maybe. Q. And during that year and a half, you could have done visits at the [father]’s home or your dad’s home or [the father]’s mother’s home, but you felt uncomfortable. A. Correct. The juvenile court determined the mother’s “efforts were insufficient to maintain substantial and continuous or repeated contact” with J.H. and termination was in J.H.’s best interest. The court entered an order terminating the mother’s parental rights on November 23, 2016. The mother now appeals. II. Standard of Review. We conduct a de novo review of termination proceedings under chapter 600A. In re C.A.V., 787 N.W.2d 96, 99 (Iowa 2010). “We accord weight to the factual findings of the juvenile court, especially those regarding witness credibility, but we are not bound by them.” Id. Our paramount consideration is the best interest of the child. Iowa Code § 600A.1. III. Analysis. The mother asserts there is not clear and convincing evidence she abandoned J.H., and contends termination is not in J.H.’s best interest. Iowa Code section 600A.8(3)(b) provides grounds for termination when there is clear and convincing evidence a parent has abandoned a child six months of age or older unless the parent maintains substantial and continuous or repeated contact with the child as demonstrated by contribution toward 6 support of the child of a reasonable amount, according to the parent’s means, and as demonstrated by . . . [v]isiting the child at least monthly when physically and financially able to do so and when not prevented from doing so by the person having lawful custody of the child . . . [or] [r]egular communication with the child or with the person having the care or custody of the child, when physically and financially unable to visit the child or when prevented from visiting the child by the person having lawful custody of the child. To her credit, the mother did render modest child support payments sporadically throughout the child’s life when the mother was employed and had the means to provide support. However, the juvenile court found the mother did not maintain substantial and continuous contact with the child within the meaning of section 600A.8(3)(b). We agree. Although the location of the mother’s visitation was limited to protect the safety of the child, the mother was provided opportunities to visit with J.H. and only did so on two occasions in 2015. By the time of the termination hearing in October 2016, the mother had not visited J.H. in approximately one year. The mother contends the father prevented her from participating in visitation with J.H. However, the father did not refuse visitation. Rather, he provided alternatives to the mother to ensure J.H.’s safety during visits. The mother testified she objected to visiting J.H. at the father’s house because it was uncomfortable for her. But the father offered two other locations for visitation, and the mother never initiated any court action after the decree was entered to enforce her visitation rights. Further, it seems likely that DHS may have intervened if the mother exercised visitation in her home when her husband was present. 7 The mother also did not maintain continuous communication with J.H. or the father, at times making no attempt to contact them for thirty or even ninety days. The mother did not take advantage of the opportunities provided to her to see her child, and certainly was not visiting with J.H. on a monthly basis or maintaining regular communication. We therefore find the juvenile court properly determined there were grounds for termination under Iowa Code section 600A.8(3)(b) on the basis that the mother failed to maintain “substantial and continuous or repeated contact with the child.” We also conclude termination of the mother’s parental rights is in J.H.’s best interest. Iowa Code section 600A.1 provides: The best interest of a child requires that each biological parent affirmatively assume the duties encompassed by the role of being a parent. In determining whether a parent has affirmatively assumed the duties of a parent, the court shall consider, but is not limited to consideration of, the fulfillment of financial obligations, demonstration of a continued interest in the child, demonstration of a genuine effort to maintain communication with the child, and demonstration of the establishment and maintenance of a place of importance in the child’s life. In evaluating J.H.’s best interest, the juvenile court stated: [The mother] testified that she is no longer in a relationship with [her husband], even though they remain married. The court gives little weight to [the mother]’s testimony in this regard, given her documented dishonesty regarding her relationship with [her husband]. Even if she is no longer in a relationship with [her husband], her protective capacities are still called into question. [The mother] testified she is currently in a relationship with an individual who has his own criminal history issues and had his parental rights terminated, but she was unsure why. [The mother] is currently homeless and sleeps on the couch of a family friend. The residence appears to be a duplex in which [the mother]’s uncle was arrested on drug charges. . . . [The mother] testified it was her intention to move out of the apartment and either into the Maria House or in with her new boyfriend. [The mother]’s unstable 8 lifestyle, prior termination of her parental rights, and volatile relationships remain a concern. In evaluating the child’s best interest, “[w]e look to the child’s long-range, as well as immediate, interests.” In re R.K.B., 572 N.W.2d 600, 601 (Iowa 1998) (citation omitted). The mother has not demonstrated appropriate decision- making skills with regard to her relationships. The mother did not take the necessary steps to protect her children from her husband, resulting in the termination of her parental rights to her other two children and DHS involvement and a founded child-abuse report with respect to J.H. The decisions by the mother have negatively impacted J.H., causing J.H. a great deal of fear and uncertainty as to whether she would be protected by the mother in the future. Additionally, the mother has not exhibited the ability to provide a safe and stable environment for J.H. The mother did not have a suitable residence at the time of the termination hearing and was engaging in a relationship with a new individual with a criminal history. The mother has not demonstrated a genuine effort to show a continued interest or maintain a place of importance in J.H.’s life. Alternatively, the father and stepmother have provided a safe and stable environment for J.H. The stepmother has acted as a caregiver for J.H. and expresses a desire to adopt J.H. The father brought the petition for termination to facilitate the stepmother’s adoption of J.H. in order to allow J.H. to feel secure and know that she will not be placed back in a frightening environment with her mother. We agree with the juvenile court that [g]iven that [the stepmother] has assumed the role of full-time parent for [J.H.], and is willing to do so on a permanent basis through adoption, . . . termination would also be in the best interest 9 of the child as it will best meet [J.H.]’s long-term nurturing and growth, and her physical and emotional needs. We agree that termination of the mother’s parental rights is in J.H.’s best interest. IV. Conclusion. We conclude there is clear and convincing evidence the mother abandoned J.H. within the meaning of Iowa Code section 600A.8(3)(b), and termination of the mother’s parental rights is in J.H.’s best interest. We therefore affirm the juvenile court’s order terminating the mother’s parental rights. AFFIRMED.

01-03-2023

05-03-2017

https://www.courtlistener.com/api/rest/v3/opinions/2133200/

803 F.Supp. 97 (1992) NATURAL RESOURCES DEFENSE COUNCIL, INC., et al., Plaintiffs, v. VYGEN CORPORATION, Defendant. No. 4:92CV0024. United States District Court, N.D. Ohio, E.D. September 24, 1992. *98 Stephen P. Samuels, Law Offices of Stephen P. Samuels, Columbus, Ohio, Andrew Buchsbaum, Nat. Environmental Law Center, Ann Arbor, Mich., Nancy S. Marks, James F. Simon, Katherine Kennedy, Turner R. Odell, Jr., Natural Resources Defenses Council, Inc., New York City, for plaintiffs. Duane J. Dubsky, Jeffrey A. Ford, Law Offices Of Charles M. Diamond, Ashtabula, Ohio, Harry F. Klodowski, Jr., Barry J. Trilling, Doepken, Keevican, Weiss & Medved, Pittsburgh, Pa., for defendant. MEMORANDUM AND ORDER ANN ALDRICH, District Judge. Natural Resources Defense Council, Inc. and the Ohio Public Interest Research Group bring this citizen action, pursuant to 33 U.S.C. § 1365, against Vygen Corporation for violations of the Clean Water Act. Both environmental groups have moved for partial summary judgment on the question of liability. Vygen has moved for summary judgment as well. For the reasons stated, the plaintiffs' motion is granted and the defendant's motion is denied. I. The Clean Water Act of 1972, as amended, prohibits the discharge of any pollutants into navigable waters except in accordance with a permit issued by the United States Environmental Protection Agency (U.S. EPA) or an authorized state. 33 U.S.C. § 1311(a), § 1342. Pursuant to 33 U.S.C. § 1342(b), the U.S. EPA has authorized the state of Ohio to establish and administer its own permit program so long as it conforms to federal guidelines. Vygen Corporation operates an organic chemical plant in Ashtabula, Ohio. On September 29, 1989, the Ohio Department of Environmental Protection (OEPA) issued Vygen a permit to discharge its industrial wastewater into the Vygen tributary of Fields Brook. That permit establishes numerical limits on the amount and concentration of specified pollutants that Vygen may discharge into the brook. Without a valid permit from the OEPA, Vygen may not legally discharge any industrial waste into navigable waters. 33 U.S.C. § 1311(a). To ensure compliance with permit effluent limitations, the Clean Water Act requires a permit holder, like Vygen, to monitor its discharges and report on its permit compliance on a monthly basis. 33 U.S.C. § 1318. The monthly discharge monitoring reports ("DMRs") are public information. 40 C.F.R. § 122.41. In its DMRs, Vygen has admitted that it has violated its permit limits on at least 149 occasions from January 1989 through March 1992. In addition, Vygen's DMRs demonstrate that Vygen *99 has violated its monitoring and reporting requirements on several occasions during the same period. Each of these violations constitutes a violation of the Clean Water Act. To ensure compliance with the Clean Water Act, OEPA instituted an administrative enforcement action against Vygen in 1989. On February 9, 1990, OEPA issued an administrative order, called a Director's Final Findings and Orders ("DFFO"), which found that Vygen was not in compliance with the final effluent limitations contained in its permit for vinyl chloride. To achieve compliance "as expeditiously as practicable," OEPA established deadlines for the construction of a new wastewater treatment system to reduce pollutants. This schedule required Vygen to apply for a permit to install within twelve (12) months, initiate construction within twenty-four (24) months, and achieve final compliance within thirty-six (36) months. It also ordered Vygen to pay $25,000 "in settlement of Ohio EPA's claim for civil penalties which may be assessed pursuant to Chapter 6111 of the Ohio Revised Code." After the issuance of the 1990 DFFO, Vygen continued to violate the terms of the 1990 DFFO and the requirements of its permit. As a result, in November, 1991, OEPA issued a second DFFO which found that Vygen had failed to comply with the effluent limitations on five (5) other pollutants, in addition to vinyl chloride. It also found that Vygen had failed to apply for a permit to install a wastewater treatment facility in accordance with the 1990 DFFO and comply with its monitoring and reporting requirements. To address these violations, OEPA issued a revised compliance schedule with modified interim effluent limitations and monitoring requirements. In addition, the 1991 DFFO ordered Vygen to pay $50,000 in settlement of OEPA's claim for civil penalties. The first $10,000 was to be paid by December, 1991, and the remaining $40,000 was to be paid by May, 1992. On May 8, 1992, OEPA wrote Vygen to inform it that it had violated the 1991 DFFO by failing to submit approvable detail plans for the construction of a wastewater treatment system. Vygen had requested a delay in these deadlines. In addition, OEPA informed Vygen on May 22, 1992, that it has violated the 1991 DFFO by failing to pay the $40,000 penalty on time. On September 6, 1991, before the issuance of the 1991 DFFO, the National Resource Defense Council, Inc. ("NRDC") and the Ohio Public Interest Research Group ("OPIRG") sent Vygen a notice of intent to sue for alleged violations of the Clean Water Act. A copy of this letter was sent to OEPA. Four months later, on January 3, 1992, NRDC and OPIRG filed this action pursuant to 33 U.S.C. § 1365, charging that Vygen had violated the terms of its discharge permit and the state administrative orders and seeking a declaratory judgment, permanent injunctive relief, appropriate civil penalties, and costs including attorneys' fees. They have now moved for partial summary judgment on the question of liability. In response, Vygen has moved for summary judgment as well. For the reasons stated below, this Court grants NRDC and OPRIG's motion for partial summary judgment and denies Vygen's motion for summary judgment. II. Federal Rule of Civil Procedure 56(c) governs summary judgment motions and provides: The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law ... The nature of materials properly presented in a summary judgment pleading is set forth in Federal Rule of Civil Procedure 56(e): Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein ... The court may permit affidavits to be supplemented *100 or opposed by depositions, answers to interrogatories, or further affidavits. 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 denial of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If the adverse party does not so respond, summary judgment, if appropriate, shall be entered against the adverse party. However, the movant is not required to file affidavits or other similar materials negating a claim on which its opponent bears the burden of proof, so long as the movant relies upon the absence of the essential element in the pleadings, depositions, answers to interrogatories, and admissions on file. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In reviewing summary judgment motions, this Court must view the evidence in the light most favorable to the nonmoving party to determine whether a genuine issue of material fact exists. Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); White v. Turfway Park Racing Assn., Inc., 909 F.2d 941, 943-44 (6th Cir.1990). A fact is "material" only if its resolution will affect the outcome of the lawsuit. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). Determination of whether a factual issue is "genuine" requires consideration of the applicable evidentiary standards. Thus, in most civil cases the Court must decide "whether reasonable jurors could find by a preponderance of the evidence that the [non-moving party] is entitled to a verdict." Id. at 252, 106 S.Ct. at 2512. The fact that both parties have filed cross-motions for summary judgment does not change this standard of review. Taft Broadcasting v. United States, 929 F.2d 240, 249 (6th Cir. 1991). III. There is no question that Vygen has failed to comply with the terms of its permit and the terms of the 1990 and 1991 DFFOs. Accordingly, it is subject to both federal and state enforcement actions for failure to comply. See 33 U.S.C. §§ 1319, 1342(b)(7). In addition, Vygen may be subject to a "citizen suit" under 33 U.S.C. § 1365(a)(1), which provides: Except as provided by subsection (b) of this section and section 1319(g)(6) of this title, any citizen may commence a civil action on his own behalf — against any person ... who is alleged to be in violation of (A) an effluent standard or limitation under this chapter or (B) an order issued by the Administrator or a State with respect to such a standard or limitation. As the 33 U.S.C. § 1319(g)(6) provides, a citizen's suit may not be brought where "... a State has commenced and is diligently prosecuting an action under a State law comparable to [33 U.S.C. § 1319(g)]." Vygen argues that plaintiffs are barred from bringing this citizens suit because the OEPA is diligently prosecuting an action against Vygen under Ohio law. However, in order for § 1319(g)(6)(A) to preclude a citizens suit, the state law under which Vygen is being prosecuted must be comparable to the federal law. For the reasons stated below, this Court finds that Ohio law is not comparable to 1319(g)(6)(A), and thus the DFFOs issued by OEPA do not preclude plaintiffs' actions. IV. The Ohio law differs from the Clean Water Act in a very significant way. The OEPA administrative orders issued against Vygen are issued under the state Water Pollution Control Act, Ohio Revised Code § 6111.01 et seq., and the regulations promulgated thereunder, Ohio Administrative Code Chapter 3745-33.[1] *101 The Ohio Act is not comparable to the federal Clean Water Act because the Ohio Act lacks the public participation safeguards present in 1319(g). Section 1319(g) contains several provisions to safeguard the public's right to participate in the administrative action process. Section 1319(g)(4) specifies that: 1) the public must be given notice of a proposed order and must be provided a "reasonable opportunity to comment" on the order before it is finalized; and 2) any person who provides such comment must be given individual notice of any subsequent hearing pertaining to that penalty; and 3) if no such hearing is scheduled, any such person may petition the agency to hold a hearing. The agency must consider the evidence presented by the petitioner to set aside the order or hold the hearing, and if the agency decides not to hold a hearing, it must publish its reasons; and 4) any person who comments on a penalty order has the right to judicial review of the penalty assessed. These requirements are mandatory; they are not permissive. State laws must contain safeguards comparable to those of § 1319(g) if state agency orders are to preclude citizen suits. Atlantic States Legal Foundation v. Universal Tool and Stamping Co., 735 F.Supp. 1404, 1415 (N.D.Ind.1990). These safeguards must be mandatory, rather than permissive, if state law is to be considered comparable to § 1319(g). Id. at 1416.[2] (emphasis added). As evidenced by the detailed requirements of § 1319(g)(4) set forth above, Congress was careful to limit preclusion of citizen enforcement actions only in those situations where the affected public had ample opportunity to participate in the process by which the administrative action was taken. Thus, the state law safeguards must be examined carefully to determine whether they are comparable to those provided by § 1319(g)(4). Ohio law does not provide safeguards comparable to § 1319(g)(4). Although Ohio law sets out circumstances under which an agency may decide to provide for notice, comment and hearings, it also allows the OEPA the discretion to avoid such public participation, as it did in this case. Under Ohio law, the OEPA may issue a final order, a proposed order or a draft order. OAC XXXX-XX-XX. The director of OEPA may issue a final action without first issuing a proposed action. OAC XXXX-XX-XX(E), ORC 3704.04. The Ohio regulations specify that the director shall provide notice of all actions, including final actions, but only after the action has been taken. OAC XXXX-XX-XX. Thus, if the agency decides to issue a final enforcement action without first issuing a proposed action, Ohio law denies the public any right to prior notice of the final order, no right to comment on the order before it is issued, and no right to a hearing prior to the order's issuance. Therefore, OEPA has the discretion to avoid public participation requirements by not issuing a proposed action. This is, in fact, what the OEPA did in the case at hand. Furthermore, the notice requirements in the regulations are directory, not mandatory. William L. Campbell v. Maynard, EBR 521036 (1983). Failure to give notice does not invalidate any action by the director, absent a showing of detrimental reliance by a party to the action. OAC XXXX-XX-XX(F). Indeed, in the case at hand, no notice was ever published or sent to plaintiffs after the 1991 DFFO was issued. As discussed above, § 1319(g) mandates public notice and opportunity to be heard prior to the imposition of a civil penalty. Vygen argues that the public notice requirement is satisfied because the OEPA records are public records, which ensures that any interested person can review them. The First Circuit has held that a state statute which provides for orders which are public documents protects citizen *102 interests sufficiently to be comparable to § 1319(g)'s public participation provisions. North & South Rivers Watershed Ass'n v. Scituate, 949 F.2d 552, 556 n. 7 (1st Cir. 1991). This Court disagrees. The detailed, mandatory safeguards of citizen participation contained in § 1319(g)(4) are not comparable to simply having a public record on file somewhere for a citizen to look at should that citizen somehow discover that a particular action has been taken. Public notice is fundamental to protecting citizen participation in agency decisions. If the public does not know about agency actions, it cannot avail itself of any right to participate in any action that may be taken pursuant to that statute. Thus, since Ohio law has no mandatory public notice requirement, nor a requirement of public notice and opportunity to be heard prior to the issuance of a civil penalty, Ohio's provisions are not comparable to § 1319(g), and the plaintiffs' claim is not barred by Ohio's administrative orders. IV. Vygen also alleges that the plaintiffs' claim is barred by § 1319(g)(6)(a)(iii), which provides that any violation for which the ... State ... has issued a final order not subject to further judicial review and the violator has paid a penalty assessment under this subsection, or such comparable state law, as the case may be, shall not be the subject of a civil penalty action under ... section 1365 of this title. Vygen's argument fails because, as discussed supra, the administrative orders issued by the OEPA were not issued under a state law comparable to § 1319(g). Thus, § 1319(g)(6)(a)(iii) does not bar plaintiffs' suit. V. Vygen has also challenged the plaintiffs' standing in this case. Vygen argues that the recent United States Supreme Court decision in Lujan v. Defenders of Wildlife, ___ U.S. ___, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992), undermines the traditional standard for standing in citizen suits under the Clean Water Act. However, this Court finds that Lujan does not alter plaintiffs' standing in this case. In Lujan, the Supreme Court reaffirmed the constitutional requirements for standing: an injury in fact which affects the plaintiff in a personal way and is imminent; the injury must be fairly traceable to the defendant's actions; the injury must be likely to be redressed by a favorable decision. Id. 112 S.Ct. at 2136. To meet these standing requirements, plaintiffs must submit affidavits or other evidence showing that one or more of plaintiffs' members are directly affected, apart from their special interest. Id. at 2137-38. In Lujan, plaintiffs' members had previously visited the areas in question five to ten years earlier, but had no current plans to visit the areas again. Here, to establish standing, plaintiffs submitted affidavits of four of their members. These members state that they live or recreate in the vicinity of defendant's organic chemical plant and that their health, recreational, environmental or professional interests are harmed by the pollution. Marian Plank states that she lives 12 miles from the Ashtabula River and visits the River two to three times per year with her grandchildren. Marlene Sartini lives ½ mile from the river and goes boating on the river four to five times per year. She states that the pollution in the river makes it unpleasant to boat there. She also states that her public relations business is affected by the pollution. Sartini's business is to help businesses in Ashtabula project a positive image for Ashtabula. The pollution in the Ashtabula River makes it more difficult for her to promote a positive image of the city. Jessica Jenkins and Katherine Armer state that they had an unpleasant encounter with the discolored and smelly waters of the Vygen tributary. They both also stated that they would not return to Ashtabula to recreate nor would they swim in Lake Erie near the River's mouth. If the river were clean, they would recreate there. Thus, plaintiffs have shown an injury in fact which affects them personally and is imminent. *103 Vygen also argues that plaintiffs do not have standing in this case because their injury is not redressable. Vygen argues that even if it were forced to close its plant, the Ashtabula River and Lake Erie would continue to be polluted by other industries upstream on the river, and therefore, plaintiffs' injury is not redressable. This Court finds this argument eminently unpersuasive. Plaintiffs need not show that polluted waters will be "returned to pristine condition" in order to satisfy the minimal standing requirements; it is sufficient that an injunction will decrease pollution. PIRG of New Jersey v. Powell Duffryn Terminals, Inc., 913 F.2d 64, 73 (3rd Cir. 1990). VI. Plaintiffs have also moved for summary judgment on the issue of Vygen's liability for several violations of the Clean Water Act. Plaintiffs assert that the uncontroverted facts demonstrate that Vygen, by its own admission, has violated the terms of its NPDES permit. As noted earlier, the Clean Water Act requires a permit holder to monitor its discharges and report the results to the EPA or the state in DMRs. If the permit holder fails to comply with its permit, it is deemed to be in violation. Atlantic States Legal Foundation v. Universal Tool 735 F.Supp. 1404, 1420-2 (N.D.Ind.1990). Plaintiffs claim that Vygen has admitted in its DMRs that its discharge into the Vygen tributary of Fields Brook has exceeded the limits of its NPDES permit at least 149 times since January of 1989. Plaintiffs also claim that the DMRs document 3,731 cases of non-reporting. Vygen does not deny it violated the NPDES permit, but they dispute the number of violations, alleging that plaintiffs made 68 miscalculations in their violation log and at least 1,765 in their reporting violation log, exaggerating Vygen's alleged noncompliance by 84% to 89.9%. Accordingly, this Court grants plaintiffs' summary judgment motion as to Vygen's liability, but finds that there is a material issue of fact as to the total number of violations. VII In sum, this Court grants NRDC and OPIRG's motion for partial summary judgment and denies Vygen's motion for summary judgment. This Court finds that there remains a material issue of fact as to the specific number of violations, and as to the scope of relief. Therefore, this Court orders the parties to appear before this Court on September 29, 1992, at 3:00 p.m., for a status conference regarding the further disposition of this case. IT IS SO ORDERED. NOTES [1] Procedurally, OEPA actions must comply with the statute establishing the OEPA, Ohio Revised Code § 3745.01 et seq., and its accompanying regulations, Ohio Administrative Code Chapter 3745-45, and the Ohio Administrative Procedure Act, § 119.01 et seq. [2] To the extent that the holding in North & South Rivers Watershed Ass'n. v. Scituate, 949 F.2d 552 (1st Cir.1991) differs from this conclusion, this Court disagrees. See infra, at pp. 101-02.

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969 F. Supp. 420 (1997) NORDAR HOLDINGS, INC., Plaintiff, v. WESTERN SECURITIES (USA) LTD. and Western Securities Ltd., Defendants. Civil No. 3:96-CV-0427-H. United States District Court, N.D. Texas, Dallas Division. July 10, 1997. *421 Geoffrey H. Bracken, James G. Munisteri, Gardere & Wynne Sewell & Riggs, Houston, TX, for Plaintiff. Sim D. Isaeloff, Cowles & Thompson, Dallas, TX, for Defendants. MEMORANDUM OPINION AND ORDER SANDERS, Senior District Judge. On July 8, 1997, this case was tried before the Court without a jury. The Court concludes that this case is controlled by an issue of law, and therefore will resolve the case in the form of a Memorandum Opinion in lieu of detailed findings of fact and conclusions of law. Any of the Court's conclusions herein that are more appropriately considered findings of fact are so deemed. I. Background This suit began as an action to recover under a guaranty on a promissory note. Plaintiff NorDar Holdings, Inc. is a Florida corporation. Defendant Western Securities Limited ("WSL") is a Canadian corporation with its principal place of business in Calgary, Alberta, Canada. Defendant Western Securities (USA) Limited ("Western USA") is a Colorado corporation with its principal place of business in San Antonio, Texas. Former Defendant Western Properties (Texas) Limited ("Western Properties") is also a Colorado corporation with its principal place of business in San Antonio. WSL owns preferred stock in Western USA' which in turn wholly owns Western Properties. This suit is based on two related underlying transactions. In 1987, Western USA executed an original promissory note in favor of Commerce Savings Association. The original note was secured by a parcel of real property in Dallas, Texas. In 1988, Western USA conveyed the land to Western Properties. In 1991, in a settlement of separate litigation involving the Resolution Trust Corporation ("RTC"), Western Properties executed a second promissory note, renewing and extending the original. As part of this 1991 renewal transaction, Western USA executed a limited guaranty agreement in the amount of $1.1 million. WSL, the ultimate parent of Western USA and Western Properties, did not execute the note or the guaranty and never owned the real property securing the debt. After the 1991 renewal transaction, Commerce Savings was placed in RTC receivership. Through this receivership, all rights *422 under the 1991 note and guaranty were eventually conveyed to NorDar. Western Properties defaulted on the note and the real property securing it was foreclosed upon, leaving a deficiency of approximately $1.8 million. NorDar instituted the present lawsuit to collect the deficiency. NorDar sued Western Properties as maker of the note and Western USA as guarantor. NorDar has also sued WSL, arguing that the Court should disregard the corporate fiction and hold WSL liable for the obligations of its affiliates. On September 18, 1996, pursuant to a stipulation of the parties, the Court dismissed Western Properties as a defendant. On December 18, 1997, the Court entered summary judgment in the amount of $1,100,000 against Western USA based on the limited guaranty agreement. That left for trial only the issue of WSL's liability. At trial, Plaintiff sought to establish that WSL should be jointly and severally liable for the $1.1 million judgment entered against Western USA. Plaintiff maintained that the Court should disregard the corporate fiction with respect to WSL based on the related Texas-law doctrines of alter ego and single business enterprise.[1] II. Texas Law on Disregard of the Corporate Entity Texas law on disregard of the corporate entity has undergone substantial change over the last decade. In 1986, the Texas Supreme Court decided Castleberry v. Branscum, 721 S.W.2d 270, 272 (Tex.1986), and set out six situations in which Texas courts will disregard the corporate fiction and hold shareholders liable for corporate obligations. Summarizing these six situations, the Fifth Circuit has articulated three theories of piercing the corporate veil under Texas law: 1) when the corporation is the alter ego of its shareholders or owners; 2) when the corporation is used for illegal purposes; or 3) when the corporation is used as a sham to perpetrate a fraud. See Villar v. Crowley Maritime Corp., 990 F.2d 1489, 1496 (5th Cir.1993), cert. denied, 510 U.S. 1044, 114 S. Ct. 690, 126 L. Ed. 2d 658 (1994). In Castleberry, the Texas Supreme Court went on to hold that when proceeding on the theory of sham to perpetrate a fraud, a plaintiff need prove only constructive fraud, rather than actual fraud. Castleberry, 721 S.W.2d at 273. In 1989, in reaction to Castleberry, the Texas Legislature amended the Texas Business Corporation Act to provide that, in contract cases, a plaintiff seeking to pierce the corporate veil under the theory of sham to perpetrate a fraud must prove that the defendant-shareholder caused the corporation to perpetrate an actual fraud on the obligee for the direct, personal benefit of the shareholder. See TEX.BUS.CORP.ACT ANN. art. 2.21 & Comment of Bar Committee (West Supp. 1997). In 1991, the Legislature again amended Article 2.21 to provide that the actual fraud requirement also applies to plaintiffs seeking to have the court disregard the corporate fiction on the alter ego theory or "other similar theory." Id. Both the Fifth Circuit and intermediate Texas courts have confirmed that the amendments to Article 2.21 require a showing of actual fraud in order to pierce the corporate veil on the alter ego theory. Thrift v. Hubbard, 44 F.3d 348, 353 (5th Cir.1995); Western Horizontal Drilling v. Jonnet Energy Corp., 11 F.3d 65, 68 & n. 4 (5th Cir.1994); Farr v. Sun World Sav. Ass'n, 810 S.W.2d 294 (Tex.App. — El Paso 1991, no writ); see also Atlantic Richfield Co. v. The Long Trusts, 860 S.W.2d 439, 445-47 (Tex.App. — Texarkana 1993, writ denied). The Court concludes that the statute, as amended, also requires actual fraud in order to disregard the corporate entity under the single business enterprise theory. Under Texas law, single business enterprise is a doctrine — separate from piercing the corporate veil — that allows the court to impose joint liability when two corporations are not operated as separate entities and integrate their resources to achieve a common purpose. Old Republic Ins. Co. v. Ex-Im Servs. Corp., 920 S.W.2d 393, 395-96 (Tex.App. — Houston [1st Dist.] 1996, no writ). Although the *423 amended Article 2.21 does not explicitly mention the single business enterprise doctrine, it does provide that, in contract cases, actual fraud is required to hold a shareholder liable on the basis of alter ego, sham to perpetrate a fraud, "or other similar theory." The Court concludes that single business enterprise is such a "similar theory." See TEX. BUS.CORP.ACT ANN. art. 2.21 Comment of Bar Committee. Furthermore, subsection B of Article 2.21, also added by the post-Castleberry amendments, provides that the liability created by the statute "is exclusive and preempts any other liability imposed on [a corporate shareholder] ... under common law or otherwise." The obvious intent of Article 2.21, as amended, is to require a plaintiff in a contract case to establish actual fraud before a court may disregard the corporate entity — on whatever theory — and impose joint liability on the corporation and its owner(s). Here, WSL is a shareholder of Western USA; NorDar is asking the Court to impose liability on WSL for a contractual obligation of Western USA. In light of Article 2.21 and the cases cited above, the Court concludes that it is an essential element of NorDar's case against WSL to establish that an actual fraud was perpetrated on Commerce Savings (NorDar's predecessor-in-interest) for the direct, personal benefit of WSL.[2] III. No Sufficient Evidence of Actual Fraud Having determined that actual fraud is a necessary element in order to disregard the corporate entity and impose liability on WSL, the Court turns to the evidence relating to fraud. The Court concludes that the evidence presented at trial is wholly inadequate to establish that a fraud was perpetrated against Commerce Savings. There is simply no evidence that either WSL or Western USA made a materially false representation on which Commerce Savings relied to its detriment. NorDar argues that WSL and Western USA committed fraud by failing to inform Commerce Savings that Western USA had insufficient assets to meet a $1.1 million obligation. Specifically, NorDar points to a Western USA Consolidated Financial Statement (Plf.Ex. 15) which, NorDar maintains, misleadingly glosses over the fact that Western USA had limited liquid assets at the time of the 1991 renewal transaction. However, there is no definitive evidence that this Consolidated Financial Statement, or any other such financial document, was actually presented to Commerce Savings. Moreover, despite NorDar's characterization, there is no evidence that the Financial Statement or any other representation by Western USA was false in any material way. Finally, there is absolutely no evidence of reliance by Commerce Savings on the Financial Statement or any other representation of any party to the 1991 renewal transaction. Based on the absence of any evidence, the Court concludes that NorDar has failed to establish that actual fraud was perpetrated on Commerce Savings for the direct, personal benefit of WSL. IV. Conclusion Since actual fraud is a necessary element of NorDar's claim and there is no evidence to support that element, NorDar's claim against Western Securities Ltd. necessarily fails. Judgment will be entered accordingly. SO ORDERED. NOTES [1] The parties stipulated at the pre-trial conference on July 7, 1997, that Texas corporate law governs this case. [2] The cases relied on by NorDar do not lead to a different conclusion. NorDar relies most heavily on Mancorp, Inc. v. Culpepper, 802 S.W.2d 226 (Tex.1990), a "post-amendment" case on alter ego from the Texas Supreme Court. NorDar observes that, despite an extensive discussion of the doctrine, Mancorp does not mention actual fraud as a necessary element of an alter ego claim. This Court does not find that omission persuasive since Mancorp was decided before the 1991 legislative amendments, which explicitly clarified that alter ego liability was intended to be subject to the actual fraud requirement of Article 2.21(A)(2). NorDar also cites Beneficial Personnel Servs., Inc. v. Rey, 927 S.W.2d 157 (Tex.App. — El Paso 1996), judgment vacated and case remanded in light of settlement, 938 S.W.2d 717 (Tex.1997), for the proposition that actual fraud is not required to impose joint corporate liability under the single business enterprise theory. However, Beneficial Personnel is primarily a tort case; by the terms of the Article 2.21 amendments, actual fraud is required only in contract cases. Therefore, Beneficial Personnel is inapposite.

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479 F. Supp. 2d 349 (2007) FRATERNITY FUND LTD, et al., Plaintiffs, v. BEACON HILL ASSET MANAGEMENT, LLC, et al., Defendants, No. 03 CIV.2387 LAK. United States District Court, S.D. New York. March 27, 2007. *350 *351 Scott M. Berman, Robert S. Loigman, Heather J. Windt, Lee D. Vartan, Freidman Kaplan Seiler & Adelman LLP, for Plaintiffs. Steven Wolowitz, Henninger S. Bullock, Andrew J. Calica, Mayer Brown Rowe & Maw LLP, for Defendant Banc of America Securities LLC. Joel M. Miller, Claire L. Huene, Miller & Wrubel PC, for Defendants Prudential Financial, Inc., Prudential Equity Group, LLC, and Wachovia Securities, LLC. OPINION KAPLAN, District Judge. Investors in several hedge funds bring this action against the funds' managers and certain financial institutions for participating in an alleged fraud. Banc of America Securities, LLC ("BAS") and Prudential Financial, Inc., Prudential Equity Group, LLC, and Wachovia Securities, LLC (collectively "Prudential") are charged with aiding and abetting fraud and breach of fiduciary duty by the funds' managers. They move to dismiss the corn: plaint as to, them. Facts I. The Funds Plaintiffs are investors in Bristol Fund, Ltd. ("Bristol"), Safe Harbor Fund, LP ("Safe Harbor"), and/or Milestone Plus Partners, LP ("Milestone") (collectively, the "Funds"),[1] hedge funds that invested primarily in mortgage-backed and related securities.[2] The Funds were managed "directly or indirectly by Beacon Hill Asset Management, LLC ("Beacon Hill")[3] and its four principals, John Barry, Thomas Daniels, John Irwin, and Mark Miszkiewicz (together with Beacon Hill, the "Beacon Hill Defendants").[4] In 2002, the Funds became "feeder funds" into a master fund *352 managed by Beacon Hill (the "Master Fund").[5] II. The Alleged Fraud The Funds consisted of portfolios of investments including collateralized mortgage obligations ("CMOs") and, it appears, short positions in U.S. treasury securities.[6] The stated approach was to hedge the positions in CMOs, mostly by shorting U.S. treasury bonds in an effort to achieve a low risk, stable return that would be sheltered, at least to a significant extent, from fluctuations attributable to interest rate movements.[7] The Beacon Hill Defendants reported the Funds' net asset values ("NAVs") to investors each month and provided annual audited financial statements.[8] They allegedly represented also in, communications to investors that the NAVs had been or would be calculated in good faith using independent prices.[9] Plaintiffs claim that they relied on these statements when making or retaining investments in the Funds.[10] According to the second amended complaint (the "SAC"), these statements were fraudulent. The Beacon Hill Defendants allegedly overstated the Funds' NAVs by using phony prices for individual securities in the Funds' portfolios in order to create the false appearance of steadily rising values.[11] Rather than using independent prices, the Beacon Hill Defendants allegedly used their own fraudulent valuations.[12] A. Valuation Plaintiffs allege that from March 2000 through the fall of 2002, the Beacon Hill Defendants misrepresented the Funds' NAVs in order to make it appear as though "each Funds' [sic] NAV was steadily increasing with little volatility and virtually no negative months. . . . [when] [i]n fact the Funds were losing money."[13] They allegedly did so primarily by means of a two step process relating to the valuation of the funds' CMOs. The first step involved calculating a so-called "hedge-adjusted" NAV for a fund by determining the gain or loss in a fund's short U.S. treasury hedge position and then "plug[ging] the change in value in the treasury position into a computer spreadsheet [the `Hedge Alloc Spreadsheet'] that allocated value changes, to the portfolio's CMOs that matched, in the opposite direction, any loss or gain in the short U.S. treasury position."[14] These calculated CMO values therefore increased in response to any decline in the value of the short treasury position and decreased in response to any gain.[15] In fact, plaintiffs *353 allege, the values thus determined for individual CMOs did not necessarily reflect their market values.[16] The second step involved manual adjustments to the values of individual CMOs, allegedly to maintain the appearance that the Funds' portfolios steadily increased in value over time.[17] B. The Audits The Funds were audited on an annual basis by Ernst & Young Cayman Islands and Ernst & Young LLP (collectively, "E & Y"). Before the creation of the Master Fund in early 2002, Bristol was audited following the conclusion of years ending March 31, while Milestone and Safe Harbor were audited following the conclusion of calendar years. After the creation of the Master Fund, all of the Funds were audited by E & Y for, years ending March 31.[18] Beacon Hill sent investors audited financial statements following each audit.[19] According to the SAC, Beacon Hill was required to provide E & Y with independent corroboration of the Funds' stated values for the CMOs in the Funds' portfolios. In addition, E & Y's internal guidelines provided that E & Y was required to evaluate price differences for all securities where the difference between the Beacon Hill-provided value and the independently obtained value exceeded five percent.[20] Plaintiffs allege that Beacon Hill satisfied its need to provide corroborating values by accumulating "from a wide array of sources" numerous independently deter mined price marks for each CMO in a fund's portfolio and then providing to E & Y "only that mark or value . . . that came closest to the manipulated results" of its two-step valuation.[21] The SAC alleges that the Beacon Hill Defendants occasionally were unable to "cherry pick" independently determined values sufficiently close to their internally generated values for some CMOs. In some instances, this led them to make further manual adjustments to CMO values in order to bring, them within, a range of values for which independent corroboration existed.[22] In others, Beacon Hill turned to Prudential and BAS to obtain "false" corroboration. According to the SAC, "unlike other brokers that provided marks to the Beacon Defendants, Prudential and BAS did not determine CMO values and provide them to Beacon Hill. Rather, Beacon Hill requested that these brokers provide it with specific marks and then confirm those values to *354 the Funds' auditors as if the brokers had determined the prices themselves."[23] 1. Bristol's 2000 Audit In connection with Bristol's audit for the year ending March 31, 2000, plaintiffs allege that Beacon Hill first determined the fund's NAV using the Hedge Alloc Spreadsheet. It then cherry picked CMO values from a range of independent sources including Bear Stearns, its primary broker, as well as DLJ, Merrill Lynch, IDC, and Bloomberg, but not Prudential. Next, it made manual downward adjustments because the values produced by the Hedge Alloc Spreadsheet were "dramatically inconsistent" with the values obtained from the independent sources. This, however, resulted in a $2 million decrease in Bristol's NAV. Beacon Hill therefore manually increased the values of 31 CMOs. According to plaintiffs, these upward adjustments more than eliminated the decrease in NAV.[24] Beacon Hill then sought corroboration from Prudential for its adjusted values. On April 12, 2000, Daniels sent a list of the 31 CMOs in Bristol's portfolio to Isaac Kearney, a Prudential broker, along with their "prices" as determined by Beacon Hill. Two days later, Kearney faxed to Beacon Hill on Prudential letterhead an identical list of securities with identical prices. According to the SAC, "Kearney did not even bother to retype the list of CMOs; rather, he took the e-mail from Beacon Hill, cut out the price list, and pasted it to Prudential's letterhead with the indication, `Prices as of 3-31-00 for Beacon Funds.'"[25] This, plaintiffs allege, made it look as though Prudential had arrived independently at the values provided.[26] According to the SAC, Beacon Hill then manually reduced certain values because its upward adjustments to the values of the 31 CMOs increased Bristol's NAV above Beacon Hill's target for the period ended March 31, 2001. Bristol's NAV after this round of adjustments was within $50,000 of the original output from the Hedge Alloc Spreadsheet. Beacon Hill then sent the newly adjusted values to E & Y with a cherry picked selection of independent prices as well as the list of prices obtained from Prudential. Prudential allegedly confirmed to E & Y the accuracy of the marks it provided to Beacon Hill.[27] Plaintiffs allege also that, Beacon Hill's manipulation of CMO values "was not limited to its collusion with Prudential." It adjusted also the values of other CMOs "in order to enable the collection of cherry picked independent marks." When some of the CMOs were "clearly overvalued," plaintiffs allege, Beacon Hill made manual downward adjustments to those values. In order to offset these decreases, it allegedly made upward adjustments to the values of other CMOs.[28] According to plaintiffs, Beacon Hill made these upward and downward adjustments for purposes of Bristol's 2000 audit and then largely reversed them for purposes of its April 2000 valuation of Bristol's portfolio.[29] On May 12, 2000, Beacon Hill released Bristol's audited financial statements as of and for the year ending March 31, 2000, *355 which reported the fund's NAV and included a statement by E & Y that the financial statement "present[ed] fairly, in all material respects, the financial position of Bristol Fund Ltd. at March 31, 2000."[30] 2. Safe Harbor's 2000 Audit Plaintiffs allege that Kearney no longer worked at Prudential when it came time for the audit of Safe Harbor for the year ending December 31, 2000. When Beacon Hill was unable to cherry pick corroborating values for some of the CMOs in Safe Harbor's portfolio, it could not turn to Prudential for assistance.[31] On January 18, 2001, Trwin sent an email to IDC, an independent pricing service, which previously had published prices as of December 29, 2000 for certain CMOs in Safe Harbor's portfolio. The e-Mail asked IDC to take a "second look" at some of the prices and issue new values as of December 29. On January 31, David Levy of IDC responded that IDC would not "reprice bonds once those prices have already been released," but that it would "re-evaluate sectors going forward" based on newly available information. Levy provided Irwin with a list of reevaluated prices for 10 CMOs as of December 29, 2000, and reemphasized that IDC would not change the prices it had released. According to the SAC, Irwin "secretly altered the IDC e-mail. He took out those parts of the IDC e-mail that were not helpful," such as the prices for five of the CMOs and the portions of the e-mail emphasizing that IDC would not release new prices. Irwin then printed the "altered" email and sent it to auditors.[32] Allegedly, "Beacon Hill created a `second secretly altered e-mail using the exact same technique" and "[f]rom the two fake e-mails, Beacon Hill drew new values for 10 of the CMOs in Safe Harbor's portfolio," thus allowing it to overstate Safe Harbor's NAV.[33] 3. Bristol's 2001 Audit Plaintiffs allege that, starting around December 2000, the value of the Funds' short U.S. treasury position began to fall. Beacon Hill's stated CMO values grew accordingly as a result of the calculations performed by the Hedge Alloc Spreadsheet. For many CMOs, plaintiffs allege, "the resulting prices were simply absurd." This is indicated, they claim, by the fact that one CMO in Milestone's portfolio and another in Bristol's portfolio each was determined months later to have a strongly negative option adjusted spread ("OAS" ).[34] According to the SAC, a strongly negative OAS signals that a CMO is overvalued.[35] Plaintiffs allege further that Kearney got a new job at BAS just prior to Bristol's audit for the year ending March 31, 2001, in part because Beacon Hill offered to provide BAS with lucrative business if it would hire Kearney.[36] While at BAS, Kearney allegedly continued to assist the Beacon Hill Defendants in deceiving auditors. *356 According to the SAC, Bristol on March 29, 2001 purchased from Milestone a CMO called GECMS 1998-13 at a price of $99.8125. On April 9, 2001, Bear Stearns allegedly sent Beacon Hill a list of March month-end prices for 32 CMOs that included a price of $100.7028 for GECMS 1998-13. According to plaintiffs, Beacon Hill then assigned GECMS 1998-13 a March month-end value of $118.04 and requested that Bear Stearns send a new list of values. On April 11, Bear Stearns partially complied, although its list did not contain a price for GECMS 1998-13. This list was sent to E & Y as corroboration for some of Beacon Hill's prices. "Beacon Hill then obtained the inflated value of 118.31 from BAS to corroborate its obviously inflated month-end value" of $118.04.[37] Plaintiffs claim that the $118.04 value for GECMS 1998-13 that Beacon Hill used to determine NAVs "increased Bristol's portfolio value by more than $585,000, or approximately 46% of Bristol's net income for the preceding month." Allegedly, the Beacon Hill Defendants used in total "35 `corroborating' values from BAS," allowing them to overstate Bristol's portfolio value even further.[38] The SAC does not specify when these values were sent to E & Y or who sent them. Bristol's 2001 audited financial statement was released on May 24. Beacon Hill reported the fund's NAV as of March 31, 2001, and E & Y once again stated that the information in the financial statement was fair and accurate.[39] 4. The Master Fund's 2002 Audit BAS allegedly assisted Beacon Hill in misstating NAVs in connection with the Master Fund's March 31, 2002 audit.[40] According to plaintiffs, Beacon Hill was unable to cherry pick independent marks to corroborate the manipulated values for all of the CMOs in the Master Fund's portfolio and so once again turned to Kearney at BAS.[41] On May 20, 2002, plaintiffs allege, Irwin e-mailed to Kearney a list of 31 CMOs in the Master Fund's portfolio and their Beacon Hill-determined prices. Irwin asked Kearney to transfer the prices to BAS's letterhead "so we can double check them one more time before we give you the go ahead to send them to auditors." rrli next day, Kearney complied and sent an identical list of prices on BAS letterhead to E & Y.[42] Plaintiffs allege that BAS was aware that the figures it provided were not legitimate valuations and that they would be used for the purpose of deceiving Beacon Hill's auditors.[43] On May 31, 2002, Beacon Hill released the Master Fund's audited financial statement for the period January 2 to March 31, 2002. E & Y signed off on the statement as a fair representation of the Master Fund's financial position:[44] III. The Collapse The Beacon Hill Defendants allegedly employed their scheme in order to conceal *357 that the Funds actually were suffering substantial losses. In October, and November 2002, however, Beacon Hill made three disclosures that revealed the extent of the Funds' losses. First, "[o]n October, 8, 2002, Beacon Hill disclosed to investors, including the plaintiffs, that the NAVs of the Funds declined by an estimated 25% in September. This disclosure was prompted by Bear Stearns' refusal to provide additional financing due to the material over-valuation of the portfolios and Bear Stearns reporting this situation to the SEC."[45] Second, "[o]n October 17, 2002, following inquiries from the SEC, Beacon Hill disclosed to investors, including the plaintiffs, that, as of September 30, 2002, the NAVs for the Funds actually declined by 54% from the reported. NAVs as of August 31, 2002. In this disclosure, Beacon Hill admitted that a portion of the Funds' losses occurred prior to August 31, 2002."[46] Finally, "[o]n November 27, 2002, Beacon Hill disclosed that the NAV of the Funds had actually declined by "61.22% from the NAV reported as of August 31, 2002."[47] The SAC alleges that, "[i]n actuality, the NAVs of the Funds had been declining for years."[48] Plaintiffs allege that the Funds now are in liquidation and that "it has become increasingly . . . clear that much of the capital invested in these Funds has been lost."[49] IV. The Litigation A. The SEC Case The disclosures by Beacon Hill in the fall of 2002 prompted an action in this Court by the SEC.[50] Without admitting or denying liability, the Beacon Hill Defendants consented to' entry of a final judgment and injunction pursuant to which they were obliged to pay $2.2 million in disgorgement and $2 million in civil penalties.[51] B. Prior Proceedings in this Case 1. Motions to Dismiss Plaintiffs commenced this action on April 8, 2003. The Court subsequently granted motions by the Beacon Hill Defendants and Asset Alliance Corp. to dismiss a corrected and supplemental complaint.[52] The Court granted also motions by Milestone Global Advisors, LP, and Asset Alliance Corp. to compel arbitration by Balentine Global Hedge Fund, L.P. and Balentine Hedge Fund Select, L.P. (the "Balentine Plaintiffs").[53] 2. The Amended Complaint In Fraternity Fund Ltd. v. Beacon Hill Asset Management LLC ("Fraternity *358 Fund I"),[54] the Court dismissed large portions of an amended complaint in this action, which did not name Prudential or BAS as defendants. The Court held, in relevant part, that plaintiffs failed to plead with sufficient particularity that the Beacon Hill Defendants' statements of NAVs and how they would be calculated were fraudulent in the period prior to April 2002. The Court sustained allegations, however, that the Beacon Hill defendants fraudulently misrepresented NAVs for the period April to the fall of 2002.[55] With respect to that time period, plaintiffs alleged that (1) Barry, Daniels, and Irwin profited from self-dealing by buying bonds from the Master Fund at prices lower than the values Beacon Hill placed on those bonds for purposes of computing the Funds' NAVs, (2) when Beacon Hill disclosed in October 2002 that the NAVs had declined by 54 percent from the values reported as of August 31, 2002, it admitted that a portion of the losses had occurred prior to August 31, 2002, and (3) the disparity between NAVs based on Beacon Hill-determined prices and those based on Bear Stearns prices more than doubled between June and July 2002 and increased from about 24 percent to about 37 percent from April until August. These factors considered together, the Court held, were sufficient to justify an inference that statements of NAVs were materially false during the period April to the fall of 2002.[56] In addition, the Court held that plaintiffs adequately alleged scienter. The allegations of self-dealing by Barry, Daniels, and Irwin were sufficient to establish motive and opportunity on the part of those defendants. And allegations that Miszkiewicz had access to the Funds' pricing sheets and Bear Stearns' independent marks, supervised the determination of NAVs, and worked closely with Daniels and Irwin, who were performing pricing analyses, were sufficient to "give rise to a strong inference that [Miszkiewicz] acted recklessly with respect to whether valuations were materially false and misleading."[57] The Court held also that plaintiffs adequately pleaded causation, and therefore reliance, as they alleged that they made or. retained investments in reliance upon Beacon Hill's misrepresentations of NAVs and that they were injured when the overvaluation-the subject of the alleged misrepresentations — was revealed.[58] Finally, the Court held that plaintiffs' allegations of fraud were sufficient to state a claim of breach of fiduciary duty as well for the period April to the fall of 2002.[59] 3. The Second Amended Complaint The SAC makes largely the smile allegations as the amended complaint concerning the period April to the fall of 2002[60] but expands upon allegations concerning earlier periods. *359 Plaintiffs are 45 investors in the Funds and the alleged successor in interest to an investor[61] who allegedly invested, in aggregate, approximately $265 million between 1997 and fall 2002.[62] All but the Balentine Plaintiffs, who invested only in Milestone, invested in Bristol and/or Safe Harbor.[63] All but the Salentine Plaintiffs assert against the Beacon Hill Defendants claims, inter cilia, for violations of Section 10(b) of the Securities and Exchange Act of 1934 (the "Exchange Act")[64] and Rule 10b-5 thereunder,[65] common law fraud, and breach of fiduciary duty. Their gist is that the Beacon Hill Defendants misrepresented the Funds' NAVs and the methods by which they would be calculated.[66] Prudential and BAS are sued for aiding and abetting common law fraud and breach of fiduciary duty.[67] They now move to dismiss the SAC as to them. They argue principally that the SAC fails to state claims of aiding and abetting. They argue also that plaintiff Oran Ltd. ("Oran") lacks standing and that plaintiffs have failed to plead grounds for punitive damages. Discussion I. Motion to Dismiss Standard In deciding a motion to dismiss, the Court ordinarily accepts as true all well pleaded factual allegations and draws all reasonable inferences in the plaintiff's favor.[68] Dismissal is inappropriate "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.[69]*360 Fraud claims, however, are subject to a more stringent standard. Allegations of fraud, and of breach of fiduciary duty consisting of fraud by a fiduciary, are governed by Federal Rule of Civil Procedure 9(b),[70] which requires that the circumstances constituting fraud be stated with particularity.[71] This means that the complaint must (1) specify the statements that the plaintiffs contend were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent.[72] In addition, the complaint must allege facts from which a strong inference of fraudulent intent may be drawn.[73] This is accomplished by alleging facts indicating that the defendants had both motive and opportunity to commit fraud or facts that amount to strong circumstantial evidence of conscious misbehavior or recklessness.[74] II. Aiding and Abetting In order to recover on a claim for aiding and abetting fraud, plaintiffs will be obliged to establish that the Beacon' Hill Defendants committed a primary wrong — that is, that they defrauded plaintiffs, that the moving defendants knew of the primary violation, and that they lent substantial assistance to the Beacon Hill Defendants in committing the primary wrong.[75] Similarly, "[a] claim for aiding and abetting a breach of fiduciary duty requires: (1) a breach by a fiduciary of obligations to another, (2) that the defendant knowingly induced or participated in the breach, and (3) that plaintiff suffered damage as a result of the breach."[76] "These causes of action are parallel in several respects,"[77] especially where, as here, the same activity is alleged to constitute the primary violation underlying both claims.[78] Knowledge of the primary violation with respect to one claim will entail knowledge of the primary violation with respect to the other. Moreover, when a plaintiff adequately pleads substantial assistance in connection with a fraud claim, he or she fulfills also the participation element of the breach of fiduciary duty claim.[79] *361 A. Primary Violation "To state a cause of action for fraud, a plaintiff must allege a representation of material fact, the falsity of the representation, knowledge by the party making the representation that it was false when made, justifiable reliance by the plaintiff and resulting injury."[80] 1. April to Fall 2002 The allegations in the SAC concerning the period April to the fall of 2002 are the same in all material respects as those in the amended complaint, which the Court held in Fraternity Fund I were sufficient to allege common law fraud and breach of fiduciary duty. Accordingly, plaintiffs adequately have alleged primary violations for that period for purposes of their aiding and abetting claim against BAS in connection with the Master Fund's 2002 audit.[81] 2. Earlier Periods As plaintiffs allege also that Prudential and BAS aided and abetted Beacon Hill during the spring of 2000 and the spring of 2001 respectively, the initial question is whether the SAC now sufficiently alleges a primary violation by the Beacon Hill Defendants during those periods. The logical starting point is whether the pleading now sufficiently alleges that the statements of NAV were materially false, which requires consideration of what that means in the context of this case. a. Material Falsity and CMOs The NAVs depended, at least in significant measure, upon the value of the CMOs held by the Funds. It therefore is important to focus on the nature of those securities and their valuation. CMOs "are bonds that represent claims to specific cash flows from large pools of home mortgages. The streams of principal and interest payments on the mortgages are distributed to the different classes of CMO interests, known as tranches, according to a complicated deal structure. Each tranche may have different principal balances, coupon rates, prepayment risks, and maturity dates (ranging from a few months to twenty years). "CMOs are often highly sensitive to changes in interest rates and any resulting change in the rate at which homeowners sell their properties, refinance, or otherwise pre-pay their loans. Investors in these securities may not only be subjected to this prepayment risk, but also exposed to significant market and liquidity risks."[82] CMOs are traded between investors and dealers rather than on exchanges.[83] The *362 degree of liquidity varies.[84] Hence, valuation of CMOs is not a precise science.[85] Where there is sufficient liquidity for a given CMO, a value may be `based on one or more price quotes, or marks, from independent dealers, although different dealers may quote different prices for the same bond and thus require one seeking to value that bond to exercise judgment in fixing a value. A judgment as to value may be made also by making appropriate assumptions about such matters as prepayment risks and future market interest rates and using complex financial models that seek to take account of the characteristics of particular CMOs, the impact on prepayment rates of possible changes in interest rates, and other pertinent factors.[86] Regardless of method, the nature of the market for CMOs means that a statement as to the value of a CMO, and therefore as to the NAV, of a share of a fund holding CMOs in its portfolio, may be considerably more a statement of opinion than a report of an objectively determinable fact. But, as with so many other things, context is important. If, for example, a fund's prospectus or offering memorandum had stated that portfolio values in all cases would be determined by averaging three independent marks for each security, a statement of NAV in substance could be an implicit representation that the portfolio value as of a given date had been determined in that manner and that the NAV had been computed on that basis. On the other hand, if a fund's prospectus or offering memorandum had stated that portfolios would be determined by the fund's advisor, taking into account such Independent marks as it might obtain, a statement of NAV would imply no more than that the advisor considered whatever independent marks it obtained and then made its own decision as to value. In the former case, it would be a representation of fact. In the latter, it would be considerably closer to a representation that the NAV was based upon the advisor's (presumably good faith) judgment as to the value of the underlying securities. b. This Case This point is illustrated by comparing the Funds' offering memoranda. Milestone's memorandum stated that "[f]or purposes of preparing . . . monthly statements, the General Partner will price the Partnership's portfolio securities based upon the mean between the bid and the asked prices for such securities received from the partnership's brokers and dealers. . . . For purposes of preparing . . . quarterly, statements, the General Partner will price the Partnership's portfolio securities based upon the average of the mean between the bid and the asked prices for such securities received from the partnership's brokers and dealers."[87] Given this language, the question whether statements of Milestone's NAV were materially false apparently would be susceptible of a straightforward, objectively determinable *363 answer. It would come down to whether Beacon Hill in fact determined CMO values using the mean of the bid and ask prices of its brokers and dealers. Bristol's offering memoranda, on the other hand, stated that "[t]he Fund's securities are generally not traded on an exchange and [that] there are no published prices to which the Investment Manager may refer in valuing the Fund's securities. The Investment Manager will independently value the Fund's securities based upon certain models and the prices quoted for similar securities."[88] The memoranda for Safe Harbor and the Master Fund contained the same or similar language.[89] As the documents represented only that the fund's manager independently would value the securities "based upon" models and prices quoted for "similar" securities, they made clear that statements of NAV would rest to a large degree upon the managers' judgment. In this context, Beacon Hill's representations of NAVs of Bristol, Safe Harbor, and the Master Fund in essence were representations that the NAVs reflected management's honest opinions, based in some unspecified manner on unspecified models and prices quoted for "similar securities," as to the values of the underlying securities. The question of material falsity therefore is whether plaintiffs' allegations, if true, would support a strong inference that these representations were false — not because the values were "wrong" in some empirical sense, but because the totality of the evidence would give rise to a strong inference that management did not give its honest opinion.[90] Here, BAS and Prudential are accused of aiding and abetting fraud with respect to statements of NAV for Bristol and the Master Fund. In consequence, the pertinent *364 issue is whether the SAC adequately alleges that the NAVs issued by the Beacon Hill Defendants did not reflect their honest views as to value. (a) Bristol's 2000 Audit Plaintiffs argue that, during the spring of 2000, Beacon Hill used the Hedge Alloc Spreadsheet to maintain the appearance that Bristol's overall portfolio value remained constant as its short U.S. treasury position lost value. Beacon Hill then cherry picked independent marks to corroborate the resulting CMO values, but where no corroboration existed either adjusted the CMO values so that they would be sufficiently close to independent marks or sought Prudential's phony corroboration. According to plaintiffs, this demonstrates that Beacon Hill targeted an NAV for Bristol's audit period and adjusted values so as simultaneously to keep Bristol's portfolio value relatively constant and individual CMO values within the range of what could be supported by independent marks, regardless of their true market value. The argument has superficial appeal. But greater scrutiny reveals that it is not as strong as it first appears. (i) The Hedge Alloc Spreadsheet The first problem is that the argument is premised on the belief that it necessarily or probably was unreasonable for an honest manager to begin the process of valuing a portfolio of CMOs by assuming that the portfolio's value was an inverse function of the value of short U.S. treasury positions. But the SAC fails to allege facts sufficient to warrant such a conclusion. Certainly CMOs, the values of which are sensitive and negatively related to interest rate changes (i.e., value drops in response to increases in interest rates), would be expected to move in the opposite direction as the values of short positions in U.S. treasuries (the value of which would rise in response to an increase in interest rates). The critical question is whether the relationship between price movements for the benchmark short treasury position and those of the CMO portfolio is sufficiently close. So the fact that the Beacon Hill Defendants used short treasury positions as a benchmark to approximate the value of the CMO portfolios, in and of itself, suggests little or nothing. It may have been entirely reasonable or quite dishonest, depending upon the facts. And the SAC fails to allege any facts that suggest that it was one or the other. Nor is much added by the allegation that the Beacon Hill Defendants, in this initial step in determining the NAVs, allocated the assumed change in the aggregate value of the CMO positions to individual securities. The SAC alleges no context from which to evaluate whether the assumptions underlying the Hedge Alloc Spreadsheet were reasonable. The allegations therefore are equally consistent with an inference of fraud and with an inference that Beacon Hill used the spreadsheet in good faith as a way initially to determine the approximate effect interest rate changes had on the fund's investments. (ii) Manual Adjustments Furthermore, if the Hedge Alloc Spreadsheets were used to determine approximate starting points for valuing CMOs, manual adjustments to the spreadsheet-produced values would not necessarily or even probably have been improper. Plaintiffs allege that a series of adjustments was made and, in some instances, the sizes of the adjustments. But it is at best unclear what inference ought to be drawn from this. Beacon Hill may have made the adjustments dishonestly in order to reach predetermined results. But it may have made the adjustments as it incorporated such market information as *365 was available in an effort to make its CMO values as accurate as possible. (iii) "Cherry Picking" Values That Beacon Hill allegedly cherry picked independent marks to corroborate its CMO values comes closer to raising an inference of fraud. Even assuming that the Beacon Hill Defendants were entitled, so far as Bristol's offering memorandum was concerned, to value the CMOs simply on the basis of their own judgment, that would not have been good enough for auditors. The Beacon Hill Defendants were required to show E & Y that their judgment produced values sufficiently close to those determined by independent sources. If they attempted to evade this obligation, then one could infer that their CMO values were not determined honestly. The allegations in the SAC, however, do not necessarily make out a strong case that Beacon Hill dishonestly sought to evade this obligation. Plaintiffs do not allege, for example, that Beacon Hill was required to use only one source's marks or that it was the norm in the industry to do so. Indeed, the SAC indicates that E & Y accepted the marks Beacon Hill provided and approved Beacon Hill's statements of NAVs despite the practice of cherry picking. The allegations of cherry picking alone therefore do not necessarily indicate fraud. But plaintiffs allege more. (iv) Correspondence with Prudential According to the SAC, after Beacon Hill sought marks from five sources, it still had not obtained corroboration for all of its CMO values. It then turned to Prudential in April 2000. After Beacon Hill sent a list of values to Prudential — which in and of itself is not necessarily indicative of bad faith, as Beacon Hill may have been asking Prudential to examine and, if appropriate, correct its values — Prudential responded with an identical set of marks. Given the nature of CMOs, it does not seem very likely that Prudential independently valued 31 CMOs exactly the same as Beacon Hill. Accordingly, this strengthens the inference that Beacon Hill used Prudential to evade its obligation to E & Y. It is possible, however, that Beacon Hill sent its values to Prudential in good faith without the expectation that Prudential would rubber stamp' them. That Kearney may have been dishonest in suggesting that he had performed an independent valuation does not necessarily indicate that the values fixed by the Beacon Hill Defendants were not their honest opinions. (b) Bristol's 2001 Audit The allegations with respect to the period between Bristol's 2000 and 2001 audits are largely duplicative of the allegations regarding the spring of 2000. Plaintiffs allege that Beacon Hill used its two-step valuation method to determine CMO values, cherry picked independent marks to corroborate them, and received corroboration from BAS when independent values were not sufficiently close to their own. The allegations that BAS supplied false corroboration to Beacon Hill during this period, however, are substantially less detailed than the allegations of Beacon Hill's April 2000 correspondence with Prudential. Plaintiffs allege that BAS supplied "35 `corroborating' values" to Beacon Hill in connection with Bristol's 2001 audit.[91] But they fail to allege any particulars. They do not allege the manner in which Beacon Hill requested corroboration from BAS. Nor do they allege what values BAS supplied — with the exception of the $118.31 value for GECMS 1998-13 — when the values were sent to E & Y, who sent them, or how they compared to marks *366 provided by other sources. While the allegations concerning Prudential's actions in the spring of 2000 go some way toward indicating Beacon. Hill's bad faith, the allegations of BAS's actions in the spring of 2001 go a significantly shorter distance. Furthermore, the additional allegations during the period between Bristol's 2000 and 2001 audits add only somewhat to plaintiffs' case. (i) The IDC E-mail First, that Beacon Hill sent to E & Y only a portion of the January 30 e-mail from David Levy does not raise a strong inference that Beacon Hill acted in bad faith in determining CMO values. Plaintiffs do not allege that Beacon Hill changed the values in Levy's e-mail. They allege only that it sent some of the values and not others — in other words, that it cherry picked the marks, which, by itself, does not necessarily show bad faith: Plaintiffs allege also that Beacon Hill neglected to include. Levy's statement that the marks provided were reevaluations of bond prices as of December 29, 2000 in light of new information. Plaintiffs do not contend, however, that it is improper to reevaluate CMOs as of a certain date in light of newly acquired information. Nor do they allege that a reevaluation of a CMO after an initial pricing could not be used as corroboration for purposes of a fund's audit. (ii) Negative OASs Second, that Beacon Hill's Hedge Alloc Spreadsheet produced values that resulted in some bonds having a negative OAS does not raise an inference that the spreadsheet was employed in bad faith. As noted, using the Hedge Alloc Spreadsheet to make initial approximations of Bristol's portfolio value as interest rates changed was not necessarily improper. Furthermore, the SAC alleges that once the CMOs were determined to have negative OASs, Beacon Hill adjusted their values downwards.[92] This does not rule out the possibility of fraud. But it is consistent also with the inference that Beacon Hill made adjustments in order to fine tune the spreadsheet-produced values as it learned that they were not entirely accurate in representing the bonds' market values.[93] (iii) Repricing Bonds The argument that Beacon Hill acted dishonestly by selling bonds at lower prices that it used to determine NAVs strengthens plaintiffs' hand with respect to this period. Beacon Hill is alleged to have assigned GECMS 1998-13 a value of $99.8125 on March 29, 2001. On April 9, 2001, Bear Stearns provided the Beacon Hill Defendants with a price for that bond as of March 31 of $100.7028. Beacon Hill, at some unspecified time and for purposes of Bristol's audit for the year ended March 31, priced the same security as of that date at $118.04. As the Bear Stearns price quite plainly did not support the Beacon Hill Defendants' valuation, they turned to BAS to corroborate the value of $118.04. These allegations are troublesome, at least in the absence of evidence of some extraneous event or information that could have led the Beacon Hill Defendants to believe in good faith that a CMO they considered to be worth $99.8125 on March *367 29 had risen in value to $118.04 in a mere two days. While the Court acknowledges that CMOs properly may be revalued as of a `given date in light of new information, the magnitude of this difference suggests dishonesty. Nevertheless, it is not necessary to decide that question now. * * * * * * As noted elsewhere, the Court already has determined that plaintiffs sufficiently have stated a claim that the Beacon Hill Defendants engaged in a fraud by misrepresenting the Funds' NAVs during the period from April through the fall of 2002. The foregoing discussion demonstrates that the question whether they made materially false representations on that subject prior to April 2002 is not free from doubt. The allegations concerning the periods of Bristol's 2000 and 2001 audits, when taken together, may raise the inference that Beacon Hill's values at those times were false in the sense described above.[94] But it would not be desirable to resolve that issue on these motions if it is unnecessary to do so because the, Beacon Hill Defendants have not been heard on the issue. As the Court concludes that the SAC does not adequately allege aiding and abetting against Prudential or BAS with respect to the period prior to April 2002 even assuming that the SAC alleges an earlier primary violation by the Beacon Hill Defendants, it need not be resolved now. Accordingly, the Court does not decide the question or address the other elements of a primary violation. B. Knowledge 1. Pleading Knowledge Generally The second element of an aiding and abetting claim is knowledge of the primary violation. Allegations of constructive knowledge or recklessness are insufficient. Plaintiffs must allege actual knowledge on the part of the defendant.[95] "The burden of demonstrating actual knowledge, although not insurmountable, is nevertheless a heavy one."[96] As in the context of pleading a primary violation, pleading knowledge for purposes of an aiding and, abetting claim requires allegations of facts that give rise to a "strong inference" of actual knowledge.[97] 2. Conscious Avoidance The parties dispute whether conscious avoidance is sufficient to satisfy the knowledge prong of an aiding and abetting claim. Plaintiffs cite Cromer Finance Ltd. v. Berger,[98] which held that "there is no reason to believe that New York law would not accept willful blindness as a substitute for actual knowledge in connection with *368 aiding and abetting claims."[99] Prudential and BAS, on the other hand, point to Pension Committee of University of Montreal Pension Plan v. Banc of America Securities, LLC,[100] which held that "actual knowledge is required, rather than a lower standard such as recklessness or willful blindness."[101] Pension Committee and BAS cite numerous cases to support the contention that conscious avoidance is the same as or similar to constructive knowledge and therefore insufficient for aiding and abetting claims. The cases hold, however, only that constructive knowledge is insufficient, which is not disputed. But constructive knowledge and conscious-avoidance are not equivalent. Constructive knowledge is "[k]nowledge that one using reasonable care or diligence should have, and therefore that is attributed by law to a given person."[102] Conscious avoidance, on the other hand, occurs when "it can almost be said that the defendant actually knew" because he or she suspected a fact and realized its probability, but refrained from confirming it in order later to be able"to deny knowledge.[103] Conscious avoidance therefore involves a culpable state of mind whereas constructive knowledge imputes a state of mind on a theory of negligence. Reflecting this analysis, the Second Circuit has held in the criminal context that conscious avoidance may satisfy the knowledge prong of an aiding and abetting charge.[104] Accordingly, the Court sees no reason to spare a putative aider and abettor who consciously avoids confirming facts that, if known, would demonstrate the fraudulent nature of the endeavor he or she substantially furthers. 3. This Case a. Prudential — Spring 2000 Plaintiffs allege that "Prudential knowingly played a significant role in Beacon Hill's fraudulent valuation of the securities in Bristol's portfolio"[105] and that "Prudential knew that Beacon Hill was providing the values purportedly generated by Prudential — but, in fact, based on Beacon Hill's `hedge alloc' spreadsheet — to Bristol's auditors."[106] The only non-conclusory allegation regarding Prudential's knowledge is the assertion that Kearney responded to Daniels' April 12, 2000 list of CMOs and their Beacon Hill-determined values with an identical list, on Prudential letterhead. Plaintiffs suggest that this strongly suggests culpable knowledge on the part of Kearney both because Beacon Hill's inclusion of its own prices signaled to Kearney the desired answer and because Kearney's evernse with identical prices is most unlikely to have reflected any independent valuation by Prudential. *369 The fact that Beacon Hill sent its values to Prudential is ambiguous. The allegation supports the inference that Prudential knew the values to be false and rubber stamped them because it was colluding with Beacon Hill. But it is consistent also with the inference that Prudential thought that Beacon Hill was asking in good faith to have its values examined and, if need be, corrected. The meaning of Kearney's response is ambiguous as well. Certainly the fact that Kearney responded with an identical set of values indicates that he did not value the CMOs independently.[107] But that is not enough. That Kearney rubber stamped Beacon, Hill's values is consistent either with laziness or with a dishonest attempt to provide Beacon Hill with the appearance of independent corroboration when in fact he did not determine the values himself. But even if one assumed that it reflected dishonesty, the SAC would not sufficiently allege facts from which Kearney could be said to have known or consciously disregarded Beacon Hill's fraud, at least in the absence of allegations that Prudential or Kearney had any motive to assist Beacon Hill. The SAC therefore fails to allege facts strongly supporting an inference of knowledge on Prudential's part. b. BAS — Spring 2001 Plaintiffs' allegations that BAS knew of the Beacon Hill fraud during the spring of 2001 are insufficient as well. The SAC alleges that BAS supplied Beacon Hill, with "35 `corroborating' values,"[108] which it "knew to be false."[109] The only non-conclusory allegations of BAS's knowledge during this period concern BAS's pricing of GECMS 1998-13. The SAC alleges that Beacon Hill obtained from BAS a March month-end price of $118.31 for the bond to corroborate its own value of $118.04, which was about $18 higher than the value Bear Stearns assigned. The problem with these allegations is that they are consistent with the inference that BAS conducted an independent valuation of GECMS 1998-13. BAS's mark was not identical to Beacon Hill's. Moreover, plaintiffs fail to allege the manner in which Beacon Hill requested corroboration, when it did so, when BAS responded, or when BAS's mark was sent to E & Y. Essentially, plaintiffs allege only that. BAS's mark was close to Beacon Hill's and that BAS therefore must have known that Beacon Hill's value was false. Furthermore, the fact that BAS's mark was about $18 higher than Bear Stearns' says little about BAS's knowledge of Beacon Hill's assumed wrongdoing. Bear Stearns arrived at its lower value on April 9, 2001. Plaintiffs do not allege when BAS provided its mark for GECMS 1998-13. As Bristol's 2001 audited financial statement was not released until May 24, the allegations are consistent with the inference that BAS conducted an independent *370 valuation of GE CMS 1998-13 several weeks after Bear Stearns and therefore was able to take account of more recently available market information. Finally, plaintiffs' allegations of motive are unavailing. They allege that Beacon Hill offered BAS substantial business if it hired Kearney. But this does not indicate that BAS stood to gain from helping Beacon Hill commit fraud. It suggests at most that BAS had a motive to hire Kearney to acquire new business. And while Beacon Hill may have helped Kearney acquire a new job, the SAC does not allege facts suggesting that once Kearney was employed at BAS, he would have gained anything more from Beacon Hill by aiding a fraudulent valuation scheme. c. BAS — Spring 2002 Plaintiffs' allegations concerning the spring of 2002 are another matter. The SAC alleges that, in May 2002, Irwin had an exchange with Kearney resembling the one Daniels had two years earlier while Kearney was at Prudential. Irwin sent a list of values to Kearney who in turn rubber stamped them. But there was a key difference. Plaintiffs allege that when. Irwin sent Beacon Hill's values to Kearney in May 2002, he specifically asked that the values be placed on BAS letterhead. The significance of this allegation is that, if true, it would suggest strongly that BAS knew that Beacon Hill was not asking to have its values corrected, but wanted BAS blindly to confirm them. It is reasonable to infer that BAS knew that Beacon Hill would not have made such a request if it thought that BAS's independent valuation would produce corroborative marks. In other words, the most likely explanation for Beacon Hill's request is that it thought its prices were beyond the range of what could be corroborated and therefore not reflective of the market values of the CMOs. These allegations tend to show either that BAS knew that the values were false or that it was aware of the possibility that they were phony, but nevertheless complied with Beacon Hill's request and sent the rubber stamped values directly to E & Y without inquiring as to the values' potential falsity. This especially is so in light of the allegation that BAS sent its "corroborating" values directly to E & Y and therefore knew that Beacon Hill was providing its auditors with ostensibly independent marks that were not in fact arrived at independently. Accordingly, plaintiffs adequately have alleged BAS's knowledge of Beacon Hill's primary violation in connection with the Master Fund's March 2002 audit. C. Substantial Assistance "Substantial assistance occurs when a defendant affirmatively assists, helps conceal or, fails to act when required to do so, thereby enabling the [fraud or breach of fiduciary duty] to occur."[110] In addition, substantial assistance is intimately related to the concept of proximate cause. "[W]hether the assistance is substantial or not is measured . . . by whether the action of the aider and abettor proximately caused the harm on which the primary liability is predicated."[111] 1. Proximate Cause [10] In the aiding and abetting context, a plaintiff must allege that the defendant's *371 substantial assistance in the primary violation proximately caused the harm on which the primary liability is predicated.[112] Plaintiffs must allege more than but-for causation. They must allege also that their injury was "a direct or reasonably foreseeable result of the conduct."[113] Furthermore, in the context of an aiding and abetting claim, where the alleged primary violations consist of misrepresentations in a document, the defendant must be alleged to have given substantial assistance to the making and dissemination of that document.[114] This stems from the relationship between substantial assistance and proximate cause. If plaintiffs were to rely to their detriment on a misstatement, but the alleged aider and abettor did not assist in the making or dissemination of that statement, the plaintiffs, in most situations, could not say that their losses were proximately caused by the aider and abettor's actions.[115] The only misrepresentation at issue is Beacon Hill's statement of the Master Fund's NAV in its 2002 audited financial statement. Plaintiffs have failed to allege Prudential's or BAS's knowledge of the falsity of any other statement by the Beacon Hill Defendants. Accordingly, in order to plead causation and therefore substantial assistance, plaintiffs must allege that they received and relied upon the Master Fund's 2002 audited financial statement. Certain plaintiffs have failed to do so, including Antarctica Market Neutral Fund, Ltd. ("Antarctica"), the Balentine Plaintiffs, Credit Agricole Indosuez Luzembourg ("Credit Agricole"), Sanpaolo IMI Alternative Investments 8GR SpA. ("Sanpaolo"), Crestline Offshore Fund, Ltd. ("Crestline"), Erik A. Hartog, Private Space, Ltd. ("Private Space"), and Pooled Funds, Inc. ('Pooled Funds"). These *372 plaintiffs allege only that they received statements of NAVs appearing in other documents.[116] They therefore have failed to allege that BAS's actions caused their continued investment in the Funds while their losses were being concealed by the Beacon Hill Defendants. The remaining plaintiffs, on the other hand, allege that they received and relied upon the Master Fund's 2002 audited financial statement.[117] Taking the allegations in the SAC as true, a jury would be entitled to find that Beacon Hill would have been required to reveal in the audited financial statement that the fund was losing money if BAS had not assisted Beacon Hill as it did and that these plaintiffs would have avoided substantial losses by pulling out before the collapse in the fall of 2002. Furthermore, the SAC supports the inference that BAS was aware that the CMO values it confirmed in May 2002 were phony. Additionally, that BAS sent its "corroborating" values directly to E & Y shows that it knew that the values would be used for audit purposes. From this it is reasonable to infer that it was foreseeable to BAS that its actions would permit Beacon Hill to overstate CMO values without alerting auditors that independent corroboration did not exist. BAS nevertheless argues that the SAC does not allege proximate cause. It cites Kolbeck v. LIT America, Inc.,[118] in which a commodities trader, Schindler, was alleged to have concealed from investors that he was not registered as a futures commission merchant with the Commodities Futures Trading Commission ("CFTC"), The plaintiffs sued two brokers for clearing Schindler's trades.. They contended that the brokers aided and abetted a breach of fiduciary by failing to investigate whether Schindler was registered. According to the plaintiffs, if the brokers had ceased doing business with Schindler, or had required him to register with the CFTC, plaintiffs would not have suffered losses. The court held that the plaintiffs had not pleaded proximate cause because "Schindler's failure to register, and defendants' failure to investigate that lapse, had little if anything to do with plaintiffs' losses," and because the plaintiffs' theory involved a "chain of causation . . . [that was] far too long to constitute proximate cause."[119] BAS's reliance on Kolbeck is misplaced. The clearing brokers there were alleged merely to have failed to discover acts of deception by Schindler. Here, by contrast, BAS is alleged to have known about and participated actively in Beacon Hill's scheme by sending fake corroboration to auditors. Additionally, plaintiffs' alleged losses allegedly were directly attributable to BAS's misbehavior. A jury could find that by rubber stamping and submitting phony marks to E & Y, BAS made it possible for Beacon Hill to overstate NAVs without E & Y detecting the misstatements and revealing them to plaintiffs. Accordingly, plaintiffs — except for Antarctica, the Balentine Plaintiffs, Credit Agricole, Sanpaolo, Crestline, Hartog, Private Space, and Pooled Funds — have alleged *373 causation for purposes of the substantial assistance prong. 2. Routine Activity BAS argues also that plaintiffs have failed to plead substantial assistance because "the provision of marks is not unusual for a broker, and, indeed, is part of its normal course of conduct."[120] It cites Greenberg v. Bear, Stearns, & Co.[121] and Kaufman v. Cohen[122] for the proposition that there is no substantial assistance where the conduct of the alleged aiders and abettors is routine and within their normal course of business.[123] This is unavailing. While it may be routine for brokers to provide marks, BAS's alleged activity here was anything but routine. What is routine, according to the SAC, is for a broker to arrive at independent valuations, not to take a list of CMO values provided to it by a hedge fund manager, put, the list on its own letterhead at the request of the manager, and, then send the list directly to the hedge fund's auditor. III. Oran's Standing BAS next challenges Oran's standing. It argues that the SAC fails to allege either that Oran owned shares in the Funds at times relevant to the SAC, or that someone who did expressly assigned its claims to Oran. Plaintiffs must plead facts, that, if true, would establish standing.[124] In addition, while causes of action are freely assignable in New York,[125] the New York courts have held that "in the absence of an explicit assignment of a cause of action based on fraud, `only the . . . assignor may rescind or sue for damages for fraud and deceit"` because where "the representations were made to" the assignor, he or she "alone had the right to rely upon them."[126] *374 The SAC alleges that TEB Turkish Premier Fund, Ltd. ("TEB") invested in Bristol in 2001 and sold a portion of its, shares in 2004 to a third party, which plaintiffs identify in their memorandum as Deutsche Bank AG, London ("Deutsche Bank"). Deutsche Bank in turn transferred the shares to Oran in December 2005.[127] The SAC does not allege either that TEB expressly assigned its claims to Deutsche Bank or, if it did, that Deutsche Bank expressly assigned those claims to Oran. It therefore does not adequately plead Oran's standing.[128] IV Punitive Damages "Under New York law, punitive damages are appropriate in cases involving gross, wanton, or willful fraud or other morally culpable conduct. Such conduct need not be directed at the general public"[129] "While intentional conduct is not a mandatory showing for punitive damages, the conduct generally must be so reckless or wantonly negligent as to be the equivalent *375 of a conscious disregard of the rights of others."[130] Here, the allegations against BAS are sufficient to support a claim for punitive damages. According to the SAC, BAS either knew that Beacon Hill was using phony CMO values to determine NAVs or was aware of the strong possibility that the values were false but deliberately failed to find out. On the latter hypothesis, it blindly confirmed Beacon Hill's values and sent its "corroboration" directly to Beacon Hill's auditor. The allegations, if true, would support a finding that BAS knowingly participated in or assisted a scheme to deceive E & Y and ultimately plaintiffs and therefore that it consciously disregarded plaintiffs' rights. BAS contends that plaintiffs' requests for punitive damages must be dismissed because plaintiffs fail to allege that BAS, as Kearney's employer, was complicit in Kearney's behavior. It points to Loughry v. Lincoln First Bank, N.A,[131] in which the New York Court of Appeals held that "punitive damages can be imposed on an employer for the intentional wrongdoing of its employees only where management has authorized, participated in, consented to or ratified the conduct giving rise to such damages, or deliberately retained the unfit servant, or the wrong was in pursuance of a recognized business system of the " entity. Put another way, this `complicity rule' . . . results in employer liability for punitive damages only when a superior officer in the course of employment orders, participates in, or ratifies outrageous conduct."[132] While plaintiffs do not allege Kearney's position at BAS or that a superior officer participated in or ratified his conduct, the Court is not persuaded that plaintiffs' claims for punitive damages should be dismissed at this stage. Dismissal on the pleadings is inappropriate "unless it appears beyond doubt that the plaintiff[s] can prove no set of facts in support of [their] claim which would entitle [them] to relief."[133] Plaintiffs may well adduce evidence that Kearney was a superior officer or, if not, that another person who was a superior officer at BAS ratified Kearney's actions. Conclusion The motion to dismiss the SAC as to Prudential [docket item 141] is granted. The motion to dismiss the SAC as to BAS [docket item 143] is granted insofar as (1) the claims of Antarctica, the Balentine Plaintiffs, Credit Agricole, Sanpaolo, Crestline, Hartog, Oran Ltd., Private Space, and Pooled Funds are dismissed in all respects, and (2) the claims of all other plaintiffs insofar as they allege liability based on aiding and abetting prior to May 2002 all are dismissed. The motion otherwise is denied. SO ORDERED. NOTES [1] Cpt. ¶¶ 1, 14. "Cpt." refers to the second amended complaint (docket item 132). One of the plaintiffs sues as the alleged assignee of an investor. See id. ¶ 14 (oo). [2] Id. ¶¶ 26-28, 32-34, 48. [3] Id. ¶¶ 1, 15. [4] Id. ¶¶ 1, 16-19. [5] Id. ¶ 135. [6] See id. ¶¶ 4-5, 48, 100, 114. [7] Id. ¶ 48. [8] Id. ¶ 4, 150-291. [9] Id. ¶¶ 38-46. [10] Id. ¶ 150. [11] Id. ¶ 4. [12] E.g., id. ¶¶ 65-99. [13] Id. ¶ 4. [14] Id. ¶ 48; see id. ¶ 100. [15] Parenthetically, it is worth noting that the SAC, despite the quoted language, is not clear as to whether plaintiffs contend that the short treasury position was of a composition and size as to eliminate all sensitivity to interest rate movements, which seems quite improbable. Compare ¶¶ 48, 100 (suggesting that Hedge Alloc Spreadsheet-calculated movements in value of CMO portfolios were equal to and opposite to actual changes in values of short treasury positions) with ¶ 4 (asserting that losses in summer 2002 were exacerbated by accumulation of "a significant short position in U.S. Treasuries on a highly leveraged basis — apparently betting on an increase in interest rates"). More likely, they contend that the Beacon Hill Defendants used the proportionate movement in the value of short treasury positions, which were not complete hedges, as a proxy to compute an assumed movement in the value of the long CMO positions and then allocated that assumed movement among individual CMOs by means of the Hedge Alloc Spreadsheet. This uncertainty in the pleading, although troublesome, is not material for purposes of these motions. [16] Id. ¶¶ 48-49. [17] Id. ¶¶ 47, 51-52. [18] Id. ¶ 65. [19] See id. ¶¶ 150-291 (alleging plaintiffs' receipt of documents sent by Beacon Hill, including audited financial statements). [20] Id. ¶¶ 136. Plaintiffs allege also that E & Y was required to perform an independent valuation if the portfolio value of a fund as determined using Beacon Hill's prices exceeded the value as determined using independent prices by a certain "tolerable error" ("TE"), Plaintiffs allege inconsistently that the TE for the Master Fund was $460,055, id. ¶ 136, and $4,600,550, id. ¶ 141. [21] Id. ¶ 67. [22] E.g., id. ¶ 114-115. [23] Id. ¶ 8 (emphasis in original). [24] Id. ¶¶ 70-74. [25] Id. ¶ 103. [26] Id. ¶ 74. [27] Id. ¶¶ 75-76. [28] Id. ¶ 105. [29] Id. ¶ 106. [30] Amended Complaint (docket item 42) Ex. D (Bristol's audited financial statement for year ending March 31, 2000). [31] Cpt. ¶ 109. [32] Id. ¶¶ 109-112. [33] Id. ¶¶ 13. [34] Id. ¶ 114. [35] The OAS is the incremental rate at which investors are compensated' for investing in a risky CMO instead of risk-free treasury bonds. Id. ¶ 114 & n. 7 (citing complaint in SEC v. Beacon Hill Asset Mgmt. LLC, No. 02 Civ. 8855(LAK)). [36] Id. ¶ 80. [37] Id. ¶¶ 81-83, 128. The SAC does not allege when BAS's mark of $118.31 was sent to E & Y, or who sent it. [38] Id. ¶¶ 81-84. [39] Amended Complaint Ex. D. (Bristol's audited financial statement for year ending March 31, 2001). [40] Cpt. ¶¶ 85-86. [41] Id. ¶¶ 86-87. [42] Id. ¶¶ 88-89. [43] Id. ¶ 91. [44] Amended Complaint Ex. D (Master fund's audited financial statement for period January 2 to March 31, 2002). [45] Cpt. ¶ 292. [46] Id. ¶ 293. [47] Id. ¶ 294. [48] Id. ¶ 295. [49] Id. ¶ 4. [50] SEC v. Beacon Hill Asset Mgmt. LLC, No. 02 Civ. 8855(LAK). [51] SEC v. Beacon Hill Asset Mgmt. LLC, No. 02 Civ. 8855(LAK), 2004 WL 2404096 (S.D.N.Y. Oct.28, 2004). [52] Alteram S.A. v. Beacon Hill Asset Mgmt. LLC, No. 03 Civ. 2387(LAK), 2004 WL 367709 (S.D.N.Y. Feb.27, 2004). [53] Fraternity Fund Ltd. v. Beacon Hill Asset Mgmt. LLC, 371 F. Supp. 2d 571 (S.D.N.Y. 2005). The Court there dismissed claims against Milestone Global and Asset. Alliance Corp. only. See id. at 573. It did not consider claims by the Balentine Plaintiffs against the Beacon Hill Defendants. [54] 376 F. Supp. 2d 385 (S.D.N.Y.2005). [55] Id. at 416. [56] Fraternity Fund I, 376 F.Supp.2d at 396-97: [57] Id. at 404. [58] Id. at 402-03. [59] Id. at 408-10. [60] See, e.g., Cpt. ¶¶ 6, 56 (percentage differences between NAVs as determined using Beacon Hill prices and as determined using Bear Stearns prices); id. ¶ 293 (October 2002 disclosure that losses occurred prior to August 31, 2002); id. ¶ 303-304 (self dealing); id. ¶¶ 59, 63 (Miszkiewicz's recklessness); id. ¶¶ 150-291 (Beacon Hill's representation of NAVs to each plaintiff). [61] Id. ¶ 14 [62] Id. ¶ 1. Ten plaintiffs have joined this action since the first amended complaint was filed. The aggregate amount alleged to have been invested has increased by nearly $160 million. "Compare Amended Complaint ¶¶ 1, 15 with Cpt. ¶¶ 1, 14. [63] Cpt. ¶ 14. [64] 15 U.S.C. § 78j(b). [65] 17 C.F.R. § 240.10b-5. [66] The SAC asserts also claims against Asset Alliance Corp. for control person liability under Section 20(a) of the Exchange Act, 15 U.S.C. § 78t(a), and for breach of contract and fiduciary duty. The Balentine Plaintiffs assert claims against the Beacon Hill Defendants for aiding and abetting fraud and breach of fiduciary duty by Milestone Global, a general partner of Milestone. Finally, certain investors in Safe Harbor assert a claim of contract breach against SHAM, a general partner of Safe Harbor. [67] See Cpt. ¶¶ 391-419. Plaintiffs do not allege primary violations by Prudential and BAS of the Exchange Act. It is unclear whether they seek to hold Prudential and BAS liable for aiding and abetting federal securities fraud. Any such claim, however, would not be viable. See Cent. Bank of Denver, N.A. v. First Interstate Bonk of Denver, N.A, 511 U.S. 164, 191, 114 S. Ct. 1439, 128 L. Ed. 2d 119 (1994) (no private cause of action for aiding and abetting a Rule 10b-5 violation); accord Wright v. Ernst & Young LLP, 152 F.3d 169, 174-76 (2d Cir.1998). The Court therefore construes the SAC as asserting claims against Prudential and BAS only for aiding and abetting common law fraud and breach of fiduciary duty. While plaintiffs do not assert federal claims against these defendants, the Court has supplemental jurisdiction over the aiding and abetting claims pursuant to 28 U.S.C. § 1367, as they are intimately related to and involve substantially the same facts as the federal securities fraud claims against the Beacon Hill Defendants. E.g., Auscape Int'l v. Nat'l Geographic Soc., 461 F. Supp. 2d 174, 178 n. 8 (S.D.N.Y.2006). [68] E.g., Levy v. Southbrook Int'l Invs., Ltd., 263 F.3d 10, 14 (2d Cir.2001), cert. denied, 535 U.S. 1054, 122 S. Ct. 1911, 152 L. Ed. 2d 821 (2002). [69] Id.; Cohen v. Koenig, 25 F.3d 1168, 1172 (2d Cir.1994) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957)). [70] E.g., Krause v. Forex Exch. Mkt., Inc., 356 F. Supp. 2d 332, 338 & 49 (S.D.N.Y.2005). The claims of breach of fiduciary duty in this case allege actual fraud. Plaintiffs allege that the Beacon Hill Defendants owed them fiduciary duties as managers of plaintiffs' assets and that they breached their duties by "falsely reporting the value of plaintiffs' investments." Cpt. ¶¶ 327, 329. [71] FED. R. CIV. P. 9(b). [72] In Re Parmalat Secs. Litig., 383 F. Supp. 2d 616, 622 (S.D.N.Y.2005) (quoting Novak v. Kasaks, 216 F.3d 300, 306 (2d Cir.2000) (quoting Shields v. Citytrust Bancorp, Inc., 25 F.3d 1124, 1128 (2d Cir.1994))). [73] Lerner v. Fleet Bank, N.A., 459 F.3d 273, 290 (2d Cir.2006) (quoting Acito v. IMCERA Group, Inc., 47 F.3d 47, 52 (2d Cir.1995)). [74] Id. (quoting Shields, 25 F.3d at 1128). [75] Lerner, 459 F.3d at 292-95; Krause, 356 F.Supp.2d at 338. [76] Lerner, 459 F.3d at 294 (quoting Kaufman tr. Cohen, 307 A.D.2d 113, 125, 760 N.Y.S.2d 157, 169 (1st Dep't 2003)). [77] Pension Comm. of Univ. of Montreal Pension Plan v. Banc of Am. Secs., LLC, 446 F. Supp. 2d 163, 201 (S.D.N.Y.2006). [78] See Cpt. ¶¶ 400, 415 (alleging breach of fiduciary duty by Beacon Hill Defendants based on their "misrepresenting the value of the securities in Funds' portfolios") [79] Pension Comm., 446 F.Supp.2d at 201 (citing Kolbeck v. LIT Am., Inc., 939 F. Supp. 240, 247 (S.D.N.Y.1996)); see Lerner, 459 F.3d at 294 ("[A] person knowingly participates in a breach of fiduciary duty only when he or she provides `substantial assistance' to the primary violator." (quoting Kaufman, 307 A.D.2d at 125, 760 N.Y.S.2d at 169)). [80] Lerner, 459 F.3d at 291 (quoting Kaufman, 307 A.D.2d at 119, 760 N.Y.S.2d at 165). [81] Plaintiffs make numerous allegations with respect to the time period between Bristol's 2001 audit and the spring of 2002, when the Master Fund's 2002 audit was conducted. See Cpt. ¶¶ 117-125. It is unnecessary to expand upon these here, as plaintiffs' allegations for the period April to fall 2002 are sufficient to allege a primary violation for purposes of the claims that BAS aided and abetted fraud in connection with the Master Fund's March 2002 audit, as BAS's alleged actions took place in May of that year. See id. ¶ 89. [82] U.S. Secs. and Exch. Comm., Collateralized Mortgage Obligations (CMOs) (available at http://www.sec.gov/answers/tcmos.htm) (last visited Mar. 25, 2007). See also Secs. Indus. and Fin. Mkts. Ass'n, Types of Bonds (CMOs): The Various Types of CMOs (available at http://www.investinginbonds.com/ learnmore.asp?catid=5 & subcatid=17 & id =35)(last visited Mar. 25, 2007). [83] Secs. Indus. and Fin. Mkts. Ass'n, Types of Bonds (CMOs): Minimum Investments, Transaction Costs, and Liquidity (available at http:// www.investinginbon ds.coni/learnmore.asp?catid=5 & subcatid=17 & id=36)(last visited Mar. 25, 2007). [84] Id. [85] See Primavera Familienstiftung v. Askin, 173 F.R.D. 115, 124 (S.D.N.Y.1997) ("Valuing CMOs is `an art, not a science"' (quoting Primavera Familienstiftung v. Askin, No. 95 Civ. 8905(RWS), 1996 WL 494904, *21 (S.D.N.Y. Aug.30, 1996) (citing Kidder Peabody & Co. v. Unigestion Int'l Ltd., 903 F. Supp. 479, 499 (S.D.N.Y.1995)))). [86] See generally, e.g., FRANK J. FABOZZI, THE HANDBOOK OF MORTGAGE BACKED SECURITIES 587-700 (1995) (discussing various methods for valuing mortgage backed securities, including CMOs, and the factors pertinent to different models). [87] Cpt. ¶ 40; Amended Complaint Ex, B (Milestone offering memorandum). [88] Fraternity Fund I, 376 F.Supp.2d at 399 n. 85 (citing Amended Complaint Ex. B (Bristol offering memoranda for 1997 and 2000)). [89] See Amended Complaint Ex. B (Safe Harbor offering memoranda for 1997 and 2002). The Master Fund offering memorandum is not before the Court on these motions. The SAC alleges, however, that the Master Fund's Amended and Restated Memorandum and Articles of Association, provided that securities traded on an exchange or over the counter would be valued by looking at market quotations, but that "[s]ecurities or other assets for' which market quotations are not readily available will be valued at their fair value as determined in good faith in accordance with procedures adopted by the Investment Manager." Cpt. ¶ 41. [90] It is important to note that the mere fact that Beacon Hill promised to value NAVs in good faith and then allegedly did not do so would not necessarily state fraud claims. "[A] failure to perform promises of future acts is not fraud unless there exists an intent not to comply with the promise at the time it is made." Murray v. Xerox Corp., 811 F.2d 118, 121 (2d Cir.1987) (citing Chase Manhattan Bank v. Perla, 65 A.D.2d 207, 411 N.Y.S.2d 66, 68 (4th Dep't 1978)). But this does not mean that plaintiffs' case necessarily turns on the Beacon Hill Defendants' intentions at the time the offering memoranda were released. Under New York law, a duty to update past representations arises when a statement of future intention, "reasonable at the time it is made, becomes misleading because of a subsequent event." In re Int'l Bus. Machs. Corp. Secs. Litig., 163 F.3d 102, 110 (2d Cir. 1998). If Beacon Hill intended to determine NAVs in" good faith but subsequently did not do so, a duty to update arguably would have arisen, as the offering memoranda would have become misleading. Moreover, Beacon Hill's breach of that duty would have changed the nature of its subsequent statements of NAVs. Those statements, absent Beacon Hill's disclosure that it had changed its valuation method, would have become implicit representations that the valuation method described in the offering memoranda in fact had been complied with. In that case, the fact that the Beacon Hill Defendants did not determine the NAVs in good faith could constitute fraud, regardless of their intentions at the time the offering memoranda were released. [91] Id. ¶ 84. [92] See Cpt. ¶¶ 115-116. [93] Additionally, even if Beacon Hill had not made these downward adjustments, the negative OASs themselves would not necessarily have indicated fraud. A negative OAS may signal that a bond is overpriced, but it does not necessarily signify that the model used to determine the price that led to the negative OAS was fraudulent in the first place. Plaintiffs do not allege that a negative OAS could not be the product of a proper pricing model. [94] There also are allegations that cut the other way. Beacon Hill's alleged activity during the spring of 2000 preceded by more than two years its disclosure that the Funds had lost substantial value. Furthermore, plaintiffs do not allege any self-dealing on the part of the Beacon Hill. Defendants during this period or that Beacon Hill's CMO values differed from those of independent sources by amounts that would have been considered abnormal in the industry; They allege only that NAVs determined using Bear Stearns' CMO values were 10 to 15 percent lower than NAVs determined using Beacon Hill values. Cpt. ¶ 56. But, as the Court held in Fraternity Fund I, bald allegations that the CMOs were overvalued do not raise an inference of fraud. 376 F. Supp. 2d at 397. [95] E.g., id. at 412. [96] Terrydale Liquidating Trust v. Barness, 611 F. Supp. 1006, 1027 (S.D.N.Y.1984) (citing Armstrong v. McAlpin, 699 F.2d 79, 91 (2d Cir.1983)). [97] Lerner, 459 F.3d 273, 293. [98] No. 00 Civ. 2284(DLC), 2003 WL 21436164 (S.D.N.Y. June 23, 2003). [99] Id. at *9. [100] 446 F. Supp. 2d 163. [101] Id. at 201 n. 279. [102] BLACK'S LAW DICTIONARY (8th ed.2004) (knowledge). [103] United States v. Nektalov, 461 F.3d 309, 315 (2d Cir.2006) (quoting United States v. Reyes 302 F.3d 48, 54 (2d Cir.2002) (quoting GLANVILLE WILLIAMS, CRIMINAL LAW: THE GENERAL PART § 57, at 159 (2d ed.1961))). [104] See United States v. Bakal, 20 Fed.Appx. 37, 42 (2d Cir.2001) (conscious avoidance theory of knowledge not per se inapplicable to specific intent crimes like aiding and abetting); cf. United States v. Samaria, 239 F.3d 228 (2d Cir.2001) (conscious avoidance can establish knowledge of criminal endeavors, although not specific intent to participate in substantive crimes, for purposes of general aiding and abetting statute, 18 U.S.C. § 2). [105] Cpt. ¶ 392. [106] Id. ¶ 79. [107] Prudential argues that the allegation that Kearney took two days to respond to Daniels is consistent with the inference that Prudential took the time to verify the values independently. This is not persuasive. Given the nature of CMOs and the judgment that is required to value them, for Prudential to have conducted an independent valuation and arrived at 31 identical values as Beacon Hill would have been an amazing coincidence. But this ultimately is beside the point. For the reasons stated in the text, even if Kearney had not conducted an independent valuation, this would not necessarily indicate that he or anyone else at Prudential knew that Beacon Hill's values were phony. [108] Id. ¶ 84. [109] Id. ¶ 8. [110] Lerner, 459 F.3d at 295 (quoting Kaufman, 307 A.D.2d at 126, 760 N.Y.S.2d at 170). [111] Pension Comm., 446 F.Supp.2d at 202 (quoting JP Morgan Chase Bank v. Winnick, 406 F. Supp. 2d 247, 256 (S.D.N.Y.2005)). [112] Id. at 201-02 (citing Diduck v. Kaszycki & Sons Contractors, Inc., 974 F.2d 270, 284 (2d Cir.1992), abrogated on other grounds, Mertens v. Hewitt Assocs., 508 U.S. 248, 113 S. Ct. 2063, 124 L. Ed. 2d 161 (1993)). [113] Id. There is some debate about whether proximate cause and substantial assistance ought to be equated in the aiding and abetting context. See Winnick, 406 F.Supp.2d at 256 n. 6 (S.D.N.Y.2005) ("This Court has some doubt about whether `substantial assistance' can be equated with proximate cause. A person can make a meaningful contribution to a fraudulent scheme without being understood to have legally `caused' the scheme or its results."); see also In re Monahan Ford Corp. of Flushing, 340 B.R. 1, 34 (E.D.N.Y.2006) ("[S]ome question has been expressed whether the `proximate cause' standard or a lesser standard should be utilized in the context of aiding and abetting liability."). Nevertheless, as the Winnick court recognized, "the Second Circuit has utilized the `proximate cause' standard in the context of aiding and abetting securities fraud." Winnick, 406 F.Supp.2d at 256 n. 6 (citing Edwards & Hanly v. Wells Fargo Sec. Clearance Corp., 602 F.2d 478, 484 (2d Cir.1979), superseded on other grounds," Cent. Bank, 511 U.S. 164, 114 S. Ct. 1439). And in any event, as will become clear, plaintiffs adequately plead proximate cause. [114] Morin v. Trupin, 711 F. Supp. 97, 113 (S.D.N.Y.1989) (citing Terrydale, 549 F. Supp. 529, 531); In re Union Carbide Corp. Consumer Prods. Bus. Secs. Litig., 666 F. Supp. 547, 560 (S.D.N.Y.1987). [115] In ABF Capital Mgmt. v. Askin Capital Mgmt., L.P., 957 F. Supp. 1308 (S.D.N.Y. 1997), the court held that where plaintiffs "allege a highly interdependent scheme in which both parties benefitted from . . . fraudulent activity. . . . allegations that a defendant actively assisted and facilitated the fraudulent scheme itself, as opposed to assisting in the preparation of the documents themselves, are sufficient." Id. at 1328. ABF does not apply here, however, as plaintiffs have not alleged that Beacon Hill and BAS were in a "symbiotic" relationship, or that BAS actively played a role in the bad faith determination of CMO values. See id. at 1330. [116] See Cpt. ¶¶ 164 (Antarctica), 179 (Balentine Plaintiffs), 186 (Credit Agricole), 231 (Sanpaolo), 243-250 (Crestline), 267 (Hartog), 275 (Private Space), 286-291 (Pooled Funds). [117] See generally id. ¶¶ 150-291 (alleging plaintiffs' receipt of documents sent by Beacon Hill, including audited financial statements). [118] 939 F. Supp. 240. [119] Id. at 249. [120] BAS Mem. 18. [121] 220 F.3d 22 (2d Cir.2000). [122] 307 A.D.2d 113, 760 N.Y.S.2d 157. [123] See Greenberg, 220 F.3d at 29 ("[T]he simple providing of normal clearing services to a primary broker who is acting in violation of the law does not make out a case of aiding and abetting against the clearing broker.") (quoting Stander v. Fin. Clearing & Servs. Corp., 730 F. Supp. 1282, 1286 (S.D.N.Y. 1990)); Kaufman, 307 A.D.2d at 126, 760 N.Y.S.2d at 170 (assisting someone in acquiring an interest in a piece of property was "not an unusual activity for those in the business of commercial real estate development" and so did not give rise to liability for aiding and abetting breach of fiduciary duty). [124] E.g., Bluebird Partners, L.P. v. First Fidelity Bank, N.A. New Jersey, 85 F.3d 970, 973 (2d Cir.1996) (citing FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 231, 110 S. Ct. 596, 107 L. Ed. 2d 603 (1990)). [125] N.Y. GEN. OBLIG. LAW § 13-101. [126] Banque Arabe et Internationale D'Investissement v. Maryland Nat. Bank, 57 F.3d 146, 151 (2d Cir.1995) (quoting Nearpark Realty Corp. v. City Invest. Co., 112 N.Y.S.2d 816, 817 (1952) (citing Fox v. Hirschfeld, 157 A.D. 364, 142 N.Y.S. 261 (1st Dep't 1913))); accord In re Nucorp Energy Secs. Litig., 772 F.2d 1486, 1493 (9th Cir.1985) (applying New York law and citing Licht v. Donaldson, Lufkin & Jenrette Secs. Corp., No. 24560/82, slip op. (Sup.Ct. N.Y. Co. Sept. 1, 1983), aff'd mem., 100 A.D.2d 987, 474 N.Y.S.2d 1004, appeal denied, 63 N.Y.2d 608, 483 N.Y.S.2d 1024, 472 N.E.2d 1044 (1984)); Lowry v. Baltimore and Ohio R. Co., 629 F. Supp. 532, 534 (W.D.Pa.1986) (applying New York law). Plaintiffs contend that this rule is not applicable here because Bluebird Partners, L.P. v. First Fidelity Bank, N.A., 97 N.Y.2d 456, 741 N.Y.S.2d 181, 767 N.E.2d 672 (2002), held that "the buyer of a bond receives exactly the same `claims or demands' as the seller held before the transfer." Id. at 461, 741 N.Y.S.2d at 184, 767 N.E.2d 672. But Bluebird Partners is inapposite. That case applied General Obligations Law § 13-107, which provides that "[u]nless expressly reserved in writing, a transfer of any bond shall vest in the transferee all claims or demands" against (a) the bond obligor, (b) the indenture trustee or depository, or (c) the guarantor of the obligation. N.Y. GEN. OBLIG. LAW § 13-107. This case concerns interests in hedge funds, not bonds. Accordingly, § 13-107 has no applicability here. Furthermore, while the Uniform Commercial Code provides that the purchaser of a security "acquires all rights in the security that the transferor had or had power to transfer," N.Y.U.C.C. § 8-302(a), the term "rights in the security" does not mean "all rights related to the security or accrued while possessing the security." Consol. Edison, Inc. v. Northeast Utils., 318 F. Supp. 2d 181, 188 (S.D.N.Y.2004) (rejecting argument that N.Y. U.C.C.A 8-302(a) provides for automatic transfer of accrued claims), rev'd on other grounds, 426 F.3d 524 (2d Cir.2005). Section 8-302(a) thus primarily concerns issues of title, such as defenses against enforcement of ownership rights. Id. at 191. It does not provide for the automatic transfer of fraud claims against third parties. See id. at 192-93 ("[U]pon the transfer of stock, the transferee receives rights in the security vis-à-vis the issuer and rights vis-à-vis other potential holders, including, for example, good title and bona fide purchaser status. Nothing in the text of § 8-302(a), in its history or commentary, or in other provisions of the U.C.C. supports [the] proposition that "rights in the security" include contract rights against third parties or that § 8-302(a) codifies a rule for the automatic transfer of such rights to subsequent purchasers of the stock."). [127] Cpt. ¶ 14(oo). [128] Plaintiffs urge the Court to consider the purchase agreements between TEB and Deutsche Bank, Faurot Aff. (docket item 152) Ex. A, and Deutsche Bank and Oran, id. Ex. C, each of which, they argue, expressly assigned claims. Even if the Court were to rely on these documents — and, it is not clear that it could do so, as they neither were attached to the SAC, incorporated by reference, nor relied upon by Oran in making its claims, see Chambers v. Time Warner, Inc., 282 F.3d 147, 152-53 (2d Cir.2002) — the result would be the same. Plaintiffs argue that §§ 1.01, 6.01, and 6.04 of the TEB-Deutsche Bank agreement demonstrate TEB's intent to assign its claims. But plaintiffs misread the language. Section 1.01 provided that TEB would transfer its shares in Bristol free of any encumbrances. Section 6.01 required each party to use reasonable efforts to effectuate the agreement. And Section 6.04 required TEB to cause Bristol to execute all documents necessary to consummate the transfer of shares and evidence Deutsche Bank's ownership. See Faurot Aff. Ex. A, §§ 1.01, 6.01, 6.04. None of these clauses expressly provided for assignment of claims. Notably, the purchase agreement between Deutsche Bank and Oran did provide expressly for assignment. See id., Ex. C, § 1.02. But this does not help plaintiffs. If TEB did not assign its claims to Deutsche Bank, Deutsche Bank had no claims to assign Oran. [129] Fraternity Fund I, 376 F.Supp.2d at 412 (quoting Action S.A. v. Marc Rich & Co., 951 F.2d 504, 509 (2d Cir.1991) and citing Campagnola v. Mulholland, 76 N.Y.2d 38, 48, 556 N.Y.S.2d 239, 245, 555 N.E.2d 611 (1990)). [130] Trudeau v. Cooke, 2 A.D.3d 1133, 1134, 769 N.Y.S.2d 322, 323 (3d Dep't 2003). [131] 67 N.Y.2d 369, 502 N.Y.S.2d. 965, 494 N.E.2d 70 (1986). [132] Id. at 378, 502 N.Y.S.2d at 969-70, 494 N.E.2d 70 (citations omitted). [133] Cohen, 25 F.3d at 1172 (quoting Conley, 355 U.S. at 45-46, 78 S. Ct. 99).

01-03-2023

10-30-2013

https://www.courtlistener.com/api/rest/v3/opinions/4027427/

NOTICE: All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports. If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557- 1030; [email protected] SJC-11977 KATELYNN GOODWIN vs. LEE PUBLIC SCHOOLS & others.1 Berkshire. March 10, 2016. - August 23, 2016. Present: Gants, C.J., Spina, Cordy, Botsford, Duffly, Lenk, & Hines, JJ.2 School and School Committee, Enforcement of discipline. Education, Disciplinary matter. Practice, Civil, Dismissal. Administrative Law, Exhaustion of remedies. Civil action commenced in the Superior Court Department on December 30, 2014. A motion to dismiss was heard by C. Jeffrey Kinder, J., and a motion for reconsideration was considered by him. The Supreme Judicial Court granted an application for direct appellate review. Joseph N. Schneiderman for the plaintiff. David S. Monastersky for the defendants. Sky Kochenour & Jenny Chou, for Center for Law and Education & another, amici curiae, submitted a brief. 1 Town of Lee; Jason P. McCandless. 2 Justice Duffly participated in the deliberation on this case and authored this opinion prior to her retirement. Justices Spina and Cordy participated in the deliberation on this case prior to their retirements. 2 DUFFLY, J. The plaintiff, Katelynn Goodwin, was a high school student at the Lee Middle and High School in the town of Lee (town) when she was suspended from school for conduct that purportedly took place not on school grounds, pursuant to a school policy, based on G. L. c. 71, § 37H1/2 (§ 37H1/2), which provided that students who had been charged with felonies would be suspended. The principal ordered the suspension in the mistaken belief that the plaintiff had been charged with a felony, stealing, or being involved in the theft of, a firearm. Ultimately, the suspension lasted for the entire final semester of what would have been the plaintiff's senior year, and she was unable to graduate with her class, but eventually obtained her high school diploma. She thereafter commenced this action in the Superior Court against the Lee public schools, the superintendent of the Lee schools, and the town. The question confronting the court is whether the judge erred in allowing the defendants' motion to dismiss based on the failure to exhaust the administrative remedies available under § 37H1/2. We conclude that, because the tort recovery a student may seek under G. L. c. 76, § 16, provides a separate and distinct remedy from that available under § 37H1/2, a statute that establishes an expedited process by which a student may 3 seek readmission to school, the plaintiff was not obligated to exhaust the statute's administrative remedies before pursuing a tort claim under G. L. c. 76, § 16. Background. The plaintiff was in her senior year of high school when the principal of the Lee Middle and High School temporarily suspended her on December 20, 2011. The suspension, which was to last through January 9, 2012, was based on a school policy concerning students who had been charged with a felony. The policy, apparently derived from the school's reading of § 37H1/2 (1),3 was included in the student handbook. In a letter sent to the plaintiff's mother on the day of the suspension, the principal explained that her decision to suspend the plaintiff was based on "charges brought against her by the Lee [p]olice, including an alleged connection to weapons[] theft [a felony]." In fact, no charges had been filed. In April, 2012, more than three months after imposition of the suspension, a complaint issued from the Berkshire County Division of the Juvenile Court Department charging the plaintiff with receipt of stolen property under $250, a misdemeanor to which § 37H1/2 (1) does 3 General Laws c. 71, § 37H1/2 (§ 37H1/2), permits, but does not require, a school principal or headmaster to suspend a student who has been charged with a felony, for a length of time that the principal or headmaster deems appropriate, if he or she determines that the student's continued presence in the school "would have a substantial detrimental effect on the general welfare of the school." G. L. c. 71, § 37H1/2 (1). 4 not apply. The plaintiff was never charged with a felony. On December 21, 2011, the day after the plaintiff had been suspended, the plaintiff's mother telephoned the superintendent and asked him to lift the plaintiff's suspension, advising him that no criminal charges had issued against her daughter. That same day, the superintendent sent a letter to the plaintiff's mother stating that "we are keeping [the plaintiff] out of school until the legal matter is clarified." The superintendent acknowledged in his letter that the plaintiff had "perhaps not been charged yet." On January 6, 2012, the principal wrote a second letter to the plaintiff's mother, stating that the plaintiff would be suspended from school, beginning on January 10, 2012, assertedly pursuant to the provisions of § 37H1/2, "for the duration of all criminal proceedings as a result of the issuance of criminal complaints by the Lee Police against [her]." Under § 37H1/2 (1), a student may be suspended from school "[u]pon the issuance of a criminal complaint charging a student with a felony . . . if [the] principal or headmaster determines that the student's continued presence in school would have a substantial detrimental effect on the general welfare of the school." The principal's letter also stated that the plaintiff had the right to appeal from her suspension to the 5 superintendent within five days of the effective date of the suspension. The plaintiff concedes that she did not formally appeal to the superintendent (in writing) from her suspension.4 The plaintiff subsequently acquired legal counsel and, on April 26, 2012, sent a letter to the superintendent seeking to have her suspension lifted. A meeting was held on the plaintiff's request on May 2, 2012, and the suspension was lifted, based on the determination that the plaintiff could return to classes because she was "not currently charged with a felony," but that she would not be allowed to attend the graduation ceremony with her classmates. After learning that she would not be able to attend graduation, the plaintiff decided that she did not want to return to classes at the school. A written agreement apparently was reached concerning how she would be able to complete the missed credits and obtain her diploma. The agreement provided, among other things, that the plaintiff would receive tutoring at the town library, two 4 At the hearing on the motion to dismiss, the Superior Court judge commented that imposing a five-day deadline on a pro se plaintiff appeared "harsh." We observe that § 37H1/2 does not provide a student who has been suspended or expelled the right to request an extension of time in which to appeal, as provided in other school discipline statutes, see, e.g., G. L. c. 71, § 37H3/4 (e), and requires a parent (who may be illiterate or unable to read and write in English) to make the request in writing. 6 hours per day, through the end of the school year on June 15, 2012. The plaintiff then took classes through an online program provided by the school, and ultimately graduated from high school in the summer of 2013; she rejected the school's offer of holding a graduation ceremony conducted for her alone. In December, 2014, the plaintiff commenced this action in the Superior Court. The plaintiff's complaint asserted that her suspension was unlawful under § 37H1/2, because she had not been charged with a felony, and sought compensation "for the grief and stigmatization caused to the Plaintiff for not being permitted to participate in her last year of school on school grounds and in the rite of passage that is graduation." The defendants filed a motion to dismiss the complaint for failure to state a claim upon which relief can be granted, arguing that the plaintiff had not exhausted administrative remedies under § 37H1/2, and had not sought certiorari review under G. L. c. 249, § 4. In her opposition to the defendants' motion, the plaintiff asserted that she was also entitled to damages under G. L. c. 76, § 16, based on the same facts. At a hearing on the motion to dismiss, the judge heard arguments concerning both claims. The plaintiff argued, and the defendants did not dispute, that the plaintiff's approximately five-month suspension from 7 school was unlawful. The judge allowed the defendants' motion to dismiss, however, on the ground that the plaintiff failed to exhaust her administrative remedies under § 37H1/2 before filing her complaint. The judge's decision did not expressly address the plaintiff's argument that she could pursue damages under G. L. c. 76, § 16. The plaintiff thereafter filed a motion for reconsideration, in which she argued that the exhaustion requirements under § 37H1/2 did not apply to her, and that she had a separate and distinct right of action under G. L. c. 76, § 16. The judge denied the motion, and the plaintiff filed a timely appeal. We allowed the plaintiff's application for direct appellate review. Discussion. We review the allowance of a motion to dismiss de novo. Curtis v. Herb Chambers I-95, Inc., 458 Mass. 674, 676 (2011), citing Harhen v. Brown, 431 Mass. 838, 845 (2000). For purposes of such review, we "accept[] as true the facts alleged in the plaintiff['s] complaint and exhibits attached thereto, and favorable inferences that reasonably can be drawn from them." See Burbank Apartments Tenant Ass'n v. Kargman, 474 Mass. 107, 116 (2016), citing Coghlin Elec. Contractors, Inc. v. Gilbane Bldg. Co., 472 Mass. 549, 553 (2015). 1. Statutory provisions. General Laws c. 76, § 16, which has been in effect in essentially the same form since 1845, see 8 St. 1845, c. 214, permits students who have been unlawfully excluded from a public school to obtain monetary damages from the relevant municipality. The statute provides that any student who has reached the age of eighteen, or a parent or guardian of a student under the age of eighteen, "who has been refused admission to or excluded from the public schools or from the advantages, privileges and courses of study of such public schools shall on application be furnished by the school committee with a written statement of the reasons therefor, and thereafter, if the refusal to admit or exclusion was unlawful, such pupil may recover from the town or, in the case of such refusal or exclusion by a regional school district from the district, in tort . . . ." By contrast, § 37H1/2, enacted in 1994, see St. 1993, c. 380, § 2, allows principals to suspend from school students who have been charged with a felony, and sets forth an expedited procedure by which a student may appeal from such a suspension. It appears to be the only statute that permits suspension from school for an act that occurred other than on school grounds. Compare § 37H1/2 with G. L. c. 71, § 84, and G. L. c. 76, § 17. Section 37H1/2 provides, in relevant part: "Notwithstanding the provisions of [G. L. c. 71, § 84, G. L. c. 76, § 16, and G. L. c. 76, § 17]: "(1) Upon the issuance of a criminal complaint charging a student with a felony . . . , the principal or headmaster of a school in which the student is enrolled may suspend such student for a period of time determined appropriate by said principal or headmaster if said principal or headmaster determines that the student's 9 continued presence in school would have a substantial detrimental effect on the general welfare of the school. The student shall receive written notification of the charges and the reasons for such suspension prior to such suspension taking effect. The student shall also receive written notification of his right to appeal and the process for appealing such suspension . . . ." (Emphasis supplied.) G. L. c. 71, § 37H1/2. As initially enacted as part of the Education Reform Act of 1993, see St. 1993, c. 71, as amended by St. 1993, c. 380, § 2, the statute stated that "no school or school district shall be required to provide educational services to" a student who had been expelled from school.5 In 2012, as part of significant changes to school disciplinary policy designed to keep students in school, and to ensure that exclusion from school is a last resort, see "An Act relative to student access to educational services and exclusion from school," House Doc. No. 4332 (2012), the statute was amended to 5 This provision of the Education Reform Act of 1993, which was designed to enforce "zero tolerance" policies towards school violence, authorized school principals, for the first time, to exclude students from school. See Keep Kids in Class: New Approaches to School Discipline, Massachusetts Appleseed Center for Law and Justice at 4 (2012). See, e.g., Rashin and Meschino, Long and winding road: The role of courts, zero tolerance and school exclusion in Mass., Mass. Law. J. 22, 22 (May, 2011); Letter from Massachusetts Advocates for Children to Governor Deval L. Patrick, in support of House Doc. 4332 entitled "H. 4332/An Act Relative to Students' Access to Educational Services and Exclusion from School" (Aug. 6, 2012); Massachusetts Advocates for Children, Keeping Kids in Class, http://massadvocates.org/discipline/ [https://perma.cco/4C58- Z3SH]. 10 its current form, allowing students suspended under its provisions an immediate review by the superintendent of schools, and affording such students numerous procedural protections. See St. 2012, c. 222, § 3; D.A. Randall and D.E. Franklin, Municipal Law & Practice § 22.38 (5th ed. 2006); T. Mela and A. Klemas, Keeping Kids in School and Out of the Pipeline: Ensuring Due Process and Chapter 222, Massachusetts Advocates for Children (2013). Suspension as a result of a pending felony charge is an exception to the general rule under G. L. c. 71, § 84, that "[n]o student shall be suspended . . . for conduct which is not connected with any school-sponsored activities." As with the ability to impose a suspension for conduct that is not school related, the administrative review prescribed by § 37H1/2 differs significantly from the procedures set forth in other provisions relative to review, for students who have been suspended from school under other statutory provisions.6 If a 6 A student suspended under § 37H1/2 (1) is afforded substantially greater procedural protections in seeking review of a decision that the student be suspended than students who have been suspended under other statutory provisions, including commission of certain criminal offenses on school grounds. See G. L. c. 71, § 37H3/4 (a). These protections include the right to a hearing within eight calendar days of the suspension (notice of request for a hearing within five days and a hearing within three days of such notice), the right to have counsel and a parent at the hearing and to present oral and written 11 superintendent decides that a student suspended pursuant to § 37H1/2 should be afforded relief, the superintendent may, inter alia, order reinstatement to the school the student had been attending, shorten the period of suspension, or refer the student to a different school or "alternate educational program." G. L. c. 71, § 37H1/2 (1). 2. Motion to dismiss. As a preliminary matter, and notwithstanding the defendants' assertions to the contrary, we note that the plaintiff's claim under G. L. c. 76, § 16, is properly before us. Although the complaint did not expressly identify G. L. c. 76, § 16, as the statute under which the plaintiff sought damages for her unlawful exclusion from school, the plaintiff's complaint alleged facts, which, taken as true for the purpose of a motion to dismiss, satisfy each element of that statute. She alleged that she had been unlawfully excluded from school, and that the reasons proffered by the school for her exclusion were in violation of § 37H1/2, a statute which permits suspension only "[u]pon the issuance of a criminal complaint charging a student with a felony." Moreover, she stated explicitly in her opposition to the defendants' motion to dismiss that she also was seeking damages under G. L. c. 76, testimony, and the right to a written decision within five calendar days after the hearing. See § 37H1/2 (1). 12 § 16, and defense counsel addressed this claim at the hearing on the motion. Although it would have been preferable for the plaintiff to have sought to amend her complaint, failure to do so is not fatal in this context. See Sullivan v. Chief Justice for Admin. Mgt. of the Trial Court, 448 Mass. 15, 21 (2006) (plaintiff's complaint should be allowed to proceed if plaintiff demonstrates possibility of entitlement "to any form of relief, even" if theory upon which plaintiff appears to rely "may not be appropriate"). As the plaintiff's tort claim under G. L. c. 76, § 16, was before the judge, and was fully briefed by the parties in their filings in this court, we address it here. The crux of the defendants' argument is that because the plaintiff failed to exhaust the administrative remedies set forth in § 37H1/2, she may not avail herself of the tort remedy available under G. L. c. 76, § 16. The plaintiff maintains that, because she was not charged with a felony, either before the suspension or at any point thereafter, see § 37H1/2, she was not required to exhaust administrative remedies under a statute that did not authorize her suspension, and that, in any event, G. L. c. 76, § 16, provides a suspended student a parallel and distinct avenue for relief. We agree. The plain language of § 37H1/2 (1) states that its provisions, and imposition of the suspension it permits a 13 principal or headmaster to impose, are triggered "[u]pon the issuance of a criminal complaint charging a student with a felony." This language necessarily implies that, unless a criminal complaint charging a student with a felony has been issued, a student may not be excluded from school under the statute. As stated, it is undisputed that on December 20, 2011, when the plaintiff was suspended temporarily, and on January 10, 2012, when she was suspended indefinitely,7 no criminal complaints charging her with a felony had issued. Moreover, the superintendent's letter of December 21, 2011, and the principal's letter on January 6, 2012, make clear that both were aware that no criminal charges of any sort had been filed. Therefore, because the plaintiff's suspension under § 37H1/2 was in violation of the statute, she was not required to exhaust the administrative remedies provided under that statute (appeal to the superintendent) before seeking review of that suspension in the Superior Court.8 The judge erred in allowing the defendants' 7 In the circumstances here, the plaintiff's suspension for an indefinite period of time ("for the duration of all criminal proceedings") "in effect amounted to a permanent exclusion" within the meaning of G. L. c. 76, § 16. See Jones v. Fitchburg, 211 Mass. 66, 68 (1912). 8 Because the plaintiff has graduated from high school, any remedy that she could have been afforded under § 37H1/2 is now 14 motion to dismiss on this ground. The judge did not explicitly address whether the failure to exhaust administrative remedies under § 37H1/2 prevents the plaintiff from seeking damages under G. L. c. 76, § 16. Nonetheless, in light of his allowance of the motion to dismiss, we assume that the judge also concluded that the failure to exhaust remedies under § 37H1/2 was fatal to the plaintiff's tort claim under G. L. c. 76, § 16. The defendants argue that the language of § 37H1/2 evinces a legislative intent to require a student to exhaust the administrative remedies set forth in that statute before pursuing a tort claim under G. L. c. 76, § 16. In the defendants' view, the introductory language of § 37H1/2 creates an additional requirement for any student who has been suspended under that statute before that student may pursue a claim under G. L. c. 76, § 16. That language provides: "Notwithstanding the provisions of [G. L. c. 71, § 84, G. L. c. 76, § 16, and G. L. c. 76, § 17,] . . . [u]pon the issuance of a criminal complaint charging a student with a felony . . . , the principal or headmaster of a school in which the student is enrolled may suspend such student for a period of time determined appropriate)." moot. That statute does not provide for recovery of damages, and monetary damages are not available from a school absent an explicit waiver of sovereign immunity. See Kelly K. v. Framingham, 36 Mass. App. Ct. 483, 488-489 (1994) 15 The defendants' understanding of the statute appears to rely on a misconstruction of the statutory language "notwithstanding" in § 37H1/2, which they contend imposes a restriction on otherwise available means by which to seek money damages for students who have been charged with a felony. We do not agree. Under its ordinary meaning, the word "notwithstanding" does not mean, as the defendants' argument necessarily would imply, eliminating or setting aside otherwise available remedies. Rather, it means that even where those other remedies exist, students suspended under the terms of this provision are entitled to an additional, immediate, review of a decision to exclude them from school, with the goal of readmission. See, e.g., Black's Law Dictionary 1231 (10th ed. 2014) (defining "notwithstanding" as "[d]espite; in spite of [e.g.,] notwithstanding the conditions listed above, the landlord can terminate the lease if the tenant defaults"). In enacting this provision, the Legislature intended to ensure that students who have been suspended as a result of felony charges have an opportunity for immediate review of such a suspension, and to continue with their public education as expeditiously as possible. We discern no legislative intent to 16 take away methods of obtaining financial redress.9 Rather, § 37H1/2 is plainly designed to afford suspended students an immediate opportunity to have their suspensions lifted and to be readmitted to school, to have their suspensions shortened, or to be admitted to alternate educational programs. By contrast, the payment of damages as allowed under G. L. c. 76, § 16, provides a student, who very likely is a minor, no relief from the immediate deprivation of a free and appropriate public education. Thus, contrary to the defendants' assertions,10 nothing in 9 "Data show that a student being suspended or expelled is a strong precursor to him or her dropping out of school, which leads to far-reaching consequences for the student, the community, and taxpayers. The bill aims to curb the overuse of suspension and expulsion -- jointly known as school exclusions - - as a disciplinary tactic other than as a last resort. The ultimate goal is to keep kids in school, actively engaged in learning, and severing the school to prison pipeline." Letter from Massachusetts Advocates for Children to Governor Deval L. Patrick, in support of House Doc. 4332, supra. 10 The defendants maintain further that the plaintiff's claim under G. L. c. 76, § 16, must be dismissed because she did not obtain a statement from the school committee of the reasons for her suspension before seeking relief under that statute. This contention is contrary to the legislative purpose in enacting the statute, and inconsistent with its plain language. The statutory language obligates the school committee to provide a suspended student with a written statement of reasons for the suspension, on request by the student; it does not mandate that the student obtain such a list from the school committee before pursuing an appeal. Rather, the statement of reasons provides a suspended student a right to obtain information. While a suspended student may use the statement of reasons to support a 17 the language of § 37H1/2 precludes a student who has been suspended under that statute from seeking to pursue a tort remedy under G. L. c. 76, § 16, without having first pursued or prevailed on appeal of a decision ordering the student's suspension under § 37H1/2.11 The defendants' motion to dismiss therefore should not have been allowed. Conclusion. The judgment allowing the defendants' motion to dismiss is reversed. The matter is remanded to the Superior Court for further proceedings consistent with this opinion. So ordered. claim that the exclusion was unlawful, recovery in tort is permissible, without any statutory prerequisite, "if the refusal to admit or exclusion was unlawful." See G. L. c. 76, § 16. Here, it is undisputed that the exclusion was unlawful, and a statement to that effect by the school committee, which had no involvement in the superintendent's decision to affirm the suspension, would add nothing more to establish the reasons for the plaintiff's unlawful exclusion. 11 Although, in some circumstances, the failure to exhaust administrative remedies seeking readmission to school might be relevant to a mitigation of damages, the two statutes afford separate and independent remedies.

01-03-2023

08-23-2016

https://www.courtlistener.com/api/rest/v3/opinions/2960665/

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA __________________________________________ ) LEON MARYLAND, ) ) Plaintiff, ) ) v. ) Civil Action No. 14-1318 (RMC) ) U.S. DEPARTMENT OF VETERAN ) AFFAIRS, et al., ) ) Defendants. ) ) __________________________________________) OPINION Leon Maryland, proceeding pro se, brings suit against the U.S. Department of Veteran Affairs (VA), Center for Verification and Evaluations (CVE) under the Freedom of Information Act (FOIA), 5 U.S.C. § 552, seeking the release of records relating to the VA website that serves as a federal government portal for veteran-owned businesses, https://www.vip.vetbiz.gov/. The VA has moved for summary judgment, and Mr. Maryland has cross-moved for summary judgment. For the reasons below, the Court will grant VA’s motion and deny Mr. Maryland’s cross-motion. I. BACKGROUND A. Facts CVE is an office within the VA’s Office of Small and Disadvantaged Business Utilization (OSDBU). See VA Mot. for Summ. J. [Dkt. 42] (Def. Mot.), Supp. Decl. of Laurie Karnay (Karnay Decl.) ¶ 5. CVE seeks to enable service-disabled Veteran-owned small businesses (SDVOSB) and Veteran-owned small businesses (VOSB), to compete for and win contracts with VA. CVE verifies applications submitted by Veteran small business owners interested in competing 1 for Veteran set-aside procurement opportunities. If approved, businesses are listed on the Vendor Information Pages (VIP), which is a database used by the VA Acquisition community to find firms for Veteran set-aside procurement opportunities. CVE maintains the VIP “Vetbiz” database, which contains data on approved Veteran-owned companies, such as business addresses. . . . The information regarding businesses in the VIP database is regularly updated to reflect the current status of businesses that have applied for inclusion in the database. Id. Mr. Maryland has repeatedly requested “information regarding businesses that have applied, or have applications pending, for verification. This includes those businesses that have been approved or denied, or that have withdrawn from, or been cancelled from, the verification program.” Id. ¶ 6. Only two of Mr. Maryland’s FOIA requests are the subject of this action: a FOIA request dated August 13, 2013 with an addendum dated August 22, 2013 (collectively, the August 2013 Request) which CVE assigned tracking number 13-06522-F, and a FOIA request dated November 5, 2014 (November 2014 Request) which CVE assigned tracking number 15- 00846-F. Id. ¶¶ 6, 9, 16. 1. August 2013 Request Mr. Maryland’s August 2013 Request “included four parts, each of which consisted of a list of items of information about business applications that had applied to CVE for certification and inclusion in CVE’s VIP database for a period ‘within thirty (30) days before the date’ that VA responded to the request.” Id. ¶ 9; see Karnay Decl., Ex. 1 (August 2013 2 Letter) at 18-21 1 and Ex. 2 (August 2013 Addendum) at 23-27. 2 Mr. Maryland requested a fee waiver for the August 2013 Request. Id., Ex. 3 (Fee Waiver Request) at 29-34. In response to Mr. Maryland’s August 2013 Request, CVE explained that it was withholding certain responsive records under FOIA Exemptions 3, 5, and 6 and directed Mr. Maryland to www.vip.vetbiz.gov where the other requested information was publicly available. Id., Ex. 4 (September 2013 Determination) at 36-40. CVE placed Mr. Maryland’s request in the commercial requester category and determined that the fees associated with “search, review, duplication and mailing” would be $18,447.58. Id. at 37. CVE informed Mr. Maryland that he was required to pay the fee before CVE would process his request. Id. Mr. Maryland appealed CVE’s September 2013 Determination to VA’s Office of General Counsel (OGC). OGC issued its final administrative decision on November 26, 2013, granting Mr. Maryland’s appeal in part. See id., Ex. 5 (OGC’s November 2013 Remand) at 42- 43. OGC determined that “applicable law requires the release of the names and locations of businesses which were denied inclusion in the VIP database.” Id. at 42. OGC further concluded that CVE’s determination that Mr. Maryland was a commercial use requester required further elucidation and that “CVE’s fee determination was not made in accordance with the FOIA or 1 Page references to exhibits to the Karnay Declaration correspond to the ECF page numbers of Docket 42-2. 2 Mr. Maryland requested “18 items of data, for each Veteran-owned small business, service- disabled Veteran-owned small business, or Joint Venture applying for verification, in four separate categories: businesses approved for verification; businesses denied for verification, by means of a final denial letter; businesses denied for verification, by means of an initial denial letter; and businesses currently in the verification stage that have been scheduled or planned to be scheduled for an on-site inspection, ‘within thirty days before the date [] [the] agency responds to this FOIA request.’” Id., Ex. 5 at 42. 3 VA’s FOIA regulations.” Id. at 42-43. OGC remanded the case to CVE for further processing. Id. at 43. On remand, CVE conducted a de novo review of Mr. Maryland’s August 2013 Request and issued its response on January 27, 2014. See id., Ex. 6 (January 27 Letter Part 1) at 45-49; id., Ex. 7 (January 27 Letter Part 2) at 51-53. CVE released certain responsive records and specified that the remaining items were publicly viewable, not maintained by CVE, or withheld pursuant to FOIA Exemption 5. Id. at 46-47. CVE again placed Mr. Maryland’s request in the commercial requester category because his “response did not adequately satisfy the requirements to receive a Fee Waiver.” Id. at 45-46. CVE reasoned that Mr. Maryland planned to disseminate the requested information through a private Facebook page and a closed email list so that only people invited by Mr. Maryland would have access to the information. CVE contrasted Mr. Maryland to “representatives of the media [who] have full and open disclosure to all citizens.” Id. at 45. CVE also justified placing Mr. Maryland in the commercial fee category based on his purported statement to a VA FOIA Office that it was important for him to receive the information as soon as possible because he had been paid for it and the payers were expecting him to deliver the information. Id. at 46. CVE informed Mr. Maryland that the revised fee estimate for processing his request would be $241.69. Id. However, CVE did not assess a fee because it had failed to comply with FOIA time limits for completing the search and was prohibited by regulation for charging a fee in such situation. Id. at 46 (citing 38 C.F.R. Part 1). CVE continued to withhold “individual names in email addresses that identified an individual under FOIA Exemption 6 and disclosed the remaining email addresses of initially or finally denied businesses.” Karnay Decl. ¶ 12. CVE reasoned that “FOIA Exemption 6 . . . 4 protects all information which, if disclosed, would constitute a clearly unwarranted invasion of an individual’s personal privacy.” Id., Ex. 7 (January 27 Letter Part 2) at 52. On February 27, 2014, Mr. Maryland appealed parts of CVE’s determinations on his August 2013 Request to OGC: (1) CVE’s placement of his request in the commercial requester category and (2) CVE’s decision to withhold personal names in email addresses under FOIA Exemption 6. Karnay Decl. ¶ 15; id., Ex. 8 (Second Appeal) at 55-71. OGC had not acted on Mr. Maryland’s appeal when he filed suit here in August 2014. Karnay Decl. ¶ 15. OGC must decide appeals within 20 working days of their receipt. See 5 U.S.C. § 552(a)(6)(A)(ii). Mr. Maryland is deemed to have exhausted his administrative remedies with respect to his appeal because OGC failed to comply with the applicable time provisions. Id. § 552(a)(6)(C). 2. November 2014 Request Pursuant to his November 2014 Request, Mr. Maryland “requested fifteen items of information related to each Veteran-Owned Small Business, Service-Disabled Veteran-Owned Small Business, or Joint Venture (i) for which CVE had approved inclusion in its VetBiz Vendor Information Pages (VIP) database; (ii) that had applied for inclusion in VetBiz VIP; (iii) that CVE had denied, by means of a final denial letter, inclusion in VetBiz VIP; (iv) that CVE denied, by means of an initial denial letter, inclusion in VetBiz VIP; and (v) that withdrew their application for inclusion in VetBiz VIP.” Karnay Decl. ¶ 16; see id., Ex. 9 (November 2014 Request) at 73-77. By letter dated November 25, 2014, the VA informed Mr. Maryland that it placed his request in the “All Other” fee category and requested payment of $183.08 to process his November 2014 Request. Id., Ex. 10 (2014 Fee Estimate Letter) at 79. Mr. Maryland paid the requested fee. Karnay Decl. ¶ 17. 5 On December 10, 2014, CVE issued an initial agency determination, releasing some of the information requested in November 2014 and concluding that the rest of the requested information was publicly available or subject to withholding pursuant to FOIA Exemptions 5 or 6. Id. ¶ 18. Consistent with its response to Mr. Maryland’s August 2013 Request, “[w]ith regard to email addresses of the businesses initially or finally denied, CVE released the email addresses in part, withholding the names of individuals when they appeared in an email address, based upon FOIA Exemption 6.” Id. Mr. Maryland appealed CVE’s December 2014 determination in part. He appealed CVE’s invocation of Exemptions 5 and 6 to withhold records and CVE’s referral to other government websites to obtain information in lieu of providing the information itself. Id. ¶ 19, Ex. 12 (2014 Appeal) at 88. He also requested a refund of the fee paid for records that were not provided to him. Id. On March 6, 2015, VA OGC issued a final agency decision, upholding CVE’s invocation of Exemption 6 as to individual names in email addresses for businesses denied inclusion on the VetBiz database and concluding that “CVE’s action with regard to the fee assessment associated with the November 5, 2014 request had been in accordance with the law and agency practice.” Id. ¶ 20. Subsequent to VA OGC’s decision, CVE re-evaluated its withholding of information in response to the November 2014 Request and made a supplemental release of information to Mr. Maryland on May 29, 2015 and August 3, 2015. Def. Reply [Dkt. 53], Second Supp. Decl. of Laurie Karnay (Karnay Supp. Decl.) ¶¶ 8, 11. CVE continued to withhold personal names in email addresses that were also withheld in response to the August 2013 Request. Karnay Decl. ¶ 22. 6 B. Procedural History Mr. Maryland filed his original Complaint on August 4, 2014 and filed an Amended Complaint on October 28, 2014, which the Court accepted due to Mr. Maryland’s pro se status. See 10/28/14 Minute Order. Mr. Maryland’s Amended Complaint alleged two counts. Count One was styled as a request for an injunction against the VA. Am. Compl. [Dkt. 14] ¶¶ 58-69. Count Two alleged violations of Mr. Maryland’s First Amendment rights and sought monetary damages under 42 U.S.C. § 1983 against VA employees Karen Zhussanbay and Thomas Leney in their personal capacities based on their alleged roles in processing certain FOIA requests. Id. ¶¶ 70-90. 3 Mr. Maryland moved for leave to file a second amended complaint, see Mot. for Leave to Amend [Dkt. 19], which the Court deemed a motion to supplement the pleadings since he sought to add allegations regarding a FOIA request that post- dated the filing of the operative complaint. The Court denied Mr. Maryland’s motion as futile for failure to exhaust his administrative remedies. See Order [Dkt. 28]. On December 19, 2014, Mr. Maryland moved for entry of a preliminary injunction and restraining order against the VA due to his dissatisfaction with how VA’s FOIA Officer, Karen Zhussanbay, was handling his FOIA request. See Mot. for PI & Restraining Order [Dkt. 16]. The Court denied his request. See Order [Dkt. 27]. The Court also sua sponte dismissed Count Two of the Amended Complaint with prejudice for failure to state a claim upon which relief can be granted and dismissed Ms. Zhussanbay and Mr. Leney as parties to the case. See Order [Dkt. 29]. 3 Mr. Maryland also asserted a right to attorney fees under the Civil Rights Attorney’s Fees Award Act, 42 U.S.C. § 1988. Id. 7 Mr. Maryland filed a second motion for leave to amend his amended complaint, Dkt. 32, which the Court granted on March 20, 2015. See 3/20/15 Minute Order; Second Am. Compl. [Dkt. 33].4 The Second Amended Complaint alleges that “Defendant is unlawfully withholding records requested by Plaintiff in FOIA Tracking Number 13-06522-F and FOIA Tracking Number 15-00846-F, both pursuant to 5 U.S.C. §552.” Second Am. Compl. ¶ 11. VA filed an answer to the Second Amended Complaint on April 30, 2015. VA has moved for summary judgment and Mr. Maryland has cross-moved for summary judgment. 5 The motions are now ripe for decision. II. LEGAL STANDARD Summary judgment is justified when there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). A motion under Rule 56 is properly granted against a party who “after adequate time for discovery and upon motion . . . fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). When evaluating cross-motions for summary judgment, each motion 4 Although Mr. Maryland titled this document the “First Amended Complaint,” it is properly referred to as the Second Amended Complaint because Mr. Maryland had already filed an amended complaint, see Dkt. 14. 5 VA moves to strike Mr. Maryland’s cross-motion for summary judgment as contrary to the Court’s May 1, 2015 Minute Order which set a briefing schedule for a single dispositive motion by VA. See 5/1/15 Minute Order; Mot. to Strike [Dkt. 45]. Because the Court will rule on Mr. Maryland’s cross-motion for summary judgment, it will deny the motion to strike. Also pending is Mr. Maryland’s second motion for a preliminary injunction and restraining order to enjoin VA from processing Mr. Maryland’s current FOIA request (FOIA Tracking Number 15-05308F) until the Court rules on the cross motions for summary judgment, Dkt. 46. FOIA Tracking Number 15-05308F is not the subject of the instant suit. The Court will deny Mr. Maryland’s motion as moot. 8 is reviewed “separately on its own merits to determine whether [any] of the parties deserves judgment as a matter of law.” Family Trust of Mass., Inc. v. United States, 892 F. Supp. 2d 149, 154 (D.D.C. 2012) (citation and internal quotation marks omitted). Neither party is deemed to “concede the factual assertions of the opposing motion.” Competitive Enter. Inst. Wash. Bureau, Inc. v. Dep’t of Justice, 469 F.3d 126, 129 (D.C. Cir. 2006) (citation omitted)). “[T]he court shall grant summary judgment only if one of the moving parties is entitled to judgment as a matter of law upon material facts that are not genuinely disputed.” Am. Ins. Ass’n v. United States HUD, 2014 WL 5802283, at *5 (D.D.C. Nov. 7, 2014) (internal quotation marks and citation omitted). A genuine issue exists only where “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248. FOIA cases are typically and appropriately decided on motions for summary judgment. Miscavige v. IRS, 2 F.3d 366, 368 (11th Cir. 1993); Rushford v. Civiletti, 485 F. Supp. 477, 481 n.13 (D.D.C. 1980), aff’d, Rushford v. Smith, 656 F.2d 900 (D.C. Cir. 1981). In a FOIA case, a court may award summary judgment solely on the basis of information provided by the agency in affidavits or declarations when the affidavits or declarations describe “the documents and the justifications for nondisclosure with reasonably specific detail, demonstrate that the information withheld logically falls within the claimed exemption, and are not controverted by either contrary evidence in the record nor by evidence of agency bad faith.” Military Audit Project v. Casey, 656 F.2d 724, 738 (D.C. Cir. 1981); see also Vaughn v. Rosen, 484 F.2d 820, 826-28 (D.C. Cir. 1973) (requiring agencies to prepare an itemized index correlating each withheld document, or portion thereof, with a specific FOIA Exemption and the relevant part of the agency’s nondisclosure justification). An agency must demonstrate that “each document that falls within the class requested either has been produced, is unidentifiable, 9 or is wholly [or partially] exempt” from FOIA’s requirements. Goland v. CIA, 607 F.2d 339, 352 (D.C. Cir. 1978) (internal quotation marks and citation omitted). FOIA also requires that “[a]ny reasonably segregable portion of a record shall be provided to any person requesting such record after deletion of the portions which are exempt.” 5 U.S.C. § 552(b)(9); see also Oglesby v. Dep’t of Army, 79 F.3d 1172, 1176 (D.C. Cir. 1996). A district court has “‘an affirmative duty to consider the segregability issue sua sponte.’” Juarez v. Dep’t of Justice, 518 F.3d 54, 60 (D.C. Cir. 2008) (citation omitted). III. ANALYSIS FOIA obligates Mr. Maryland to exhaust his administrative remedies before he may seek judicial review of his claims in this Court. See Dettman v. Dep’t of Justice, 802 F.2d 1472, 1476-77 (D.C. Cir. 1986) (“[E]xhaustion of such administrative remedies is required under the Freedom of Information Act before a party may seek judicial review.”). Although Mr. Maryland lodges a range of complaints about CVE’s handling of his August 2013 Request and November 2014 Request, this lawsuit is limited to those issues for which Mr. Maryland exhausted his administrative remedies. See Kenney v. DOJ, 603 F. Supp. 2d 184, 190 (D.D.C. 2009) (“It is appropriate for the Court to consider only those aspects of plaintiff’s request which he properly exhausted.”). A. August 2013 Request Mr. Maryland has been tenacious in his attack on CVE’s handling of his FOIA requests. Mr. Maryland has repeatedly pressed his position that CVE improperly placed him in the commercial fee requester category with respect to his August 2013 Request. Mr. Maryland also complains that CVE improperly withheld the email addresses of submitters that reveal personal names. Despite his evident exasperation with CVE over these matters, Mr. Maryland failed to include these allegations in the Second Amended Complaint, thereby waiving them. 10 Young v. City of Mount Ranier, 238 F.3d 567, 573 (4th Cir. 2001) (“[I]f an amended complaint omits claims raised in the original complaint, the plaintiff has waived those omitted claims.”). Nonetheless, both parties have strayed outside the pleadings and expend considerable time briefing these issues. In an abundance of caution, the Court will address these issues along with the specific allegations of the Second Amended Complaint. The Second Amended Complaint alleges that Mr. Maryland sought in his August 2013 Request “a list of those companies that Defendant scheduled or planned to schedule for an on-site inspection” and that the VA has “refused to release the requested information with regards to companies that Defendant site visited.” Second Am. Compl. ¶ 5. Mr. Maryland, however, did not appeal this issue to OGC. See Karnay Decl. ¶ 15; id., Ex. 8 (Second Appeal) at 55-71. By failing to appeal CVE’s determination on this issue to OGC, Mr. Maryland has failed to exhaust his administrative remedies with respect to it and the issue is therefore not subject to judicial review. See Dettman, 802 F.2d at 1476-77; see also Kenney, 603 F. Supp. 2d at 190. Mr. Maryland appealed to OGC two issues from CVE’s de novo review of his August 2013 Request: (1) CVE’s placement of his request in the commercial requester category, and (2) CVE’s determination to withhold personal names in email addresses under FOIA Exemption 6. Karnay Decl. ¶ 15; id., Ex. 8 (Second Appeal) at 55-71. These are the only two issues that have been exhausted administratively and are subject to judicial review. 6 6 Mr. Maryland criticizes CVE’s “systematic[] fail[ure] to adhere to the requirements of the VA’s OGC’s November 26, 2013 Remand.” Pl. Reply [Dkt. 56] at 11. To the extent Mr. Maryland was dissatisfied with how CVE complied with OGC’s November 2013 Remand in conducting its de novo review of Mr. Maryland’s August 2013 Request, CVE expressly informed Mr. Maryland of his right to appeal CVE’s de novo January 2014 determinations to OGC. See Karnay Decl., Ex. 6 (January 27 Letter Part 1) at 48; id., Ex. 7 (January 27 Letter Part 2) at 52- 53. By failing to appeal to OGC any issue other than the two identified, Mr. Maryland failed to exhaust his administrative remedies and is not entitled to judicial review of newly asserted claims here. See Dettman, 802 F.2d at 1476-77; see also Kenney, 603 F. Supp. 2d at 190. 11 CVE argues that the issue of Mr. Maryland’s fee requester status is moot because CVE did not ultimately charge Mr. Maryland a fee to process the August 2013 Request. Mr. Maryland responds that the issue is not moot because CVE allegedly “continues to place Plaintiff in the commercial fee category without complying with the VA’s OGC’s November 26, 2013 Remand.” See Pl. Reply [Dkt. 56] at 1. Mr. Maryland requests a declaration that his use of the requested information qualifies him as a “representative of the news media” and that he “be categorized as a member of the media in all past, present, and future FOIA requests to Defendant.” See Cross-Mot. Mem. [Dkt. 43-24] at 5, 11-18; Cross-Mot. at 2. The “rule against deciding moot cases forbids federal courts from rendering advisory opinions or decid[ing] questions that cannot affect the rights of litigants in the case before them.” Hall v. CIA, 437 F.3d 94, 99 (D.C. Cir. 2006) (internal citation and quotation marks omitted). Mr. Maryland hints at the “capable of repetition, yet evading review” exception to the mootness doctrine by arguing that CVE continually places him in the commercial requester category for his other FOIA requests. “[I]n the absence of a class action, the ‘capable of repetition, yet evading review’ doctrine [is] limited to the situation where two elements combine [ ]: (1) the challenged action was in its duration too short to be fully litigated prior to its cessation or expiration, and (2) there was a reasonable expectation that the same complaining party would be subjected to the same action again.” Pharmachemie B.V. v. Barr Lab., Inc., 276 F.3d 627, 633 (D.C. Cir. 2002) (citing Weinstein v. Bradford, 423 U.S. 147 (1975)). This exception is inapplicable here. Mr. Maryland has not demonstrated that the challenged action is “in its duration too short to be fully litigated prior to its cessation or expiration.” Barr Therefore, VA is entitled to summary judgment on any other issue that Mr. Maryland purports to bring in connection with his August 2013 Request. 12 Laboratories, Inc., 276 F.3d at 633. Moreover, Mr. Maryland’s contention that CVE continually places him in the commercial requester category is factually incorrect. CVE placed Mr. Maryland in the “All Other” fee category when processing his November 2014 Request—not the commercial requester category. See Karnay Decl., Ex. 10 (2014 Fee Estimate Letter) at 79. CVE is correct that the first issue is moot. A FOIA requester’s fee category determines how much an individual is charged by an agency to process a particular FOIA request. 5 U.S.C. § 552(a)(4)(A)(i). FOIA provides that a representative of the news media may only be charged for document duplication, whereas a commercial requester may be charged for document search, duplication and review. See id. §§ 552(a)(4)(A)(ii)(I)-(II). Because no fee was ultimately assessed for answering the August 2013 Request, determining whether CVE properly placed Mr. Maryland in the commercial requester category would not affect Mr. Maryland’s rights in this case. 7 Because the “rule against deciding moot cases forbids federal courts from . . . decid[ing] questions that cannot affect the rights of litigants in the case before them,” Hall, 437 F.3d at 99 (internal citation and quotation marks omitted), the Court will dismiss Mr. Maryland’s claim that he was placed in the wrong fee category with respect to his August 2013 Request. See also, id. (“We find that the CIA’s decision to release documents to Hall without seeking payment from him moots Hall’s arguments that the district court’s denial of a fee waiver was substantively incorrect.”). The Court declines to address Mr. Maryland’s request to be categorized as a “representative of the news media” because doing so would run counter to the prohibition on issuing advisory opinions. Id. 7 Mr. Maryland claims that CVE can extend the time in which it may deliver documents to him by “approximately one month” by placing him in the commercial fee category. See Pl. Reply [Dkt. 56]. Mr. Maryland provides no support for this statement. See Greene v. Dalton, 164 F.3d 671, 675 (D.C. Cir. 1999) (on a motion for summary judgment, a party may not rely solely on allegations or conclusory statements). 13 VA invokes FOIA Exemption 6 to withhold the names of individuals that are contained in the email addresses of businesses whose applications were rejected for inclusion on the VetBiz database. 8 Def. Mot. at 7. FOIA Exemption 6 permits the withholding of “personnel and medical files and similar files” when the disclosure of such information “would constitute a clearly unwarranted invasion of personal privacy.” 5 U.S.C. § 552(b)(6). 9 This exemption should not be narrowly construed and is “intended to cover detailed Government records on an individual which can be identified as applying to that individual.” Wash. Post Co., 456 U.S. at 602. To determine whether an agency can rely on Exemption 6 to withhold information, “a court must weigh the privacy interest in non-disclosure against the public interest in the release of the records in order to determine whether, on balance, the disclosure would work a clearly unwarranted invasion of personal privacy.” Lepelletier v. FDIC, 164 F.3d 37, 46 (D.C. Cir. 1999) (internal quotation marks and citation omitted). “The only relevant public interest in the FOIA balancing analysis is the extent to which disclosure of the information sought would shed light on an agency’s performance of its statutory duties or otherwise let citizens know what their government is up to.” Id. (internal quotation marks, alterations and citation omitted). “Information that reveals little or nothing about an agency’s own conduct does not further the statutory purpose; thus the public has no cognizable interest in the release of such information.” 8 CVE “releases personal names in email addresses on its website regarding businesses that have been approved for inclusion in the CVE’s VetBiz VIP database. Those business email addresses are provided by individuals as part of the application process for inclusion in CVE’s database and as contact information for the business; in other words, the email provided is the one chosen by the business as a point of contact once approved.” Karney Decl. ¶ 23. 9 Mr. Maryland claims that the e-mail addresses CVE refuses to release under Exemption 6 do not come from a personnel, medical, or similar file. See Cross-Mot Mem. at 31. However, the withheld email addresses constitute “similar files” within Exemption 6 because they are contained in “Government records on an individual which can be identified as applying to that individual.” U.S. Dep’t of State v. Wash. Post Co., 456 U.S. 595, 602 (1982). 14 Beck v. Dep't of Justice, 997 F.2d 1489, 1493 (D.C. Cir. 1993) (internal quotation marks and citation omitted). CVE states that it performed the requisite balancing test and concluded that Exemption 6 applies here. CVE argues that the public interest in an individual’s name that appears in an email address is minimal compared with the substantial privacy interest these individuals have in their anonymity. See Karnay Decl. ¶ 13. CVE maintains that “there may be an unwarranted stigma or negative connotation associated with CVE’s denial of a business for inclusion in CVE’s database” and that “[t]hese negative references or presumptions would then extend to the individual identified if personal names were released.” Karnay Decl. ¶ 14. Mr. Maryland argues that CVE invoked Exemption 6 during the administrative process without much elucidation of its rationale for doing so. By failing to explain its reasons for invoking Exemption 6 at the administrative level, Mr. Maryland insists that CVE is barred from relying on new arguments to defend its invocation of Exemption 6 here. Mr. Maryland further argues that the privacy interests in this case are de minimis because CVE regularly publishes similar information on its website and “all submitters to Defendant’s Verification Program are required to register with SAM, which publishes the email addresses of submitters that reveal personal names on its website.” Cross-Mot. Mem. at 35. Mr. Maryland is incorrect that CVE is limited to arguments it made at the administrative level. A district court reviews an agency’s invocation of FOIA exemptions de novo. See 5 U.S.C. § 552(a)(4)(B); see also War Babes v. Wilson, 770 F. Supp. 1, 2 (D.D.C. 1990). The FOIA provision Mr. Maryland cites in support of his argument—Section 552(a)(4)(A)(vii)—applies to the limited issue of fee waivers and not the applicability of a FOIA exemption. See 5 U.S.C. § 552(a)(4)(A)(vii) (“In any action by a requester regarding the waiver 15 of fees under this section, the court shall determine the matter de novo: Provided, That the court’s review of the matter shall be limited to the record before the agency.”) (emphasis added). Therefore, the Court will consider CVE’s justification for its invocation of Exemption 6 as set forth in its motion for summary judgment. The public interest in the release of email addresses containing individual’s names is practically nonexistent. Releasing individuals’ names in email addresses will not serve to shed light on CVE’s conduct. On the other hand, release of these email addresses would disclose the names of individuals whose applications for inclusion on the VetBiz database were denied. These individuals may be subject to stigma if they are publicly identified as being connected with businesses who were denied inclusion in the VetBiz database. See Washington Post Co., 456 U.S. at 599 (“Congress’ primary purpose in enacting Exemption 6 was to protect individuals from the injury and embarrassment that can result from the unnecessary disclosure of personal information.”); see also Nat’l Ass’n of Retired Federal Emp. v. Horner, 879 F.2d 873, 874 (D.C. Cir. 1989) (agreeing to withholding of an individual’s name and address under Exemption 6 in context of individual’s status as a federal annuitant). There is no inconsistency in protecting these email addresses even though the email addresses of submitters whose applications were approved are publicly disclosed on the VetBiz database. By applying to have their business profiles included on the VetBiz database, submitters consent (expressly or impliedly) to the public display of their email addresses. However, it does not follow that individuals whose applications have been denied and whose information is therefore not published on the VetBiz database waive their privacy interest in their identities and email addresses. Further, Mr. Maryland’s unsubstantiated claim that all submitters’ email addresses are publicly available through the “SAM” website does not suffice to create a genuine issue of material fact that defeats 16 summary judgment. See Military Audit Project, 656 F.2d at 738 (plaintiff must controvert agency affidavits “by either contrary evidence in the record []or by evidence of agency bad faith”). On balance, given the complete lack of public interest in disclosure, release of the email addresses would work “a clearly unwarranted invasion of personal privacy.” Lepelletier, 164 F.3d at 46; Horner, 879 F.2d at 879 (concluding that “even a modest privacy interest, outweighs nothing every time”). Therefore, the Court concludes that the email addresses at issue fall within the scope of Exemption 6 and CVE may withhold them. The Court will grant judgment to VA as to Mr. Maryland’s August 2013 Request. Finally, Mr. Maryland requests expenses he incurred in the administrative appeal of his August 2013 Request. FOIA does not provide for the recovery of attorney fees incurred during the administrative process. See, e.g., 5 U.S.C. § 552(a)(4)(E)(i) (The “court may assess against the United States reasonable attorney fees and other litigation costs reasonably incurred in any case under this section in which the complainant has substantially prevailed.”) (emphasis added); Queen Anne’s Conservation Ass’n v. U.S. Dep’t of State, 800 F. Supp. 2d 195, 201 (D.D.C. 2011) (“FOIA does not authorize fees for work performed at the administrative stage.”) (citation omitted). In addition, Mr. Maryland proceeds pro se and thus has not incurred attorney fees in bringing his appeal. See, e.g., Benavides v. Bureau of Prisons, 993 F.2d 257, 258-60 (D.C. Cir. 1993) (holding that pro se litigants may not recover attorney fees under FOIA). B. November 2014 Request CVE contends that “the only issues that Mr. Maryland appealed and which remain in contention concern CVE’s withholding of personal names in emails under exemption 6 and Mr. Maryland’s request for a refund of his fee payment based on his dissatisfaction with the response that he received.” Def. Mot. at 11. CVE maintains that it made a supplemental release of information on May 29, 2015 and August 3, 2015 that satisfies the only outstanding claim 17 from the November 2014 Request that have been administratively exhausted. Id.; see also Karnay Supp. Decl. ¶¶ 8, 11. As before, Mr. Maryland argues that CVE cannot withhold email addresses under Exemption 6. He also contends that CVE has yet to release all of the records to which he is entitled, despite its supplemental May 29, 2015 release. Mr. Maryland offers no rejoinder to CVE’s argument that his dissatisfaction with the results of his November 2014 Request does not entitle him to a refund of the processing fee. See generally Pl. Reply. Therefore, the Court deems the argument conceded. See, e.g., Hopkins v. Women's Div., Gen. Bd. of Global Ministries, 284 F. Supp. 2d 15, 25 (D.D.C. 2003) (a court may treat arguments plaintiff failed to address as conceded in deciding summary judgment motions), aff'd sub nom. Hopkins v. Women's Div., Gen. Bd. of Global Ministries, United Methodist Church, 98 F. App’x 8 (D.C. Cir. 2004). As it did with the August 2013 Request, the Court will uphold CVE’s invocation of Exemption 6 to withhold email addresses that identify an individual whose application for inclusion on the VetBiz database was denied. See supra pp. 15- 17. Mr. Maryland complains that CVE’s supplemental May 29, 2015 production was incomplete because it provided only three items of information out of the fifteen items of information requested in the November 2014 Request. CVE acknowledges that it only released three items of information in its supplemental release, but explains that CVE had already released the remaining 12 items requested for those categories of businesses in December 2014; as a result of the May 2015 release, therefore, he had then received all 15 items of information requested for the categories of businesses denied by final and initial denial letter for the period of time covered by CVE’s initial response. 18 Karnay Supp. Decl. ¶ 10 (emphasis in original). Mr. Maryland does not dispute that he already received twelve out of the fifteen items of information requested in his November 2014 Request or that he received the three remaining items of requested information. See generally Pl. Reply. Mr. Maryland contends that CVE used the incorrect cut-off date for its supplemental May 2015 release. CVE responds that CVE interpreted the May 2015 release as a supplemental release pursuant to the November 2014 request. Accordingly, CVE released the information for the same time period covered by the November 2014 request, i.e., October 20 to November 20, 2014. The May 2015 supplemental release, therefore, essentially “completed” the prior release in response to the November 2014 request; Mr. Maryland already had received most of the other information requested when CVE provided a response in December 2014. In making the May 29, 2015 release, CVE released all of the remaining information requested by Mr. Maryland in his November 2014 request, except personal names in email addresses, for the period from October 20, 2014 to November 20, 2014. Karnay Supp. Decl. ¶ 9. However, based on Mr. Maryland’s cross-motion for summary judgment, CVE understands, however, that Mr. Maryland believed that the release in May 2015 would include the thirty days prior to the release. In light of the apparent misunderstanding regarding which thirty-day period applied, CVE made an amended supplemental release on August 3, 2015. Id. ¶ 11. In its supplemental August 3, 2015 production, CVE released the same information that it released on May 29, 2015 (i.e., information withheld from the initial release with the exception of personal names in email addresses which it continues to withhold under Exemption 6 for the reasons stated in my June 2015 declaration), but for the period covering the thirty days prior to May 29, 2015. Id; see also id., Exhibit 3 (August 3, 2015 Letter). Mr. Maryland makes no objections to CVE’s August 3, 2015 production. See generally Pl. Reply. As such, there is no genuine dispute as to any material fact that CVE has satisfied its obligations under FOIA in responding to Mr. 19 Maryland’s November 2014 Request. CVE has demonstrate that “each document that falls within the class requested either has been produced, is unidentifiable, or is wholly [or partially] exempt” from FOIA’s requirements. Goland, 607 F.2d at 352. Therefore, the Court will grant judgment to VA as to Mr. Maryland’s November 2014 Request. C. Segregability The Court has an affirmative obligation to consider whether any portion of the information CVE withheld pursuant to Exemption 6 is segregable and subject to release. See Juarez, 518 F.3d at 60 (D.C. Cir. 2008). Even if an agency properly withholds responsive records under a FOIA exemption, it nevertheless must disclose any non-exempt information that is “reasonably segregable.” 5 U.S.C. § 552(b); Mead Data Cent., 566 F.2d at 260 (D.C. Cir. 1977) (“It has long been a rule in this Circuit that non-exempt portions of a document must be disclosed unless they are inextricably intertwined with exempt portions.”). “The question of segregability is by necessity subjective and context-specific, turning upon the nature of the documents and information in question.” Am. Civil Liberties Union v. U.S. Dep't of State, 878 F. Supp. 2d 215, 225 (D.D.C. 2012) (citing Mead Data Cent., 566 F.2d at 261). Because of the discrete nature of the information withheld under Exemption 6—email addresses—the Court is satisfied that there are no reasonably segregable portions of that information that can or must be released. The Court will not order CVE to release the “@” symbol or the domain of each withheld email address. See Mead Data Cent., 566 F.2d at 261 n. 55 (A district court need not “order an agency to commit significant time and resources to the separation of disjointed words, phrases, or even sentences which taken separately or together have minimal or no information content.”). 20 D. Adequacy of Search In passing, Mr. Maryland argues that he is entitled to summary judgment because CVE did not conduct a reasonable search for records. See Cross-Mot. [Dkt. 43] at 1. The Second Amended Complaint does not allege that CVE’s search in response to either the August 2013 Request or November 2014 Request was inadequate. Only those claims in the operative complaint are before the Court. Jo v. Dist. of Columbia, 582 F. Supp. 2d 51, 64 (D.D.C. 2008) (“It is well-established in this district that a plaintiff cannot amend his Complaint in an opposition to a defendant's motion for summary judgment.”); Sharp v. Rosa Mexicano, D.C., L.L.C., 496 F. Supp. 2d 93, 97 n. 3 (D.D.C. 2007) (stating that plaintiff may not, “through summary judgment briefs, raise [ ] new claims . . . because [the] plaintiff did not raise them in his complaint”); accord Gilmour v. Gates, McDonald and Co., 382 F.3d 1312, 1315 (11th Cir. 2004) (holding that claims raised for the first time in an opposition to a motion for summary judgment are not properly before the court). Neither party briefed this issue. Therefore, the Court will not address this allegation, raised for the first time in Mr. Maryland’s cross-motion for summary judgment. IV. CONCLUSION VA’s motion for summary judgment, Dkt. 42, will be granted and Mr. Maryland’s cross-motion for summary judgment, Dkt. 43, will be denied. Judgment will be entered in favor of VA. VA’s motion to strike Mr. Maryland’s cross-motion for summary judgment, Dkt. 45, and Mr. Maryland’s second motion for a preliminary injunction and restraining order, Dkt. 46, will be denied as moot. A memorializing Order accompanies this Opinion. 21 Date: September 17, 2015 /s/ ROSEMARY M. COLLYER United States District Judge 22

01-03-2023

09-17-2015

https://www.courtlistener.com/api/rest/v3/opinions/2986173/

Motion Granted; Appeal Dismissed and Memorandum Opinion filed August 22, 2013. In The Fourteenth Court of Appeals NO. 14-13-00026-CV FORMOSA MANAGEMENT, LLC, Appellant V. TRINA WACASEY, Appellee On Appeal from the 281st District Court Harris County, Texas Trial Court Cause No. 2012-30881 MEMORANDUM OPINION This is an appeal from a judgment signed December 11, 2012. On August 14, 2013, appellant filed a motion to dismiss the appeal. See Tex. R. App. P. 42.1. The motion is granted. Accordingly, the appeal is ordered dismissed. PER CURIAM Panel consists of Justices Frost, Boyce, and Jamison.

01-03-2023

09-23-2015

https://www.courtlistener.com/api/rest/v3/opinions/1480832/

318 F. Supp. 89 (1970) Lindahl KING, and Mark Carlson, Michael Martin, John Kindel and John Murray, minors, appearing by their Guardians ad Litem, Plaintiffs, v. SADDLEBACK JUNIOR COLLEGE DISTRICT, a public corporation, Fred H. Bremer, Superintendent, Defendants. Civ. No. 69-2501. United States District Court, C. D. California. July 17, 1970. *90 Patricia Herzog, Corona del Mar, Cal., A. L. Wirin, Fred Okrand, Los Angeles, Cal., for plaintiffs. Adrian Kuyper, County Counsel, and John F. Powell, Deputy County Counsel, Santa Ana, Cal., for defendants. MEMORANDUM OPINION PREGERSON, District Judge. Plaintiffs are persons residing within the Saddleback Junior College District who have been denied registration as students at Saddleback Junior College, a public junior college and part of the State school system, on the sole ground that their hair styles failed to comply with the Student Dress Code. The pertinent regulation, Number 7 of the Student Dress Code, prohibits male students from having "hair which falls below the eyebrows, or covers all or part of the ear, or hangs entirely over the collar of a dress shirt." Plaintiffs seek a declaration that the quoted regulation violates the due process clause of the Fourteenth Amendment to the United States Constitution. In addition, plaintiffs pray for a permanent injunction against the regulation's enforcement. Plaintiffs contend that they have a cause of action under the Civil Rights Act, 42 U.S.C. §§ 1981, 1983, 1988, and under the Fourteenth Amendment. Jurisdiction exists under 28 U.S.C. § 1343. The Court has power to grant the requested relief. 28 U.S.C. §§ 2201, 2202; Breen v. Kahl, 419 F.2d 1034 (7th Cir. 1969), cert. denied June 1, 1970, 398 U.S. 937, 90 S. Ct. 1836, 26 L. Ed. 2d 268; see also Bell v. Hood, 327 U.S. 678, 66 S. Ct. 773, 90 L. Ed. 939 (1946). At the outset, defendants contend that the Court should not interfere in the day-to-day operation of Saddleback Junior College. Section 1052 of the California Education Code provides that "[t]he governing board of any school district shall prescribe rules not inconsistent with law or with the rules prescribed by the State Board of Education, for the government and discipline of the schools under its jurisdiction." Supposedly, defendants' Student Dress Code was authorized by Section 1052. In a very recent opinion, however, United States District Judge Warren J. Ferguson suggested that Section 1052 does not authorize a school board regulation restricting the hair length of male students in a public high school. Alexander v. Thompson, 313 F. Supp. 1389 (C.D.Cal. 1970). In any event, the Court is aware of "the need for affirming the comprehensive authority of the States and of school officials, consistent with fundamental constitutional safeguards, to prescribe and control conduct in the schools." Tinker v. Des Moines Independent Community School District, 393 U.S. 503, 507, 89 S. Ct. 733, 737, 21 L. Ed. 2d 731 (1969). Accordingly, the Court is reluctant to intervene in a conflict which arises in the daily operation of a public school system. Nevertheless, when facts are presented which make clear that such *91 conflict "directly and sharply implicate(s) basic constitutional values," the Court may not remain impassive. Epperson v. Arkansas, 393 U.S. 97, 104, 89 S. Ct. 266, 271, 21 L. Ed. 2d 228 (1968). "The vigilant protection of constitutional freedoms is nowhere more vital than in the community of American schools." Shelton v. Tucker, 364 U.S. 479, 487, 81 S. Ct. 247, 251, 5 L. Ed. 2d 231 (1960). At the trial of this case, neither side presented any witnesses, although affidavits by plaintiffs and by defendant, Superintendent Bremer, among others, were offered in evidence. In closing argument, defendants contended that plaintiffs had failed to sustain their burden of proof, thereby entitling defendants to prevail. In contrast, plaintiffs argued that the fatal failure of proof was defendants'. It is, therefore, apparent that the threshold question involves a determination of where the burden of proof lies. There is no dispute that plaintiffs have the burden of proving that a constitutional right of theirs was impaired by defendants. King v. Saddleback Junior College District, 425 F.2d 426 (9th Cir. 1970). Essentially, the disagreement arises after it has been shown that a constitutional right was or is being impaired. Then, plaintiffs maintain that the burden of proving a substantial justification for the regulation's intrusion upon constitutional rights falls on defendants. For their part, defendants contend that after plaintiffs have shown that the regulation infringes a constitutional right, the burden remains with plaintiffs to prove that the regulation is not a reasonable intrusion in furtherance of a legitimate state interest. In resolving this issue, the Court notes that "[s]tudents in school as well as out of school are `persons' under our Constitution." Tinker v. Des Moines Independent Community School District, supra, 393 U.S. at 511, 89 S.Ct. at 739. As such, they are entitled to the fundamental rights flowing therefrom. Id. The State must respect these fundamental rights and does not have an unlimited right to impose "any conditions that it chooses upon attendance at public institutions of learning, however violative they may be of fundamental constitutional guarantees." Id. at 506, n. 2, 89 S.Ct. at 736, n. 2. "Merely arbitrary choices of states or their official representatives cannot be enforced against any individual's serious claims of liberty." Richards v. Thurston, 304 F. Supp. 449, 452 (D.Mass.1969) (Wyzanski, C. J.). Thus, the Supreme Court has observed that "* * * where there is no finding and no showing that engaging in the forbidden conduct would `materially and substantially interfere with the requirements of appropriate discipline in the operation of the school,' the prohibition cannot be sustained." [Citations omitted] [Emphasis added] Tinker v. Des Moines Independent Community School District, supra, 89 S.Ct. at 738. "`Where there is a significant encroachment upon personal liberty, the State may prevail only upon showing a subordinating interest which is compelling.' Bates v. City of Little Rock, 361 U.S. 516, 524, 80 S. Ct. 412, 4 L. Ed. 2d 480 (1960)." Griswold v. Connecticut, 381 U.S. 479, 504, 85 S. Ct. 1678, 1692, 14 L. Ed. 2d 510 (1965) (White, J., concurring). Accordingly, the Court concludes that once a constitutional right of plaintiffs is shown to be infringed by the regulation, the burden rests with defendants to show an overriding state interest justifying the infringement. Richards v. Thurston, 424 F.2d 1281 (1st Cir. 1970), aff'g 304 F. Supp. 449, supra; Breen v. Kahl, supra. There has been a multitude of recent cases dealing with the validity of public school regulations establishing permissible hair lengths for male students. While the Supreme Court has not directly ruled on the constitutionality of any such regulation, the tenor of its opinions pays homage to the sanctity of the individual's right to control his own person. For example, in Union Pacific Railway Co. v. Botsford, 141 U.S. 250, 251, *92 11 S. Ct. 1000, 1001, 35 L. Ed. 734 (1891), the Court observed: "No right is held more sacred, or is more carefully guarded, by the common law, than the right of every individual to the possession and control of his own person, free from all restraint or interference of others, unless by clear and unquestionable authority of law. As well said by Judge Cooley, `The right of one's person may be said to be a right of complete immunity; to be let alone.'" Recently, in a different context, the Supreme Court reaffirmed the individual's right to dominion over his own person by its recognition that every person has a right "to be let alone," which, under some circumstances, will outweigh the freedom of others to communicate. Rowan v. United States Post Office Dept., 397 U.S. 728, 90 S. Ct. 1484, 1490, 25 L. Ed. 2d 736 (1970). Among the appellate and district courts, there has been substantial divergence of opinion with respect to the validity of hair regulations. Compare Richards v. Thurston, supra, Breen v. Kahl, supra, and Griffin v. Tatum, 300 F. Supp. 60 (M.D.Ala.1969), with Ferrell v. Dallas Independent School District, 392 F.2d 697 (5th Cir. 1968), cert. denied, 393 U.S. 856, 89 S. Ct. 98, 21 L. Ed. 2d 125 (1968), and Jackson v. Dorrier, 424 F.2d 213 (6th Cir. 1970). This Court agrees generally with the holdings and reasoning of Richards v. Thurston, supra, 424 F.2d 1281, ("* * * within the commodious concept of liberty, embracing freedoms great and small, is the right to wear one's hair as he wishes."); Griffin v. Tatum, supra, ("* * * the Constitution protects the freedoms to determine one's own hair style and otherwise to govern one's personal appearance." 300 F.Supp. at 62); Zachry v. Brown, 299 F. Supp. 1360, 1362 (N.D.Ala.1967), ("* * * the classification of male students * * * by their hair style is unreasonable and fails to pass constitutional muster."); Olff v. East Side Union High School District, 305 F. Supp. 557 (N.D.Cal.1969) (Peckham, J.); and Breen v. Kahl, supra, ("* * * freedom to wear one's hair at a certain length * * * is constitutionally protected, even though it expresses nothing but individual taste." 296 F.Supp. at 705-706.) The Court holds that the right to determine one's own hair length is a fundamental freedom implicit in the concept of ordered liberty and protected against state infringement by the due process clause of the Fourteenth Amendment. Hence, unless defendants have satisfied their burden of showing a substantial justification for the regulation's intrusion on plaintiffs' rights, the regulation must fall. A review of the evidence in this case reveals, beyond doubt, that no rational foundation was laid for this regulation. Defendants have offered no facts to show that the length or style of plaintiffs' hair has created or would likely create an unreasonable risk of harm to the educational process because it disrupts classroom decorum, causes or contributes to campus disorder, interferes with the learning processes or rights of other students, or poses a health or safety hazard. Cf. Jackson v. Dorrier, supra (in which several members of the faculty, the principal of the high school, and several students testified to the disruptive effect of the two students with long hair). Moreover, during argument defendants' counsel conceded that there has been no classroom disruption, campus disorder, or other interference with the learning process at Saddleback attributable to the long hair of any students.[1]*93 Nor do defendants contend that long hair on male students would pose a health or safety hazard. In view of defendants' failure of proof, the conclusion is compelled that no substantial state interest justifies the infringement by Number 7 of the Dress Code upon plaintiffs' right to wear their hair as they choose. Further, it is appropriate to note that this case, unlike Jackson, supra, and Ferrell, supra, involves college students rather than high school students. Indeed, the affidavit of John Bothwell, the president of the Associated Student Body, indicates that he is 37 years old.[2] Any state interest which might support a regulation proscribing the hair length of students of high-school age must be of considerably less import in the college environment. In addition to conflicting with the due process clause, the regulation violates the equal protection clause of the Fourteenth Amendment. The latter clause prohibits arbitrary and irrational classifications. The lack of a rational foundation for the regulation, whose implementation excludes male students with long hair from public educational facilities, has been noted above. The arbitrary nature of the dress code is attested to by the statements of Michael Collins, Chairman, from the December 18, 1968 meeting of the Saddleback College Board: "* * * I am entirely willing to admit that the dress code is absolutely arbitrary. It happens to reflect at this point the prevailing community standards, but those are arbitrary. * * * * * * "So far as I'm concerned, we're going to establish this wholly arbitrary body of rules and regulations for this college, and the students are going to comply with it." Plaintiffs' Exhibit 3, Partial Transcript of Official Board Tape, 23-24. In view of the arbitrariness of the classification made by the regulation and the absence of proof of a rational relationship between long hair on male students and interference with the educational process, the refusal to permit plaintiffs to register and attend classes for failure to comply with the regulation was a denial of equal protection in violation of the Fourteenth Amendment.[3] Miller v. Gillis, 315 F. Supp. 94 (N.D.Ill. 1969); Zachry v. Brown, supra. Finally, the Court finds that plaintiffs have no adequate remedy at law and will suffer irreparable injury if prevented from registering and attending Saddleback Junior College because *94 of their failure to comply with the hair regulation of the Saddleback Junior College Dress Code. For the reasons given above, It is ordered, adjudged and decreed: 1. That Number 7 of the Saddleback Junior College Student Dress Code, pertaining to the hair length of male students, violates the Due Process and Equal Protection Clauses of the Fourteenth Amendment to the Constitution of the United States. 2. That defendants are permanently restrained and enjoined from refusing to permit plaintiffs to register and attend classes at Saddleback Junior College on the ground that plaintiffs' hair length does not comply with Number 7 of the Student Dress Code. NOTES [1] Defendants suggested in their Trial Memorandum, page 7, and reiterated during oral argument, that a raison d'etre of the regulation was to "better enable students to prepare for a vocation and obtain a job," citing Farrell v. Smith, 310 F. Supp. 732 (D.Me.1970). This suggestion is belied by the statement of Michael Collins, Chairman of the Saddleback College Board: "When I look at a dress code, or when I hope to adopt this dress code or that, I do not purport to be training you to get jobs." Plaintiff's Exhibit 3, Partial Transcript of Official Board Tape, Saddleback College Board Meeting, December 18, 1968, at page 22, lines 21-24. The Farrell case is relevant, however, to the question of whether the Constitution protects an individual's right to choose his hair length. To this issue the Court declared that "* * * the right to grow a beard or wear one's hair at any length is an aspect of personal liberty protected by the United States Constitution." Farrell v. Smith, supra, 310 F. Supp. at 736. [2] With respect to the relationship of student hair length and disruption of the educational program, Bothwell states the following: "3. Long hair on male students is very common in our area. It causes no comment and no undue interest by other students. If anything, very short haircuts are unusual and subject to more attention. "4. Long hair, as such, has not disrupted the educational program, but the enforcement of the dress code has created a resentment toward, and a disrespect for, the authority which imposes it." Plaintiffs' Exhibit 9, Affidavit of John Bothwell. [3] The dress code provision with which this case is concerned applies only to male students. Query whether the Equal Protection Clause is violated by defendants' imposition of hair length regulations on male students while imposing none on females?

01-03-2023

10-30-2013

https://www.courtlistener.com/api/rest/v3/opinions/2336635/

236 F.Supp.2d 737 (2002) BITUMINOUS CASUALTY CORPORATION, Plaintiff, v. COMBS CONTRACTING INC., et al., Defendants. No. CIV.A.02-54-DLB. United States District Court, E.D. Kentucky, Pikeville. December 23, 2002. *738 Robert E. Maclin, III and Pamela Adams Chesnut of McBrayer, McGinnis, Leslie & Kirkland, Lexington, KY, for Plaintiff. Randall Ancil Campbell, Adam P. Collins of Campbell Collins, Hindman, KY, for Defendants. ORDER BUNNING, District Judge. This matter is before the Court upon the Report and Recommendation of the United States Magistrate Judge (Doc. #23); and there being no objections filed thereto; and the Court being sufficiently advised; IT IS HEREBY ORDERED as follows: (1) That the Report and Recommendation of the United States Magistrate Judge (Doc #23) is hereby adopted as the findings and conclusions of the Court; (2) That the Court declines to exercise its discretionary jurisdiction over Counts I *739 and II of Plaintiff's Complaint, and Counts I and II are therefore dismissed without prejudice; (3) That the Court hereby retains jurisdiction over Counts III and IV of Plaintiff's Complaint; and, (4) That the case shall proceed on the remaining Counts III and IV in accordance with the Court's Scheduling Order of April 24, 2002 (Doc. #10). MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION PATTERSON, United States Magistrate Judge. I. INTRODUCTION This matter is presently before the court upon the response by the parties (Record Nos. 19-22) to the undersigned's July 19, 2002, show cause order (Record No. 17), directing Plaintiff, Bituminous Casualty Company ("Bituminous"), to show cause why this Declaratory Judgment action should not be dismissed. Now fully briefed and ripe for decision on that issue, and for the reasons set forth below, the undersigned recommends that this court decline to exercise its discretionary jurisdiction over Counts I and II of the Complaint, which should therefore be dismissed without prejudice and that jurisdiction over Counts III and IV be retained for appropriate disposition. II. FACTUAL BACKGROUND AND PROCEDURAL HISTORY A. Factual Background On June 22, 2001, Art Potter and several other individuals (hereinafter "Underlying Plaintiffs") filed suit in the Pike Circuit Court, alleging in their complaint that Perry Combs, d/b/a Combs Logging ("Combs"), John Collins and Mountain Heritage Flooring, Inc., ("Mountain Heritage") intentionally trespassed on Underlying Plaintiffs' land by removing timber and damaging roads. (Record No. 1, Ex. B.) On July 27, 2001, Collins and Mountain Heritage filed an answer to the complaint and a cross-claim against Combs in the state court action. (Record No. 1, Ex. C.) The cross-claim sought indemnification and release from the damages alleged by Underlying Plaintiffs. (Id.) In their cross-claim, Collins and Mountain Heritage asserted that a contract was entered into whereby Combs agreed to indemnify, release and hold harmless Collins and Mountain Heritage for any alleged damages resulting from logging activities. (Id.) Although he was personally served in the state court action on August 7, 2001, Combs did not answer or otherwise respond to the Underlying Plaintiffs' complaint or the cross-claim filed by Collins and Mountain Heritage. (Record No. 1, p. 4.) On September 5, 2001, Underlying Plaintiffs filed a Motion for Default Judgment against Combs on the claims in their original complaint in the state court action. (Id.) Additionally, on October 5, 2001, Collins and Mountain Heritage filed a Motion for Default Judgment in relation to the cross-claim against Combs. (Id.) Underlying Plaintiffs' motion was orally sustained by the Pike Circuit Court on October 12, 2001, and the default judgment on the cross-claim was entered on November 15, 2001. (Id.; Record No. 6, p. 4.)[1] Underlying *740 Plaintiffs amended their complaint on November 13, 2001, adding additional tracts of land on which Combs allegedly trespassed. (Record No. 20, Attached Motion to Amend Complaint and Amended Complaint.) Although Combs did not answer the amended complaint, a default judgment has not been entered on the additional claims. Bituminous, Combs's general liability insurance carrier, states that it did not receive notice of the state court action until October 11, 2002, one day before Underlying Plaintiffs' default judgment motion was orally sustained. (Record No. 19, pp. 2-3.) Bituminous has made numerous attempts to contact Combs regarding the underlying state action. (Id. at p. 3.) Bituminous has not provided a defense to Combs in the underlying action based on its assertions that Combs failed to notify Bituminous of the pending state action and that the policy does not cover Combs's alleged intentional trespass. (Id.) Bituminous filed this action on February 7, 2002, seeking a declaratory judgment pursuant to 28 U.S.C. § 2201 as to its defense and indemnification obligations under the Commercial General Liability Policy issued to Combs. Combs was personally served with summons and a copy of the Complaint on February 15, 2002, but did not answer or otherwise respond. (Record No. 3, p. 2.) Defendants Collins and Mountain Heritage filed an Answer on March 11, 2002. (Record No. 6.) On April 30, 2002, Defendants Collins and Mountain Heritage filed a motion asking the Pike Circuit Court to hold the underlying action in abeyance until the proceedings before this court are resolved. (Record No. 19, Ex. A.) The motion was granted on May 6, 2002, postponing the state court proceedings until November 1, 2002, when a status conference was to be held. (Id.) Bituminous's Complaint herein pleads four (4) primary grounds for its claim that it does not owe coverage for any alleged harm resulting from Combs's logging activities. (Record No. 1, pp. 5-10.) In Count I of the Complaint, Bituminous pleads that the policy only covers property damage that is the result of an "occurrence," which is defined in the policy as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." (Id. at p. 6.) Bituminous further alleges that the insurance policy excludes coverage for property damage that is expected or intended from the standpoint of the insured, and that Combs acted intentionally when he cut timber from the Underlying Plaintiffs' land. (Id. at pp. 6-7.) In Count II, Bituminous states that Combs is not entitled to coverage under the endorsement entitled "AMENDMENT — LOGGING AND LUMBERING OPERATIONS LIMITATION OF COVERAGE (ACCIDENTAL OVERCUT OF TIMBER)." (Id. at pp. 7-8.) That provision states that subject to twenty (20) percent participation by the insured, Bituminous will pay eighty (80) percent, up to $40,000, on the insured's behalf for property damage arising out of an "accidental overcut of timber." (Id.) The provision defines accidental overcut as "the cutting of timber done by you or for you on land where you were not legally entitled to cut and which was cut as a result of a bonafide mistake regarding the boundaries in which you were legally entitled to cut." (Id.) Bituminous contends that the alleged intentional trespass by Combs onto Underlying Plaintiffs' land was not an "accidental *741 overcut," and therefore is not entitled to coverage under this provision. (Id.) Count III of the Complaint asserts that Combs is not entitled to coverage or a defense because he has breached the policy conditions listed in SECTION IV of the policy. (Id. at pp. 8-10.) SECTION IV Paragraph 2 delineates the insured's "Duties In The Event Of Occurrence, Offense, Claim Or Suit." (Id.) Among these is the duty of the insured to notify Bituminous of any claim or suit and to cooperate in the defense against that suit. (Id.) Bituminous asserts that Combs did not properly notify it of the pending state court action, which resulted in irreversible prejudice. (Id.) Therefore, Bituminous contends that Combs's failure to satisfy the condition precedent of notifying Bituminous of the state court action relieves Bituminous from all defense and coverage obligations. (Id.) Count IV of the Complaint states Collins and Mountain Heritage do not qualify as insureds under the policy issued to Combs. (Id. at 10-11.) Bituminous does recognize that Defendants Collins and Mountain Heritage have claimed a right to coverage under an indemnification contract entered into with Combs in connection with the logging activity. (Id.) Bituminous argues that Collins and Mountain Heritage are not entitled to any rights not available to its insured, Combs. (Id.) Because Bituminous has alleged that Combs is not entitled to a defense or coverage due to the reasons set forth in Counts I — III of the Complaint, Bituminous asserts that Defendants Collins and Mountain Heritage have no right to indemnification under the Bituminous policy. (Id.) B. Relevant Procedural History This case was referred to the undersigned by order of the presiding district judge, Hon. David L. Bunning, dated April 24, 2002, with directions to resolve discovery disputes, and to conduct a telephonic conference and a settlement conference. (Record No. 10.) At the telephonic conference held on July 17, 2002, as memorialized by order dated July 19, 2002, Bituminous was directed to show cause, by memorandum brief, why this court should not exercise its discretion to dismiss this action, without prejudice, by virtue of the underlying state court action now pending in the Pike Circuit Court. (Record No. 17.) An order to show cause why the action should not be dismissed is a proper method by which the court, sua sponte, may raise and resolve the issue of whether it should exercise its discretionary jurisdiction in a declaratory judgment action. Westfield Insurance Company v. Stone Harbor Construction, Inc., 106 F.Supp.2d 956, 957 (W.D.Mich.2000). The primary basis of that show cause order was the decision of the United States Court of Appeals for the Sixth Circuit in Scottsdale Insurance Company v. Roumph, 211 F.3d 964 (6th Cir.2000). In that case, the court listed a set of factors that a district court must consider in assessing the propriety of exercising its discretionary jurisdiction over a declaratory judgment action concerning insurance coverage when the insured has been sued for alleged tort liability in state court. Id. at 968. These factors will be discussed in detail below. By order dated July 19, 2002, (Record No. 18) Judge Bunning referred the issues raised by the July 19, 2002, show cause order (Record No. 17) to the undersigned for appropriate disposition. Bituminous filed its response to that show cause order on August 19, 2002. (Record No. 19.) Collins and Mountain Heritage filed a response to Bituminous's memorandum on September 11, 2002. (Record No. 20.) On September 19, 2002, Bituminous filed a reply to the memorandum filed by Collins and Mountain Heritage. (Record No. 21.) Bituminous then supplemented that reply *742 on September 20, 2002. (Record No. 22.) Although he was served with a copy of the court's show cause order, Defendant Combs has not answered or otherwise responded thereto. (Record No. 17, Certificate of Mailing). All briefing in response to the show cause order having thus been completed, the matter is now ripe for review. III. ANALYSIS The Declaratory Judgment Act, 28 U.S.C. §§ 2201 and 2202, gives federal district courts the discretion whether to exercise their jurisdiction in actions brought pursuant to the Act. Wilton v. Seven Falls Co., 515 U.S. 277, 286-88, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995); Northern Insurance Company of New York v. Addison Products, Inc., 148 F.Supp.2d 859, 860 (E.D.Mich.2001). The Declaratory Judgment Act has always been "understood to confer on federal courts unique and substantial discretion in deciding whether to declare the rights of litigants." Roumph, 211 F.3d at 969. The Act is an enabling statute which provides that a court "may declare" the rights of interested parties. 28 U.S.C. § 2201(a). "`There is ... nothing automatic or obligatory about the assumption of `jurisdiction' by a federal court' to hear a declaratory judgment action." Roumph, 211 F.3d at 969 (quoting Wilton, 515 U.S. at 278-88, 115 S.Ct. 2137). In Roumph, the Sixth Circuit listed five factors for the district court to consider when assessing the propriety of a declaratory judgment action concerning insurance coverage when the insureds have been sued for alleged tort liability in state court. Roumph, 211 F.3d at 968. These five factors are: (1) whether the judgment would settle the controversy; (2) whether the declaratory judgment action would serve a useful purpose in clarifying the legal relations at issue; (3) whether the declaratory remedy is being used merely for the purpose of "procedural fencing" or "to provide an arena for a race for res judicata;" (4) whether the use of a declaratory action would increase the friction between federal and state courts and improperly encroach on state jurisdiction; and (5) whether there is an alternative remedy that is better or more effective. Id. The parties' responses to this court's show cause order will be analyzed according to these factors. A. Counts I and II of the Complaint Count I of the Complaint asserts that Combs in not entitled to a defense or coverage under the general liability policy with Bituminous because the alleged damage related to logging activities was not an "occurrence" eligible for coverage as defined in the policy. (Record No. 1, pp. 5-6.) Count I further alleges that Combs's alleged intentional trespass falls within a specific exclusion in the general liability policy for property damage that is expected or intended from the standpoint of the insured. (Id. at pp. 6-7.) Similarly, Count II of the Complaint pleads that Combs is not entitled to coverage under the accidental overcut of timber provision because his actions constitute an intentional trespass, not a bonafide mistake. (Id. at pp. 7-8.) Thus, the underlying questions in Counts I and II are whether Combs's actions were in fact intentional and whether his actions exclude him from the rights to coverage and a defense under the Bituminous policy. The propriety of this court's exercise of jurisdiction over Counts I and II will be analyzed according to the factors in Roumph. 1. Whether the judgment would settle the controversy Plaintiff Bituminous argues that a declaratory judgment by this court would settle the controversy between the parties. (Record No. 19, pp. 5-6.) Specifically, Bituminous argues that there are no remaining factual issues to be determined in the *743 underlying action that are necessary to determine the extent of coverage under the insurance policy. (Id. at p. 5.) As a basis for this argument, Bituminous points out that a default judgment has been entered against Combs in the underlying action for intentional trespass. (Id.) Bituminous asserts that because liability has been determined in the underlying action, the only remaining issue is a legal question: whether Combs's actions are covered under the general liability policy. (Id.) In the response filed by Collins and Mountain Heritage, Defendants contend that the question of coverage cannot presently be resolved because there are underlying facts which have yet to be resolved in the pending state court action. Defendants advance two (2) primary arguments in support of their position. First, Defendants assert that conflicting default judgments have been entered in the pending state court proceedings. (Record No. 6, p. 6.) In addition to the default judgment entered against Combs on the underlying complaint for intentional trespass, Defendants assert that a default judgment based on negligence, breach of contract and indemnification was entered against Combs on the underlying cross-claim. (Id.) Because of the conflicting default judgments, Defendants contend that the default judgment on the underlying complaint is not conclusive as to whether Combs is precluded from coverage. (Id.) Second, Defendants assert that Underlying Plaintiffs' amended complaint is still pending in the state court. (Record No. 20, p. 2.) A default judgment has not been entered on the additional claims brought in the amended complaint. (Id.) Thus, Defendants argue that the liability issue has not been resolved in the pending state court action as to these new claims. (Id. at p. 6.) According to Defendants, a declaratory judgment by this court would not resolve factual issues still pending before the state court. (Id.) In its reply to Defendants' response, Bituminous contends that the underlying amended complaint contains the same allegations of intentional trespass against Combs. (Record No. 21, p. 2.) The only addition is another tract of land that was inadvertently omitted from the underlying complaint. (Id.) Bituminous argues that any remaining factual issues in the pending state court action have no bearing on whether an intentional trespass is covered by the insurance policy. (Id. at p. 3.) Although a decision on the coverage issues addressed in Counts I and II of the Complaint may "resolve the controversy" as such between Bituminous and Defendants Collins and Mountain Heritage, the analysis of the four remaining factors under Roumph make this first factor relatively insignificant. As discussed below, the concerns under the remaining four factors substantially outweigh any benefit attained by resolving the coverage question raised in Counts I and II. 2. Whether the declaratory action would serve a useful purpose in clarifying the legal relations at issue Without a specific explanation, Bituminous asserts that a declaratory judgment by this court would serve a useful purpose by "clarifying the legal relations between the parties by determining their rights under the subject insurance policy." (Record No. 19, p. 7.) Defendants cite Allstate Ins. Co. v. Mercier, 913 F.2d 273, 279 (6th Cir.1990), for the proposition that any useful purpose which might be served by "clarifying the legal relations in issue" would come at the expense of "increasing friction between our federal and state courts," the fourth factor in Roumph. Neither side makes a detailed effort to explain the application of the "useful purpose" factor to the case sub judice. *744 A declaratory action does not serve a "useful purpose" when insurance coverage questions can only be resolved based on facts yet to be determined in the state courts. Mercier, 913 F.2d at 279; Addison Products, 148 F.Supp.2d at 862. To resolve the legal issues in Counts I and II of the Complaint, this court would first need to resolve the factual issues regarding Combs's actions in his logging activities on Underlying Plaintiffs' land. Specifically, this court would have to decide whether Combs acted intentionally or negligently. As stated above, Bituminous asserts that this issue has been resolved by the default judgment entered against Combs on the underlying complaint for intentional trespass. But, according to the memoranda filed in this action, the Pike Circuit Court has issued conflicting default judgments. (Record No. 6, p. 6.) The underlying complaint avers that Combs acted intentionally, while the cross-claim asserts that Combs acted negligently. (Id.) Because the Pike Circuit Court entered default judgments on both the underlying complaint and the cross-claim without clarification as to the nature of Combs's actions, this court cannot and should not attempt to clarify the legal relations at issue by determining whether Combs acted intentionally or negligently. A decision on Counts I and II of this declaratory action would depend on a resolution of conflicting default judgments and underlying factual issues in the state court case, and therefore, this second factor weighs heavily in favor of dismissing Counts I and II of this action without prejudice. 3. Whether the declaratory remedy is being used merely for the purpose of "procedural fencing" or "to provide an arena for a race for res judicata" Bituminous argues that there is no evidence to suggest that it is using this federal declaratory judgment action for purposes of procedural fencing or a race for res judicata. (Record No. 19, p. 7.) Bituminous contends that the fact that a default judgment has already been entered on the underlying complaint "removes any consideration that Bituminous filed this action in federal court as `procedural fencing' or to win a `race for res judicata.'" (Id.) Defendants Collins and Mountain Heritage argue that Bituminous is using this declaratory judgment action to obtain res judicata on the amended complaint still pending before the Pike Circuit Court. (Record No. 20 p. 5.) Specifically, Defendants assert that the default judgment entered at the state court level concerns one small parcel of land. (Id.) A default judgment has not been entered on the amended complaint, which adds a much larger parcel. (Id.) Therefore, Defendants contend that Bituminous is using this declaratory judgment action to avoid providing a defense or coverage for the larger claims asserted in the amended complaint. (Id.) This factor also weighs heavily in favor of dismissal. A determination as to coverage under the insurance policy would require a determination whether Combs acted intentionally. The issues concerning liability under the amended complaint before the Pike Circuit Court will also require a determination as to whether Combs acted intentionally. Therefore, a premature declaratory judgment based on Counts I and II of the Complaint would create res judicata problems. For example, if this court were to find that Combs is not covered under his insurance policy with Bituminous because he acted intentionally, the Pike Circuit Court, under principles of res judicata, would be required to find in the liability stage that Combs acted intentionally. With the liability issue contained in the amended complaint still pending for decision in the state court action, a declaratory judgment on *745 the policy's definition of "occurrence," the intentional act exclusion and the accidental overcut provision would prematurely and improperly resolve factual issues on liability. Accordingly, the third factor in Roumph weighs heavily in favor of dismissing Counts I and II of the Complaint. 4. Whether the use of a declaratory action would increase friction between federal and state courts and improperly encroach upon state jurisdiction Bituminous asserts that issues involving insurance coverage are entirely distinct from liability issues already decided by virtue of a default judgment in the state court proceedings, and therefore will not create friction between the federal and state courts. (Record No. 19, p. 7.) Bituminous also points out that the Pike Circuit Court has been advised that this declaratory judgment action is pending before this court. (Id.) Additionally, Bituminous contends that friction will be avoided because Defendants Collins and Mountain Heritage filed a motion on April 30, 2002, to hold the state court proceedings in abeyance, which was granted by the Pike Circuit Court on May 6, 2002. (Id.) Defendants Collins and Mountain Heritage discuss the relationship that this fourth factor has with the other factors in Roumph, but never apply the factor directly to the case sub judice. (Record No. 6, p. 4.) Defendants do assert that they requested that the state court proceedings be held in abeyance because they felt Bituminous was attempting to take advantage of state court proceedings to gain an advantage in this declaratory judgment action. (Id. at p. 7.) The Sixth Circuit has repeatedly held that when a state court action is pending, that court is "in a better position than a federal district court to decide an insurance declaratory judgment action that involves underlying factual issues." Scottsdale Insurance Co. v. Roumph, 18 F.Supp.2d 730, 735 (E.D.Mich.1998), aff'd 211 F.3d 964 (6th Cir.2000); Addison Products, 148 F.Supp.2d at 862. The Sixth Circuit has also recognized three additional factors to consider when such federalism concerns are presented; (1) whether the underlying factual issues are important to an informed resolution of the declaratory action; (2) whether the state trial court is in a better position to evaluate those factual issues than is the federal court; and (3) whether there is a close nexus between the underlying factual issues and state law and/or public policy, or whether federal common or statutory law dictates. Roumph, 211 F.3d at 968. Underlying factual issues are important to an informed resolution of Counts I and II of the Complaint. To make an informed resolution of the coverage issues under the definition of "occurrence," the intentional act exclusion and the accidental overcut provision, this court would have to decide whether Combs acted intentionally. The state trial court is in a better position to resolve these facts, which were first alleged in the complaint filed in that court against Combs. Contrary to Bituminous's position, the issue is not resolved by the default judgment on the underlying complaint due to the existence of a conflicting default judgment on the cross-claim. Those facts must be, and in the pending state court action will be, resolved in accord with Kentucky law, with which a state court is more familiar. And, there are no controlling principles of federal common law or statutory law that apply to the substantive issues in this case, and thus, there are no federal issues which this court is called upon to resolve. Accordingly, the fourth factor in Roumph weighs heavily in favor of dismissing Counts I and II of this action. *746 5. Whether there is an alternative remedy which is better or more effective As the district court in Addison Products indicated, the Sixth Circuit has held that a separate civil state court action on defense and indemnity issues is usually a better and more effective remedy than a declaratory action in federal court. 148 F.Supp.2d at 863. See also Allstate Insurance Co. v. Mercier, 913 F.2d 273, 278 (6th Cir.1990) (concluding that the state court deciding the underlying tort action would be "in a superior position" to determine the indemnity issues); Manley, Bennett, McDonald & Co. v. St. Paul Fire & Marine Insurance Co., 791 F.2d 460, 462-63 (6th Cir.1986) (describing a indemnity action after conclusion of the state court trial as "a superior alternative remedy"); American Home Assurance Co. v. Evans, 791 F.2d 61, 62 (6th Cir.1986) (describing "a traditional indemnity action" as "a more appropriate means of enforcement"). Nothing in either of the parties' briefs in this case suggest otherwise. Bituminous can bring an appropriate defense and indemnification action in state court or a second action for declaratory relief in this court after the issues concerning the conflicting default judgments and the amended complaint have been resolved in the pending Pike Circuit Court action. Accordingly, the fifth factor in Roumph weighs in favor of dismissing Counts I and II of this action without prejudice. Upon consideration of the arguments presented by both parties on the propriety of this courts exercise of jurisdiction over Counts I and II of the Complaint, the undersigned concludes that all five factors in Roumph weigh heavily in favor of dismissal of Counts I and II of this action. B. Count III of the Complaint In Count III of the Complaint, Bituminous pleads that Combs is not entitled to a defense or coverage because he breached the conditions listed in Section IV of the policy which require the insured to notify Bituminous of any civil action. (Record No. 1, pp. 8-10.) Defendants Collins and Mountain Heritage argue that Bituminous did have sufficient notice of the underlying action, but chose not to attempt a defense. The propriety of this court's exercise of jurisdiction over Count III will be analyzed according to the factors in Roumph. 1. Whether the judgment would settle the controversy Bituminous contends that whether Combs gave Bituminous notice of the state court action is not an issue in the underlying action, nor is it relevant to any claims pending in that underlying action. (Record No. 21, p. 3.) Bituminous asserts that the notice issue is only relevant to the issue of insurance coverage under the policy. (Id.) Because the issue of notice is pending before this court, Bituminous argues that a declaratory judgment would settle the controversy. (Id.) Defendants argue that there are unresolved issues of fact in regard to the notice received by Bituminous. (Record No. 20, p. 5.) Specifically, Defendants allege that Bituminous had enough time to attempt a defense before the default judgments were entered, but instead chose to sit idle. (Id.) Defendants do not directly address how a judgment on this issue would not settle the controversy. Bituminous is correct that the issues concerning whether notice was received by Bituminous are not pending before the state court. In fact, there is nothing to suggest that the notice issue was ever raised in the state court. Bituminous is not a party to the state court action, nor is it providing a defense for Combs in that action. To resolve this controversy, this court would only be required to interpret *747 the provisions in Section IV of the policy as they relate to the facts concerning the alleged failure of Combs to notify Bituminous of the pending state court action. Unlike the issues surrounding the nature of Combs's actions in regard to cutting timber, there are no pending and unresolved issues of fact in the state court proceedings concerning the policy conditions in Section IV. If this court were to decide whether Combs did in fact breach the policy conditions by failing to give proper notice to Bituminous, then, as Bituminous contends, the controversy would be resolved. Thus, the first factor in Roumph weighs in favor this court asserting jurisdiction over Count III of the Complaint. 2. Whether the declaratory action would serve a useful purpose in clarifying the legal relations at issue As stated in Section III(A)(2) above, a declaratory action does not serve a "useful purpose" when insurance coverage questions can only be resolved based on facts yet to be determined in the state courts. Mercier, 913 F.2d at 279; Addison Products, 148 F.Supp.2d at 862. The lack of notice alleged by Bituminous is not pending before the state court. Although Defendants claim that there are unresolved issues of fact concerning the notice issue, it is clear that those facts will not be determined in the state court. Bituminous has properly brought this issue before this court asking for a declaration that Combs breached the notice requirements of the policy, and therefore, he is not entitled to coverage. Bituminous further alleges that because Combs has breached the policy conditions requiring notice, Defendants Collins and Mountain Heritage are not entitled to indemnification. Discovery on this sole issue of whether Combs did in fact breach the policy conditions requiring notice would lead to a clarification of the legal relations at issue, therefore serving a "useful purpose." Accordingly, the second factor in Roumph weighs in favor this court exercising its jurisdiction over Count III of the Complaint. 3. Whether the declaratory remedy is being used merely for the purpose of "procedural fencing" or "to provide an arena for a race for res judicata" The third factor in Roumph also weighs in favor of this court asserting jurisdiction over Count III of the Complaint. As Bituminous points out, the issue of whether Bituminous received proper notice of the suit is not pending before the state court. (Record No. 21, p. 3.) Defendants argue that there are still unresolved factual issues concerning whether Bituminous received proper notice of the suit, and therefore a declaratory judgment action on this issue is not appropriate. (Record No. 20, p. 5.) Because this issue is not pending before the state court, there is no risk of creating improper res judicata. The unresolved factual issues alleged by Defendants could properly be resolved through discovery in this declaratory action. Also, there is no evidence that the declaratory remedy is being used for "procedural fencing." Accordingly, the third factor in Roumph weighs in favor of asserting jurisdiction over Count III of the Complaint. 4. Whether the use of a declaratory action would increase friction between federal and state courts and improperly encroach upon state jurisdiction Bituminous asserts that the notice issue is not relevant to any issue currently pending before the state court. (Record No. 21, p. 4.) Bituminous also contends that friction will be avoided because Defendants Collins and Mountain Heritage filed a motion on April 30, 2002, to hold the state *748 court proceedings in abeyance, which was granted by the Pike Circuit Court on May 6, 2002. (Record No. 19, p. 7) Defendants Collins and Mountain Heritage discuss the relationship that this fourth factor has with the other factors in Roumph, but never apply the factor directly to the case sub judice. (Record No. 6, p. 4.) Defendants do assert that they requested that the state court proceedings be held in abeyance because they felt Bituminous was attempting to take advantage of state court proceedings to gain an advantage in this declaratory judgment action. (Id. at p. 7.) The Sixth Circuit has repeatedly held that when a state court action is pending, that court is "in a better position than a federal district court to decide an insurance declaratory judgment action that involves underlying factual issues." Roumph, 18 F.Supp.2d 730, 735 (E.D.Mich.1998), aff'd 211 F.3d 964 (6th Cir.2000); Addison Products, 148 F.Supp.2d at 862. The Sixth Circuit has also recognized three additional factors to consider when such federalism concerns are presented: (1) whether the underlying factual issues are important to an informed resolution of the declaratory action; (2) whether the state trial court is in a better position to evaluate those factual issues than is the federal court; and (3) whether there is a close nexus between the underlying factual issues and state law and/or public policy, or whether federal common or statutory law dictates. Roumph, 211 F.3d at 968. The application of these three additional factors also weighs in favor of this court exercising its jurisdiction over Count III of the Complaint. Underlying factual issues are not important to an informed resolution of the notice issue alleged by Bituminous. The state court is not in a better position to evaluate the factual issues concerning the alleged lack of notice given by Combs because that issue is not pending before the state court. Although federal common or statutory law does not dictate this issue, the factual issues concerning the alleged breach of the notice requirements in the policy do not have a close nexus to state law and/or public policy. Accordingly, this factor weighs in favor of retaining Count III of this declaratory judgment action. 5. Whether there is an alternative remedy which is better or more effective As stated in Section III(A)(5) above, a separate state court civil action on defense and indemnity issues is usually a better and more effective remedy than a declaratory judgment action in federal court. Addison Products, 148 F.Supp.2d at 863. See also Mercier, 913 F.2d at 278 (concluding that the state court deciding the underlying tort action would be "in a superior position" to determine the indemnity issues); Manley, Bennett, McDonald & Co., 791 F.2d at 462-63 (describing a indemnity action after conclusion of the state court trial as "a superior alternative remedy"); Evans, 791 F.2d at 62 (describing "a traditional indemnity action" as "a more appropriate means of enforcement"). Here, the state court deciding the underlying tort action will be dealing with issues entirely separate from the notice provisions of the Bituminous policy. Whether the state court action has concluded its proceedings on the liability issues will not have any effect on the notice issue alleged in Count III of the Complaint. Therefore, a separate state court action cannot be considered to be a better or more effective remedy. In fact, resolution of the notice issue in federal court may resolve the coverage question before the conclusion of a separate state court proceeding, which in turn may prevent Bituminous from unnecessarily expending time and resources to provide a defense on the underlying amended complaint. *749 Therefore, the fifth factor in Roumph weighs in favor of this court asserting jurisdiction over Count III of the Complaint. Accordingly, the undersigned concludes that a decision on Count III of the Complaint would not create res judicata problems or unnecessary friction with the state court. More importantly, a decision by this court would settle the controversy and clarify the legal relations at issue. Thus, the factors in Roumph weigh in favor of this court asserting jurisdiction over Count III of the Complaint. Extensive research of case law applying the factors listed in Roumph has not produced any published authority that would prevent this court from retaining jurisdiction over this Count of the Complaint while dismissing Counts I and II. Accordingly, the undersigned recommends that this court assert its discretionary jurisdiction over Count III of the Complaint. C. Count IV of the Complaint Count IV of the Complaint alleges that Defendants Collins and Mountain Heritage are not insureds under the Bituminous policy. (Record No. 1, pp. 10-11.) Additionally, Count IV alleges that Defendants Collins and Mountain Heritage are not entitled to indemnification because Combs is not entitled to coverage for the reasons set forth in Counts I-III of the Complaint. (Id.) Defendants admit that they are not insureds under the policy, but contend that they are entitled to indemnification because of their contract with Combs. (Record No. 6, p. 9.) Because Combs has never answered or otherwise responded to any pleading or order in this case, Count IV of the Complaint summarizes the exact issue pending before this court, whether Collins and Mountain Heritage are entitled to indemnification from Bituminous for the actions committed by Combs. Because Bituminous claims Combs is not entitled to coverage, and therefore Collins and Mountain Heritage are not entitled to indemnification, this court cannot decide the issue raised in Count IV without asserting jurisdiction over one of the issues contained in Counts I-III of the Complaint. As stated above, the factors in Roumph weigh in favor of retaining count III of this action, and therefore, the undersigned concludes that Count IV should be retained as well. IV. CONCLUSION Upon consideration of the parties' responses to the undersigned's show cause order (Record No. 17) in light of the five factors set forth in Roumph, the undersigned concludes that those factors, collectively, weigh in favor of this Court declining to exercise its discretionary jurisdiction over Counts I and II of the Complaint, which should therefore be dismissed without prejudice. As to Counts III and IV of the Complaint, the undersigned recommends that this Court retain its discretionary jurisdiction over these claims and proceed with appropriate disposition, in accord with the pretrial and trial schedule previously set in this case by Judge Bunning's Scheduling Order dated April 24, 2002. (Record No. 10.) Particularized objections to this Report and Recommendation must be filed within ten (10) days of the date of service of the same or further appeal is waived. Thomas v. Arn, 728 F.2d 813, 814 (6th Cir.1984), aff'd, 474 U.S. 140, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985); Wright v. Holbrook, 794 F.2d 1152, 1154-55 (6th Cir.1986.) Poorly drafted objections, general objections, or objections that require a judge's interpretation should be afforded no effect and are insufficient to preserve the right to appeal. See Howard v. Secretary of Health and Human Services, 932 F.2d *750 505, 509 (6th Cir.1991). A party may file a response to another party's objections with ten (10) days after being served with a copy thereof. Rule 72(b), Fed.R.Civ.P. Dec. 4, 2002. NOTES [1] The Complaint filed by Bituminous (Record No. 1) and the Answer filed by Collins and Mountain Heritage (Record No. 6) in this declaratory judgment action refer to the default judgments in the Pike Circuit Court on the complaint and cross-claim against Combs. The directives and exact language of the default judgments cannot be determined from the record in this case because only a copy of the motions for default judgment have been filed of record. (Record No. 1, Ex. D-E.) Defendants Collins and Mountain Heritage refer to a November 15, 2001 order of default judgment in their reply memorandum (Record No. 20, p. 5) to Bituminous's response to the show cause order, but contrary to the statement in that reply, a copy of that default judgment is not attached to that pleading.

01-03-2023

10-30-2013

https://www.courtlistener.com/api/rest/v3/opinions/2336271/

72 F.Supp.2d 1237 (1999) Michael A. PALMER, Plaintiff, v. UNIFIED GOVERNMENT OF WYANDOTTE COUNTY/KANSAS CITY, Kansas, et al., Defendants. No. 98-2382-JWL. United States District Court, D. Kansas. September 15, 1999. *1238 *1239 Sulaimon Adebayo Hassan, Hassan Law Firm, Chartered, Kansas City, KS, for Michael A Palmer, plaintiff. *1240 Henry E. Couchman, Jr., Maurice J. Ryan, Kenneth J. Moore, City of Kansas City, Kansas-Legal Dept., Kansas City, KS, for defendants. MEMORANDUM AND ORDER LUNGSTRUM, District Judge. Plaintiff Michael Palmer filed this civil rights action against defendants alleging unlawful arrest and use of excessive force in violation of his Fourth, Fifth, Eighth, and Fourteenth Amendment rights. Additionally, plaintiff asserts common law claims for false arrest and imprisonment, battery, negligence, negligent supervision, and misuse of the criminal process. Presently before the court is defendants Unified Government of Wyandotte County/Kansas City, Kansas ("Unified Government"), Carol Marinovich, Joe Vaught, James Swafford, Rex Garner, Ron Miller, Vince Davenport, Gregory Burris, Jose Hernandez, Claude Harper, and Jerry Campbell's motion for partial summary judgment (doc. 37). For the reasons set forth below, defendants' motion is granted in part and denied in part. The court grants defendants' motion with respect to plaintiff's claims arising under federal law, but denies defendants' motion with respect to plaintiff's pendent state law claims for which defendants seek summary judgment. Plaintiff's state law claims are dismissed without prejudice. I. Facts In the late spring of 1996, plaintiff entered into a one-year lease agreement with Daniel Shapiro, a commercial property owner, for the rental of building space in which plaintiff opened an arcade parlor known as "Palmer's Arcade." Plaintiff applied for, and received, the appropriate city licenses for the billiards tables and video games located inside his arcade. Mr. Palmer was advised by city officials that he was not permitted to sell alcoholic beverages of any kind on the arcade premises. Additionally, the city code provided that, as a licensed amusement arcade, plaintiff's business was subject to reasonable inspections by the police department. At some point in mid-August 1996, Palmer's Arcade was placed under surveillance by the Kansas City, Kansas Police Department ("KCKPD"). Plaintiff admits that he refused KCKPD officers entry into his business on more than one occasion. In the evening hours of August 23, 1996, defendant Davenport, a KCKPD Vice and Narcotics Unit detective, sought and obtained a search warrant for Palmer's Arcade. According to Davenport, his purpose in securing the warrant was primarily to search for alcoholic beverages allegedly being consumed on the premises by minors. Shortly after midnight on August 24, 1996, KCKPD Officers Campbell, Burris, and Harper approached and identified themselves to plaintiff, who was standing outside of the arcade at that time. The officers indicated that the purpose of their visit was to execute a warrant to search the premises. The officers then directed plaintiff to unlock the front door to the arcade so that they could enter the building. At this point, the stories of Mr. Palmer and Officers Campbell, Burris, and Harper diverge. According to plaintiff, immediately upon hearing the officers' request to gain entry into the arcade, he turned toward the building to unlock the front door of the arcade, but then turned back around to face the officers, and simply asked them to explain the reasons for which the warrant had been issued. Suddenly and without warning, plaintiff contends, defendant Davenport knocked the keys out of plaintiff's hand so forcefully that plaintiff's wrist was injured by the blow. As the keys were being knocked out of his hand, plaintiff claims, an unknown officer grabbed his ponytail, while defendant Burris placed plaintiff in a "choke hold," at which point plaintiff's gun was removed from his left hip. Defendant Harper then proceeded to handcuff plaintiff, and in doing so, plaintiff maintains, Harper placed the handcuffs on plaintiff's wrists so tightly that the cuffs cut into his skin, which, in *1241 turn, left bruises and lacerations on plaintiff's wrists. After several requests from plaintiff to loosen the handcuffs were ignored by the attendant officers, one of the officers finally adjusted the handcuffs. Defendants, on the other hand, relate a markedly different version of the events leading to plaintiff's arrest. According to defendants Campbell, Burris, and Davenport, after the officers identified themselves and announced that they had a search warrant and thus that they needed plaintiff to let them into the arcade, plaintiff began to walk toward the door, turned around, walked back to the officers, and asked them why they were there. At that point, defendants contend, Campbell repeated the reason for their visit, and plaintiff once again started toward the door, but then turned around a second time and began questioning the officers regarding the purpose of their presence at the arcade. According to defendants, plaintiff repeated this scenario three or four times. After plaintiff turned toward the front door for the third or fourth time, Burris and Davenport claim, plaintiff threw his keys into a grassy area next to the building. Campbell neither saw plaintiff throw his keys, nor where the keys landed; Campbell merely heard plaintiff's keys hit the ground. After hearing the keys fall to the ground and observing the gun on plaintiff's left hip, Campbell ordered Burris and Harper to arrest plaintiff, and to remove Mr. Palmer's weapon. Officer Burris applied a vascular neck restraint to plaintiff's neck while Officer Harper removed the gun from plaintiff's hip. Burris testified that plaintiff quickly submitted to the arrest shortly after he began to apply pressure to plaintiff's neck. Officer Harper then secured plaintiff's arms with handcuffs, thereby effecting plaintiff's arrest. The parties agree that, once plaintiff was placed under arrest, the officers broke out the front plate glass window in order to gain access to the arcade.[1] Plaintiff claims that, while he was standing handcuffed observing the subsequent events, he heard defendant Davenport instruct Daniel Shapiro, his landlord, to shut the arcade down. Additionally, plaintiff contends that he heard defendant Mayor Carol Marinovich order plaintiff's place of business to be shut down. Defendant Marinovich denies making any such statement, and defendant Davenport claims that Mr. Shapiro volunteered to board up the window that had been broken by the police officers. Following his August 24, 1996 arrest, Mr. Palmer was charged and convicted in municipal court of the offenses of resisting arrest and obstruction of justice. After his conviction in municipal court on both charges, plaintiff appealed to the Wyandotte County District Court. A jury found Mr. Palmer guilty on the obstruction of justice charge, but acquitted him on the charge of resisting arrest. The obstruction of justice conviction was affirmed by the Kansas Court of Appeals on January 29, 1999. On October 6, 1997, over a year after the August 24, 1996 incident, a bench warrant for plaintiff's arrest was erroneously issued by a Kansas City, Kansas municipal court judge. On September 16, 1998, plaintiff was arrested on a County warrant for child abuse, an outstanding traffic warrant, and the erroneously-issued October 6, 1997 bench warrant. On September 22, 1998, plaintiff notified Municipal Court Judge Wes Griffin that the October 6, 1997 bench warrant was invalid. At that time, Judge Griffin acknowledged the error, and noted the inaccuracy on the court's docket sheet. The bench warrant was not purged *1242 from the court's computer system, however, and on November 9, 1998, plaintiff was once again arrested on the outstanding October 6, 1997 bench warrant. Plaintiff filed this action on August 24, 1998, alleging violations of 42 U.S.C. § 1981 for interfering with his ability to enjoy the benefits of his contract with Daniel Shapiro and closing down his arcade business because of his race, 42 U.S.C. § 1983 for excessive force and unlawful arrest in violation of the Fourth, Fifth, Eighth, and Fourteenth Amendments, as well as a common law claim for the filing of a false criminal complaint against plaintiff for resisting arrest on August 24, 1996. Plaintiff further asserts claims for unlawful arrest, battery, negligent supervision, and negligence in connection with the September 16, 1998 and November 9, 1998 arrests pursuant to an invalid warrant. Defendants move for summary judgment with respect to each of plaintiff's claims except those asserted against the Unified Government for false arrest and false imprisonment on September 16, 1998 and November 9, 1998. II. Legal Standard Summary judgment is appropriate if the moving party demonstrates that there is "no genuine issue as to any material fact" and that it is "entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). In applying this standard, the court views the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party. Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)). A fact is "material" if, under the applicable substantive law, it is "essential to the proper disposition of the claim." Id. (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). An issue of fact is "genuine" if "there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either way." Id. (citing Anderson, 477 U.S. at 248, 106 S.Ct. 2505). The moving party bears the initial burden of demonstrating an absence of a genuine issue of material fact and entitlement to judgment as a matter of law. Id. at 670-71. In attempting to meet that standard, a movant that does not bear the ultimate burden of persuasion at trial need not negate the other party's claim; rather, the movant need simply point out to the court a lack of evidence for the other party on an essential element of that party's claim. Id. at 671 (citing Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). Once the movant has met this initial burden, the burden shifts to the nonmoving party to "set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S. at 256, 106 S.Ct. 2505; see Adler, 144 F.3d at 671 n. 1 (concerning shifting burdens on summary judgment). The nonmoving party may not simply rest upon its pleadings to satisfy its burden. Anderson, 477 U.S. at 256, 106 S.Ct. 2505. Rather, the nonmoving party must "set forth specific facts that would be admissible in evidence in the event of trial from which a rational trier of fact could find for the nonmovant." Adler, 144 F.3d at 671. "To accomplish this, the facts must be identified by reference to affidavits, deposition transcripts, or specific exhibits incorporated therein." Id. Finally, the court notes that summary judgment is not a "disfavored procedural shortcut;" rather, it is an important procedure "designed to secure the just, speedy and inexpensive determination of every action." Celotex, 477 U.S. at 327, 106 S.Ct. 2548 (quoting Fed.R.Civ.P. 1). III. Discussion A. Qualified Immunity and Fourth Amendment Claims[2] The qualified immunity doctrine shields government officials from personal liability under 42 U.S.C. § 1983 "unless *1243 their conduct violates `clearly established statutory or constitutional rights of which a reasonable person would have known.'" Baptiste v. JC Penney Co., Inc., 147 F.3d 1252, 1255 (10th Cir.1998) (quoting Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S.Ct. 2727, 73 L.Ed.2d 396 (1982)). Where the defense of qualified immunity is raised, the first step in analyzing plaintiff's 42 U.S.C. § 1983 claim "is to identify the exact contours of the underlying right said to have been violated." County of Sacramento v. Lewis, 523 U.S. 833, 118 S.Ct. 1708, 1714 n. 5, 140 L.Ed.2d 1043 (1998) ("[T]he better approach to resolving cases in which the defense of qualified immunity is raised is to determine first whether the plaintiff has alleged a deprivation of a constitutional right at all.") This is true because "[a] necessary concomitant to the determination of whether the constitutional right asserted by plaintiff is `clearly established' at the time the defendant acted is the determination of whether the plaintiff has asserted a violation of a constitutional right at all." Siegert v. Gilley, 500 U.S. 226, 231, 111 S.Ct. 1789, 114 L.Ed.2d 277 (1991). Accordingly, "[w]here a plaintiff fails to demonstrate that a defendant's conduct violated the law, [the court] need not reach the issue of whether the law was clearly established." Barney v. Pulsipher, 143 F.3d 1299, 1309 (10th Cir.1998); accord Baptiste, 147 F.3d at 1255 n. 6 ("In accord with County of Sacramento v. Lewis, ... this court first determines whether Ms. Baptiste has alleged a deprivation of a constitutional right. Only after determining that Ms Baptiste has alleged a deprivation of a constitutional right[ ] does this court ask whether the right allegedly violated was clearly established at the time of the conduct at issue.") Plaintiff alleges that his August 24, 1996 arrest violated the Fourth Amendment because: (1) no probable cause existed to arrest him, (2) the force used to effect the arrest was excessive, and (3) the seizure of his gun during the course of his arrest and subsequent retention of the gun after the arrest was unreasonable. Defendants move for summary judgment with respect to plaintiff's Fourth Amendment claims, arguing that plaintiff has failed to establish that the actions about which plaintiff complains rise to the level of a constitutional violation. Alternatively, defendants contend that even if a Fourth Amendment violation occurred during the course of plaintiff's arrest, defendants Harper, Burris, and Campbell are nonetheless entitled to summary judgment on plaintiff's Fourth Amendment claims on the basis of qualified immunity. The Fourth Amendment guarantees "[t]he right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures." U.S. CONST. amend. IV. Included in the protection afforded individuals under the Fourth Amendment is the right to be free from arrest without probable cause, Beck v. Ohio, 379 U.S. 89, 91, 85 S.Ct. 223, 13 L.Ed.2d 142 (1964), as well as from government officials' use of excessive force during the course of an arrest. Graham v. Connor, 490 U.S. 386, 395, 109 S.Ct. 1865, 104 L.Ed.2d 443 (1989). As explained in detail below, the court concludes that plaintiff's allegations fail to demonstrate that he suffered a constitutional deprivation at the hands of defendants. Accordingly, the court declines to address the second prong of defendants' qualified immunity defense, i.e., whether the constitutional rights alleged by plaintiff were "clearly established" at the time defendants acted. See Pulsipher, 143 F.3d at 1309. *1244 1. Unlawful Arrest Mr. Palmer claims Officers Harper, Burris, and Campbell violated his Fourth Amendment right to be free from unreasonable seizures by arresting him without probable cause. Defendants move for summary judgment with respect to plaintiff's unlawful arrest on the ground that plaintiff's conviction on the obstruction charge conclusively establishes the existence of probable cause for his arrest. Plaintiff's claim that his August 24, 1996 arrest was obtained without probable cause necessarily requires an analysis of the principles set forth in Heck v. Humphrey, 512 U.S. 477, 114 S.Ct. 2364, 129 L.Ed.2d 383 (1994). In that case, the Supreme Court was faced with determining whether a state prisoner could challenge the constitutionality of his state court conviction in an action for monetary damages under 42 U.S.C. § 1983. Id. at 483-84, 114 S.Ct. 2364. Citing its belief that "the hoary principle that civil tort actions are not appropriate vehicles for challenging the validity of outstanding criminal judgments applies to § 1983 damages actions that necessarily require the plaintiff to prove the unlawfulness of his conviction or confinement," id. at 486, 114 S.Ct. 2364, the Heck court explained that in order to recover damages for [an] allegedly unconstitutional conviction or imprisonment, or for other harm caused by actions whose unlawfulness would render a conviction or sentence invalid, a § 1983 plaintiff must prove that the conviction or sentence has been reversed on direct appeal, expunged by executive order, declared invalid by a state tribunal authorized to make such determination, or called into question by a federal court's issuance of a writ of habeas corpus. A claim for damages bearing that relationship to a conviction or sentence that has not been so invalidated is not cognizable under § 1983. Id. at 486-87, 114 S.Ct. 2364 (internal citation and footnote omitted). Illustrative of the type of "other harm caused by actions whose unlawfulness would render a conviction or sentence invalid" is the following hypothetical: A state defendant is convicted of and sentenced for the crime of resisting arrest, defined as intentionally preventing a peace officer from effecting a lawful arrest.... He then brings a § 1983 action against the arresting officer, seeking damages for violation of his Fourth Amendment right to be free from unreasonable seizures. In order to prevail in this § 1983 action, he would have to negate an element of the offense of which he has been convicted. Regardless of the state law concerning res judicata, ... the § 1983 action will not lie. Id. at 487 n. 6, 114 S.Ct. 2364. Relying on the principles announced in Heck, the Tenth Circuit has recently held that, although plaintiff's state court conviction on a charge of resisting arrest did not foreclose his excessive force claim under § 1983, to the extent that the complaint challenged whether probable cause existed to arrest plaintiff for the underlying offense, any such allegation "must be stricken because any such finding ... would suggest the invalidity of [plaintiff's] state court conviction for resisting arrest." Martinez v. City of Albuquerque, 184 F.3d 1123, 1127 (10th Cir.1999). Thus, in reversing the district court's entry of summary judgment in favor of defendants on plaintiff's excessive force claim, the Martinez court explained that so long as plaintiff's underlying conviction remained intact, "the court must instruct the jury that [plaintiff's] conviction was lawful per se" because "[o]therwise, the jury might proceed on the incorrect assumption that the police officers had no probable cause to arrest [plaintiff], and thus reach a verdict inconsistent with [plaintiff's] criminal conviction." Id. In his papers, plaintiff does not squarely address the substance of defendants' arguments with respect to whether his conviction on the obstruction charge conclusively establishes the existence of probable cause such that plaintiff is barred *1245 from claiming that his arrest was unlawful. Instead, plaintiff states that "the dispute over the issue of probable cause is a material issue, rendering summary judgment inappropriate at this time." Pl.Mem. in Opp. at 13. This assertion appears to be based on plaintiff's belief that a dispute regarding the circumstances of his arrest somehow creates a material fact issue with respect to whether the officers had probable cause to arrest him. Thus, without acknowledging, disputing, or otherwise exploring whether Heck applies to the facts of this case, plaintiff merely sets forth the substance of the factual dispute regarding the circumstances of his arrest. To that end, plaintiff explains that whereas defendants claim that plaintiff's repeated questioning of their authority provided probable cause to arrest him for obstruction of official duties, plaintiff contends that his simple inquiry regarding the reason for the issuance of the warrant, an appropriate exercise of his First Amendment right to free speech, no less, could not possibly provide the officers with probable cause to arrest him. Plaintiff's attempt to ignore defendants' arguments notwithstanding, the court concludes that, under the principles announced in Heck and Martinez, plaintiff's reference to the controverted facts regarding the circumstances of his arrest is insufficient to avoid summary judgment on his wrongful arrest claim. On the contrary, the court finds that because plaintiff's obstruction conviction is currently undisturbed, plaintiff is precluded from challenging the lawfulness of his arrest under 42 U.S.C. § 1983. See Heck, 512 U.S. at 485-87, 114 S.Ct. 2364; Martinez, 184 F.3d at 1127. Accordingly, defendants are entitled to summary judgment with respect to plaintiff's Fourth Amendment unlawful arrest claim.[3] 2. Excessive Force That plaintiff is precluded from challenging whether probable cause existed to *1246 arrest him on August 24, 1996 does not bar plaintiff from claiming that the force used to effect his arrest was excessive and therefore unconstitutional. In this case, plaintiff claims that "defendants used excessive force by knocking the keys out of plaintiff's hand, by grabbing his pony tail, by placing a choke hold on him, and by clamping the handcuffs on his hand [sic] so tight resulting in physical injury." Pl.Mem. in Opp. at 14-15. With respect to plaintiff's excessive force claims, defendants contend that summary judgment is appropriate because the force used to arrest plaintiff was neither unreasonable or excessive. As stated above, the Fourth Amendment guarantees citizens the right to be free from the use of excessive force by government officials during the course of an individual's arrest. Graham v. Connor, 490 U.S. 386, 395, 109 S.Ct. 1865, 104 L.Ed.2d 443 (1989). In Graham, the Supreme Court held that all constitutional claims for excessive force "in the course of an arrest, investigatory stop, or other `seizure' of a free citizen should be analyzed under the Fourth Amendment and its `reasonableness' standard...." Id. "[T]he `reasonableness' inquiry in an excessive force case is an objective one: the question is whether the officers' actions are `objectively reasonable' in light of the facts and circumstances confronting them, without regard to their underlying intent or motivation." Id. at 397, 109 S.Ct. 1865. As noted by the Tenth Circuit, "[w]e judge the reasonableness of the force used not with the '20/20 vision of hindsight' or from the serenity of chambers but from the perspective of the officer on the scene, allowing for the split-second nature of most law enforcement decisions." Pride v. Does, 997 F.2d 712, 716-17 (10th Cir.1993) (citing Graham, 490 U.S. at 396-97, 109 S.Ct. 1865). In determining whether the force used was objectively reasonable, the court is to consider "the severity of the crime at issue, whether the subject poses an immediate threat to the safety of the officer, and whether the subject is resisting arrest." Wilson v. Meeks, 52 F.3d 1547, 1553 (10th Cir.1995). Applying the standards set forth above to the case at bar, the court concludes that the force used to effect plaintiff's August 24, 1996 arrest was objectively reasonable. As a preliminary matter, the court notes that plaintiff's assertion that excessive force was used when the keys were knocked out of his hand is somewhat confusing in light of the fact that, according to plaintiff, defendant Davenport was the officer who knocked plaintiff's keys away from him. As noted above, plaintiff has conceded that insufficient facts exist to support an excessive force against defendant Davenport. Thus, in light of this concession, the court concludes that to the extent that plaintiff's excessive force claim is predicated on the allegation that his keys were knocked out of his hand, summary judgment in favor of defendants is appropriate. The court is thus left to resolve whether plaintiff's allegations of hair pulling, use of the vascular neck restraint (or "choke hold") technique, and the allegedly too-tight handcuffs constitute a claim for unconstitutionally excessive force. Whether taken together or analyzed separately, the court concludes that plaintiff's allegations fail to state a claim for excessive force under the Fourth Amendment. Indeed, taking as true plaintiff's version of the events, i.e., that he did not repeatedly question the officers but merely turned around once to inquire why the warrant had issued, defendant Burris' application of the vascular neck restraint technique was objectively reasonable under the circumstances. It is uncontroverted that plaintiff was wearing a gun on the night of his arrest, and that, once Officer Campbell saw the gun, he advised defendants Harper and Burris to disarm the plaintiff. As set forth above, probable cause to arrest plaintiff existed, at least with respect to the obstructing charge. It was undoubtedly reasonable to disarm plaintiff during the *1247 course of his arrest. See, e.g., Chimel v. California, 395 U.S. 752, 762-63, 89 S.Ct. 2034, 23 L.Ed.2d 685 (1969) ("When an arrest is made, it is reasonable for the arresting officer to search the person arrested in order to remove any weapons that the latter might seek to use in order to resist arrest or effect his escape.") In light of the fact that plaintiff has alleged no injury attributable to Burris' use of the vascular neck restraint, the court concludes that the choke-hold allegation is insufficient to satisfy plaintiff's burden on summary judgment to establish a claim for excessive force. Indeed, because plaintiff does not claim any injury arising from his placement in the choke hold, the application can hardly be characterized as "excessive."[4]See, e.g., Pride, 997 F.2d at 716-17 (where choke hold technique produced only minimal bruising "and no permanent injury whatsoever," officer's use of neck pressure technique characterized as "moderate force.") Nor does the court believe that plaintiff has stated a claim for excessive force based on the allegation that one of the officers[5] pulled his ponytail. As with his complaint regarding Burris' use of the vascular neck restraint technique, plaintiff has not alleged, much less offered any facts to establish, that he suffered any injuries as a result of his hair being pulled. Furthermore, and the court notes, not surprisingly, plaintiff has not cited, and the court's research fails to reveal, any authority for the proposition that an officer's pulling on an arrestee's hair rises to the level of a constitutional violation. Although somewhat more troubling, the court concludes that plaintiff's allegations regarding the manner in which he was handcuffed are likewise insufficient to establish a violation of his civil rights. Indeed, although plaintiff claims that Harper placed the handcuffs on him so tightly that his blood circulation was "cut off" and bruises were left on his wrists, the only evidence offered by plaintiff to support his allegation that he suffered injuries from the handcuffs is his own deposition testimony. In his deposition, plaintiff identified several exhibits as photographs of his wrists in which the lacerations allegedly caused by the handcuffs are, according to plaintiff's testimony, visible.[6] Plaintiff further *1248 testified in his deposition that the cuffs caused his wrists to bleed, and that his injuries necessitated a visit to a medical doctor. Despite these claims, however, plaintiff has not seen fit to provide the court with any evidence to substantiate his deposition testimony, such as the photographs to which he refers therein, or an affidavit or other documentation from the medical doctor from which he allegedly sought medical attention.[7] With nothing but a record conspicuously devoid of such corroborative evidence, the court views plaintiff's assertions regarding the extent of his injuries with a great deal of skepticism. In the context of excessive force claims, the Tenth Circuit has held that "while loosening tight handcuffs may be the most compassionate action, the failure to do so does not rise to a clearly established constitutional violation." Morreale v. City of Cripple Creek, 113 F.3d 1246 (table), 1997 WL 290976, at *6 (quoting Hannula v. City of Lakewood, 907 F.2d 129, 132 (10th Cir.1990)); see also Swanson v. Fields, 13 F.3d 407 (table), 1993 WL 537708, at *6 (10th Cir. Dec. 20, 1993) (same). In Hannula v. City of Lakewood,[8] the plaintiff claimed that she sustained "nerve damage and possibly bone damage" as a result of the arresting officer's placement of tight handcuffs on her wrists. Hannula, 907 F.2d at 132. Plaintiff's allegations with respect to the extent of her injuries notwithstanding, the court noted, "Hannula does not offer any supporting evidence for these statements. Indeed, Hannula offers no medical evidence of any type of injury." Hannula, 907 F.2d at 132 n. 3. Thus, it appears that the Hannula holding was premised, at least in part, on the lack of evidentiary support for plaintiff's injuries.[9] In light of Tenth Circuit law governing excessive force claims, and given that plaintiff has failed to present the court with any evidence to substantiate his deposition testimony regarding the extent of his injuries, the court concludes that plaintiff has failed to meet his burden on summary judgment to establish that a constitutional *1249 violation occurred during the course of his arrest. Accordingly, summary judgment in favor of defendants with respect to plaintiff's Fourth Amendment excessive force claim is granted. 3. Unreasonable Seizure and Retention of Plaintiff's Gun Plaintiff maintains that because his "possession of the gun was lawful because it was duly licensed and registered," and because plaintiff did not attempt to use the gun in a "threatening manner towards [sic] the defendants," Pl.Mem. in Opp. at 16-17, the seizure of his gun during the course of his arrest violated his Fourth Amendment rights. As stated above, however, the court concludes that, under well-settled principles of search and seizure law, the seizure of plaintiff's gun during the course of his arrest was constitutional. See, e.g., Knowles v. Iowa, 525 U.S. 113, 119 S.Ct. 484, 487, 142 L.Ed.2d 492 (1998). In Knowles, the Supreme Court reiterated the "the two historical rationales for the `search incident to arrest' exception: (1) the need to disarm the suspect in order to take him into custody, and (2) the need to preserve evidence for later use at trial." Id. (citing United States v. Robinson, 414 U.S. 218, 234, 94 S.Ct. 467, 38 L.Ed.2d 427 (1973) and Chimel v. California, 395 U.S. 752, 762-63, 89 S.Ct. 2034, 23 L.Ed.2d 685 (1969)). Both underlying rationales are present here, and plaintiff's arguments to the contrary are, quite simply, unavailing. Plaintiff's arguments with respect to the retention of his gun, however, are not so easily dismissed. In that regard, plaintiff states that "[e]ven if we assume that the taking of the gun was reasonable when they arrested plaintiff, defendants have no justifiable reasons [sic] to retain the gun." Pl.Mem. in Opp. at 16. Defendants, on the other hand, argue that the retention of his gun was reasonable under state law, and that, in any event, the retention of plaintiff's gun does not rise to the level of a constitutional violation. The court agrees. Pursuant to K.S.A. § 22-2512(1), "[p]roperty seized under a search warrant or validly seized without a warrant shall be safely kept by the officer seizing the same unless otherwise directed by the magistrate, and shall be so kept as long as necessary for the purpose of being produced as evidence on any trial." K.S.A. § 22-2512(1). Plaintiff claims that because he was not charged with a gun-related offense, and because his gun was not introduced at trial, defendants' retention of his gun was unconstitutional. Plaintiff further states that, despite his attempts to retrieve his gun, "[a]ll he gets [sic] is the run around." Pl.Mem. in Opp. at 17.[10] In their answer filed October 26, 1998, defendants stated that plaintiff's gun would be released to him upon his presentation of valid identification and weapons registration documentation to the police property room attendant. Even so, plaintiff did not attempt to retrieve his gun until March 22, 1999, five months after defendants' answer indicated it would be released.[11] Contrary to the statement that plaintiff need only present himself and appropriate documentation in order to reclaim his gun, however, upon his arrival to the police property room, plaintiff was told that his gun could not be released until written authorization from Unified Government's Legal Department was received. On March 26, 1999, counsel for defendants *1250 submitted the required authorization, and plaintiff's gun was eventually released to plaintiff on April 6, 1999. Despite plaintiff's argument that defendants' retention of his gun amounted to a violation of his constitutional rights, plaintiff offers no authority for that assertion. The court acknowledges that plaintiff's gun remained in defendants' custody for a fairly lengthy period of time, and finds it unfortunate that plaintiff's telephone requests seeking the release of his gun were repeatedly rebuffed. The court further commiserates with plaintiff's understandable disappointment when, despite defendants' assertion that plaintiff's gun would be released upon presentation of the appropriate documentation, his March 22, 1999 request for the release of his gun was denied pending written authorization from defendants' counsel. Plaintiff's understandable dismay with the delayed return of his gun notwithstanding, the court fails to see how bureaucratic red tape and/or apparent administrative snafus resulted in a wrong of constitutional dimensions. Accordingly, summary judgment in favor of defendants with respect to plaintiff's Fourth Amendment claim for the allegedly unreasonable seizure and subsequent retention of his gun is granted. C. Claims Against Defendant Unified Government In his response to defendants' motion for summary judgment, plaintiff fails to address any of defendants' arguments with respect to defendant Unified Government's entitlement to summary judgment on plaintiff's claims. The court therefore deems any claims asserted against defendant Unified Government abandoned. See Wesley v. Don Stein Buick, Inc., 42 F.Supp.2d 1192, 1195 n. 2 (D.Kan.1999). Plaintiff's tacit abandonment of his § 1983 claims against defendant Unified Government notwithstanding, the court notes that, based on the record currently before it, it is unlikely that plaintiff's claims against the municipality would withstand summary judgment under the principles announced in Monell v. Department of Social Services, 436 U.S. 658, 691, 98 S.Ct. 2018, 56 L.Ed.2d 611 (1978) and its progeny. In Monell, the Supreme Court established the now well-settled rule that local governments are only liable under 42 U.S.C. § 1983 for constitutional torts that amount to a custom or policy of the municipal entity. Id. More specifically, municipal liability in a § 1983 case will attach "only when the official policy is the `moving force' behind the injury alleged." Board of County Comm'rs v. Brown, 520 U.S. 397, 404, 117 S.Ct. 1382, 137 L.Ed.2d 626 (1997). Thus, "a plaintiff must show that the municipal action was taken with the requisite degree of culpability and must demonstrate a direct causal link between the municipal action and deprivation of federal rights." Barney v. Pulsipher, 143 F.3d 1299, 1307 (10th Cir.1998). In this case, the record is completely devoid of any evidence showing that a Unified Government policy was the "moving force" behind the constitutional deprivations alleged by plaintiff. Thus, in light of plaintiff's utter failure to address defendant Unified Government's municipal liability arguments, and because the record before the court fails to establish any facts from which a reasonable fact finder could infer that any of the constitutional violations alleged resulted from a municipal policy, summary judgment in favor of defendant Unified Government is granted with respect to each of plaintiff's § 1983 claims. See Myers v. Oklahoma County Bd. of County Comm'rs, 151 F.3d 1313, 1321 (10th Cir.1998). D. Eighth Amendment Claim In his response to defendants' motion for summary judgment, plaintiff has failed to respond to defendants' arguments with regard to his claims allegedly arising under the Eighth Amendment. As noted earlier, the court deems plaintiff's failure to respond to an argument raised in defendants' papers tantamount to an express *1251 abandonment of any such claim. See Wesley v. Don Stein Buick, Inc., 42 F.Supp.2d 1192, 1195 n. 2 (D.Kan.1999). In any event, the court notes that, under the holding in Graham v. Connor, any claims for excessive force on the part of government officials during the course of an arrest are to be analyzed under the Fourth Amendment. Graham, 490 U.S. at 395 n. 10, 109 S.Ct. 1865. Indeed, it is well-settled that the Eighth Amendment governs alleged post-conviction constitutional violations asserted by inmates during the course of their incarceration. Whitley v. Albers, 475 U.S. 312, 327, 106 S.Ct. 1078, 89 L.Ed.2d 251 (1986) (the Eighth Amendment "serves as the primary source of substantive protection to convicted prisoners ... where the deliberate use of force is challenged as excessive and unjustified.") Thus, in light of the fact that plaintiff has failed to address defendants' arguments with respect to his Eighth Amendment claim, and given that plaintiff's claims for alleged constitutional violations are inappropriately analyzed under the Eighth Amendment, the court grants summary judgment with respect to plaintiff's Eighth Amendment claims as well. E. Fifth Amendment Claim In the pretrial order, plaintiff alleged that defendants' seizure and retention of his gun without just compensation constitutes an unconstitutional taking in violation of the Fifth Amendment. In his opposition to defendants' motion for summary judgment, however, plaintiff has not responded to defendants' arguments with respect to his Fifth Amendment claim. Accordingly, the court deems any such claim abandoned, and grants summary judgment in favor of defendants on plaintiff's Fifth Amendment claim. The court further notes that plaintiff's taking claim is substantively untenable for a number of reasons, the two most obvious being that his gun has, in fact, been released to him, and that there are no facts indicating that defendants manifested an intention to permanently appropriate plaintiff's gun. See, e.g., Porter v. United States, 473 F.2d 1329, 1335-36 (5th Cir. 1973) (Government officials' "mere possession [of suspected assassin Lee Harvey Oswald's personal effects incident to a criminal investigation] does not ipso facto establish that there was an actual `taking,' in the constitutional sense, for which compensation would be required.") F. Fourteenth Amendment Procedural Due Process Claims 1. Seizure of Plaintiff's Gun In his response to defendants' motion for summary judgment, plaintiff fails to address defendants' arguments with respect to whether the seizure of his gun constitutes a violation of the Fourteenth Amendment. 2. Deprivation of Plaintiff's Contractual Rights From what the court can discern from plaintiff's papers, it appears that plaintiff alleges that defendants Marinovich and Davenport, by their alleged orders to "shut down" his arcade business on the night of plaintiff's arrest, deprived him of procedural due process.[12] More specifically, plaintiff contends that defendant Davenport's alleged statement to plaintiff that "you will never operate another arcade in this City again, or any type of business like this," as well as an Judge Robert Serra's[13] alleged instruction to plaintiff *1252 that he "wasn't allowed in [his] business anymore" operated as a constructive revocation of his business license "as well as his contractual relationship on his lease and with the vendors." Pl.Mem. in Opp. at 18. To determine "whether an individual was denied procedural due process, `courts must engage in a two-step inquiry: (1) did the individual possess a protected interest such that the due process protections were applicable; and, if so, then (2) was the individual afforded an appropriate level of process.'" Hatfield v. Board of County Comm'rs, 52 F.3d 858, 862 (10th Cir.1995) (quoting Farthing v. City of Shawnee, 39 F.3d 1131, 1135 (10th Cir.1994)). Whether a protected property interest exists is determined by reference to state law. Watson v. University of Utah Med. Ctr., 75 F.3d 569, 577 (10th Cir.1996). Although plaintiff apparently claims that the interest of which he was deprived was his interest in operating his arcade business, the court notes that plaintiff has not specifically so argued. Assuming arguendo that plaintiff has somehow adequately established a protected property interest in operating his business, the court concludes that defendants are entitled to summary judgment with respect to plaintiff's procedural due process claim. In any event, defendants argue that the alleged statements by Marinovich and Davenport, if actionable at all, fall under the Parratt/Hudson doctrine. See Parratt v. Taylor, 451 U.S. 527, 539-41, 101 S.Ct. 1908, 68 L.Ed.2d 420 (1981) overruled on other grounds by Daniels v. Williams, 474 U.S. 327, 330, 106 S.Ct. 662, 88 L.Ed.2d 662 (1986) and Hudson v. Palmer, 468 U.S. 517, 533, 104 S.Ct. 3194, 82 L.Ed.2d 393 (1984). The Parratt/Hudson doctrine holds that, so long as an adequate post-deprivation remedy is in place, no procedural due process violation occurs where the alleged deprivation is attributable to unpredictable, random or unauthorized acts by state employees. Zinermon v. Burch, 494 U.S. 113, 128, 110 S.Ct. 975, 108 L.Ed.2d 100 (1990) ("Parratt and Hudson represent a special case ... in which postdeprivation tort remedies are all the process that is due, simply because they are the only remedies the State could be expected to provide.") The court concludes that, in light of the above standards governing procedural due process claims, plaintiff's allegations are insufficient to withstand summary judgment. Indeed, plaintiff does not dispute that he has never returned to the Palmer's Arcade premises, nor had any further contact with Daniel Shapiro, since his August 24, 1996 arrest. In fact, there is no indication from the record currently before the court that plaintiff's lease agreement with Mr. Shapiro was terminated or became otherwise unenforceable after plaintiff's arrest. Moreover, plaintiff admits, his video game and billiards tables licenses were not revoked or otherwise invalidated by any of the defendants to this action, but instead expired by their own terms. Plaintiff apparently relies on his allegation that his right to remain in business was constructively revoked by defendants' alleged comments regarding his ability to reopen the arcade. However, the court does not believe that, without more, these alleged comments could be reasonably interpreted to represent a revocation, constructive or otherwise, of plaintiff's right to operate his business. Plaintiff's conclusory allegations to the contrary notwithstanding, the court concludes that plaintiff has failed to come forward with specific facts from which a reasonable fact finder could infer that a constitutional deprivation of a protected property interest occurred. See, e.g., Watson, 75 F.3d at 578 ("As to plaintiff's allegations that defendants denied her due process with regard to her property right to her nursing license, she has not shown enough: [state licensing department] took no action to revoke or suspend her license.") Furthermore, the court finds persuasive defendants' arguments with respect to the probable application of the *1253 Parratt/Hudson doctrine to the facts of this case; arguments to which, the court notes, plaintiff has failed to specifically respond. With regard to that issue, the court notes that plaintiff does not controvert defendants' factual assertions that, if the statements plaintiff alleges deprived him of his interest in maintaining his business were in fact made, neither Marinovich nor Davenport had any authority to make them. Additionally, plaintiff does not challenge defendants' assertion that adequate post-deprivation remedies existed under state law. Thus, taking as true plaintiff's allegations regarding Marinovich's and Davenport's alleged orders to "shut down" plaintiff's business, any such directives could be characterized as the type of random, unauthorized acts of government officials against which the Parratt/Hudson doctrine constitutes a defense. In light of plaintiff's failure to refute defendants' contentions regarding the operation of the Parratt/Hudson doctrine as barring plaintiff's procedural due process claim, summary judgment is likely appropriate on this additional ground as well. Accordingly, the court concludes that plaintiff's procedural due process claim fails on a number of counts, and therefore grants summary judgment in favor of defendants with respect to plaintiff's Fourteenth Amendment procedural due process[14] claim.[15] G. Section 1981 Claims Defendants Davenport and Marinovich move for summary judgment with respect to plaintiff's 42 U.S.C. § 1981 claims against them, claiming that plaintiff has failed to come forward with sufficient evidence demonstrating the existence of a material fact issue for trial with respect to his § 1981 claim. More specifically, defendants argue that plaintiff has failed to offer sufficient evidence to establish a prima facie case of under § 1981. Section 1981 provides: (a) All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens.... (b) For purposes of this section, the term "make and enforce contracts" includes the making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship. 42 U.S.C. § 1981. To establish a prima facie claim under § 1981, the plaintiff must present evidence with respect to the following elements: (1) plaintiff is a member of a racial minority; (2) an intent to discriminate on the basis of race by the defendant; and (3) the discrimination concerned one or more of the activities enumerated in the statute. Mian v. Donaldson, Lufkin & Jenrette Securities Corp., 7 F.3d 1085, 1087 (2d Cir.1993). In this case, plaintiff alleges that defendants Marinovich and Davenport discriminated against him on the basis of race by harassing him, "shutting down" his business while allowing other similarly-situated caucasian businesses to remain operating, and otherwise interfering with his ability to enjoy the fruits of his rental contract with his landlord on the basis of his skin color. To that end, plaintiff boldly *1254 asserts that "Defendants Marinovich and Davenport did not dispute plaintiff's claims that they deliberately prevented him from enjoying the benefits of contractual [sic] relationship with Daniel Shapiro and other vendors because of his race." Pl.Mem. in Opp. at 19. To support this assertion, plaintiff states that "[t]he record shows that plaintiff is an African American, and both defendants are white" and that plaintiff "was harassed and prosecuted for not displaying licenses over his video games." Id. Plaintiff then claims that "[n]o such prosecution of white-owned business [sic] with similar circumstances" occurred, id., but offers no specific facts to support that assertion. Plaintiff then relies on his own deposition testimony to support his contention that "plaintiff [sic] business was closed down, while a white-owned business known to have been used for trafficking drugs was not closed down." Id. Based on these allegedly undisputed facts, plaintiff claims, "a reasonable inference could be drawn that defendants [sic] actions were motivated by racial animus." Id. As a preliminary matter, the court notes that plaintiff does not controvert defendants' assertion that the KCKPD has, on numerous occasions, recommended that legal action be taken to suspend the operations of several white-owned businesses suspected of engaging in illegal activities. Nor does plaintiff dispute the fact that the KCKPD has executed hundreds of search warrants issued with respect to white-owned businesses and/or residences. Nevertheless, plaintiff appears to believe that he was treated differently by defendants, and thus prevented from making and enforcing contracts on the basis of his race. Turning to plaintiff's "evidence" of racial animus, the court first notes that the "white-owned business" to which plaintiff refers is, apparently, known as Miller Hardware. Plaintiff's deposition testimony regarding Miller Hardware is not based on his own personal knowledge; instead, plaintiff's knowledge of the Miller Hardware "drug-dealing" incident was derived solely from a newspaper article. Because plaintiff fails to provide any specific facts regarding the white-owned business, the differential treatment of which plaintiff bases his § 1981 claim, it is unclear whether Miller Hardware was in fact allowed to remain open for business following the drug "bust." More importantly, however, there is no evidence to support the proposition that any of the defendants in this case had any influence with regard to the manner in which the Miller Hardware case was handled, much less whether defendants Davenport or Marinovich were involved in the case at all. Thus, it is difficult to ascertain how a reasonable fact finder could infer racial animus from the allegedly disparate treatment between Miller Hardware and plaintiff's arcade, if the persons alleged to have treated him differently than the Caucasian Miller Hardware owners were not directly involved in both cases. Furthermore, plaintiff does not dispute defendants' assertion that he never returned to the Palmer's Arcade premises to reopen the business, and that his video game and billiards table licenses were not revoked by city officials, but instead expired by their own terms on July 12, 1997. Given the fact that plaintiff does not controvert the assertion that he never attempted to reopen the business that was allegedly "shut down" by defendants because of his race, the court is hard-pressed to believe that he was prevented from enjoying the benefits of his contractual relationship at all, much less on the basis of his race. Thus, the court concludes that summary judgment in favor of defendants with respect to plaintiff's § 1981 claim is appropriate.[16] *1255 H. September 16, 1998 and November 9, 1998 Arrests As is the case with so many of plaintiff's original claims, plaintiff appears to have abandoned his § 1983 claims for the allegedly wrongful arrests that occurred on September 16, 1998 and November 9, 1998 by his failure to respond to defendants' arguments with respect to those claims. Summary judgment with respect to these claims is, therefore, appropriate. His failure to address defendants' arguments specific to these claims notwithstanding, the court notes that plaintiff controverts defendants' factual assertions regarding the September 16, 1998 and November 9, 1998 arrests. Specifically, plaintiff states that Judge Sera, or Cook, or Hutton willfully, intentionally and deliberately issued a bench warrant for plaintiff's arrest on October 6, 1997 for alleged failure to appear for court hearing on the obstruction and resisting arrest charges, while in fact he has no reason or probable cause to believe plaintiff failed to appear for any of the scheduled hearing [sic] on these charges in the municipal or the district court. Pl.Mem. in Opp. at 7. As support for this assertion, plaintiff refers the court to what appear to be municipal court records relating to Mr. Palmer. Evidently, plaintiff expects the court to draw an inference from the notations written by what appear to be several different people that because nothing in these documents specifically states that Mr. Palmer failed to appear for any scheduled hearing, then whichever of the three judges issued the bench warrant must have lacked probable cause to believe that he had so failed to appear for court. Defendants admit that the October 6, 1997 bench warrant was erroneously issued by a Kansas City, Kansas municipal court judge. Defendants further admit that the warrant should have been canceled in the court's computer system once it was brought to Judge Griffin's attention, and that had it been so canceled, plaintiff's subsequent arrest on November 9, 1998 would not have occurred. The court concludes that while plaintiff became the victim of a rather unfortunate chain of events arising from the issuance of an erroneous bench warrant, and continued by an apparent glitch in the municipal court's computer docketing system, or human error on the part of Judge Griffin or his clerks, he has presented no evidence that would permit this set of circumstances to be actionable under 42 U.S.C. § 1983. The September 16, 1998 arrest was not solely due to the existence of the erroneous bench warrant; indeed, plaintiff was arrested at that time on the basis of two additional warrants: one for child abuse, and the other for an outstanding traffic warrant. Thus, the invalid warrant resulted in plaintiff's arrest on one more occasion than he otherwise would have been arrested. As a general rule, a single allegation of unconstitutional conduct is insufficient to establish municipal liability. Butler v. City of Norman, 992 F.2d 1053, 1055 (10th Cir.1993) ("Proof of a single incident of unconstitutional activity is not sufficient to impose liability under Monell ... unless proof of the incident includes proof that it was caused by an existing, unconstitutional municipal policy, which policy can be attributed to a municipal policymaker"); see also Campbell v. City of San Antonio, 43 F.3d 973, 977 (5th Cir.1995) (single incident of mistaken arrest insufficient to allege constitutional deprivation). Thus, the court concludes that *1256 plaintiff's allegations regarding the unlawfulness of his September 16, 1998 and November 11, 1998 arrests fail to establish a violation of his constitutional rights. I. Remaining State Law Claims It is undisputed that no separate jurisdictional basis for plaintiff's common law claims exists in this case. Because the court finds defendants entitled to summary judgment with respect to each of plaintiff's claims arising under federal law, the court declines to exercise its discretion to address the merits of defendants' arguments regarding the propriety of summary judgment any of plaintiff's remaining state law claims.[17]See 28 U.S.C. § 1367(c)(3); Smith v. City of Enid, 149 F.3d 1151, 1156 (10th Cir.1998) ("When all federal claims have been dismissed, the court may, and usually should, decline to exercise jurisdiction over any remaining state claims."); see also Pride v. Does, 997 F.2d 712, 717 (10th Cir.1993) (in light of Tenth Circuit's affirmance of district court's dismissal of plaintiff's "jurisdictionally predicate" federal claims under § 1983, dismissal of plaintiff's pendent state law claims appropriate). Accordingly, all of plaintiff's state law claims are dismissed hereby without prejudice. IT IS THEREFORE BY THE COURT ORDERED THAT defendants' motion for partial summary judgment (doc. 37) is granted in part and denied in part. Defendants' motion is granted with respect to each of plaintiff's claims arising under federal law. Defendants' motion is denied with respect to the state law claims for which defendants seek summary judgment. Plaintiff's state law claims are hereby dismissed without prejudice. NOTES [1] There is some debate between the parties as to what was found inside the arcade and the manner in which it arrived there. According to defendants, once inside the arcade, the officers found several open cans and bottles of beer and liquor, as well as marijuana. Plaintiff claims that any open alcoholic beverages allegedly found on the premises were planted by the police because no alcohol was being consumed by Mr. Palmer's guests inside the arcade. Although the parties' differing views as to how the alcoholic beverages came to be left in plain view of anyone entering the building suggests an issue of fact, a resolution of the dispute is immaterial to the issues presently before the court. [2] In his response to defendants' motion for summary judgment, plaintiff "concedes that there are insufficient facts to support [his Fourth Amendment] claims against defendants Marinovich, Vaught, Swafford, Garner, Miller, Davenport, and Hernandez." Pl. Mem. in Opp. at 12. Thus, in light of plaintiff's acquiescence to the court's entry of summary judgment with respect to his Fourth Amendment claims in favor of the above-named defendants, see id., the court grants summary judgment on plaintiff's Fourth Amendment claims against defendants Marinovich, Vaught, Swafford, Garner, Miller, Davenport, and Hernandez. [3] The court further notes that, if the existence of probable cause were not conclusively established by plaintiff's state court conviction on the obstruction charge, a traditional "probable cause" analysis would yield the same result under the facts of this case. "The constitutionality of a warrantless arrest [is analyzed] under the probable cause standard." Romero v. Fay, 45 F.3d 1472, 1476 (10th Cir.1995). A police officer may effect a warrantless arrest "if he has probable cause to believe that person committed a crime." Id. "Probable cause exists if facts and circumstances within the arresting officer's knowledge and of which he or she has reasonably trustworthy information are sufficient to lead a prudent person to believe that the arrestee has committed or is committing an offense." Id. (quoting Jones v. City and County of Denver, 854 F.2d 1206, 1210 (10th Cir.1988)). When a warrantless arrest is challenged as violative of a § 1983 plaintiff's civil rights, "the defendant arresting officer is `entitled to immunity if a reasonable officer could have believed that probable cause existed to arrest' the plaintiff." Id. (quoting Hunter v. Bryant, 502 U.S. 224, 228, 112 S.Ct. 534, 116 L.Ed.2d 589 (1991)). Plaintiff does not controvert the assertion that "defendant Campbell had been informed that plaintiff would lock the front door and stand out on the front porch and keep watch while other people were inside the business." Def.Mem.Supp.Summ.J. at 6. Nor does plaintiff dispute the fact that, when they first approached plaintiff on August 24, 1996, defendant Campbell identified himself and his accompanying officers as members of the KCKPD and informed plaintiff that the officers were there to execute a search warrant. Id. at 8. A fact issue exists, however, with respect to whether plaintiff inquired as to the reasons for the officers' search warrant only once, as plaintiff maintains, or several times, as the defendants contend. Taking plaintiff's version of the facts as true as the court must for purposes of summary judgment, the court concludes that a reasonable officer could have believed that plaintiff was attempting to obstruct justice by questioning the officers' authority at all, especially in light of their previous explanation that they were there to execute a warrant to search the premises and that they needed him to open the door. Indeed, if the officers were aware that plaintiff regularly stood guard outside the arcade, it would be reasonable for the officers to conclude that his questioning their presence was an intentional obstruction of the officers' attempt to execute the warrant for which plaintiff would be guilty of a violation under K.S.A. § 21-3808(a). [4] The court notes that plaintiff does not controvert defendants' assertion that, although a vascular neck restraint can cause the "victim" of the restraint to lose consciousness if applied forcefully and for a long period of time, plaintiff never lost consciousness as a result of Burris' use of the technique on him. Def.Mem.Supp.Summ.J. at 9. Indeed, plaintiff admits that, once defendant Burris began to apply the vascular neck restraint to plaintiff, plaintiff submitted to the arrest, and Burris then "backed off the technique." Id. [5] The court notes that, in his deposition, plaintiff was unable to identify which of the officers on the scene allegedly pulled his hair. Because plaintiff has assented to the entry of summary judgment on his Fourth Amendment claims with respect to all defendants except Officers Burris, Campbell, and Harper, if the officer who allegedly pulled plaintiff's ponytail was not one of these three officers, plaintiff's excessive force claim based on the alleged hair-pulling incident must fail. Because the court finds the alleged hair pulling insufficient to establish plaintiff's excessive force claim, however, the identity of the unknown hair-puller need not be resolved for the purposes of defendants' motion. [6] Plaintiff testified in his deposition as follows: Q: ... And the lacerations were caused by what? A: By the handcuffs. . . . . . Q: [I] show you Exhibit No. 10. Can you identify that photograph for me? A: ... That's myself sitting in a chair and my wife taking a picture of my arms and stuff. And my hands Q: When was that photograph taken? A: I can't recall if it was the next day or the day after that. q: Well, it says on the back of it September 10th, 1996. Is that when it was taken? A: That's when I brought them to [my attorney]. Q: What does Exhibit No. 10 depict? A: That's showing [my attorney] and anybody else whose [sic] looking at it the way my wrist is and everything. You can see the scars and all. . . . . . Q: Did you seek any medical attention for the injuries from the handcuffs? A: Yes, sir.... . . . . . Q: Which doctor did you see? A: It's the doctor at — no, I didn't have K.U. Blue Cross-Blue Shield. I can't recall which doctor it was. . . . . . Q: Which day did you miss from work? A: The day I was incarcerated and the day that I went to the doctor, the swelling. The day I swelled up. Q: So you missed two days? A: I can't recall how many days I missed. [7] The court further notes that, although plaintiff's arrest did not occur until August 24, 1996, plaintiff's deposition testimony indicates that on August 10, 1996 he presented to his attorney the photographs depicting the wrist injuries he allegedly sustained during his arrest. Because it is impossible to photograph injuries before they occur, the court is puzzled by this apparent inconsistency in plaintiff's deposition testimony; although it is certainly possible that the transcript is in error, or that plaintiff was mistaken when he testified as to the date of the photographs, plaintiff has made no attempt to resolve the discrepancy. [8] The court notes that, in the Hannula case, plaintiff's excessive force claim was analyzed under the due process standard because, at the time of plaintiff's arrest, "the Tenth Circuit generally examined claims of excessive use of force under a substantive due process standard." Hannula, 907 F.2d at 131. Although it is now clear that such claims are to be analyzed under the Fourth Amendment, see Graham v. Connor, 490 U.S. 386, 396-97, 109 S.Ct. 1865, 104 L.Ed.2d 443 (1989), the court does not believe that Hannula's holding that, without more, allegations of too-tight handcuffs fail to state a constitutional violation would be altered in any significant way. [9] The court notes that the requirement of evidence to support a plaintiff's allegations of injuries resulting from a law enforcement's use of allegedly excessive force is not a novel concept in the Tenth Circuit. In that regard, the court notes that, albeit in the context of a Fifth Amendment claim, as opposed to a claim of excessive force arising under the Fourth Amendment, the Tenth Circuit has recently noted that "we have never upheld an excessive force claim without some evidence of physical injury." Bella v. Chamberlain, 24 F.3d 1251, 1257 (10th Cir.), cert. denied, 513 U.S. 1109, 115 S.Ct. 898, 130 L.Ed.2d 783 (1995) (emphasis added). [10] In his papers, plaintiff states that he "called and visited Unified Government's police department property room several times in an effort to get his gun back." Pl.Mem. in Opp. at 17. Plaintiff refers the court to his deposition testimony as support for this assertion. A review of plaintiff's deposition testimony indicates only that plaintiff placed telephone calls to the police department, not that he personally visited the property facility. [11] Although non-dispositive of the issue, plaintiff's delay in attempting to retrieve his gun once given the proverbial "green light" for its release casts some doubt as to plaintiff's true need or desire to regain custody over his gun. [12] The first sentence of plaintiff's argument with respect to this issue states: "There is no dispute that plaintiff's allegation that defendants Marinovich and Davenport's order that plaintiff's arcade be shut down on August 24, 1996 deprived of [sic] interest in his arcade business, and denied him of [sic] contractual relationship with Daniel Shapiro and other vendors are [sic] protected property interest." Pl.Mem. in Opp. at 18. [13] Judge Serra presided over plaintiff's arraignment in municipal court on the charges of resisting arrest and obstructing official duty. Def.Mem.Supp.Summ.J. at 8 n. 8. [14] In response to defendant's motion for summary judgment, plaintiff asserts what appears to be a substantive due process claim against defendants. Pl.Mem. in Opp. at 18. Because no substantive due process claim was preserved in the pretrial order or any subsequent amendment thereto, plaintiff's attempt to raise any such claim at this juncture is inappropriate. [15] The court notes that, although defendants have raised the defense of qualified immunity with respect to plaintiff's procedural due process claim, because the court concludes that plaintiff has failed to adequately allege a deprivation of a constitutional right, the court need not determine whether "the right allegedly violated was clearly established at the time of the conduct at issue." Baptiste, 147 F.3d at 1255 n. 6. [16] Summary judgment with respect to plaintiff's § 1981 claim against defendant Unified Government is appropriate for substantially the same reasons underlying the court's entry of summary judgment in favor of defendant Unified Government with respect to plaintiff's § 1983. First, plaintiff has failed to address defendant Unified Government's arguments with respect to this issue in his response to defendants' motion for summary judgment, and the court therefore deems any such claim abandoned. Furthermore, a § 1981 plaintiff, like a § 1983 plaintiff, must establish that a municipal policy or custom was the "moving force" behind the alleged § 1981 violation. Jett v. Dallas Indep. Sch. Dist, 491 U.S. 701, 735-36, 109 S.Ct. 2702, 105 L.Ed.2d 598 (1989). As with plaintiff's § 1983 claim, the record before the court is devoid of any facts to support such an assertion. In light of plaintiff's apparent abandonment of his § 1981 claims against defendant Unified Government, and in the absence of any facts tending to show that the alleged violation was caused by a municipal policy or custom, summary judgment in favor of defendant Unified Government with respect to plaintiff's § 1981 claim is granted. [17] The court notes that, with the exception of plaintiff's state law claims for false arrest/imprisonment against defendant Unified Government, defendants move for summary judgment with respect to all of plaintiff's claims asserted in this action. This is why defendants' motion is captioned as one for "partial" summary judgment.

01-03-2023

10-30-2013

https://www.courtlistener.com/api/rest/v3/opinions/2347579/

457 F. Supp. 896 (1978) OWENS ILLINOIS, INC. v. LAKE SHORE LAND COMPANY, INC. Civ. A. No. 77-38 Erie. United States District Court, W. D. Pennsylvania. September 27, 1978. *897 *898 John J. Stroh, Jr., Erie, Pa., for plaintiff. Eugene J. Brew, Jr., Erie, Pa., for defendant. MEMORANDUM OPINION, FINDINGS OF FACT, DISCUSSION, AND CONCLUSIONS OF LAW KNOX, District Judge. A. Introduction The complaint as originally filed March 15, 1977, in this case sought a declaratory judgment with respect to provisions of an option agreement covering real estate in Lake City Borough and Girard Township, Erie County. There followed considerable preliminary skirmishing much of it resulting *899 from failure of defendant to cooperate in discovery, litigation resulting from defendant's demands for jury trial, and arguments with respect to joinder of Jeannette Corporation as a party. The date for conveyance of the property, October 1, 1977 having passed plaintiff amended its complaint to include a prayer for specific performance. A late filed counterclaim was dismissed without prejudice to filing a separate action. A non jury trial scheduled for December 27, 1977 was frustrated by defendant filing a petition for mandamus in the United States Court of Appeals and seeking a subsequent stay from the U.S. Supreme Court. Non jury trial was finally commenced March 21, 1978. The matter has since been briefed and argued and the court makes the following: B. Findings of Fact (1) Plaintiff Owens Illinois, Inc., is an Ohio Corporation with its principal place of business at 405 Madison Avenue, Toledo, Ohio. (Tr. 281) (2) Defendant Lake Shore Land Company, Inc. is a Pennsylvania corporation with its principal place of business at 704 Sassafras Street, Erie, Pennsylvania. (Tr. 102) (3) The amount in controversy exceeds the sum of $10,000, exclusive of interest and costs. (Tr. 281) (4) Lake Shore Land Company, Inc., is a closely-held corporation owned and operated by the families of Robert F. Painter and Douglas Painter. Robert F. Painter is President and Director of Lake Shore Land Company, Inc. Douglas Painter is Vice President, Secretary, and a Director of Lake Shore Land Company, Inc. (Tr. 102, 183) (5) Robert F. Painter, age 54, is knowledgeable in the areas of real estate and construction. He is a registered engineer who has been involved in the construction business for 30 years. He is President of United Atkinson, Inc., general contractors of Erie, Pennsylvania. He received a BS in mechanical engineering from Penn State University in 1943. (Tr. 136,9) (6) Douglas Painter, age 49, is knowledgeable in the areas of real estate, insurance and law. In addition to his interest in Lake Shore Land Company, Inc., he has a real estate and insurance company in Erie, Pennsylvania, known as Painter and Company, a real estate company in Cleveland, Ohio, known as Painter Realty Company, and a law office in Cleveland, Ohio known as McGuinness, Painter & McGuinness. He also is Secretary of United Atkinson, Inc. of Erie, Pennsylvania. Douglas Painter received a BS in commerce and finance from the University of South Carolina in 1949 and a JD from Western Reserve University in 1967. He has been licensed to practice law in the State of Ohio since 1967. (Tr. 181,3, 225,6) (7) On April 19, 1967, Owens Illinois, Inc. and Lake Shore Land Company, Inc. executed a separate Lease Agreement for a term of 15 years with a right of extension for additional five year terms to 1992, covering a 4.078 acre tract partly in Lake City Borough and partly in Girard Township, Erie County, Pennsylvania. (Tr. 25) (8) On April 19, 1967, Owens Illinois, Inc. and Lake Shore Land Company, Inc. executed a separate Option Agreement whereby Owens Illinois, Inc. was given the right to purchase from Lake Shore Land Company, Inc. the said 4.078 acre parcel of land situate partly in the Borough of Lake City and partly in the Township of Girard, Erie County, Pennsylvania. (Tr. 25) (9) This Option Agreement recites separate consideration of $10 cash in hand paid by Owens Illinois, Inc. to Lake Shore Land Company, Inc. in return for the grant of the option, in addition to further consideration of the execution of a separate Lease Agreement covering the same property. (10) The term of the Lease Agreement was to commence upon completion of the construction by Lake Shore Land Company, Inc. of a warehouse addition to an existing manufacturing building located on adjoining property owned by Owens Illinois, Inc. The Owens Illinois, Inc. property is to the *900 south and east of the property which is subject to the Option Agreement and the Lease Agreement, and there is a party wall between the warehouse facility to the north on the Lake Shore Land Company, Inc. property and the existing manufacturing building on the south located on Owens Illinois, Inc. property. (Tr. 28-30) (11) The warehouse addition was completed by Lake Shore Land Company, Inc. in 1967, and by agreement of the parties the initial lease term commenced on October 1, 1967 and was to run until September 30, 1982. (Tr. 29-31) (12) Both the Option Agreement and the separate Lease Agreement were not form agreements, and both were the subject of back and forth negotiations between Robert F. Painter, Douglas Painter and Eugene Brew, Esquire on behalf of Lake Shore Land Company, Inc. and Harvey Minton, Joe D'Italia and Don Koepfler on behalf of Owens Illinois, Inc., which negotiations resulted in substantial page and paragraph changes on the original drafts of the two agreements. The result was an agreement negotiated at arms length on both sides. There was no overreaching. (Tr. 226,7, 231,2, 297-300, 303-305) (13) Under paragraph 23 of the Lease Agreement, Owens Illinois, Inc. had the option to require Lake Shore Land Company, Inc. to build an addition to the warehouse facility which had been constructed by Lake Shore Land Company, Inc. in 1967. This option to require additional construction had to be exercised during the first three years of the lease term commencing on October 1, 1967, or prior to September 30, 1970. (14) Owens Illinois, Inc. chose not to exercise its option to have Lake Shore Land Company, Inc. construct this addition to the warehouse facility during this three year period. (Tr. 93) (15) Under paragraph 15 of the Lease Agreement, Owens Illinois, Inc. could not assign or sublet the 4.078 acre parcel without the written consent of Lake Shore Land Company, Inc. but Lake Shore Land Company, Inc. could not unreasonably withhold its consent. No consent, however, would be necessary if the assignment or subletting were made to a subsidiary or affiliate of Owens Illinois, Inc. or to any corporation in which Owens Illinois, Inc. had a controlling interest but lessee should remain liable. (16) On December 7, 1978, George Pavuk of Owens Illinois, Inc. telephoned Robert F. Painter, President of Lake Shore Land Company, Inc., to request permission to sublease the 4.078 acre parcel of property. Pavuk obtained Painter's oral consent on that date. (Tr. 57, 114,5) (17) Lake Shore Land Company, Inc. then provided Owens Illinois, Inc. with written permission to sublease the parcel by letter of December 11, 1972, signed by Robert F. Painter, President, and Douglas Painter, Secretary. (Tr. 51, 70) (18) On December 21, 1972, Lake Shore Land Company, Inc. sent a letter to Northeastern Ohio National Bank, the mortgagor of their 4.078 acre parcel, advising that Lake Shore Land Company, Inc. had given its consent to sublease the parcel and enclosing newspaper clippings from the Wall Street Journal and Erie Times setting forth the involvement of Jeannette Corporation. (Tr. 144-149) (19) Jeannette Corporation (Jeannette) is a publicly-held Pennsylvania corporation of sufficient stature that Northeastern Ohio National Bank was agreeable to any assignment of the mortgage from Lake Shore Land Company, Inc. to Jeannette Corporation, if the need should arise. (20) Lake Shore Land Company, Inc. had actual knowledge in December, 1972, that Jeannette Corporation was not a subsidiary, affiliate, or controlled corporation. If Owens Illinois, Inc. and Jeannette were related corporations, there would have been no need for Owens Illinois, Inc. to seek the consent of Lake Shore Land Company, Inc. under paragraph 18 of the Lease Agreement. (Tr. 144-149) (21) There was no reason for Lake Shore to withhold consent to a sublease to Jeannette and to withhold such consent would have been unreasonable. *901 (22) Pursuant to the written permission of sublease granted by Lake Shore Land Company, Inc.'s letter of December 11, 1972, Owens Illinois, Inc. entered into an Agreement to Sublease with Purchase Option with Jeannette on January 15, 1973. This Agreement covered the 4.078 acre parcel of land which is subject to the Option Agreement and the separate lease agreement between Owens Illinois, Inc. and Lake Shore Land Company, Inc. (Tr. 50-52, 60-62) (23) On January 15, 1973, Owens Illinois, Inc. and Jeannette entered into a separate Plan Lease with Purchase Option covering the property owned by Owens Illinois, Inc. which was to the south and east of the 4.078 acre parcel of land which is subject to the Option Agreement and the separate Lease Agreement between Owens Illinois, Inc. and Lake Shore Land Company, Inc. This separate parcel of land owned by Owens Illinois, Inc. is not involved in this action. (24) On January 15, 1973, Owens Illinois requested a further letter from Lake Shore specifically naming Jeannette as subtenant. Robert F. Painter stated that he would get such a letter in the mail that day or the next day, and Owens Illinois, Inc. then executed the agreement with Jeannette to sublease with purchase option. (Tr. 49, 50) (25) Despite the representation made by Robert F. Painter during the January 15, 1973 telephone conversation with Harvey Minton, Lake Shore Land Company, Inc. failed to provide the promised letter specifically naming Jeannette Corporation as the approved subtenant. (Tr. 52, 58) (26) Under paragraph 19 of the option Owens Illinois had the right to purchase the 4.078 acre piece at the end of any five year lease period for a declining purchase as fixed in said paragraph 1. The tenth lease year or second five year lease period expired September 30, 1977. "Optionee may exercise this option during the term of the Lease or additional terms in the manner hereinafter set forth to consummate the purchase of the property at the end of any five year lease period." (27) Pursuant to Paragraph 3 of the option agreement between Owens Illinois, Inc. and Lake Shore Land Company, Inc., Owens Illinois, Inc. exercised its option to purchase the 4.078 acre parcel of land at the end of the tenth lease year, i. e., September 30, 1977, by letter of July 2, 1976 sent by registered mail and received by Lake Shore Land Company on July 6, 1976. (Tr. 31-33) (28) The option agreement provided in paragraph 9 that the purchase shall be closed at a designated place "or at such other place as the optionee shall direct not more than 120 days after the exercise of the option". It was, however, also provided in paragraph 4 that optionor will provide optionee with an interim binder for title insurance within 45 days after exercise. This was never provided by optionor which did nothing. (29) By letter of December 15, 1976, Douglas Painter on behalf of Lake Shore Land Company advised Owens Illinois that Lake Shore was refusing to convey title to the property subject to the option agreement at any time. (Tr. 33,4) The purported reason was "The violation of the lease option agreement by Owens Illinois". The nature of the violation was not stated. (30) Owens Illinois has been and is ready, willing and able to pay the $92,000 purchase price under the option agreement, but Lake Shore has refused to perform its obligations under the option agreement or to tender a deed and continues to refuse to do so at any time. (Tr. 35, 96,7) (31) Paragraph 16 of the lease agreement between Owens Illinois and Lake Shore Land Company contains the sole procedure for declaring a default and subsequent termination of the lease between the parties covering the 4.078 acre parcel of land. In the event that Owens Illinois is in default of its obligation to pay rent or perform any other terms or provisions of the lease, Lake Shore Land Company, Inc. must provide written notice of the default. Owens Illinois, Inc. then has a 30-day period from receipt of the notice to cure the default. If the default is not cured within the 30-day *902 period, Lake Shore, at its option, may terminate the Lease Agreement by written notice of termination within six months thereafter if the default is continuing. (32) Lake Shore Land Company, Inc. failed to provide Owens Illinois, Inc. with any written notice of default under paragraph 16 of the Lease Agreement until sending its letter of June 14, 1977, after the exercise of the option and after commencement of this lawsuit. This letter refers to an alleged default of paragraph 15 of the Lease Agreement dealing with subleasing and an alleged default of paragraph 8 of the Lease Agreement dealing with fire insurance and is the only written notice of default which ever has been sent pursuant to paragraph 16 of the Lease Agreement. (Tr. 87, 163) (33) Lake Shore had claimed that Owens Illinois, was in default of paragraph 8 of the Lease Agreement for carrying a $5,000 deductible on the fire insurance policy covering the 4.078 acre parcel in question. Although Owens Illinois, Inc. disputed that this deductible constituted a violation of paragraph 8, the deductible was removed at the request of counsel effective May 11, 1977, and there never has been any fire loss to the property. The alleged default was therefore harmless and timely cured. (Tr. 199, 204) (34) Although not mentioned in the written notice of default dated June 14, 1977, Lake Shore Land Company also objected to the form of certificate of liability insurance because the provision which named Lake Shore Land Company, Inc. as an additional insured did not have a signature thereunder. Although Owens Illinois, Inc. disputed that the certificate was improper Owens Illinois presented Lake Shore Land Company, Inc. with a certificate which satisfied its obligation under paragraph 13 of the Lease Agreement. (Tr. 285-286) (35) In any event, Lake Shore failed to give written notice of termination of the Lease Agreement within six months from the end of the period for cure as required by paragraph 16 of the Lease Agreement, but instead chose to continue the Lease Agreement between the parties despite the alleged defaults. (Tr. 176-177) (36) On the morning of March 22, 1978, prior to beginning the second day of trial, Lake Shore sent a letter to Owens Illinois containing a notice of termination under paragraph 16 of the lease agreement which referred only the "failure to correct" an alleged default regarding the subleasing to Jeannette Corporation. The letter does not mention insurance. This written notice was not given within the required six month period. (37) From the commencement of the lease term on October 1, 1967 up through the time of trial, Owens Illinois, Inc. has continued to pay, and Lake Shore Land Company, Inc. has continued to receive and have credited to its mortgage account with Northeastern Ohio National Bank, rental payments in the amount of $975. per month. At no time has Lake Shore Land Company, Inc. refused to accept these monthly rental payments and treat the Lease Agreement as terminated. (Tr. 36-40) C. Discussion While this case was originally commenced as an action for declaratory judgment under 28 U.S.C. § 2201, it has since become as the result of the passage of the date, i. e., October 1, 1977, for the transfer of title a pure and simple equity action for specific performance of a contract to convey real estate. It is a diversity action and since the land lies in Erie County Pennsylvania, the laws of Pennsylvania apply. Defendant throughout this litigation has evinced a settled intention to grasp at all available straws to avoid its obligation to convey this real estate pursuant to the option which it executed. Defendant of course does have the right to insist that the option be exercised precisely in accordance with its terms. The court however holds that it has been so exercised and that an order for specific performance must be entered under the findings of fact above set forth. *903 (1) Was the option exercised at the proper time in accordance with its terms? It will be noted under paragraph 1 the optionee may exercise this option during the term of the accompanying lease at the end of any five year lease period. Since the lease commenced October 1, 1967, the first five year lease period ended September 30, 1972 and the second five year period ended October 1, 1977. Paragraph 3 provided for method of exercising the option and provided "such notice shall be mailed not less than 45 days prior to the expiration of the lease year at the end of which the sale is to be consummated". Thus it appears that the lease period referred to at the end of which the option could be exercised was at the end of the second five year period since the first five year period had elapsed without any attempt to exercise the option. This date was clearly October 1, 1977. On July 2, 1976, a notice of exercise of option in accordance with the terms of the agreement was sent on July 2, 1976, to the defendant by registered mail and received by defendant on July 6, 1976. (See P. Ex. 4). The notice clearly provided that the exercise was to be at the end of the tenth year period ending September 30, 1977. It will be noted that nothing forbids the exercise of the option more than 45 days before the expiration of the five year term and there is nothing which requires that the option be exercised during the tenth lease year as contended by defendant. It is the defendant's contention apparently that notice of exercise of the option had to be sent exactly 45 days before the expiration of the ten year period but this is not what the agreement provides. If it was the intention of the parties to tie themselves to such a rigorous schedule the clause would have read "such notice shall be mailed not more nor less than 45 days prior to the expiration of the lease year . . .". In other words the notice of exercise of the option had to be given on August 16, 1977, or not at all. The defendant complains that the notice of exercise of the option was given too soon but how defendant was harmed by this is not apparent. It further appears that to send a later notice during the last year of the ten year term would have been futile and useless in view of the letter sent by defendant to plaintiff on December 15, 1976, (P. Ex. 8) which plainly says "your request for settlement is refused. The violation of lease option agreement by Owens Illinois precludes the formation of a contract for sale of the property; therefore we do not intend to convey title on the days you suggest, or any day". In view of this flat refusal and repudiation of its obligations under the option agreement plaintiff was not required to send any further notices. The law does not require a party in such a situation to do a vain and useless thing. See Restatement of Contracts, § 306. Unatin Seven Up Co. v. Solomon, 350 Pa. 632, 39 A.2d 835 (1934). In any event this suit was filed March 15, 1977, during the last year of the ten year period in which plaintiff sought originally a declaration that it was entitled to a conveyance of the property. October 1, 1977, came and went while the parties were skirmishing on preliminary matters in discovery and defendant still did nothing to comply with its obligation. Defendant contends that closing had to be within 120 days of notice of exercise of the option, under paragraph 9 of the option agreement. It will be noted that there is nothing in the agreement which makes the exercise of the option dependent upon closing within 120 days. The closing within 120 days was dependent upon optionor complying with paragraph 4 of the agreement to provide optionee in 30 days with an interim binder for title insurance policy covering the property and this requirement was never performed by optionee which will not be permitted to take advantage of its own default as an excuse. The court considers the 120 day clause in paragraph 9 to be for the benefit of the optionee in the event the option was exercised 45 days before the end of the year in which case the parties had 120 days to close and this would prevent dilatory tactics *904 by optionor or optionee for that matter with respect to closing. This matter was not raised as a reason for the absolute refusal to convey under any circumstances contained in the letter of December 15, 1976, and if applicable would therefore be considered waived. The court is at a loss to see how the defendant was harmed by giving of notice on July 2, 1976, to exercise the option effective at the end of the term expiring September 30, 1977. This obviously gave the parties plenty of time to make adjustments and to arrange for title searches and title insurance and other details of closing. Defendant obviously would be entitled to its rent up to the end of the ten year period ending September 30, 1977, and this could be adjusted at time of closing. (2) Default by Plaintiff. Defendant's second line of defense is that the plaintiff has defaulted under the terms of the lease and hence is not entitled to specific performance of the option to purchase. The alleged defaults pertain to granting a sublease of the premises or assignment to Jeannette Corporation which is presently in possession. (3) Violation of the insurance clause in that the policy provided for a $5,000 exclusion from coverage and failure to name Lake Shore Land Company and Jeannette Corporation as interested parties under the Insurance coverage. The court holds that the option agreement and the lease agreement were entirely separate documents and even if there were default under the terms of the lease agreement this cannot be used as a defense to an action for specific performance to the option. The law of Pennsylvania is clear that an option in a lease is treated as an entirely separate agreement and without express language in the contract that default in the lease shall prevent securing of specific performance of the option, such default will be no bar. The law in this area was summed up in Myers v. Epstein, 37 D&C 2d 549 (1965) in these words: "The option to purchase is not an essential covenant of the lease, nor is it a term and condition of the demise. There are many covenants which are often found in leases which are independent and not essential parts of the demise, which, without express agreement to that effect, are not to be incorporated in renewals thereof, such as a covenant to renew or any covenant that has been fulfilled and is not continuous. "The option to purchase is an independent clause in the lease, giving the lessee the right to purchase the property within the time specified: Signor v. Keystone Consistory, 277 Pa. 504, [121 A. 320.] It may be treated as a part of the agreement insofar as it describes the persons and the property, but it forms no part of the demise and was not necessary for the continuance of the tenancy. "Judge Laub, in Felver v. Baumgarten, 35 Erie 91, referred to the Pettit case and others as follows: `The Pettit case, for example, in clear and unambiguous language, divorces an option to purchase contained in a lease from the demise itself and holds that the former is an independent covenant, not essential to the latter and referable to it only insofar as it describes the persons and the property. So too, Parker v. Lewis, 267 Pa. 382, succinctly decided that a lease containing an option to purchase which had been renewed "under the same conditions" constituted a renewal of the lease terms only and not those of the option. And Signor v. Keystone Consistory A.A.S.R., 277 Pa. 504, [121 A. 320,] is to the same effect, holding that an option is an independent contract which is not extended by a renewal of the lease. Kentucky, at least, seems to be in accord with our law. See Carter v. Frakes, 303 Ky. 244, 197 S.W.2d 436.'" While Myers v. Epstein is a lower court case, nevertheless the Supreme Court of Pennsylvania has clearly so held in respect to this matter in Pettit v. Tourison, 283 Pa. 529, 129 A. 587, and Signor v. Keystone Consistory, 277 Pa. 504, 121 A. 320. *905 As stated, the option may be treated as part of the lease for reference to the persons and property covered but otherwise it is not part of the lease and may be assigned separately. The instant case is even of greater strength in establishing this principle since here the option is embodied in a separate agreement and has a separate additional consideration and further specifically states in paragraph 13 that "optionee shall have an unrestricted right to transfer and assign all its rights under this option without the consent of the optionor." This is contrasted with paragraph 15 of the lease where it is provided that the lessee may not assign this lease or sublet the premises without written consent of lessor which shall not be unreasonably withheld. There is nothing in the option agreement which says that default under the terms of the lease is a bar to exercise of the option. This distinguishes this case from Gateway Trading Company v. Children's Hospital, 438 Pa. 329, 265 A.2d 115 (1970). This was a case where the tenant had a right of first refusal and the clause stated "that if the Tenant be not in default under the terms of this Lease or any renewal thereof . . ." This alone distinguishes the case from the case at bar. The court further finds there was no material default under the terms of the lease. The defendant has most strenuously complained that the lease was assigned without written consent by the lessor in violation of paragraph 15. However, defendant's Exhibit P did give consent to an assignment under date of December 11, 1972, "provided that all of the conditions of paragraph 15 are met" which means of course that the lessee would remain liable. Since the lessee still had its obligations and commitments to the lessor this court held that the lessee was a proper real party in interest for the purpose of this action. The court further notes that the clause in question in the lease provides that consent shall not be unreasonably withheld. No sufficient reason has been given as to why consent should not be given to a subletting to Jeannette Corporation a large publicly traded corporation. There is nothing indicated as to Jeannette's financial irresponsibility and therefore the court holds that to refuse to consent to the subletting to Jeannette was unreasonable withholding of consent. Insurance violations — $5,000 deductible. The lease provided in paragraph 8 that lessee should carry fire and extended coverage insurance on the premises. It was therefore not proper for the plaintiff to secure a policy with a $5,000 deductible clause. This defect however was remedied upon demand by the defendant without any default being declared under the lease. Insurance default (named insured). Defendant was also correct in demanding that the policy name Jeannette Corporation and Lake Shore Land Company as insured. This default however was also promptly remedied and no loss occurred during the period when the insurance was not in proper form and there was no attempt by the defendant to declare the lease forfeited. In paragraph 16 of the lease it is provided that if there be a default in terms and conditions other than rent and the lessee shall fail to secure such default within 30 days after written notice, then lessor at its option may at once or within 6 months thereafter but only during the continuance of such defaulted condition terminate the lease whereupon the lease shall end. No such notice of termination was given in this case until the second day of trial, well after the lapse of the six month period. It will be noted that a default in conditions under the lease does not forfeit the lease except in accordance with the terms thereof and defendant never declared such forfeiture but continued to accept rent and recognize the relationship between the parties. Such conduct amounted to a waiver of any reliance upon defaults. See English v. Yates, 205 Pa. 106, 54 A. 503 (1903); Paul v. Snyder, 66 D&C 2d 463 (1974). The court therefore holds that the option agreement is a separate contract from the lease, that the lease is not lugged into the *906 option agreement in any manner and that any default under the terms of the lease would not in these circumstances be a default under the option or a defense against exercise of the same. Since we hold that the option was validly exercised and that default if any by the tenant under the terms of the lease would not be a defense to this action to enforce the option a decree of specific performance must be entered. D. Conclusions of Law (1) This court has jurisdiction over the parties and the subject matter. (2) Owens Illinois, Inc. and Lake Shore Land Company, Inc. entered into a valid and enforceable option agreement (P. Ex. 1) on April 19, 1967. (3) Owens Illinois and Lake Shore entered into a separate lease agreement (P. Ex. 2) on April 19, 1967. (4) Owens Illinois, Inc. as optionee gave consideration to Lake Shore as optionor for execution of the option agreement which was separate and independent from that given for the lease agreement. (5) Pursuant to paragraph 1 of the option agreement, Owens Illinois, Inc. had a right to exercise its option to purchase the 4.078 acre parcel of land from Lake Shore Land Company, Inc. at the end of the tenth year of the lease, which lease year ended on September 30, 1977. (6) By letter of July 2, 1976, sent by registered mail and received by Lake Shore on July 6, 1976, Owens Illinois made a valid exercise of its option to purchase the property at the end of the tenth year of the lease — September 30, 1977. This exercise was consistent with paragraph 3 of the option agreement which required notice of exercise to be mailed not less than 45 days prior to the expiration of the lease year at the end of which the sale was to be consummated. (7) By letter of December 15, 1976, Lake Shore clearly stated that it refused to convey title to the 4.078 acre parcel of land at any time in breach of the option agreement. (8) By filing and pursuing their action for declaratory and injunctive relief, Owens Illinois has indicated its continued desire to purchase the 4.078 acre parcel of land under the option agreement. (9) Owens Illinois had no obligation to designate the exact date, time and place of closing under paragraph 9 of the option agreement especially in view of Lake Shore Land Company's continuing refusal to convey title at any time. (10) Owens Illinois has at all relevant times been ready, willing and able to pay the purchase price under the option agreement but Lake Shore has breached its legal obligations under said option agreement by refusing to execute a deed or to perform its other obligations under the option agreement. (11) Lake Shore Land Company's claim of an alleged breach of the lease agreement does not affect its obligations under the option agreement because the two agreements are separate and independent, as shown by the separate consideration and the fact that the optionee's rights under the option agreement are freely assignable without the optionor's consent contrary to the terms of the lease agreement, and since there is no provision which declares a forfeiture of the option upon a forfeiture of the lease. (12) In any event, there has been no forfeiture of the lease because Lake Shore has chosen not to terminate the lease agreement pursuant to paragraph 16 thereof for an alleged default of that lease agreement, but instead has chosen to continue the lease agreement between the parties. (13) By failing to terminate the lease agreement pursuant to paragraph 16 thereof and by continuing to accept monthly rental payments by Owens Illinois under the lease agreement Lake Shore has waived any right to declare a forfeiture of the lease and thereby affect the validity of the option agreement. (14) The agreement to sublease with purchase option (P. Ex. 15) constitutes a valid *907 sublease, and not an assignment, pursuant to paragraph 15 of the lease agreement. (15) There has been no default under paragraph 15 of the lease agreement because Lake Shore Land Company's letter of December 11, 1972, constitutes the required written consent to sublease. (16) In any event, Lake Shore could not unreasonably withhold its consent to the sublease to Jeannette Corporation in view of the fact that: (1) Owens Illinois continued to be responsible for the obligations under the lease agreement, (2) Jeannette Corporation is a large, publicly held corporation of sufficient financial backing as not to cause any prejudice to Lake Shore and (3) Lake Shore was not losing a right to build an addition to the warehouse for Owens Illinois because Owens Illinois, Inc.'s right to require that construction expired on September 30, 1970, more than two years prior to the subleasing in question. (17) The alleged default in carrying a $5000 deductible on the insurance policy was cured by Owens Illinois was waived by Lake Shore and in any event does not affect any rights and obligations under the separate option agreement. (18) This alleged default with respect to naming of insureds was cured by Owens Illinois, was waived by Lake Shore, and in any event does not affect any rights and obligations under the separate option agreement. (19) Owens Illinois has no adequate remedy at law. (20) Lake Shore is obligated to comply with all terms of the option agreement including the conveyance of 4.078 acre parcel of land by general warranty deed pursuant to paragraph 6 thereof. (21) Owens Illinois is obligated to comply with all terms of the option agreement including but not limited to the payment of $92,000 pursuant to paragraph 1 thereof, less a credit for all monthly rental payments made after September 30, 1977. At time of trial, these payments to be credited totaled $5,850. (22) Specific performance will be decreed consistent with these conclusions of law. (23) Attorneys for the plaintiff are directed to prepare a proper decree of specific performance in accordance with this adjudication and submit the same to the court after notice to the defendant for execution. Such proposed decree shall be submitted within 10 days from the date of this adjudication.

01-03-2023

10-30-2013

https://www.courtlistener.com/api/rest/v3/opinions/1888734/

603 F. Supp. 983 (1985) Anthony HERBERT, Plaintiff, v. Barry LANDO, Mike Wallace, Columbia Broadcasting System, Inc., Defendants. No. 74 Civ. 434-CSH. United States District Court, S.D. New York. February 27, 1985. *984 Cohn, Glickstein, Lurie, Ostrin, Lubell & Lubell, New York City, for plaintiff; Jonathan W. Lubell, New York City, of counsel. Coudert Brothers, New York City, for defendants CBS, Inc. and Mike Wallace; Pamela G. Ostrager, New York City, Selene E. Mize, of counsel. Green & Hillman, New York City, for defendant Barry Lando; Richard G. Green, Adria S. Hillman, New York City, of counsel. Ronald E. Guttman, New York City, for CBS, Inc. MEMORANDUM OPINION AND ORDER HAIGHT, District Judge: In this action for defamation brought by a public figure plaintiff and arising out of a television program and subsequent magazine article, defendants Lando, Wallace, and Columbia Broadcasting System, Inc. ("CBS") moved for summary judgment dismissing the complaint. This Court granted the motion in part and denied it in part, thereby requiring trial on two particular statements ascribed to defendants. That decision is reported at 596 F. Supp. 1178 (S.D.N.Y.1984), with which familiarity is assumed.[1] Plaintiff and defendants now cross move for reargument pursuant to Civil Rule 3(j) of this Court. Plaintiff asks that the complaint be entirely reinstated. Defendants, ask that it be entirely dismissed. Both motions are denied. Rule 3(j) provides that to succeed on a motion for reargument, the moving party bears the burden of "setting forth concisely *985 the matters or controlling decisions which counsel believes the court has overlooked." Implicit in that obligation is the conclusion that if such "matters or controlling decisions" are not demonstrated, the motion fails. As for plaintiff, his further extensive briefs seek to reargue, without making the requisite showing, a considerable number of the adverse determinations contained in the Court's prior opinion. Only one argument warrants consideration here. That is the contention appearing in plaintiff's Main Brief on Reargument at 4: "Plaintiff's position throughout this litigation, also advanced in his opposing papers, has been that he was defamed by the program and article as a whole and not simply by isolated statements removed from that overall defamatory context.... By failing to consider plaintiff's contentions regarding the defamations caused by the program and article as a whole, the court disregarded controlling precedent which holds that libel actions may be grounded upon the defamatory import of the publication as a whole." Plaintiff supports this indictment by citing the string of cases set forth in the margin.[2] The fault in the Court's prior opinion, as perceived by plaintiff, is that the Court "erroneously treated plaintiff's position regarding the defamations at issue as restricted to eleven statements," id. at 2. That is a reference to eleven particular statements which, in his brief opposing summary judgment, plaintiff culled from the television program and the article and alleged were defamatory, false, and published with knowledge of falsity. The Court's prior opinion considered each of those eleven statements with respect to whether or not they were "actionable," that is, "susceptible of imposing liability at the hands of a reasonable jury properly instructed on the law." 596 F. Supp. at 1198. No district judge particularly enjoys being told that he has "disregarded controlling precedent." To avoid that professional embarrassment, the judge relies (a) upon the briefs of counsel, and (b) his own knowledge of the law, as supplemented by independent research. The judge reasonably relies upon counsel to call to his attention "controlling precedent" bearing upon the issues at hand. These reflections are prompted by the fact that none of the nine cases plaintiff now identifies as controlling precedents which this Court disregarded was cited in plaintiff's 282-page brief in opposition to summary judgment, which cited 106 other cases. Nor was the argument presently put forward included in that brief, although the defendants, in their motion for summary judgment following extensive discovery, launched a broad scale attack upon the viability of plaintiff's claims. If the plaintiff's new argument were sound, and the authorities now cited for the first time apposite, his motion for reargument would pose a question of substance, notwithstanding the Court's perhaps understandably puzzled state at not having been told about them before. In fact, however, the argument is not sound, and the cases do not focus upon the analysis pursued in the Court's prior opinion. In consequence, what emerges is not a puzzling case of advocate's amnesia, but an unsuccessful effort to recast claims which discovery has demonstrated are not actionable. The cases now cited by plaintiff stand essentially for the proposition that whether or not statements are capable of a defamatory *986 interpretation often turns upon the context in which they appear. It is quite true, as plaintiff argues on the present motion, that "libel actions may be grounded upon the defamatory import of the publication as a whole." The cases cited by plaintiff, fn. 1 supra, illustrate the working of that rule. Golden Bear Distributing Systems of Texas v. Chase Revel, Inc. did not involve a public figure plaintiff. Hence the measure of liability was negligence, not malice, as in the case at bar. The holding upon which plaintiff relies relates to the initial inquiry of whether the article in question contained an actionable defamatory meaning. The purported quotation from the case (plaintiff's Main Brief on Reargument at 5) does not in fact appear in the Fifth Circuit's opinion; what does appear is this: "The evidence presented at trial suggests that all the individual statements in the magazine article concerning Golden Bear of California's fraudulent activities and Golden Bear of Texas' representations to potential investors were true. The basis of the libel lies in the juxtaposition of truthful statements about one company with truthful statements about the illegal operations of an independent company of the same name located in a different state." 708 F.2d at 948. Street v. NBC involved a suit by the prosecutrix and main witness in the famous Scottsboro rape trials. She sued NBC for defamation, NBC having televised a play dramatizing the role of the presiding judge at one of the Scottsboro trials. The plaintiff was held still to be a "public figure." Her claim was based on nine specific scenes in the play, each of which plaintiff contended contained false and defamatory statements of fact which she specifically identified. 645 F.2d at 1230-32. Having examined those statements in detail, the Sixth Circuit predictably concluded that "[t]he facts recited above illustrate that the play does cast plaintiff in an extremely derogatory light. She is portrayed as a perjurer, a woman of bad character, a woman who falsely accused the Scottsboro boys of rape knowing that the result would likely be the electric chair." 645 F.2d at 1232. That recitation led to the equally unsurprising conclusion: "Taken as a whole, the play conveys a defamatory image of the plaintiff." Ibid. Having resolved in plaintiff's favor the issue of whether the play was defamatory, the Sixth Circuit then turned to the separate question of whether plaintiff had adduced evidence sufficient to support a jury verdict of malice. The court answered that question in the negative, and affirmed the district court's directed verdict for NBC: "So long as there is no evidence of bad faith or conscious or extreme disregard of the truth, the speaker in such a situation does not violate the malice standard. His version of history may be wrong, but the law does not punish him for being a bad historian. "The malice standard is flexible and encourages diverse political opinions and robust debate about social issues. It tolerates silly arguments and strange ways of yoking facts together in unusual patterns." 645 F.2d at 1237. Hoffman v. The Washington Post Company considered whether five particular statements in a newspaper article about plaintiff, a trainer of athletes, were defamatory in respect of the efficacy of dietary supplements sold by plaintiff, a public figure within the limited area of his claimed expertise. Defendant moved for summary judgment. The district court declined to read the five statements "as discrete units, for the challenged publication must be read as a whole. Its content must be considered in its entirety and weighed in connection with its structure, nuances, implications, and connotations." 433 F. Supp. at 602 n. 1. The district judge concluded that the defendants' article "was defamatory because it imputed dishonest conduct to Bob Hoffman and tended to disgrace him and bring him into ridicule." Id. at 603. However, summary judgment was granted to defendants, after discovery, because "[t]he record *987 in this case fails to demonstrate that plaintiff could produce clear and convincing evidence that each defendant acted with actual malice," id. at 605. Afro-American Publishing Co. v. Jaffe involved an appeal by defendants after bench trial in a libel action brought by a pharmacist who operated a local drugstore in Washington, D.C. Plaintiff, who was white, served a neighborhood where 80% of his customers were black. Plaintiff ceased distributing the defendant's newspaper "Afro" because he regarded it as racist and inflammatory. This provoked an editorial in "Afro" critical of plaintiff, prompting a suit for invasion of privacy and defamation. Plaintiff recovered compensatory and punitive damages on both counts. The District of Columbia Circuit, sitting en banc, reversed the award for invasion of privacy, 366 F.2d at 654, but affirmed the judgment for compensatory (although not punitive) damages for defamation. The court stated generally that the publication "must be taken as a whole, and in the sense in which it would be understood by the readers to whom it was addressed"; certain "false statements were critical in the total impact of the article. The article contained other items that were true, but in the setting already described these only reinforced the defamatory impression." Id. at 655. It is worth noting that the Court of Appeals specifically found that the plaintiff was not a public figure, so that he was not required to prove malice under New York Times Co. v. Sullivan, 376 U.S. 254, 84 S. Ct. 710, 11 L. Ed. 2d 686 (1964), and its progeny. Sellers v. Time, Inc., a diversity action turning upon Pennsylvania law, involved a Time magazine article about a businessman-golfer who succeeded in driving a golf ball backwards and into the eye of a golfing partner. The perpetrator of this unintended assault was sued by his golfing partner; he pleaded the defense of assumption of the risk; Time regarded the incident as newsworthy and published an article about it. In plaintiff's ensuing suit for libel, defendant moved successfully for summary judgment. The Third Circuit noted plaintiff's contention that various perceived innuendoes "support his contention that the article as a whole portrays him as one for whom business success overrides all concerns for others," 423 F.2d 890, but concluded that the article was not defamatory: "While the article may have caused Sellers great personal annoyance, annoyance alone does not constitute defamation." Id. at 891 (citing Pennsylvania cases). Mulvihill v. Forbes is another case in which the motion of the defendant, Forbes magazine, for summary judgment was granted. A Forbes article discussed "boiler shop" security operations and mentioned plaintiff's name. The Court said: "The issue in the instant case, simply stated, is whether there has actually been a defamation." 9 Med.L.Rptr. at 1138. The district judge accepted plaintiff's argument that "the court should review the article as a whole, and not view the passage which names Mulvihill out of context," but went on to say: "The court does not believe that the article, viewed as a whole, can reasonably be considered to be defamatory." Id. at 1140-41. Wilder v. Johnson Publishing Co. also turned only upon the question of whether or not a published article was defamatory, the issue arising within the context of defendant's motion to dismiss the complaint under Rule 12(b)(6) for failure to state a claim. The district court held that one aspect of the article was not defamatory, but that another aspect was, and set the case down for trial in respect of that aspect. No other issues were raised or decided. Green v. Northern Publishing involved an action by a physician appointed by prison authorities to supervise the health of incarcerated individuals. The death of a prisoner in custody excited newspaper attention, culminating in an editorial which reported the termination of the plaintiff physician's services by the prison authorities, and made other comments concerning him. The Alaska Supreme Court reversed a summary judgment in defendant's favor. The opinion deals first with the question of *988 whether or not the editorial was defamatory of plaintiff, the court concluding that it was 8 Med.L.Rptr. at 2418. Turning to the separate issues present, the Court observed generally: "Defamation defendants have two defenses — truth and privilege." Ibid. Citing New York Times Co. v. Sullivan, supra, the Alaska Supreme Court refers to "a conditional constitutional privilege for media defendants in defamation suits brought by `public officials.' The `condition' was that the privilege applied only if the media defendant had not uttered the defamation with `actual malice', i.e., with actual knowledge that its utterance was false or with reckless disregard for its truth or falsity." Ibid. The Court held that the physician plaintiff should be regarded as a "public official," and that, on the evidence in the record, reasonable jurors could find that at least one statement in the editorial was published with malice. Clark v. Pearson, another case dealing with the issue of defamation, states generally: "An accused publication must be read as a whole. Its content must be considered in its entirety and weighed in connection with its structure, nuances, implications and connotations.... It is not sufficient to take every sentence separately and demonstrate its individual accuracy, detached and wrenched out of its context." 248 F. Supp. at 191. The district judge concluded that the article in question could reasonably be regarded as defamatory, and denied defendant's motion for summary judgment. It is worth nothing, however, that the court also regarded the plaintiff as a private individual, and not a public figure, id. at 195, so that the case did not present the question of actual malice. I have no quarrel with the holdings or the rationales of any of these cases. Nor does this Court's prior opinion depart in any way from their principles. Plaintiff's claim on reargument of judicial disregard of "controlling precedent" itself disregards the three separate issues which arise in a public figure's libel action against the media. "When a public figure sues for defamation, the first amendment bars recovery unless the defamatory falsehoods were made with knowledge of falsity or with reckless disregard for the truth." Hotchner v. Castillo-Puche, 551 F.2d 910, 912 (2d Cir.1977). Thus before a media defendant may be held liable to a public figure plaintiff, the plaintiff must prevail on each of three discrete issues: (1) was the statement defamatory? (2) was the statement false? (3) was the statement published with actual malice? It will be recalled that these are the precise questions, and in that order, submitted by Judge Sofaer to the jury in Sharon v. Time, Inc., 83 Civ. 4660 (ADS). Sharon's complaint was dismissed because, although he prevailed on the first two questions, the jury held against him on the third. The separate and independent nature of these three issues is further emphasized by the fact that the plaintiff's burdens of proof as between them are different: "... there is a significant difference between proof of actual malice and mere proof of falsity," Bose Corp. v. Consumers Union of U.S., Inc., ___ U.S. ___, 104 S. Ct. 1949, 1965, 80 L. Ed. 2d 502 (1984). This brings me again to the task I set myself in response to defendants' motion for summary judgment, namely, to consider whether the eleven specific statements identified by plaintiff were "actionable," in the sense of permitting a reasonable jury to answer all three questions in plaintiff's favor. In respect to the nine statements as to which summary judgment was granted, I concluded that a reasonable jury, properly instructed, could not do so. A reading of the Court's prior opinion makes it plain that the main focus was upon whether or not a jury could find that plaintiff had proved actual malice by that measurably heavier burden of "clear and convincing evidence." In emphasizing that issue, I did not disregard the others. It was the parties themselves, in their motion papers, who concentrated upon the issue of actual malice. It would be an exaggeration to say that the defendants conceded that the program and the article were defamatory; but the argument was not emphasized, *989 the main debate revolving around the issue of malice. While as an alternative ground for decision I concluded that some of the statements were not defamatory, defendants' motion for summary judgment, to the extent that it was granted, depends primarily upon the Court's conclusions concerning the challenged statements that plaintiff could not prove actual malice at trial. Nothing in plaintiff's motion for reargument causes me to question those conclusions. Plaintiff complains of the Court's concentration upon the eleven specific statements which plaintiff urged in his brief were defamatory, false, and published with malice. I remain of the view that plaintiff was entitled to no more than that. Fully appreciating plaintiff's contention that "he was defamed by the program as a whole, not simply by particular statements made on the program," Main Brief on Reargument at 2, even those cases which properly consider the publication as a whole in determining defamation vel non typically begin their analyses with the particular statements alleged to be false and defamatory. Street v. NBC, supra, is illustrative. The nine specific incidents identified by plaintiff as false and defamatory, within the context of the Scottsboro play as a whole, are the functional equivalents of the eleven statements identified by the present plaintiff as false and defamatory within the context of the television program and article.[3] There are policy reasons for requiring specific pleading in cases of this nature. Media discussion of a public figure's conduct enjoys presumptive First Amendment protection. Small v. ABC, 10 Med.L.Rptr. 2391, 2392 (N.D.Iowa 1984); Barger v. Playboy Enterprises, Inc., 564 F. Supp. 1151, 1154 (N.D.Cal.1983). In Franchise Realty Interstate Corp. v. San Francisco Local Joint Executive Board of Culinary Workers, 542 F.2d 1076, 1082-83 (9th Cir. 1976), the Ninth Circuit stated generally that in cases involving "conduct which is prima facie protected by the First Amendment, the danger that the mere pendency of the action will chill the exercise of First Amendment rights requires more specific allegations than would otherwise be required." Because of that principle, the district court in Small v. ABC, supra, an action which like the case at bar alleged defamation in a television news program, granted defendants' motion "to require the plaintiff to state in his complaint the exact words broadcast which were defamatory." Id. at 2392. Given the constitutional implications of such cases, that is not asking too much of a public figure plaintiff. In the case at bar, defendants made no such motion addressing the sufficiency of the complaint; plaintiff's specifications of "the exact words [broadcast and in the article] which were defamatory" first emerged in his opposition to summary judgment. The inadequacy of general allegations of defamation, divorced from the specific words plaintiff challenges, is all the more apparent in light of the established rule that, on the separate issue of actual malice, an article's "uncomplimentary" or "snide" tone "is no evidence that the article was published with actual malice." Reliance Insurance Co. v. Barrons', 442 F. Supp. 1341, 1352 (S.D.N.Y.1977). Judge Leval made the same point more recently in Westmoreland v. CBS, 601 F. Supp. 66, 68 (S.D.N.Y. 1984): "Publishers and reporters do not commit a libel in a public figure case by publishing unfair one-sided attacks. The issue in the libel suit is whether the publisher recklessly or knowingly published false *990 material. The fact that a commentary is one sided and sets forth categorical accusations has no tendency to prove that the publisher believed it to be false." First Amendment implications aside, under general principles it is usually held that a defamation plaintiff does not satisfy the requirements of notice pleading unless he specifically alleges the words said to be actionable. Asay v. Hallmark Cards, Inc., 594 F.2d 692, 699 (8th Cir.1979) ("Nevertheless, the use of in haec verba pleadings on defamation charges is favored in the federal courts because generally knowledge of the exact language used is necessary to form responsive pleadings."). The Second Circuit, construing New York law in diversity cases, has reached the same conclusion. Foltz v. Moore-McCormack Lines, 189 F.2d 537, 539 (2d Cir.1951) ("It is true that in actions for libel or slander the false and defamatory matter should be pleaded in haec verba."), citing and approving Simpson v. Oil Transfer Corporation, 75 F. Supp. 819, 822 (N.D.N.Y.1948) ("It has long been held that defamatory words must be set forth in the complaint, if an action is to be based thereon."). For further New York authority, see N.Y. CPLR § 3016(a) (McKinney 1974): "In an action for libel or slander, the particular words complained of shall be set forth in the complaint...."; Laiken v. American Bank & Trust Company, 34 A.D.2d 514, 308 N.Y.S.2d 111, 112 (1st Dept.1970) ("The complaint in an action for slander is required to state in haec verba the words used. This requirement is strictly enforced and the exact words must be set forth.").[4] In the light of these authorities, it is useful to review the chronology of the case at bar. Plaintiff's complaint alleged that the program and the article defamed him in several respects. Those allegations were reiterated in plaintiff's motion opposing summary judgment. 596 F. Supp. at 1184. The allegations of the complaint were general and conclusory. They are of doubtful sufficiency under New York law as interpreted by the Second Circuit.[5] But defendants did not test the sufficiency of the pleading by motion. Instead, they joined issue by answer. Pre-trial discovery then began. The boundaries of proper discovery were litigated and eventually resolved by the Supreme Court. 441 U.S. 153, 99 S. Ct. 1635, 60 L. Ed. 2d 115 (1979). During discovery, plaintiff and the individual defendants each testified for days. Other witnesses were deposed. Tens of thousands of pages of testimony were generated. Hundreds of exhibits were produced. After *991 completion of discovery, defendants moved for summary judgment. They argued that nothing in the article or program was false or defamatory; but that in any event, the discovery demonstrated that, as a matter of law, plaintiff could not prove actual malice by clear and convincing evidence that any statement was made with actual malice. Plaintiff's answering papers identified eleven specific statements in the program and article which plaintiff claimed were false, defamatory, and known by defendants to be false. Brief at 224-228. They fell within one or another of the general areas of defamation plaintiff articulated in his pleadings. Plaintiff discussed these specific statements separately, with references to prior analyses in the brief (pages 37-156) of the evidence pertinent to each of them. Defendants' reply papers focused upon those eleven statements. Defendants argued that certain of the statements were not false, or if false, not defamatory; but that in no case could plaintiff demonstrate actual malice. The Court's opinion, granting summary judgment in part and denying it in part, similarly focused upon the eleven statements specified by plaintiff. The evidence as to each statement was reviewed. Nine statements were found to be nonactionable, and the remaining two statements actionable. 596 F. Supp. at 1198-1224. Plaintiff now contends on reargument that the Court should not have concentrated upon the eleven statements discussed in the briefs, but should rather have adjudicated the summary judgment motion on the basis of plaintiff's more general and conclusory allegations of defamation set forth in the pleadings. I cannot, under prevailing law, accept that proposition. It is simply not sufficient for a public figure libel plaintiff, bearing the burdens of proof imposed by existing law on the discrete issues of defamation, falsity, and actual malice, in resisting a summary judgment motion after extensive discovery, to proffer the full text of a media program or article and argue that its general tone or thrust could sustain a plaintiff's verdict. The media, protected by the First Amendment, and the Court, charged inter alia with its enforcement, are entitled to be directed by the public figure plaintiff to specific statements which are defamatory; false (the falsity lying in haec verba or dishonest juxtaposition of true statements); and which a jury could find on clear and convincing evidence were published with actual malice. The present plaintiff undertook that burden in his opposing papers, and the Court dealt fully with the issues as raised. Disappointed in the result, and under the guise of a motion for reargument, plaintiff attempts a different and less demanding approach which constitutional principles reject. Plaintiff's difficulty lies in part in the failure to plead specifically; but it is much more than that. After comprehensive discovery, plaintiff has not shown, save for the two statements as to which summary judgment was denied, that a reasonable jury could find actual malice in respect of any statement uttered by any defendant.[6] I have considered the other contentions of the parties. They do not conform to the *992 requirements of the rule governing motions for reargument, and require no further discussion.[7] The motions for reargument are denied in their entirety. Trial will go forward in accordance with the separate scheduling order entered concurrently. It is SO ORDERED. NOTES [1] The Court granted summary judgment to the magazine publisher, Atlantic Monthly Company, and dismissed the complaint as to it. [2] Golden Bear Distributing Systems of Texas, Inc. v. Chase Revel, Inc., 708 F.2d 944 (5th Cir.1983); Street v. NBC, 645 F.2d 1227 (6th Cir.1981), cert. dismissed, 454 U.S. 1095, 102 S. Ct. 667, 70 L. Ed. 2d 636 (1981); Hoffman v. Washington Post Co., 433 F. Supp. 600 (D.D.C. 1977), aff'd, 578 F.2d 442 (D.C.Cir.1978); Afro-American Publishing Co. v. Jaffe, 366 F.2d 649 (D.C.Cir.1966) (en banc); Sellers v. Time, Inc., 423 F.2d 887 (3rd Cir.), cert. denied, 400 U.S. 830, 91 S. Ct. 61, 27 L. Ed. 2d 61 (1970); Mulvihill v. Forbes, 9 Med.L.Rptr. 1137 (D.N.J.1982); Wilder v. Johnson Publishing Co., 551 F. Supp. 622 (E.D.Va.1982); Green v. Northern Publishing Co., Inc., 8 Med.L.Rptr. 2515 (Alaska Sup.Ct. 1982), cert. denied, ___ U.S. ___, 103 S. Ct. 3539, 77 L. Ed. 2d 1389 (1983); Clark v. Pearson, 248 F. Supp. 188 (D.D.C.1965). [3] Golden Bear Distributing Systems of Texas v. Chase Revel, Inc., supra, appears at first blush to be different because the Fifth Circuit said at 708 F.2d 948 that "all the individual statements ... were true." But Golden Bear's particular facts make any difference more apparent than real. The particular libel of which plaintiff complained lay "in the juxtaposition of truthful statements about one company with truthful statements about the illegal operations of an independent company of the same name located in a different state." Ibid. In other words, by misleading editing the defendant achieved the functional equivalent of a false statement, which plaintiff identified and specifically challenged as defamatory. Plaintiff makes no comparable claim in the case at bar. [4] In his reply brief on reargument, plaintiff cites for the first time Locricchio v. Evening News Association, Inc., No. 64729 (Mich.App. entered August 24, 1983), reh'g. denied (October 17, 1983), cert. denied, ___ U.S. ___, 105 S. Ct. 433, 83 L. Ed. 2d 360 (1984). The suit arose out of a series of allegedly defamatory articles published in the Detroit News concerning plaintiffs' activities with regard to the development and operation of an entertainment complex. Defendants interposed interrogatories asking plaintiffs to specifically identify each statement claimed to be defamatory or false. Plaintiffs in their answers did not do so, contending rather that "the entire series of articles, in their entirety" defamed them by presenting "a false portrayal, implication, imputation and/or insinuation" that plaintiffs were, inter alia, members of the Mafia. On the basis of that response, defendants moved for summary judgment. The trial court denied summary judgment and the Michigan Court of Appeals affirmed, expressing the view that the pleadings raised "a genuine issue of material fact as to whether the specified articles, read as a whole, carry a defamatory insinuation or inference that plaintiffs are associated with organized crime." Locricchio, while to a degree supportive of plaintiff's position, does not alter the conclusions which I reach in the case at bar. Michigan law, to the extent that it forms the basis for decision, is not applicable here. There is no indication that the plaintiffs were public figures — indeed, one infers that they preferred to keep a low profile — and so the constitutional considerations implicit when the media discuss public figures do not arise. Furthermore, Locricchio came to the Michigan Court of Appeals at the pleading stage; no discovery had been held, and as the result of the combination of these circumstances, the issue of actual malice was not before the court. [5] Plaintiff's allegations of defamation are no more specific than those condemned in Simpson v. Oil Transfer Corporation, supra, at 75 F. Supp. 822, or those found insufficient for defamation purposes in Foltz v. Moore-McCormack Lines, supra, 189 F.2d at 539, which approved Simpson. [6] I am inclined to the view that, when a public figure plaintiff sues the media for libel, he must allege the actionable words with precision or be non-suited. Such a requirement is not inconsistent with the rule that the allegedly offending publication must be read as a whole; that salutary principle requires that the specified words be read in context. Cf. Cianci v. New Times Publishing Co., 639 F.2d 54 (2d Cir.1980), where the former mayor of Providence pointed to the headline in a newspaper article about him — "BUDDY WE HARDLY KNEW YA" — and Judge Friendly observed that a jury, "considering this in light of the article as a whole, could surely conclude that New Times was saying that Mayor Cianci" was a disreputable character. It is a quite different proposition to say that a public figure plaintiff sufficiently alleges a defamation action against the media without specifically identifying the offending statements, relying instead upon general allegations of insinuation or suggestion. I would be inclined to hold, in a case where the issue is squarely presented, that the First Amendment protection afforded to the press includes protection against embarking upon that slippery slope of interpretation. But I need not decide the issue in the case at bar, because defendants moved not on the pleadings, but for summary judgment after comprehensive discovery. [7] Plaintiff offers, in his briefs on reargument, four additional specific statements said to be actionable. Main Brief on Reargument at 25-27. Given the chronology of the case, these additional claims are untimely. In any event, the statements are not actionable. Plaintiff attacks the credibility of helicopter pilot Plantz's descriptions of incidents involving Herbert, as recounted by Wallace on the program. But Lando, who researched the program, was not required in law to credit Herbert's denials, or the hearsay opinions of Kahila, Peyser and Bruce Potter that such incidents were unlikely to have occurred; or pursue independent corroboration of Plantz. There is no evidence that Lando or Wallace knew Plantz's statements were false, or that they had a "high degree of awareness of their probable falsity," Garrison v. Louisiana, 379 U.S. 64, 74, 85 S. Ct. 209, 215, 13 L. Ed. 2d 125 (1964), cited in this Court's prior opinion at 596 F. Supp. 1187. Rosenblum's opinion that the Barnes investigation "wasn't a whitewash," included on the program, was his personal opinion, based on reasons which he articulated, and is not actionable on any theory. Furthermore, the facts that Barnes "took the Fifth" and the investigators chose not to call as witnesses certain individuals is not inconsistent with Rosenblum's reasoning, or the opinion he expressed that the Army conducted a thorough investigation. Wallace's statement and Lando's writing concerning the claims of LTC Nicholson and Major Crouch that they flew back from Hawaii to Vietnam with Franklin are peripheral to the particular defamation plaintiff alleges, namely, that Franklin was not in Vietnam on February 14 to receive the report that Herbert says he gave him. See 596 F. Supp. at 1210-1212. On reargument plaintiff argues Crouch should not be believed. The reasons given do not, and could not, amount in law to a showing that Lando knew what both Crouch and Nicholson reported about their trip with Franklin were false or probably so.

01-03-2023

10-30-2013

https://www.courtlistener.com/api/rest/v3/opinions/1888621/

603 F. Supp. 1088 (1985) John THOMAS, Joseph Molepske, Robert Gibson, Terrence Smith, Maxwell Riffkind and Grant Petersen, Trustees of the Dairy Employees'-Milk Dealers Pension Plan, Plaintiffs, v. The SOUTHLAND CORPORATION, Defendant. No. 84 C 5330. United States District Court, N.D. Illinois, E.D. March 4, 1985. Asher, Pavalon, Gittler & Greenfield, Robert B. Greenberg, Chicago, Ill., for plaintiffs. Rothschild, Barry & Myers, Christopher G. Walsh, Chicago, Ill., for defendant. ORDER NORGLE, District Judge. This matter is before the court on the Defendant's, the Southland Corporation ("SOUTHLAND"), Rule 12(b)(6) motion to dismiss. The issue presented by Southland's motion is whether the Multiemployer Pension Plan Amendments Act of 1980, 29 U.S.C. §§ 1381, et seq. ("MPPAA"), entitles the Plaintiffs, Trustees of the Dairy Employee's-Milk Dealer's Pension Plan ("PLAN"), to payments for Southland's *1089 withdrawal liability pending the arbitrator's determination of Southland's withdrawal liability. Southland contends that internal ambiguities and inconsistencies within MPPAA, as well as several constitutional considerations, preclude a construction of the statute which would entitle the Plan to interim payments. Because the court finds the statutory scheme established by MPPAA consistent and without constitutional defect, Southland's motion to dismiss must be denied. A brief outline of the MPPAA precedes a discussion of the issues raised by the motion to dismiss. The MPPAA provides a comprehensive statutory scheme which regulates employer withdrawals from multiemployer plans. An employer, therefore, is subject to "withdrawal liability" from the date of withdrawal for a plan's "unfunded vested liability." 29 U.S.C. § 1381. Section 1382 directs the plan's trustees to compute the employer's withdrawal liability. After performing the computation and preparing a schedule of payments, the trustees are rquired by § 1399(b)(1) to notify the withdrawing employer of its liability and demand payment in accord with the established schedule. If a withdrawing employer fails to make payments as demanded by the trustees, then § 1399(c)(3) provides that interest shall accrue on the delinquent payments. After a delinquency period of 60 days the trustees may declare the entire amount of an employer's withdrawal liability due. § 1399(c)(5). A delinquent employer is also subject to interest and penalty on the lump sum payment. Id. Section 1401(a) and (b) provide arbitration procedures in the event of a dispute between the plan and the employer regarding an employer's liability or the plan's calculations. In this case, Southland has made a timely request for arbitration, but the parties have yet to appear before an arbitrator. During its deliberation of the MPPAA, Congress was preoccupied with shoring up the security of funding for multiemployer plans. House of Representatives Education and Labor Committee Report, H.R.REP. No. 96-869, Part I, 96th Cong., 2d Sess. 54-55, reprinted in 1980 U.S.Code Cong. & Ad.News 2918, 2919, 2925, 2928, 2931, 2952 (hereinafter cited as "House Report"). The MPPAA was generally regarded as a remedy for problems inherent in ERISA as it was enacted in 1974. Id. at 2919, 2925, 2928, 2020. Under ERISA, employers actually received a benefit by withdrawing from existing plans. Id. at 2928. The MPPAA was designed to remove that benefit by imposing liability on withdrawing employers for "vested but unpaid benefits." See Peick v. Pension Benefit Guaranty Corp., 724 F.2d 1247, 1254-55 (7th Cir.1983). The MPPAA also contains several presumptions which favor determinations and calculations made by plan sponsors. E.g., § 1401(a)(3)(A) and (c). Finally, the MPPAA provides incentives for employers and plans to resolve disputes through arbitration. E.g., § 1401(a)(1). Thus, in keeping with the statutory scheme of MPPAA, as well as the Congressional intent behind the statute, plans are provided with the security of continuous funding upon employer withdrawal and withdrawing employers are provided with explicit administrative procedure for resolution of any disputed calculations.[1] On its face the *1090 MPPAA appears to greatly favor plan sponsors over employers. However, it must be kept in mind that an employer's liability to a plan is rooted in the employer's contractual obligations. The House Committee Report on the MPPAA specifically noted the close relationship between the MPPAA and an employer's contractual obligations under a collective bargaining agreement. Multiemployer plans are creatures of collective bargaining. The committee believes that the integrity of the collective bargaining process must be preserved to the utmost extent consistent with assuring the financial soundness of multiemployer plans to meet benefit commitments. The bill as reported out by the committee represents an effort to strike an appropriate balance among conflicting interest and needs. The legislation is designed to improve the financial condition of multiemployer plans and eliminate existing incentives to plan termination, while maintaining an adequate level of protection for plan participants through financial assistance to insolvent plans. House Report, supra, at 2931. With this background in mind, we turn to the task of construing §§ 1399 and 1401. Section 1399(c)(2) provides: (2) Withdrawal liability shall be payable in accordance with the schedule set forth by the plan sponsor under subsection (b)(1) of this section being no later than 60 days after the date of the demand notwithstanding any request for review or appeal of determinations of the amount of such liability or of the schedule. Section 1401(d) provides: (d) Payments by employer prior and subsequent to determination by arbitrator; adjustment; failure of employer to make payments Payments shall be made by an employer in accordance with the determinations made under this part until the arbitrator issues a final decision with respect to the determination submitted for arbitration, with any necessary adjustments in subsequent payments for overpayments or underpayments arising out of the decision of the arbitrator with respect to the determination. If the employer fails to make timely payment in accordance with such final decision, the employer shall be treated as being delinquent in the making of a contribution required under the plan (within the meaning of section 1145 of this title). (emphasis added). Southland concedes that both sections create a duty on behalf of withdrawing employers to make interim payments to plans pending an arbitrator's decision. See Defendants Brief in Support of Motion to Dismiss at 12, 13. Nevertheless, citing Republic Industries v. Teamster Joint Counsel, 718 F.2d 628 (4th Cir.1983), Southland contends that § 1401(b)(1) implicity contradicts §§ 1399(c)(2) and 1402(d). Southland argues that this conflict prevents liability for interim withdrawal payments to the Plan. This court disagrees. In Republic, an employer attacked the constitutionality of the MPPAA. One argument raised by the employer was that *1091 provisions of the Act requiring payments pending arbitration violated the due process clause. After upholding the MPPAA against the employer's constitutional attack, the Republic court specifically declined to decide whether the MPPAA required an employer to make interim payments. Republic, supra, at 642. In a footnote, however, the court discussed what it perceived to be an ambiguity in the MPPAA regarding interim payments. Id. at 641 & nn 15, 16. Although the court agreed that § 1399(c)(2) and the first sentence of § 1401(d) clearly require employers to make payments pending arbitration, the court thought the second sentence of § 1401(d) and § 1401(b)(1) were to the contrary. Id. Southland has seized the ambiguity identified in Republic and reads § 1401(a)(1), (b)(1) as treating amounts demanded by a plan under § 1399(b)(1) as ""due and owing ..." only "[i]f no arbitration proceeding has been initiated pursuant to subsection (a)."" Defendant's Brief in Support of Motion to Dismiss at 12-13. This reading, however, represents a rather myopic view of § 1401(b)(1). The full text of § 1401(b)(1) provides: (b) Alternative collection proceedings; civil action subsequent to arbitration award; conduct of arbitration proceedings (1) If no arbitration proceeding has been initiated pursuant to subsection (a) of this section, the amounts demanded by the plan sponsor under section 1399(b)(1) of this title shall be due and owing on the schedule set forth by the plan sponsor. The plan sponsor may bring an action in a State or Federal court of competent jurisdiction for collection. The subsection, therefore, plainly requires that "amounts demanded by the plan sponsor under section 1399(b)(1)" become "due and owing" under section 1401(b)(1) in the absence of a request for arbitration under § 1401(a). In other words, § 1401(b)(1) has no application to cases in which an employer has requested arbitration.[2] Section 1401(d), on the other hand, does have application in cases where an employer requests arbitration. Subsection (d) contemplates payments "by an employer in accordance with the determinations made under this part until the arbitrator issues a final decision." (emphasis added). The application of either subsection clearly depends on whether arbitration has been requested: If arbitration has not been requested, then § 1401(b)(1) applies: If arbitration has been requested, then § 1401(d) applies. Thus, as we read them, the subsections are not inconsistent because each applies under different circumstances.[3] Moreover, it would be anomalous for a Congress so concerned with the continued vitality of multiemployer plans to intend the result suggested by Southland (viz. the suspension of payments by withdrawing employers who have initiated arbitration). This court's reading of § 1401 is consistent with the congressional policy behind MPPAA and the interim regulations promulgated by the PBGC. See 29 C.F.R. § 2644.2(c)(2). As previously mentioned, the MPPAA provides an employer with significant incentives to honor its contractual obligations to a pension fund. This Court declines to disturb the rational decisions made by Congress to protect the security of pension plans. Board of Trustees v. Ceazan, 559 F. Supp. 1210 (N.D.Cal.1983); Retirement Fund v. Lazar-Wisotzky, 550 F. Supp. 35, 36 (S.D.N.Y.1982) aff'd 738 F.2d 419 (2d Cir.1984). *1092 Southland further argues that the Plan is required to exhaust its administrative or arbital remedies under MPAA before proceeding under §§ 1401 and 1451 for payments pending arbitration. This argument is without merit. If the application of the exhaustion doctrine suggested by Southland is accepted, then the requirements for payment pending arbitration contained in § 1401(d) are rendered inoperative. Congress is unlikely to have intended such a result. Further, in seeking to compel Southland to make interim payments, the Plan is not attempting to make an end run around the arbitration procedures provided by § 1401(a). The Plan seeks construction and enforcement of a separate statutory right provided by §§ 1399(c)(2) and 1401(d). Therefore, because we read these sections as clearly requiring interim payments by a withdrawing employer pending an arbitrator's decision, there can be no exhaustion issue in this case. See I.A.M. National Pension Fund v. Stockton Tri Industries, 727 F.2d 1204, 1209-11 (D.C.Cir.1984). The constitutional arguments raised by Southland are not persuasive. The MPPAA has survived attack under the due process clause and the seventh amendment. E.g., Republic supra, at 642; Peick, supra, at 1277. See also Ceazan, supra, at 1216-18; Lazar-Witsotzky, supra. at 37. The motion to dismiss is therefore denied. IT IS SO ORDERED. NOTES [1] Representative Thompson pointed out the necessity for providing plan sponsors with an efficient procedure to insure continued funding upon an employer's withdrawal. Pending the resolution of the dispute [involving a plan's determination of withdrawal liability], the employer is required to pay withdrawal liability as originally determined by the plan ... Senate Labor and Human Resources Committee and Finance Committee, Joint Explanation of S.1076: Multiemployer Pension Plan Amendments Act of 1980, 126 Cong.Rec. S. 10120 (Daily ed. July 29, 1980). Recourse available under current law [ERISA] for collecting delinquent contributions is sufficient and unnecessarily cumbersome and costly. Some simple collection actions brought by plan trustees have been converted into lengthly, costly and complex litigation concerning claims and defenses unrelated to the employer's promise and the plans' entitlement to the contributions. This should not be the case. Federal pension law must permit trustees of plans to recover delinquent contributions efficaciously, and without regard to issues which might arise under labor-management relations law — other than 29 U.S.C. 186. Sound national pension policy demands that employers who enter into agreements providing for pension contributions not be permitted to repudiate their pension promises. ... These same principles apply to a plan's claim for employer withdrawal liability assessed in accordance with this legislature [sic]. The public policy of this legislation to foster the preservation of the private multiemployer pension plan system necessitates that provision be made discourage delinquencies and simplify delinquency collection. ... Under the provision of the bill, in addition to any other consequences that follow from a default in paying withdrawal liability payments within the time prescribed is to be treated in the same manner as a delinquent contribution to the plan. Thus, the court must award the plan not only the liability that is in default, plus interest but also liquidated damages and attorneys' fees ... (Rep. Frank Thompson, Jr., Cong.Rec. August 26, 1980, H7899). [2] In its discussion of the changes resulting in ERISA after the enactment of the MPPA our court of appeals noted that "[u]nder MPPA an employer who withdraws must immediately begin to pay a fixed and certain debt owed to the plan." Peick, supra, at 1255 [3] The internal scheme of subsection (b) supports this conclusion. The subsection is titled "alternative collection proceedings". Subsection (b)(1) applies where "no arbitration proceeding has been initiated." Subsection (b)(2) presents an alternative "[u]pon the completion of arbitration proceedings."

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603 F. Supp. 668 (1984) NATIONAL COAL ASSOCIATION, et al., Plaintiffs, v. William CLARK, et al., Defendants. NATIONAL COAL ASSOCIATION, et al., Plaintiffs, v. William CLARK, et al., Defendants. NORTHERN PLAINS RESOURCE COUNCIL, et al., Plaintiffs, v. William CLARK, et al., Defendants. Civ. A. Nos. 83-2985, 83-3320 and 83-3330. United States District Court, District of Columbia. November 28, 1984. *669 Arnold Levy, Jerome H. Simonds, John S. Lopatto, III, Freedman, Levy, Kroll & Simonds, Washington, D.C., for plaintiffs Nat. Coal Ass'n and Mining and Reclamation Council of America; Robert Stauffer, Peter A. Gabauer, Deputy Gen. Counsel, Thomas Altmeyer, Washington, D.C., of counsel. Robert D. Daniel, Sp. Litigation Counsel, Land and Natural Resources Div., U.S. Dept. of Justice, Washington, D.C., for federal defendants; John J. McHale, Energy and Resources, U.S. Dept. of the Interior, Washington, D.C., of counsel. Russell H. Carpenter, Jr., Laird Hart, Covington & Burling, Washington, D.C., for defendants Rocky Mountain Energy Co., Union Pacific Corp., and Union Pacific R. Co. Steven P. Quarles, Thomas R. Lundquist, Crowell & Moring, Washington, D.C., Stephen H. Foster, Holland & Hart, Billings, Mont., for defendant Meridian Land and Mineral Co. Guy R. Martin, Perkins, Coie, Stone, Olsen & Williams, Washington, D.C., for defendants *670 Burlington Northern, Inc., and Burlington Northern R. Co. David Charles Masselli, Washington, D.C., James A. Patten, Patten & Renz, Billings, Mont., Thomas France, National Wildlife Federation, Northern Rockies Natural Resource Center, Missoula, Mont., for plaintiff Northern Plains Resource Council. MEMORANDUM ORDER HAROLD H. GREENE, District Judge. These three cases involve challenges to decisions of the Department of the Interior to exchange federal property containing substantial coal reserves for property owned by entities which are subsidiaries of, or otherwise controlled by, major railroads. In No. 83-2985, plaintiffs, which are trade associations representing coal producers, challenge the Department's "Corral Canyon" (Wyoming) exchange with defendant Rocky Mountain Coal Company, a subsidiary of the Union Pacific Railroad. In No. 83-3320 the same plaintiffs challenge the Interior Department's "Circle West" exchange of land in Montana with defendant Meridian Land and Mineral Company, which is owned by defendant Burlington Northern Railroad Company. And in No. 83-3330, the same "Circle West" exchange is challenged by a number of environmental and community organizations. The major claim asserted by plaintiffs in all three cases—and indeed, the only major common legal claim in these cases—is that the exchanges do not satisfy the "public interest" requirement of the Federal Land Policy and Management Act of 1976 (FLPMA), 43 U.S.C. § 1716(a), in that they violate policies embodied in other federal statutes which prohibit common carrier railroads from holding federal coal leases or transporting coal that they have themselves mined.[1] Plaintiffs seek declaratory and injunctive relief, including a declaration that the Interior Department's construction of the relevant statute and its approval of the exchanges were contrary to law and invalid. Plaintiffs have moved to consolidate the cases, primarily on the ground that all three turn on the common FLPMA legal issue. The motion is opposed on the ground that the pending motions by the private defendants in both Nos. 83-3320 and 83-3330 to dismiss for lack of personal jurisdiction and for improper venue,[2] and by the government in No. 83-3320 to dismiss for lack of standing, place the "Circle West" cases in different procedural postures than the "Corral Canyon" case, so that consolidation would neither be fair nor promote judicial economy and efficiency.[3] The motions to dismiss for lack of personal jurisdiction and improper venue obviously constitute threshold challenges to this Court's appropriateness as a forum for deciding these cases. Accordingly, the Court will consider these issues before considering the other pending motions.[4] *671 I In determining whether it possesses personal jurisdiction over the private defendants in the "Circle West" cases, the Court must begin by inquiring whether the contacts of these defendants with the District of Columbia are sufficient to establish personal jurisdiction under District of Columbia law, the source of the Court's power of personal jurisdiction over non-resident defendants. Fed.R.Civ.P. 4(d)(3), 4(e); see Lott v. Burning Tree Club, Inc., 516 F. Supp. 913, 915 (D.D.C.1980); 4 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure Civil §§ 1112-18. It is undisputed that none of these defendants resides, is incorporated, or maintains its principal place of business in the District. Accordingly, the only conceivable bases for the Court's exercise of personal jurisdiction over them are those enumerated in the District of Columbia "long-arm" statute, 4 D.C.Code Ann. § 13-423 (1981 and Supp. 1984). On the various grounds set forth in the statute for asserting "long arm" jurisdiction over a foreign defendant, the only one potentially applicable here is that set out in subsection (a)(1) of section 423. This subsection permits a court in the District of Columbia to exercise personal jurisdiction over a person, who acts directly or through an agent, as to a claim arising from that person's transaction of business in the District. 4 D.C.Code Ann. § 13-423(a)(1), (b). Plaintiffs here claim that the written and oral contacts of the private defendants with Interior Department officials in the District constitute business transactions sufficient to render defendants amenable to jurisdiction under subsection 423(a)(1).[5] In the view of this Court, that claim fails adequately to take account of the effect of the long-recognized "government contacts" exception to that provision. The government contacts exception exempts from consideration as business transactions upon which section 423(a)(1) "long-arm" jurisdiction may be based contacts of a non-resident defendant in this District which are made solely with the federal government. As the District of Columbia Court of Appeals has explained, two major considerations underlay the development of the "government contacts" exception. First, the court was concerned with protecting the important First Amendment right to petition the national government for the redress of grievances, which arguably would have been impermissibly burdened by a "long-arm" statute that permitted such contacts, standing alone, to subject a non-resident to the jurisdiction of local courts. See Rose v. Silver, 394 A.2d 1368, 1373-74 (D.C.1978). Second, the Court of Appeals noted that, absent the government contacts exception, subsection 423(a)(1) would effectively transform the District of Columbia into a national judicial forum whose courts would rapidly be inundated with lawsuits—a result not intended by Congress in enacting the "long-arm" statute. See Environmental Research International, Inc. v. Lockwood Greene Engineers, Inc., 355 A.2d 808, 813 (D.C.1976). Although the articulation and application of the government contacts exception by the local Court of Appeals may have been somewhat inconsistent over the years,[6] the federal Court of Appeals for this Circuit recently concluded upon a careful analysis of the District of Columbia case law both that the government contacts exception remains the law in the District of Columbia and that this exception applies to contacts with all branches of the federal government, not merely to contacts with the Congress. In Naartex Consulting Corp. v. Watt, 722 F.2d 779 (D.C.Cir.1983), cert. denied, ___ U.S. ___, 104 S. Ct. 2399, 81 L. Ed. 2d 355 (1984), the relevant jurisdictional facts of which are strikingly similar to those of the "Circle West" cases, the Court of Appeals *672 determined that a foreign corporate defendant, whose only contacts with the District consisted of the maintenance of an office used for monitoring legislative and regulatory matters and of several appearances before the Interior Department, lacked sufficient non-governmental, business contacts to be amenable to suit in this District under subsection 423(a)(1). Id. at 786-87. And with respect to another issue of relevance here, the court further concluded that the protection of the defendants under the government contacts exception was in no way diminished by the circumstance that their contacts concerned the protection of their own proprietary interests. Naartex clearly controls the "Circle West" cases.[7] In these cases, as in Naartex, the undisputed affidavits submitted by the private defendants establish that their only contacts with the District of Columbia were the maintenance of a governmental affairs office and limited personal and written communication with Interior Department officials concerning the challenged exchanges. These contacts are insufficient under Naartex to satisfy the jurisdictional prerequisites of subsection 423(a)(1), and the Court therefore lacks personal jurisdiction over the private defendants in the "Circle West" exchange cases. These defendants must therefore be dismissed as to those cases. II Having concluded that it lacks personal jurisdiction over the private defendants in the "Circle West" cases, the Court must consider next whether these defendants are necessary and indispensable parties within the meaning of Rule 19, Fed. R.Civ.P. It is clear that at least one such defendant—Meridian Land and Mineral Company (Meridian)—is both a necessary and an indispensable party.[8] Meridian is clearly a necessary party within the meaning of Rule 19(a).[9] Meridian negotiated the challenged land exchange with officials of the Interior Department's Bureau of Land Management, and Meridian obviously has a strong interest in the "Circle West" actions, which call into question both the legality of the exchange and Meridian's title to the land it received as a result of the exchange. It follows that the disposition of these actions in favor of the plaintiffs would impede Meridian's ability to defend its fee interest in the land. Such a disposition could also subject the government to conflicting obligations with respect to the exchanged parcels of land as between a court order invalidating the exchange, *673 and Meridian's potential (due process) claim that, title having passed, it cannot now be disturbed by a judgment in a case to which Meridian was not a party. Finally, as is shown by plaintiffs' joinder of Meridian, they recognize that Meridian's absence would prevent the Court from granting them complete relief and returning matters to the status quo ante. All of these considerations compel the conclusion that Meridian is a necessary party under Rule 19(a). See McKenna v. Udall, 418 F.2d 1171, 1174 (D.C.Cir.1969). Similar reasoning compels the conclusion that Meridian is an indispensable party under Rule 19(b).[10] As explained above, a full, fair, and adequate judgment that does not prejudice the plaintiffs, the government, or Meridian cannot be reached in Meridian's absence. None of the parties has suggested, nor has the Court itself divined, a satisfactory means by which these problems could be resolved or even mitigated by a careful shaping of any judgment or relief. Finally, the District Court for the District of Montana constitutes an adequate alternative forum[11] in which Meridian[12] and the other defendants[13] may be joined and the "Circle West" suits be heard.[14] *674 For the reasons stated, the Court will grant the motions of the private defendants in Nos. 83-3320 and 83-3330 to dismiss these cases pursuant to Rule 19, Fed.R. Civ.P.[15] III Accordingly, it is this 28th day of November, 1984 ORDERED that the motions of private defendants in Nos. 83-3320 and 83-3330 to dismiss be and they are hereby granted, and it is further ORDERED that National Coal Association v. Clark, Civil Action No. 83-3320, and Northern Plains Resource Council v. Clark, Civil Action No. 83-3330 be and they are hereby dismissed, and it is further ORDERED that oral argument will be heard on the pending motion to dismiss or for summary judgment in National Coal Association v. Clark, Civil Action No. 83-2985, on January 11, 1985, at 10:00 a.m. NOTES [1] Specifically, plaintiffs cite a provision of the Mineral Lands Leasing Act of 1920, 30 U.S.C. §§ 181, 202, which prohibits a company operating a common carrier railroad from holding or being given a federal coal lease, and the "commodities clause" of the Interstate Commerce Act, 49 U.S.C. § 10746, which prohibits railroads operating under the jurisdiction of the Interstate Commerce Commission from transporting goods that the railroad has produced or mined. [2] In No. 83-3320, these defendants have moved to dismiss for lack of jurisdiction and improper venue, or in the alternative for transfer to the federal district court for the district of Montana, or for summary judgment. In No. 83-3330, they have filed a similar motion as to jurisdiction and venue, but they have omitted the summary judgment motion. [3] It is also claimed that consolidation is inappropriate because of factual distinctions and differences in legal theories. For example, plaintiffs in No. 83-3330 have also asserted a claim under the National Environmental Policy Act (NEPA), 42 U.S.C. §§ 4321 et seq., asserting that the environmental impact statement prepared by the Bureau of Land Management was inadequate under NEPA. [4] The other pending motions in these cases include defendants' motions to dismiss for failure to state a claim or for summary judgment in No. 83-2985, the government defendants' motion to dismiss for lack of standing in No. 83-3320, and a cross-motion for summary judgment filed by plaintiffs in the same case. [5] It was the purpose of these contacts to persuade the officials to establish the policy that led to the challenged "Circle West" exchange, and to approve the exchange itself. [6] Compare Environmental Research, supra, with Rose v. Silver, supra; see also Naartex Consulting Corp. v. Watt, 722 F.2d 779, 786-87 (D.C.Cir. 1983). [7] Plaintiffs seek to distinguish Naartex and, alternatively, they invite the Court to undertake its own analysis of the relevant District of Columbia Court of Appeals cases. The attempted distinctions of these cases from Naartex are entirely convincing. As for the suggestion that this Court should undertake an independent analysis of District of Columbia law, it is obvious that this Court is bound by the recent, carefully reasoned opinion of its own Court of Appeals. Plaintiffs also argue that the vitality of Naartex and the government contacts exception is undermined by recent decisions of the Supreme Court in Keeton v. Hustler, ___ U.S. ___, 104 S. Ct. 1473, 79 L. Ed. 2d 790 (1984), and Calder v. Jones, ___ U.S. ___, 104 S. Ct. 1482, 79 L. Ed. 2d 804 (1984), which held, inter alia, that First Amendment concerns should not affect jurisdictional analysis. This argument also falls short of the mark, however, for it ignores the dual basis for the government contacts exception, which is rooted not only in the First Amendment, but also in the concern that the courts in the District of Columbia not be transformed into national forums contrary to congressional intent. [8] Because of this determination, the Court need not and does not reach the question whether Burlington Northern, Inc. and Burlington Northern Railroad Company, which have financial interests in Meridian (and indirect financial interests in the outcome of these cases), are also necessary and indispensable parties. [9] That Rule requires the joinder of a party if "(1) in his absence complete relief cannot be accorded among those already parties, or (2) he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter impair or impede his ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest". [10] That Rule requires a court that has identified a necessary party which is not amenable to process to "determine whether in equity and good conscience the action should proceed among the parties before it, or should be dismissed ... The factors to be considered by the Court include: first, to what extent a judgment rendered in the person's absence might be prejudicial to him or those already parties; second, the extent to which, by protective provisions in the judgment, by the shaping of relief, or other measures, the prejudice can be lessened or avoided; third, whether a judgment rendered in the person's absence will be adequate; fourth, whether the plaintiff will have an adequate remedy if the action is dismissed for non-joinder". [11] In addition to its jurisdictional adequacy (see n. 12, 13, and 14), the Montana court is clearly an adequate forum for an adjudication on the merits. That court is, of course, endowed with decision-making authority equal to that enjoyed by this Court and by all other federal courts. Moreover, the Montana court's proximity to the land which is the subject of the "Circle West" suits, and its concomitantly greater familiarity with the substantive issues that will have to be reached if plaintiffs' threshold statutory challenges fail would, if anything, render it more competent than this Court to decide these cases. Finally, since many of the individuals whose actions are challenged in these cases—e.g., the Bureau of Land Management officials and Meridian representatives—reside in Montana, as do the members of plaintiff organizations in No. 83-3330 and some of the members of plaintiff organizations in No. 83-3320, the Montana court would be a convenient forum for the parties in these cases. [12] Meridian, a Montana corporation which owns land in Montana, both is found and does business in Montana, and is therefore subject to jurisdiction under Fed.R.Civ.P. 4(d)(3) and 4 Mont.Code Ann.Civ.Proc. Rule 4B, which provides, inter alia, that "[a]ll persons found within the state of Montana are subject to the jurisdiction of the courts of this state". Id. [13] The federal defendant can be joined pursuant to 28 U.S.C. § 1391(e), which provides, inter alia, that suits against officers of the United States acting in their official capacities may be brought "in any judicial district in which (1) a defendant in the action resides, or (2) the cause of action arose, or (3) any real property involved in the action is situated". Id. These cases appear to satisfy all three of the cited grounds. Private defendant Meridian resides in Montana (see n. 12, supra). The involvement of the local office of the Interior Department's Bureau of Land Management in the development and approval of the land exchange certainly permits Montana to be characterized as the district in which the claims arose. Finally, the land involved in the exchange is located in Montana. As for the private defendants, Burlington Northern Railroad Company is qualified to do business in Montana (Defendants' Memorandum in Support of Motion to Dismiss in No. 83-3320 at 14-15 n. 5), and it is therefore found in Montana and amenable to process under the Montana "long-arm" statute, Mont.Code Ann. Civ.Proc. Rule 4B(1). Burlington Northern, Inc. may also be amenable to suit in Montana; in any event, it has indicated that it would consent to the jurisdiction of the Montana federal district court (Defendants' Memorandum, supra; Affidavit of Scott Anderson). Moreover, even if Burlington Northern were not amenable to suit, its indirect economic interest in the challenged land exchange, coupled with the absence of an available alternative forum in the wake of this Court's decision in these cases, would likely lead the Montana federal court to conclude that Burlington Northern is not an indispensable party in whose absence the suits could not proceed. [14] Venue would be proper in the District Court in Montana under 28 U.S.C. §§ 1391(b), (c), and (e). As noted in note 13, supra, venue as to the United States is proper under 28 U.S.C. § 1391(e) and will be proper with respect to the entire lawsuit if it is also proper with respect to the other defendants. Lamont v. Haig, 590 F.2d 1124, 1129, 1130 n. 36 (D.C.Cir.1978). Under 28 U.S.C. § 1391(b), venue is proper in the district in which the claim arose, and as noted in note 13, supra, Montana can reasonably be characterized as the district in which these claims arose. Moreover, if a subsequent lawsuit is brought against all of the present defendants except for Burlington Northern, Inc., venue would be proper under 28 U.S.C. §§ 1391(b) and (c), which provide that venue in cases not founded solely on diversity is proper in the district where all defendants reside and that a corporation's residence for venue purposes is "any district in which it is incorporated or licensed to do business or is doing business" (28 U.S.C. § 1391(c)); and it might even be proper as to Burlington Northern under the "doing business" provision of § 1391(c). [15] Because the Court has concluded that these cases must be dismissed for lack of jurisdiction over an indispensable party, it does not reach the issues of venue, standing, and appropriateness for consolidation.

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72 F. Supp. 2d 344 (1999) Richard MORALES, Plaintiff, v. QUINTEL ENTERTAINMENT, INC. and Peter Stolz, Defendants. No. 98 Civ. 7071(WCC). United States District Court, S.D. New York. October 27, 1999. *345 Law Offices of David Lopez, Southampton, New York, for plaintiff; David Lopez, Albert D. Barnes, of counsel. Moses & Singer LLP, New York City, for defendant; Roger L. Waldman, Gregory J. Fleesler, of counsel. OPINION AND ORDER WILLIAM C. CONNER, Senior District Judge. Plaintiff Richard Morales brings this shareholder suit pursuant to Section 16(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78p(b) (the "Act"), to recover profits realized by defendant Peter Stolz through his short-swing trading in common shares of Quintel Entertainment, Inc. ("Quintel"). Quintel is a named defendant solely to bring all the necessary parties before the court. Before this Court are plaintiff's motion and defendant Stolz's cross-motion for summary judgment. For the reasons stated below, plaintiff's motion is denied and defendant Stolz's cross-motion is granted. BACKGROUND Pursuant to a January 17, 1996 agreement[1] (the "PRN/Quintel Agreement"), Psychic Reader's Network ("PRN") sold its one-half interest in New Lauderdale LLC to Quintel. As an 11% shareholder of PRN, defendant Stolz received 352,000 shares of Quintel common stock as a result of this transaction. These shares represented less than 2.5% of the outstanding common stock of Quintel. The other two shareholders of PRN were Steve Feder, who owned 44.5% of PRN shares, and Thomas Lindsey, who owned 44.5% of PRN shares. Both Feder and Lindsey received 1,429,000 shares as a result of the PRN/Quintel Agreement. The PRN/Quintel Agreement, negotiated by Feder and PRN's counsel with Quintel's Chief Executive Officer and Quintel's counsel, included several provisions restricting PRN shareholders from selling the Quintel stock that they received pursuant to the agreement. These provisions, commonly called "lock-up" provisions, are often included in merger and acquisition agreements. The first lock-up provision, contained in Section 3.3 of the PRN/Quintel Agreement, prevented the PRN shareholders from selling shares of Quintel stock for two years unless a Quintel Principal sold shares. If a Quintel Principal sold shares, then each of the PRN shareholders had the right to sell a specific number of shares as determined by a formula. Each PRN shareholder could also sell a specific number of shares to pay taxes. The second lock-up provision, contained in Section 3.2.1 of the PRN/Quintel Agreement, restricted *346 the PRN shareholders from selling more than a specific number of shares of Quintel stock in any quarter. In December 1996, Stolz executed a Schedule 13D. The Schedule 13D indicated, by a check in the appropriate box, that Stolz was a member of a group. It also stated that a group "may be formed" which "may be deemed to be the beneficial owner" of the 3,388,000 shares of Quintel stock collectively owned by Feder, Lindsey and Stolz. Stolz filed four amendments to the Schedule 13D with the Securities and Exchange Commission ("SEC") that included the same information with respect to the existence of a group. Defendant Stolz also filed one Form 5 and six Forms 4 with the SEC between February 1997 and September 1998. Each of these forms stated that the "Relationship of Reporting Person to Issuer" was a "Member of 13(d) group owning more than 10%." The cover letter accompanying each of these Forms also stated that Stolz was a member of a § 13(d) group owning more than 10% of Quintel stock. Defendant Stolz claims that the Schedule 13D and the Forms 4 and 5 were prepared by his attorney and he signed them without regard to the statements that he was a member of a group. Between November 1996 and August 1998, defendant Stolz made forty (40) purchases and fifty-one (51) sales of Quintel stock. Plaintiff seeks disgorgement of the profits Stolz made from these transactions based upon the allegation that the transactions were short-swing trading[2] by an insider. DISCUSSION Under Federal Rule of Civil Procedure 56(c), the moving party is entitled to summary judgment if the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). Where there are cross-motions for summary judgment, "the standard is the same as that for individual motions for summary judgment and the court must consider each motion independent of the other.... Simply because the parties have cross-moved, and therefore have implicitly agreed that no material issues of fact exist, does not mean that the court must join in that agreement and grant judgment as a matter of law for one side or the other." Aviall, Inc. v. Ryder System, Inc., 913 F. Supp. 826, 828 (S.D.N.Y.1996), aff'd, 110 F.3d 892 (2d Cir. 1997). When evaluating each motion, the court must consider the facts in the light most favorable to the non-moving party. See id. In addition to moving for summary judgment on the issue of liability under § 16(b), plaintiff also requests an award of pre-judgment interest. Defendant opposes the motion on the issue of liability, opposes the reward of pre-judgment interest, and cross-moves for summary judgment. I. Section 16(b) Section 16(b) of the Act allows an issuer of securities or a shareholder to bring an action for disgorgement of the profits made by a statutory insider from a purchase and sale of the issuer's securities that occurs within a six-month period. See 15 U.S.C. § 78p. Section 16(b) does not require a showing of bad faith, and "operates mechanically, and makes no moral distinctions, penalizing technical violators of pure heart, and bypassing corrupt insiders who skirt the letter of the prohibition." Magma Power Co. v. Dow Chem. Co., 136 *347 F.3d 316, 320 (2d Cir.1998). The stated purpose of the statute is to prevent the "unfair use of information which may have been obtained by such beneficial owner, director, or officer by reason of his relationship to the issuer." 15 U.S.C. § 78p(b). In order to establish liability under § 16(b), plaintiff must show (1) a purchase and (2) a sale of securities (3) by a beneficial owner of more than 10% of any class of equity security, director or officer (4) within a six-month period. See Gwozdzinsky v. Zell/Chilmark Fund, L.P., 156 F.3d 305, 308 (2d Cir.1998). Defendant concedes that he made purchases and sales of Quintel stock within a six-month period. It is also undisputed that he is not a director or officer of Quintel. The only remaining issue is whether defendant is a beneficial owner of more than 10% of the Quintel common stock. Summary judgment is appropriate if there is no genuine issue of material fact underlying the legal question of whether defendant was a beneficial owner of more than 10% of Quintel common stock at the time of his short-swing transactions. See Morales v. New Valley Corp., 999 F. Supp. 470, 472 (S.D.N.Y.1998), aff'd Morales v. Freund, 163 F.3d 763 (2d Cir.1999). Section 16 requires a "two-tier" analysis of beneficial ownership. SEC Rule 16a-1(a) requires that, in order to be a beneficial owner under § 16(b), defendant must be a beneficial owner as defined by § 13(d) of the Act and defendant must have a pecuniary interest in the securities at issue. See Morales, 999 F.Supp. at 473. Pecuniary interest is defined as "the opportunity, directly or indirectly, to profit or share in any profit derived from a transaction in the subject securities." 17 C.F.R. § 240.16a-1(a)(2)(i). Defendant Stolz admits that he profited from the purchase and sale of Quintel securities, therefore he had a pecuniary interest in the Quintel securities. Under Rule 16a-1(a)(1), for the purposes of determining whether a person is a beneficial owner of more than ten percent of any class of securities, a beneficial owner is "any person who is deemed a beneficial owner under section 13(d) of the Act and rules thereunder." Section 13(d) of the Act states in relevant part that "if two or more persons act as a ... group for the purpose of acquiring, holding or disposing of securities of an issuer, such group shall be deemed a person" that may itself be deemed a beneficial owner. 15 U.S.C. § 78m(d)(3). If two or more persons are determined to be a "group" for the purposes of § 13(d), their stock holdings are aggregated to determine whether they are beneficial owners of 10% of the issuer's stock. Thus, if defendant Stolz acted with Feder and Lindsey "as a group for the purpose of acquiring, holding or disposing of" Quintel securities, their stock holdings would be aggregated to more than 18% and Stolz would be a beneficial owner of more than 10% of Quintel stock under § 16(b). II. Section 13(d) The purpose of § 13(d) is "to alert the marketplace to every large, rapid aggregation or accumulation of securities, regardless of technique employed, which might represent a potential shift in corporate control." GAF Corp. v. Milstein, 453 F.2d 709, 717 (2d Cir.1971). In order to form a group under § 13(d), the defendants must have "combined in support of the common objective." S.E.C. v. Savoy Indus., 587 F.2d 1149, 1162 (D.C.Cir.1978) (citations omitted). The pooling agreements that Congress targeted in § 13(d) will not always be in writing; a § 13(d) group may be proved with circumstantial evidence. See id. at 1162-63. In this case, plaintiff alleges that the written PRN/Quintel Agreement is a pooling agreement in which defendant, Feder and Lindsey combined in support of a common objective. Defendant does not dispute that he signed the PRN/Quintel Agreement, but disputes that this agreement rendered him a member of a group *348 under § 13(d). Thus, we must consider whether, as a matter of law, the PRN/Quintel Agreement was an agreement between Stolz, Feder and Lindsey to act as a group with the purpose of acquiring, holding, or disposing of Quintel securities. We must also consider the significance of defendant's Schedule 13(d) and other SEC filings that indicated he was a member of a § 13(d) group. A. Agreement to Acquire, Hold or Dispose of Quintel Securities Although the lock-up provisions in the PRN/Quintel Agreement control when and how Stolz, Feder and Lindsey can dispose of their Quintel securities, the provisions are not an agreement among them to acquire, hold or dispose of their securities. In determining whether there is a § 13(d) group, courts have considered common objectives to control the stock price or effectuate a shift in corporate control, the ability of the group members to exert influence over the corporation, and the voluntariness of the agreement to acquire, hold, or dispose of stock. In order to find a § 13(d) group, a common objective among its members is required. In Morales v. Freund, a § 13(d) group was formed when the defendants entered into an agreement to use their best efforts to obtain voting control of the issuer's stock by acquiring more stock. 163 F.3d at 766. Similarly, the court found a prima facie case of a § 13(d) group in Lerner v. Millenco because the defendants coordinated their investments for the purpose of artificially maintaining the market price of the stock. 23 F. Supp. 2d 337, 343 (S.D.N.Y.1998). In Global Intellicom v. Thomson Kernaghan & Co., the common objective of the § 13(d) group was artificially to increase trading volume and decrease the value of the stock. 99 Civ. 342, 1999 WL 544708, at *14 (S.D.N.Y. July 27, 1999) (denying defendants' motion to dismiss). There is no evidence that Stolz, Feder and Lindsey were trying to effectuate a shift in corporate control through the disposition of Quintel stock. In S.E.C. v. Levy, the defendant was a member of a § 13(d) group that agreed to use their stock to further the common objective of acquiring control over the issuing corporation. 706 F. Supp. 61, 71 (D.D.C.1989). Similarly, in GAF Corp., the defendant was a member of a § 13(d) group whose members agreed to pool their stock holdings to attempt a corporate takeover. 453 F.2d at 717; see also Wellman v. Dickinson, 682 F.2d 355, 363 (2d Cir.1982) (affirming district court's determination that defendants agreed to act in concert in disposing of their shares as part of an effort to effectuate a shift in corporate control). In contrast to the agreements in the aforementioned cases, the PRN/Quintel Agreement was an agreement between two corporations to effectuate a sale of PRN's holdings in another company. Although the sale was in exchange for Quintel stock, the purpose of the agreement was not to acquire control of Quintel. Nor is there any other evidence of an agreement to attempt a corporate takeover.[3] The only common objective that Stolz, Feder and Lindsey shared was to sell PRN's holdings in New Lauderdale LLC. The lock-up provisions here do not reflect the objectives of Stolz, Feder and Lindsey, rather they exist to protect Quintel and Quintel shareholders. Quintel, not defendant Stolz and the alleged group, was trying to affect — i.e., protect — the price of Quintel stock. Defendant Stolz did not agree with Feder and Lindsey to use their stock to exert *349 influence over Quintel. In Savoy, the defendant was a member of a § 13(d) group because he had a substantial interest in the corporation and exerted substantial influence through the disposition of his shares. Savoy, 587 F.2d at 1165. The defendant was suggesting acquisitions and business transactions to the corporation. See id. Unlike the defendant in Savoy, Stolz owned less than 2.5% of Quintel stock. Even combining Stolz's interest with the holdings of Feder and Lindsey, the alleged group would own about 18% of Quintel, and would be unable to exert substantial influence over Quintel. Further, there is no evidence that Stolz has attempted to exert influence over or get involved in the management of Quintel. The SEC has ruled that Goldman Sachs' partners and employees, who had to sign a shareholders' agreement as a condition of receiving stock, were not subject to aggregation of their stock for the purposes of determining whether they were 10% beneficial owners under § 16(b), even though the agreement included lock-up provisions and voting agreements. See Goldman Sachs Group, Inc., S.E.C. No-Action Letter [1999 Transfer Binder] Fed.Sec.L.Rep. (CCH) ¶ 77,553 (April 30, 1999). The SEC Staff based its ruling in part on the shareholders' lack of ability to control Goldman Sachs because of the large number of shareholders and their small individual holdings. Similarly, each individual shareholder here owns a small percentage of Quintel stock. Although there are only three shareholders in the alleged group, there is no indication that Stolz, Feder and Lindsey had the ability, or common objective, to exert influence over Quintel. Also relevant is whether the PRN/Quintel Agreement was voluntary. In the Goldman Sachs No-Action Letter, the SEC also based its ruling on the involuntariness of the shareholder agreement. See id. The partners and employees at Goldman Sachs had to agree to the lock-up and voting provisions, or they could not receive their shares of Goldman Sachs stock. Similarly, the sale of PRN's holding in New Lauderdale LLC would not have occurred unless Stolz, Feder and Lindsey agreed to the lock-up provisions. Considering the involuntary nature of the lock-up provisions, the lack of evidence that Stolz was attempting to exert influence over Quintel by acting with Feder and Lindsey, and the fact that the lock-up provisions reflect Quintel's objectives, defendant Stolz was not a member of a § 13(d) group as a matter of law. B. Defendant's Schedule 13(d) and Forms 4 and 5 Plaintiff also argues that defendant Stolz admitted that he was a member of a § 13(d) group by so indicating on the Schedule 13(d) and Forms 4 and 5 that Stolz filed with the SEC. Although these documents may be evidence of Stolz's belief that he was a member of a § 13(d) group, § 16(b) liability will not be imposed unless Stolz meets the statutory definition of a beneficial owner. Other courts in this District have held that a defendant's filings cannot "dispose of the question of statutory interpretation presented." Levner v. Saud, 903 F. Supp. 452, 461 n. 14 (S.D.N.Y. 1994) (quoting Chemical Fund v. Xerox Corp. 377 F.2d 107, 112 (2d Cir.1967)), aff'd Levner v. Prince Alwaleed, 61 F.3d 8 (2d Cir.1995); see also Levy v. Seaton, 358 F. Supp. 1, 4 (S.D.N.Y.1973) (filing "would not be dispositive if it was an unnecessary act based on a mistake of law"). Therefore, defendant's indications in his SEC filings that he was a member of a § 13(d) group are not dispositive of his legal status as a member of a § 13(d) group. Plaintiff also must show that as a matter of interpretation of § 13(d), defendant is a member of a group that agreed to acquire, hold or dispose of Quintel stock. Because we have found, upon application of § 13(d) to the undisputed facts, that defendant Stolz is not a member of a § 13(d) group, his SEC filings will not impose § 16(b) liability. *350 Because defendant Stolz is not a member of a group under § 13(d), we cannot aggregate his holdings of Quintel stock with those of Feder and Lindsey. As a less than 2.5% beneficial owner of Quintel stock, Stolz is not subject to § 16(b) liability. II. Plaintiff's Claim for Pre-Judgment Interest We need not reach plaintiff's claim for pre-judgment interest because we have determined as a matter of law that defendant Stolz is not liable under § 16(b) for his short-swing trading in Quintel stock. CONCLUSION For the foregoing reasons, plaintiff's motion for summary judgment is denied and defendant's cross-motion for summary judgment is granted. Plaintiff's complaint is hereby dismissed with prejudice as to all defendants and the Clerk of the Court shall enter judgment for defendant Stolz. SO ORDERED. NOTES [1] The PRN/Quintel Agreement was executed in September 1996. [2] "Short-swing" trading is a purchase then sale or sale then purchase of the corporation's stock occurring within six months. See Thomas Lee Hazen, Federal Securities Law 100 n. 384 (Federal Judicial Center 1993). [3] Plaintiffs point to the Schedule 13D, where defendant Stolz, Feder and Lindsey reserved the right to explore, among other things, the acquisition of additional Quintel stock, liquidation, sale of Quintel's assets, and a change in the management of Quintel. Reservation of the right to influence the management of Quintel is not evidence of an attempt to effectuate a corporate takeover through the use of their shares. This provision, without other evidence, is insufficient to show a common objective among Stolz, Feder and Lindsey.

01-03-2023

10-30-2013

https://www.courtlistener.com/api/rest/v3/opinions/1964945/

80 B.R. 81 (1987) Sandra L. ROBERTS, Plaintiff-Appellant, v. Edward Wayne POOLE, Defendant-Appellee. Civ. A. No. CA3-87-0774-D. United States District Court, N.D. Texas, Dallas Division. November 25, 1987. *82 *83 B. Prater Monning, III and Beverly Caro of Gardere & Wynne, Dallas, Tex., for plaintiff-appellant. Greg Gutman of Jackson, Loving & Gutman, Dallas, for defendant-appellee. OPINION FITZWATER, District Judge. A former wife appeals from an adverse bankruptcy court judgment which held that certain periodic payments to be made by her former husband, a chapter 7 debtor, were not in the nature of alimony, maintenance, or support and were thus dischargeable under 11 U.S.C. § 523(a)(5)(B). The principal question presented is whether the bankruptcy court erred in considering extrinsic evidence to interpret the parties' unambiguous written agreement. Because the bankruptcy court correctly admitted the evidence in question and because its unchallenged factual findings support the judgment, the judgment is AFFIRMED. I. BACKGROUND FACTS AND PROCEEDINGS BELOW Plaintiff-appellant, Sandra L. Roberts ("Sandra"), and defendant-appellee, Edward Wayne Poole ("Wayne"), were divorced in 1981. In order to settle the distribution of their property, Sandra and Wayne entered into a written agreement incident to divorce (the "Agreement"), which was incorporated in the divorce decree. The Agreement contained the usual provisions which set forth the purpose of the Agreement, divided the parties' property, apportioned their respective liabilities, prescribed the conservatorship for their daughter, provided for child support, prescribed how federal income taxes would be paid, required that Wayne purchase an annuity for the benefit of Sandra, and contained remedial and technical clauses, including a merger clause and a clause making the Agreement subject to Texas law. The Agreement also contained a section entitled, "Support of Spouse," which required Wayne to make "periodic payments" to Sandra in the amount of $3,000 per month for a period of ten years.[1] In 1982 Sandra filed suit in Texas state court to enforce the periodic payments obligation undertaken by Wayne and to obtain a restraining order and receivership over his assets. The suit was still pending when, in 1983, Wayne filed a voluntary chapter 7 petition in the bankruptcy court. In 1984 Sandra filed a complaint in the bankruptcy court to determine whether the periodic payments were dischargeable; after trial, the bankruptcy court held that the payments were dischargeable. The bankruptcy court found that, after Wayne had made eight $3,000 periodic payments, he was unable to make further payments because his businesses had suffered irreversible setbacks which chopped his income from $40,000 or so per month in 1981 (in company profits) to $18,000 to $20,000 per year in 1982 and that he would have continued making the payments but for the business reversals. The bankruptcy court noted that the Agreement stated on its face that the periodic payments "are intended for maintenance and support and that they constitute no part of the property division in the divorce[.]" The court nevertheless *84 concluded that it had both the jurisdiction and obligation to conduct an inquiry concerning the indebtedness, which inquiry could look behind or extend beyond the four corners of the document in question, to determine whether the periodic payments "were truly in the nature of alimony, maintenance, and/or support or whether such payments were, in fact, in the nature of property settlement[.]" The bankruptcy court relied on the following evidence to conclude that the payments were intended as a division of the parties' property: first, in Sandra's state court suit to enforce the Agreement she alleged under oath that company stock and corporate assets which Wayne received under the Agreement formed the basis for the periodic payments; second, the divorce attorneys and Wayne's bookkeeper arrived at an agreement, based upon Sandra's divorce lawyer's request and suggestion, that the periodic payments be denominated as alimony and for the support of Sandra because Sandra's lawyer believed the Agreement so structured would yield overall tax savings because of perceived probable differences in future marginal tax brackets for Sandra and Wayne; third, the Agreement did not provide for a cessation of payments in the event of Sandra's death or remarriage, which strongly indicated that the parties intended the payments to be consideration for property division rather than alimony, maintenance, and/or support; fourth, at divorce, Sandra took from the estate cash and property valued at approximately $125,000 which, together with $360,000 in anticipated payments, equaled approximately $400,000 to $500,000, and Wayne took personal property and stock in then-successful companies which at the time of the divorce "approximated the value of money and property to which [Sandra] became entitled under the Agreement Incident to Divorce;" and fifth, at the time of the Agreement, Wayne did not have the liquidity to pay Sandra a lump sum settlement and such lack of liquidity was another factor in the parties' decision "to structure the Agreement in the form of a payout[.]" After the bankruptcy court entered a take nothing judgment against Sandra, she timely filed a motion for new trial and a motion to alter or amend final judgment. The bankruptcy court[2] denied the motions and made these additional findings and conclusions: the Agreement clearly and unambiguously provides that the periodic payments are to be made for Sandra's support, and not as a part of any property division incident to divorce; the parol evidence rule is inapplicable to a § 523(a)(5) proceeding; and, the terms of the Agreement, even if clear and unambiguous, are subject to contradiction by evidence of prior or contemporaneous agreements or understandings of the parties as to the nature of the periodic payments. Sandra appeals. II. ANALYSIS Sandra principally challenges the bankruptcy court's determination that the parol evidence rule is inapplicable to a § 523(a)(5)(B) proceeding and that the clear and unambiguous terms of a written agreement incident to divorce may be contradicted by evidence of prior or contemporaneous agreements or understandings of the parties as to the nature of the periodic payments. Sandra does not challenge the bankruptcy court's factual finding that the payments are properly characterized as a property settlement rather than support. Instead, Sandra urges that the bankruptcy court should never have made such a finding because the Agreement itself unambiguously provides that the periodic payments constitute support and the language of the Agreement properly should have been found to have been determinative. The Bankruptcy Code excepts from chapter 7 discharge any debt to a former spouse for alimony, maintenance, or *85 support of the spouse in connection with a separation agreement, divorce decree, or other court order, governmental unit determination, or property settlement agreement. 11 U.S.C. § 523(a)(5). However, a debt liability designated as alimony, maintenance, or support is not exempt from discharge unless the liability is actually in the nature of alimony, maintenance, or support. 11 U.S.C. § 523(a)(5)(B).[3] The burden is on the person who asserts nondischargeability of a debt to prove its exemption from discharge, Matter of Benich, 811 F.2d 943, 945 (5th Cir.1987), and the intention of the parties is the ultimate question, id. Sandra and Wayne do not disagree that § 523(a)(5)(B) establishes the controlling law or that the burden of proof is upon Sandra. They do disagree as to the evidence that may properly be considered by the trier of fact. Unfortunately for Sandra, her position that the parol evidence rule restricts the bankruptcy court in the case of an unambiguous written agreement is squarely rejected in this circuit. In Benich, the Fifth Circuit held that the Bankruptcy Code requires the bankruptcy court to determine the true nature of the debt, regardless of the characterization placed on it by the parties' agreement. 811 F.2d at 945 (citing Brown v. Felsen, 442 U.S. 127, 138, 99 S. Ct. 2205, 2212-13, 60 L. Ed. 2d 767 (1979), and Collier on Bankruptcy § 523.15(3) & (5) (15th ed. 1986)). Accordingly, the bankruptcy court may consider extrinsic evidence to determine the real nature of the underlying obligation in order to determine its dischargeability. Benich, 811 F.2d at 945 (citing In re Wright, 584 F.2d 83, 84 (5th Cir.1978)). In her brief, Sandra's analysis of Benich is somewhat inscrutable. Sandra comments that "Benich is helpful because it shows where the court's initial concern with agreement interpretations evolved from" (Appellant Br. at 15), she asserts that Benich interprets Colorado law, id.,[4] and she questions the Benich court's reliance on Brown v. Felsen, the facts of which Sandra contends are distinguishable from Benich, id. at 15-16. At oral argument, however, her contentions concerning Benich were more developed. While acknowledging that Benich is the law of the circuit, and while refusing to assert that Benich was wrongly decided, Sandra sought to limit the reach of Benich to cases which involve contentions of deceit, fraud, and malicious conversion, or which seek to interpret the meaning of a state court decision (which Sandra contends was the case in Benich). Sandra argued that even Benich permits enforcement of the parol evidence rule where there are no such allegations and the parties have unambiguously set forth their intentions in an arms-length written agreement. This court does not read Benich as narrowly as does Sandra. In Benich the Fifth Circuit dealt with a Texas "property-settlement agreement" apparently of the type present in the instant case. The parties were divorced, the husband failed to make contractually prescribed payments to the former wife, the former wife filed suit in Texas state court for breach of the agreement, the husband filed bankruptcy, and the wife sought a declaration that the debt was nondischargeable. Noting that debts for maintenance or support of a wife or child are among those debts expressly exempt from discharge, the Benich court held: The Bankruptcy Code requires the bankruptcy court, as that court properly held, to determine the true nature of the debt, regardless of the characterization placed on it by the parties' agreement or the *86 state court proceeding. The bankruptcy court may, therefore, consider extrinsic evidence to determine the real nature of the underlying obligation in order to determine dischargeability. 811 F.2d at 945. (Footnotes omitted). Benich did cite Brown v. Felsen, among other authorities, in support of the foregoing holding, but Benich itself did not involve a claim of deceit, fraud, or malicious conversion, nor was the court required, as Sandra asserts, to interpret the meaning of a state court decision. Moreover, assuming arguendo that Benich has abolished the parol evidence rule in a context that Congress did not intend, Sandra must convince the en banc Fifth Circuit or the Supreme Court of the error. This court is bound to follow the law of this circuit as set forth in the Benich panel opinion.[5] Sandra also urges this court to follow In re Hodges, 4 B.C.D. 966, 969 (N.D.Tex. 1978) (affirming and adopting bankruptcy court opinion). In Hodges the court held, in a Bankruptcy Act decision: Naturally, where the decree, the agreement, or the record is clear and unambiguous in indicating whether the liability is or is not nondischargeable, then the Bankruptcy Court should stop at any such point. To the extent, however, that Hodges is applicable in a case decided under the Bankruptcy Code, the court questions whether Hodges remains viable in light of Benich, and hence chooses not to follow Hodges. Moreover, it appears that every other court to decide the question has reached the same conclusion as did the Benich court. See, e.g., In re Williams, 703 F.2d 1055, 1057 (8th Cir.1983) ("[B]ankruptcy courts are not . . . bound to accept a divorce decree's characterization of an award as maintenance or a property settlement."); In re Miller, 34 B.R. 289, 292 (Bankr.E.D.Pa.1983) ("It is well-established in § 523(a)(5) cases that, in determining the intention of the parties, extrinsic evidence of the parties' intention regarding a particular obligation should be considered along with the document itself creating the obligation in question."); In re Smotherman, 30 B.R. 568, 570 (Bankr.N.D.Ohio 1983) (The "Court must look beyond the four corners of the [divorce] decree" to determine whether a debt is support or property settlement.); see also 3 Collier on Bankruptcy ¶ 523.15[5] (15th ed. 1986) ("An agreement between husband and wife may expressly describe an obligation created therein as `alimony,' but the label is insufficient to make the obligations nondischargeable unless the payment is actually for the support and maintenance of a spouse, former spouse, or child of the debtor."). Sandra also relies upon contract law principles holding that where a contractual provision is unambiguous, extrinsic evidence is irrelevant. Sandra's reliance upon these rules is misplaced. The legislative history of § 523(a)(5) explicitly instructs that "[w]hat constitutes alimony, maintenance, or support, will be determined under the bankruptcy laws, not State law." H.R. Rep. No. 595, 95th Cong., 1st Sess. 364, reprinted in 1978 U.S.Code Cong. & Ad. News 5963, 6320; S.Rep. No. 989, 95th Cong., 2d Sess. 79, reprinted in 1978 U.S. Code Cong. & Ad.News 5787, 5865. In sum, where a creditor seeks to have a debt declared nondischargeable on the grounds that it constitutes alimony, maintenance, or support, the bankruptcy court not only may, but it must independently determine the parties' intent and, in turn, the nature of the debt. In making this inquiry the bankruptcy court is not limited to cases involving claims of deceit, fraud, or malicious conversion, or to cases which require the interpretation of a state court decision. While the characterization placed upon the debt by a separation agreement or divorce decree has probative value and may be considered by the trier of fact to evidence the parties' intent, that characterization is not determinative even where the characterization is unambiguous. In the present case the bankruptcy court correctly considered extrinsic evidence *87 that would arguably have been foreclosed by the parol evidence rule. Because Sandra does not question the factual findings made by the bankruptcy court and the findings support the judgment entered, no error is presented which requires reversal.[6] Accordingly, the judgment appealed from is affirmed. AFFIRMED. NOTES [1] The provisions in question state: 7.01. Periodic Payments. The support payments provided for in this Section 7 are intended by both spouses to qualify as periodic payments as that term is defined [in the Internal Revenue Code]. The parties therefore contemplate that all provisions of this Section 7 will be interpreted in a manner consistent with that intention. The support obligation contained in this Section 7 is unrelated to the division of any property in this agreement, and it is not intended in any way to constitute a form of payment for any rights or interests in the estate of the parties. 7.02. Amount of Payments. EDWARD W. POOLE agrees to pay SANDRA L. POOLE periodic payments in the amount of $3,000 per month, the first payment being due and payable on the 1st day of December, 1981, and a like payment being due and payable on the same day of each month thereafter for a period of ten (10) years. [2] The matter was tried on October 15, 1984 before Judge John C. Ford, who entered a judgment on November 7, 1984. Sandra's motions for new trial and to alter or amend final judgment were denied by order entered February 25, 1987 by Judge Ford's successor, Judge Harold C. Abramson. Sandra timely filed her notice of appeal from Judge Abramson's order. [3] 11 U.S.C. § 523(a)(5)(B): A discharge under [the applicable sections] of this title does not discharge an individual debtor from any debt— (5) to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child, in connection with a separation agreement, divorce decree or other order of a court of record, determination made in accordance with State or territorial law by a governmental unit, or property settlement agreement, but not to the extent that— * * * * * * (B) such debt includes a liability designated as alimony, maintenance, or support, unless such liability is actually in the nature of alimony, maintenance, or support[.] [4] Sandra conceded at oral argument that this assertion in her brief was erroneous. [5] See In re Ambassador Park Hotel, Ltd., 61 B.R. 792, 796 n. 7 (N.D.Tex.1986) (district court bound to follow law of circuit). [6] Sandra also contends the bankruptcy court committed reversible error by admitting the testimony of Wayne's divorce lawyer because (1) the testimony violated the parol evidence rule and (2) the selective manner in which Wayne invoked and waived the privilege unduly prejudiced Sandra. The court rejects Sandra's parol evidence rule argument for the reasons stated above. As to the balance of her argument, Sandra has the burden of demonstrating both that the bankruptcy court abused its discretion in admitting the evidence and that Sandra's substantial rights were thereby prejudiced. See Wallace v. Ener, 521 F.2d 215, 222 (5th Cir.1975) (error must rise above threshold of harmless error); Fed.R.Evid. 103 (Fed.R.Bankr.P. 9017); Fed.R.Civ.P. 61 (Fed.R.Bank.P. 9005); Foster v. Ford Motor Co., 621 F.2d 715, 721 (5th Cir.1980) (evidentiary rulings must be affirmed unless they affect a substantial right of the complaining party). The court has carefully considered Sandra's arguments, and concludes that the bankruptcy court did not abuse its discretion in admitting the testimony and that Sandra has not demonstrated that her substantial rights were affected. As to the decision to admit the testimony, this court is not convinced that Sandra could not have moved for a continuance, moved to reopen discovery, and/or moved to compel the testimony of Wayne's divorce attorney, rather than seek to exclude the entire testimony. As to the matter of substantial prejudice, Sandra devotes portions or all of five pages of her brief to the argument that the bankruptcy court erred in admitting the testimony in question. (Appellant Br. at 20-24). In but one paragraph, however, does she attempt to demonstrate how she has been harmed by the admission of the evidence, arguing that the ruling "fail[ed] to give deference to the parol evidence rule" id. at 24, a proposition which the court has already rejected, and that "it also allowed evidence which should have in equity and fairness been excluded." Id. This court is quite unwilling, on the basis of vaguely asserted notions of "equity and fairness," to hold that a trial court ruling admitting evidence has prejudiced the substantial rights of a party.

01-03-2023

10-30-2013

https://www.courtlistener.com/api/rest/v3/opinions/1974795/

627 F. Supp. 2d 384 (2009) BRACCO DIAGNOSTICS, INC., Plaintiff, v. AMERSHAM HEALTH, INC., et al., Defendants. Civil Action No. 03-6025. United States District Court, D. New Jersey. June 5, 2009. *396 Arnold B. Calmann, Esq., Saiber LLC, Newark, NJ, Donald L. Rhoads, Esq., Nicholas L. Coch, Esq., Christopher A. Colvin, Esq., Albert B. Chen, Esq., Kramer, Levin, Naftalis & Frankel, LLP, New York, NY, for Plaintiff Bracco Diagnostics, Inc. Richard L. DeLucia, Esq., Charles A. Weiss, Esq., Jeffrey S. Ginsberg, Esq., Kenyon & Kenyon, LLP, New York, NY, for Defendant Amersham Health Inc., Amersham Health AS, Amersham PLC. AMENDED OPINION FREDA L. WOLFSON, District Judge. Glossary of Abbreviations AHI Amersham Health Inc. (U.S.-based Counterclaim Plaintiff) ASD GEH Area Sales Director AWC Adequate and well-controlled study BDI Bracco Diagnostics Inc. [witness] D Designated deposition testimony [witness] Dec Designated declaration CE Continuing Education for doctors, nurses and technicians CIN Contrast Induced Nephropathy or renal damage caused by x-ray contrast medium CM Contrast Medium or Contrast Media CME Continuing Medical Education for doctors CMS Centers for Medicare and Medicaid Services CT Computer Tomography. A type of x-ray procedure where the CM is given by i.v. administration CT DCAM Novation's DCAM for CT (i.e., x-ray) contrast media CT+MR DCAM Novation's DCAM for both CT (i.e., x-ray) and MR contrast media C x Bracco's Proposed Post-Trial Conclusion Of Law at paragraph "x" Dx:y Defendant's Trial Exhibit "x" at page "y" (where y is the last three numbers of a Bates number, if applicable) DCAM Decision Criteria Award Matrix DHRxns Delayed Hypersensitivity Reactions Dual DCAM Novation's DCAM for a dual source award for both CT (i.e., x-ray) and MR contrast media FC Financial Criteria FDA United States Food and Drug Administration GEH GEH Healthcare, which acquired the three named defendants, who in turn acquired Amersham and Nycomed GPO Group Purchasing Organization HOCM High Osmolar Contrast Medium i.a. intra-arterial (form of administration directly into an artery) i.v. Intra-venous (form of administration directly into a vein) IOCM GEH's trademarked term, Isosmolar Contrast Medium ITB Novation's June 14, 2004 "Invitation To Bid" JACC Journal of the American College of Cardiology KOL Key Opinion Leader LBB "Low Best Bid" or "Low Best Bidder" LOCM Low Osmolar Contrast Medium MA Meta-Analysis, a type of clinical study analysis MACE Major Adverse Cardiac Events or Major Adverse Clinical Events, depending on the study design MR DCAM Novation's DCAM for MR contrast media MRI magnetic resonance imaging contrast media NAC N-acetylcysteine NEJM New England Journal of Medicine NFC Non-Financial Criteria NQWMI Non-Q-wave Miocardial Infarction RFA GEH's responses to Bracco's requests for admissions RFP GPO Request For Proposal OTSheet Omnipaque Toss Sheet Px:y Plaintiff's Trial Exhibit "x" at page "y" (where y is the last three *397 numbers of a Bates number, if applicable) PCI percutaneous cardiac intervention PO Pretrial Order POA Plan of Attack or Plan of Action PTCA Percutaneous Transluminal Coronary Angioplasty SR Systematic Review (type of clinical study analysis) TCT Transcatheter Cardiovascular Therapeutics (TCT) Scientific Symposium TF Novation's ICM Task Force URTBrochure Unchallenged Renal Tolerability Brochure x T y Trial Transcript Volume "x" at page "y" VVAT Visipaque Value Analyis Tool Contrast Agents Isovue Bracco x-ray contrast agent ProHance Bracco MRI contrast agent MultiHance Bracco MRI contrast agent Visipaque GEH x-ray contrast agent Omnipaque GEH x-ray contrast agent Omniscan GEH MRI contrast agent Optiray Tyco/Mallinckrodt x-ray contrast agent Hexabrix Tyco/Mallinckrodt x-ray contrast agent This matter comes before the Court upon a Complaint brought by Plaintiff Bracco Diagnostics Inc. (referred to herein as "Bracco") against Defendants Amersham Health Inc., Amersham Health AS, and Amersham PLC (collectively referred to herein as "GEH") for alleged false advertising in violation of the Lanham Act. In response, GEH filed a Counterclaim against Bracco for alleged false advertising of its own line of products. Bracco and GEH have competing product lines in the contrast medium healthcare industry. The crux of Bracco's case is that GEH has falsely advertised the superiority of its product, Visipaque, over Bracco's product, Isovue. The Court conducted a thirty-nine day bench trial with numerous experts[1] and witnesses testifying as to each party's product lines and the underlying clinical studies upon which GEH and Bracco have based their advertising campaigns. In light of the evidence presented at trial, the Court concludes that GEH did promote false messages which were sufficient in number to constitute actionable commercial advertisements or promotions under the Lanham Act, however the Court finds that Bracco has failed to establish a causal nexus between GEH's false advertisements and Bracco's alleged lost profit damages. In that regard, the Court determines that the greater number of GEH's advertisements were in fact true and based on reliable scientific studies. The messages that the Court finds false are those that extrapolate beyond the studies' results. In connection with Bracco's claim, the Court finds that an injunction and damages for post and future corrective advertising are appropriate remedies to prevent future violations of the Lanham Act. As to GEH's counterclaim, GEH dismissed its claim for damages and Bracco has stipulated that it no longer uses the offending advertisements. Thus, although the Court finds that certain of Bracco's ads were false, nonetheless, an injunction is not appropriate in this case. In addition, the Court imposes an alternative dispute mechanism applicable to both parties for safeguarding against any future false advertisements. I. Overview A. Parties and Product Lines GEH and Bracco market and sell x-ray contrast media ("CM") in the United States. CM are classified by osmolality. HOCM (high osmolar CM) have osmolalities of greater than 1500 mOsm/kg. LOCM (low osmolar CM) have osmolalities between 600 and 850 and include Omnipaque (iohexol), Isovue (iopamidol), Hexabrix *398 (ioxaglate), Ultravist (iopromide), Iomeron (iomeprol), and Optiray (ioversol). The osmolality of blood is approximately 290 mOsm/kg. Both GEH and Bracco market LOCM; GEH sells Omnipaque and Bracco sells Isovue. In addition, GEH also markets a product called Visipaque (iodixanol) which it classifies as isoosmolar or isotonic, (i.e.,—its osmolality equals blood). Visipaque is referred to in various medical literature as an IOCM (iso-osmolar CM). Part of GEH's advertising campaign is that its iso-osmolar CM performs better than LOCM. Visipaque was introduced in 1996, ten years after Omnipaque and Isovue were marketed and is the only "IOCM" available in the U.S. B. Procedural History On December 16, 2003, Bracco filed a four count Complaint in the District of New Jersey against GEH alleging: (1) dissemination of false and misleading advertisements in violation of Section 43(a) of the Lanham Act; and (2) N.J.S.A. 56:4-1, et seq.; (3) violations of the common law of unfair competition; and (4) negligent misrepresentations. GEH filed an Answer and two counterclaims against Bracco alleging: (1) dissemination into commerce of allegedly false and misleading statements concerning the relative safety of Omnipaque, Visipaque, and Isovue in violation of Section 43(a) of the Lanham Act; and (2) N.J.S.A. 56:4-1, et seq. GEH's counterclaim was filed against Bracco and its foreign affiliates, Bracco S.p.A. and Bracco Imaging S.p.A. However, pursuant to an Order entered on September 7, 2004, GEH's counterclaim against Bracco's foreign affiliates was dismissed for lack of personal jurisdiction. Motions for Summary Judgment were denied by the Court, after which, a thirty-nine day bench trial was conducted between the period of May 7, 2007 and December 2007, followed by further written submissions. The Court held a hearing on May 15, 2008, wherein the Court resolved evidentiary objections regarding the admission of disputed exhibits. Subsequently, the parties submitted proposed Findings of Fact and Conclusions of Law, which were supplemented by Reply briefs and additional Daubert briefs to exclude expert testimony proffered by both sides. II. Findings of Fact A. Bracco's Case in Chief As set forth below, the Court finds that GEH advertises and promotes Visipaque with establishment claims asserting that studies show it is superior in several ways, including renal and cardiovascular safety, pain, heat and discomfort. The Court further finds that: the spike in Visipaque sales that started in 2003 was primarily due to the publication of the NEPHRIC study; GEH's advertising of NEPHRIC through true renal ads and promotions also contributed significantly to GEH's success with Visipaque; only a fraction of GEH's ads were false; while these false ads were sufficient in number to constitute actionable promotions under the Lanham Act, they were not the cause of GPO contracts being awarded to GEH. In addition, the Court finds that the limited false ads disseminated by GEH were not willfully false because GEH relied on scientific studies, which have not been disproved, and that GEH had a protocol in place for approving advertisements that attempted to ensure against falsity. 1. GEH's Establishment Claims Of Renal Superiority In late 2002 to early 2003, GEH focused its ads and promotions on renal establishment claims based on the NEPHRIC study; GEH claimed that Visipaque had superior renal safety over competitor *399 drugs or LOCM. (See, e.g., P1672 ("[w]e will begin to shift our focus from a Excellent Patient Comfort/Cardiac Safety message to the prime message being Excellent Renal Tolerance"), P106, P849:932, P1269:219, P1147:261, P1265:203, P1266:208; 13 T 72, 16 T 95, 6 T 58-79,102-104, 17 T 69-70). These claims are of two types: the data (from NEPHRIC or other studies) show (a) Visipaque is superior to a LOCM or all LOCM or (b) Visipaque is as good as or better than LOCM with pretreatments.[2] GEH uses the term LOCM to obscure the fact that its own drug, Omnipaque, was the comparator in the NEPHRIC study, and to thereby lessen any impact on Omnipaque, specifically, and to generalize the results to all LOCM, including Isovue. (P1534, P1535, P1519, P1523; 13 T 62-63). GEH designed and then planned to disseminate the claims through multiple promotional channels (print media, websites, GEH representatives, medical doctors and CME's). (8 T 4-15, 81-129, 135-37, 17 T 53,64-68; P869 ('03), P849 ('04), P2098 ('05)).[3] GEH determined that the claims were the most effective way to convert sales based on its experience, (e.g., 7 T 178), and marketing research (P196, P696, P1400, P1700, P1716:739, P1742, P2038; 13 T 27-28). The GEH representatives were instructed in Plans of Action ("POA") (e.g., P2101:559 (e.g., "less incidence of CIN")), memoranda (e.g., P102 ("top 3 messages"), P104, P353, P398:394, P639:552 ("(CIN) in high-risk patients was 11X less likely ... than with LOCM"), P640, P661, P662, P696, P772, P1832:194, P2027, P4249; D790), training (e.g., P651 (e.g., "Visipaque is clinically proven to be ... safer for high risk patients"), P1136:370 ("safer")) and Medical Bulletins (e.g., P402:563 (e.g., "NEPHRIC data clearly demonstrate ... a significantly better renal safety profile than a traditional [LOCM], such as iohexol, in at-risk patients"), P538:888, P798:078) to disseminate the claims. (E.g., P85, P632, P774, P1008, P1012, P1021, P1080, P1082, P1136, P1178, P1373:182, P1561, P1572:893, P1681, P1699, P1721, P2099, P2100, P2101, P3708; 8 T 68-81, 129-135, 148-80, 9 T 5-53, 65-80, 88-102).[4] The claims were then disseminated nationwide using print media, GEH representatives and continuing medical education ("CME") presentations. The print media (e.g., brochures, websites, presentations, articles) with extracted messages that were identified in Bracco's pretrial *400 brief and discovery responses and addressed at trial include:[5] • Press releases on its website: "[]The NEPHRIC data clearly demonstrate that Visipaque™ offers a significantly better renal safety profile than traditional low osmolar non-ionic contrast media in at-risk patients.... We believe that the data strongly support Visipaque as the agent of choice for these patient groups." P2449:379, P69:915, P254:863, P772:340, P1448:898, P4149:p2; 7 T 68-69. • Computer Tomography (CT) brochures: "Nonionic Dimer Provides Lower Osmolality, Reduced ... CIN" "CIN": "Nonionic Dimer": "↓"; "Nonionic Monomer": "↑". P410:965, 3649:408, 3649A:408; D2324:117. • Novation presentation: "Isosmolar VISIPAQUE... Demonstrated to significantly reduce incidence of Contrast-induced Nephropathy (CIN)." P2161:391. GEH rep efforts included the delivery of the claims and print media in face-to-face detailing of administrators, technicians, nurses and doctors, for which records were presented at trial from GEH's sales call record system, emails and memoranda, e.g."[6] • Sales Calls Records: "Discussed patient types that would benefit from Visipaque usage over Isovue. Re-affirmed with Nephric study." P2312:A637284, P4049:A637284. "Discussed having hospital start using Visipaque for high-risk patients in CT. Detailed Nephric study and core visual aid to support benefits of isosmolar Visipaque vs. Isovue." P2312:A637355, P4049:A637355. "[C]linical studies, nephric etc show less risk nephrotox vs... Isovue for [high risk] pts ...." P2312:A659673, P4049:A659673. "reviewed why Visi. is the best for kidneys." P2312:A670058, P4049:A670058. "Approached dr. with nephric focus and differentiating vis from locm class with regards to osmoality. Reminded dr. that patients are 11 times likely to have CIN with the locm class than visi." P3682:Omni/3727, 4049:Omni/3727.[7][8] *401 • Consorta detailing: "Baluchi [from Consorta] asked about Isovue with respect to Omnipaque/LOCM as positioned in NEPHRIC. We made the point that Omnipaque represents a LOCM (gold standard) and confirmed his key take away that it is iso-osmolar versus low-osmolar that was studied, not necessarily Visipaque vs. Omnipaque." P682:286. "I ... discussed the attributes of Isosmolar Visipaque including it's impact on CIN-a clinical issue just coming to light; it's elimination of costly drug therapies (fenladopan) to prevent CIN with std LOCM". P793:514. • HPG detailing: "Ami presented the Nephric data to Lew and he was very interested in the info. He told her that one criticism of this paper was that it was not a head to head with Isovue. Ami showed him the list of references that prove the incidence of CIN with Isovue is equal to that of Omnipaque so it is reasonable to draw a correlation that the results of Nephric would be the same if Isovue had been used." P663:942 (emphasis added). The Court also finds that GEH-sponsored CME presentations for doctors (e.g., P849:946) delivered IOCM versus LOCM claims:[9] • 2004 CME On CIN: "[R]ecent controlled trials have shown that non-ionic Iso-osmolar contrast agents are superior to low-osmolar agents in preventing CIN." P4251:210 (emphasis added). "The use of iodixanol in at-risk patients appears to minimize the risk of CIN even without additional pharmacological prophylaxis." P4251:212. At trial, GEH's sales rep, Mr. Joseph Murray, confirmed delivering these claims through the print media (e.g., press releases and articles) and CME-type presentations to customers in order to convert sales to Visipaque. (E.g., 16 T 31-49, 56-58, 81-88, 97-114; 17 T 49-51, 64-132). 2. The Falsity Of GEH's Renal Establishment/Superiority Claims The Court finds that certain assertions made by GEH were supported by the studies' (NEPHRIC and Chalmers) conclusions (e.g.—Visipaque may be renally superior over a LOCM—Omnipaque), while others were not (i.e.—Visipaque may perform better than LOCM with prophylactics and Visipaque is renally superior over all LOCM). Bracco asserts that GEH's representations are false and misleading because: (a) the NEPHRIC study omitted results and has flaws that contradict GEH's claims (Pl.'s FOF ¶¶ 11-15, *402 17); (b) the studies (NEPHRIC and Chalmers) cannot reliably (Pl.'s FOF ¶¶ 11-13) support a conclusion of Visipaque superiority over all LOCM; and (c) the weight of the clinical evidence is that Visipaque is not superior to all LOCM as a group or to Isovue individually (Pl.'s FOF ¶¶ 11-15, 17). For example, Bracco asserts that results of studies done with intra-arterial ("i.a.") use are not reliable enough to predict with reasonable certainty intravenous ("i.v.") results, (see P1733)[10][11]; furthermore, Bracco points out that no studies compare Visipaque to a LOCM combined with pretreatments or even head-to-head with multiple LOCM. The Court finds: (1) while there were flaws in NEPHRIC, those flaws do not vitiate its results; (2) the NEPHRIC and Chalmers studies are not unreliable in their conclusions; and (3) it has not been established by the weight of clinical evidence that Visipaque is superior to all LOCM as a group or to Isovue individually. Although there has never been one adequate and well-controlled ("AWC") clinical study (let alone two, done the same way with the same drug) showing that Visipaque is superior to any LOCM (even Omnipaque), with or without pretreatments,[12][13] the Lanham Act does not demand such a rigorous finding. Nonetheless, although not dispositive, the FDA agrees with the Court's findings in numerous letters sent to GEH, including one as recent as March 21, 2005, where it states that the results of the NEPHRIC study cannot be extrapolated to CM other than Omnipaque in GEH advertising. (P1894.) To lay the foundation for Bracco's claims, and GEH's defenses, the parties first presented background clinical evidence at trial. The following pertains to such evidence: randomization in a clinical trial increases its reliability;[14] a primary endpoint is a clinically relevant endpoint around which a study is designed;[15] studies may also have secondary endpoints, which are of interest but are deemed to be of less importance to the study investigators;[16]*403 a MA is a statistical combination of results from multiple studies;[17] a p-value is a statistical measure that provides a general estimate of the probability that two tested clinical strategies are different;[18] furthermore, the probability that two treatments are different can be roughly estimated as 1 minus the p-value.[19] After laying a foundation for generalized information regarding the interpretation of medical studies, the parties presented specific clinical evidence in connection with GEH's claim that Visipaque is less nephrotoxic than other LOCM. Changes in renal function are commonly measured by serum creatinine ("SCr").[20] Dr. Peter Aspelin, an M.D., Ph.D., a professor of medicine in Stockholm,[21] and the author of NEPHRIC, testified that CIN is commonly defined as an increase in SCr up to 3 days of 0.5 mg/dL, 25%, or both,[22] and that rises in SCr after 3 days may be due to factors other than administration of CM.[23] Bracco disputes this definition of CIN; it contends that rises in SCr after three days are significant. The Court need not determine the clinical significance of CIN after three days because while I find that such data is relevant to the weight given to a study's conclusions, here I find that the use of either definition would not make the underlying study unreliable. Nonetheless, it is undisputed that patients with both renal insufficiency (RI) and diabetes are at a higher risk for developing CIN, than patients with only RI or only diabetes.[24] In addition, Dr. Harold I. Feldman, an expert in internal medicine and nephrology, proffered by GEH, testified that patients with only diabetes have a lower risk than patients with only RI[25] and that greater contrast volume increases a patient's risk of CIN,[26] while N-acetylcysteine (NAC) or sodium bicarbonate may reduce CIN.[27] Furthermore, it was established at trial, through expert testimony and exhibits, that there is a scientifically reasonable and widely held belief in the medical community that LOCM are less nephrotoxic than HOCM due to the reduced osmolality of LOCM.[28] This belief is also shared by Bracco.[29] As to LOCM, Dr. Feldman testified at trial, that as of February 2003, there was little evidence of differences in nephrotoxicity between Omnipaque and Isovue.[30] Bracco's Dr. Spinazzi *404 testified, and published to his peers, that as of the date NEPHRIC was published, it was believed that all nonionic LOCM performed similarly even though he qualified the testimony as not being supported by "evidence in the field."[31] Notwithstanding the prevailing belief in the field, the FDA found it to be misleading for GEH to advertise, based on the NEPHRIC results (comparing Visipaque to one LOCM, Omnipaque), that "Visipaque is safer than other conventional non-ionic contrast media." (P1894). This implies that the FDA did not believe that there was sufficient support to conclude that all LOCM perform similarly. Thus, the FDA questioned, based on the NEPHRIC study, claims of Visipaque superiority over all LOCM as opposed to merely the LOCM tested in NEPHRIC. GEH relies on several scientific studies to support its claim that Visipaque is less nephrotoxic than other LOCM, and hence has a better renal safety profile, but primarily, GEH relies on the Chalmers and NEPHRIC studies. Chalmers, first published in 1999, was a randomized head-to-head trial of Visipaque (iodixanol) and Omnipaque (iohexol) administered to patients with RI.[32] It showed Visipaque to be less nephrotoxic than Omnipaque.[33] NEPHRIC was a double-blind, randomized, multi-center, head-to-head trial comparing the nephrotoxicity of Visipaque and Omnipaque in patients with RI and diabetes.[34] Dr. Aspelin was the principal investigator ("PI") for NEPHRIC.[35] He has nearly 200 published papers and is a peer-reviewer for several journals.[36] Dr. Aspelin was not a consultant for GEH and was not paid for his work on the NEPHRIC study, however, he did receive input from GEH regarding the formulation of the language used in his conclusions in NEPHRIC and indeed, GEH was the financial sponsor for the study.[37] NEPHRIC reported that Visipaque was less nephrotoxic and caused 11 times less CIN than the studied CM, Omnipaque.[38] Dr. Aspelin had overall responsibility for, and final authority over, the content of NEPHRIC.[39] The other NEPHRIC authors, including Dr. Berg (a renal physiology expert) contributed to and approved the contents of the article.[40] While the results of the NEPHRIC study, which was a head-to-head comparison of Omnipaque and Visipaque, provide reasonable scientific support for the claim that Visipaque performs better than Omnipaque in high risk patients, it does not support the claim that Visipaque performs better than all LOCM for that patient group.[41]See infra pp. 132-39. Other studies in the field and referred to at trial will be reviewed below. *405 a. The RECOVER Study RECOVER was a randomized blinded head-to-head clinical trial, published in 2006, comparing the nephrotoxicity of Visipaque and Hexabrix (ionic low osmolar CM) in patients with RI.[42] It showed that Visipaque was less nephrotoxic and caused less CIN than Hexabrix.[43] Neither party, Bracco nor GEH, was involved in the study or publication of RECOVER.[44] Bracco alleges that RECOVER is unreliable due to a discrepancy with an earlier published abstract. However, the RECOVER authors explained in a published letter to the editors that the published results in the Journal of the American College of Cardiology (herein "JACC") were accurate, and that the results reported in the earlier abstract were based on preliminary data.[45] Accordingly, the Court finds this study to support the contention that Visipaque is less nephrotoxic than Hexabrix. b. The Jingwei Study Jingwei was a head-to-head clinical trial, also published in 2006, comparing the nephrotoxicity of Visipaque and Isovue in patients undergoing percutaneous cardiac intervention ("PCI").[46] It showed that Visipaque caused smaller SCr elevations.[47] Nonetheless, there was no clinically significant difference in the occurrence of CIN. The record does not indicate any involvement by GEH or Bracco in the Jingwei study. c. The McCullough Meta-Analysis ("MA") The McCullough Meta-Analysis ("MA"), published in 2006, used patient level data from head-to-head randomized intra-arterial clinical trials gathered from a GEH patient database.[48] Dr. Peter McCullough, a consultant for GEH, and co-authors had control over the MA.[49] McCullough found that Visipaque was less nephrotoxic than LOCM in: (i) all risk level patients; (ii) patients with RI; and (iii) patients with RI and diabetes.[50] Bracco's expert, Dr. Lee Jen Wei, re-analyzed the MA and confirmed that Visipaque causes less CIN than the LOCM analyzed in the study using the CIN definition chosen by McCullough.[51] However, as Wei cogently and significantly pointed out during his testimony, the McCullough MA was comprised of 16 studies, 9 of which were Omnipaque and 7 of which were non-Omnipaque LOCM. Isovue only represented 1 of the 16 studies. Dr. Wei concluded through statistical analysis, and the Court finds his testimony credible and persuasive, that when the non-Omnipaque studies were compared to Visipaque there was no statistically significant difference in CIN and that the nine Omnipaque studies skewed the results. Therefore, the Court does not find the McCullough Meta Analysis Study reliable for the claim that Visipaque ("IOCM") causes less CIN than all LOCM. *406 d. The VALOR trial The VALOR study, sponsored by GEH, was an head-to-head clinical trial comparing the nephrotoxicity of Visipaque and Optiray, and allowed for the discretionary administration of Nacetylcysteine ("NAC").[52] Following a protocol specified interim analysis, it was determined that patients receiving NAC had more CIN.[53] Thus, enrollment was suspended and then terminated.[54] A manuscript reporting on VALOR was submitted for publication in 2007.[55] The incidence of CIN was lower with Visipaque than Optiray, and Visipaque caused a lower maximum percentage change in SCr from the baseline.[56] However, the study concluded that there was no statistically significant difference in the incidence of CIN between the two CM tested; therefore no reliable conclusions can be drawn from this study as to Visipaque's renal superiority. e. The IMPACT article IMPACT was a study sponsored by Bracco and completed in 2006.[57] It was not a prospective study, but combined secondary data from two previously completed Bracco studies, INVICTA and VIRPACT, that were designed to study image quality, not CIN.[58] The post-hoc combination of data from two studies was not disclosed in the manuscript and is not an accepted practice in the scientific community.[59] Although Dr. Feldman testified that IMPACT does not contradict the conclusions of NEPHRIC because of the different patient sample groups, IMPACT does come to the conclusion that Visipaque and Isovue performed similarly and had similar renal safety profiles in patients at elevated risk for CIN.[60] f. The CARE Study CARE was another Bracco sponsored study[61] comparing Visipaque and Isovue. CARE was published in May 2007, and, prior to that, was not available to GEH.[62] All patients received sodium bicarbonate according to a protocol from the Merten study, which showed that sodium bicarbonate reduced CIN when used with Isovue.[63] Merten concluded that sodium bicarbonate inhibited the negative effects of hyperosmolar stress caused by LOCM such as Isovue.[64] At the time the CARE protocol was finalized, there was no significant evidence that bicarbonate was beneficial when used with an iso-osmolar agent *407 like Visipaque.[65] Dr. Feldman testified that CARE does not speak to the relative nephrotoxicity of Visipaque and Isovue without use of bicarbonate and does not contradict Chalmers, NEPHRIC, RECOVER, Jingwei, or the McCullough MA.[66] That is true, however, the Court finds this study's findings probative because its results indicate no statistically significant difference in CIN between Isovue with sodium bicarbonate and Visipaque with sodium bicarbonate. g. The Sharma Pooled Analysis, Solomon Systematic Review and Solomon/DuMouchel articles are biased and methodologically flawed The Sharma Pooled Analysis (D262A) was drafted in-house by Bracco and was based upon a prior article by Dr. Alberto Spinazzi, Bracco's senior vice-president responsible for medical and regulatory programs.[67] Bracco performed the statistical analysis[68] and paid Dr. Samin K. Sharma, a doctor at Mount Sinai School of Medicine, $50,000 for his costs associated with the article.[69] Bracco also drafted the Solomon Systematic Review (D107) and paid Dr. Richard J. Solomon, a specialist in internal medicine and nephrology and an expert proffered by Bracco, $30,000 for his involvement.[70] Together with Dr. Solomon, Bracco published an abstract of its review, but without data from Chalmers to "strengthen the argument" of equivalency between Isovue and Visipaque.[71] Bracco and Dr. Spinazzi were intimately involved in drafting the Solomon/DuMouchel article (D222).[72] Because of methodological flaws, the Court finds that no reasonable conclusions on the relative nephrotoxicity of Visipaque, Omnipaque and Isovue can be drawn from the Sharma, Solomon Systematic Review or Solomon/DuMouchel articles.[73] Bracco's expert, Dr. Isabel Elaine Allen, attempted to validate the Solomon Systematic Review, but her analysis was plagued by errors.[74] The reported CIN rates in both Solomon and Sharma were in fact lower for Visipaque than for both Isovue[75] and Omnipaque,[76] although the difference in the rate of CIN between Visipaque and Isovue was not statistically significant. There was a statistically significant difference in the rate of CIN between Visipaque and Omnipaque, and furthermore a statistically significant difference between Isovue and Omnipaque; Visipaque and Isovue performed better than Omnipaque overall. *408 h. The NEHPRIC Study The NEPHRIC study, reported in the NEJM (P2467), compared Visipaque and Omnipaque head-to-head, but stated in its conclusion that "[n]ephropathy induced by contrast medium may be less likely to develop in high-risk patients when iodixanol [(an iso-osmolar contrast medium) ] is used rather than a low-osmolar, nonionic contrast medium." Bracco assails the reliability of the NEPHRIC study by contending: (1) it was not designed to test whether osmolality is responsible for CIN (e.g., 20 T 6) and therefore cannot support the conclusion that Visipaque performs better than all LOCM in connection with renal function and CIN; (2) it has never been repeated in an AWC study; (3) it does not provide any support for the conclusion that Visipaque is as good as or better than LOCM with prophylactics;[77] and (4) it does not represent the weight of scientific evidence. (P2467; 3 T 89-90). In addition, Bracco avers, through the testimony of Dr. Solomon, that Table IV of the NEPHRIC article, which purports to present results from other studies, is inaccurate and misleading because it incorrectly reports the results of those studies. (3 T 126-31; P3148, 37, 2053, 2386, 2390). Bracco also alleges that Table IV is inaccurate and misleading because it does not report the allegedly contradictory results of GEH's NEPHRIC II study;[78] but NEPHRIC II was not completed prior to the publication of the original NEPHRIC article and therefore could not have an impact on the reliability of the Table IV charts when published. Additionally, any such allegations as to the results of the NEPHRIC II study are speculative and it is improper for the Court to draw any inferences in the absence of its production. According to Bracco there are several additional flaws inherent in NEPHRIC which make it unreliable: • Primary outcome flaw. The record indicates that Nephric's primary endpoint—mean peak change in serum creatinine—is not a reliable metric, although it is used in the article and GEH's ads (e.g., the 11 times better assertion). (33 T 207) (Feldman). P4288:437 ("unknown clinical significance"), P200 (p3, FDA rejects Nephric's mean peak change endpoint); see also P1540 (definition of clinically significant) • Omitting of key results. The NEJM article does not report the 25% rise in serum-creatinine results (P44, P4144, P1887; D2039T), which GEH added to make the study more comparable to the Chalmers study and to provide a more rigorous test for CIN. Id.; 3 T 90-99. Instead, the article falsely states that the secondary endpoints were significantly better. (P2467:913). GEH's marketing director was aware of this unreported data (e.g., P1951:131 (declining to provide the 25% results in Spain)) and he permitted the article to falsely report that all of the secondary outcomes showed a statistically significant (defined as p[79] *409 • Hydration flaws. Inadequate hydration was described by a GEH doctor as one of the "greatest weaknesses of the study" but it was not acknowledged in the article or any ad. (P530:148, 20 T 25; 3 T 101-105). • Baseline and other population flaws. The patients in the Omnipaque group had worse baseline values (P207-08, P979, P1887, P48, P49; 3 T 119-120; 20 T 35), which greatly increases the chance of getting CIN. Id. The patient groups also had other differences that were never analyzed together. Id.; 3 T 105-109,112-117. Furthermore, since there was no standard hydration, and hydration changes baseline values to an unknown extent, there is no way to know the correct values and thus there was no way to accurately calculate mean peak change or CIN. P823, P4250; 20 T 39. • Improper manipulation. While the study was ongoing, and in violation of the protocol and proper practice, GEH took secret and forbidden peeks at the data looking for trends, and even changed the study endpoints and stopped the study early in response.[80]E.g., P562:821 (found "Mean of max day 2 and 3: 20% (25% for Omnipaque and 15% for Visipaque)" to compare treatment arms before study completion), 1882:966 ("The statistician thought the data [from the two treatment arms] looked equal in both CrCl groups."); 11 T 20-26, 43-44, 71-75; D2039T ("pretend", "plausibility will not increase"), 2339, 2440. These types of unplanned interim analyses (defined by D2340:42 and D2339:34 as any comparison of treatment arms prior to completion) and secret attempt to "fix" the study midstream makes the trial non-prospective. P830; 20 T 28-33, 11 T 14-44, 70-71; P130. When a NEJM reviewer asked whether there was an interim analysis (P1869, 46), GEH and the authors replied there was none, and then amended the article to falsely say there was none. (P68; 20 T 17-18). • Hidden duration of diabetes flaw. Duration of diabetes may be a predictor of CIN (P 4377:29K; 34 T 57-62). GEH found that the statistically significant higher duration of diabetes in the Omnipaque patients may explain the results, independent of the CM, making the conclusion of the article unreliable. GEH did not reveal these results to the public. (P49, P967, P4364, P4364T, P4365, P4365T; 20 T 33-34). • Misrepresentative conclusion and manuscript. GEH's marketing director provided input to the NEJM article to try to make it misleading, and then celebrated the final version's obscuring of the limitation of the results of the study to Omnipaque and its overly broad and unsupportable conclusion. P1519, P1534, P1535, P4210 (admitted to only show input), P1532, P4208, P1672, P1873 (conclusion same as TCT abstract), P1876, P4208; 6 T 87-89, 13 T 62-71; see also P480. (Pl.'s FOF ¶ 13). Taking into consideration that the study compares one LOCM (Omnipaque) with Visipaque, nonetheless, the Court does not find that the study's results are vitiated by the flaws identified by Bracco. In addition, the NEPHRIC *410 study uses conservative language in its conclusion (e.g.-use of Visipaque "may" cause less CIN than "a" LOCM), which does not render the study unreliable merely because it only compared Visipaque and Omnipaque. As it pertains to GEH's advertising, however, the non-definitive language used in the NEPHRIC conclusion permits GEH to use it for the contention that Visipaque may be renally better than a LOCM (which in the context of the article, means better than Omnipaque), but only if GEH plainly identifies, in same size print (and not in footnoted material), that Omnipaque was the only LOCM compared and that the NEPHRIC findings are limited to the studied CM.[81] The NEPHRIC article cannot be used to claim that Visipaque has a superior renal safety profile to all or any other LOCM. Further, in regard to the claim that "Visipaque is as good as or better than LOCM with prophylactics," the Court finds that the results of the NEPHRIC study cannot reliably support such a conclusion because using a LOCM with prophylactics was not part of the results of the study and was only concluded through a MA. Moreover, Bracco contends that reliance on NEPHRIC is unreasonable because all other reliable clinical trials, reviews and MAs demonstrate no basis for a superiority claim of Visipaque over Isovue. Indeed, Bracco contends that all reported AWC clinical evidence and properly conducted MAs (e.g., Dr. Wei's unrebutted MA of GEH data) show no statistically significant difference between Visipaque over either Isovue or Optiray, whether given i.a. or i.v.[82] (1 T-4 T, 11-12). Bracco also contends that for seven years prior to the NEPHRIC campaign, no doctors had ever observed that Visipaque caused less CIN, Id., and that GEH's internal hidden data, never mentioned in its ads, also show no renal superiority for Visipaque.[83] GEH reported to its representatives that the studies provide valid and reliable information and that anecdotal experiences are not reliable in making CIN comparisons. (P260:413; 13 T 72-74). In further support of its claim for false advertising, Bracco also relies on FDA findings which declined to approve a renal superiority claim for Visipaque. The FDA has repeatedly found (e.g., in the years 1996, 2001, 2005) that there is inadequate support to make renal superiority claims for Visipaque. (E.g., P596, P457, P585, *411 P200, P816, P1894; 7 T 54-56; 14 T 41-57; 15 T 25-37, 38-39, 43-48). Furthermore, in 2001, GEH submitted the proposed NEPHRIC study to the FDA with proposed superiority claims. (P200, P199, P4205, P816, P556, P818, P1542, P264B, P271, P1670, P1543, P810, P972; 20 T 48-57; 14 T 57-62). The FDA again rejected GEH's proposed claims, requiring AWC clinical trials and rejecting NEPHRIC as an AWC clinical trial (e.g., "the current [NEPHRIC] protocol contained a number of sources of variability, which may confound the ability to clearly determine the effects of the drug on renal function"). (P200, 1542; 20 T 48-51). As part of GEH's rebuttal to the assertion that its representations constituted false advertising, GEH relied on four studies: Chalmers, NEPHRIC, RECOVER and the McCullough MA. Bracco contends that flaws in these studies vitiate their results as follows: (a) Chalmers was not AWC (small and unblinded), showed no significant difference (there was total agreement that the 10% test is irrelevant), and even the authors concluded it was weak (3 T); (b) NEPHRIC is unreliable; (c) RECOVER only involves Hexabrix (an ionic agent), it showed no differences in certain CIN measures and it is unreliable (3 T; Solomon Dec; D1990; P3823); and (d) the McCullough MA is of limited value as demonstrated by Dr. Wei's unrebutted testimony (11 T-12 T) that the McCullough MA results were mostly due to Omnipaque (and not Isovue).[84] The Court finds that these studies' conclusions do not establish the proposition that Visipaque has renal superiority to all LOCM. Turning specifically to the NEPHRIC study, despite certain flaws, there were significant reliable aspects. The Visipaque and Omnipaque groups in NEPHRIC were demographically comparable.[85] The requisite number of patients pursuant to the protocol were included.[86] All patients had RI and met the inclusion criteria.[87] Also, the Court is not convinced that the use of NAC in 11 patients affected the viability of the NEPHRIC results.[88] Furthermore, contrary to Bracco's assertion, no interim analysis, as that term is understood and defined by the scientific community, was performed during NEPHRIC.[89] ICH and FDA Guidelines for clinical trials, adopted by Bracco's expert Dr. Sanford Bolton (an expert in pharmaceutics, physical pharmacy and bio-statistics, as authoritative),[90] define an interim analysis as the unblinded comparison of *412 treatment results.[91] During NEPHRIC, the results were not unblinded and treatment results were not compared.[92] ICH and FDA Guidelines acknowledge that a sponsor may, without impacting a study's validity, monitor the success of planned accrual targets and the appropriateness of design assumptions.[93] Indeed, it is the sponsor's responsibility to do so.[94] Thus, GEH's monitoring of patient enrollment, sample size assumptions and overall (not separated into two treatment groups) SCr changes (e.g., Ps 562, 1882, 1883, 1884, 1885 1890, 1891), do not constitute interim analyses.[95] As to Bracco's claim that GEH influenced the wording of the NEPHRIC study conclusion, the Court finds that GEH did have input. Nonetheless, Dr. Aspelin's first draft dated March 6, 2002, which was authored before GEH offered comments and before presentation of an abstract at the TCT conference, also included a conclusion applying NEPHRIC results to the class of LOCM.[96][97] Further, Dr. Aspelin testified that he, his co-authors, and the New England Journal of Medicine editors believed in the scientific reasonableness of the conclusion.[98] All of this lends support to the reliability of the article, but combined with the chronic rejection by the FDA of its use for superiority advertising and the fact that the NEPHRIC article only compares one LOCM to Visipaque, it cannot be concluded from the study and the article that Visipaque is renally better than all LOCM. Indeed, this latter finding is also supported by the non-definitive language used in NEPHRIC's own conclusion that Visipaque MAY cause less CIN than A LOCM. Thus, the Court concludes that the NEPHRIC results do not support a claim of Visipaque renal superiority over all LOCM or any LOCM other than the one tested in that study (Omnipaque) because only one LOCM was compared, and because the NEPHRIC conclusion does not make an absolute claim of Visipaque renal superiority, hedging its findings with less than definitive language; NEPHRIC also does not support a conclusion that Visipaque has renal superiority over LOCM with prophylactics because the study did not compare any LOCM with prophylactics against Visipaque. i. None of the Proffered Studies Demonstrate that all LOCM (including Isovue) without Prophylactics Cause the Same Rate of CIN Bracco contends that P1937, an internal GEH document with MA results, shows *413 differences in rates of CIN between LOCM and that as such, a head-to-head study with one LOCM cannot be extrapolated to other LOCM. GEH contends that this was not an analysis of relative CIN rates[99] and that published guidelines treat all LOCM, including Omnipaque and Isovue, as functionally interchangeable.[100] However, the Court finds that even though multiple CM are categorized together as LOCM, it does not mean that they have the same effect, or produce the same rate of CIN. The Court is not persuaded that all LOCM perform identically—multiple studies introduced in evidence show that not all LOCM perform similarly nor do they produce the same rate of CIN. (See RECOVER, Jingwei, McCullough MA, VALOR, IMPACT and CARE). 3. GEH's Establishment Claims Of Non-Renal Superiority GEH also disseminated establishment claims of cardiovascular system, pain, warmth, discomfort and patient movement superiority, and establishment claims that Visipaque, and iso-osmolar agents generally, are a superior class of drugs that lead to lower hospital, legal and patient care costs. The Court finds that these claims explicitly or implicitly assert that data from clinical studies show that Visipaque is superior to a LOCM or all LOCM and thus they are establishment claims. As with the renal establishment/superiority claims, these claims were: (a) designed to be disseminated (Pl.'s FOF ¶ 4); (b) shown to be effective by GEH's collective experience and marketing research (Pl.'s FOF ¶ 4); (c) disseminated by the GEH representatives (Pl.'s FOF ¶ 5); and (d) disseminated in various channels of communication.[101] a. GEH's Non-Renal Cardiovascular Superiority Claims Are Not False And Misleading Examples of the cardiovascular system establishment/superiority claims extracted from GEH's print media, sales calls records and CME-type presentations are:[102] • Press releases on website even during trial: "Abstract Shows Significantly Lower Incidence of [Major Adverse Cardiac Events or Major Adverse Clinical ("MACE")] Following [PCI] Using Visipaque Compared to Isovue...." P2669:480, P3114H:857-58, P1893:940-41, P4151:p2; 7 T 69. • CT brochures: "Nonionic Dimer Provides Reduced MACE ..." P410:965, P3649:408, P3649A:408, D2324:117. • Sales call records: "Visipaque doesn't increase heart rate or B/P like LOCM". P3682:Omni/38573, 4049:Omni/38573. *414 i. MACE Bracco contends that GEH's cardiovascular claims are false because: (a) the studies do not support the claims (e.g., no superiority over all LOCM, i.a. results do not predict i.v. results, and any difference purportedly shown in studies was fleeting because the results for different contrast agents converge after 30 days); (b) there were allegedly omitted results and flaws that contradict the claims made in GEH's advertising; and (c) the studies GEH relies on (COURT and VICC) are unreliable. The following is a detailed analysis of Bracco's allegations beginning with the various promotional materials disseminated and moving on to the integrity of the COURT and VICC trials. Bracco's assertions, include: (1) the weight of the clinical evidence shows that Visipaque is not superior to all LOCM and definitely not superior to Isovue (Bracco concedes that ionic Hexabrix may be inferior); and (2) there has never been one AWC clinical study (let alone two, done the same way with the same drug) showing that Visipaque is superior to a LOCM with regard to MACE. 1. FDA findings Referencing a series of letters dating back to 1996, Bracco argues that the FDA found no support for GEH to make cardiovascular superiority claims. (E.g., P596, P457, P588, P585, P82; 15 T 25-39, 43-44). Nonetheless, some of these letters pre-date the COURT trial (circa 2000) and all pre-date the VICC trial (circa 2005) and since that time, new evidence has come to light. Thus, the Court finds these FDA letters are neither dispositive, nor highly probative as to whether GEH's advertising was literally false regarding its claims of the incidence of MACE. See infra pp. 467-69. 2. COURT Study as Reported by GEH Bracco asserts that GEH reported false information from the COURT study. (P2561). According to Bracco the study is limited to: (a) a comparison between Visipaque and ionic Hexabrix; (b) the patients studied ("extrapolation of these results to [a stable] population is not possible" (P2561), and the reported results were not consistent with the results from the less sick patients in the VIP study, see discussion infra at pp. 417-18, (P71)); and (c) a fleeting difference in adverse events between the two drugs cumulatively at the 30 day point (something not mentioned in GEH's ads). (5 T 37-44). Bracco also asserts that the actual data, including data not disclosed by GEH, show that there were no differences between the drugs and the results were not reliable.[103] GEH responds by contending that COURT was a randomized head-to-head clinical trial comparing Visipaque and a LOCM, Hexabrix, in 856 high risk patients undergoing Percutaneous Transluminal *415 Coronary Angioplasty ("PTCA").[104] Dr. Davidson was the principal investigator ("PI") and helped design and run it.[105] Dr. Kevin Harrison, the PI of the Bracco sponsored VICC trial, was also an investigator for COURT.[106] The primary endpoint of COURT was in-hospital MACE.[107] The in-hospital period is most relevant because MACE events caused from CM, as opposed to those caused by other factors, tend to cluster in the first few days.[108] The Visipaque group had less in-hospital MACE than Hexabrix (5.4% vs. 9.5%) and fewer myocardial infractions ("MIs") (2.0% vs. 4.4%).[109] The incidence of MACE at 30 days favored Visipaque (9.1% vs. 13.4%).[110] Dr. Kern, a Bracco expert, agreed that COURT showed that "the incidence of [MACE] and major angiographic complications are reduced in high risk patients undergoing coronary interventions with Visipaque compared with Hexabrix."[111] MACE events in COURT were adjudicated in a blinded manner by the authors.[112] I need not find whether the COURT results could support a conclusion that MACE is related to osmolality,[113] because the conclusion in COURT only stated that Visipaque causes less MACE than Hexabrix in high risk patients undergoing coronary intervention.[114] The Court finds that, despite the qualms referenced by Bracco, the COURT study is sufficiently reliable to permit one to conclude with reasonable certainty that it established a cardiovascular superiority claim for Visipaque over Hexabrix for use in high risk patients undergoing coronary intervention. COURT does not, however, support such a conclusion as to any LOCM other than Hexabrix. 3. VICC study The Bracco-sponsored VICC trial compared Isovue to Visipaque. (P2326, P3909). However, this study has never been published in a peer-reviewed journal[115] and Bracco contends that it was poorly designed and unreliable based on several flaws, including: (a) its crossover effect and lack of a washout period, (23 T 122-124); (b) its failure to uniformly measure CK-MB (23 T 126-127); (c) its side effect; and (d) the adjudicators' failure to follow the rules on calculating CK-MB change (P3912:654). D1441; 5 T 44-67; 25 T 121-44; 33 T (Spinazzi). The Court finds that these concerns, whether in isolation, or in conjunction, do not make the study so unreliable as to render it unsupportable *416 for the conclusions stated therein. The results of the trial show that Visipaque had statistically significant less incidence of in-hospital MACE than Isovue. GEH correctly avers that VICC was a Bracco sponsored head-to-head randomized trial comparing Visipaque and Isovue in 1276 patients at mixed risk levels for MACE.[116] Dr. Harrison was the PI.[117] Drs. Charles Davidson and Morten Kern were co-investigators.[118] The idea for the VICC trial came from Duke University, which approached Bracco for support.[119] The evidence reveals that Bracco agreed to sponsor it and then tried to minimize publication of any negative results.[120] The primary endpoint of VICC was the incidence of MACE in the earlier of the first two days following contrast administration, or until hospital discharge.[121] The VICC protocol specified CK-MB for the primary diagnosis of non-Q-wave MIs.[122] CK-MB are commonly used in clinical practice for such diagnosis.[123] Visipaque caused less in-hospital MACE than Isovue (4.8% vs. 9.0%), including less in-hospital non-Q-wave MIs (3.4% vs. 7.5%), which the study concluded was significant for treatment.[124] At 30 days there were significantly fewer non-Q-wave MIs with Visipaque.[125] The periods of 0-7, 2-7, and 2-30 day MACE were included as secondary endpoints in VICC, but are not as clinically relevant as in-hospital MACE.[126] There was also no significant difference in repeat PCIs of the target vessel, i.e., the vessel treated at the time of procedure.[127] Repeat PCIs of non-target vessels are unlikely to be related to the effects of CM.[128] The Court finds that it is scientifically reasonable to conclude from VICC that (1) Visipaque is associated with significantly less in-hospital MACE than Isovue;[129] and (2) Visipaque is associated with fewer non-Q-wave MIs than Isovue.[130] The primary results of VICC and COURT are essentially the same.[131] VICC confirmed the findings of COURT, extended it to a different comparative agent, and was a *417 more contemporary study based on the practice having changed, i.e., use of more stents and the use of more IIB/IIIA inhibitors.[132] Dr. Kern testified that the lack of a washout period in VICC makes the data difficult to interpret, but Dr. Harrison disagreed; he testified that it does not affect interpretability of the data.[133] In addition, Dr. Davidson testified that he did make sure that the patients in his portion of the VICC trial who underwent a diagnostic procedure got the same drug as in the interventional procedure, thus eliminating a crossover or a washout effect. (23 T 122:24-123:14). Furthermore, he found that Visipaque performed better than Isovue whether it was the same contrast agent being used in the procedures or whether there was contamination from another contrast agent. (23 T 123:18-124). Further, Dr. Kern signed the published abstract that did not mention the washout issue[134] and approved the protocol in conjunction with his colleagues.[135] The testimony reveals that Bracco believed VICC favored Visipaque, and thus would damage Isovue in the market. As a result, Bracco sought to contain damage by re-analyzing the data, seeking to undermine the validity of unfavorable results, and pressuring Dr. Harrison regarding the contents of the abstract and manuscript.[136] The Court finds that the VICC study is sufficiently reliable to permit one to conclude with reasonable certainty that Visipaque causes less in-hospital MACE than Isovue for patients undergoing PCI within the initial 48 hours after the procedure. 4. The VIP Trial The Court finds that VIP, a study published in 2000, that compared Visipaque and Hexabrix in low risk patients,[137] does not undermine the conclusions of COURT or negate its findings regarding high risk patients. However, VIP's conclusion that there is no statistically significant difference between Visipaque and Hexabrix in low risk patients with regard to MACE,[138] militates against any finding that Visipaque performs better than this low-osmolar contrast agent with regard to MACE in that patient group. Furthermore, since no other studies have focused on Visipaque and any other LOCM to confirm the incidence of MACE in low risk patients, there is no basis to assert any Visipaque superiority claims for MACE in low risk patients. ii. Hemodynamic Effects Bracco contends that GEH has not rebutted Bracco's evidence that iso-osmolality and Visipaque are not superior over Isovue or other non-ionic LOCM for heart rate, blood pressure, ECG, LVEDP and other cardiovascular effects as shown by Dr. Kern and VIP (P71), IMPACT (P2799), Sutton I (P3770), Sutton II (P3855), Verow (P2356), Manninen (P3846), Palmers (P3847), and Klow (3844), or that iso-osmolality does not cause less red blood cell deformity than LOCM. 5 T (Kern); P27, P34, P41; 2 T (Katzberg). Moreover, GEH's internal data also shows *418 no superiority: DXVPRC01 (P1705); DXVD09 (P220:931). (5 T 76; 2 T 58-60). Bracco contends that GEH's rebuttal ignored Bracco's proofs and relied on excerpts from three articles that are not cited in the ads in issue and that cannot support the scope of its claims: the Bergstra Article does not attribute the LVEDP difference seen between Omnipaque and Visipaque to osmolality differences (D814:222) and the Soiva and Murdock articles did not involve Visipaque (D2249; D2377). In fact, Soiva, finding significant differences between LOCM, showed that LOCM cannot be considered as a uniform group. Here, GEH incorrectly contends that there is a good basis to conclude, from clinical trials, that Visipaque causes fewer and milder hemodynamic effects (e.g., heart rate changes) than LOCM[139] and that LOCM are all similar in this regard.[140] The Court finds that these conclusions are neither adequately supported nor reliably based upon the studies GEH cites. b. GEH's non-renal discomfort-type claims Examples of the discomfort-type (i.e., claiming less pain, warmth, discomfort or patient movement or designed for such) establishment/superiority claims extracted from GEH's print media, sales calls records and CME-type presentations are:[141] • Website, brochures and CMEs: "[Visipaque] offers significantly better comfort to the patient ..." P2508:767A, P2511C:781A, P4163:767A, P4166C:781A. • CT brochures: "Less chance of extravasation-related complications—including pain, discomfort ... when used:" "Less chance of patient discomfort ... when used in:" "High concentration", "High-rate injections", "Multiple procedures", "High-speed procedures." P410:966. • Sales call records: "She asked why use Vis Shared theory iso-osmolar, less fluid shifts and thus less pt discomfort, movement and need to rescan...." P2312:A650688, P4049:A650688. GEH makes claims that Visipaque is superior to LOCM because it provides less pain, heat, and discomfort and that these benefits are due to its iso-osmolality. Bracco contends that these claims are false and misleading because: (a) the studies do not support the claims (e.g., no superiority over all LOCM, i.a. results do not predict i.v. results, no difference in movement ever shown); (b) omitted results and flaws contradict the statements; and (c) the weight of the clinical evidence is that Visipaque is not superior to all LOCM and definitely not superior to Isovue. There may be a benefit in heat sensation that is sometimes *419 described as pain in peripheral angiography, but that has never been proven and peripheral angiography is a de minimus use of CM. (1% today, 2 T 91; 29 T 158-159). GEH's own Dr. Anthony Nicholson, an interventional radiologist, testified that GEH's claims were too broad because any benefit of Visipaque is limited to direct local injections in small vessels, a limitation found in none of GEH's advertising claims. (Id.) In addition, there has never been one AWC clinical study that was repeated and supports the claim that Visipaque is superior to a LOCM (or all LOCM) in a manner claimed by GEH. Furthermore, Bracco contends that the FDA found there was no support to make discomfort-type superiority claims for Visipaque. (E.g., P596, 457, 588, 585, 82; 15 T 25-39, 43-44). At most, the FDA permits GEH to make a very limited and inconclusive statement about a trend that is not a superiority claim. (14 T 66). There have been eleven studies showing no difference in patient movement and no reliable study showing a difference in patient movement. GEH's attempt to show a difference (DXV071) was a failure so GEH did not make great effort to release the results. (P557).[142] Furthermore, data from unpublished studies showed no consistent differences in pain, discomfort or movement: GEH MA (P549); DXV071 (P557); DXVA001 (P220:930); DXASG001 (P220:930); DXVD11 (P220:932); 2 T. Bracco asserts that Dr. Michael Rappeport's survey demonstrated that the claim, Visipaque is superior regarding pain "compared to LOCM", is understood by an overwhelming proportion of customers to claim superiority to all LOCM. (Pl.'s FOF ¶ 18). However the Court is excluding Dr. Rappeport's survey for its inherent unreliability. See infra p. 90. In response to the Rappeport survey, GEH proffered Dr. Nicholson who presented several studies asserting differences in pain or discomfort (nothing on patient movement) but none compared Visipaque to all LOCM or even one LOCM in an AWC study that was ever repeated. (See 29 T). Conversely, GEH avers that CM can cause pain, discomfort or heat upon injection, and that this aspect of patient comfort is clinically relevant.[143] GEH also contends that Visipaque causes less pain, discomfort and warmth than LOCM, including Isovue, in certain procedures,[144] and that this difference is clinically relevant.[145] No study has shown Isovue to cause less pain than Visipaque.[146] Bracco acknowledged that there is less pain with Visipaque than Isovue in peripheral angiography procedures.[147] Bracco's expert, Dr. Katzberg, acknowledged the same.[148]*420 Furthermore, GEH's expert, Dr. Nicholson, could not substantiate by a reasonable degree of scientific certainty, based on the studies, that any claim of Visipaque superior regarding pain extended beyond peripheral angiography procedures.[149] Accordingly, the Court finds that GEH's claims of comfort superiority are only supported in regard to peripheral angiography procedures. Thus, GEH's broad assertions of superior patient comfort are not supported by the conclusions of the various studies it uses to bolster them and any such advertising must be limited to the procedures that were used in the studies. c. GEH's Osmolality Class/Cost Claims Examples of the osmolality class and cost establishment/superiority claims extracted from GEH's print media, sales calls records and CME-type presentations are:[150] • Website: "Isosmolar Visipaque. It's innovative in a class of its own." P2505:757A, 2511A:774A, 4155A:737, 4160:757A, 4166A:774A, 3448A:p2 • Diagrams/claims repeated in websites, brochures and CMEs: Showing "hyperosmolality" (i.e., osmolality higher than blood, like Isovue) leading to "altered morphology" of "erythrocytes" and "endothelial cells", ultimately leading to "discomfort", "warmth", "coldness" and "pain." P2508:766A, P2511C:781A, P4163:766A, P4166C:781A; see also P3114K:823, P2510:771A, P2508:763A, P2511C:779A, P4163:763A, P4165:771A, P4166C:779A, P2183:982, P2184:000, P2311:p4, P2298:p25, P4252:p3, P3828:929, P3261:011, P3829:036, P2156:036, P2157:212. Additional claims of less red blood cell effect of IOCM vs. LOCM can be found at: P2311:p5, P3710:p2, P2280:p5, P395:357, P409:945, P333:738, P410:960, P3649:403, P3649A:403, P436A:421, 27-28, P2298:p7, 13-14, P782:893, P2161:387, P2183:991, P2184:009, P4252:p12, P4174:p1, P3114J:821, P3210:934, 410:962, P3649:405, P3649A:405, P2510:772A, P2508:764A-65A, P2511C:780A, P4163:764A-65A, P4165:772A, P4166C:780A; D2324:114, D2334:p2, D2324:112 • Health Value brochure: "Isosmolar VISIPAQUE may reduce financial burden *421 due to serious adverse events". P446:641, P649:665 • Sales call records: "Used the `cost' story for Visi vs. LOCM" P3682:Visi/154349, P4049:Visi/154349 These claims are based upon alleged renal, cardiovascular or discomfort-type superiority tied to osmolality (e.g., 6 T 94-99) or costs. Bracco asserts that they are false and misleading because (a) the studies (shown above) do not support the claims (e.g., no superiority over all LOCM, i.a. results do not predict i.v. results), and (b) omitted results and flaws contradict the claims. The Court finds that the weight of the clinical evidence does not show that Visipaque is superior to all LOCM nor does it show that it is superior over Isovue, except perhaps under limited circumstances for pain and in-hospital MACE for patients undergoing PCI. The FDA found that there was no support for making class/cost superiority claims for Visipaque. (E.g., P588, P585, P82; 15 T 33-39, 43-44). Furthermore, GEH's medical officer testified that while iso-osmolality is a chemical property of the final Visipaque formulation, it does not put the drug in a proper, formal class of drugs separate from LOCM by FDA standards. (16 T 186-187) ("IOCM and LOCM are not separate classes, Correct?" "That is true."). This is because the FDA classifies all iodinated contrast media the same. (Id.) In addition, Bracco contends that GEH improperly advertised the role of osmolality in causing adverse events. GEH's documents give some indication that Visipaque has a much higher rate (5-7 times) of delayed adverse events than Isovue and other LOCM (e.g., P1948:947(1.4% v. 0.2%), P2133, P1169, P544, P557, P3860:167; 13 T 82-85) and thus it belies GEH's superiority claims in regard to Visipaque (and iso-osmolar Isovist, withdrawn for this reason). In light of this data (P1169:703, P4240:670, P544), GEH countered with claims that there were an equal or lower number of adverse reactions. (E.g., P2291:054, 2305(Conclusion), 2309, 976, 2026, 2027, 2286; 15 T 151-152). GEH also argues that Bracco's foreign affiliate and experts agree that osmolality is relevant to renal safety, cardiac safety, and pain/discomfort.[151] However, the Court does not attribute significant weight to these general assertions. Finally, Bracco asserts, and the Court agrees, that there is little evidence to support a claim of decreased costs using Visipaque. There is no support for GEH's claims that studies show that there is less patient care, hospital care or legal liability costs for Visipaque versus all the LOCM or even one LOCM.[152] The only way to make such a cost inference is by associating the cost of treating additional instances of MACE and CIN to higher overall cost, but since the Court has not made such a finding with regard to CIN, the only viable means of advertising lower cost is through less incidence of MACE for patients undergoing PCI within the 48 hours after the procedure. *422 4. Additional Evidence Regarding Dissemination In addition to the proofs cited above, dissemination of allegedly false claims was confirmed by the testimony of Mr. Scott Kerachsky, Director of Marketing for GEH Healthcare, North America, (15 T 100-142), Dr. Peter McCullough (34 T 160-165), and stipulations by GEH. GEH representatives are instructed to present printed materials a section at a time, by pointing to specific parts, and not as a whole. (E.g., 15 T 116, 172-175; P2100:530, 2098). But, in his testimony, Mr. Kerachsky also elaborated on the impact of GEH's various levels of approval mechanisms over promotional materials and their dissemination. Specifically, Mr. Kerachsky identified four levels of approval, medical, regulatory, marketing, and legal, whose responsibility it is to ensure that the clinical data provides support for proposed promotional materials. (15 T 86, 90). Mr. Kerachsky also testified that every piece of promotional material used by GEH's sales force was approved by medical, regulatory, marketing, and legal. (15 T 83, 86, 90). In fact, Mr. Kerachsky himself reviewed prospective promotional materials from a marketing prospective, mindful of FDA regulatory issues and possible conflicts with the underlying clinical data. (15 T 93, 95, 125). For example, with respect to NEPHRIC, Mr. Kerachsky testified that marketing "clarified, just to be extra careful, that it was iohexol" which was studied. (15 T 125). For the time period covered by GEH's sales call record production (i.e., Sept. 2003-2005), Bracco asserts that at least 87% of GEH's representatives delivered GEH's clinical superiority claims. (17 T 102,107; 18 T 25-34, 40, 42-43; P3493M, 3922, 4049; D2004). While Bracco asserts that at least 82.5% of GEH's sales call records with substantive communications show the delivery of GEH's clinical superiority claims to customers, the Court finds this number to be grossly inflated based upon its own evaluation of the records and expert testimony; nonetheless, some instances of false messages are supported by the record. (See also 17 T 102, 107; 18 T 25-34, 40, 42-43; P3922, 4049; D2004). GEH argues that Bracco has grossly mischaracterized the number of actionable sales call notes and promotional materials, specifically because of flaws in Mr. Russell's testimony. For example, Mr. Russell could not identify the basis for his testimony that certain GEH promotional materials contain pain/discomfort superiority claims.[153] Mr. Russell improperly categorized: (1) accurate discussions of the NEPHRIC study,[154] and (2) a Visipaque logo as renal superiority claims.[155] Mr. Russell could not identify the basis for his categorization of GEH promotional materials, including a specific piece containing the statement "Is your contrast media this close to plasma?" as cardiac superiority claims.[156] Mr. Russell improperly categorized statements, including "Currently, there is no health care common procedural code to delineate iso-osmolar contrast agents such as Visipaque from low-osmolar contrast media LOCM," as class claims.[157] Mr. Russell improperly categorized statements in GEH promotional material, including a piece that expressly states that medical personnel should consider taking *423 prophylactic measures to reduce the risk of CIN, as promotion of "the lack of pretreatments and emergency use without renal function testing."[158] Nonetheless, a number of the sales call notes reviewed by this Court do indicate that certain members of the GEH sales force were using the NEPHRIC study's conclusion to make superiority claims. In addition, GEH argues that Mr. Russell's analysis of sales call notes is unreliable because of the allegation that Mr. Russell's compilation of allegedly improper sales call entries was compiled by Bracco's counsel[159] and was widely over-inclusive. The compilation was created from 314,468 GEH sales call notes produced in this case.[160] For example, Mr. Russell improperly categorized entries that reference only the word, "NEPHRIC," as being "on-message."[161] Also many included notes were duplicative.[162] In addition, GEH states that Mr. Russell's compilation improperly categorized sales call notes as (1) renal superiority messages; (2) cardiac superiority messages; and (3) evidence of the application of Visipaque "leverage." Indeed, Mr. Russell admitted that there was no reason that innocuous sales call entries such as "Discussed use of Visi for high risk patients"; "Told him about Visi for the coronary"; and "Thanked Dr. Vogel on the lead to move forward to bundle a LOCM and MRI contrast deal," were included in the above categories, respectively.[163] GEH argues that due to the lack of standards employed, Mr. Russell's compilations are inflated and unreliable.[164] The Court agrees that Mr. Russell's opinions as to the percentage of "onmessage" sales call notes and representatives who made them are greatly inflated.[165] Nonetheless, the Court has had the opportunity to review the sales call notes and disagrees with GEH that the Court should only review sales call notes that mention Isovue as follows: (1) 284 notes that mentioned Isovue; (2) only 38 where Isovue was mentioned and a superiority claim that could arguably be construed from the note; and (3) 1,251 notes from a single GEH sales representative (Chad Chaney) who entered substantially the same comment for numerous notes.[166] I find that focusing on the subset of sales call notes that explicitly mention Isovue would understate of the number of sales calls that improperly made Visipaque superiority claims over all LOCM. GEH's claim that Visipaque is better than all LOCM or a LOCM, without identifying the one LOCM compared, is what makes its advertising campaign problematic; a sales call need not mention Isovue specifically. In sum, Bracco's position that any advertisement which references NEPHRIC is false is incorrect and thus results in an over-inclusive determination; conversely, GEH's position that only those advertisements which compare or mention Isovue may be improper is under-inclusive. 5. Evidence Concerning Materiality The evidence of materiality includes: *424 • The repetition of certain unsupported claims by GEH's sales and marketing teams. • The substance of the claims (e.g., CIN and other clinical data), which cannot be ariecdotally observed with reliability (e.g., P260:413; 5 T 28-29). • The type of claims—i.e., drug safety, which GEH's own observations (7 T 178) and market research showed were the most effective in converting sales (E.g., P100-102, 104-106, 196:573-580, 1400, 1436, 1716:739, 2038, 2112). • The limited evidence that it will take several years for Bracco to recover from GEH's false claims once they are stopped (17T 117-118; 21 T 110-122). These few examples, when considered in conjunction, demonstrate that GEH's false advertising claims appear material to a consumer's purchasing decision. Moreover, because I find that some of GEH's claims are literally false, as stated infra p. 143-45, there is a presumption of materiality and deception. 6. Harm, Damages And Other Remedies a. Causation For Bracco's Losses i. GEH's Testimony and Business Records Numerous GEH witnesses conceded that Visipaque renal safety claims drove substantial sales increases which came, in significant part, at Bracco's expense. GEH's President, Dan Peters, testified that GEH enjoyed a dramatic sales increase after the publication of NEPHRIC, primarily due to GEH's renal safety message. (6 T 103; see also 7 T 94-95; P2461, 1892:925-6). He acknowledged that GEH's renal message had a "large impact" on the "whole market" while GEH tried to "minimize [Nephric's] negative impact on Omnipaque." (6 T 59-60, 100). GEH's Vice President of Sales, Don Quinn, confirmed that the "NEPHRIC data coupled with a very consistent targeted marketing campaign has propelled demand for Visipaque to new heights." (8 T 124-125; P849:934). He further admitted that GEH used NEPHRIC to convert competitive business, including Isovue accounts.[167] Mr. Quinn agreed that GEH set out to increase Visipaque's market share through an "aggressive sales and marketing effort" and that there "[a]bsolutely" was a connection between that effort and these increases.[168] In addition, GEH's global brand manager, Mr. Paul Gehris, admitted that GEH saw "very good share growth since the NEPHRIC" that was "driven by awareness of the data and the perceived differentiation." (13 T 77-80, 14-19; P1694:022). However, it remains that out of the entire GEH ad campaign relating to Visipaque, only a small fraction of the disseminated messages were indeed false. Most were proper and were backed up by the underlying scientific studies that they reference. Therefore, a causal connection cannot be made by a sales trend alone; the accurate touting of favorable results of reliable scientific studies plays too much of a significant part in this case to determine that the limited number of false ads disseminated are the cause of Bracco's lost profits. GEH sales representatives also gave testimony relating to GEH's renal superiority claims. GEH's representative sales-person, *425 Mr. Murray, testified during his deposition that in general, when talking with customers about high risk patients, he discusses that the NEPHRIC study shows that Visipaque has a better renal profile than traditional LOCM. (See 16 T 84:4-11). However, when a question relating to that statement was posed to Mr. Murray at trial, Mr. Murray clarified his statement to mean that "when we were talking about NEPHRIC and the traditional LOCM, we were talking about [] Omnipaque." Id. 14-17. In fact, Mr. Murray testified that as a sales representatives "he tr[ied] to talk about Omnipaque and Visipaque."[169] While it is difficult for the Court determine what was actually communicated to the customers, based on Mr. Murray's testimony, some of this sales calls' messages may be construed as misleading, especially when Mr. Murray did not qualify or specifically identity Omnipaque as being the traditional LOCM. Nonetheless, the Court finds in its review of the sales call notes that the instances of sales reps making such misleading statements were limited. Importantly, the majority of GEH's messages were in fact true and properly relied on reliable scientific studies to support them. GEH admitted that Visipaque's premium price resulted from its "clinical differentiation" messages. Mr. Quinn testified that customers "absolutely" had to believe Visipaque provided patient benefits to pay the price premium.[170] The 2004 Marketing Plan states that "based upon its clinical differentiation ... a significant price premium has been placed on Visipaque when compared to low osmolar products."[171] Mr. Gehris admitted the clinical differentiation strategy drove Visipaque's premium price. (13 T 14-19; P1436:616,622,635). However, this was in large part a result of the underlying studies and GEH's promotion of their results. Quotes from GEH business records relating to GEH's claims of renal differentiation include, for example: • "The objective ... to increase market share ... will be accomplished strategically by clinically differentiating Isosmolar Visipaque from all other LOCM products...." (P849:932; 8 T 123-124). • "The Nephric success stories continue to come in with the majority of new dollars coming from competitive LOCM products." (P1311) • "Sales performance reflects strong continued efforts in all markets to communicate NEPHRIC results and Visipaque clinical differentiation message.... Sales reports continue to highlight customer acceptance of these messages and adoption of Visipaque use in patients at risk of CIN." (P1157:744) • "2005 is projected to be the 3rd consecutive year of very aggressive growth.... The NEPHRIC data, coupled with a very consistent and targeted marketing campaign ... has propelled demand for Visipaque to new heights."[172]*426 Because the NEPHRIC study itself concluded that Visipaque may perform better than a LOCM, and that conclusion accurately reports the study's findings, GEH's internal documents which advocate differentiation of Visipaque from other LOCM did not lead to a false message so long as GEH actually disseminated an accurate portrayal of the NEPHRIC results and did not extrapolate them beyond the limited comparison of Visipaque and Omnipaque. However, to the extent that GEH did not so limit its comparison and message, it would result in a false message. ii. Sales Trends In the LOCM market, three players (GEH, Bracco and Tyco) control 97% of the market, with Tyco's share almost entirely due to the Premier GPO. (P849:881; 8 T 123 (Quinn), 18 T 114 (Malackowski), 21 T 91-92 (Medici)). The Court finds that, outside of the Premier GPO (which is not part of Bracco's damages claim), the LOCM market effectively is a two-player market. This finding is reinforced by the undisputed facts of record that Bracco and GEH were effectively the only two competitors for the Novation, Consorta and Kaiser contracts (as discussed below). Mr. Medici testified both parties' market shares were stable but "changed dramatically" after the NEPHRIC article was published and its subsequent marketing, with GEH's sales increasing and Bracco's decreasing. (21 T 93, 97, 103-104, 110-113). Mr. Peters agreed that initially Visipaque had grown only gradually but "grew very well after the NEPHRIC study, yes." (6 T 44).[173] iii. The Parties' Surveys The Court is excluding both Bracco's survey expert, Dr. Rappeport, as well as GEH's survey expert, Dr. Ericksen. However, Mr. Quinn, GEH's Vice President of Sales, in an email to GEH officials, announced the results of an informal study of physicians and their feedback regarding the NEPHRIC article, including the "top 3 messages that excite physicians to action," "Safety in patient with creatine above 1.5," "Less Nephropathy" and "Isosmolar Visipaque is 11 times less likely to cause renal failure."[174] In this case, each of these general statements may be part of a true advertising campaign, but only if they plainly describe the circumstances of the underlying studies, e.g. type of patients tested, and the actual products that were tested (and not in small footnoted material); GEH may not extrapolate these findings to CM which were not compared in these studies. iv. Bracco's Harm and Response Mr. Medici and Dr. Spinazzi testified that Bracco expended substantial resources, including spending millions of dollars, responding to the effects of GEH's allegedly false claims—e.g., responding to purportedly deceived customers; responsive advertising; sponsorship of the Sharma, Solomon and Solomon/Du-Mouchel papers; and two head-to-head Visipaque versus Isovue studies (CARE and IMPACT). (E.g., 20 T 108-149; 21 T 99-110). Bracco alleges that GEH's false ads caused Bracco and Isovue to lose significant *427 reputation and goodwill. (Id.) However, Bracco's complaints about spending additional funds to sponsor studies verifying its product's efficacy cannot all be laid at the feet of GEH. Bracco and GEH are the primary players in the field of CM and thus, fiercely compete against each other in the marketplace, obviously target each other, and look to tout their own products whenever possible. Indeed, as shown during the course of the trial, by way of the sheer number of sponsored studies proffered by both parties over the years, in this business it appears to be commonplace, if not a necessary part of the industry, for companies to spend significant amounts of capital in support of scientific comparative studies to promote sales of their products. Moreover, the Court was surprised by the revelations that virtually every clinical trial, study, and resultant publication in this area was sponsored by GEH or Bracco. In some cases, the principal investigators were paid consultants to one of these companies. This has lead the Court to conclude, and lament, that there is little in the way of a truly independent clinical study in the CM market. v. Anecdotal Evidence of Visipaque Superiority GEH argues that customers also observed Visipaque's alleged superiority, anecdotally. However, GEH's medical department concluded that "spontaneous clinical observation cannot give any statistical evidence" and only head-to-head studies can determine renal safety. (P260:413; 13 T 72-74). GEH's clinical expert, Dr. Feldman, concurs, 35 T 118-120; P3738:P3, as does the Court. Consequently, the Court finds that anecdotal evidence does not impact the validity or invalidity of GEH's superiority claims, and cannot be used to bolster the claims. vi. Visipaque Leverage. GEH developed a "Visipaque Leverage" strategy to keep existing accounts and convert competitive accounts by (1) "penetrating" the account with Visipaque; and (2) "leveraging" a contract award by threatening to raise Visipaque prices if GEH lost the bid for its other products. The 2004 Visipaque, Omnipaque, and Omniscan Marketing Plans all prominently feature Visipaque leverage.[175] Shortly after GEH developed its "WAT" tool to illustrate Visipaque Leverage to its customers, it observed "several examples already of customers threatening to leave [GEH] ... that reconsider their decision once they understand the consequences of Visipaque price increase should they decide to leave [GEH] on other products." (P786:201, 470). vii. The Novation Contract In 2004, Novation issued an invitation to bid (ITB) for its Injectable CM (ICM) contract.[176] GEH, Bracco, Berlex Laboratories, *428 Bristol-Myers Squibb, Guerbet, and Tyco Healthcare submitted bids.[177] Novation selected twelve members from Novation hospitals to comprise a Task Force ("TF") charged with assisting in the evaluations.[178] Its members were experienced with CM. Shortly before the TF's meeting at which it decided to award a separate technology contract for Visipaque, Novation provided the members with COURT, NEPHRIC, and VICC.[179] The TF recommended, and Novation awarded, a technology contract for Visipaque.[180] At the technology meeting, a Novation representative presented the technology claims for three products. With respect to Visipaque, the representative "went over all of the clinical documentation and referenced the pre-reading. The consensus of the TF was that this contrast agent is unique and innovative and offers clinically proven incremental benefits over other products on the market. The TF believes Visipaque should be carved out and identified as innovative."[181] It is unknown which specific incremental benefits the TF considered or upon what specific information the TF relied in making its decision to carve Visipaque out of the ICM bid.[182] Generally, Novation asked the TF "to use [relevant] information along with their personal practical and own clinical experience to evaluate not only the bids but new technology submissions. And so it's [Novation's] belief that they do that."[183] It also asked the TF members "to do their own research within their institutions and talk to those clinicians who have further experience, and we expect them to represent that fairly in their decision-making process."[184] Novation saw no evidence that the TF relied on advertising in concluding that Visipaque offered clinical benefits.[185] Indeed, the stated conclusion of this experienced task force—that Visipaque offers "clinically proven" benefits— is itself evidence that experts in the field can reasonably conclude that Visipaque has advantages over other CM. In April 2004, as a result of the technology award, Visipaque was carved out from the ICM contract decision process; the TF did not further consider Visipaque in analyzing either the non-financial or financial components of the ICM bids.[186] Even after Visipaque had been carved out, GEH received the highest scores from the TF with respect to all non-financial criteria (NFC).[187] Novation's contract development *429 department evaluated the financial portions of the bids and scored each supplier with respect to the financial criteria (FC).[188] The bidder with the lowest ratio of FC score to NFC score has the low best bid.[189] Novation awarded a sole-source contract to GEH based upon its top score on the NFC and its low-best bid for an x-ray/CT and MR combined contract, and based upon the fact that it was the only qualified bidder on ultrasound.[190] The Novation TF appears to have based its evaluation of GEH's bid on personal experience, feedback from physician colleagues, clinical information, and the positive relationship Novation had with GEH.[191] It is impossible to determine how, if at all, the award decision would have been "different if in fact the council viewed Visipaque differently than [it] did," and had Visipaque not been carved out.[192] Ultimately, on March 1, 2005, Novation, a long-time customer of GEH, announced that GEH had won a sole-source contract for X-ray and MR CM. (P4118).[193] As is usual in this market, all bidders, except GEH and Bracco, were eliminated early.[194] Novation identified presumptive winners using a formula Low Best Bid ("LBB") = FC/NFC. (P4126, 4083). The LBB results appear on a CT Decision Award Criterial Matrix ("DCAM"); MR DCAM; CT + MR DCAM; and Dual DCAM. (P4083). NFC scores were provided by the TF and FC scores were calculated "in-house" at Novation.[195] Bracco was the LBB for the CT DCAM and the Dual DCAM. Bracco was a very close second on the two other DCAMs: *430 (19 T 63; P4083; 37 T 44-45). This is because Bracco's FC scores were millions of dollars lower. (P4083; 37 T 38-40). However, Bracco contends that if Visipaque had been included in the FC, Bracco would have been the lowest bidder for the CT + MR DCAM—by a margin of more than $13 million—and it would have therefore won both the CT and MR sole-source contracts.[196] Bracco further contends that GEH's allegedly false Visipaque claims almost certainly affected the NFC scores as well. GEH's NFC score was 138.2 points higher than Bracco's. (P4083, 4084; Sweeney T 316-7). Bracco would have won the CT + MR DCAM (and thus both contracts) if GEH's NFC score was only 15 points lower or, conversely, Bracco's 13 points higher (or if both changed by 7-8 points). (P4085:101,103; 19 T 80-81; Sweeney T 256). The Court does not, however, find that GEH's false advertising was a substantial factor in the TF's carve-out decision. GEH maintains that Novation's decision to renew its longstanding contract with GEH was not based on advertising, let alone GEH's alleged false advertising, noting that GEH and its predecessors had held a sole source contract with Novation since at least the late 1980s and Novation was generally satisfied with GEH products and services.[197] In fact, Bracco even acknowledged that it was extremely unlikely that Novation would award a contract to another supplier and gave itself a 0% chance of winning a sole source award because of GEH's strong relationship and history with Novation and the general satisfaction of Novation members with GEH products.[198] The Court finds this longstanding favorable business relationship highly probative of Novation's decision to continue awarding the bid to GEH. The Court also finds that the NEPHRIC article itself was a substantial driver for Visipaque's special carve out, and that even if there was false advertising in GEH's ad campaign, it was not sufficient to be a material factor in this bid. The TF members and their colleagues *431 were titled individuals chosen from the staff at various hospitals, who may have been exposed to GEH's Visipaque promotional campaign,[199] but who were also privy to the underlying studies supporting such contentions. GEH's pre-award sales call records on Novation member hospitals show the limited dissemination of GEH's false superiority claims.[200] The Court finds that the offending sales call notes were too few to have a material impact on the award of the Novation contract nor were these sales calls made directly to any of the TF members participating in the decision. Although Bracco asserts that a few weeks before the carve out decision GEH met with the TF and again presented its Visipaque claims, the TF was still privy to the underlying studies and free to come to its own conclusions regarding Visipaque and its desirability as a CM.[201] More importantly, Bracco has not proffered evidence to show that any of the TF members were influenced by the ads as opposed to the underlying studies when they made their decisions.[202] In fact, Novation gave the TF a 27-page summary of the "things ... viewed to be most important" from GEH's 300-page bid. Dan Sweeney, Vice President, Contract and Program Sales at Novation, testified that Novation provided the TF with GEH's bid summary to serve as the main reference to evaluate GEH's bid.[203] However, Mr. Sweeney could not testify what additional information the TF members considered except for their own personal experience in the medical field. (Sweeney T 66:9-23). Even if the TF only considered the bid summary, the Court finds that the bid summary does not claim Visipaque superiority to all LOCM. In response to the bid summary's inquiry as to clinical studies that evaluate the safety and efficacy of the proposed products, GEH cited to the NEPHRIC, COURT, and VICC studies. Specifically, GEH expounded on NEPHRIC's results as to renal safety, stating that "[i]n a comparison of VISIPAQUE vs. iohexol, VISIPAQUE was demonstrated to significantly reduce incidence of contrast-induced-nephropathy (CIN) ... and the conclusion was that nephropathy induced by contrast medium may be less likely to develop in high-risk patients when VISIPAQUE is used rather than the low-osmolar, non-ionic contrast medium." (P4137:6331) (emphasis added). In light of their experiences, the TF members should have known that iohexol is Omnipaque and that NEPHRIC's conclusions are limited to that comparison, given the language in the bid summary that Visipaque may be safer renally than "the low-osmolar, non-ionic contrast medium" compared in NEPHRIC. Absent from the bid *432 summary is any mention of another LOCM, i.e. Isovue, or any statements that seek to extrapolate NEPHRIC's findings to another LOCM. Essentially, the TF members were left to weigh the value of NEPHRIC and the other studies cited with respect to Visipaque. Visipaque safety claims are the most salient feature of the NFC portion of the summary and likely account for most of the large disparity in GEH's and Bracco's NFC scores.[204] Mr. Sweeney, although not a member of the TF, admitted that the TF members likely read GEH's bid summary to mean that Visipaque has superior safety to other CM and less pain than "traditional LOCM" which would include Isovue.[205] GEH's GPO expert admitted that Bracco's NFC score certainly could have been lowered by GEH's Visipaque safety claims. Bracco alleges that the clinical information in the summary was so misleading that Mr. Sweeney thought that the NEPHRIC and COURT studies might have been against Isovue.[206] However, Mr. Sweeney was not on the Novation TF, and was only responsible for the financial aspect of the bidding process, without any sophisticated knowledge of the clinical nature of GEH's bid. In fact, Mr. Sweeney conceded that he has limited knowledge of the clinical studies that evaluated the efficacy and safety of Visipaque. (Sweeney T 175-77). Accordingly, his lack of knowledge regarding scientific names of drugs (i.e. iohexol vs. iodixanol) that were represented in various studies is not probative of what was understood by the decision-makers —the TF members—because they had the underlying studies and were able to come to their own decisions regarding the efficacy of the products. Furthermore, the Court does not find this to be a substantial factor in the bid, because the vast majority of the material in the summary was not false or misleading and consisted of appropriate advertising materials which touted the NEPHRIC study results in an acceptable way, (See 37 T 6, 21; 36 T 220-229). The Court finds that any inaccurate information in the summary, limited as it was, did not have a material impact on the TF, particularly when combined with the TF members' satisfaction with GEH's products and GEH's longstanding relationship with Novation. viii. The Consorta Contract In 1999, Consorta entered into a five-year, sole-source contract with Bracco for supply of x-ray and MRI CM.[207] Consorta put the contract out for bid in 2003 and received bids from at least Bracco, GEH, Berlex, and Tyco/Mallinckrodt.[208] In January 2004, Consorta awarded separate solesource contracts to GEH for X-ray and MR agents (Bracco is seeking only damages for loss of the X-ray contract). (P702). The X-ray contract awarded to GEH by Consorta was a three-year sole source contract.[209] Consorta's Award Rationale states: "The imaging subcommittee agreed that the clinical acceptability of radiographic [x-ray] agents [ (e.g.—Isovue, *433 Visipaque, and Omnipaque) ] would not be an issue,"[210] nonetheless, it also states that "Bracco's ProHanceTM [ (Bracco's paramagnetic agent) ] ... had not garnered high compliance ... and that determining clinical acceptance of the paramagnetic agents was a critical step in the decision making process." The Consorta Award Rationale later states that GEH "was the only company that could provide clinically acceptable products, with formidable market positions, for both our radiographic and paramagnetic needs [and furthermore, that GEH] "is the only manufacturer of Isosmolar Contrast Media (VisipaqueTM).""[211] GEH avers that the reasons for the award were: (1) GEH is the only manufacturer of Isoosmolar CM; (2) GEH's more competitive prices for Omnipaque and Visipaque; (2) low clinical acceptance of Bracco's MRI product, ProHance; and (3) Consorta's belief that Bracco acted unethically during the bidding process.[212] Also, the Consorta members' satisfaction with GEH's products, based in part on their own clinical trials, contributed to their decision to contract with GEH.[213] Bracco asserts that, despite all the abovementioned factors, that GEH's false advertising campaign was a material factor in the Consorta Award. The Court disagrees, but will begin its analysis by looking at internal GEH dialogue and the dialogue between Consorta and GEH. Mr. Jay Rapp, National Accounts Director at GEH, told Mr. Smith, his supervisor, that "[w]e need to drive as much Visipaque business within Consorta accounts as possible between now and the RFP process."[214] Mr. Smith agreed "Visipaque will be key to our success" and said the "POA should [include] specific elements for increasing Visipaque sales."[215] Mr. Rapp told Consorta's Dan Ingram, Manager of Imaging Contracts, that Visipaque "must be part of the [financial] comparison," and further stated in an internal GEH email that Dan Ingram "understands this, but we need to make this clear at the [July 2003] presentation as well as individual meetings ... and explai[n] the cost of not using Visipaque." (P629; 12 T 111-112; P4226, 608). GEH's July 2003 presentation devoted nine slides to Visipaque's alleged benefits (versus three Omnipaque *434 slides). (P782:890-901; 12 T 138-148). Bracco points to evidence that Consorta "asked about Isovue with respect to Omnipaque/LOCM as positioned in NEPHRIC" and that GEH responded: "it is Iso-osmolar versus low-osmolar that was studied [in NEPHRIC], not necessarily Visipaque versus Omnipaque." (P682; 2 T 153-157). GEH's statements emphasize the possible extension of the NEPHRIC head-to-head study to all LOCM, and at the same time deflect negative reaction away from Omnipaque. The above statement is ambiguous at best, but is not necessarily false, because the NEPHRIC study and article devotes part of its analysis to extending the conclusion from the two CM studied, Visipaque versus Omnipaque, to Visipaque versus other LOCM. Furthermore, NEPHRIC hedged its conclusion to say that Visipaque may perform better than a LOCM. The Court does not find that NEPHRIC was unreliable for this latter conclusion, but does find that GEH must disclose that the two CM used in the study were Visipaque and Omnipaque, and that GEH may not extend NEPHRIC's results to a claim that Visipaque performs better than any LOCM other than Omnipaque. Here, Consorta was clearly aware that NEPHRIC compared Omnipaque and Visipaque. However, Bracco contends that GEH took its advertising a step further. One example of the alleged false advertising in the GEH presentation was a NEPHRIC slide claiming "high risk patients 11X less likely to develop CIN with an isosmolar CM, iodixanol, than with a low-osmolar CM." (P782:A251897). However that same slide also presents a chart showing iodixanol (Visipaque) versus iohexol (Omnipaque). (Id.) While this slide appears to obscure the name brands of the products tested, it still presents the two CM that were tested in the study. Thus, the slide was not false, but it may have been misleading. Bracco contends that the aftermath of this presentation was that a Consorta "inside person" reported that GEH "made a good showing" and "Visipaque is something that has to be considered." (P680; 12 T 158-160). But, this does not tell the Court whether it was the slides that made an impact. As far as cost, Consorta told GEH it was "very concerned with Visipaque because of the impact increased use will have on Expense Budgets," and Ron Smith concluded that "it will be imperative ... to effectively communicate ... a clinical reason ... to justify Visipaque use in high risk patients" and "it is essential that we clearly show the consequences on Visipaque pricing in a win and lose scenario." (P612, 666; 12 T 174-178). GEH's RFP response emphasized the alleged clinical superiority of Visipaque; for example, GEH stated: "the safety profile of Isosmolar Visipaque [ ] has propelled its growth in recent years" and "[c]ontrast with higher osmolalities could affect patients with at-risk conditions...." (D945:425-6,430; 12 T 179-180). Nonetheless, these statements are nothing new to the medical community, and certainly have not been disproven. The Court finds that inserting the word "could" merely re-states the conclusion of the NEPHRIC study, and does not contain additional spin. Notwithstanding, as set forth herein, more precision will be required of GEH's ads in the future as limited by this Opinion. In short, an implication that NEPHRIC's conclusions can be applied to any LOCM other than Omnipaque will not be permitted based on NEPHRIC alone. In addition, any comparative advertisement based upon a study must be consistent in its reference to the names of the drugs tested; for instance, if GEH were to advertise the comparative results of NEPHRIC, its reference to the *435 drugs must be "Visipaque v. Omnipaque" or "iodoxianol v. iohexol." Consorta's January 2004 press release stated that GEH's products were "preferable due to Amersham's range of product that includes ... the only iso-osmolar agent Visipaque available in the United States." (P702:540; 12 T 197-199). Consorta's internal announcement shows that its "Award Decision" was based in part on increasing use (and costs) of Visipaque. (P715:851-2; 12 T 201-203; P163:110, 146). Mr. Smith recognized how crucial Visipaque Leverage was to GEH's win, stating that Consorta "had to consider what would happen to prices if Consorta went away from us [i.e.,] with Visipaque... so we just can't assume that our offer was $6 million better than Bracco's offer. It wasn't." (P1469). Bracco asserts that the most direct evidence of Visipaque Leverage is a memorandum produced by Consorta itself. In that document, Consorta compared the prices of a dual source award, Bracco (X-ray) / Berlex (MR), to a sole source award to GEH. (D212:004 (col. 2 and 3)).[216] The "three year spend" in the GEH column is slightly (0.4%) lower than the Bracco/Berlex column, but only because a Visipaque line item is included under Bracco's heading. Bracco argues that if that Visipaque line item is replaced with Isovue, Bracco would have won the contract by a comfortable margin.[217] This evidence, however, does not establish that GEH's false advertising was a material factor in the award; all it means is that Consorta viewed Visipaque as "a must have" product. Since Consorta could have come to this conclusion by reading the NEPHRIC article, and agreeing with its conclusions, it does not mean that the limited false or misleading ads GEH disseminated to Consorta were a substantial factor, particularly in light of other facts, as set forth below. *436 1. GEH's prices were more competitive than Bracco's prices The primary reason Consorta switched suppliers for its 2004 contract was pricing.[218] Consorta determined it would save about $16 million over three years by accepting GEH's bid over Bracco's bid, notwithstanding Bracco's efforts to convince Consorta that the actual cost of contracting with GEH would be higher than contracting with Bracco.[219] Bracco decided not to lower its price for Isovue, despite being aware before submitting its bid that Consorta wanted lower prices.[220] Even Bracco, in hindsight, recognized that it should have offered Consorta a lower price during the contract extension negotiations.[221] Mr. Malackowski, Bracco's damages expert, admitted that GEH's bid was less than Bracco's initial bid due to the low Omnipaque price, even after accounting for so-called "Visipaque leverage."[222] However, the second bid by Bracco was competitive. One of the key issues was pricing in the event that Consorta obtained a dual source contract with GEH and Bracco. Under those conditions, GEH would have charged a bigger premium for Visipaque which effectively made the GEH bid better. This shows that Consorta took into account that Visipaque was the only isosmolar CM on the market. In light of these findings, this Court disagrees with Bracco's assertion that GEH's false advertising as to Visipaque renal superiority over LOCM had a material effect on the bid process. Bracco has not demonstrated that the few false ads shown by GEH to Consorta were a material factor in its favorable view of Visipaque. 2. Bracco's ProHance product was not well accepted Another asserted reason for Consorta's award was the low compliance with the MR portion of its contract when Bracco was the incumbent.[223] Consorta's members had clinical concerns about ProHance, including its inducement of vomiting.[224] Not surprisingly, Consorta officials were highly receptive and impressed with GEH products, so much so that some, based on their own clinical trials, wanted to continue *437 using GEH products. Although a dual source bid would have alleviated concerns about the ProHance product and was an option that would have had competitive pricing had it not been for the Visipaque premium, Consorta's award rationale appears to be based primarily on GEH's ability to provide clinically acceptable products across all spectrums as contrasted with Bracco. Thus, the Court finds that GEH's limited false advertising was not a material factor, while Bracco's failing ProHance product was a material factor in Consorta's award rationale. 3. Consorta believed Bracco acted unethically in bidding After the suppliers submitted bids to Consorta, Bracco learned through "competitive intelligence" that GEH had submitted a much lower bid.[225] Bracco then restructured its bid so that it was similar to GEH's and submitted a revised bid.[226] Consorta believed that it would be unethical for it to consider the revised bid.[227] Indeed, Bracco's internal documents also attribute the loss of the Consorta contract to a variety of other factors, unrelated to alleged false advertising, including Bracco's lack of understanding of Consorta's contracting process and a lack of "depth and breath [sic] of relationships" between Bracco and Consorta.[228] Consorta's subjective view of Bracco's actions in the bid process, as opposed to GEH's advertising, sounded the death knell for Bracco's bid. ix. GEH's Allegedly False Visipaque Claims And Leverage were not a Material or Substantial Factor in the Award of the Kaiser Contract In August 2003, GEH signed a solesource agreement with the Kaiser IDN, even though Kaiser had joined the Broadlane GPO which had a sole-source contract with Bracco. Bracco avers that GEH's allegedly false claims about Visipaque were a material factor in GEH's contract win at Kaiser and that it is shown by GEH's post-award analysis that GEH won the contract by demonstrating to Kaiser that its "contrast media spend budget would increase" as a result of "increased Visipaque penetration" and a "[p]rice increase from 45% to 20% off list for Visipaque if they switched to Bracco and Broadlane."[229] However, the Court fails to see how this links the alleged false advertising with the Kaiser bid. Offering a more competitive price and offering other products at a discount for putting other GEH products on contract is an acceptable business practice. In addition, GEH had *438 held a sole source agreement with Kaiser for the supply of x-ray CM since 1993 and had enjoyed a favorable relationship with Kaiser.[230] In addition, during negotiations for an extension, GEH lowered its price on Omnipaque.[231] There is no evidence that advertising played any role in the renewal. III. GEH'S Counterclaim GEH alleges that Bracco has disseminated ads in violation of 43(a) of the Lanham Act and New Jersey State Law. During the course of trial GEH stipulated to dropping all claims for damages in its counterclaim, leaving only a request for injunctive relief. (36 T 4-8). In Bracco's Revised Findings of Fact (¶ 96) it stipulated that the Bracco ads and promotions identified by GEH (except D2013) in connection with its counterclaim are no longer in use. Bracco contends that due to this stipulation any injunctive relief against Bracco would have no effect on GEH, Bracco or the market. A. Bracco's Comparison of Results from Kay and NEPHRIC GEH contends that Bracco advertisements (e.g. D3, 31, 2014, 2015) promote Isovue as less renally toxic than Visipaque and/or Omnipaque. In order to make that claim, Bracco relies on the results of the Kay study and represents in these advertisements that NEPHRIC and Kay were similar studies.[232] GEH argues that the two studies were not similar because: (1) NEPHRIC patients were at greater risk for renal injury than patients in Kay; (2) NEPHRIC patients received a greater iodine dosage than the Kay patients; and (3) Kay did not even report the iodine concentration of Isovue used. In support of its contention that D2014 and 2015 disseminated false messages, GEH proffered Dr. Harold Feldman, who testified that in his opinion, the studies were not comparable. (E.g., 21 T 139:12-159:13; 32 T 73:23-75:5). The Court finds that Bracco's advertisements that compare the results of Kay and NEPHRIC advance comparisons that are unreliable given the distinct differences between Kay and NEPHRIC, specifically that the patients in NEPHRIC had a substantially higher risk of renal injury than those patients in the Kay study. Indeed, any claim of Isovue superiority over Visipaque and/or Omnipaque based on comparative results of the Kay and NEPHRIC studies strays too far from the actual results. IV. Daubert Motions Necessarily, the Court must dispose of remaining evidentiary issues in connection with the admission of expert testimony. At trial, numerous experts for both sides testified on a broad swath of subjects ranging from the reliability of clinical studies using contrast media to testimony on the impact and dissemination of the parties' marketing materials. These experts provide the lynchpin to the parties' claims. Furthermore, expert testimony is critical in establishing damages and proving liability under certain prongs of the Lanham Act's false advertising regime. *439 A. Standard Federal Rule of Evidence 702 requires that only reliable testimony, offered with a sufficient factual basis, be admitted. It was amended in response to the Supreme Court's decision in Daubert v. Merrell Dow Pharms., Inc., which established a "gatekeeping role for the judge," whereby the court must determine the admissibility of expert testimony. 509 U.S. 579, 597, 113 S. Ct. 2786, 125 L. Ed. 2d 469 (1993). Kumho Tire v. Carmichael explained that the Court's gatekeeper function applies not only to cases involving "scientific" knowledge but also in cases involving "technical" and "other specialized" knowledge. 526 U.S. 137, 141, 119 S. Ct. 1167, 143 L. Ed. 2d 238 (1999). Together, Daubert and Rule 702 impose three requirements for admissibility of expert testimony: "qualification, reliability, and fit." Calhoun v. Yamaha Motor Corp., 350 F.3d 316, 321 (3d Cir.2003). First, the witness must have specialized expertise appropriate to his testimony. Feit v. Great-West Life and Annuity Ins. Co., 460 F. Supp. 2d 632, 636 (D.N.J.2006). Second, the testimony must be reliable, which excludes opinions based on subjective belief or speculation; the opinion instead must "reliably flow from the facts known to the expert and the methodology used." Id. at 637. Third, the testimony must be relevant to issues in the case and assist the trier of fact. Id. at 636. B. Motion to Preclude the Expert Reports and Testimony of John Russell Mr. John Russell, Bracco's pharmaceutical marketing expert, has 33 years of experience in sales, sales management, sales operations, product management, new product launches, reimbursement, pricing strategy, contracting strategy, market research, and business planning concerning pharmaceuticals. Mr. Russell authored four expert reports and testified about pharmaceutical sales and marketing. Bracco asserts that his testimony is intended to provide a full and detailed understanding of the manner in which pharmaceutical companies traditionally sell and market their products as well as his understanding of GEH marketing and sales practices. His opinions were informed by analyzing GEH internal documents, deposition transcripts, review of other expert reports and discussions with people in the specific field of selling CM. 1. Mr. Russell's Opinions on Whether Alleged Implicit "Messages" Contained in GEH Advertisements and Internal Documents are False are Excluded. Mr. Russell testified that GEH documents, including advertisements and sales call notes, contained implicit messages. He based his conclusions on other expert reports provided to him. (17 T 12:25-13:10). During trial, the Court stated that Mr. Russell, who is not a physician or scientist, and has no experience with contrast media, may provide testimony based on the assumption that Defendants' disseminated messages were false, but that he is not qualified to make an independent determination of their falsity. (17 T 12:25-13:10, 106:6-107:3-5). Mr Russell also testified to customers' supposed expectations of pharmaceutical advertising. (17 T 49:9-15). However, Mr. Russell did not conduct or rely on any official customer survey for his opinions (17 T 34:14-18), and relied primarily on his own belief of what customers would understand and expect. (18 T 10:7-24, 11:20-14:3, 14:14-18:18, 21:2-22:2, 22:8-23:12). The Second Circuit has discussed the critical role of customer surveys in the *440 context of establishing a claim of false advertising under the Lanham Act. Generally, before a court can determine the truth or falsity of an advertisement's message, it must first determine what message was actually conveyed to the viewing audience. Consumer surveys supply such information. Once the meaning to the target audience has been determined, the court, as the finder of fact, must then judge whether the evidence establishes that they were likely to be misled. Johnson & Johnson Merck Consumer Pharms. Co. v. Smithkline Beecham Corp., 960 F.2d 294, 298 (2d Cir.1992) (citations and quotations omitted). Furthermore, the Second Circuit went on to state that: Absent such a threshold showing, an implied falsehood claim must fail. This follows from the obvious fact that the injuries redressed in false advertising cases are the result of public deception. Thus, where the plaintiff cannot demonstrate that a statistically significant part of the commercial audience holds the false belief allegedly communicated by the challenged advertisement, the plaintiff cannot establish that it suffered any injury as a result of the advertisement's message. Without injury there can be no claim, regardless of commercial context, prior advertising history, or audience sophistication. Id. In addition, the Third Circuit has concluded that, in the context of direct marketing to consumers, an expert's "personal opinion is not the legal standard by which courts must determine whether customers were misled" and that absent evidence such as customer surveys, no court can conclude that consumers were mislead. See Johnson & Johnson-Merck Consumer Pharms. Co. v. Rhone-Poulenc Rorer Pharms. Inc., 19 F.3d 125, 136 (3d Cir. 1994). Here, Mr. Russell's opinion as to falsity of messages is not only unsupported, but is also irrelevant to the issue of customers' understanding and reaction to the advertisements. Therefore, the Court finds that Mr. Russell's net opinion or personal belief about alleged implicit messages or customers' expectations is legally irrelevant because he is not a member of the relevant purchasing group, did not rely on a survey of this group, and is unqualified to opine on the issue of how physicians would evaluate and act upon scientifically oriented ads or promotions for x-ray contrast media. Consequently, Bracco cannot rely on Mr. Russell's testimony as a substitute for its failure to conduct an adequate survey. 2. Mr. Russell's Opinion on Intent, the Actions of Sales Representatives, Causation, and Sales Call Notes are Unreliable. a. Mr. Russell Cannot Opine on GEH's State of Mind Mr. Russell purported to divine what GEH was "trying" to do with its marketing strategy and what it believed was right or wrong. (See, e.g., 17 T 65:6-17, 66:19-22, 81:14-16). However, as the Court stated during trial, experts cannot opine on intent. (17 T 4:19-7:18); see AstraZeneca LP v. TAP Pharm. Prods., Inc., 444 F. Supp. 2d 278, 293 (D.Del.2006) (precluding expert opinion of what party recognized, felt, concluded, or was concerned about and recognizing that expert witnesses are not "permitted to testify ... regarding [the defendant's] intent, motive, or state of mind, or evidence by which such state of mind may be inferred."); In re Rezulin Prods. Liability Litig., 309 F. Supp. 2d 531, 547 (S.D.N.Y.2004) (concluding that "[i]nferences about the intent or motive of parties or others lie outside the bounds of expert testimony"). Accordingly, the Court strikes Mr. Russell's testimony *441 to the extent that it opines on the intent or state of mind of others. b. Mr. Russell's Speculation About the Actions of GEH Sales Representatives is Unreliable Mr. Russell speculated that GEH sales representatives posted protocols for Visipaque usage; that conclusion is unreliable and in conflict with the factual record. (17 T 101:13-14). During the course of trial, the Court quoted Crowley v. Chait, which concluded that no expert or "any other witness will be permitted to simply summarize the facts and the depositions of others. Such testimony comes `dangerously close to usurping the [factfinder's] function' and `implicates Rule 403 as a needless presentation of cumulative evidence and a waste of time.'" 322 F. Supp. 2d 530, 553-54 (D.N.J.2004) (quoting United States v. Dukagjini, 326 F.3d 45, 54 (2d Cir.2003)). GEH witnesses uniformly and credibly testified that Visipaque protocols were not posted (6 T 75:1-7; 15 T 191:9-22; 16 T 151:17-152:1), and accordingly, the Court finds that it is not Mr. Russell's function as an expert to judge the credibility of those witnesses, or to supplant the factual record with speculative testimony. c. Mr. Russell's Testimony Regarding Causation is Unreliable GEH argues that Mr. Russell's opinions about causation, (See, e.g., 17T 115:12-18, 116:1-5, 116:12-21, 117:1-4), are speculative and unreliable because he has no experience with contrast agent purchasing decisions and did not fully consider the factual record. It is true that Mr. Russell never negotiated a contract to sell contrast agents to a GPO or hospital (17 T 31:8-11), was never on a committee evaluating contrast agents (17 T 31:12-15), never made purchasing decisions at a hospital or GPO (17 T 31:16-18), and has not worked on any GPO contract since 1992. (17 T 31:19-21). Furthermore, the Court finds that Mr. Russell did not undertake a systematic or scientific analysis of all factors to determine the specific effect of any particular piece of advertising, (i.e., he did not separate out the effect of any particular piece of advertising, marketplace effects or influences other than alleged false advertising, including true advertising). (17 T 34:3-38:12). For example, with regard to Consorta and Novation, he failed to consider the economics of the bids (17 T 145:12-20, 148:5-11, 150:18-20, 166:12-25), and in the case of Consorta, did not consider Bracco and Consorta documents showing that Consorta was displeased with Bracco's conduct during the bidding process and with its MRI agent ProHance (17 T 145:3-20; D 2098 at Consorta 0322; D 204 at A143081; D 212 at Consorta 002). Mr. Russell also failed to talk to Bracco executives about the Consorta contract (17 T 145:21-146:24), and did not consider GEH's long-time incumbency at Novation, despite opining that Bracco's incumbency at Consorta was a reason that it would have kept the contract. (17 T 168:14-170:4). GEH argues that Mr. Russell's opinions about customer purchasing decisions are connected to the facts of the case only by his own ipse dixit and thus, are unreliable. See Calhoun, 350 F.3d at 321 (where the court excluded testimony that offered opinions on specific matters without a reliable foundation); Ortiz v. Yale Materials Handling Corp., No. 03-3657, 2005 WL 2044923, at *4, 2005 U.S. Dist. LEXIS 18424, at *15 (D.N.J. Aug. 24, 2005) (holding that "[a] court may conclude that there is simply too great an analytical gap between the data and the opinion proffered" *442 and thus exclude the expert's testimony). Nonetheless, an expert need not take into account every possible factor in rendering an opinion. See MicroStrategy Inc. v. Business Objects, S.A., 429 F.3d 1344, 1355 (Fed.Cir.2005) ("While an expert need not consider every possible factor to render a `reliable' opinion, the expert still must consider enough factors to make his or her opinion sufficiently reliable in the eyes of the court."); Callahan v. A.E.V., Inc., 182 F.3d 237, 257 (3d. Cir.1999) (where the court rejected defendant's argument that an expert report was inadequate because it failed to rule out every possible alternative cause for plaintiff's loss); Yarchak v. Trek Bicycle Corp., 208 F. Supp. 2d 470, 498 (D.N.J.2002) ("a medical expert's causation conclusion should not be excluded merely because he or she failed to rule out every possible alternative cause of a plaintiffs illness.") (citation omitted). In this case, while Mr. Russell did undertake an analysis of internal GEH documents which were produced during the discovery period before trial, but see Section 3, p. 84, infra, he did not take into account numerous, or indeed, most relevant factors as to causation. Thus, his opinion is not reliable. d. Mr. Russell's Testimony Regarding the Percentages of Alleged "clinical differentiation messages" in GEH's Sales Call Notes is Unreliable Mr. Russell opined as to the percentage of GEH sales call notes he believed were "clinical differentiation messages" or "on-message," and the percentage of sales representatives who had delivered the same (see, e.g., 17 T 102:15-21, 107:8-16). However, on cross examination, Mr. Russell admitted that the "on-message" compilation he relied on had been done by Bracco's counsel (18 T 26:2-7, 29:7-16), and he could not explain why a number of notes had been included at all (18 T 36:17-37:1, 44:3-45:7, 46:5-18). When pressed, Mr. Russell testified that mere mention of the word NEPHRIC justified inclusion in his "on message" tallies (18 T 33:22-34:4). In fact, even when the word NEPHRIC was not mentioned in the call note, Mr. Russell speculated that it had been promoted during the sales call (18 T 34:21-35:25). He also included notes in which he could not determine if the statement at issue was made by the sales rep or the doctor (18 T 38:25-41:19). Because of these numerous shortcomings, Mr. Russell's "on-message" analysis is unreliable and is hereby excluded. 3. To the Extent that Mr. Russell's Testimony Was Nothing More Than an Attempted Summary of, and Spin On, Internal GEH Documents it is Excluded The Court finds Mr. Russell's testimony helpful to the extent that he provides information as to how a marketing department operates, however to the extent that Mr. Russell's testimony reflected no more than his summary of, and spin on, internal GEH documents (see, e.g., 17 T 51:8-11, 69:24-70:3, 80:22-81:17, 119:6-22), the Court finds that such testimony is unhelpful to the Court as the trier of fact and excludes such testimony from the record. This is because the documents speak for themselves and do not require expert testimony to discern what they mean. C. Motion to Exclude Mr. Malackowski's Testimony Mr. James E. Malackowski was proffered by Bracco to opine about causation and damages. As stated in his expert report, he provides opinions on valuation, *443 asset and risk management and is an expert in the field of intellectual capital equity management. In the past, he has served as an expert in numerous cases relating to intellectual property economics and the determination of economic damages in disputes concerning intellectual property infringement, breach of contract, and false and misleading advertising. Indeed, he is eminently qualified in these areas. In this action, he has submitted four expert reports and he testified at trial. 1. Mr. Malackowski's Testimony With Respect to the Issue of Causation is Limited to his Assumption that Causation Existed Mr. Malackowski assumed that causation existed. (19 T 106:16-21, 107:17-21, 131:8-20). Mr. Malackowski has no expertise as to why doctors prescribe certain drugs or why GPOs award certain contracts. (19 T 104:17-106:4). Thus, he was qualified only as an expert with respect to the quantification of damages, not the issue of causation. (19 T 86:25-91:11). Nonetheless, while Mr. Malackowski is only qualified as an expert on damages, in his damages assessment the Court permitted him to use GEH internal documentation such as GEH's annual marketing plans, which in some instances attribute sales growth to specific events, such as the publication and dissemination of the NEPHRIC data. This testimony is intricately tied to damages and is not excluded. (See 18 T 141-142). 2. Malackowski's Damages Calculations Fail to Distinguish Between the Marketplace Effects of Tortious and Non-Tortious Conduct Defendants argue that Mr. Malackowski failed to account for the marketplace effects of activities other than GEH's alleged false advertising, thus making his damages testimony in connection with Vispaque sales unreliable. To support their contention, Defendants rely on a series of cases that have excluded expert testimony when it failed to take into account the effect of non-tortious activity in its calculations. See IQ Prods. Co. v. Pennzoil Prods. Co., 305 F.3d 368, 376-77 (5th Cir. 2002) (affirming exclusion of expert report where expert considered combined effect of two allegedly tortious acts, but did not consider them independently, and one was determined to be non-actionable); Concord Boat Corp. v. Brunswick Corp., 207 F.3d 1039, 1055-57 (8th Cir.2000) (holding that expert testimony should not be admitted when it fails to separate lawful from unlawful conduct); See also MicroStrategy Inc., 429 F.3d at 1353-56; Children's Broad. Corp. v. Walt Disney Co., 245 F.3d 1008, 1018-19 (8th Cir.2001); Blue Dane Simmental Corp. v. Am. Simmental Ass'n, 178 F.3d 1035, 1039-41 (8th Cir.1999); El Aguila Food Prods. Inc. v. Gruma Corp., 301 F. Supp. 2d 612, 624-26 (S.D.Tex.2003), aff'd, 131 Fed.Appx. 450 (5th Cir.2005). Nonetheless, Plaintiff argues that it is not necessary for a damages expert to account for all possible sources of the injury to establish causation. The Third Circuit has held that "[c]ourts that reason that the injury could have taken place without ... advertising are misstating the relevant tort liability principles, which ask whether the advertising did in fact contribute materially to the injury." Frog, Switch & Mfg. Co., Inc. v. Travelers Ins. Co., 193 F.3d 742, 751 n. 8 (3d Cir.1999) (citation omitted). However, this does not address Defendants' argument that Mr. Malackowski's testimony is unreliable; it merely confirms the standard which is needed to establish causation. Since this Court has already ruled that Mr. Malackowski's *444 testimony in connection with causation is not admissible because he assumed causation, Plaintiffs recitation of the causation standard is not germane. Here, Mr. Malackowski assumed that the publication of NEPHRIC itself (as well as other articles favorable to Visipaque) constitutes false advertising, and included the effect of its publication in his damages analysis without differentiating it from GEH's other alleged false advertising. (19 T 129:4-9, 129:23-130:5). But, since the Court finds that NEPHRIC itself does not constitute false advertising, see infra pp. 466-67, then GEH's alleged false advertising must be differentiated from the effect of NEPHRIC on Visipaque sales. To counter this argument, Bracco directs the Court to Mr. Malackowski's testimony in which he states that it would not change the results of his account specific approach to calculating damages if the Court finds that NEPHRIC does not constitute false advertising. (19 T 130:2-14). Similarly, Mr. Malackowski testified that if the NEPHRIC article were true that it would be accounted for within the sales trend approach in market growth rates because sales trends only go higher as the market grows. (Id.) The record demonstrates that Mr. Malackowski did not attempt to break down the injury to Bracco by particular ads or brochures. (19 T 109:24-110:8, 165:4-7, 176:4-12). The Court recognizes this as an attempt to avoid having to apportion any amount of damage (under any of his multiple theories) to any particular advertisement or type of advertisement. Thus, if any of GEH's promotional efforts were proper, which this Court has found to be the case, then Mr. Malackowski has failed to account for the market effects of these non-tortious efforts. Mr. Malackowski's failure to account for the effects of non-tortious activity is fatal to the validity of his calculations since the Court finds the NEPHRIC article itself to not be a form of false advertising. Indeed, his "analysis" blames false advertising for: (1) 100% of the alleged drop-off in Bracco's sales occurring after NEPHRIC; (2) 100% of Amersham's Visipaque sales; and (3) 100% of Visipaque's higher price (as compared to other contrast agents). (18 T 93:6-12; 19 T 107:17-108:17, 114:18-25, 143:6-14, 164:15-165:3, 176:4-7). 3. Malackowski's Damages Calculations as to Bracco's Expenditures on Corrective Advertising Finally, Bracco proffers Mr. Malackowski's testimony to support its request for damages relating to corrective advertising and clinical trials done in response to NEPHRIC and GEH's Visipaque advertising campaign. Although the Court excludes Mr. Malackowski's testimony with regard to disgorgement and lost profit damages based upon an assumption of causation, which the Court finds is not supported, his opinions with regard to recovery of corrective advertising, past and future, are not subject to the same attack. Different from his disgorgement and lost profits analysis, the same causation analysis does not apply. In that light, the Court finds Mr. Malackowski's opinion as to past and future corrective advertising costs reliable. D. Motion to Exclude Mr. Pines' Testimony Mr. Wayne Pines was proffered by Bracco as an expert on FDA practices and regulations. His experience includes monitoring FDA regulation of marketing materials and advertisements. He was retained to provide testimony relating to the FDA and GEH's advertising and promotion of its x-ray contrast agents, Visipaque and Omnipaque. *445 1. Mr. Pines' Testimony Relating to FDA Guidelines Is Relevant GEH urges the Court to exclude Mr. Pines' testimony that the FDA standard for superiority claims requires "substantial evidence," which he acknowledged was defined by the FDA as two or more adequate and well controlled studies, each directly comparing the same two products. (14 T 216:10-217:2, 218:12-220:3; 15 T 43:1-7). GEH asserts that under the Lanham Act standard, neither FDA statements about the lack of "substantial evidence," nor Mr. Pines' spin on the same are relevant. Indeed, the Third Circuit has declined "to blur the distinctions between the FTC and [the] Lanham Act [because it] would require [courts] to ignore the separate jurisprudence that has evolved under each Act, and the sound reasoning that underlies it." Sandoz Pharms. Corp. v. Richardson-Vicks, Inc., 902 F.2d 222, 229 (3d Cir.1990). In Sandoz, the court further held that "it is not sufficient for a Lanham Act plaintiff to show only that the defendant's advertising claims of its own drug's effectiveness are inadequately substantiated under FDA guidelines; the plaintiff must also show that the claims are literally false or misleading to the public." Id. (emphasis added). For instance, a defendant could advertise the results of one adequate well-conducted study showing superiority of its product (clearly not a Lanham Act violation), yet lack "substantial evidence" under the FDA standard. Nonetheless, Defendants' reliance on Sandoz is misplaced because here FDA guidelines and statements regarding Visipaque are not the only evidence to support Plaintiff's Lanham Act claim. Thus, while the Court declines to substitute the FDA standard for those under the Lanham Act, the Court finds the FDA's response to be probative and not irrelevant. Courts have recognized that an FDA finding about the strength and veracity of a study's conclusions about a pharmaceutical product to be persuasive evidence and helpful in determining if those conclusions were also false under the standard promulgated in the Lanham Act. See Zeneca Inc. v. Eli Lilly and Co., No. 99-1452, 1999 WL 509471, at *18 (S.D.N.Y. 1999) (in a Lanham action, the court found the FDA's conclusions to be persuasive when the FDA reviewed all the data from a trial, met with the study investigators and scientists and determined that based on its review that the study does not and cannot prove that the drug reduces the risk of breast cancer); SmithKline Beecham Consumer Healthcare, L.P. v. Johnson & Johnson-Merck Consumer Pharmaceuticals, Co., No. 95-7011, 1996 WL 280810, at *13 (S.D.N.Y. May 24, 1996) (court declined to substitute its opinion for that of the FDA where manufacturers had to submit studies to the FDA proving safety and effectiveness of over-the-counter medication in order to obtain approval for package labeling); see also American Home Prods. v. Procter & Gamble, 871 F. Supp. 739, 754 (D.N.J.1994) (expert's conclusion concerning efficacy of analgesic is "bolstered by the FDA's formal findings" concerning the product). Similarly, this Court finds that Mr. Pines' testimony on this issue is properly admitted. E. Motion to Exclude Dr. Rappeport's Testimony Dr. Michael Rappeport, a Bracco expert, is a marketing and survey research expert with 35 years of experience. He has testified over 200 times in the areas of statistics, statistical analysis, marketing, and public opinion in disputes such as trademark infringement, libel, damages, and reapportionment. During trial, he testified regarding a survey that he conducted to determine physicians' perceptions *446 of GEH's website advertising. Dr. Rappeport's survey was carried out by DIR, a California based company. A total of 80 radiologists and 30 interventional cardiologists were interviewed and the survey referenced re-created web pages from the Visipaque portion of GEH's website. The Court made a finding at trial that Dr. Rappeport was qualified to provide testimony in the field of designing, conducting, and analyzing surveys. (22 T 36-37). 1. Dr. Rappeport's Survey is Unreliable Defendants attacked the reliability of Dr. Rappeport's trial testimony and underlying survey in their original Daubert motion on various grounds, asserting and highlighting: (1) uncertainties surrounding the material actually tested in his survey and Bracco's failure to preserve it for review; (2) that his testimony is not helpful to the trier of fact; (3) problems with the definition of the survey population and the selection of respondents; (4) problems with the reporting and analysis of his data; and (5) problems with the design and administration of the survey. The Court notes at the outset that Dr. Rappeport's survey is replete with problems that undermine the survey's reliability. (D.I. 375). To state a few, the survey: (1) failed to identify the correct survey population by not asking survey respondents whether they were in any way responsible for the purchase of contrast media; (2) failed to use an adequate control mechanism to determine whether the respondents may have had preexisting or predominant views prior to viewing the advertisements that may have affected their decision; and (3) failed to correctly characterize certain statements made to the survey participants; for example, one statement was prefaced with the statement "the makers of Visipaque state," when the statement was actually a direct quote from the NEPHRIC study, a peer reviewed article in the New England Journal of Medicine. These factors all lead the Court to conclude that Dr. Rappeport's survey is inherently unreliable and that even if it were admitted that it would be given little or no weight. Initially, the Court strikes Dr. Rappeport's survey as it pertains to the 30 interventional cardiologists interviewed. This is based on the fact that the web pages re-created by DIR for the survey administered to the 30 interventional cardiologists were never produced at trial, nor were their contents testified to by a witness with personal knowledge. Dr. Rappeport testified that he never saw the web pages that were re-created and used for the survey and neither counsel nor Dr. Rappeport were able to produce the original email from Dr. Rappeport which allegedly contained the web pages used in the survey. (22 T 65-66). Because displaying the web pages in the same manner as the website is critical to obtaining accurate and reliable survey results, and this information is lacking, the Court finds this portion of the survey unreliable. The Court also finds that Dr. Rappeport's survey with regard to the 80 radiologists is also fatally flawed and hence unreliable. First, the web page that was presented to the survey respondents did not contain a clickable link, as the actual GEH website did, to view the abstract of the NEPHRIC study. (22 T 74). Second, at trial, Dr. Rappeport gave inconsistent testimony about the interviewer's instructions. First, he testified that they were instructed to write down anything material that the respondents asked or said, but then he testified that they were instructed to write down everything that they heard. (22 T 75). This discrepancy in what the interviewers were instructed can skew the results, especially in conjunction with the *447 fact that the respondents were not able to click on a link that would have allowed them to view the abstract of the NEPHRIC study. Third, the survey asked the participants whether they thought: "the makers of Visipaque are claiming reduced nephropathy compared to all brands of low-osmolar non-ionic contrast mediums, some but not all brands of lowosmolar non-ionic contrast mediums or just one specific brand of low-osmolar non-ionic contrast mediums?" According to Dr. Rappeport, this is a closed question which was designed to cover all possibilities. However, as shown in the survey, one respondent did not answer the question, demonstrating that the questions did not account for the participants that might have had no opinion on the matter. (22 T 80-81). Fourth, Dr. Rappeport attributed a quote from the NEPHRIC article, which was on the GEH website, to the makers of Visipaque. (22 T 82-83). While the website certainly contained the NEPHRIC quote, it may introduce a bias to attribute the statement incorrectly to the makers of Visipaque. Consequently, this also skews the survey's results. Fifth, the survey failed to identify the correct sample population; none of the survey questions established whether the participants were in any way responsible for the purchase of contrast media. Even without asking this question, many survey respondents independently stated that they were not involved in making the purchasing decision, and that their use of the product was mainly because the hospital uses that brand product, not because the respondent had any impact or influence on the purchasing decision. This is a critical flaw in the design of the survey, which makes it significantly less useful for determining whether consumers who were making the actual purchasing decision were deceived, a critical question in this case. During trial, Dr. Rappeport stated that in his opinion, all doctors influenced the purchasing decision for CM because it would be unethical for them to administer a product which they did not feel was the best product. (22 T 99-103). He came to this opinion by conducting a so-called pre-test where he contacted physicians and asked them questions so that he could become knowledgeable about the subject matter for the survey. (Id. at 103). The physicians that he contacted were not part of the actual survey. (Id.) In addition, Dr. Rappeport gave inconsistent testimony about how many physicians he interviewed for this pre-test. First he said 6, then he said 10, then he said it may be about 9 or so. (Id. at 103-105). He also stated that these physicians were friends, and friends of friends, all of whom were in the New Jersey and Pennsylvania area, not nationwide. (Id.) Furthermore, Dr. Rappeport testified that at least one of them was not even a radiologist or an interventional cardiologist. (Id. at 105). Dr. Rappeport then went on to state that all of the physicians in the pre-test stated that they personally make the decision as to what contrast agent they administer to patients, however yet again, the question of whether they were involved in the purchasing decision was never asked. (Id. at 108-109). The Court finds the quantum of Dr. Rappeport's testimony to be unclear and his methods for conducting the survey not consistent with usual accepted practices; for these reasons the Court strikes the testimony and survey results of Dr. Rappeport as unreliable. Case law from this district as well as others supports the contention that Dr. Rappeport's survey needed control mechanisms to be reliable. For example, one court in the District of New Jersey opined: "[i]t is clear that in a false advertising action survey results must be filtered via an adequate control mechanism to screen *448 out those participants who took away no message from the advertisement as well as to account for those consumers who may have brought to the survey certain publicly held preconceptions regarding the product." American Home Products Corp., 871 F.Supp. at 761-62; see also Merck Consumer Pharmaceuticals Co., 960 F.2d at 298 (concluding that where a portion of the survey population may have held extrinsic beliefs prior to viewing an advertisement, a control mechanism "would likely be indispensable"). Furthermore, the Court notes that in addition to other courts excluding expert testimony on similar grounds, another court specifically excluded one of Dr. Rappeport's surveys because it did not use a proper control group. In Procter & Gamble Pharmaceuticals, Inc. v. Hoffmann-LaRoche Inc., the court reasoned that the fact that the physician survey lacked any control was a marked departure from generally accepted market research practices, rejecting Dr. Rappeport's contention that "a control group is unnecessary for sophisticated respondents like doctors, who are unlikely to `guess.'" No. 06-0034, 2006 WL 2588002, at *25 (S.D.N.Y. Sept.6, 2006). Here, on cross examination, counsel confronted Dr. Rappeport with the fact that his lack of a control group has been rejected by other courts and Dr. Rappeport's testimony reflected that although he did not think a control group is necessary for doctors, not all courts agree with him. (22 T 126-128). Additionally, he said that the main downside of using a control group is money, something that the Court finds to be disingenuous for this particular case, especially given the apparent staggering amount of legal fees and costs related to expert testimony.[233] (Id.) Accordingly, the Court finds no basis for Dr. Rappeport to fail to use control group in this case, and that his survey is unreliable for lack of a control mechanism, similar to the courts' analysis in American Home Products Corp., Johnson & Johnson-Merck Consumer Pharmaceuticals Co. and Procter & Gamble Pharmaceuticals, Inc. In addition to the grounds asserted in Defendants' initial Daubert brief for exclusion of the testimony of Dr. Rappeport, Defendants assert in their post trial supplemental Daubert brief that Dr. Rappeport's trial testimony revealed that his survey did not include the required number of participants to meet his own reliability standards. Specifically, Dr. Rappeport surveyed 80 radiologists and 30 interventional cardiologists. (22 T 73:10-12). However, the interventional cardiologists were shown a re-created website that Dr. Rappeport never saw, was never produced or shown to GEH, and was not introduced at trial. (22 T 60:23-61:22, 64:16-65:13). The Court disallowed reliance on the results of the interventional cardiologists subject to Bracco's production of the recreated website, which it never did produce. (22 T 68:14-72:11, 74:1-75:24, 147:7-150:13). Absent the interventional cardiologists, per Dr. Rappeport's own admission, the survey was too small to meet prospectively defined reliability requirements. (22 T 110:21-111:10). Thus, the Court excludes Dr. Rappeport's testimony in connection with his survey in its entirety. F. Motion to Exclude Dr. Schmittlein's and Dr. Stewart's Testimony as Unsupported by Facts or Analysis Dr. David Carl Schmittlein and Dr. Marion Stewart are two experts, proffered *449 by GEH, to rebut the expert testimony of Mr. Russell and Mr. Malackowski. Dr. Schmittlein is a Professor of Marketing at the Wharton School of Business at the University of Pennsylvania. His expertise is specifically within the field of measuring consumer perceptions, preferences, and behaviors, and the link between these measures and marketing programs. Dr. Stewart is an economist and senior vice president of National Economic Research Associates (hereinafter "NERA"). Bracco argues that the testimony from GEH's Dr. Schmittlein (36 T) and Dr. Stewart (37 T-38 T), regarding the cause of Bracco's harm, is unreliable and lacks fit. Bracco incorporates its motions in limine (D.I. 344 and 384) and identifies additional arguments for exclusion as follows: (1) both experts asserted that there were possible causative "factors" that Bracco's experts should have considered; (2) both experts failed to conduct any factual investigation into Bracco's harm, the contrast agent market, or GEH's practices to inform their testimony; (3) both experts failed to use any appropriate scientific methodology, such as interviewing knowledgeable people, reviewing GEH's internal analyses or applying a survey or other experimental tool, to support their testimony; and (4) both experts failed to use any information except that which was spoon fed to them from GEH's counsel. As to Bracco's first argument, it asserts that neither expert fit the factors to this case, such as by determining that the factors applied to the relevant market or that there were additional material factors entitled to weight, (36 T 43-52, 54, 58-83; 37 T 174-177) and that both GEH experts explicitly testified that they did not know enough to weigh these factors and determine any value to be accorded to them. (Id.) To support its assertion of lack of fit, Bracco looks to both Mr. Malackowski and Mr. Russell's extensive investigations of GEH's internal documents and examinations of the market as an example.[234] Bracco contends that Mr. Malackowski and Mr. Russell actually did look for and examine the facts in issue for the factors the GEH experts asserted may apply and found no evidence for them, thus concluding that GEH's alleged false NEPHRIC advertising caused the harm that is the focus of its damages calculation. (See, e.g., 17 T 40-53, 64-132; 18 T 132-186; 19 T 59-76; see also Malackowski Expert Reports; Russell Expert Reports). The Court finds that Dr. Schmittlein's and Dr. Stewart's "fit" to the facts of this case is too loose for the Court to allow admission of their testimony as to the external factors that they assert should have been taken into account in Mr. Malackowski and Mr. Russell's methodology of determining damages. Bracco argues that both experts failed to conduct any factual investigation into Bracco's harm, the contrast agent market, or GEH's practices to inform their testimony, (36 T 54, 58-83; 38 T 35-102; Ex. E and F), further asserting that such testimony is unreliable and inadmissible under Daubert. See, e.g., Crowley, 322 F.Supp.2d at 541-542; see also Ortiz, 2005 WL 2044923, at *6-7, 2005 U.S. Dist. LEXIS 18424, at *21-23 (excluded for no independent investigation of accuracy of accident reports); JMJ Enters. v. *450 Via Veneto Italian Ice, Inc., No. 97-0652, 1998 WL 175888, at *6-8 (E.D.Pa. Apr.15, 1998) (excluded for no independent investigation of damage numbers provided by client); Chemipal Ltd. v. Slim-Fast Nutritional Foods Int'l, 350 F. Supp. 2d 582, 589 (D.Del.2004) (excluded for no investigation of the methodology used in the third party marketing projections); JRL Enters. v. Procorp Assocs., No. 01-2893, 2003 WL 21284020, at *5, 7-8, 2003 U.S. Dist. LEXIS 9397, at *14, 22-23 (E.D. La. June 3, 2003) (excluded where "conducted no independent investigation of these numbers," but instead relied on the client's numbers); TK-7 Corp. v. Estate of Barbouti, 993 F.2d 722, 732 (10th Cir.1993) (excluded where relied on figures calculated by another without independent investigation). The testimony provided by Dr. Schmittlein and Dr. Stewart was a composite of criticisms and conclusions based upon the methodology used by Bracco's experts, Mr. Malackowski and Mr. Russell. In the Court's view, these opinions would have benefitted from independent market analysis to properly critique Bracco's experts. Moreover, their testimony may not be used to determine qualitatively the actual causes of Bracco's failure to obtain the GPO contracts at issue. Third, Bracco argues that both experts failed to use any appropriate scientific methodology, such as interviewing knowledgeable people, reviewing GEH's internal analyses or applying a survey or other experimental tool, to support their testimony (36 T 54, 58-83; 38 T 35-102). Bracco asserts that this does not comport with Rule 702. This Court agrees. Fourth, Bracco argues that both experts failed to use any information except that which was given to them by GEH's counsel (36 T 25-31, 38-41, 79; 38 T 35-102; Exhs. E and F). Bracco relies on a Third Circuit case which held that a medical expert's testimony must be excluded when it was based on medical history summaries that were generated through interviews conducted by nonprofessionals aligned with counsel. In re TMI Litig., 193 F.3d 613, 698 (3d Cir. 1999), amended by, 199 F.3d 158 (3d Cir. 2000). However, In re TMI Litig is not analogous to the present case because Dr. Schmittlein's and Dr. Stewart's analyses were not based on summaries generated by GEH's counsel, but were based on analyses of the methodology of Mr. Malackowski and Mr. Russell's expert reports. Nonetheless, both Dr. Schmittlein's and Dr. Stewart's testimony and related exhibits are excluded for the other reasons set forth herein. G. Motion to Exclude the Testimony of Dr. Schmid Based on Lack of Fit and Validity Dr. Christopher Schmid is an expert in statistical analysis, proffered by GEH, who provided testimony during the course of trial regarding general statistical principles, general principles of performing clinical studies used to evaluate efficacy and safety of drugs, and evaluation and statistical analysis of the results from clinical studies. Bracco argues that portions of Dr. Schmid's testimony (37 T) are inadmissible for failure to fit them to the facts, failing to provide a basis for the testimony at trial or in reports, and having no valid scientific basis. For the reasons below, the Court finds that Dr. Schmid's generalized testimony was not properly fit to the statistical analysis of studies used in this case, and that his opinions of hypothetical abstract statistical analysis cannot be used to attack particular ads and studies, which were not addressed directly in his testimony. This prevented Bracco from being able to cross examine the witness about specific studies and the specific circumstances of each one, which Defendants *451 seek to undermine through generalized testimony. First, Bracco asserts that Dr. Schmid's testimony on general statistics (37 T 84-104) and his comparison of results from single arms of different clinical trials (37 T 137-139) was never related to the facts of this case and thus there is no fit with the "particular disputed factual issues in the case." Milanowicz v. Raymond Corp., 148 F. Supp. 2d 525, 530-31 (D.N.J.2001) (quoting In re Paoli R.R. Yard PCB Litig., 35 F.3d 717, 741-43 (3d Cir.1994)). In particular, in response to Bracco's objections on these grounds (37 T 100) and its attempt to cross-examine Dr. Schmid and relate his testimony to the facts (37 T 139-150), GEH itself objected, stopped Bracco's objections and cross-examination, and admitted that its strategy was to not relate Dr. Schmid's testimony to any particular study or ad offered into evidence by Bracco, but merely to testify as to the unreliability of comparing single arms of different clinical trials. (37 T 100-101, 139-150). Bracco asserts that such testimony is inadmissible as a matter of law. See Fed.R.Evid. 702 (e.g., expert "may testify ... if ... (3) the witness has applied the principles and methods reliably to the facts in the case"); Paoli, 35 F.3d at 742-43. Daubert explains that "[f]it is not always obvious, and scientific validity for one purpose is not necessarily scientific validity for other, unrelated purposes." Daubert, 509 U.S. at 591, 113 S. Ct. 2786. Bracco argues that GEH and Dr. Schmid never related these opinions and conclusions to any facts during trial, and that they should not be permitted to provide such a linkage solely through attorney argument in post-trial briefing. The Court agrees. Second, Bracco argues that Dr. Schmid's very limited testimony concerning the NEPHRIC study (37 T 104-132), is inadmissible because he gave no basis for it in either his reports or at trial. GEH claimed that the testimony was necessitated by testimony from Bracco's witness, Dr. Solomon, five months earlier, when he testified that the 25% secondary endpoint of the NEPHRIC study led to an opposite conclusion to the study's primary end point as opposed to an inconsistent conclusion to the study's primary end point. (37 T 123-126). GEH was permitted to ask a question specifically tailored to that new testimony regarding an "opposite conclusion," which was not precisely the language used in Dr. Soloman's expert report. (e.g., 37 T 126-132). Bracco argues that Dr. Schmid did not review the NEPHRIC statistical plan, statistical report, study data or the study report and he did not talk to the NEPHRIC investigators or read their testimony, thus asserting that Dr. Schmid's testimony regarding this issue lacks a proper foundation. However, the Court will allow his testimony regarding this very limited issue because he is an expert qualified in the field of biostatistics, his testimony distinguishing the difference between what an "inconsistent" secondary end point as opposed to an "opposite" secondary end point means does not require an additional factual foundation than that to which he had access. Third, Bracco argues that Dr. Schmid's testimony on confidence intervals must be excluded as unreliable because it was in disagreement with the vast weight of scientific knowledge. Rule 702 (e.g., expert "may testify ... if ... (2) the testimony is the product of reliable principles and methods"). Bracco argues that in connection with confidence intervals, Dr. Schmid admitted that even though he was giving hypothetical examples, they were incorrect (37 T 94). He testified using examples showing that confidence intervals for certain values were symmetric around a value, when such symmetry is impossible (37 T 91-96). The Court agrees that his testimony *452 was unreliable and will strike this testimony. Lastly, Bracco argues that in connection with p-values, despite having no support in his reports, Dr. Schmid several times testified that the 0.05 p-value test for statistical significance was not grounded in solid science (37 T 98 ("It's just tradition ..."); 37 T 140 ("done for traditional purposes")). Bracco contends that those statements are incorrect as a general matter and that it is also incorrect in the specific clinical studies in issue in this case, including the Chalmers study, the NEPHRIC study, the VALOR study, and in every other instance of import in this case, where the expert clinicians, editors and statisticians explicitly chose, on a prospective basis, the 0.05 p-value as appropriate for determining whether any difference was likely due to chance or not. Bracco states that Dr. Schmid's post hoc analysis violates the rules and underlying rationale for performing scientific analysis in a prospective, unbiased manner and that such testimony, (i.e., 37 T 132, 134-135), based on flawed methodology and flawed assumptions should be excluded. See Total Containment, Inc. v. Dayco Prods., Inc., No. 1997-6013, 2001 WL 1167506, at *4-5 (E.D.Pa. Sept. 6, 2001); JMJ Enters. v. Via Veneto Italian Ice, Inc., No. 97-0625, 1998 WL 175888, at *8-10 (E.D. Pa. April 15, 1998); In re Med Diversified, Inc., 334 B.R. 89, 100 (E.D.N.Y.2005); Lippe v. Bairnco Corp., 288 B.R. 678, 701 (S.D.N.Y.2005), aff d, 99 Fed.Appx. 274 (2d Cir.2004); Club Car, Inc. v. Club Car (Quebec) Imp., Inc., 362 F.3d 775, 780 (11th Cir.2004), (striking of testimony based on flawed methodology that was unaccepted in the accounting community). The Court agrees—Dr. Schmid is a qualified bio-statistician—but his testimony regarding the use of the p-value is not properly based upon science and is not reliable. The basis for his opinions and conclusions on this issue will therefore be excluded by the Court. H. Motion to Exclude Dr. Ericksen's Testimony as Inadmissible Dr. Eugene P. Ericksen, proffered by GEH, is an expert in statistical analysis and a special consultant with NERA Economic Consulting. He gave testimony during the course of trial and designed a survey to determine the impact of marketing pieces shown and distributed by Bracco to physicians. Bracco contends that Dr. Ericksen's testimony (35 T) and related GEH survey (D326), ostensibly relating to a Bracco brochure and letter, were flawed in several respects, such that they render his opinions and testimony unreliable, lacking fit and otherwise of no help to the Court. Bracco incorporates its related motion in limine (D.I. 393) and identifies the alleged flaws as follows: (1) the survey used three cropped and out of context snippets taken from a Bracco brochure (D2014) and a letter sent to doctors (D3); (2) the survey used the three snippets orally over the telephone despite the uncontested fact that the documents (and the snippets) were meant to be read (not heard) and handled and thus the survey did not in any way simulate marketplace conditions, as again Dr. Ericksen admitted (35 T 211-212, 215, 217-218); (3) certain of the survey questions misrepresented the snippet used (e.g., parentheses in question 16 were not communicated thereby changing its meaning) (35 T 159-161, 181-182, 228-232); and (4) counsel for GEH chose the snippets that were tested and helped design the survey, demonstrating its lack of probative value and Dr. Ericksen's failure to provide objective and reliable analysis and testimony (35 T 222). As to Bracco's first contention, the survey withheld from the respondents large amounts of other essential visual, contextual *453 and informational portions from the two documents that directly relate to the survey questions, as Dr. Ericksen admitted. (35 T 225-237; D2014 (e.g., withheld graphs and portions showing differences in patient populations); D3 (e.g., withheld Kay paper, six bullet points and the descriptions of the studies and patients)). The Court finds that the survey results thus have no probative value as to whether there was false or misleading advertising or the effect of any advertising on a customer, and as such, the Ericksen testimony is excluded.[235] As to Bracco's second contention, the problem of presenting the material orally as opposed to in writing does present a problem, but only because all three snippets are difficult to understand when heard orally (35 T 157-160) and more appropriate internet-based or other methods were available but not used (35 T 212-214, 217-218). Thus, Bracco argues that the survey has no probative value.[236] The Court agrees. Bracco's third contention is that certain of the survey questions misrepresented the snippet used (e.g., parentheses in question 16 were not communicated thereby changing its meaning (35 T 159-161, 181-182, 228-232); questions 14, 14al, 14b, 14c asked about a study "comparison" divorced from the snippet and thus asked for the respondents' own comparison (35 T 178-179, 180, 245-246)) and suggested answers (e.g., initial questions focused respondents on high risk, CIN and different information about the Kay and NEPHRIC articles and included suggestive preambles (35 T 154-156, 237-239, 243-247); prefaces to questions 13 and 15 provided non-objective opinions (D326)), rendering the survey unreliable, inconclusive and lacking fit to the facts in issue—i.e., whether ads were false or misleading. Again, the Court concurs. Fourth, Bracco contends that Dr. Ericksen's lack of objectivity was also confirmed by how he interpreted his results (e.g., without justification he leapt from responses to questions about "any input into the decisions made about which contrast agents to use" to the conclusion that "the physicians were responsible for the selection" and the physicians were the persons who "made these decisions" (35 T 150-154, 215-216)) and the wording of critical questions that were asked (e.g., a snippet said "similar populations" but the respondents' answer choices were limited to "same," "different," or "did not know," in contravention of proper survey practice (35 T 165-167, 169-170, 196); he illogically asked doctors who had no input in decisions for patients how the snippets would change their input in decisions for patients (35 T 202)).[237] *454 Lastly, Bracco avers that Dr. Ericksen admitted that his results cannot be extrapolated to other snippets or documents, such as any ads or promotions themselves (35 T 237-239). Thus Bracco argues that GEH's survey and Dr. Ericksen's testimony, including his conclusions, should be excluded from evidence as unreliable, lacking fit and any probative value. The Court agrees for all of the aforementioned reasons and excludes Dr. Ericksen's testimony. V. Conclusions of Law A. Bracco's Case in Chief 1. False Advertising Claims Under the Lanham Act or New Jersey State Law This case is based upon a claim for false advertising, and thus, the Court's analysis must begin with Section 43(a)(1)(B) of the Lanham Act which provides in relevant part: (a)(1) Any person who, on or in connection with any goods or services ... uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any ... false or misleading description of fact, or false or misleading representation of fact, which— ... (B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her ... goods, services, or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act. 15 U.S.C. § 1125(a)(1)(B). A Lanham Act plaintiff must prove that: "(1) that the defendant has made false or misleading statements as to his own product [or another's]; (2) that there is actual deception or at least a tendency to deceive a substantial portion of the intended audience; (3) that the deception is material in that it is likely to influence purchasing decisions; (4) that the advertised goods traveled in interstate commerce; and (5) that there is a likelihood of injury to the plaintiff in terms of declining sales, loss of good will, etc." Warner-Lambert Co. v. BreathAsure, Inc., 204 F.3d 87, 91-92 (3d Cir.2000); Rhone-Poulenc, 19 F.3d at 129 (quoting U.S. Healthcare, Inc. v. Blue Cross of Greater Phila., 898 F.2d 914, 922-23 (3d Cir.1990)). "However, `[i]f a plaintiff proves a challenged claim is literally false, a court may grant relief without considering whether the buying public was misled.'" Warner-Lambert Co. 204 F.3d at 92; Johnson & Johnson-Merck, 19 F.3d at 129; see also Castrol, Inc. v. Pennzoil Co., 987 F.2d 939, 943 (3d Cir.1993). Furthermore, unfair competition claims under New Jersey statutory and common law generally parallel those under § 43(a) of the Lanham Act. Buying For The Home, LLC v. Humble Abode, LLC, 459 F. Supp. 2d 310, 317-318 (D.N.J.2006); see J & J Snack Foods, Corp. v. Earthgrains Co., 220 F. Supp. 2d 358, 374 (D.N.J.2002) ("[T]he elements for a claim for trademark infringement under the Lanham Act are the same as the elements for a claim of unfair competition under the Lanham Act and for claims of trademark infringement and unfair competition under New Jersey statutory and common law...."); Harlem Wizards Entertainment Basketball, Inc. v. NBA Properties, Inc., 952 F. Supp. 1084, 1091 (D.N.J.1997) ("N.J.S.A. 56:4-1 is the statutory equivalent *455 of Section 43(a)(1) of the Lanham Act"). 2. Commercial Advertising Under the Lanham Act The initial determination of whether a form of speech is actionable commercial speech is not always a simple question. The Court must begin its inquiry with the Supreme Court's jurisprudence in connection with the First Amendment and its application to different types of representations. As the Supreme Court stated in Bolger v. Youngs Drug Products Corp., 463 U.S. 60, 103 S. Ct. 2875, 77 L. Ed. 2d 469 (1983): [T]he First Amendment means that government has no power to restrict expression because of its message, its ideas, its subject matter, or its content. With respect to noncommercial speech, this Court has sustained content-based restrictions only in the most extraordinary circumstances. By contrast, regulation of commercial speech based on content is less problematic. In light of the greater potential for deception or confusion in the context of certain advertising messages, content-based restrictions on commercial speech may be permissible. Bolger, 463 U.S. at 65, 103 S. Ct. 2875 (citations and quotations omitted). The Supreme Court has also held that where the main purpose of a work is for noncommercial speech purposes but also contains a commercial speech component, thus leaving the commercial and noncommercial speech "inextricably intertwined, [to the point where the court] cannot parcel out the speech, applying one test to one phrase and another test to another phrase ... [the court must] apply our test for fully-protected expression." Riley v. National Federation of the Blind, 487 U.S. 781, 795-96, 108 S. Ct. 2667, 101 L. Ed. 2d 669 (1988). In City of Cincinnati v. Discovery Network, Inc., 507 U.S. 410, 113 S. Ct. 1505, 123 L. Ed. 2d 99 (1993), the Supreme Court again inquired into the distinction between commercial and noncommercial speech. There, the Court recognized the difficulty of drawing bright lines that will clearly cabin commercial speech in a distinct category. While the Court noted that it has often described the core notion of commercial speech as speech which does no more than propose a commercial transaction, it noted that it has also identified a somewhat larger category of commercial speech—that is, expression related solely to the economic interests of the speaker and its audience. Neither definition may prove particularly helpful in a particular case ... [thus,] a broader and more nuanced inquiry may be required. [R]ather than simply applying bright-line rules, [courts must examine] restrictions on speech carefully to ensure that speech deserving of greater constitutional protection is not inadvertently suppressed. Gordon & Breach Science Publishers v. Am. Inst. of Physics, 859 F. Supp. 1521, 1537 (S.D.N.Y.1994) (hereinafter "G & B") (summarizing Discovery Network, Inc., 507 U.S. at 410, 113 S. Ct. 1505) (citations and quotations omitted) (emphasis added). The seminal case on the application of the Lanham Act is G & B. In G & B, Judge Sand held that the Lanham Act prohibits only those false or misleading statements made in "commercial advertising [and] promotion." G & B, 859 F.Supp. at 1533; Seven-Up v. Coca-Cola, 86 F.3d 1379, 1383 n. 6, 1384 (5th Cir.1996); Eli Lilly & Co. v. Roussel Corp., 23 F. Supp. 2d 460, 480 (D.N.J.1998); Oxycal Labs. v. Jeffers, 909 F. Supp. 719, 722-23 (S.D.Cal. 1995). The court then set forth a four part test for making a determination as to *456 whether representations should be considered commercial or noncommercial speech, which has been followed in this district among others: The Lanham Act does not define "advertising" or "promotion." However, courts have held that commercial advertising or promotion consists of four elements: (1) commercial speech; (2) by a defendant in commercial competition with the plaintiff; (3) for the purpose of influencing customers to buy the defendant's goods or services; and (4) disseminated sufficiently to the relevant purchasing public to constitute "advertising" or "promotion" within the industry. Eli Lilly & Co., 23 F.Supp.2d at 480 (quoting G & B, 859 F.Supp. at 1536). Accordingly, although the Lanham Act only applies to "commercial advertising and promotion," G & B and its progeny establish that the definition of commercial speech applies to more than just the typical type of advertising. Semco, Inc. v. Amcast, Inc., 52 F.3d 108, 112 (6th Cir. 1995) (article written for trade magazine may be classified as commercial promotion); Bolger, 463 U.S. at 67-68, 103 S. Ct. 2875 (mailing of informational pamphlets by nonprofit organization can be classified as commercial speech); G & B, 859 F.Supp. at 1534-36; Birthright v. Birthright, Inc., 827 F. Supp. 1114, 1138 (D.N.J.1993) (non-profit fundraising letters can be commercial advertising); National Artists Mgmt. Co. v. Weaving, 769 F. Supp. 1224, 1234-36 (S.D.N.Y.1991) (former employee's badmouthing of employer can fit into category of commercial advertising). In this case, there are various types of alleged commercial speech, each of which requires a separate and independent analysis as to whether it constitutes actionable "commercial advertising and promotion." At issue here are scientific articles in peer reviewed journals, internal GEH documents, oral statements made by GEH sales associates, CME materials, and a purported "Visipaque Protocol" allegedly distributed to potential physician customers. a. Scientific Articles Published in Peer Reviewed Journals are not Commercial Speech Defendants contend that published scientific articles, such as NEPHRIC and COURT, are protected by the First Amendment and are not actionable under the Lanham Act, regardless of the extent of their dissemination by a commercial entity; and furthermore, that published scientific research is protected even if it contains incorrect statements or erroneous conclusions. The Court finds that there is an abundance of case law to support the proposition that a scientific article is protected noncommercial speech despite the potential for erroneous content. See, e.g., Bd. of Trs. of Leland Stanford Junior Univ. v. Sullivan, 773 F. Supp. 472, 474 (D.D.C.1991) ("It is equally settled, however, though less commonly the subject of litigation, that the First Amendment protects scientific expression and debate just as it protects political and artistic expression."); G & B, 859 F.Supp. at 1541-44; Oxycal, 909 F.Supp. at 723-26 (where the court held that a book containing false statements about the content of a commercially produced vitamin was not actionable commercial speech because "the commercial elements of the speech [were] intertwined with the central message" which was noncommercial in nature); Neurotron, Inc. v. American Ass'n of Electrodiagnostic Med., 189 F. Supp. 2d 271, 275-77 (D.Md.2001) (the court held that a nonprofit medical association's publication of an article which contained allegedly false statements about the defendant's electrodiagnostic medical devices was unlikely to *457 constitute commercial speech because the authors of the article did not advocate for a commercial transaction; moreover the court reasoned that even if some language in the article was commercial in nature that it still would not necessarily constitute commercial speech). Plaintiff relies on Semco for the proposition that "disseminating study results (e.g., journal articles) to promote products is commercial speech that has no constitutional protection to the extent it is false or misleading." (Pl.'s COL ¶ 4). In Semco, the court held that when the author of a published article is the president of the company that manufactures a product which is featured in the article, and the article contains favorably false information about the product, that the initial publication of the article is actionable under the Lanham Act against the manufacturing company. 52 F.3d at 113-15. However, as stated above, the Supreme Court's broadest definition for commercial speech is an "expression related solely to the economic interests of the speaker and its audience." Discovery Network, Inc., 507 U.S. at 422, 113 S. Ct. 1505. In this case, none of the scientific articles in question meet that definition. The NEPHRIC article was published by the New England Journal of Medicine ("NEJM"), a widely renowned medical journal published for educational purposes and for the benefit of the medical field. This simply does not fit the definition of a representation that is solely related to economic interests. In short, by going through the factors promulgated in G & B, and applying them to the NEPHRIC article: (1) the NEJM's main focus is for an educational purpose, which falls far short of the "solely commercial" requirement; (2) NEPHRIC was not published by a defendant in commercial competition. Despite the fact that Defendants sponsored the research for the article, they did not author it like the defendant in Semco. Dr. Aspelin, the author of NEPHRIC, was not paid by GEH for his work on the article; therefore Semco is inapposite and does not control for purposes of this case; (3) its publication was not commercial because it did not advocate that the reader purchase a particular product over another, even though it did come to specific scientific conclusions about which products, (Visipaque or Omnipaque) were better suited for certain medical purposes; and (4) although it was widely disseminated in the NEJM's distribution pool, it is a protected form of speech, distributed by an impartial educational journal in the field of medicine. Furthermore, the Court finds that it would be inappropriate to "inquire into the validity of ... scientific theories" which are not commercial speech and promulgated in scientific journals. Thus, it declines to do so today.[238]Oxycal, 909 F.Supp. at 724; see also Sanderson v. Culligan Int'l, 415 F.3d 620, 624 (7th Cir.2005) (Lanham Act was not "designed to throw into federal courts all disputes about the efficacy of competing products ... and scientific disputes must be resolved by scientific means," not federal courts). The Court recognizes the myriad of problems that might ensue from judicial forays into the field of scientific research and publication; as such, the Court adopts the analysis from the court in G & B: The conclusion we reach here is supported by a consideration of the chilling effect on speech in the academic and non-profit context that could be the result of allowing actions such as this to *458 proceed. This case dangerously juxtaposes academic speech, the health of which depends crucially on "that robust exchange of ideas which discovers truth `out of a multitude of tongues'," Keyishian v. Board of Regents, 385 U.S. 589, 603, 87 S. Ct. 675, 17 L. Ed. 2d 629 (1967) with commercial speech, regarding which the Court has said "[t]he government may ban forms of communication more likely to deceive the public than to inform it." Central Hudson Gas & Electric Corp. v. Public Service Comm'n, 447 U.S. 557, 563, 100 S. Ct. 2343, 65 L. Ed. 2d 341 (1980). G & B, 859 F.Supp. at 1542. Thus, for the reasons stated above, the Court finds that the initial publication of the NEPHRIC article in the NEJM is not actionable commercial speech under the Lanham Act. b. Secondary Dissemination of Scientific Articles and Their Findings do Constitute Commercial Speech Plaintiff argues that even if the NEPHRIC article itself is not considered commercial speech, that the secondary dissemination of the article in Defendants' advertisements does constitute actionable commercial speech. To support this contention, Plaintiff relies on Washington Legal Found. v. Friedman, 13 F. Supp. 2d 51 (D.D.C.1998), vacated in part on other grounds, 202 F.3d 331 (D.C.Cir.2000), and G & B. Both cases celebrate the high level of protection given to scientific and academic research, however caution that secondary dissemination of that same information can constitute commercial speech in certain circumstances. In Washington Legal Found., the court began its analysis by noting that: "It is beyond dispute that when considered outside of the context of manufacturer promotion of their drug products, CME seminars, peer-reviewed medical journal articles and commercially-available medical textbooks merit the highest degree of constitutional protection. Scientific and academic speech reside at the core of the First Amendment." Id. at 62; see, e.g., Keyishian, 385 U.S. at 603, 87 S. Ct. 675; Sullivan, 773 F.Supp. at 474. Like in this case, there it was argued that "because this speech merits full protection when uttered by a scientist or academic, the level of constitutional scrutiny should not change merely because a corporation wishes to enhance the distribution of that message." Id.; cf. First National Bank of Boston v. Bellotti, 435 U.S. 765, 784, 98 S. Ct. 1407, 55 L. Ed. 2d 707 (1978) (holding that the expression of views on matters of public importance does not lose First Amendment protection merely because a corporation seeks to utter the speech); New York Times v. Sullivan, 376 U.S. 254, 266, 84 S. Ct. 710, 11 L. Ed. 2d 686 (1964) (noting that statements do not lose constitutional protection because they are presented in the form of a paid advertisement). Nonetheless, the court recognized that "[t]he peculiarities of the prescription drug industry make dissemination of scientific research results an especially important and prevalent marketing tool." Washington Legal Found., 13 F.Supp.2d at 63. The court honed in on this concept to make its determination that secondary dissemination of fully protected scientific articles could be actionable commercial speech under the Lanham Act. The court reasoned that while there may be an abundance of resources in the form of scientific articles, CME seminars and the like, both opposing and favoring a certain product, it is likely that manufacturers will only seek to disseminate materials favorable to their product. Id. at 65. *459 That fact, combined with the considerable financial resources available to pharmaceutical companies, means that findings concluding that a drug effectively treats a condition is more likely to reach a physician than studies reaching the opposite conclusion. Therefore, physicians could be led to believe that a certain drug is safe and effective because a manufacturer has found, and aggressively promoted, "the one" article that supports use of their drug, even if there exists considerable evidence to the contrary. Id. This reasoning led the court in Washington Legal Found. to depart from the rigorous standard of review generally demanded by the First Amendment. In G & B, the court also held that secondary distribution of scientific research articles could constitute actionable conduct under the Lanham Act if it is found to be false or misleading. G & B, 859 F.Supp. at 1544-45. In that case, plaintiffs, commercial publishers of scientific journals, brought an action against nonprofit scientific societies for false advertising under the Lanham Act for the publication of comparative surveys of scientific journals in which nonprofit journals were rated as superior. Id. at 1524-27. There the court distinguished between the defendant's initial publication of the article and its continued distribution of reprints at a librarians' conference, which was its target audience. The court reasoned: These are allegations of activities explicitly promotional in nature: distribution of survey results favoring defendants' products to an audience that represents the core consumers of those products. These activities clearly fall closer to Section 43(a)'s reach than does mere publication of the articles. They may properly be described as "commercial speech that a competitor employs for the express purpose of influencing consumers to buy [its] goods or services," or as "speech proposing a commercial transaction," Id. at 1544 (citation omitted). Thus, here again, the court concluded that secondary dissemination of a fully protected article can constitute a violation of the Lanham Act if false or misleading. Accordingly, because GEH's advertising campaign using the NEPHRIC article is clearly promotional in nature, similar to the advertising in G & B and Washington Legal Found, the Court finds that Defendants' secondary distribution of the NEPHRIC article does constitute a form of commercial speech. i. Internal Company Documents That Were Never Publicly Disseminated in the United States Are Not Actionable At the outset, the Court notes that internal documents such as marketing plans and medical bulletins do not constitute "commercial advertising or promotion" because they are not disseminated to consumers, much less disseminated to a sufficient portion of the relevant purchasing public so as to constitute "advertising" or "promotion" within the industry, under the four element test promulgated by the court in G & B. ii. Accused Oral Statements Allegedly Made by GEH Sales Representatives are Actionable Under the Lanham Act GEH avers that the evidence presented at trial demonstrated that GEH sales call notes are, at best, "brief shorthand" notes that do not reflect verbatim statements made by sales representatives. (28 T 153:12-21; see also 18 T 38:25-41:19). GEH further argues that Bracco *460 did not show that the accused GEH sales call notes reflect statements that were actually made, and cannot rely on them as grounds for its claim. Bracco accuses 87% of GEH's sales call entries of being false or misleading. GEH asserts that the percentage is grossly inflated. (GEH Findings of Fact (hereinafter "FOF") at ¶¶ 105-09). GEH asserts that Isovue is mentioned in only 284 call notes (0.09% of GEH's 314,468 notes), and that of those, at best, only 38 (or 0.012%) could even remotely be construed as including a superiority claim, with ambiguity still remaining as to whether the statements were made by the sales rep or by the customer. Accordingly, GEH asserts that Mr. Russell conducted an overly inclusive compilation of GEH's sales calls (with which the Court agrees) and that they were not enough in number to be sufficiently actionable. First, the Court must determine whether such sales call notes are indicative of the sales representatives' actual conduct; second, the Court will address whether there are sufficient sales call notes to be actionable. "Courts have consistently held that oral statements by a company's sales representative concerning a product constitute `commercial advertising or promotion' under the Lanham Act." Zeneca Inc. v. Eli Lilly & Co., No. 99-1452, 1999 WL 509471, at *31 (S.D.N.Y. July 19, 1999). Bracco asserts, and the Court agrees, that the sales call notes are relevant evidence in establishing actionable commercial speech under the Lanham Act. In that regard, Bracco relies on a series of cases that use sales call notes as evidence of a campaign of false oral advertising. For example, in Zeneca Inc., the court found that "Eli Lilly representatives are trained and required to maintain written notes, prepared as soon as possible after each visit with a physician, encapsulating the visit." Id. at *8. The court in Zeneca Inc., then used the sales call notes as evidence that false advertising was taking place. Id. at *31. Similarly, in Abbott Labs. v. Mead Johnson & Co., 971 F.2d 6 (7th Cir.1992), the court concluded that sales call notes "are the best evidence of what the representatives communicated to doctors during their detail visits." 971 F.2d at 10. The court in Pfizer, Inc. v. Miles, Inc., 868 F. Supp. 437 (D.Conn.1994), also reiterated this concept, acknowledging the relevance of purported false statements when they were made by Pfizer sales representatives to medical professionals. Id. at 454. Here, the Court finds that the sales call notes, albeit vastly overstated in number by Bracco, are useful in determining whether false advertising occurred, and the extent to which it occurred in GEH's overall sales campaign. Similar to the sales call notes in Zeneca Inc., the Court finds the GEH sales call notes highly probative as to whether false advertising was occurring and to what proportion of the audience the allegedly false messages were being disseminated. Second, to constitute "commercial advertising or promotion," challenged oral statements "must be disseminated sufficiently to the relevant purchasing public to constitute advertising or promotion within that industry." Seven-Up, 86 F.3d at 1384; G & B, 859 F.Supp. at 1535-36; see also J & M Turner v. Applied Bolting Tech. Prods., No. 95-2179, 1997 WL 83766, at *16, 1997 U.S. Dist. LEXIS 1835, at *49 (E.D.Pa. Feb. 18, 1997). While courts may disagree about whether the Lanham Act reaches certain oral statements,[239] it is well-settled *461 that the challenged statements, at the very least, must be "widely disseminated" and "part of an organized campaign to penetrate the relevant market." Fashion Boutique v. Fendi USA, Inc., 314 F.3d 48, 56-57 (2d Cir.2002); Optimum Techs. v. Home Depot, 78 USPQ2d 1801, 1806 (N.D.Ga.2005); see also Mario Valente Collezioni v. AAK Ltd., 280 F. Supp. 2d 244, 256-57 (S.D.N.Y.2003). "Although advertising is generally understood to consist of widespread communication through print or broadcast media, `promotion' may take other forms of publicity used in the relevant industry, such as displays at trade shows and sales presentations to buyers." Id. at 57; see, e.g., Seven-Up, 86 F.3d at 1386 (finding sales presentation to a significant percentage of industry customers constitutes advertising under the Lanham Act). Here, GEH contends that the number of statements at issue is too small to be actionable. See Procter & Gamble Pharms. v. Hoffmann-LaRoche Inc., No. 06-0034, 2006 WL 2588002, at *32 (S.D.N.Y. Sep.6, 2006) (the court implied that 2% of call notes, which were made by a very small number of persons on the overall sales force, was a small percentage, noting that the company spoke to those representatives and confirmed that the proper sales message was being administered); Fashion Boutique, 314 F.3d at 58 (the court held that "twenty-seven oral statements regarding plaintiff's products in a marketplace of thousands of customers" was not actionable under the Lanham Act); Auto-Chlor Sys. of Minn., Inc. v. JohnsonDiversey, 328 F. Supp. 2d 980, 1019-20 (D.Minn. 2004) (the court held that "three statements by Diversey-Lever representatives to three customers in a marketplace of hundreds of customers" is insufficient to show that the message was widely disseminated); Optimum Tech., 78 USPQ2d at 1806 ("here, isolated statements by sales personnel to individual customers do not satisfy the requirement of sufficient dissemination"). Conversely, Bracco relies on Florida Breckenridge, Inc. v. Solvay Pharm., Inc., No. 97-8417, 1998 WL 468753, 1998 U.S. Dist. LEXIS 14742 (S.D.Fla. Mar. 18, 1998), for the contention that the sales call notes are enough in number to constitute actionable representations to customers. In Florida Breckenridge, Inc., the court found that the oral statements in question "were ... an integral part of Breckenridge's advertising campaign," holding that they constituted commercial advertising as a matter of law. Id. at *7-8, 1998 U.S. Dist. LEXIS 14742 at *20-21. The court held that such oral statements were sufficiently disseminated to constitute advertising within the pharmaceutical drug industry, even though it was unclear how many times they were made. Id. at *7-8, 1998 U.S. Dist. LEXIS 14742 at *21. The court relied on testimony from defendant's director of marketing, who stated: "I know of no business in the industry that promotes its prescription drugs without such face-to-face or personal attention on the part of the sales representative to the customer. In fact, in my experience, a prescription drug product could not be adequately promoted without such in-person and word-of-mouth promotion." Id. at *7, 1998 U.S. Dist. LEXIS 14742 at *21. The Court finds Florida Breckenridge, Inc. to be more analogous to the present case than the cases relied on by GEH because here the sales call notes were not made in isolation and were part of a large *462 scale marketing plan to disseminate a message to its potential customers. Fashion Boutique, Auto-Chlor Sys. of Minn., Inc., and Optimum Tech. are inapposite because in each one of those cases, unlike the present case, the number of statements was either so small as to be insignificant or they were not part of an organized campaign to penetrate the relevant market. Here, it appears that the sales call notes, albeit limited in number, were only one part of a full-scale marketing plan by GEH to claim the benefits of Visipaque over LOCM alternatives, through sales calls, websites, print marketing materials and more. The 87% number is greatly inflated, but even if the offending sales calls are a very small percentage, and thus, alone would not be actionable, when the sales calls are combined with GEH's overall campaign, which was promoted through press releases, websites, and CMEs, the result is false ads which have been sufficiently disseminated to be actionable under the Lanham Act. GEH also contends that a good faith effort by a company to educate its sales force about what can fairly be said about published studies, such as GEH's training of the sales force and approval process for its promotional materials, renders any limited false or misleading statements made by representatives outside of those parameters not actionable. Procter & Gamble, 2006 WL 2588002 at *32. However, the Court does not agree with the Defendants' reading of Procter & Gamble. There the court did not base its ruling solely on Roche's efforts to educate its sales force; the ruling was based on the dispositive determination that the statements were not false or misleading in the first place. Id. Therefore, while the Court finds such training to be evidential, it is not dispositive. iii. Website Ads, Print Ads in Newspapers, Magazines and Journals, Television Ads are Actionable Commercial Speech Courts have applied the Lanham Act to just about every imaginable print and media form, including press releases, print ads, posters, and websites. See, e.g., Novartis Consumer Health, Inc. v. Johnson & Johnson-Merck Consumer Pharm. Co., 290 F.3d 578, 585-86 (3d Cir.2002) (applying an injunction to advertisements on the defendants' website); Am. Home Prod., 871 F.Supp. at 744-45 (applying the Lanham Act to print advertisements in medical journals, TV commercials and print newspapers). iv. Other Accused Materials as "Commercial Advertising or Promotion" Bracco failed to adduce evidence that a Visipaque "protocol" was created or posted by GEH. Any such "protocol" is not "commercial advertising or promotion" because it was not sufficiently disseminated, if at all, to the relevant purchasing group or intended to influence purchasing decisions. However, CMEs sponsored by GEH are "commercial advertising or promotion," because although they are purportedly designed for educating the medical community and not influencing potential customers to buy goods or services, here they have been designed by GEH to deliver a specific message related to Visipaque renal superiority. See Neurotron, 189 F.Supp.2d at 277. CMEs are customarily presented by physicians, but it appears that GEH, who sponsored certain CMEs, had a substantial role in the creation of the content of various CME presentations. For example, at trial, GEH's sales representative, Mr. Joseph Murray, confirmed delivering the Visipaque/NEPHRIC *463 claims through the print media (e.g., press releases and articles) and CME-type presentations to customers in order to convert sales to Visipaque. (E.g., 16 T 31-49, 56-58, 81-88, 97-114; 17 T 49-51, 64-132). P2307 is one example of a CME which was sponsored by GEH, had the GEH logo on every slide, and was given by an authorized GEH representative. The Court finds such a CME—created by GEH, sponsored by GEH, and presented by GEH representatives—to be actionable under the Lanham Act because the direct control by GEH makes it commercial in nature, much akin to the scenario in Semco, where the court held that a trade article was actionable because the author was the manufacturer of the product. See Semco, 52 F.3d at 112. In addition, this type of CME presentation bears a resemblance to the informational mailings in Bolger, which contained product information, yet tried to veil their commercial nature by also including noncommercial speech about family planning. There, the court still held that the informational packet was actionable commercial speech. See Bolger, 463 U.S. at 67-68, 103 S. Ct. 2875. Similarly, here the Court finds that CMEs which were created by GEH, sponsored by GEH, and presented by GEH representatives are actionable commercial speech. Another example of a GEH-sponsored CME, presented at least in part by GEH consultants, (Drs. McCullough and Davidson) states the following: "[R]ecent controlled trials have shown that non-ionic Isosmolar contrast agents are superior to low-osmolar agents in preventing CIN." (P4251:210) (emphasis added). "The use of iodixanol in at-risk patients appears to minimize the risk of CIN even without additional pharmacological prophylaxis." (P4251:212). This particular CME has the GEH logo on the first slide of the presentation and was presented, in part, by doctors who were paid consultants for GEH. (See P4251). Therefore, the Court finds that under the test promulgated in G & B, certain CMEs at issue in this case do in fact constitute commercial speech. This is strikingly similar to the circumstances in Semco, where the Court found the article at issue to be commercial advertising because the author was a biased member of the company selling the product for which the article touted superiority. Semco, 52 F.3d at 113-115. Here, by going through the G & B factors: (1) the CME is commercial advertising because similar to Semco the Court concludes that various CMEs were sponsored by GEH and presented by GEH consultants and tout Visipaque superiority, thus departing from the actual conclusions of the scientific studies upon which they are derived; (2) GEH is a direct competitor of Bracco; (3) the CMEs were put together for the purpose of influencing customers as their main message is Visipaque renal superiority over LOCM; and (4) the CMEs were widely disseminated as they were part of symposiums which were a component of an advertising campaign that spanned print, online, and phone. Therefore, the Court finds such CMEs containing the message that Visipaque is renally superior to LOCM to be actionable commercial speech under the Lanham Act. 3. GEH'S Representations are False and Misleading Under the Lanham Act "Liability [under the Lanham Act] arises if the commercial message or statement is either (1) literally false or (2) literally true or ambiguous, but has the tendency to deceive consumers." Novartis Consumer Health, 290 F.3d at 586 (citing Castrol, 987 F.2d at 943 ("a plaintiff must prove either literal falsity or consumer confusion, but *464 not both") (emphasis in original)). The focus of a Lanham Act inquiry is whether statements "are false or misleading at the time they are made." Alpo Petfoods, Inc. v. Ralston Purina Co., 720 F. Supp. 194, 205 n. 12 (D.D.C.1989) ("Post facto evidence cannot make actionable true claims which later become false and does not bar suits for false or misleading representations which later become true."), rev'd in part on other grounds, 913 F.2d 958 (D.C.Cir.1990); Satis Vacuum Indus. Vertriebs, AG. v. Optovision Tech., Inc., No. 399-2147, 2001 WL 1142803, at *10 (N.D.Tex. Sept. 24, 2001). The Court will address Bracco's claims under each theory of liability. a. Puffery Under the Lanham Act, nonspecific statements that do not refer to specific characteristics of a product are non actionable puffery. See Nikkal Indus., Ltd. v. Salton, Inc., 735 F. Supp. 1227, 1234 n. 3 (S.D.N.Y.1990) (General claims that the product was "better" were mere puffery and not actionable as false advertising.); United States Healthcare, 898 F.2d at 926 (In the context of the advertising in the case, the defendant's claim that it was the better health care plan was an innocuous kind of puffery.). "Puffery is distinguishable from misdescriptions or false representations of specific characteristics of a product. As such, it is not actionable." Castrol, 987 F.2d at 945-46; see Stiffel Co. v. Westwood Lighting Group, 658 F. Supp. 1103, 1115 (D.N.J. 1987). Bracco contends that GEH's claims are not puffery and that they are actionable under the Lanham Act. The Court finds that GEH's allegedly false claims that explicitly or implicitly address product attributes of importance to customers and make statements that are measurable by comparative research are not puffery. See Castrol, 987 F.2d at 945-46 (holding that Pennzoil's claim of superior engine protection was more than mere puffery because "it is both specific and measurable by comparative research"); see also Stiffel Co., 658 F.Supp. at 1115 (claims to superiority flowing from purported independent tests, are more than puffery); Genderm Corp. v. Biozone Labs., No. 92-2533, 1992 WL 220638, at *14-15, 1992 U.S. Dist. LEXIS 13521, at *42 (N.D. Ill., Sept. 3 1992) (false descriptions of clinical trial results are not puffery); Am. Home Prods. v. Johnson & Johnson, 654 F. Supp. 568 (S.D.N.Y.1987) (claim that Tylenol gives unsurpassed relief is not puffery). In addition, false claims are not excused or remedied by the use of footnotes because "a footnote or disclaimer that `purports to change the apparent meaning of the claims and render them literally truthful, but which is so inconspicuously located or in such fine print that readers tend to overlook it, will not remedy the misleading nature of the claims." SmithKline Beecham Consumer Healthcare, L.P. v. Johnson & Johnson-Merck Consumer Pharm. Co., 906 F. Supp. 178, 182 (S.D.N.Y.1995) (citing Am. Home Prods. v. Johnson & Johnson, 577 F.2d at 167); McNeilab, 654 F. Supp. 568, 590 (S.D.N.Y.1987), aff'd, 100 F.3d 943 (2d Cir.1996); Cuisinarts, Inc. v. Robot-Coupe Int'l Corp., 509 F. Supp. 1036, 1044 (S.D.N.Y.1981). In this case, GEH used footnotes after its claims, which provided alleged support for the statements, by citing to studies or articles, without further explanation. Even if footnotes could make a significant difference, GEH's footnotes never cite to the weight of the clinical evidence, GEH's other unpublished studies, and perhaps most compellingly, other study results and limitations in its own studies. Thus, the footnotes do not excuse any claims that are false or misleading. *465 b. Unclean Hands Moreover, GEH's claims, which have significant safety implications (Pl.'s FOF ¶ 87, n. 88), are not excused by any allegations that Bracco has unclean hands. GEH asserts that Bracco has unclean hands because it is allegedly inflating its damages claim beyond all reason, and engaging in its own alleged campaign of false advertising against Omnipaque. (See Answer ¶¶ 96-101). The Court notes that such a defense is rarely successful due to "a strong public interest in the prevention of misleading advertisements." Am. Home Prods. Corp., 654 F.Supp. at 590 (citing Coca-Cola Co. v. Tropicana Prods., Inc., 690 F.2d 312, 317 (2d Cir.1982)). As such, "a defense of unclean hands can be established only by `clear, unequivocal and convincing' evidence." Id. (quoting Nike, Inc. v. Rubber Mfrs. Ass'n, Inc., 509 F. Supp. 919, 926 (S.D.N.Y.1981)). Furthermore, when public health is at issue, as in false drug advertising, the unclean hands defense must be "judiciously applied." McNeilab, 501 F.Supp. at 539.[240] Bracco's alleged misconduct, even if taken as true, was, done for largely defensive purposes, limited in scope and duration; it does not create an unclean hands defense. c. Literal Falsity In Novartis, the Third Circuit clearly set out the framework for making a determination of literal falsity: In analyzing whether an advertisement or product name is literally false, a court must determine, first, the unambiguous claims made by the advertisement or product name, and second, whether those claims are false. Clorox Co. v. Proctor & Gamble Commercial Co., 228 F.3d 24, 34 (1st Cir.2000). A "literally false" message may be either explicit or "conveyed by necessary implication when, considering the advertisement in its entirety, the audience would recognize the claim as readily as if it had been explicitly stated." Regardless, only an unambiguous message can be literally false. "The greater the degree to which a message relies upon the viewer or consumer to integrate its components and draw the apparent conclusion, however, the less likely it is that a finding of literal falsity will be supported." United Indus. Corp. v. Clorox Co., 140 F.3d 1175, 1181 (8th Cir.1998); see Warner-Lambert Co. v. BreathAsure, Inc., 204 F.3d 87, 96 (3d Cir.2000); Castrol, 987 F.2d at 946; see also Cuisinarts, Inc. v. Robot-Coupe Int'l Corp., [No. 81-731,] 1982 WL 121559, at *2 (S.D.N.Y. June 9, 1982). Novartis, 290 F.3d at 586-87. Furthermore, when determining whether a claim is literally false, audience sophistication is irrelevant. JR Tobacco of America, Inc. v. Davidoff of Geneva (CT), Inc., 957 F. Supp. 426, 432 (S.D.N.Y.1997) (citing Merck Consumer Pharmaceuticals, 960 F.2d at 298 (listing factors to be used in determining whether an advertisement is likely to mislead or confuse public, not literal falsity)); see Morgenstern Chem. Co. v. G.D. Searle & Co., 253 F.2d 390, 393-94 (3d Cir.1958) (declining to take into account customer sophistication in particular industry when determining whether there is a likelihood of confusion between two trademarks). *466 The first step in analyzing whether GEH's renal and non-renal superiority claims are literally false requires the Court to determine the unambiguous claims used in GEH's advertising. Here, the renal claims being made by GEH can be categorized into three messages: "Visipaque may be better than a LOCM," "Visipaque is better than all LOCM,"[241] and "Visipaque is as good as or better than a LOCM with prophylactics."[242] The claims asserted in the last two statements are unambiguous, however the meaning of the first statement has garnered substantial argument from the parties in this case. The first claim is paraphrased from the conclusion of the NEPHRIC study[243] and without the context of the study may be subject to interpretation and be misleading. This is primarily because the study compared one iso-osmolar CM (Visipaque) with only one low-osmolar CM (Omnipaque), not all low-osmolar CM. Thus, when the conclusion is read in conjunction with the entire article, it could be taken to mean that Visipaque is only better than the LOCM tested in the study, namely Omnipaque. Nonetheless, when the conclusion of the NEPHRIC study is distributed secondarily in advertising, without the benefit of the study results, the Court finds that it projects a misleading message that Visipaque may be better than all LOCM, even those not tested in the NEPHRIC study. GEH's non-renal superiority claims can be categorized into the following messages: (1) cardiovascular superiority, (a) Visipaque causes lower incidence of MACE than LOCM;[244] (b) Visipaque causes less discomfort-type (i.e., claiming less pain, warmth, discomfort or patient movement or designed for such);[245] (2) osmosality/cost *467 superiority, (a) Visipaque performs better than LOCM because of lower osmosality and associated costs as a result.[246] Second, the Court must determine if the unambiguous statements are literally false. The type of proof needed to prove literal falsity varies with the type of advertising claim being made. Novartis, 290 F.3d at 586-87; Castrol, Inc. v. Quaker State Corp., 977 F.2d 57, 63 (2d Cir. 1992). Claims that do not mention tests must be affirmatively proven false, whereas establishment or "tests prove" claims can be challenged by "demonstrating that the tests were not sufficiently reliable" to permit the conclusion reached or by showing that "the tests, even if reliable, do not establish the proposition asserted." Rhone-Poulenc Rorer Pharms. v. Marion Merrell Dow, 93 F.3d 511, 515 (8th Cir. 1996) (holding that in analyzing "tests prove" claims, courts "should give advertisers a fair amount of leeway," in order "[t]o ensure vigorous competition and to protect legitimate commercial speech"). There are two types of comparative advertising campaigns that typically become the subject of a Lanham Act false superiority claim. Marion Merrell Dow, 93 F.3d at 514-15. The first constitutes a bald assertion of superiority, in essence: "my product is better than yours." Id. at 514. The second occurs when an ad campaign relies on scientific testing or studies to support the claim of superiority: "tests or studies prove that my product is better than yours." Id. To establish literal falsity of the second type of superiority claim, which is at issue here,[247] "a plaintiff must do *468 more than show that the tests supporting the challenged claim are unpersuasive." Castrol Inc. v. Pennzoil Quaker State, 169 F. Supp. 2d 332, 336 (D.N.J.2001); see McNeil-P.C.C, Inc. v. Bristol-Myers Squibb Co., 938 F.2d 1544, 1549 (2d Cir. 1991); Procter & Gamble Co. v. Chesebrough-Pond's, Inc., 747 F.2d 114, 119 (2d Cir.1984). Bracco contends that GEH's renal representations (Pl.'s FOF ¶¶ 2-9) and non-renal representations (Pl.'s FOF ¶¶ 18-22) for Visipaque are establishment claims that either explicitly or implicitly reference tests, data, charts, and clinical trials and/or use terms such as "proven" or "establish." See, e.g., Glaxosmithkline Consumer Healthcare, L.P. v. Merix Pharm. Corp., No. 05-898, 2005 WL 2230318, at *3 (D.N.J. Sept.13, 2005), aff'd, 197 Fed.Appx. 120 (3d Cir.2006); Glaxo Warner-Lambert OTC G.P. v. Johnson & Johnson Merck Consumer Pharm. Co., 935 F. Supp. 327, 329 (S.D.N.Y.1996). Accordingly, in this case, the Plaintiff must show that the underlying studies upon which the representations are based are "not sufficiently reliable to permit one to conclude with reasonable certainty that they established the claim made." McNeil-P.C.C, 938 F.2d at 1549 (internal quotation omitted). There are two ways for plaintiff to carry this burden: either by successfully assailing the validity of the underlying study; or by showing that the study results are undermined by other scientific studies. Castrol Inc., 169 F.Supp.2d at 336; McNeil-P.C.C., 938 F.2d at 1549; see also Quaker State, 977 F.2d at 62-63 (distinguishing product superiority claim not based on testing, which must be proven false by affirmative evidence, from product superiority claim explicitly or implicitly based on tests or studies which may be proven false by showing that the tests did not establish the proposition for which they were cited). "Moreover, if the plaintiff can show that the tests, even if reliable, do not establish the proposition asserted by the defendant, the plaintiff has met its burden of demonstrating literal falsity." Castrol Inc., 169 F.Supp.2d at 336; Quaker State, 977 F.2d at 63. Bracco further contends that GEH has made a claim in its advertising that "Visipaque is better than all LOCM," and that this statement is literally false and unsupported by the findings of the NEPHRIC study. (See Pl.'s FOF ¶¶ 10-17, 23-39). In the alternative, Bracco asserts that the studies upon which GEH based its representations are unreliable (including NEPHRIC, COURT, and VICC) and are contradicted by the weight of the pertinent *469 scientific evidence. (Id.) With regard to the first allegation, the Court finds that GEH's representation, that "Visipaque is better than all LOCM," is an extrapolation which strays too far from the results and conclusions of the underlying NEPHRIC, COURT, and VICC studies. See supra pp. 407-17. In regard to the second allegation, the Court finds that the NEPHRIC, COURT and VICC studies are reliable, to the extent that their conclusions state that Visipaque may perform better than a LOCM, for certain patient groups,[248] however, for GEH to redistribute the study conclusions, without clearly and prominently identifying the drugs compared in each of the studies, presents a misleading message to the public. GEH must caveat the quoted or paraphrased conclusions by clearly and conspicuously stating which drugs were actually tested in the studies. This approach produces an equitable result because the Court finds that the underlying data of the studies are not vitiated by the flaws Bracco identifies. Thus, GEH may use NEPHRIC and similar studies in its advertising as long as the actual drugs tested, identified by brand name, are plainly and conspicuously disclosed—not simply in a footnote or small print-and it is disclosed that other LOCM were not tested.[249] At that point, consumers can make an informed decision as to how much weight to accord a certain study. Finally, GEH may not explicitly or implicitly, through its sales representatives, communicate Visipaque superiority over Isovue unless a reliable head to head trial between these products supports such a contention. Nonetheless, despite the Court's finding that NEPHRIC, COURT and VICC are reliable regarding their conclusions as to the administration of CM alone, the Court finds that the articles are not reliable for the assertion that "Visipaque is better than (or superior) to LOCM with prophylactics." This conclusion is simply not adequately supported by any studies, as discussed supra, pp. 407-17. i. Impact of FDA on Standard for Determining Literal Falsity Bracco contends that the falsity of the claims is further confirmed by the findings of the FDA. (Pl.'s FOF ¶¶ 11, 24, 31, 37). The "FDCA or FDA regulations may be utilized in a Lanham Act action to `establish the standard or duty which defendants allegedly failed to meet.'" Genderm Corp. v. Biozone Labs., No. 92-2533, 1992 WL 220638, 1992 U.S. Dist. LEXIS 13521 (N.D. Ill., Sept. 3 1992) (quoting Grove Fresh Dist., Inc. v. Flavor Fresh Foods, Inc., 720 F. Supp. 714, 716 (N.D.Ill. 1989)). Furthermore, courts have consistently held that the FDA's scientific findings are not only relevant, but entitled to significant deference. See, e.g., Zeneca, 1999 WL 509471, at *33-34. Here, GEH *470 conceded the probity of the FDA's determinations. (7 T 5-6). Courts have likewise rejected arguments that would require them to second-guess the expert judgment of the FDA. See, e.g., Thompson Med. Co. v. Ciba-Geigy Corp., 643 F. Supp. 1190, 1193 n. 5 (S.D.N.Y. 1986); SmithKline Beecham Consumer Healthcare v. Johnson & Johnson-Merck, No. 95-7011, 1996 WL 280810, at *13 (S.D.N.Y. May 24, 1996). GEH responds by arguing that the Lanham Act cannot be used to redress perceived violations of the Food, Drug, and Cosmetic Act ("FDCA"), and that it is improper "for a court in a Lanham Act case to determine preemptively how the FDA will interpret and enforce its own regulations." Sandoz, 902 F.2d at 231; 21 U.S.C. § 337; Eli Lilly, 23 F.Supp.2d at 476-77; see also Gile v. Optical Rad. Corp., 22 F.3d 540, 544 (3d Cir. 1994). Contrary to GEH's assertions, the Court here is not speculating as to how the FDA might opine since the FDA has flagged its views through numerous letters to GEH regarding the misleading nature of Visipaque superiority claims. Furthermore, Bracco asserts that the FDA's failure to take action against GEH and its ads is irrelevant because (a) GEH never proved that it sent its ads to the FDA; (b) courts consistently refuse to infer agency adoption based on mere inaction (Providence Journal Co. v. United States Dep't of the Army, 981 F.2d 552, 558 (1st Cir.1992)); (c) the FDA's silence as to particular ads is not a valid defense (In re Bextra & Celebrex Mktg. Sales Practices & Prod. Liab. Litig., No. 05-1699, 2006 WL 2374742, at *11 (N.D.Cal. Aug. 16, 2006)); and (d) GEH conceded the point. (7 T 8). GEH responds by arguing that Bracco tried, without success, to convince the FDA to take action against GEH for the same alleged statements that Bracco argues are false and misleading in this case and that Bracco now urges this Court to take action where the FDA has not.[250] GEH contends that to use statements in a non-final FDA letter, that issued based on Bracco's lobbying and before GEH had an opportunity to be heard, is premature. GEH relies on a series of cases that rejected attempts to use the Lanham Act as a backdoor for private enforcement of the FDCA, with courts dismissing false advertising claims that stray "too close to the exclusive enforcement domain of the FDA." Schering-Plough, 547 F.Supp.2d at 943-44, 948 (marketing and labeling of prescription drugs are properly addressed to the FDA, not the courts); Schwarz Pharma, 388 F.Supp.2d at 974 (courts should not interfere with the FDA's investigatory timetable and prosecutorial decision-making); Summit, 922 F.Supp. at 306; Sandoz, 902 F.2d at 231. However, the Court finds those cases to be inapposite because here the Court is not seeking to usurp the FDA's authority or preempt its findings in an ongoing investigation. Furthermore, the Court finds the circumstances in Zeneca, as opposed to the cases cited by GEH, to be more analogous to this case. There, the court addressed the issue of an ongoing dialogue with the FDA regarding a peer reviewed *471 study resulting in multiple non-final letters: Eli Lilly also suggests that the dialogue with the FDA is still ongoing and that the findings and opinions set forth in the January 1999 minutes with respect to MORE, and the May 1999 minutes with respect to MORE and CORE, do not reflect the agency's last word on the subject or are an incorrect recitation of the FDA's position. This argument is contradicted by the FDA's repeated statements over a two-year period. And whether or not the dialogue is ongoing, the FDA has made abundantly clear that MORE-either alone or in conjunction with CORE does not and cannot prove that Evista reduces the risk of breast cancer. Zeneca, 1999 WL 509471 at *27. Similar to the dialogue with the defendant in Zeneca, here the FDA has also consistently sent letters to GEH, over the course of many years, advising that GEH cannot make a Visipaque superiority claim. Furthermore, there is no indication of an ongoing dialogue. Accordingly, there is no compelling reason for this Court to delay its decision or defer this action to the FDA; it is properly within the scope of the Lanham Act and the province of this Court. Nonetheless, the Court notes that Bracco cannot prove falsity simply by relying on statements made in FDA letters that apply FDA standards. A Lanham Act plaintiff must do more than assert that the challenged claims "are inadequately substantiated under FDA guidelines; the plaintiff must also show that the claims are literally false or misleading to the public." Sandoz, 902 F.2d at 224, 229 (FDCA serves a different purpose and applies different standards to advertising and promotion than the Lanham Act); J & J-Merck, 19 F.3d at 130; AstraZeneca, 444 F.Supp.2d at 295. As Bracco's FDA expert, Mr. Pines, admitted, the FDA requires at least two adequate and well-controlled studies comparing the same two products for a superiority claim, and thus imposes a more stringent standard than that applicable under the Lanham Act. (14 T 216:10-217:2, 218:12-220:3; 15 T 43:1-7). However, in this case, Bracco has not relied solely on the FDA, but has put forth other arguments in support of a finding that GEH disseminated false messages in its advertising. 1. The Conclusions of the NEPHRIC Study as Reported in the New England Journal of Medicine To begin, the Court will discuss the relevance of the NEPHRIC study to determine if GEH's claims that "Visipaque is better than all LOCM," "Visipaque may be better than a LOCM," and "Visipaque is as good as or better than a LOCM with prophylactics" are supported by NEPHRIC's conclusions or whether the representations are unsupported by the study conclusions, thus making them literally false. The NEPHRIC study reported in the NEJM, (P2467), only compared Visipaque to Omnipaque, not Visipaque to all LOCM (or Isovue). Bracco avers that, because the NEPHRIC study only compares Omnipaque to Visipaque, GEH's claims that "Visipaque is better than all LOCM" is not a conclusion of the study and that the claim that "Visipaque is better than a LOCM" is only true for Omnipaque, and thus, does not apply to Isovue or any other LOCM since no other LOCM was the subject of the study. Bracco further avers that the NEPHRIC study did not even test the use of a LOCM with prophylactics, and therefore, does not support a claim that Visipaque is as good as or better than a LOCM with prophylactics. *472 The Court agrees with Bracco's reading of the conclusions in the NEPHRIC study. The NEPHRIC study concludes that "[n]ephropathy induced by contrast medium may be less likely to develop in highrisk patients when iodixanol [(an iso-osmolar contrast medium)] is used rather than a low-osmolar, nonionic contrast medium." (P2467). The study concludes that nephropathy may be less likely to occur; this is different from what GEH advertises: that renally, iso-osmolar contrast mediums (the equivalent of saying Visipaque because it is the only iso-osmolar CM on the market) are better than low-osmolar, nonionic contrast mediums in high risk patients. Isovue is a lowosmolar, nonionic contrast medium, as is Omnipaque, the one tested in the NEPHRIC study, and Visipaque is an iso-osmolar contrast medium, which was the CM actually tested in the study. Therefore, the Court finds that based on the conclusions of the NEPHRIC study there is no support for GEH to represent that "Visipaque is renally better than all LOCM" and "Visipaque is better than a LOCM," because the NEPHRIC study conclusion only states that Visipaque may be better than a LOCM. Even then, GEH must give context to the statement by including language that identifies which products, by brand name, were actually tested in the study. In addition, the conclusion reached in the NEPHRIC study, i.e., that the Visipaque results "were similar to or better than those in studies that included low-osmolar contrast mediums and [prophylactic pharmacologic regimens]" (P2467:917), is inadequately supported, and thus, the study is unreliable for this claim. Accordingly, GEH's claims of superiority, as set forth above, are determined to be literally false due to unsupported representations and misstated conclusions. 2. The NEPHRIC Study Bracco asserts, in the alternative, that even if GEH's representations are supported by the conclusions of the NEPHRIC study, the study itself was unreliable and is undermined by other scientific studies supporting a determination of literal falsity for GEH's superiority claims. Bracco began its attack on the NEPHRIC study by presenting testimony which it claims establishes that NEPHRIC was not designed to test whether osmolality is responsible for CIN, (20 T 6) and that its conclusions were never repeated in an adequate and well-controlled study.[251] In addition, Bracco also contends that NEPHRIC provided no support for the claim that Visipaque is as good as or better than a LOCM with prophylactics and does not represent the weight of the scientific evidence. (See, e.g., P2467; 3 T 89-90).[252] Dr. Solomon testified, and GEH did not rebut, that Table IV of the NEPHRIC article, which purports to present results from other studies, is inaccurate and misleading because it incorrectly reports the results of the studies. (3 T 126-131; P3148, P37, P2053, P2386, P2390). Bracco states that Table IV is also inaccurate and misleading because it does not report the contradictory results of GEH's internal data, which were not reported in the NEPHRIC study.[253] *473 The Court finds that these contentions do more than "show that the [NEPHRIC Article] supporting the challenged claim [is] unpersuasive." Castrol Inc., 169 F.Supp.2d at 336; see McNeil-P.C.C., 938 F.2d at 1549; Procter & Gamble, 747 F.2d at 119. As stated above, Bracco bears the burden of establishing that the underlying studies upon which GEH's representations are based are "not sufficiently reliable to permit one to conclude with reasonable certainty that they established the claim made." McNeil-P.C.C., 938 F.2d at 1549 (internal quotation omitted). It is not dispositive that the NEPHRIC article misstated certain test criteria from other articles because the relevant inquiry is whether the NEPHRIC study and its test data are sufficiently reliable to support NEPHRIC's conclusions. Here, the Court determines that NEPHRIC is reliable for its conclusion that Visipaque may perform better renally, in high-risk patients, than a LOCM, that LOCM being Omnipaque, but unreliable for the conclusion that Visipaque may or does perform better than LOCM with prophylactics. The NEPHRIC study was a head-to-head study between Omnipaque and Visipaque, albeit not Visipaque and all, or even more than one LOCM, but the study does go through some analysis as to why such results may apply across all LOCM. Therefore, the Court concludes that while GEH cannot rely on NEPHRIC to advertise that Visipaque performs better than all LOCM, it can redistribute the NEPHRIC article as long as it is clear in the advertising that the study was ahead-to-head comparison, using Omnipaque and Visipaque, not any other LOCM or all LOCM. Not surprisingly, the FDA agrees that NEPHRIC cannot support a statement that Visipaque is renally superior to all LOCM. (P1894). As to whether the NEPHRIC article's conclusion, "the use of iodixanol alone may eliminate many of the effects or logistic problems created when prophylactic pharmacologic regimens are used," is unsupported by its results is a more involved inquiry. The NEPHRIC study did not test any LOCM with prophylactics, but the conclusion stops short of stating the proposition that iso-osmolar contrast mediums will be more effective than nonionic low-osmolar contrast mediums with prophylactics in preventing CIN. The article merely *474 states that using iso-osmolar contrast mediums would eliminate some logistical and adverse side effects associated with the use of low-osmolar contrast mediums combined with prophylactics. The NEPHRIC study need not test low-osmolar contrast mediums with prophylactics to demonstrate the tautology that the absence of the prophylactics would cure any logistical or adverse side effects produced by the prophylactics themselves. Nonetheless, because the NEPHRIC study does not actually test LOCM with prophylactics, it is literally false for GEH to state that Visipaque is as good as or better than a LOCM with prophylactics based on the NEPHRIC article. Accordingly, the Court finds that the NEPHRIC article and its accompanying conclusions do not stand for the propositions that (1) Visipaque is better than all LOCM or (2) Visipaque is better than a LOCM with prophylactics. Nonetheless, the Court finds that GEH may state in its advertising that Visipaque may be better renally than a LOCM in high-risk patients only if that same printed advertising plainly and conspicuously reveals that NEPHRIC was a head-to-head study between Visipaque and Omnipaque and that the conclusion of NEPHRIC is limited to the tested product, or when relying on any other study, the actual CM compared; additionally, any sales calls or other oral presentations which discuss the NEPHRIC conclusions or other studies must disclose the actual comparative drugs in the study, and it must be made clear that extrapolation to other LOCM is not established by the study. ii. FDA's Input on the NEPHRIC Study is Persuasive Evidence of its Unreliability For Renal Superiority Claim as to All LOCM The Court finds persuasive that GEH's primary endpoint in the NEPHRIC study, mean peak change, was rejected as a meaningful or reliable measure by the FDA and GEH's Dr. Feldman. (Pl.'s FOF ¶¶ 11, 13). This lends credence to the Court's finding that NEPHRIC cannot reliably support GEH's Visipaque renal superiority claim and thus prevents GEH from using the NEPHRIC article as a reliable means to support its claim of renal superiority over all LOCM. See, e.g., Abbott Lab. v. Mead Johnson & Co., No. 91-202, 1991 U.S. Dist. LEXIS 21010, at *105 (S.D.Ind., Oct. 10, 1991) (rejection of study data as not clinically meaningful); Quaker State, 977 F.2d at 64 (holding that a claim of superiority was false when defendants' tests were shown to not be sufficiently reliable and that the same test does not apply to plaintiff's evidence to rebut the claim); Smithkline Beecham, 906 F.Supp. at 182-83; S.C. Johnson & Son v. Clorox Co., 930 F. Supp. 753, 780 (E.D.N.Y.1996) (In making this determination, a fact-finder "should consider all relevant circumstances, including the state of the testing art, the existence and feasibility of superior procedures, the objectivity and skill of the persons conducting the tests, the accuracy of their reports, and the results of other pertinent tests"). Furthermore, Bracco asserts that the FDA's explicit rejection of GEH's claims and the NEPHRIC study as reliable (on at least two occasions), is highly persuasive evidence entitled to significant deference regarding the falsity of GEH's claims. See, e.g., Zeneca, 1999 WL 509471, at *3; Rhone-Poulenc Rorer Pharms. v. Marion Merrell Dow, No. 93-0144, 1994 U.S.Dist. LEXIS 20782, at *13 (W.D.Mo. Sept. 30, 1994), aff'd in part, rev'd in part on other grounds, 93 F.3d 511 (8th Cir.1996). (See Pl.'s COL ¶ 12). In Zeneca, the court extensively commented on the significance of a published peer reviewed article accompanied by expert testimony as to the validity *475 of its conclusions. 1999 WL 509471, at *27-30. There, the court determined that when the FDA did not approve of the claim asserted in a peer reviewed article that the underlying article did not constitute a reliable means for disseminating those claims through advertising. Id. Here, the Court finds that the FDA's rejection of the claim that Visipaque performs better renally than all LOCM is persuasive in determining whether false advertising has occurred. While the FDA's determination of reliability and actionable conduct is different than that promulgated under the Lanham Act, it is compelling evidence that the underlying article cannot support a claim that Visipaque performs better renally than all LOCM. 3. GEH's Renal, Cardiovascular, Discomfort-type and Class and Cost Claims for Visipaque and Omnipaque Are Literally False Because GEH's Ads Omit Critical Information That Goes Toward Limitations of its Overly Broad Claims Moreover, Bracco contends that GEH's renal, cardiovascular, discomfort-type and class and cost claims for Visipaque and Omnipaque all omit critical test results and data that demonstrate limitations of the data. (Pl.'s FOF ¶¶ 10-17, 23-39). Bracco asserts that because such claims are based on selective and unreliable data, while ignoring relevant, contradictory data, they are literally false establishment claims. See, e.g., SmithKline Beecham Consumer Healthcare v. Johnson & Johnson-Merck Consumer Pharma., No. 01-2775, 2001 WL 588846, at *13 (S.D.N.Y. June 1, 2001); E.R. Squibb & Sons Inc. v. Stuart Pharm., No. 90-1178, 1990 WL 159909, at *18 (D.N.J. Oct.16, 1990) (finding material omission in selective reporting of study's results regarding competitor medication rendered ad literally false); Philip Morris v. Loew's Theatres, 511 F. Supp. 855, 856-57 (S.D.N.Y. 1980) (holding that incomplete citation to study data to make own product appear superior rendered advertisement false on its face). In this Opinion, the Court has found that there is limited or no support for certain of GEH's non-renal claims that (a) Visipaque causes lower incidence of MACE than LOCM; (b) Visipaque causes less discomfort (i.e., claiming less pain, warmth, discomfort or patient movement or designed for such) than LOCM; and (c) Visipaque performs better than LOCM because of lower osmosality and associated costs. With regard to cardiovascular superiority, the Court concludes that there is sufficient support in the VICC trial to support the claim that Visipaque causes less MACE than Isovue for patients undergoing PCI within the initial 48 hours after the procedure, however there is insufficient support in the proffered studies to make a claim that Visipaque has superior hemodynamic effects over LOCM. As to discomfort, the Court finds that GEH's claims of Visipaque comfort superiority to LOCM are supported, but only as to peripheral angiography procedures, and thus, GEH's broad assertions of superior patient comfort are not supported by the conclusions of the various studies it uses to bolster them; any such advertising must be limited to the procedures and circumstances that were used in the studies. Finally, as to a cost superiority claim, the only support for such a claim is to associate the cost of treating additional instances of MACE and CIN to higher overall cost; since the Court has not made such a finding with regard to CIN, the only viable means of advertising lower cost is through less incidence of MACE in the circumstances defined herein. *476 d. Implied Falsity Bracco contends, in the alternative, that even if the Court determines that GEH's representations regarding the renal and non-renal superiority of Visipaque are literally true that the representations are still false by implication (e.g., "Visipaque is better than a LOCM", which implies that it is better than Isovue). "Where a plaintiff cannot show that a claim is literally false under the Lanham Act, it must show that the advertisement conveyed an impliedly false message that was misleading to consumers." AstraZeneca, 444 F.Supp.2d at 295 (citing Johnson & Johnson-Merck Consumer Pharma, Co. v. Rhone-Poulenc Rorer Pharma., Inc., 19 F.3d 125, 129 (3d Cir.1994)). The Third Circuit has held an "impliedly false message" cannot be proved without considering proof of customer reaction. In Sandoz, the Third Circuit stated that where the advertisements are not literally false, see PPX Enterprises v. Audiofidelity Enterprises, 818 F.2d 266, 272 (2d Cir.1987), plaintiff bears the burden of proving actual deception by a preponderance of the evidence. Hence, it cannot obtain relief by arguing how consumers could react; it must show how consumers actually do react. Sandoz, 902 F.2d at 229-30; see, e.g., Novartis, 290 F.3d at 586-87; AstraZeneca, 444 F.Supp.2d at 295; see also Merck Consumers Pharms, 960 F.2d at 297 ("It is not for the judge to determine, based solely upon his or her own intuitive reaction, whether the advertisement is deceptive... [since] the question in such cases is what does the person to whom the advertisement is addressed find to be the message?"). Moreover, context is highly important in discerning the message conveyed, particularly when "the target of the advertising is not the consuming public but a more well informed and sophisticated audience." Sandoz, 902 F.2d at 229. Doctors are sophisticated, knowledgeable consumers who are not easily misled; in contrast to literal falsity claims, in implied falsity claims, this factor must be taken into account for the Court's analysis of whether the message was impliedly false or misleading to the target audience. See, e.g., Id. at 229-30. Likewise, committee members responsible for purchasing decisions who have knowledge of, and experience with, the advertised products are not likely to be deceived. See, e.g., Labware v. Thermo Labsystems, No. 04-2545, 2005 WL 1541028, at *10-11, 2005 U.S. Dist. LEXIS 12993, at *30-32 (E.D.Pa. June 28, 2005). In addition, even if the claims were not literally false, Bracco alleges that they are still misleading, as shown by: (a) the Rappeport survey; Merisant Co. v. McNeil Nutritionals, LLC, 515 F. Supp. 2d 509, 526 (E.D.Pa.2007) (15-20% deception is enough); see also Stiffel Co., 658 F.Supp. at 1114; or (b) GEH's willfulness and intent to deceive (see, e.g., McNeil-P.P.C., Inc. v. Pfizer, Inc., 351 F. Supp. 2d 226, 249 (S.D.N.Y.2005)). However, in this case, the Court has excluded Rappeport's survey for unreliability and determines that there is no willful conduct; consequently, without survey evidence this Court cannot find that GEH's renal and non-renal claims were impliedly false. Nevertheless, since the Court has already found that certain of GEH's claims are literally false, Bracco need not show customer deception for those specific claims.[254] *477 4. Actual Deception or at Least a Tendency to Deceive a Substantial Portion of the Intended Audience a. Presumption of Deception Many courts, including the Third Circuit, impose a rebuttable presumption of customer deception when there is a finding of literal false advertising. See, e.g., Castrol, 987 F.2d at 943 (confirming that in the Third Circuit, where the advertisement is shown to be literally false, the court may enjoin it without reference to its impact on the consumer); Cashmere & Camel Hair Manuf. Institute v. Saks Fifth Ave., 284 F.3d 302, 314-16 (1st Cir.2002) ("it has become the practice of most circuits to apply the [customer deception] presumption to all literal falsity claims"); PPX Enters., 818 F.2d at 272-273; EFCO Corp. v. Symons Corp., 219 F.3d 734, 740 (8th Cir.2000); Solvay Pharm. Inc. v. Global Pharm. Inc., 419 F. Supp. 2d 1133, 1144-45 (D.Minn.2006); Iams Co. v. Nutro Prods. Inc., No. 00-566, 2004 U.S. Dist. LEXIS 15134, at *13-14 (S.D.Ohio July 3, 2004). In addition, courts will also presume customer deception where defendant's misconduct is willful and egregious. See, e.g., Cashmere, 284 F.3d at 316; Columbus Rose Ltd. v. New Millennium Press, No. 02-2634, 2002 WL 1033560, *7 (S.D.N.Y. May 20, 2002). b. Dissemination of Allegedly False Message to Substantial Portion of the Intended Audience GEH's sales call records are admissible as business records, as GEH has agreed, and are highly probative of what GEH's sales representatives communicated. While some of the records are fragments of communications, based on their content, the records show that the sales representatives disseminated both false renal and non-renal claims. Bracco relies on Mr. Russell's expert testimony that at least 87% of GEH representatives documented delivery of false and/or misleading messages and at least 82.5% of substantive calls overall are "on message." As discussed supra, the Court found these percentages to be grossly inflated. Nonetheless, GEH did disseminate false renal and non-renal messages to the market. Customers were exposed to the claims through various channels (e.g., sales representatives, meetings, CME's, press releases, and websites). The claims from the different *478 sources, when examined as part of the entire campaign, further demonstrate that GEH had a widespread campaign to promote Visipaque, with some of the ads containing false claims. See, e.g., McNeil-P.C.C., 938 F.2d at 1546. Therefore, the evidence of GEH's sales and marketing efforts demonstrates that GEH management used market research and experience to craft the claims that would have the most impact on customers (Pl.'s FOF ¶ 4), told the sales representatives to disseminate the claims (Pl.'s FOF ¶ 5), the sales representatives disseminated the claims, as recorded in print ads, sales call records, emails and other records (Pl.'s FOF ¶¶ 6-9,18-22), and that some of these claims were false. GEH's print media and CME-type presentations also disseminated its false claims. 5. The Accused Materials Were Material in That They Were Likely to Influence Purchasing Decisions Bracco maintains that there is overwhelming evidence (e.g., Pl.'s FOF ¶ 42), that GEH's false and misleading claims of superior safety are material to customers. "The materiality inquiry `focuses on whether the false or misleading statement is likely to make a difference to purchasers.'" Labware v. Thermo Labsystems, Inc., No. 04-2545, 2005 WL 1541028, at *10-12, 2005 U.S. Dist. LEXIS 12993, at *31-35 (E.D.Pa. Jun. 28, 2005) (quoting Cashmere, 284 F.3d at 312 n. 10) (citing J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 27:35 (4th ed.2001)). "Once it is determined that a statement is false, it is presumed to be material." Telebrands Corp. v. E. Mishan & Sons, No. 97-1414, 1997 WL 232595, at *22 (S.D.N.Y. May 7, 1997). The type of evidence needed to prove materiality ... varies depending on what type of recovery the plaintiff seeks. Plaintiffs looking to recover monetary damages for false or misleading advertising that is not literally false must prove actual deception. See Balance Dynamics Corp. v. Schmitt Ind., 204 F.3d 683, 690 (6th Cir.2000); [Resource Developers, Inc., v. Statue of Liberty-Ellis Island Foundation, Inc., 926 F.2d 134, 139 (2d Cir.1991)]. Plaintiffs attempting to prove actual deception have to produce evidence of actual consumer reaction to the challenged advertising or surveys showing that a substantial number of consumers were actually misled by the advertisements. See, e.g., PPX Enters., Inc. v. Audiofidelity Enters., Inc., 818 F.2d 266, 271 (2d Cir.1987) ("Actual consumer confusion often is demonstrated through the use of direct evidence, e.g., testimony from members of the buying public, as well as through circumstantial evidence, e.g., consumer surveys or consumer reaction tests.") .... Plaintiffs seeking injunctive relief must prove that defendant's representations "have a tendency to deceive consumers." Balance Dynamics, 204 F.3d 683 at 690; see also Resource Developers, 926 F.2d at 139; Blue Dane Simmental Corp. v. American Simmental Assoc., 178 F.3d 1035, 1042-43 (8th Cir.1999); Black Hills Jewelry Mfg. Co. v. Gold Rush, Inc., 633 F.2d 746, 753 (8th Cir.1980); 4 McCarthy on Trademark and Unfair Competition § 27:36 (4th ed.) Pizza Hut, Inc. v. Papa John's Int'l, Inc., 227 F.3d 489, 497 (5th Cir.2000). In this case, as discussed supra, the Court finds that GEH disseminated literally false statements, and GEH has not provided a sufficient defense to rebut a finding of deception or materiality. Thus, given these findings, it is not necessary to inquire into the impact on the customer; the *479 Court finds that GEH's representations to the public were material. Bracco, in addition to seeking injunctive relief, seeks monetary damages; however, the Court notes that although the presumption of materiality, as it applies when there is a finding of literal falsity, is highly relevant to injunctive relief, the Court needs to make additional findings before imposing an award of damages, which will be discussed below. 6. Injunctive Relief Under the Lanham Act, an injunction is a "usual and standard remedy" and "the common historical practice has been that a prevailing plaintiff in a case of ... false advertising will ordinarily receive injunctive relief of some kind." 5 J. Thomas McCarthy, Trademarks & Unfair Competition § 30:1 (4th ed.2006); Lermer Germany GmbH v. Lermer Corp., 94 F.3d 1575, 1577 (Fed.Cir.1996). In deciding whether to grant a permanent injunction, the district court must consider whether: (1) the moving party has shown actual success on the merits; (2) the moving party will be irreparably injured by the denial of injunctive relief; (3) the granting of the permanent injunction will result in even greater harm to the defendant; and (4) the injunction would be in the public interest. Gucci America, Inc. v. Daffy's Inc., 354 F.3d 228, 236-37 (3d Cir.2003) (quoting Shields v. Zuccarini, 254 F.3d 476, 482 (3d Cir.2001)). Trademark case law applies to the remedies sought in this action: Congress amended the Lanham Act to expressly make all trademark remedies available in false advertising cases, (Pub.L. No. 100-667, tit. I § 132, 202 Stat. 3935), and numerous courts have since applied trademark precedent to false advertising damages claims. See, e.g., Callaway Golf Co. v. Slazenger, 384 F. Supp. 2d 735, 740-41 (D.Del.2005); Castrol, Inc., 169 F.Supp.2d at 344. Here, the Court is the fact-finder, and has found that GEH's conduct is in violation of the Lanham Act; accordingly, Bracco has demonstrated actual success of the merits and in turn, irreparable injury. (Pl.'s FOF ¶ 88); Citizens Fin. Group, 383 F.3d at 125 (trademark infringement amounts to irreparable injury as a matter of law). With respect to the third factor, the Court has fashioned a remedy that permits GEH to use advertisements that market Visipaque in a manner that does not run afoul of the Lanham Act. Finally, it is well within the public interest for this Court to enjoin GEH from disseminating false messages regarding Visipaque. Abbott, 971 F.2d at 19. Accordingly, Bracco is entitled to the appropriate injunctive relief as set forth in this Opinion (i.e.—how GEH can advertise its renal and non-renal claims in the future without being exposed to Lanham Act liability and what types of statements would constitute false advertising). Also, as far as corrective action, the Court orders the following: GEH to issue a press release, including on its website, regarding this Court's decision and the placement of corrective ads. Corrective advertising is appropriate when, as here, a defendant is making false claims about its product that bear on the public health. See, e.g., Abbott, 971 F.2d at 19 (citing Wojnarowicz v. American Family Ass'n, 745 F. Supp. 130, 141 (S.D.N.Y. 1990)); Johnson & Johnson Vision Care, Inc. v. Ciba Vision Corp., 348 F. Supp. 2d 165, 185 (S.D.N.Y.2004). The Court also orders GEH to re-train its sales and marketing personnel in accordance with this opinion. See Zeneca, 1999 WL 509471, at *42 ("The Court hereby orders defendant Eli Lilly to design and implement a training program ..."); Pfizer, Inc. v. Miles, *480 Inc., 868 F.Supp. at 461; Marion Merrell Dow, 93 F.3d at 516. The Court also orders that to the extent that there is any dispute between Bracco and GEH arising from GEH's future advertising that may run afoul of this Court's Opinion, those disputes shall be submitted to a neutral panel or individual of the parties' choice, such as the National Advertising Division ("NAD"), a division of the Council of Better Business Bureau, for resolution.[255] In that connection, GEH shall bear the costs associated with submitting these disputes, if the ads are found to be false. However, in the event that the panel or individual finds that the advertisements are not false, Bracco shall be responsible for the costs. 7. Damages under the Lanham Act Having already determined that an injunction is appropriate in this case, the Court next decides whether monetary damages should be awarded; § 35(a) of the Lanham Act provides that the plaintiff shall be entitled to recover damages in an action subject to the principles of equity, [including] (1) defendant's profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action. The court shall assess such profits and damages or cause the same to be assessed under its direction. In assessing profits the plaintiff shall be required to prove defendant's sales only; defendant must prove all elements of cost or deduction claimed. In assessing damages the court may enter judgment, according to the circumstances of the case, for any sum above the amount found as actual damages, not exceeding three times such amount. If the court shall find that the amount of the recovery based on profits is either inadequate or excessive the court may in its discretion enter judgment for such sum as the court shall find to be just, according to the circumstances of the case. Such sum in either of the above circumstances shall constitute compensation and not a penalty. The court in exceptional cases may award reasonable attorney fees to the prevailing party. 15 U.S.C. § 1117(a). District courts have broad discretion to fashion monetary relief under § 35(a). See, e.g., Banjo Buddies, Inc. v. Renosky, 399 F.3d 168, 176 (3d Cir.2005); Gilson § 14.03[2]; see also Calmann § 23:56. In Lanham Act cases, the causation standard for an award of damages is higher than the general standard for injunctive relief: [C]ases involving injunctive relief and those seeking monetary damages under the Lanham Act have different standards of proof. A plaintiff suing to enjoin conduct that violates the Lanham Act need not prove specific damage. In contrast, courts require a heightened level of proof of injury in order to recover money damages. Porous Media Corp. v. Pall Corp., 110 F.3d 1329, 1335 (8th Cir.1997); see also Parkway Baking v. Freihofer Baking, 255 F.2d 641, 648-49 (3d Cir.1958). Thus, a plaintiff seeking monetary rather than injunctive relief must show "actual damages rather than a mere tendency to be damaged." *481 Synygy v. Scott-Levin, 51 F. Supp. 2d 570, 575 (E.D.Pa.1999). Moreover, a plaintiff seeking monetary damages must show more than a mere presumption of actual customer confusion based on a finding of literal falsity. See Societe Civile Succession Richard Guino v. Beseder Inc., No. 03-1310, 2007 WL 3238703, at *6-7, 2007 U.S. Dist. LEXIS 83782, at *19-20 (D.Ariz. Oct. 31, 2007) ("While a finding of literal falsity does support a presumption of actual confusion among consumers, this presumption does not somehow demonstrate that [the Lanham Act plaintiff] was damaged by such confusion in this case."); see also Porous Media, 110 F.3d at 1335-36 ("A plaintiff suing to enjoin conduct that violates the Lanham Act need not prove specific damage ... [however] [i]n contrast, courts require a heightened level of proof of injury in order to recover money damages"). The plaintiff must link the deception with actual harm to its business. Id. "Actual damages cannot exist without a nexus between a false advertisement and an adverse purchasing decision." Labware, 2005 WL 1541028 at *12, 2005 U.S. Dist. LEXIS 12993 at 36 (citing Synygy, 51 F.Supp.2d at 577 and IQ Prods., 305 F.3d at 376). An advertisement or promotion is harmful if there is a likelihood of injury to the plaintiff in the form of declining sales, loss of good will, and the like. Warner-Lambert, 204 F.3d at 91-92; see, e.g., U.S. Healthcare Inc., 898 F.2d at 922-23; Warner-Lambert Co., 204 F.3d at 92; GlaxoSmithKline, 197 Fed.Appx. at 123. For example, a "predicate finding of intentional [or willful] deception, as a major part of the defendant's marketing efforts, contained in comparative advertising[;]" will justify a rebuttable presumption of causation and injury in fact. Porous Media, 110 F.3d at 1335-36; see, e.g., Balance Dynamics, 204 F.3d at 694-95 (applying Porous Media but finding presumption rebutted); HipSaver Co. v. J.T. Posey Co., 497 F. Supp. 2d 96, 106 (D.Mass.2007) (holding that weight of First Circuit authority supported rebuttable presumption of causation and injury for willful, literally false comparative advertising in two-player market); Ott A.G. v. Target Corp., 153 F. Supp. 2d 1055, 1073-74 (D.Minn.2001) (recognizing presumption of causation and injury for comparative, deliberately deceptive advertising); see also McCarthy § 30:63, § 27:42 ("courts in some situations will make a monetary award in the absence of direct proof of actual confusion where defendant is a willful infringer.... [W]here confusion of customers was intended by defendant, actual confusion will be presumed to have occurred, and the burden is on defendant to prove otherwise"); Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1146 (9th Cir. 1997) ("inability to show actual damages does not alone preclude a [monetary] recovery"). Other courts have noted that, in limited circumstances, literally false advertising, by raising a presumption of consumer deception, may support a finding of a causal nexus between defendant's misconduct and plaintiff's injuries. See, e.g., EFCO Corp. v. Symons Corp., 219 F.3d 734, 740 (8th Cir.2000) (literal falsity of ads, plaintiff's lost revenues coupled with defendant's increased revenues, and plaintiff's loss of clients was "sufficient causal nexus"); Cashmere, 284 F.3d at 319 (finding causal link based on literal falsity and the "common sense" inference that "sale of cashmere-blend coats which overstated their cashmere content could cause a loss of sales of cashmere-blend coats which correctly state their cashmere content"); Iams Co., 2004 U.S. Dist. LEXIS 15134 at *13-14 (where advertising is literally false and comparative and "competitor's products are specifically targeted, a plaintiff is *482 also entitled to a presumption of money damages"); Gilson, § 14.03[3][b] ("in advertising cases, courts are willing to grant monetary relief absent evidence of actual deception based on widely accepted presumptions."). However, case law makes clear that "literal falsity, without more, is insufficient to support an award of money damages to compensate for marketplace injury." Balance Dynamics, 204 F.3d at 694-95; BASF Corp. v. Old World Trading Co., 41 F.3d at 1085-88 (finding literal falsity but requiring further proof of marketplace damages); Castrol, 987 F.2d at 941-43(affirming trial court decision granting injunctive relief but denying monetary damages despite finding of literal falsity). Societe Civile, 2007 WL 3238703 at *6-7, 2007 U.S. Dist. LEXIS 83782 at *19-20 ("While a finding of literal falsity does support a presumption of actual confusion among consumers, this presumption does not somehow demonstrate that [the Lanham Act plaintiff] was damaged by such confusion in this case"). Accordingly, in order for the Court to grant monetary relief, it must find either (1) that GEH engaged in willful conduct; or (2) that GEH's false advertising, while not willful, was a material factor in causing Bracco's lost profits. (Pl.'s FOF ¶¶ 43-82, 84, 95, n. 97.) These are the inquires to which the Court shall turn. a. Willfulness Bracco must first establish willfulness before entitlement to a presumption of causation and harm. See Castrol Inc., 169 F.Supp.2d at 341.[256] *483 In the context of a false advertising claim under the Lanham Act, "`willfulness' and `bad faith' require a connection between a defendant's awareness of its competitors and its actions at those competitors' expense." ALPO Petfoods, Inc. v. Ralston Purina Co., 913 F.2d 958, 966 (D.C.Cir.1990). "Voluntary, knowing and intentional misconduct" is considered an indicator of willfulness. See Castrol Inc., 169 F.Supp.2d at 341. Callaway, 384 F.Supp.2d at 742. Recently, the Supreme Court in Safeco Ins. Co. of America v. Charles Burr, 551 U.S. 47, 127 S. Ct. 2201, 167 L. Ed. 2d 1045 (2007), held that: "[W]illfully is a word of many meanings whose construction is often dependent on the context in which it appears, and where willfulness is a statutory condition of civil liability, we have generally taken it to cover not only knowing violations of a standard, but reckless ones as well." Id. at 2208 (citations and quotations omitted) (emphasis added). The Supreme Court also found that: "[T]he term recklessness is not self-defining, [but] the common law has generally understood it in the sphere of civil liability as conduct violating an objective standard: action entailing an unjustifiably high risk of harm that is either known or so obvious that it should be known." Id. at 2215 (citations and quotations omitted). While Safeco's holding is not in the context of false advertising, the court in Lorillard Tobacco Co. v. Yazan's Serv. Plaza, Inc., No. 05-70804, 2007 WL 1834714, at *4-5, 2007 U.S. Dist. LEXIS 45612, at *14-15 (E.D.Mich. Jun. 25, 2007), applied Safeco's definition of reckless conduct to find willfulness. The Court finds Lorillard's reasoning sound and persuasive, particularly in light of the Supreme Court's guidance. As such, a finding of recklessness, or voluntary and intentional conduct will suffice to demonstrate wilfulness. In this case, Bracco implores the Court to find that GEH's commission of false advertising (Pl.'s FOF ¶¶ 83-87) is willful, thus creating a rebuttable presumption of causation and harm. Albeit the Court finds that some accused claims were false or misleading, the Court does not find that GEH's actions rise to the level of willfulness. Particularly, in Callaway, cited by Bracco, the court found willful conduct when the defendant continued to disseminate ads with claims of superiority of its golf ball product line over all other competitor golf ball product lines on tour, when its own tests showed that a competitor's golf ball product line on tour was superior. 384 F. Supp. 2d at 742. However, in this case, there are studies and knowledgeable and credible experts supporting the challenged statements, as well as legitimate questions regarding the validity of the studies relied upon by Bracco. See Castrol Inc. v. Pennzoil Inc., 799 F. Supp. 424, 441 (D.N.J.1992) (where the court rejected the defendant's expert testimony as unconvincing, nonetheless it found that it was a worthy effort which dispelled any judicial consideration of bad faith, malice, fraud, or willfulness). Also convincing is GEH's reliance on its inter-department approval process for promotional materials. Specifically, as discussed supra p. 427, GEH identified four levels of internal mechanisms that reviewed prospective promotional materials to ensure consistency with clinical data. Although this Court finds some of the messages approved by this process are literally false, the fact that these materials were subject to extensive review militates against a finding of willfulness. Indeed, Mr. Scott Kerachsky, Director of Marketing for GEH Healthcare, testified that when reviewing prospective promotional materials with respect to NEPHRIC from the marketing department's prospective, he considered possible issues with the *484 FDA and clarified wording of the materials in light of the clinical conclusions in NEPHRIC. Bracco does not contest the validity of this approval process, i.e. there is no allegation that the process is a sham. Such a detailed process tends to show that GEH was not reckless or careless in its approval of the offending messages. Thus, the Court finds GEH's internal review process of the promotional materials probative in finding that GEH's conduct was not willful. In addition, in contrast to the clearly willful conduct in Callaway, here there were no studies that adequately and reliably demonstrated a LOCM's superiority over Visipaque. Rather, there were studies supporting a particular claim of Visipaque superiority over at least a LOCM (e.g.—Omnipaque, Hexabrix, and in VICC, Isovue). Simply put, Bracco has failed to present sufficient evidence to prove that GEH's actions were willful. As such, the Court has no basis to find that GEH knowingly or willfully disseminated false or misleading information. In finding that GEH's conduct was not willful, the Court notes that Bracco may still be entitled to disgorgement of GEH's profits if it can satisfy the other five factors set forth in Banjo Buddies. For disgorgement of profits, a plaintiff has the burden of proving that such a remedy is warranted. Castrol Inc., 169 F.Supp.2d at 341 n. 8; CollegeNET, Inc. v. XAP Corp., 483 F. Supp. 2d 1058, 1061 (D.Or. 2007). Disgorgement may be awarded based on three distinct rationales: (1) deterrence; (2) unjust enrichment; and (3) compensation for actual damages. Banjo Buddies, Inc., 399 F.3d at 177-178. The plaintiff bears the burden of showing that the sales for which it seeks disgorgement occurred because of the alleged false advertising. See Gucci, 354 F.3d at 242 n. 15; Castrol Inc., 169 F.Supp.2d at 343 ("Surely, Castrol must demonstrate with reasonable certainty the portion of Pennzoil's profits attributable to the willful and intentional false advertising before the Court can order disgorgement."); Logan v. Burgers Ozark Country Cured Hams, 263 F.3d 447, 464-65 (5th Cir.2001); Balance Dynamics, 204 F.3d at 695. The Third Circuit weighs five non-exclusive factors in determining a Lanham Act plaintiff's entitlement to disgorgement: "(1) whether the defendant had the intent to confuse or deceive; (2) whether sales have been diverted; (3) the adequacy of other remedies (such as injunctive relief or compensatory damages); (4) any unreasonable delay by the plaintiff in asserting its rights; and (5) the public interest in making the misconduct unprofitable."[257]Banjo Buddies, 399 F.3d at 175; Merisant, 515 F.Supp.2d at 529 (applying Banjo Buddies in the false advertising context). The plaintiff is not required to prove all factors; rather, they are weighed to determine whether the balance tips in favor of disgorgement. Pebble Beach Co. v. Tour 18 I, 155 F.3d 526, 554 (5th Cir. 1998). In weighing Banjo Buddies' five relevant factors for determining whether disgorgement is appropriate, the Court here finds an award of disgorgement inequitable. First, GEH's actions were not willful or deliberate-the creation of confusion and deception among customers due to GEH's advertising campaign was based on scientific studies and articles that had limited applicability, and furthermore, no scientific studies have explicitly found the *485 converse of GEH's advertisements.[258] (see Pl.'s FOF ¶¶ 42, 83-87). This finding strongly militates against an award of profits. See Banjo Buddies, 399 F.3d at 175 As to the second factor, the Court finds that sales were not diverted from Bracco to GEH as a result of GEH's false advertising. See supra, pp. 425-37. Indeed, the evidence does not show that certain sales and awards of GPOs, including Consorta, Novation, and Kaiser, caused profits that resulted from GEH's false advertising. See Id. Rather, the totality of evidence tends to show that the GPO contracts were not awarded as a result of false advertising, but for other reasons, including, but not limited to, client satisfaction with GEH's products, longstanding business relationships with GEH, dissatisfaction with certain of Bracco's productline (ProHance), Bracco's pricing and approach to the bid process, and Visipaque's distinction as an innovative product. As to the third factor, the Court concludes that other remedies, i.e., injunctive relief and compensatory damages for past and future advertising costs on Bracco's behalf to clarify the advertising claims, are adequate and can make the Plaintiff in this case whole without the exceptional remedy of disgorgement. Fourth, Bracco did not delay in asserting its rights; it responded to GEH's 2003 campaign immediately by contacting GEH and the FDA, and filed suit soon thereafter (December 2003). Finally, while strong public policies exist to make false advertising unprofitable, deter false statements about drug safety, encourage disclosure of drug safety data, and deter inflated drug prices based on false clinical claims, in this case, the Court finds that deterrence alone is not a supportable rationale for disgorgement, especially in light of the fact that GEH's violative conduct is not willful. See Tamko Roofing, 282 F.3d at 38 ("In cases of at least some direct competition and willfulness, some role may exist for deterrence in an award of an accounting of profits").[259][260][261] Although *486 there may be some deterrence value for GEH and the general marketplace, the Court finds that it is insufficient, when weighing all the other factors, to merit disgorgement. b. Bracco's Lost Profits on the GPO Contracts Absent a presumption of causation, under § 35(a)(2) Bracco is entitled to damages for its lost profits only if it shows that GEH's misconduct was a material factor (also called a "substantial" factor) in Bracco's losses. "In order to prove causation under ... the Lanham Act, the aggrieved party must demonstrate that the false advertisement actually harmed its business." Cashmere, 284 F.3d at 318; see Xoom, Inc. v. Imageline, Inc., 323 F.3d 279, 286 (4th Cir.2003). Numerous courts have applied the material factor test in the false advertising context. See, e.g., Seven-Up, 86 F.3d at 1387 n. 12("it is [] necessary that plaintiff demonstrate that defendant's illegal conduct was a substantial cause of injury to plaintiff's business") (quoting American Rockwool, Inc. v. Owens-Corning Fiberglas Corp., 640 F. Supp. 1411, 1444 (E.D.N.C.1986)) (emphasis added); Peerless Heater Co. v. Mestek, Inc., No. 98-6532, 2000 WL 637082, at *4, 2000 U.S. Dist. LEXIS 6664, at *11 (E.D.Pa. May 12, 2000) ("To satisfy this causation requirement, the plaintiff must prove that the defendants' activities were a material cause of the injury.") (emphasis added); U-Haul Int'l, Inc. v. Jartran, Inc., 601 F. Supp. 1140, 1150 (D.Ariz.1984); see also R.C. Bigelow, Inc. v. Liberty Mut. Ins. Co., 287 F.3d 242, 248 (2d Cir.2002); Dan B. Dobbs, The Law of Torts § 171 at 415 (2000); Prosser & Keeton on The Law of Torts § 41, at 266 (5th ed.1984); Restatement (Second) of Torts §§ 432, 433B (1977). The Third Circuit has also addressed the analogous issue of whether an "advertising injury" was "caused" by an insured's alleged false advertising: Courts that reason that the injury could have taken place without the advertising... are misstating the relevant tort liability principles, which ask whether the advertising did in fact contribute materially to the injury. Travelers, 193 F.3d at 751 n. 8 (the court addressed the causation issue at length to resolve "much confusion in the caselaw") (emphasis added). One way for a plaintiff to prove causation for damages under § 35(a)(2) is to show diversion of customers. Resorts Intern., Inc. v. Greate Bay Hotel and Casino, Inc., 830 F. Supp. 826, 838 (D.N.J. 1992). This "does not place upon the plaintiff a burden of proving detailed individualization of loss of sales" but only "a showing of some customer reliance on the false advertisement." Id.; see also McCarthy § 27:42 (proof of causation through diverted sales requires only "evidentiary showing of some diverted sales from which more can reasonably be extrapolated") (citing Parkway Baking, 255 F.2d at 641); 1 Robert L. Dunn, Recovery of Damages For Lost Profits § 1.8 (1998) ("Proof of the fact of damages in a lost profits case means proof that there would have been some profits"); Zenith Radio Corp. v. Hazeltine Research, 395 U.S. 100, 89 S. Ct. 1562, 23 L. Ed. 2d 129 (1969) (in analogous case of proving causation for antitrust damages, court requires only *487 proof of some damage flowing from violation of the Clayton Act). Diversion of sales can be proven either through direct or circumstantial evidence. See EFCO, 219 F.3d at 740; BASF, 41 F.3d at 1093-94 (where the court used evidence presented to come up with its own market share analysis of lost damages). Circumstantial evidence may include "consumer surveys, market analysis, or the nature of the defendants' misconduct." Restatement (Third) of Unfair Competition § 36 comments h and i. Although circumstantial evidence illustrating sales trends may suffice in some cases, where "many potential intervening factors can affect the plaintiff's sales, and the presence of such factors bears on the sufficiency of the plaintiff's proof," a sales trend approach will be insufficient to demonstrate causation Id. comment i ("proof of a general decline in sales or a disruption of anticipated business growth following the defendants' misconduct can be sufficient in some cases to justify an inference of causation"). Furthermore, some courts have implied that proof of a sales decline while in direct competition with a defendant may be enough to show causation where the defendant failed to introduce sufficient evidence tending to show other causes for the sales decline. Brunswick v. Spinit Reel, 832 F.2d 513, 525 (10th Cir.1987) (after finding actual confusion and direct competition between the two parties' products, the court was satisfied that the damages causation nexus was met where all spin-cast reels sales generally dropped 6% because of the recession, but the plaintiff's particular spin-cast reel dropped 16%); EFCO, 219 F.3d at 740 (finding sufficient causation where plaintiff's decline in revenues and defendant's increase in profits were accompanied by evidence that showed plaintiff's lost clients sought out defendant's product). Bracco first asserts that a causal link also can be shown by a "commonsense" inference that the false statements at issue would damage plaintiff's sales. For example, the First Circuit approved a "district court's commonsense inference that the sale of cashmere-blend coats which overstated their cashmere content could cause a loss of sales of cashmereblend coats which correctly stated their cashmere content." Cashmere, 284 F.3d at 319 (internal punctuation and citation omitted). However, Bracco fails to acknowledge that the First Circuit cautioned that such an inference would be unreasonable if the defendants could demonstrate that "their garment prices would have remained the same even if they had used Packard fabric." Id.; see also Seven-Up, 86 F.3d at 1388. Here, the Court does not find that the evidence gives rise to a commonsense inference; rather, the evidence more convincingly demonstrates that Bracco's loss of sales resulted from a variety of other factors wholly unrelated to GEH's false advertising. See Cashmere, 284 F.3d at 319. Indeed, a commonsense inference in Bracco's favor on the issue of lost profits would be unreasonable given this Court's findings and the evidence presented at trial, which show that GEH's false advertising was not a material or substantial factor in the decision to award the GPO contracts to GEH. Simply put, Bracco has not met its burden of establishing causation. Indeed, the First Circuit's reasoning in Cashmere follows that of the Fifth Circuit's in Seven-Up, which this Court finds compelling. Specifically, the Fifth Circuit held that proof of an adverse purchasing decision which followed in chronology the alleged false advertising does not prove that the adverse purchasing decision was a result of the alleged false advertising. Seven-Up, 86 F.3d at 1388. Much like the case *488 at bar, in Seven-Up, the court reasoned that "inferences of causation based solely on the chronology of events, where the record contains undisputed testimony to the contrary or other equally credible theories of causation," are not reasonable inferences. Id. The court ultimately held that a jury could not make a reasonable inference that a presentation containing false advertising was a substantial cause of the plaintiff's loss of a contract to its competitor where there was no evidence as to which specific false slides were presented to the company's Board or to show that the company board actually relied on the information contained in the presentation, much less anything false or misleading therein, Seven-Up, 86 F.3d at 1388-89, particularly where the CEO and Chairman of the Board testified without contradiction that he did not rely on the presentation. The Court finds Seven-Up apposite. In attempting to prove causation, Bracco has identified several forms of evidence, (emails, expert testimony, and various internal GEH documents), in support of its claim of false advertising. As discussed at length, supra, this Court finds that GEH's false advertising was not a material or substantial factor in the Novation, Consorta, and Kaiser GPO contract awards. Even Bracco's most compelling evidence— emails of conversations with GPO members containing false information and slides presented to GPO members containing false information—does not meet Bracco's burden of showing that it was GEH's false advertising and not the GPOs' independent evaluation of the various scientific studies which caused the loss of the contracts. Although the record shows that Visipaque is considered to be a unique and innovative product throughout the CM industry, this product differentiation does not mean that the view was based on GEH's false advertising; in fact, most of GEH's Visipaque advertising campaign disseminated messages that were not false, and were based on studies that the Court finds to be reliable. In sum, Bracco presented evidence, at best, showing certain false information was presented to GPO members, but it fails to demonstrate the impact of that information on the members, let alone that it was the substantial reason the contracts were awarded to GEH. Furthermore, GEH has proffered countervailing reasons, amply supported by testimony and other evidence at trial, why the GPO contracts were awarded to GEH. See Id. ("We have previously rejected inferences of causation based solely on the chronology of events, where the record contains undisputed testimony to the contrary or other equally credible theories of causation.") (string citation omitted). Importantly, with respect to the Novation contract, the Court has found that the Novation TF likely based its evaluation of GEH's bid on personal experience, feedback from physician colleagues, clinical information and the existing strong positive relationship Novation had with GEH at the time. See supra, p. 428-29. Even Bracco candidly conceded that it was extremely unlikely that Novation would award a contract to another supplier. Id. There are also various reasons why Consorta ultimately awarded the bid to GEH. Notably, Consorta conducted its own clinical trials, which contributed to its decision to award the contract to GEH. In addition, Consorta was not only dissatisfied with the low clinical acceptance of Bracco's MRI product, ProHance, Consorta was also dissuaded by its belief that Bracco acted unethically during the bidding process. See supra, pp. 431-35. The Kaiser contract was also awarded to GEH for similar reasons. Indeed, GEH has held a sole source agreement with Kaiser for the supply of x-ray CM since 1993, and with GEH's competitive pricing and favorable relationship with Kaiser, it is not a surprise that GEH received the bid regardless of its Visipaque *489 campaign. See supra, pp. 435-36. Therefore, the Court finds that the GPOs were not materially impacted by GEH's false advertising. The Court also finds that Bracco has not carried its burden of proving causation for an award of damages under § 35(a)(2) through evidence that GEH's false claims diverted sales from Bracco to GEH or caused GEH to win bids from large accounts (and Bracco to lose bids).[262] As stated above, the relevant inquiry is whether the advertising did in fact contribute materially to the injury. Here, the Court finds that Bracco has not shown that GEH's false advertising was a material factor in both GEH's gains and Bracco's losses. Thus, the Court cannot apply the Account Specific approach to damages, because Bracco has not proved a sufficient causal link between the false messages and the decisions to award the GPO contracts. More importantly, as the Court has found, there were many other factors involved in the bidding process that were credible theories of causation, which influenced the award of GPO contracts to GEH. Likewise, given the substantial number of true messages relating to Visipaque, based on NEPHPJC, VICC and other studies, it is inappropriate to use the Sales Trend Approach since Bracco, through Mr. Malackowski, has failed to adequately distinguish between the impact of the true messages from the false messages.[263] Indeed, given that Bracco and GEH almost exclusively controlled the market in this arena, any losses in Bracco's sales would presumably be GEH's gain. Not surprisingly, Visipaque sales increased after the NEPHRIC study was published. Bracco leaves the Court conjecturing the extent of the sales trend reflecting GEH's false advertising as opposed to the publication of NEHPRIC in the widely respected NEJM, as well as GEH's true messages taken from NEPHRIC and other articles. Without such showing, Bracco is not entitled to lost profits. (Pl.'s FOF ¶¶ 43-73). As a final note, since the Court declines to award disgorgement of profits it is not necessary to make a damages calculation in connection with its award. Nevertheless, GEH has proven its costs with respect to Visipaque, Omniscan, and Omnipaque sales. If disgorgement were to be awarded, these costs must be subtracted. 15 U.S.C. § 1117(a); (see also Def.'s FOF ¶¶ 173-74). c. Bracco's Lost Profits Excluding the GPO Contracts Similarly, Mr. Malackowski's testimony failed to adequately distinguish between the revenue generated by the GOP contracts and sales of Visipaque to individual doctors and hospitals. In fact, Mr. Malackowski testified that with regard to the *490 Account Specific approach, he only analyzed the GEH's profits derived from the GPO contracts as his sole basis for the damage calculation. See 19 T 56:15-23; 18 T 132:1-21. With respect to the Sales Trend Approach, he took into account all relevant factors and sales, and as such, the Court is unable to differentiate and distinguish the source of the sales by just comparing the numbers derived from the two approaches. In fact, when utilizing the Account Specific approach, Mr. Malackowski yielded a higher number than that of the Sales Trend approach. Indeed, the Sales trend approach "basically calculates sales trends for various products before the publication of the NEPHRIC article, and then determines how the sales of those products diverged from that sales trend after the publication of NEPHRIC." See 19 T 107:3-7. In addition, because this approach looks at the entire market, it will include all customers. See 18 T 132:13-21. Given the testimony by Mr. Malackowski, the Court has no basis to award damages to the extent that they may have been realized by GEH from the sales of Visipaque to individual doctors and hospitals as a result of false message directed to these customers. Simply put, Bracco has also failed to carry its burden of showing that there is any causal connection between GEH's advertisement effort, including sales calls, using the limited false messages, and the increasing sales of Visipaque to individual doctors and hospitals. d. Quantifying Bracco's Lost Profit Damages When quantifying lost profits under the Lanham Act, the Court may "make a just and reasonable estimate of the damage based on relevant data" and "act upon probable and inferential, as well as direct and positive, proof." BASF, 41 F.3d at 1095.[264] The plaintiff's burden of proving the amount of damage is recognized to be lower than proving the existence of damages (i.e., causation) and courts have been inclined to use "limited speculation" in determining an award where it is difficult to ascertain the exact amount of damages as a result of the defendant's violative conduct. GTFM, Inc. v. Solid Clothing, Inc., 215 F. Supp. 2d 273, 305 (S.D.N.Y.2002); A & H Sportswear v. Victoria's Secret Stores, 967 F. Supp. 1457, 1478 (E.D.Pa.1997); see also Broan Mfg. v. Associated Distrib., 923 F.2d 1232, 1236, 1240 (6th Cir.1991). As such, this calculation may be satisfied by circumstantial evidence from which a "probable" or "approximate" loss may be ascertained by "reasonable inference." Broan, 923 F.2d at 1236; see also Gilson § 14.03[3][a] ("recovery is not precluded merely because the amount of damages cannot be determined with precision"). Here, the Court finds that Bracco has failed to meet its burden of proof with regard to causation of damages, therefore, no further calculation is necessary. e. Bracco Has Proven It Had the Capacity to Accommodate the Additional Sales for Which it Claims Lost Profits GEH also asserts that even if Bracco can establish lost profits, that it may only *491 recover lost profits for sales for which it had the manufacturing and distribution capacity. "To prove capability to meet demand for lost sales, the [plaintiff] need only show a reasonable probability that its manufacturing and marketing efforts were adequate, or could have been made adequate, to make the additional sales." W.R. Grace & Co. v. Intercat, Inc., 60 F. Supp. 2d 316, 322 (D.Del.1999); Joy Techs., Inc. v. Flakt, Inc., 954 F. Supp. 796, 805 (D.Del. 1996). However, the Court has not found causation with regard any of the GPO contracts. Therefore, it is not necessary for the Court to determine if Bracco had the capacity to fulfill the GPO contract awards it alleges were lost due to false advertising. Nonetheless, the Court finds that Bracco would have had the continuing capacity, given its prior history and business relationship with Consorta, to fulfill a new GPO award with Consorta. The Court reserves judgment as to the Novation and Kaiser awards.[265] f. Bracco's "Future" (i.e., Post-Injunction) Damages The standard for proving future lost profits is the same as the standard for proving profits already lost. See Am. Speedy Printing Ctrs. v. AM Mktg., Inc., 69 Fed.Appx. 692, 698 (6th Cir.2003); see also Broan, 923 F.2d at 1235 (granting recovery for lost profits on future sales). As discussed above Bracco is not entitled to future lost profit damages. 8. Bracco's Responsive Advertising And Clinical Costs Under § 35(a)(2), a plaintiff may recover costs incurred for corrective advertising and other damage control expenses incurred in response to a defendant's wrongful conduct. See, e.g., U-Haul, 793 F.2d at 1041; Big O Tire Dealers, Inc. v. Goodyear Tire & Rubber Co., 561 F.2d 1365, 1374 (10th Cir.1977). No showing of actual customer deception or confusion or of actual marketplace damages is required to collect such damage control expenses, only that (1) there was a likelihood of confusion or damage to sales, profits or goodwill; (2) plaintiff's `damage control' expenses were responsive to defendant's misconduct; and (3) plaintiff's expenses were reasonable under the circumstances and proportionate to the damage that was likely to occur. Balance Dynamics, 204 F.3d at 690-93,[266] Having already determined that some of GEH's advertisements were literally false, the first factor is satisfied because the Court applies the presumption of deception and, as such, logically, the consumers were likely confused. Next, GEH argues in a conclusory manner that Bracco's corrective advertising is false and tortious itself, and has not adequately been proven to be linked to alleged false advertising on the part of GEH. GEH has not presented sufficient evidence to substantiate its claim that there is no connection between Bracco's corrective advertising and GEH's false advertising. Indeed, Bracco presented testimony of its damages expert, Mr. Malackowski, to show that the expenses spent on corrective advertising were related to the release of the NEPHRIC study and its false promotion by *492 GEH. The Court finds Mr. Malackowski's testimony convincing, particularly since, he spoke extensively with Bracco's officials and reviewed invoices relating to expenses incurred in Bracco's advertising. He opined that Bracco incurred these expenses to counter and blunt the perceived effect of GEH's false advertising, and did so in a manner proportionate to the perceived false advertising. See 19 T 87-95. Accordingly, Bracco has satisfied the second factor. Finally, on cross-examination of Mr. Malackowski, GEH challenged the reasonableness and proportionality of the expenses Bracco spent on corrective advertising by attempting to discredit his calculations. However, Mr. Malackowski's testimony adequately confirms that the amount spent on corrective advertising was reasonable. In addition, the Court notes that the testimony at trial, particularly as to the GPO contracts, revealed hundreds of millions of dollars at stake in the CM market. These staggering numbers support the reasonableness of Bracco's corrective advertising expenditures. In light of the foregoing, Bracco is entitled to $11,376,500 for corrective advertising performed in response to GE's wrongful conduct ($6,144,000 for 2003 to 2006, $2,182,500 for 2007-June 2008, and $3,050,000 to correct remaining post-injunction misperceptions). (18 T 130-131; 19 T 87-95; P2432, 2434, 2802, 2803, 2699, 4271:tabs33-5). However, the Court finds that Bracco is not entitled to clinical study expenses allegedly incurred to refute GE's false claims because such studies are undertaken as a regular cost of business in the healthcare industry and the Court does not find it equitable to award such costs. (18 T 130-131; 19 T 93, 176-178; P2881, 4271:tab36; D609). 9. Attorneys' Fees Section 35(a) of the Lanham Act provides: "The court in exceptional cases may award reasonable attorneys' fees to the prevailing party." 15 U.S.C. § 1117(a). A finding that a case is exceptional requires two steps: (1) culpable conduct by the non-prevailing party during the Lanham Act violation or the litigation (e.g.—bad faith, fraud, malice, knowing infringement or willfulness), and (2) a determination by the Court that the circumstances justify altering the general American rule that parties to litigation pay their own attorneys fees (e.g.—closeness of liability, damages suffered by plaintiff). Green v. Fornario, 486 F.3d 100, 103-04 (3d Cir.2007). The first inquiry by the Court must necessarily be a determination of whether defendants committed some kind of culpable conduct. Ferrero U.S.A. v. Ozak Trading Inc., 952 F.2d 44, 47 (3d Cir.1991). Courts have awarded attorney's fees based on a finding of willful conduct. Castrol Inc., 169 F.Supp.2d at 344-345 (In Castrol Inc., the court awarded attorneys' fees based on willful false advertising and rejected defendants' argument that the parties had been engaged in an "honest difference of scientific opinion," stating "Pennzoil's technical staff attempted, although unsuccessfully, to [restrain] Pennzoil's marketing division."); see also BASF, 41 F.3d at 1099 (fees justified where defendant's conduct was deliberate). However, as discussed supra, the Court does not find GEH's conduct to be willful, and furthermore, it does not meet any of the other culpable conduct criteria. Thus, Bracco is not entitled to attorneys' fees and costs. B. GEH's Counterclaim a. Bracco's Advertisements were Literally False GEH alleges that Bracco has disseminated ads in violation of 43(a) of the Lanham Act and New Jersey State Law. *493 As discussed supra pp. 463-66, in order for this Court to find literal falsity under a "tests prove" standard, GEH must demonstrate that the complained-of advertisements rely on studies, which, even if reliable, do not establish the cited proposition that studies have demonstrated an increased risk of CIN and nephrotoxicity with Omnipaque as compared to Isovue. GEH contends that Bracco's renal representations for Isovue as compared to Omnipaque explicitly rely on tests, data, and studies. Here, GEH has carried its burden by presenting evidence that tends to show that the Kay study was dramatically different than NEPHRIC and any comparison or extrapolation from the two studies would yield misleading conclusions. Indeed, Bracco's literally false advertisements are akin to GEH's advertisements which this Court has found, see supra, violated the Lanham Act. Accordingly, the Court finds Bracco's advertisements as identified by GEH disseminated literally false messages in violation of § 43(a) of the Lanham Act. b. Injunctive Relief During the course of trial GEH stipulated to dropping all claims for damages in its counterclaim, leaving only a request for injunctive relief. (36 T 4-8). In Bracco's Revised Findings of Fact (¶ 96) it stipulated that the Bracco ads and promotions identified by GEH (except D2013) in connection with its counterclaim are no longer in use. Bracco contends that due to this stipulation any injunctive relief against Bracco would have no effect on GEH, Bracco or the market. The Court has already found that the complained-of advertisements were literally false, see supra, in violation of the Lanham Act; however, a showing of literal falsity alone does not entitle the injured party to injunctive relief. Although GEH argues there is a reasonable expectation that Bracco will disseminate the "abandoned" false ads in the future, nonetheless, the Court's findings regarding NEPHRIC and those messages disseminated by GEH that constitute false advertising foreclose the mere possibility that Bracco will reprise their allegedly false advertising. See, e.g., Reader's Digest Ass'n, Inc. v. Conservative Digest, Inc., 821 F.2d 800, 807 (D.C.Cir. 1987); Robert Stigwood Group, Ltd. v. Hurwitz, 462 F.2d 910, 913 (2d Cir.1972) (denying injunctive relief where there is no "cognizable danger of recurrent violation, something more than the mere possibility"); Lurzer v. American Showcase, Inc., 75 F. Supp. 2d 98, 101 (S.D.N.Y.1998) (holding that permanent injunction is unnecessary if defendant ceases infringing activity and shows no inclination to repeat offense). In other words, injunctive relief is not appropriate since GEH cannot show it will suffer irreparable harm absent the injunction since the challenged activity has ceased. However, because future disputes may arise following this Court's Opinion, the Court orders that those disputes over Bracco's advertising be submitted to a qualified neutral panel or individual for resolution, in the same manner as ordered by the Court with regard to GEH's advertisements.[267] In the event that Bracco's advertisements are found to be false, Bracco shall bear the costs associated with submitting these disputes. Conversely, if the panel or individual finds that the advertisements are not false, GEH shall be responsible for the costs. Accordingly, the Court denies GEH's request for injunctive relief. VI. Conclusion For the reasons stated herein, the Court finds that certain of GEH's advertisements *494 constitute actionable commercial promotion or advertisements and are false, but that Bracco has failed to establish causation in connection with its proffered damages. Nonetheless, the Court issues an injunction in accordance with this Opinion, as well as recovery of Bracco's costs associated with corrective advertising. GEH's counterclaim requesting injunctive relief is denied. NOTES [1] Since this was a bench, not a jury, trial, the parties agreed to forego pre-trial Rule 104 hearings and instead permit the experts to appear once at trial and that the Court could rule on the Daubert motions in its findings of fact and conclusions of law—after hearing the testimony. See infra Section III. [2] See, e.g., GEH's Vice President of Sales, Mr. Donald J. Quinn, testified that statements like "Visipaque is safer renally than other LOCM" would only be made in the context of a clinical paper, making them establishment claims. (7 T 206-211). [3] See also the testimony of Peters, Quinn, Gehris, Kerachsky, Vitti, Murray and Russell describing the claims and the plans. Other descriptions of the claims and plans starting in 2003 (P17, P19, P866, P1579, P340, P341, P854, P855, P856, P857, P1163) and other reports (P417, P792, P1004, P1010, P1155, P1169, P1362, P1365, 1436:635, P616, P1449, P1450, P1584) are all consistent. Plans prior to 2003 describe the same type of establishment and superiority claim strategy since the product launch in 1996: P2111-13, P2097, P1441, P875, P877, P1648. [4] For example, P2027:853-7 and P2026:853-7 identify some of the tools and the claims (e.g., "Visipaque has highest safety profile") to be made from them. Additional instructions to deliver the claims are: P398, P399 (first page), P419, P424, P603, P634, P635, P645, P678, P688, P690-2, P694A, P711, P714, P770, P789, P798, P1164, P1249, P1250, P1373, P1388, P1424, P1692, P1714, P1715, P1934, P2025, P2034, P4247, P4249, P4263-5; 16 T 34-39, 41-42, 48-51, 56, 132-134, 136-139; POA's for GPO's: P451, 452, 623, 625, 626, 630, 680, 684, 709, 732, 788, 1363, 1718. [5] See also P1450:112, 4180:p14, 410:966, 141:486, 3089B:710, 2508:763A, 4163:763A, 2505:756A, 4155A:736, 4160:756A, 2506:758A, 4161:758A, 3448A:pl, 2956:734, 779:698-99, 1013:792-93, 782:897, 254:863, 3168A:408, 4089:510, 55:825, 1363:745, 2506:759A, 2511D:783A, 4161:759A, 4166D:783A, 333:745, 3089A:702, 4089:440, 142:507, 2304:p3, 2300:p3, 729:013, 50:772. Bracco also includes the New England Journal of Medicine ("NEPHRIC") article (P2467, P4176) and the Journal of the American College of Cardiology ("RECOVER") article by McCullough, et al. (P3807) as false promotions. [6] Additional emails and memoranda: P693:396, 415:126, 707:679, 3709:402, 436A:435, 2730:066: 2520:907A, 2529:411.1; 16 T 99-114. [7] Additional sales call records are P3689L-1, P3689M-1, P3493F, P3434, P3437. P3689H, L, M and P3493, all exhibits that were attachments to Mr. Russell's expert reports and contain Mr. Russell's initial analysis of GEH's sales call records. P4049 is Mr. Russell's final sales call analysis of GEH's combined sales call records (P2312 & 3682), being entered into the record on a laptop computer— the only way the exhibit is viewable, and was provided to the Court and GEH on June 12, 2007. Before then, Mr. Russell removed ambiguous sales calls from the on-message calls in P4049, including seven of the eleven GEH cross-examined Mr. Russell on at trial. P3493F: Omni/35994, 79270 (duplicate Visi/ 153580 removed); P3493G: Omni/54842, 14153; P3493K: Omni/17593, 32829, 12243. Mr. Russell testified why the remaining four were on-message calls. (18 T 34-38). However, the Court finds that his testimony as to on-message calls is not reliable and therefore is excluded. See infra pp. 423, 440-41. [8] Bracco submitted a laptop as exhibit P4049 with Concordance search software and a database representing Mr. Russell's final sales call analysis. GEH objected to the admission of the laptop into evidence, suggesting that it is prejudicial; however the Court has determined that such a searchable database is the only reasonable way that the Court can sift through the large number of sales call notes and therefore, admits it into evidence. Bracco asks the Court to use the following search strings for additional representative sales call notes: "((visi*). COMMENTSLONG. and ((less adj10 (risk or CIN)) or (better or improved)). COMMENTSLONG. and (renal or kidney or risk or nephric) .COMMENTSLONG.) or (((visi* or iocm) adj2 locm). COMMENTSLONG.). Bracco avers that these searches return hundreds of sales call records, the overwhelming majority of which show sales representatives delivery of similar messages. The Court reviewed the submitted laptop with its accompanying database of sales call notes and finds that even when running the suggested search strings that the sales call notes only provide a small percentage of what would be considered actionable messages. [9] See also P2671:521, P527, P3831:619, P621, P624, P629-630, P632, P634, P636-38, P640, P4251:203, P209, P211-12, P2307:p21, P2281:p7, 9, 53, P2282:p49, P3455:p12-13, 16-17, 22, 26, P3512:p12-13, 16-17, 22, 26, P3619:924, P2157:151, P3834:915, 932, P3647:355, P3890:241, 246. [10] The most significant GEH efforts in issue are those concerning CT, GEH's focus, in delivering the allegedly false claims. (8 T 178-180; 13 T 87; 17 T 80-81, 85-89; 15 T 161-162, 166-167; 20 T 15; P410, P419, P527, P772, P854, P855, P869, P1008:279, P1169, P1401, P1733, P2098). CT uses i.v. administration of CM where there are less safety risks, but GEH used i.a. administration studies in its CT claims. (e.g., P1733:481, P410; 17 T 81, 85-89; 34 T 83-84, 2 T 61-62). [11] Bracco contends that GEH ads overextended their conclusions to low risk and no risk patients. (See, e.g., P1832; P1716; P1008:279). However, the Court disagrees and finds that GEH's ads properly focused on "at risk" patients. [12] By FDA standards, such a study must be a randomized, double blinded, prospective (e.g., follow a pre-designed protocol), head-to-head comparison that is adequate and well-controlled. (E.g., Care (P4076)). [13] At trial, GEH relied on a proposed theory, that iso-osmolar agents produce no free radicals in the body, to try to support its claims. GEH's theory is proven false by the CIN caused by Visipaque, and when NAC and sodium bicarbonate, which act by reducing free radicals, were found to reduce CIN from Visipaque (P2650, P3949). Stated differently, if GEH's theory were correct, Visipaque would cause no CIN and NAC and sodium bicarbonate should have no effect with Visipaque. Of course, an unproven (and much disputed) theory can never support an establishment or superiority claim. The undisputed evidence is that the actual mechanism for the cause of CIN is still not known. [14] 30 T 139:17-140:16, 145:20-147:12. [15] 30 T 172:14-22; 37 T 102:11-21; Harrison T 12:17-13:2; 5 T 85:7-13. [16] 37 T 104:3-13. [17] D249 at A450900. [18] See generally, 30 T 189:3-9; 11 T 93:4-21. [19] For example, a p-value of 0.06 represents a roughly 94% probability (1 minus 0.06 = 0.94 or 94%) that the two treatments are different. See generally, 30 T 185-186. [20] 30 T 87:18-88:18, 88:25-89:21; 1 T 184:13-23. [21] 10 T 117:25-121:8. [22] 10 T 21:21-24, 144:19-146:13; 30 T 95:6-96:13, 101:5-15, 103:13-104:24; 1 T 185:19-186:25; 4 T 64:3-65:9; D107 at B476793; P3039 at B781784; Spinazzi, 9/06 T 63:3-65:21; D594 at 1. [23] 10 T 47:6-17, 146:15-147:14; 30 T 104:19-106:7; 32 T 216:2-25. [24] 10 T 14:13-15:8; 30 T 107:21-109:25, 112:6-114:20; 3 T 89:10-15; D98A at 553; D94 at 492; D2392 at 1-2. [25] 30 T 112:6-115:2; 20 T 217:1-6; D2392 at 1-2; D904 at B149234. [26] 30 T 116:23-117:11; D2392 at 2. [27] 30 T 116:14-19; 4 T 85:10-86:11, 100:13-101:15. [28] 10 T 124:11-125:11; 30 T 123:23-125:5; D2268 at Table 3; 1 T 130:17-23; 4 T 105:25-106:20; D2269 at 386-87. [29] D1411-T at B266402. [30] 30 T 110:16-111:10, 194:10-196:4; 31 T 111:8-112:1. [31] Spinazzi 09/06 T 56:10-60:14; D594 at 1-2; D236 at 9. [32] D228A, 30 T 133:25-134:16. [33] D228A at Table 2, 30 T 136:4-9; 37 T 133:18-21, 134:15-135:2; 32 T 96:3-98:19. [34] D94, D894; 30 T 136:22-137:12, 138:15-139:7; 3 T 88:12-23, 102:15-22. [35] D94; D894 at 2; 10 T 9:11-17. [36] Id. [37] 10 T 8:5-8; 18:8-17; 130:14-131:14. [38] D94 at 493-95; D894 at A322520; 10 T 153:16-155:17; P 1526 at A292614; 30 T 176:17-177:5, 184:18-186:15, 187:13-191:5; 3 T 90:3-23. [39] 10 T 17:5-17, 76:18-77:20, 81:18-85:22, 87:1-14, 133:9-14; 20 T 6:2-17, 33:17-34:1. [40] D94; 10 T 76:18-77:1, 80:2-20, 132:20-133:14. [41] D94 at 498; 10 T 77:24-78:23, 80:2-23; 30 T 194:10-195:17. [42] D1990; 31 T 4:20-5:15. [43] D1990 at 926-27, Figure 2; 31 T 27:11-28:2; 4 T 74:10-14, 75:8-76:10. [44] D1990 at FN on 924; 31 T 6:12-20. [45] D2381 at 1669; D 421 at 1669; D839 at 32A; 31 T 34:20-25, 38:22-39:12, 42:9-45:7, 57:5-58:1. [46] P4047; 3 T 156:21-158:1. [47] P4047 at abstract: 3 T 156:21-158:1. [48] 31 T 48:10-25, 53:17-54:25; 34 T 33:5-36:12. [49] D265A; 34 T 28:22-30:24. [50] D265A at Figure 2, Table 4; 34 T 40:3-47:4, 49:6-50:18; 31 T 51:2-12, 56:5-12. [51] 12 T 54:17-55:14, 57:1-11. [52] 20 T 25:18-27:5; P4288 at A456428; P4290 at A456460. [53] 20 T 40:6-23, 42:24-45:6; P 224 at A148468-71; P 281. [54] 20 T 40:6-23, 42:24-45:6. [55] 20 T 64:14-19, 73:17-74:3; P4288; P4290. [56] P3366 at Rudnick 0026-0027; 3 T 141:16-142:13; 20 T 61:19-63:4, 84:1-7. [57] Spinazzi 9/06 T 8:18-23; 3 T 33:4-6; D236. [58] D236 at B723074; 3 T 36:8-38:5, 40:3-20, 42:17-21, 45:1-7; Spinazzi 9/06 T 18:14-19:9; 83:12-84:2. [59] P3724; 3 T 45:16-46:2. [60] 31 T 90:21-93:7; 94:15-96:2; 21 T 76:5-77:9; D241 at B585169. [61] Spinazzi 9/06 T 8:2-23; 21 T 43:12-21; D912. [62] P 4076. [63] D387 at 2328; D912 at 10, 15; 3 T 166:13-167:14; 4 T 85:10-14; 31 T 59:23-60:22, 67:2-68:2, 69:15-70:24, 74:13-77:25; D2102 at 18; 4 T 109:8-110:23; D2298 at B089532-33; 21 T 50:18-54:13. [64] D387 at 2333; 31 T 79:12-80:6. [65] 4 T 98:22-103:6; 31 T 85:20-86:14, 87:16-23. [66] 31 T 61:9-63:5, 84:16-85:5, 102:12-103:21; P 2556 at B367123 (Sharma discussing "confounding effect of drug pre-medication"); 21 T 37:3-39:2. [67] 20 T 219:23-228:1; D594; D1864 at B412842; 21 T 19:15-22:17, 30:20-33:6, 35:7-12; D 1438 at B404824, B404832; D1356; D1860 at B412734; D262A, 4 T 54:1-55:4. [68] D1356, 1595, 1864; 20 T 219:23-228:1; 21 T 30:20-33:6; D1860 at B412734. [69] D1356; 20 T 221:22-225:6. [70] D1847; 4 T 25:20-29:7, 32:8-40:15: D105 at B272551; 4 T 42:11-44:14. [71] 4 T 32:8-40:15, 44:15-53:20; D1847; D1850; P2818. [72] Spinazzi 9/06 T 238:21-239:19. [73] 11 T 155:18-157:14; 31 T 101:2-102:17, 104:1-106:3, 115:7-21, 124:12-131:18; 32 T 4:16-10:23, 12:3-11, 13:16-17:24. [74] 11 T 119:23-123:12, 124:9-126:8. [75] D262A at 391; D107 at Table 3; 4 T 69:15-70:1. [76] D262A at 391; D107 at Table 3; 4 T 66:20-67:8, 68:3-16; 31 T 121:13-122:14. [77] None of the cited studies used pretreatments. P2467:916-7. [78] During this litigation, GEH concluded a study called "NEPHRIC II," in which it compared Visipaque and Isovue head-to-head. The study results are not part of the record in this case and the Court declines to draw an inference, as Bracco requests, that this study showed that Isovue was at least equivalent to Visipaque. [79] GEH avers that CIN at seven days is not relevant, but this contention is debated amongst the scientific community. (E.g., P1877:878, P2201:147-48, P1891:286). [80] For example, in a 2/21/01 email, the clinical research managers were informed that "we surprisingly see that some patients have max increase in serum creatinine on day 7 (not within day 3 as expected)." P213; 20 T 20-22. Shortly thereafter, GEH amended the protocol to add day 7 and other results as outcomes. P44, 4144. In addition, on 9/13/01, with knowledge of the blinded results, GEH stopped the study early, before the full number of planned patients were enrolled. (11 T 31-33; P130, P550; 20 T 24). [81] In addition, if GEH uses the brand name "Visipaque" in its advertising, it must similarly refer to the studied CM, "Omnipaque," by its brand name and not by its clinical reference, iohexol. [82] Bracco cites to the following, e.g., 2 T-4 T; Care (Solomon D.; P4434 (Solomon Dec.); P4076); Impact (P3724); Verow (D528); Carraro (P2361, P3790); Fischbach (P2644); Kolehmainen (P3017); Rao/Newhouse (P2933); Chalmers (P405; D228A); Solomon (P2818); Dr. Allen's "unrebutted" repetition of Solomon and further confirming MA (11 T 82-115); Solomon/DuMouchel (P3167); Sharma (P2556); Dr. Wei's unrebutted MA of GEH data (11 T, 12 T); Kay (P478); Katholi (P3782); Haight (P2362): Briguori I (P2650); Baker (P2626); Rudnick (P3735, 2940); Briguori II (P3003); Sandler and letters to the editor (P49; P1167); Consensus Panel (P2770); Tepel (P2789); Barrett (P2821); Liss (P2674); Bettman (P2819); CMS/Federal Gov't (P2672:660, P2555:105). [83] E.g., VALOR showed no difference and no NAC toxicity (P833, 835, 891, 937, 931, 940, 266, 273 (admits insufficient scientific proof), 15 T 159; 16 T 131-32); Visipaque MA (P1733, no difference in i.v.; 2203:154, no difference in i.v. and other conflicting results); Stevens MA (P1937); ECR MA (P2201:149-150, 2214, 2221, 2229, 2230, 2241); McCullough MA with table with LOCM identified (P2228:943) that was not displayed in final article; Verow CIN data (more CIN with Visipaque than Isovue, 12 T, not reported in P2356); Safety MA (P560); DXVD09 (P566, 567). 1 T-4 T. [84] GEH's attempt at trial to cull trends in the data using selective hindsight cannot support its establishment claims that rely on specifically cited studies that used defined levels of statistical significance. (P1894; Pl.'s FOF ¶¶ 3-10,22-24). [85] 30 T 156:24-172:9; D894 at A322564; 10 T 91:6-22, 103:7-16, 166:24-167:18; 32 T 139:13-141:4, 142:18-143:22; 33 T 190:1-193:2, 219:11-12, 223:23-224:5; P 4365; 3 T 148:4-22; D904; 4 T 58:20-63:24. [86] 10 T 29:10-20, 98:25-100:10, 138:23-141:10, 162:14-163:1; D2223 at 37 (61 patients required in each group, 70 planned to allow for dropouts); D94 at 493 (129 evaluable patients); 11 T 68:2-16. [87] D94 at 492; 10 T 133:15-137:13; 3 T 89:10-15; 20 T 76:10-77:7; P208. [88] D94 at 497; 30 T 174:12-20; 32 T 194:24-197:1, 199:12-200:8, 201:19-202:1. [89] D94 at 493; 10 T 33:10-35:25, 116:18-117:11, 157:9-19; P 551 at 3; P562 at 3; 11 T 45:2-47:15, 48:8-24, 51:11-52:5, 52:13-65:8, 70:3-22; D2339 at 18, 34; D2340 at 2, 23, 42; 20 T 19:2-20:2, 20:20-23:6, 58:11-18, 59:25-61:8; 33 T 158:4-20, 167:9-168:7. [90] 11 T 54:25-56:21. [91] D2339 at 18, 34; D 2340 at 23, 42. [92] 10 T 116:18-117:11, 157:9-19; 11 T 45:2-47:15, 48:8-24, 51:11-52:5, 52:13-54:24; 20 T 19:2-20:2, 20:20-23:6, 58:11-18, 59:25-61:8; 33 T 158:4-20, 167:9-168:7; P551 at 3; P562 at 3. [93] D2339 at 18, 34; D2340 at 23, 42. [94] D2339 at 18; D2340 at 23. [95] Bracco additionally contends that some secondary endpoints were not included in the published article. However, allegedly constrained by word limits, the authors made determinations as to the results to include. 10 T 148:20-149:12, 150:21-156:9; 30 T 190:22-191:5. Nonetheless, not all these secondary endpoints were supportive of the study's conclusions. D94; 10 T 150:21-153:2; 37 T 132:1-18; 30 T 190:1-13; D894 at A322520. [96] P1875 at A32164;10 T 159:5-22; see also P1876; 10 T 75:9-23. [97] P1875 at A321641 ("In conclusion, our results reveal a highly important clinical feature that patients at risk for developing CIN might significantly benefit from receiving iodixanol compared to other LOCM"); 10 T 159:5-22. [98] 10 T 76:18-83:24. [99] P1937; 32 T 18:1-20:24. [100] P2193 at A451448. [101] See additional examples of plans and instructions for (a) cardiovascular claims (P712, P1681:254, P1689, P2101:566; 7 T 43-52), (b) discomfort-type claims (P869:179, P1136:373, P632:455, P789;276), and (c) class/cost claims (P708:715, P789:275, P1012:720,722; 8 T 165-75). [102] See also P2161:388-89, P1013:789, P782:890, P779:695, P729:013, P2280:p8, P395:360, P409:948, P1868:137, P2283:p1, P373:070, P4171:p1, P4177:p1, P4089:619, P3654:508, P2047A:806, P2166:548, D945:425, P2561:032, P2291:p8, P2298:p11, P410:972, P3649:415, P3649A:415, P3890:246, P2281:p26, 29, P3831:637, P3890:238.2-39, 41, P2670:508, P3828:967-68, 976, P3829:032-33, 44, P2156:032-33, 44, P2157:203-04, 237-38, P3831:613-14, P2671:524, P3831:613, P3261:024, P2157:198, P2305:p6, P3114A:809, P3114B:811, P4089:440, P453, P510, P142:507, P520, P137:390, P2670:507, P510, P514, P3828:976; D2324:124. Bracco also alleges that the COURT article (P2561) is a false ad or promotion. Additional sales call records are P3689L-2, P3689M-2, P3493G. [103] Specifically, Bracco points out: the study report (P2), containing the actual results available to GEH and the investigators, but never made public until the trial, shows that the article misrepresents several critical results, including: (a) the results of the blind and valid adjudications of the data, which showed that the results were due to procedural differences and not to the contrast agents (compare P2561, reporting a statistical difference due to CM, with P2:142-5, reporting no statistical difference due to CM and all statistical differences due to procedures; 19 T 33, 45-47; 23 T 155-157); (b) the fact that the CKMB measurements were unreliable (compare P2561:029) with (P2:127; 19 T 31); and (c) a primary (within 30 day) outcome was falsely reported as a secondary outcome (compare P2561 Table 4 with P2:109-110, 122-23, 25; 19 T 27-30), to minimize the effect of the negative result. [104] D903 at 2172-73; 5 T 38:5-39:9; 23 T 32:22-36:16; Harrison T 10:11-17. [105] 23 T 28:3-16. [106] D903 at 2172; 23 T 28:23-29:14, 31:23-32:8. [107] D903 at 2173, Table 3; 23 T 36:17-38:15; 19 T 35:21-36:2. [108] 23 T 42:14-25; 19 T 35:21-37:15. [109] D903 at 2173; Harrison T 13:4-11; 23 T 39:13-42:3; 5 T 40:8-41:3. [110] D903 at 2175; 23 T 43:1-22. [111] 5 T 42:14-21. [112] 19 T 10:13-11:22, 16:3-16. [113] D903 at 2176; 23 T 48:24-52:22; 5 T 111:6-18. [114] 23 T 51:23-52:22; 5 T 107:6-11; D1720 at B323667 ("COURT elevated Visipaque over Hexabrix, but still left the monomers below both, in PCI only."). [115] The fact that the VICC study has never been published in its entirety does not bear on this Court's determination of whether VICC is reliable. Nonetheless, an abstract of the VICC trial was presented to the American Heart Association and published in 2003. P362; 5 T 55:7-12. While the manuscript was submitted for publication to the journal Circulation, following comments, it was never re-submitted. 23 T 67:15-19; 23 T 68:19-24. [116] P3632; 23 T 66:19-67:12; 5 T 45:9-22, 46:5-13. [117] Harrison T 8:2-7. [118] P3632; 23 T 59:22-60:19, 70:19-23; D2437 at Davidson 001507. [119] 33 T 6:3-14; D2440. [120] D1433 at B365439 ("it was decided to sponsor the study to have more leverage and control in case of questionable results."); 33 T 14:16-17:22, 30:2-5, 34:8-35:16; D2424 at B416880-81. [121] P3632, D2437 at Davidson 001513-14, D1296 at B002475; 23 T 76:17-77:1. [122] D1296 at B002500; 23 T 74:10-12, 74:19-76:16. [123] 5 T 120:13-121:22; Harrison T 47:21-23, 49:3-10; 23 T 75:22-76:16; D1956 at B404402 ("The investigators believed in the clinical significance of CK-MB elevations ... but not of critical elevations of troponins..."); 33 T 73:17-75:7, 75:22-25, 76:12-77:8, 78:9-78:18. [124] P3632; 5 T 47:25-48:17; D2437 at Davidson 001535; 23 T 76:17-77:24; Harrison T 20:9-19. [125] 23 T 77:25-78:14; P 3632; D2437 at Davidson 001508; Harrison T 73:21-24; 37 T 135:10-137:9. [126] Harrison T 80:23-81:18. [127] 23 T 37:5-11, 79:11-80:23; D2437 at Davidson 001523. [128] 5 T 54:19-22; 23 T 78:15-80:24. [129] 23 T 76:17-77:24, 85:3-9; P3632; D2437 at Davidson 001517-18; 5 T 47:23-48:17. [130] 23 T 77:14-24, 78:8-14; 33 T 37:20-38:3; P3632; D2437 at Davidson 001517-18; Harrison T 73:21-74:5. [131] 23 T 80:25-81:15. [132] 23 T 80:25-81:15; 85:10-21. [133] Harrison T 91:9-94:13; see also 23 T 81:16-83:16. [134] P3632; 5 T 55:7-14, 111:19-22; 71:22-24. [135] 5 T 111:23-112:14. [136] 33 T 22:4-23:17, 25:9-26:7, 50:6-54:4; 55:18-62:23; 66:5-19; D 173; D 1433 at B365440; D 1439 at B408147,49-50; D 1823; D 1879 at B377869; D 1955; D 2105; D 2438; D 2439 at B401684. [137] D812; 23 T 55:2-56:4. [138] 23 T 58:13-59:7. [139] D814 at 314; 23 T 85:25-88:4; 91:2-92:3; P28 at 93 (abstract conclusion); P2193 at A451436 ("some effects such as hypotension and tachycardia, are clearly related to hypertonicity."); P3028 at B781498; P3846 at 370 (conclusion); P 3852 at 614 (abstract conclusion). [140] D2249; D2377; 5 T 107:6-11; 23 T 88:5-92:3. [141] See also D945:430, P141:490, P2505:757A, P2511A:774A, P4155A:737, P4160:757A, P4166A:774A, P446:640-41, P729:013, P2280:p10, P395:362, P409:950, P3118A:865; P1868:134, P147, P161, P3448A:p2, P3114E:837, P2279:p5, 7, P3114G:856, P2157:214, P2161:388, P2183:980, P2184:998, P2311:p5, P2170A:739, P2170B:743, P3118B:863, P4236:716, P2171:751, P4243:241, P389:011, P779:695, P782:890, P1013:789, P2287:p1, P2288:p1, P2289:p3, P2293:p1, P2295:p1, P2296:p1, P2297:p1, P2284:p2, P374:073, P375:074, P3828:930, P3261:3012, P3829:037, P2156:037; D2334:p3, D4089:453, D142:520, D137:390. Additional sales call records are P3689L-3, P3689M-3, P3493H. [142] Dr. Katzberg showed that the studies by Manke (P3845), Verow (P3853), Justesen (P3843), Pugh (P3848), Manninen (P3846), Conroy (P848), Sundgren (P3851), Tveit (P3852), Fishbach (P2644), Klow (P3844) and Palmers (P3847) showed no efficacy differences, and therefore no patient movement (or significant pain and discomfort that would affect movement and efficacy) differences between Visipaque and LOCM. (E.g., 2 T 91-105). GEH presented no rebuttal. [143] 29 T 81:19-84:8, 127:17-128:23, 164:20-165:20, D2264 at 12 (left column); D519 at 208 (conclusion). [144] 29 T 86:21-87:2, 88:13-90:9; D2264; D511; 29 T 98:19-99:24; D197; 29 T 100:20-102:14; D519; 29 T 102:15-104:4; D2248; 29 T 104:25-107:5; D 2261; 29 T 107:6-109:17; D2271; 29 T 109:18-111:1; D517; 29 T 111:2-113:18; D527; 29 T 113:19-115:11; D785A; 29 T 116:24-117:24; 2 T 178:12-15; 3 T 11:11-18. [145] 29 T 127:17-128:23, 164:17-165:20. [146] 2 T 174:14-19. [147] D1623; 3 T 5:13-6:18. [148] 2 T 178:12-15; 3 T 11:11-18. [149] On cross-examination, Dr. Nicholson admitted he did not consider the significant viscosity and hydrophilicity differences between the drugs, entitling his testimony to little weight. 29 T 54,181-182. He also admitted that many of the differences he had noted were actually not statistically significant, many of the differences only related to heat sensation (and not pain or discomfort), that he failed to reveal other data in favor of the LOCM (e.g., D527, 785A), and in all of the remaining studies the dose of Visipaque was much less than the dose of the comparison drug, which would necessarily lead to less pain and discomfort (studies show the higher the dose, the more the heat, pain or discomfort). 29 T 160-184. GEH's proofs did not generally relate to the studies cited in the claims and even when they arguably did, they did not and could not support the claims. [150] See also P390:125, P612:171, P2286:p5, P2300:p4, P137:384, P1450:108, P4180:p11, P2956:721, P2290:p1, P1448:899, P2962:234, P2298:p3, P2291:p6, P1868:156, P410:963, P2309, P1013:789, P782:890, P779:695, P2292:p1, P3831:638, P2307:p48, P4251:203, 209, P3831:591, P2281:p30,46, P2307:p18, P3828:927, P3829:987,992, P3890:238.1, P2156:987,992, P2157:059, 063, 077, 197-98, 213, P2671:522, 28, P3261:023, 050, 053, P4247:179, P3834:924, P3709:402, P333:731, P775:350, P415:126, P1598:887, P766:281, P2730:066, P2291:p4-5, 12, P1363:744,P 436A:443, P2298:p27,36, P374:073, P1868:153, P333:749, P2671:523. Additional sales call records are P3689L-4, P3689M-4, P3493I, P3493L, P3435, P3689L-5, P3689M-5, P3493J. [151] D2169; 3 T 16:3-5; P2818; 4 T 70:9-71:16; 5 T 111:6-18; 78:17-23; 3 T 11:11-18. [152] In this regard, Bracco also asserts that GEH's Omnipaque claims are false. First, GEH obscures the fact that Omnipaque is a comparator in NEPHRIC (e.g., P1534; 6 T 99-101), by referring to it by its generic name, (16 T 70-71). In addition, GEH falsely promotes Omnipaque as "The Gold Standard," established by clinical studies as "minimizing risk," "optimizing image quality," and "maximizing cost efficiency," without any support and with contradictory clinical evidence, as shown above. (E.g., P3946, 1559:003). However, the Court finds that GEH's designation of Omnipaque as the "Gold Standard" is merely inactionable puffery. [153] 18 T 19:3-15; P 2285. [154] 18 T 7:21-10:2. [155] 18 T 10:7-11:4; P 2303. [156] 18 T 11:16-18:15; P3710; P 2283. [157] 18 T 22:3-25:4; P2285; P 2297. [158] P390 at A221124, 129, 130, 132; 17 T 132:13-135:13, 138:5-14. [159] 18 T 26:2-7, 29:7-16. [160] D2004. [161] 18 T 33:22-34:4. [162] 18 T 33:1-6. [163] 18 T 34:5-41:18; P3493-F at 74, 228; 18 T 41:21-43:19; P3493-G at 4, 8; 18 T 44:2-46:18; P3493-K at 3, 5, 7. [164] 18 T 33:1-6; 33:22-46:18. [165] 18 T 27:2-46:18. [166] P3493 F-L; P3689L-M. [167] 8 T 122-123, 136-46, 177-178; 9 T 51-53, 128-130; 16 T 80-81; 7 T 156-157; P1365:776, 781, 1175:485, 100, 101, 104, 105, 106, 1021, 1004:042-3, 691, 694A. [168] 8 T 82-84, 99-100; 9 T 6-9, 86-88; P849:943, 869:167,177, 2101:558-9, 2098:437, 1163:533, 1169:702. [169] 16 T 81-95, 8-9, 71-75. See also P400, 418, 387:433-34, 1608:074-5. [170] 8 T 144, 125-126, 168; P849:937, 480:667. Visipaque is priced 2-3 times higher than Isovue. 18 T 124-125; P2070, 1912, 2687, 2715, 4271:tabs19-20. [171] P854:937. See also 8 T 105, 162-167, 18 T 144; P869:180, 1362:720, 1012:719-22,711-6, 1178:677-80, 1341:467, 659, 785. [172] P2098:426-429,437-40,442-3,446, 869:167-8,172-4,177,180,187-8, 854:931-9, 942-6,950-1, 2098:442, 2101:536,558-9; 16 T 46-48; P1145, 1147, 1265, 1266, 1269, 1584:788,790, 2112:779, 1677:102, 875:287, 2008, 1312, 1579:261-62,269; 15 T 170-176; P1014:871, 1017:292, 1309, 1311, 3944, 712, 1699:713, 1475:303, 2005:851, 1365:772, 1398:030,035, 1155:701, 1600:985-6, 1610, 1919:667, 1476:355, 661:935, 1579:262, 1473:287, 1474:296, 1561:015-17, 2019:509. [173] Mr. Peters did not "remember anything out of the ordinary" besides NEPHRIC contributing to Visipaque's growth. 6 T 72. [174] P696; 9 T 35-36. See also 13 T 27-28, 55-60; 15 T 181-184; P1716:739, 1742:968-71, 196:573-580, 1700:821, 1400:059-62. [175] P849:940 ("Visipaque penetration must be expanded significantly in competitive accounts especially in order to leverage it in a way that can pull through additional Amersham Health products"),879,994-5 ("Expand Visipaque usage, especially in competitive accounts so that it can be effectively leveraged to pull through other Amersham Health products"). See also P1341:469 ("Visipaque pricing should be used as a lever ... If Visipaque is highly penetrated based on clinical superiority, this offers the highest level of competitive immunity"),473, 483, 642:558,650:683, 721, 1327, 693:396, 1420:648,650, 1679:161,-170-1, 3493K (GEH sales call records regarding Visipaque Leverage), 1941:746; 8 T 117-122 (Quinn); 17 T 110-112 (Russell); 21 T 117-122 (Medici); 18 T 125-127, 143 (Malackowski); 38 T 81-87 (Stewart); P1676:088. [176] Mr. Sweeney, Novation's second in command with overall responsibility for the bid, was deposed as Novation's Rule 30(b)(6) witness. P4078; Sweeney T 60:22-24, 61:10-13; 36 T 176:4-24. [177] P4085 at Bracco/Nov 000103; 36 T 176:4-24. [178] Sweeney T 96:25-99:22; P 4135 at Bracco/Nov 003620; Sweeney T 29:1-30:22, 32:12-33:6, 51:22-52:1, 66:6-67:15, 73:2-8, 84:6-85:7, 88:1-89:1; 36 T 176:25-180:22. [179] P4094 at Bracco/Nov 3419, 3421-3435: P 4097; Sweeney T 298:23-300:3; 36 T 184:19-185:13. [180] Sweeney T 300:5-301:19; P 4085 at Bracco/Nov 000102; P4097; 36 T 180:23-181:21, 184:2-186:12. [181] P4132 at Bracco/Nov 003612; P 4085 at Bracco/Nov 000102; P4097; see also P4095. [182] Sweeney T 300:25-301:19, 229:14-25, 302:3-20; 36 T 194:8-15. [183] Sweeney T 301:16-19, 67:5-15, 132:25-133:17, 140:18-141:7, 164:12-165:20. [184] Sweeney T 302:15-18; see also 36 T 193:18-194:7. [185] Sweeney T 140:18-141:7, 301:21-302:1. [186] Sweeney T 64:21-65:21, 213:10-15, 281:5-21, 293:21-295:1, 307:15-308:1, 311:17-19, 322:12-19; see also 36 T 180:25-181:21, 183:16-192:2. [187] P 4083; P4084; P4085 at Bracco/Nov 000103; Sweeney T 295:3-12, 73:14-20, 92:24-93:6, 100:19-102:9,; 36 T 163:24-164:22, 195:1-198:5. [188] Sweeney T 32:7-14, 75:4-22. [189] Sweeney T 74:4-15, 75:10-13. [190] P 4085 at Bracco/Nov 000103; P 4083 at Bracco/Nov 000094, Sweeney T 233:13-23, 303:19-304:22. [191] Sweeney T 140:18-141:7; 36 T 197:7-198:5; see also Sweeney T 83:13-84:2, 84:4, 171:22-172:7, 199:13-200:16. [192] P4085:101,109. Mr. Sweeney's purported "belief" that Visipaque would also have been carved out of the NFC is outweighed by all other evidence of record, which indicates that Visipaque was only carved out of the FC criteria; that Mr. Sweeney was not aware of any instructions to the TF to exclude consideration of Visipaque from the NFC; and that the TF was given express instructions to consider GEH's bid summary in scoring the NFC. Sw. 65-8, 123, 130-179, 210-211, 229-231, 236-237, 312-316, 322-323; P4094:436-7. GEH's GPO expert admitted that "common sense" would indicate that the TF did consider the Visipaque information in the bid summary. 36 T 218-219, generally 208-239; 37 T 21-23, 29-32. [193] Sweeney T 41-2, 177; P4120, 4112. [194] Sweeney T 94-9,102-6,233; P4085:103, 4083:094-5. [195] Sweeney T 29-32,68-71,96-9,116,191; P4135:620, 4084. [196] P4085:101,103; 19 T 67-71. [197] D2178 at 82; D31 at B461508. [198] D1373 at B117118, 20, 24-25; 28 T 62:10-70:1, 73:10-78:19, 88:13-93:9; D 2047 at B168239; D2202 at B116235 ("Amersham is going to be an extremely difficult incumbent to unseat. There is excellent product performance, acceptance, service and general comfort with the entire Amersham product line."); D2178 at 82; D31 at B461508 (Bracco felt there was "[n]o expectation of change [in Novation's contrast media contract] for 2006 ..."); D2199 at B502821; D2207 at B226890. [199] P732 (Quinn/Smith memo instructing representatives to "drive home a win" at Novation by "conveying strong clinical differentiation messages"), P4049 (database containing sales call notes for TF hospital members and colleagues); 37 T 54. [200] See, e.g., Sales Calls Records, P2312 at A629955, 654950; A632476; Visi/93672; A623608; A627592, Omni/28079, A682435; Omni/67769; A660995; A670058; A637828, Visi/72736; A617748; A637355, 646585, Omni/28094, A682451; Omni/28303; A607435; A600371; A637302, 656303, 672542, Visi/66061; A618919; A637346, 646552, 682434; A611637; Visi/57817. [201] P2161:391 ("Demonstrated to significantly reduce incidence of ... CIN"),388 ("Improves levels of patient comfort"),389-90("Demonstrated to significantly reduce ... MACE"), 4127, 4128:604, 4102, 4262; 37 T 56-57. [202] Sweeney T 306:8-20, 118:14-24, 120:1-11; see also 36 T 142:6-143:4, 199:17-200:10. [203] P4137; Sweeney T 65-8,130-43,313; P4078:032, 4085:102, 4084, 4133, 4134. [204] P4137:633-633.1,634; Sweeney T 122-87. [205] Sweeney T 147-52; P4137:633-633.1; see also 36 T 220-229, 37 T 4-18. Mr. Sweeney testified that safety was at least as important as any other factor to the TF and that GEH's bid summary contains superior safety claims only for Visipaque. Sweeney T 184-7. [206] Sweeney T 177,161,166,175-6; 37 T 9-10, 14-16; 16 T 70-71; 1 T 104-105, 18 T 173. [207] D2098 at Consorta 321; D204 at A143080; 12 T 94:5-12. [208] D2098 at Consorta 321; D204 at A143080; 12 T 217:8-12. [209] D2098; D204. [210] D2098 at Consorta 0322; D204 at A143081. [211] D2098 at Consorta 0322; D204 at A143081; see also D411-T at B266403; D123 at B168211; 12 T 220:1-3, 228:15-233:3; 19 T 115:19-116:6. [212] D1761. [213] D212 at Consorta 003 (Staff commented that several shareholders conducted clinical trials with [GEH]'s products. The Imaging Sub-Committee reported that all of the trials went extremely well and in some cases facilities did not want to switch back to the Bracco products after trialing [GEH]'s.").; P702 at A250540; D204 at A143081; 19 T 117:21-118:22; D212 at CONSORTA 002, 003; Smith T 130:14-131:24. [214] P781:704; 12 T 101, 113-114. See also P788:215, 654, 625, 789:275-6, 793, 787; 9 T 131-132; 18 T 174-175; P630, 451. [215] P709; 12 T 105-108. The POA instructed representatives to "[p]enetrate accounts with Visipaque ... by utilizing the key clinical differentiating advantages" and "ALWAYS lead with Visipaque and the NEPHRIC data and uniquely position Visipaque for the high risk and at risk patients." P386:353,358,359; 12 T 122-125. See also P676 ("all Consorta key influencers [most] clearly understand the consequences of using Omnipaque and Omniscan vs not.... Effectively communicating the Visipaque story is vital to us winning this contract."), 616 ("[o]ur pricing strategy on Visipaque will be a crucial part of the Consorta decision"), 621, 783, 786:201. GEH carefully tracked representatives' compliance with the Consorta POA. P623, 683, 684, 656, 611, 626, 707, 792, 765; 703, 643. [216] Column 2 uses Bracco's clarified pricing for Isovue, in which rebates are taken off of list price, rather than net. Both parties agreed that Bracco had always previously calculated its rebates off of list price. 12 T 103; P4223; P788:215; 21 T 183-184. There is no dispute that Consorta invited Bracco and all other bidders to clarify their bids. 21 T 178-181; D1358, 206 (Strong letter stating "other suppliers were indeed given the opportunity to respond"), 212:3 ("Bracco was directed to [clarify its bid] in writing by the next day"). But see D212:003 (Consorta meeting minutes recommending that "in the future" clarifications should not be allowed). Moreover, GEH made a series of post-bid rebate clarifications of its own (12 T 188-197; P4219, 4221, 4220, 4227) and learned Bracco's exact Consorta pricing. 12 T 97-103; P4223, 781:704. [217] 18 T 174-175,183-185; 19 T 74-75; P869, 451, 2758, 176, 177, 179, 4219, 4221, 4227; D434. [218] D212 at CONSORTA004; accord D204 at A143081; 21 T 215:6-216:8; D121; D118 at B285077; D202 at B074946; D1357; 37 T 188:7-189:1, 192:10-193:20; 12 T 213:8-214:21; Smith T 184:23-185:7; D203. [219] 21 T 216:9-15; D 117 at B426316-18. [220] 21 T 129:11-130:22, 140:2-19, 142:4-24, 148:18-24, 153:22-154:1, 158:2-159:16, 162:17-169:9; D2388AA at B284951 ("[S]ome concern was noted [by Consorta] regarding Bracco's decision to hold firm on further price reductions."); D2388CC at B285048; D674; D65; D1711 at B289570; D2388-V at B286615 ("Consorta is looking for Bracco to demonstrate a compelling value proposition with price as a central point to the discussions...."); D64 at B091484. [221] D1761 (Winning the Consorta contract "came down to a clinical issue and a price issue and [Bracco was] in the weaker position on both fronts."); D1766 ("If we had approached Consorta with even a portion of the level of concession [on price] we are now willing to make to Novation, I assure you we would still have that contract!"). [222] 19 T 133:6-135:23. [223] D2098 at Consorta 321-22; D204 at A143080-81; D64 at B091484; 19 T 117:8-20; 21 T 144:2-8, 154:2-155:24, 158:2-160:3, 215:6-216:8; 22 T 14:18-18:7; Smith T 157:19-158:21; D65 at B430469. [224] D2098 at Consorta 322 ("Bracco's ProHance... had not garnered high compliance (due to reported patient reactions) forcing many Consorta facilities to purchase competitive product offcontract."); D204 at A143081; see also 12 T 214:22-216:4; 28 T 10:4-12; 37 T 188:7-189:1, 193:21-196:3; Smith T 157:19-158:21; D1761; D63; D203; D131 at B275869. [225] D66; D2422 at B502245; 21 T 169:23-172:22, 180:19-181:1. [226] D212 at Consorta 002; D118 at B285077 ("We believe the restructured proposal makes our pricing consistent with Amersham's."); D2388DD at B289915; D119; 21 T 181:14-197:5; 22 T 20:17-26:9; D434; D937 at B433103; D938 at Consorta 013; D2422 at B502244-45; Smith T 141:9-24, 143:18-20, 145:19-146:17, 168:14-16, 168:21-169:22; D1358 at B087234. [227] D212 at Consorta 002 ("The Sub-Committee discussed [Bracco's enhanced bid] and stated that we should not accept this offer as this would be unethical."), Consorta 003; D435; D437; D1358 at B087235; D206 at Consorta 0180 (President and CEO of Consorta finding Bracco's conduct "to raise further troubling ethical issues"); 37 T 188:14-189:1, 199:24-200:7; 21 T 198:19-207:21, 210:16-215:5; 22 T 4:20-6:11. [228] D1761; D123 at B168207; 21 T 210:22-212:22; see also D1711. [229] P1490 ("Visipaque's growing penetration within Kaiser ... drove this process"), P1491, 1492, 717:877; 18 T 185-186; 19 T 75-76. [230] P1490 at A291512, 513. [231] 19 T 130:25-131:4. [232] Specifically, D2014 states that the groups tested in both studies were "very similar with regard to demographic and other baseline characteristics ... as well as iodine does administrated," and D2015 referred to the NEPHRIC and Kay studies as "similar." D2014; D2015. Likewise, in D3, a letter signed by Dr. Spinazzi and sent to over 30,000 doctors, asserts that Isovue is safer than Omnipaque, specifically comparing the results of NEPHRIC to the Kay study. D3. [233] For example, testimony revealed that Mr. Malackowski's expert fee was $500,000. In addition, on any given day of trial, multiple attorneys, technical personnel, and experts were present in the courtroom. [234] Specifically, Bracco contends that Mr. Malackowski and Mr. Russell made a thorough review of the market that included all such factors through their review of thousands of documents (e.g., GEH market research, sales calls, instructions to the sales force, marketing plans and analyses, reports from the field, and other market analysis), interviews with or from participants (e.g., users of the products, sales representatives, depositions of GEH personnel), independent research, review of the technical literature themselves and via the reports of other technical experts. [235] E.g., 35 T 211-212, 222-225 (D3465, p134); Scotts Co. v. United Indus. Corp., 315 F.3d 264, 280 (4th Cir.2002); Sears, Roebuck & Co. v. Menard, Inc., No. 01-9843, 2003 WL 168642, at *1-2, 3, 2003 U.S. Dist. LEXIS 951, at *5, 10 (N.D.Ill. Jan. 22, 2003). [236] Bracco relies on the following cites. See also Simon Prop. Group L.P. v. mySimon, Inc., 104 F. Supp. 2d 1033, 1041 (S.D.Ind.2000); Trouble v. Wet Seal, Inc., 179 F. Supp. 2d 291, 308 (S.D.N.Y.2001). [237] The survey was also confounded by not excluding the respondents' memory from more than two years earlier, of the discontinued brochure and letter, in initial questions (D326; 35 T 154-156), and in the face of the respondents receiving other similar documents from Bracco and GEH at the same time and after, that they would have confused their memories of these with documents (e.g., other similar brochures, the earlier March Spinazzi letter to doctors on the same subject matter (D1), the GEH Vitti letters to doctors on the same subject matter (P2163)), creating a flawed memory test with a high risk of testing both faulty memories and perceptions, thus rendering the survey unreliable and inadmissible hearsay. See, e.g., Pittsburgh Press Club v. United States, 579 F.2d 751 (3d Cir. 1978) (inadmissible hearsay in polling context); United States v. Southern Indiana Gas & Elec. Co., 258 F. Supp. 2d 884, 893-94 (S.D.Ind.2003) (survey with a hearsay risk of faulty memory unreliable). [238] This conclusion is made in the context of non-commercial speech. It is not to say that the Court will refrain from inquiring into the reliability of such articles when they are used in a secondary dissemination in the form of commercial advertising. [239] Sanderson, 415 F.3d at 624 (Lanham Act does not reach "oral statements and brochures at trade shows"); Schwarz Pharma, 388 F.Supp.2d at 982; First Health Group v. BCE Emergis, 269 F.3d 800, 803-04 (7th Cir. 2001) ("an advertisement read by millions (or even thousands in a trade magazine) is advertising, while a person-to-person pitch by an account executive is not"). [240] An unclean hands defense also requires that a plaintiff must have engaged in precisely the same behavior it accuses the defendant of conducting. See, e.g., Specialty Minerals, Inc. v. Pluess-Staufer AG, 395 F. Supp. 2d 109, 112-13 (S.D.N.Y.2005) (rejecting the defense because "factually similar misconduct alone is [not] sufficient to create the necessary link"); Citizens Fin. Group Inc. v. Citizens Nat'l Bank, 383 F.3d 110, 129 (3d Cir.2004) ("`the extent of actual harm caused by the conduct in question, either to the defendant or to the public interest, is a highly relevant consideration.'") (citations omitted). [241] Some indicative phrases of GEH's claims of Visipaque's renal superiority over all LOCM, as discussed supra are: (1) "[]The NEPHRIC data clearly demonstrate that VisipaqueTM offers a significantly better renal safety profile than traditional low osmolar non-ionic contrast media in at-risk patients... We believe that the data strongly support VisipaqueTM as the agent of choice for these patient groups." P2449:379, P69:915, P254:863, P772:340, P1448:898, P4149:p2; 7 T 68-69; (2) "[C]linical studies, nephric etc show less risk nephrotox vs ... Isovue for [high risk] pts...." P2312:A659673, P4049:A659673; (3) "Approached dr. with nephric focus and differentiating vis from locm class with regards to osmoality. Reminded dr. that patients are 11 times likely to have CIN with the locm class than visi." P3682:Omni/3727, 4049:Omni/3727; and (4) "[R]ecent controlled trials have shown that non-ionic Isosmolar contrast agents are superior to low-osmolar agents in preventing CIN." P4251:210 (emphasis added). [242] An example of GEH's claims of Visipaque's renal superiority over LOCM with prophylactics, as discussed supra is: "I ... discussed the attributes of Isosmolar Visipaque including it's impact on CIN—a clinical issue just coming to light; it's elimination of costly drug therapies (fenladopan) to prevent CIN with std LOCM." P793:514. [243] The NEPHRIC conclusion actually states: "[n]ephropathy induced by contrast medium may be less likely to develop in high-risk patients when iodixanol [(an iso-osmolar contrast medium)] is used rather than a low-osmolar, nonionic contrast medium." P2467. [244] Some examples of GEH's claims of Visipaque's superior performance with regard to incidence of MACE over all LOCM, as discussed supra are: (1) "Abstract Shows Significantly Lower Incidence of [Major Adverse Cardiac Events or Major Adverse Clinical ("MACE")] Following [PCI] Using Visipaque Compared to Isovue...." P2669:480, P3114H:857-58, P1893:940-41, P4151:p2; 7 T 69; (2) "Visipaque doesn't increase heart rate or B/P like LOCM". P3682:Omni/38573, 4049:Omni/38573; and (3) "Nonionic Dimer Provides Reduced MACE ..." P410:965, P3649:408, P3649A:408, D2324:117. [245] Some examples of GEH's claims of Visipaque's superior performance with regard to patient discomfort over all LOCM, as discussed supra are: (1) "[Visipaque] offers significantly better comfort to the patient ..." P2508:767A, P2511C:781A, P4163:767A, P4166C:781A; (2) "She asked why use Vis Shared theory isosmolar, less fluid shifts and thus less pt discomfort, movement and need to rescan...." P2312:A650688, P4049:A650688; and (3) "Less chance of extravasation-related complications—including pain, discomfort ... when used:" "Less chance of patient discomfort ... when used in:" "High concentration", "High-rate injections", "Multiple procedures", "High-speed procedures." P410:966. [246] Some examples of GEH's claims of Visipaque's superior performance with regard to osmosality/cost over all LOCM, as discussed supra are: (1) Showing "hyperosmolality" (i.e., osmolality higher than blood, like Isovue) leading to "altered morphology" of "erythrocytes" and "endothelial cells", ultimately leading to "discomfort", "warmth", "coldness" and "pain." P2508:766A, P2511C:781A, P4163:766A, P4166C:781A; see also P3114K:823, P2510:771A, P2508:763A, P2511C:779A, P4163:763A, P4165:771A, P4166C:779A, P2183:982, P2184:000, P2311:p4, P2298:p25, P4252:p3, P3828:929, P3261:011, P3829:036, P2156:036, P2157:212. Additional claims of less red blood cell effect of IOCM vs. LOCM can be found at: P2311:p5, P3710:p2, P2280:p5, P395:357, P409:945, P333:738, P410:960, P3649:403, P3649A:403, P436A:421, 27-28, P2298:p7, 13-14, P782:893, P2161:387, P2183:991, P2184:009, P4252:p12, P4174:pl, P3114J:821, P3210:934, 410:962, P3649:405, P3649A:405, P2510:772A, P2508:764A-65A, P2511C:780A, P4163:764A-65A, P4165:772A, P4166C:780A; D2324:114, D2334:p2, D2324:112; (2) "Isosmolar VISIPAQUE may reduce financial burden due to serious adverse events". P446:641, P649:665; and (3) "Used the `cost' story for Visi vs. LOCM....." P3682:Visi/154349, P4049:Visi/154349. [247] GEH argues that Bracco improperly characterized its marketing as "tests prove" claims. However, the Court finds that there is an abundance of evidence to show that GEH's promotional campaign was primarily based on establishment type claims of superiority. Further, GEH contends that Bracco bears the burden of proof through surveys to show that GEH's claims were establishment claims and not just regular superiority claims citing to L & F Products v. The Procter & Gamble Co., 845 F. Supp. 984 (S.D.N.Y.1994), and C.B. Fleet Co. v. SmithKline Beecham Consumer Healthcare, L.P., 131 F.3d 430 (4th Cir.1997). In L & F Products the court held that plaintiff "failed to produce persuasive evidence, such as consumer surveys, that consumers believed that the [ads] depict tests or studies." 845 F. Supp. at 1000-01. In C.B. Fleet Co., the Court concluded that "whether an advertising claim implicitly, though not expressly, asserts that it is test-validated must be considered [a] question of fact.... The relevant question for determining the required proof is whether the advertisement made an assertion of test-validation to the consumer public." 131 F.3d at 436. Nonetheless, those cases are inapposite because in each one of them, it was not clear that the superiority claim was based on a test. For example in L & F Products, the Court found that the advertisements in question unambiguously depicted demonstrations of the two competing products by actors in a studio, not a laboratory test conducted by technicians. 845 F. Supp. at 1000-01. Similarly, in C.B. Fleet Co., the court stated that the plaintiff must prove consumer perception of a "tests prove" superiority claim when the message is implicit. 131 F.3d at 436. Conversely, in this case GEH's marketing campaign was focused on disseminating the conclusions of the NEHPRIC study and it advertised itself as being a part of the NEPHRIC study. There is no ambiguity, and the Court finds GEH's advertising campaign to be explicit in its "tests prove" message. Therefore, the Court finds that no survey is required to prove that the advertising consisted of "tests prove" type claims. [248] Again, the varied relevant studies tested different patient groups. The NEPHRIC study focused on high risk patients and incidents of CIN when using Visipaque versus Omnipaque. In COURT, scientists compared the use of Visipaque and Hexabrix in high risk patients undergoing Percutaneous Transluminal Coronary Angioplasty ("PTCA") to determine which CM gave rise to more incidents of in-hospital MACE. VICC looked at patients from all risk levels, specifically those patients undergoing percutaneous cardiac intervention ("PCI"), to document incidents of MACE, comparing Isovue and Visipaque. VICC confirmed the findings of COURT in light of changes in practice, specifically the use of more stents and more IIB/IIIA inhibitors. [249] In addition, in correspondence to GEH as recently as March, 21 2005, the FDA has echoed similar caveats regarding the unsupported contention that Visipaque performs superior to all LOCM. P1894. [250] None of the FDA letters introduced by Bracco at trial constitute final agency action, and none found any specific GEH ad or promotional piece to be false or misleading. See Schering-Plough Healthcare Prods. v. Schwarz Pharma, 547 F. Supp. 2d 939, 946-47 (E.D.Wis.2008) (informal and tentative letters issued by the FDA do not constitute formal or final agency action requiring deference); Dietary Supplemental Coalition v. Sullivan, 978 F.2d 560, 562-63 (9th Cir.1992); Genendo Pharm. N.V. v. Thompson, 308 F. Supp. 2d 881, 884-85 (N.D.Ill.2003); Summit Tech. v. High-Line Medical Instruments, 922 F. Supp. 299, 306 (C.D.Cal. 1996). [251] The Court notes that the requirement that the results be repeated in an adequate and well-controlled study is not the standard of the Lanham Act and merely reflects FDA requirements. [252] Bracco supports this assertion by stating that none of the cited studies in the NEPHRIC article used pretreatments. See P2467:916-7. [253] During this litigation, evidence showed that GEH concluded a study called "NEPHRIC II," where it compared Visipaque and Isovue head-to-head. Despite the obvious relevance of such a study, GEH has not produced documents concerning it (Dr. Davidson produced the protocol pursuant to a third party subpoena). Bracco asks the Court to draw an inference that this study showed that Isovue was at least equivalent to Visipaque. However, the Court declines to do so in the absence of any evidence of its actual results. Furthermore, in 2007, GEH moved to stay the case, reopen discovery and produce NEPHRIC II documents, along with those from Bracco's ongoing PREDICT study, which compared Visipaque and Isovue. Bracco opposed the motion, and the Court denied it. Therefore, the Court declines to revisit this issue or draw an inference for either party. Nonetheless, the Court notes that such a study and its results would be of use to the Court in its determination to issue an injunction because despite the rule that new study results are only relevant to whether subsequent ads "are false or misleading," in this case the alleged violative conduct is ongoing. See Alpo Petfoods, 720 F.Supp. at 205 n. 12 ("Post facto evidence cannot make actionable true claims which later become false and does not bar suits for false or misleading representations which later become true."), rev'd in part on other grounds, 913 F.2d 958 (D.C.Cir. 1990); Satis Vacuum Indus. Vertriebs, AG. v. Optovision Tech., Inc., No. 99-2147, 2001 WL 1142803, at *10 (N.D.Tex. Sept. 24, 2001). Since the alleged violative conduct is ongoing, even if such results would not affect whether the ads disseminated before the completion of the study constituted false advertising, such results would be relevant to the Court's analysis of whether an injunction should issue. However, the subsequent study results are not before the Court. [254] GEH makes additional arguments that Bracco has failed to identify the allegedly "misleading" nature of any accused advertisement with specificity in its survey and that it has also failed to present evidence of "actual deception" through a valid survey. As set forth above, Dr. Rappeport's survey, which tested two statements that purportedly appeared on select web pages from the multi-page website www.visipaque.com, was not conducted in accordance with accepted principles of survey research. AstraZeneca, 444 F.Supp.2d at 291-293; Church & Dwight Co. v. S.C. Johnson & Son, Inc., 873 F. Supp. 893, 906-11 (D.N.J.1994); Am. Home Prods., 871 F.Supp. at 761-62; Smithkline Beecham, 960 F.2d at 300-01; Procter & Gamble, 2006 WL 2588002, at *25, 27 (excluding survey of doctors for failure to include a control group). In addition, GEH correctly argues that even if credited, which the Court has declined to do here, those results cannot be applied to: (i) statements not tested, or (ii) statements in media other than those surveyed. AstraZeneca, 444 F.Supp.2d at 296 (television survey not applied to print ad, website materials, or pamphlets); Am. Home Prods., 871 F.Supp. at 750 (refusing to extend a survey on a television ad and an insert to other print ads, even though they contained elements in common with the messages tested). Further, the survey tested only statements from foreign websites. Bracco has offered no survey evidence of actual deception from, for example., any accused print ads or sales rep statements. It also has not shown actual deception from any statements that were not tested in surveys, including those regarding cardiac events or Visipaque being iso-osmolar. See e.g., AstraZeneca, 444 F.Supp.2d at 296 n. 12. Mr. Russell's opinions regarding GEH's marketing "messages" and his assumptions about their effect cannot substitute for a valid consumer survey, hence, once again Bracco's claim of impliedly misleading messages fails. [255] On its website, NAD describes itself as a low-cost alternative to litigation, providing companies with a forum to air their disputes over the veracity of national advertisements. "NAD uses a unique, hybrid form of alternative dispute resolution, working closely with in-house counsel, marketing executives, research and development departments and outside consultants to decide whether claims have been substantiated. Each party to the dispute has ample opportunity to explain its position and provide supporting data." About NAD, www.nadreview.org/AboutNAD. aspx. [256] GEH contends that Bracco must present clear and convincing evidence in order for this Court to find willfulness. In support, GEH relies on several cases. Castrol Inc., 169 F.Supp.2d at 341 (requiring a showing of clear and convincing evidence that the defendant's false advertising was willful); Versa Prods. v. Bifold Co., 50 F.3d 189, 208 (3d Cir. 1995) (applying clear and convincing standard to prove willfulness of trade dress infringement); Tamko Roofing Prods. v. Ideal Roofing Co., 294 F.3d 227, 229 (1st Cir.2002) (applying the clear and convincing evidentiary standard to establish willfulness in trademark infringement action). Similarly, the Court notes that in other contexts a heightened standard may apply, such as requiring a prevailing party seeking attorneys' fees under § 1117(a) to demonstrate the exceptional nature of a case by clear and convincing evidence, see e.g., Schlotzsky's Ltd. v. Sterling Purchasing Nat. Distribution Co., Inc., 520 F.3d 393, 402 (5th Cir.2008); see also Seven-Up, 86 F.3d at 1390 (finding that under 15 U.S.C. § 1117(a), an "exceptional case" is one in which the infringing party acted maliciously, fraudulently, or wilfully); and to establish willful infringement, a patentee must show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent. In re Seagate Tech., LLC, 497 F.3d 1360, 1371 (Fed.Cir.2007). By contrast, a district court in Oregon recently declined to apply a clear and convincing standard to the plaintiff's willfulness showing in support of its claim of lost profits. adidas Am., Inc. v. Payless Shoesource, Inc., No. 01-1655, 2008 WL 4279812, at *9-10, 2008 U.S. Dist. LEXIS 69260, at *25-26 (D.Or. Sept. 12, 2008). In adidas, the court relied on Gracie v. Gracie, 217 F.3d 1060, 1068-69 (9th Cir. 2000), which held that a jury charge on willfulness did not need to instruct the jury that it must find willfulness by a clear and convincing standard. However, the Court is not persuaded by adidas. Specifically, the adidas court reasoned that the Ninth Circuit requires a plaintiff seeking lost profits to demonstrate that the defendant acted wilfully. Id. ("A defendant's profits can only be disgorged to prevent unjust enrichment if the trademark infringement was willful.") (citation omitted). The Third Circuit, however, has rejected a bright-line wilfulness requirement, instead considering a demonstration of willfulness as an important, but not dispositive, factor in the lost profits analysis. Banjo Buddies, 399 F.3d at 176-77. Nevertheless, the Court need not resolve the apparent tension in the law because Bracco has presented scant evidence to establish that GEH's false advertising was done willfully. [257] A sixth factor, "palming off," applies to trademark actions, but is not applicable to false advertising actions. [258] The NEHPRIC Article was published in a very highly acclaimed medical journal, making an even stronger case that GEH's actions were reasonable at the time and not carried out in a willful manner. [259] In addition, the Court notes that the Lanham Act does not provide for trebling of disgorgement of defendant's profits, but that a court may adjust an award of defendant's profits either upward or downward, in the interest of equity, provided any award does not exceed more than three times the amount of actual damages. 15 U.S.C. § 1117(a); Donsco, 587 F.2d at 607-08. However, here the court has held that disgorgement is not an appropriate remedy, let alone considered enhancement of it. Such a result would constitute a windfall to Bracco. Thus, even if Bracco were entitled to disgorgement of profits, which it is not, the Court would not increase any such award in the interest of equity. [260] The Court notes that numerous courts have adopted an "Account Specific" approach to calculate damages. See, e.g., Sweetzel, Inc. v. Hawk Hill Cookies, Inc., No. 95-2632, 1996 WL 355357, at *3-4, 1996 U.S. Dist. LEXIS 8562, at *9 (E.D.Pa. June 19, 1996). Courts have also relied on a "Sales Trend" approach for damages. Procter & Gamble Co. v. Paragon Trade Brands, Inc., 989 F. Supp. 547 (D.Del. 1997); McCarthy § 30:79. Bracco's damages expert, Mr. Malackowski, applied both a "Account Specific" approach and a "Sales Trend" approach. However, since the Court has not found that disgorgement is appropriate in this case, it does not reach the inquiry of which method is most proper for the calculation of disgorgement damages. [261] Bracco also asserts that disgorgement need not account for third party competitors. Bracco relies on authority which holds that when multiple competitors compete for sales in the market, it is acceptable to disgorge all of a defendant's increased profits without accounting for the presence of third party competitors. Callaway, 384 F.Supp.2d at 743; Tamko Roofing, 282 F.3d at 34; Banjo Buddies, 399 F.3d at 177 (3d Cir.2005). Although the record supports that the market, outside of the Premier GPO, effectively is split between GEH and Bracco, who also were the primary competitors for all accounts specifically at issue (e.g., Novation, Consorta, Kaiser), (Pl.'s FOF ¶¶ 51, 59, 72), it is not necessary for the Court to reach this question either, as disgorgement is not being ordered. [262] "While the plaintiff must prove causation, it does not have to negate every conceivable intervening factor which might have caused a decline in sales." 5 McCarthy § 30:79; see also EFCO, 219 F.3d at 740 n. 5. "Proof of a general decline in sales or a disruption of anticipated business growth following the defendant's misconduct can be sufficient in some cases to justify an inference of causation.... Proof of a decline in sales combined with evidence tending to discount the importance of other market factors, such as evidence of positive business conditions and the success of similar businesses not subject to the defendant's tortious conduct, can be sufficient to establish a causal connection between the plaintiff's decline in sales and the misconduct of the defendant." See Restatement Third, Unfair Competition § 36, comment h (1995). In this case, Bracco has failed to establish the threshold causation needed for an award of damages as there are other factors present which account for Bracco's lost profits and overshadow GEH's actual false advertising. [263] While Mr. Malackowski's presentation was illuminating on the issue of damages, Bracco has not proffered sufficient evidence linking its sales decline to GEH's false advertising. [264] Contrary to GEH's assertion that Lanham Act damages are "notoriously difficult to prove and unavailable" (36 T 5), courts frequently have upheld multi-million dollar awards. See, e.g., U-Haul Int'l v. Jartran, Inc., 793 F.2d 1034 (9th Cir. 1986) ($40 million); Procter & Gamble Co. v. Haugen, 2007 WL 1364429 (D.Utah, Mar.16, 2007) ($19.2 million); Healthpoint Ltd. v. Ethex Corp., 2002 U.S. Dist. LEXIS 26858 *15-16 (W.D.Tex. Dec. 10, 2002) ($16.2 million); First Act Inc. v. Brook Mays Music Co., 429 F. Supp. 2d 429, 438-440 (D.Mass.2006) ($15.7 million); EFCO, 219 F.3d at 740 ($14.1 million). [265] The Court notes that it excluded a Bracco letter upon which Bracco's experts relied to support their assumption that Bracco had additional capacity beyond the Consorta contract. [266] Recovery is not limited to advertisements that make specific reference to the defendant or his false claims, nor is plaintiff required to prove that the false advertisements were the sole reason for its expenditures. ALPO Petfoods, Inc. v. Ralston Purina Co., 997 F.2d 949, 952 (D.C.Cir.1993). [267] For a more detailed discussion, see supra p. 479-80.

01-03-2023

10-30-2013

https://www.courtlistener.com/api/rest/v3/opinions/2346744/

931 F. Supp. 1462 (1996) LensCRAFTERS, INC., Plaintiff and Counterclaim Defendant, v. VISION WORLD, INC., Defendant and Counterclaimant. Civil No. 3-95-137. United States District Court, D. Minnesota, Third Division. March 5, 1996. *1463 Geoffrey P. Jarpe, Seth M. Colton, Jarett B. Decker, and Stephen E. Yock, Maun & Simon, St. Paul, MN, David L. Bishop, Bishop Law Office, Falcon Heights, MN, for defendant Vision World, Inc. Peter M. Lancaster, James C. Burroughs, and Joshua J. Burke of Dorsey & Whitney, Minneapolis, for plaintiff LensCrafters. *1464 MEMORANDUM AND ORDER DAVIS, District Judge. This matter came before the Honorable Michael J. Davis on February 9, 1996 upon defendant and counterclaimant, Vision World, Inc.'s ("defendant" or "Vision World") motion for a preliminary injunction. For the reasons set forth below, Vision World's motion is denied in its entirety. FACTUAL BACKGROUND Plaintiff and counterclaim defendant, LensCrafters, Inc. ("LensCrafters") and defendant and are both in the business of manufacturing and selling prescription eyeglasses. Vision World is a Minnesota corporation and currently has 34 retail locations in Minnesota and border states. LensCrafters, a subsidiary of the Italian company, sells its products at over 600 retail locations throughout the United States as well as various foreign countries. Both companies sell a version of scratch-resistant eyeglasses which are specially formulated to prevent scratches and abrasions. In 1992, LensCrafters alleges that it initiated a joint research and development effort with Essilor of America, Inc., ("Essilor"), one of the two largest manufacturers of eyeglass lenses in the United States, to develop a scratch-resistant lens that would fully satisfy consumer demand. After developing a product that Essilor believed complied with this demand, it engaged in a number of comparative scratch tests principally with Essilor's own TRU-TINT product. Plaintiff alleges that Essilor recognized from these tests that its product was not the most scratch-resistant lens available, but was instead a typical scratch-resistant lens. Plaintiff alleges that Essilor then ran further tests with the DURALENS product against four other lenses: (1) Essilor's own SUPERSHIELD; (2) the leading scratch-resistant lens sold by SOLA, Essilor's largest competitor; (3) the leading scratch-resistant lens sold by a company known as Vision Ease; and (4) Signet Armorlite's RLXPlus. Based upon the results of these tests, plaintiff alleges that Essilor found DURALENS to be the most scratch-resistant lens. Plaintiff contends that three separate tests were used to reach that conclusion, each of which has been accepted by an international committee of experts formed by the International Standards Organization ("ISO"): (1) the "Bayer" test[1] which demonstrated that DURALENS is, according to plaintiff, "clearly superior" to any competitive lens; (2) the abrasion or "Tumble" test[2] which showed DURALENS to be superior to all lenses other than Essilor's SUPERSHIELD product[3]; and (3) a steel wool test[4] which showed the differences among the five lenses to be statistically insignificant. Plaintiff then entered into an exclusive marketing agreement with Essilor in order to market the DURALENS. It developed television and print advertising to focus upon what plaintiff characterizes as the "principal conclusions of Essilor research" — that DURALENS is the most scratch-resistant lens available and that rubbing steel wool demonstrates "clear differences" between a typical scratch-resistant lens such as TRU-TINT and the DURALENS. The television advertising commenced in November 1994 and depicts a LensCrafters' employee, Tracy Sylvester, hand rubbing the DURALENS with steel wool and a "typical" scratch-resistant lens. Ms. Sylvester then holds the two lenses up side by side to reveal the damage to each lens and states, "No other lens is more scratch resistant than Duralens." *1465 Plaintiff also began print and in-store ads in the Minneapolis area in February 1995. Comparative displays were set up in LensCrafters' stores with posters featuring Ms. Sylvester and other images similar to those in the television commercials. In addition, in-store displays were made which invite customers to rub steel wool over the surface of the DURALENS and comparable lenses. They have continued to be used since that time. On or about February 13, 1995, LensCrafters served a complaint on Vision World alleging in part that Vision World's advertising contained false, deceptive and/or misleading comparative claims about LensCrafters' prices and products. Vision World then filed an Answer and Counterclaim denying LensCrafters' allegations and asserting numerous claims against LensCrafters. In particular, Vision World alleged that a LensCrafters' advertising campaign pertaining to a new series of scratch-resistant lenses called "DURALENS" was misleading, contrived and untrue and amounted to false advertising. On October 23, 1995, defendant first demanded that the advertising be stopped for a number of reasons. First, Vision World alleged that the advertising was false and misleading because the lenses in the commercial did not show any damage to the DURALENS even though Essilor's research indicated that some damage did occur to the DURALENS in the testing and research process. Second, Vision World alleged that the allegedly comparable lens used in the commercial was a product which was not designed to be particularly scratch-resistant and was, therefore, a false comparison. Third, Vision World alleged that it was "disparaged" by LensCrafters' advertising campaign and that it would suffer irreparable harm from lost sales unless the advertising campaign was discontinued. LensCrafters alleges that the defendant is unlikely to succeed on the merits because LensCrafters' claims about the DURALENS product are true and because Vision World was not harmed by the advertisements. Vision World seeks a preliminary injunction pursuant to 15 U.S.C. § 1114 and rule 65 of the Federal Rules of Civil Procedure in order to prevent LensCrafters from advertising its DURALENS product through comparison or by referencing "scratch protection," "scratch resistance," or the "steel wool" test. For the reasons set forth below, this Court finds that Vision World is not entitled to enjoin LensCrafters from the further utilization of the DURALENS advertising campaign and therefore denies the preliminary injunction. DISCUSSION The Eighth Circuit has established the following analysis to be used in considering a preliminary injunction motion: [W]hether a preliminary injunction should issue involves consideration of (1) the threat of irreparable harm to the movant; (2) the state of balance between this harm and the injury that granting the injunction will inflict on other parties' litigant; (3) the probability that movant will succeed on the merits; and (4) the public interest. Dataphase Sys., Inc. v. C.L. Sys., Inc., 640 F.2d 109, 113 (8th Cir.1981); accord Medtronic, Inc. v. Gibbons, 527 F. Supp. 1085, 1090 (D.Minn.1981), aff'd, 684 F.2d 565 (8th Cir.1982). Whether a motion for preliminary injunction should be granted rests with the sound discretion of the Court. Calvin Klein Cosmetics Corp. v. Parfums de Coeur, Ltd., 824 F.2d 665, 667 (8th Cir.1987). In weighing these factors, no single factor is dispositive; rather, all of the factors must be considered in determining whether on balance they tip toward granting injunctive relief. Id. Likelihood of Success on the Merits Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), prohibits the use of false or misleading statements in commercial advertising. Establishing a violation of § 43(a) requires proof of the following factors: (1) defendant made false statements of fact about its own products or plaintiff's products in its advertisement; (2) those advertisements actually deceived or have the tendency to deceive a substantial segment of their audience; (3) the deception is material because it is likely to influence buying decisions; (4) defendant caused its falsely advertised *1466 goods to enter interstate commerce; and (5) plaintiff has been or is likely to be injured as a result of these activities either through direct diversion or sales from plaintiff to defendant, or by injuring the goodwill its products enjoy with the buying public. Alternative Pioneering Systems, Inc. v. Direct Innovative Products, Inc., 822 F. Supp. 1437, 1441-42 (D.Minn.1993). In order to prove that defendant made false statements of fact about its product or plaintiff's product, plaintiff must demonstrate that the statements made in the ad are either literally false or the representations, although true, are likely to mislead consumers. Id. at 1442. A. Defendant first argues that LensCrafters engaged in "literally false" advertising by representing that the DURALENS is vastly superior to its competitors using the steel wool test. In support of this argument, Vision World relies upon Essilor's finding that the difference among the five leading scratch-resistant lenses using the steel wool test is statistically insignificant. Defendant further argues that LensCrafters then decided to conduct a steel wool test using the TRU-TINT lens which defendant claims is softer and presumably more susceptible to scratching with steel wool. Defendant then cites tests of its own which demonstrate that the multi focal DURALENSES are far less susceptible to scratching by steel wool than competitive products. Affidavit of Roy R. Ferguson, Ph.D., ¶ 23-24. As a preliminary note, the Court disagrees with Vision World's reliance upon the steel wool test among the five leading scratch-resistant lenses for the simple reason that that test does not form the basis of LensCrafters' conclusions in its ad. In fact, LensCrafters readily admits in its memorandum opposing the preliminary injunction that "The results of the steel wool test could not clearly distinguish among the five most abrasion-resistant lenses, though it had distinguished between the DURALENS and TRU-TINT." Plaintiff's Memorandum, p. 5 (emphasis added). John Young, an independent consultant with IPI associates, stated that Essilor's previous comparison between the DURALENS and the TRU-TINT did, in fact, reveal "measurable differences" between the two. It is that test that forms the basis of LensCrafters' ad, not the test involving the five leading scratch-resistant lenses. Additionally, a review of the advertisements[5] reveals nothing literally false or even misleading about the reference to steel wool. The ads depict two lenses — a "typical" scratch resistant plastic lens rubbed with steel wool and the DURALENS plastic lens rubbed with steel wool. Beneath the two lenses, it states "DURALENS® — Even stands up to steel wool." Beneath this caption is a picture of a lens being rubbed with steel wool. The ad compares the DURALENS to a typical scratch resistant lens, not one of the five most scratch resistant lenses available. The ad does not profess superiority over any lens when applying steel wool as Vision World seems to argue; in fact, that is not even implied. Nor does the ad imply that any steel wool test will undoubtedly show that the DURALENS is the most scratch-resistant lens.[6] The ad merely states that the DURALENS "stands up to steel wool" and then demonstrates the superiority of the DURALENS over a "typical" scratch-resistant lens, an assertion which LensCrafters supports with ample evidence. Vision World also argues that LensCrafters introduced the TRU-TINT lens which Vision World argues is a softer lens after LensCrafters did not receive favorable results from the five leading scratch resistant lenses. This Vision World characterizes as "blatantly manipulative and improper." The Court disagrees. Even accepting as true for the moment Vision World's argument that the TRU-TINT lens is softer, that in and of itself, does not render LensCraft *1467 ers' ad false or even misleading. Again, the ad clearly states that the lens being compared to the DURALENS is a "typical" scratch resistant lens and then shows the DURALENS resisting the pressure of steel wool. Vision World does not rebut the proposition that the DURALENS is, in fact, superior to the TRU-TINT lens when subjected to the steel wool test nor does Vision World argue that the DURALENS reveals permanent scratches when rubbed with steel wool. Finally, Vision World fails to cite any authority demonstrating that an advertisement of this type comparing an attribute of a particular company's product to that of a "typical" product is legally impermissible. B. Vision World next argues that the presentation of the comparison between the DURALENS and the typical scratch-resistant lens is also false. Vision World points to a number of alleged inaccuracies in the ad which it contends are false or misleading because the advertisement either overstates the effect of rubbing the steel wool against the typical lens or understates the effect of rubbing the steel wool against the DURALENS. Specifically, Vision World alleges that the advertisement does not accurately portray the "smudging" or "smearing", i.e., the breakdown of the lens surface that creates a milky film on the surface of the lens, of the DURALENS when rubbed against the steel wool. Furthermore, Vision World argues that a typical lens will not display the scratches as demonstrated on the TRU-TINT lens and also inaccurately depicts the length of time that the steel wool is rubbed against the lenses. Even accepting these allegations as true[7], the Court does not find that they render the advertisement literally false. One of the main purposes of the advertisement is to demonstrate that the DURALENS is a more scratch-resistant lens than the TRU-TINT lens when rubbed with steel wool. Defendant's allegations regarding the overstated or understated effect of the steel wool do nothing to refute this message. Most importantly, these allegations do not undermine the fundamental premise of the advertisement, i.e., that a typical lens will reveal permanent scratches when rubbed with steel wool whereas the DURALENS will not. Nor does the Court find the alleged inaccuracies in the advertisement to be materially misleading. To enjoin an ad which is implicitly false, i.e., materially misleading, a court must conclude that the ad is confusing or deceiving based upon public reaction. Smithkline Beecham v. Johnson & Johnson-Merck, 906 F. Supp. 178, 180 (S.D.N.Y.1995), aff'd, 1996 WL 37325 (2d Cir.1996). Defendant has failed to proffer any evidence demonstrating that the smearing of the DURALENS or the "gouges" in the TRU-TINT lens actually deceived or have the tendency to deceive a substantial segment of their audience.[8] Vision World does proffer a consumer survey showing that only 23% of those viewing the television commercial understood that the lenses displayed had been rubbed for two minutes. But this statistic, standing alone, does not compel a conclusion that the commercial is misleading pursuant to section 43(a) of the Lanham Act. Vision World must also show that this misperception has a material effect upon the consumer's decision to purchase the DURALENS. Id. Vision World has failed to establish that the length of rubbing would adversely impact upon a consumer's decision to purchase the DURALENS. See e.g., L & F Products v. Procter & Gamble Co., 845 F. Supp. 984, 1003 (S.D.N.Y.1994), aff'd, 45 F.3d 709 (2d Cir. 1995) ("Even assuming that the commercials did imply that they depicted the actual cleaning *1468 efforts, L & F has failed to demonstrate how this perception would be material to a consumer"). Moreover, Tracy Sylvester, the LensCrafters optician who performed the test, stated that she did her best to treat the two lenses in the same way and that the thirty-second commercial fairly depicts the process by which the lenses were rubbed. Declaration of Tracy Sylvester, ¶ 4. She further stated that "After each lens was rubbed, there was a clear visible difference between the appearance of the DURALENS and the competing lens." Sylvester Dec., ¶ 5. The Court finds Vision World's contentions regarding the foregoing inaccuracies of the advertisement without merit. C. Vision World next argues that LensCrafters' reference to "the comfort of plastic with the durability of glass!" is false. A plaintiff seeking to prove false the statement "tests show x" can meet its burden of proof by showing that the tests referred to are not sufficiently reliable to permit one to conclude with reasonable certainty that the test establishes the proposition for which it stands. Procter & Gamble Co. v. Chesebrough-Pond's Inc., 747 F.2d 114, 119 (2d Cir.1984). An examination of the Bayer test, a reliable test used by the ISO, demonstrates that the DURALENS does, in fact, perform better than glass in terms of durability. Jarpe Aff., Ex A at 100041. Vision World offers no evidence demonstrating the invalidity or unreliability of the Bayer test. Accordingly, the Court does not find that this claim to be literally false under the provisions of the Lanham Act. Moreover, Vision World imputes a much stronger definition to the phrase "durability of glass" than is actually required. The term "durability of glass" does not require that the DURALENS be identical to or surpass glass in terms of durability; it simply connotes the idea that the durability of the DURALENS and glass be comparable. Both the Tumble test as well as the steel wool test demonstrate this comparability. Jarpe Aff. Ex. A at 100042 and 100045. D. Vision World also objects to LensCrafters' use of a tintable lens such as the TRU-TINT because, according to Vision World, the comparison is not one of "apples to apples." Vision World argues that the term "typical scratch-resistant lens" is misleading because the term fails to account for what Vision World terms a "harder, untintable lenses." According to Vision World, DURALENS is made of a hard non-tintable coating while the TRU-TINT lens was designed to be permeable and contains a softer, scratch-protective coating capable of absorbing dye. Vision World further argues that LensCrafters selected the TRU-TINT lens as a basis for its comparison to the DURALENS because two of the three tests conducted by Essilor failed to demonstrate the superiority of the DURALENS to other scratch-resistant lenses. Because consumers are allegedly unaware that the DURALENS is not being compared to a tinted lens, Vision World concludes that such a comparison misleads the public into believing that other scratch-resistant lenses are extremely susceptible to scratching. The Court disagrees with both Vision World's premise as well as its conclusion. Vision World proffers a rather myopic view of the correlation between the strength of a lens and its propensity for tintability. Vision World ignores the deposition of its own witness, Daniel Torgerson, who explicitly states: If you are talking about the lens material and the hardness or softness of the lens material, you need to confine the question to a single type of lens material. For example, polycarbonate is a very soft lens material, and it will not accept a tint. CR39 is considerably harder than polycarbonate, and it will tint very nicely. Deposition of Daniel Torgerson, p. 48. Given this testimony, the Court finds Vision World's argument regarding the "apples to non-apples" comparison involving non-tintable and tintable lenses somewhat blurry. Additionally, Vision World proffers absolutely no evidence to refute the characterization of the TRU-TINT lens as a "typical" scratch resistant lens. Simply because the TRU-TINT may contain a softer coating *1469 than the DURALENS does not mean that the TRU-TINT lens is not a typical scratch-resistant lens. LensCrafters, on the other hand, provides significant evidence to bolster its assertion regarding the status of the TRU-TINT lens as "typical" of scratch-resistant lens. Young Dec., ¶ 25. Tim Reynolds, a manager for research and development for LensCrafters, states that: In LensCrafters' television, print, and instore comparative advertisements, the DURALENS is compared to a "typical" scratch resistant lens. That lens, called TRU-TINT, is the standard scratch-resistant coating LensCrafters has sold with plastic lenses for a number of years ... LensCrafters sells over a million pairs a year of TRU-TINT lenses. LensCrafters sells more TRU-TINT lenses than it does any other type of scratch-coated CR-39 lenses. TRU-TINT's scratch-resistance qualities are comparable even to those of some other lenses regarded as essentially non-tintable, such as the Vision Ease scratch-resistant lens. For those reasons, we believe it to be a "typical" scratch-resistant lens. Declaration of Tim Reynolds, ¶ 6 (emphasis added). Given these declarations and Vision World's failure to proffer any substantive evidence refuting this claim, the Court rejects defendant's objection to the status of TRU-TINT as a "typical" scratch resistance lens. In sum, the Court does not find that Vision World has upheld its burden of demonstrating that a comparison between the DURALENS and the TRU-TINT lens is incomplete, unfair or misleading. Defendant proceeds upon a faulty premise that tintable lenses are, ipso facto, less scratch resistant than non-tintable lenses. As set forth above, the evidence demonstrates otherwise. Additionally, Vision World has provided the Court with no legitimate evidence demonstrating the invalidity or misleading nature of the TRU-TINT lens as a "typical" scratch-resistant lens. E. Vision World's eighth and final allegation concerns LensCrafters' representation of the DURALENS as a "vastly superior" product over any other scratch-resistant lens. Vision World argues that, even if the DURALENS is marginally superior, the advertisements are false and misleading given the impact upon the public. In support of this contention, Vision World relies upon statistics which demonstrate, among other things, that 66% of a group of individuals surveyed stated that they were more likely to purchase a DURALENS in the future as a result of the advertisement and 53% of those surveyed were less likely to purchase a "typical" scratch-resistant lens. As a result of this survey, Vision World concludes that well over one-half of those interviewed considered the DURALENS vastly superior. A plaintiff satisfies his burden of proving the invalidity of a superiority claim by demonstrating that the tests referred to are not sufficiently reliable to permit one to conclude with reasonable certainty that they established the proposition for which they were cited. Procter & Gamble Co. v. Chesebrough — Pond's Inc., 747 F.2d 114, 119 (2d Cir.1984). As set forth above, the Court finds that Vision World has failed to refute LensCrafters' contention that the DURALENS is a more scratch-resistant lens than the TRU-TINT lens. In fact, LensCrafters' tests provide ample evidence to support this contention. Nor does the Court find LensCrafters' use of the term "vastly superior" rather than "mildly superior", "somewhat superior" or even "possibly superior" to be misleading for purposes of the Lanham Act. The fact remains that, as long as LensCrafters proves its basic premise, i.e., that the DURALENS is more scratch resistant than the typical, TRU-TINT lens, the characterization as "vastly" superior is nothing more than common marketplace sales talk or "puffery." Such exaggeration or overstatement expressed in broad, vague, and commendatory language does not violate the Lanham Act and is understood as an expression of the seller's opinion. See e.g., Lipton v. Nature Co, 71 F.3d 464 (2d Cir.1995) (statement by author of catalog that he "thoroughly researched dozens and dozens of animals" held *1470 to be mere "puffery" and not actionable); Castrol v. Pennzoil Co., 987 F.2d 939, 945 (3d Cir.1993) (claim that Pennzoil's motor oil offered better protection against engine wear was general claim of superiority and thus not actionable); Gordon and Breach Science Publishers, S.A. v. American Institute of Physics, 905 F. Supp. 169, 182 (S.D.N.Y.1995) (language in advertisement stating "the most cost-effective prices" and "subscription prices as low as possible" is but general puffery, common to many advertisements and does not fall within section 43(a) of the Lanham Act). Balance of Hardships/Public Interest/Threat of Irreparable Harm The Court finds that analysis of the remaining factors also weighs against granting this motion. Vision World has failed to demonstrate that it will be irreparably harmed as the Court does not find that LensCrafters' advertisements damage the reputation of other prescription eyeglass providers. The advertisement portrays the DURALENS as being a more scratch-resistant lens than the "typical" lens, not all lenses, or more specifically, Vision World's lenses. An advertisement can depict one product as being superior without depicting a competing product(s) as ineffectual. L & F Products, 845 F.Supp. at 996. Additionally, the Court finds that the balance of hardships also precludes relief for Vision World. Enjoining LensCrafters from continuing to advertise its product which has been ongoing for more than a year would impose a significantly more onerous burden than any monetary harm to Vision World from potential lost sales. Finally, the Court does not find that the public interest will be served by enjoining Vision World's competitor from continuing to promote its product through legitimate advertising techniques. A thorough review of the record and all of the accompanying affidavits demonstrates that Vision World has failed to demonstrate that LensCrafters' television and print advertisements promoting the DURALENS are either literally false or misleading. Absent such proof, the Court cannot grant Vision World the drastic and extraordinary remedy of a preliminary injunction. Taxpayers' Choice Volunteer Committee v. Roseau County Board of Commissioners, 903 F. Supp. 1301 (D.Minn.1995). ORDER Based upon the foregoing analysis and all of the files, records and proceedings, it is HEREBY ORDERED that defendant and counterclaimant, Vision World, Inc.'s motion for a preliminary injunction is denied in its entirety. NOTES [1] The Bayer test involves placing a lens into a pan of sand that oscillates back and forth a standard distance and a standard number of times. Declaration of John Young ("Young Dec."), ¶ 12(a). [2] This test involves "tumbling" a lens which has been placed in a short barrel filled with a variety of abrasive materials at a standard rate for a standard time. Young Dec., ¶ 12(b). [3] As to the Essilor product, plaintiff contends that no statistical difference was shown in scratch resistance. [4] The Steel Wool test, the premise of defendant's motion for injunction, involves a test in which a pad of steel wool is rubbed against a lens and attached to any arm that oscillates in a back-and-forth motion at a standard pressure and standard number of strokes. [5] In proceeding upon a motion for preliminary injunction, visual inspections by the Court are permissible in evaluating likelihood of confusion. Calvin Klein Cosmetics Corp. v. Lenox Laboratories, Inc., 815 F.2d 500, 503 (8th Cir.1987). [6] For this reason, defendant's reliance upon its own tests, i.e., the Signet Armorlite 3M test, the Huntingdon Engineering tests, and the Sola Steel Wool test also fail to undermine the validity of LensCrafters' ad. [7] LensCrafters does not directly refute Vision World's allegations regarding the smearing of the DURALENS or the inaccurate degree of scratching on the typical lens. [8] In fact, LensCrafters' in-store displays indicate that these alleged flaws in the advertisement are neither deceptive nor material. LensCrafters allow consumers to replicate the test illustrated in the commercial by rubbing steel wool against the TRU-TINT lens as well as the DURALENS. According to affidavits submitted by LensCrafters, the marketing campaign for the past year describing the DURALENS' superior scratch-resistant capabilities has yielded no complaints of the type which Vision World describes.

01-03-2023

10-30-2013

https://www.courtlistener.com/api/rest/v3/opinions/2346806/

142 F. Supp. 2d 309 (2001) 777388 ONTARIO LIMITED and K.R. MOELLER ASSOCIATES, LTD., Plaintiffs, v. LENCORE ACOUSTICS CORP., Jack Leonard and Jonathan Leonard, Defendants, Klaus Moeller, Nicklas Moeller, Therese Moeller, John Alberti, John Alberti, Inc., Steven Williams, William McCann, D. McCord Moody, Millennium Partners, Inc. and Archoustics LLC, Additional Counterclaim Defendants. No. 99 CV 7953(ILG). United States District Court, E.D. New York. May 4, 2001. *310 *311 Jeffrey Golenbock, Elizabeth Jaffe, Esq., Golenbock, Eiseman, Assor & Bell, New York, NY, for 777388 Ontario Ltd., K.R. Moeller Associates Ltd. David Frydman, Frydman & Bergman, New York, NY, Stephen Shore, Schwarzfeld, Ganfer & Shore, New York, NY, for Lencore Acoustics Corp., Jack Leonard, Jonathan Leonard. David Frydman, Frydman & Bergman, New York, NY, for Klaus Moeller, Nicklas Moeller, Theresa Moeller, John L. Alberti, John Alberti Inc., Steven Williams, William McCann, D. McCord Moody, Millennium Partners, Inc., Archoustics LLC. MEMORANDUM and ORDER GLASSER, District Judge. The moving counterclaim defendants Teres[1] Moeller, William McCann, D. McCord Moody, Archoustics LLC, Millennium Partners, John Alberti, John Alberti, Inc. and Steven Williams have moved to dismiss the counterclaims pursuant to *312 Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction. For the reasons that follow, the counterclaim defendants' motion should be denied. Background Plaintiff 777388 Ontario Limited ("777388") and K.R. Moeller Associates, Ltd. ("Moeller") (collectively "plaintiffs") filed this action against Lencore Acoustics Corp. ("Lencore"), Jack Leonard and Jonathan Leonard (collectively "defendants") in 1999. The Complaint asserts state law causes of action for unfair competition, and misappropriation of trade secrets, as well as Lanham Act claims of false advertising, trademark infringement against Lencore and the individual defendants, in addition to a state law breach of contract claim against Lencore alone. In February 2000, prior to answering the Complaint, defendants moved to dismiss the Complaint pursuant to Fed. R.Civ.P. 12(b)(6) for failure to state a claim and in the alternative for a more definite statement of the claims against them pursuant to 12(b)(e). In a Memorandum and Order dated May 25, 2000, this court denied both motions. While familiarity with that decision is presumed here, the Complaint alleges, in brief, that 777388 owns a trademark called "Scamp" and patents registered in Canada, the United States and Europe associated with a technology known as the Scamp Sounds Masking System ("Scamp system"). The Scamp system facilitates sound level control that may be used to reduce background noise in, for example, open office spaces. The technology is manufactured by Moeller under a license from 777388. Moeller has sold its sound-masking equipment in the United States through an exclusive distributorship agreement with Lencore since 1991. Moeller alleges that, beginning in 1995, Lencore devised a scheme to compete with and supplant the Scamp system in the U.S. market. Moeller avers that in furtherance of this scheme, Lencore used engineering specifications and drawings of the Scamp system, which are alleged to be trade secrets, obtained a trademark for its line of sound-masking equipment (the "Spectra system") with the intent to confuse customers defendants had purported to cultivate on behalf of Moeller, and marketed some of its products as Lencore, rather than Scamp, products. In July 2000, following the denial of their motion to dismiss, defendants answered the Complaint and served counterclaims on plaintiffs ("counterclaim defendants") and, in addition, seven individuals and three corporations that were not named as parties to the original action ("additional counterclaim defendants"). The additional counterclaim defendants are Klaus Moeller; Nicklas Moeller; Teres Moeller; John Alberti, John Alberti, Inc.; Steven Williams, William McCann, D. McCord Moody, Millennium Partners, Inc. and Archoustics LLC. Defendants assert a claim of unfair competition against all counterclaim defendants, a breach of contract claim against Moeller, a fraud claim against Moeller and Teres Moeller, claims based on misappropriation of trade secrets and tortious interference with and breach of contract against Moeller, Klaus, Nicklas, and Teres Moeller, John Alberti, Steven Williams and John Alberti, Inc, an unjust enrichment claim against Moeller and a defamation claim against Moeller, Klaus and Nicklas Moeller, John Alberti, John Alberti, Inc., Steven Williams, William McCann, D. McCord Moody, Millennium Partners, Inc. and Archoustics LLC. No conspiracy claim is pleaded explicitly. The following factual allegations are derived from defendants' Answer and Counterclaims. Defendants allege that in the 1970's, defendant Jack Leonard and his business *313 partner, Harold Goldstein, built and obtained a patent for the Scamp sound-masking system. Around that time, Jack Leonard met Klaus Moeller, who was then a Canadian consultant in open office plan design and unfamiliar with the relatively new technology of sound-masking. Defendants aver that Jack Leonard took Klaus Moeller under his wing and taught him about the design and manufacture of sound-masking equipment. Defendants further allege that Klaus Moeller's company, known as Moeller, and Jack Leonard's company entered into an exclusive distributorship in which Moeller distributed Scamp equipment in Canada. In 1981, however, because of high import tariffs, Klaus Moeller and Jack Leonard entered into another agreement which transferred the Scamp sound-masking technology to Moeller and authorized Moeller to manufacture Scamp equipment in Canada. Defendants allege that Jack Leonard's company stopped manufacturing Scamp equipment in 1989 and sold the patent that he and Goldstein had obtained in the 1970's to Moeller. In 1990, Jack Leonard's son, Jonathan Leonard, who had previously worked with his father, formed Lencore. Lencore manufactured and sold noise suppression equipment, including acoustic wall paneling. Jonathan was subsequently joined by his father in this new company. Having known Klaus Moeller for over ten years, Jack Leonard turned to Moeller and attempted to negotiate an exclusive distribution agreement in which Lencore would sell Moeller equipment in the United States. Although an exclusive agreement was never consummated, defendants allege that Moeller did agree to fill Lencore purchase orders for Scamp equipment. Lencore eventually grew into a successful business that offers marketing, consulting, sales and installation of sound control products and services, including what defendants term the "Lencore Sound Masking System." Defendants acknowledge that certain components in this system were supplied by Moeller, but they attribute Lencore's success to Jack Leonard's vision and experience in the industry. Defendants further allege that as Lencore was becoming increasingly successful, Moeller began to show an interest in negotiating an exclusive agreement but on terms that were unfavorable to Lencore, including a unilateral right to terminate the agreement after four years and a right to access Lencore's customer lists and distribution network. At the same time Lencore was purchasing Scamp equipment from Moeller, Klaus' son, Nicklas, joined Moeller and began to learn the sound-masking trade. In addition, Moeller began using a Canadian distributor to sell its equipment in the United States. As a result, defendants began to fear that Moeller was planning to terminate Lencore and sell and distribute Scamp equipment in the United States. In 1995, Lencore began having problems with the Scamp equipment it was using in its sound-masking systems. Lencore alleges that it brought these problems to Moeller's attention but that Moeller refused to remedy them. Instead, Lencore was forced to redesign a circuit board on the Scamp unit. Defendants aver that Lencore shared its redesign with Moeller, which incorporated the redesign into its products but never paid Lencore for its work. In view of Lencore's poor experiences with the Scamp product and Moeller's refusal to negotiate a distribution agreement, Lencore became increasingly concerned that Moeller was planning to take over Lencore's United States sales and, to preempt the effect of such a plan, Lencore decided to develop its own sound-masking equipment. Lencore called this line of *314 equipment the "Spectra system" and alleges that it has a re-engineered printed circuit board with completely original functionality, external design and labeling. In 1997, Lencore began limited manufacture and sales of Spectra equipment. Defendants allege that Lencore advised Moeller of its activities for the purpose of attempting, once again, to negotiate an exclusive distribution agreement. However, refusing to negotiate in good faith, Moeller instead embarked on a scheme designed to destroy Lencore's business. As part of that scheme, Moeller set out to raid Lencore's sales force, drive away its customers by asserting false claims of patent and trademark infringement, and destroy its reputation and good will by intimidating its personnel and refusing to fulfill purchase orders for Scamp equipment that Lencore was relying on to complete projects. Defendants allege that this scheme began in October 1998 when Klaus Moeller tried to induce several Lencore sales representatives to join Moeller at a trade show in Chicago. Soon after the trade show, Moeller began to accuse Lencore of trademark infringement. To avoid conflict, defendants contend that Lencore met various demands made by Moeller, including a demand that Lencore change its marketing materials and website and provide Moeller with a list of Lencore sales representatives. In December 1998, defendants aver that Moeller called one of Lencore's top producing sales representatives in furtherance of its attempts to raid Lencore's sales personnel. In March 1999, Marcia Reed, a Lencore employee, placed an order by telephone with Moeller for approximately 2000 Scamp units. The Lencore employee spoke with Teres Moeller. Teres Moeller confirmed the order on behalf of Moeller but, as Lencore discovered one week later, neither intended to fulfill the order nor actually fulfilled it.[2] As a result, Lencore was forced to cover the units at a cost of $150,000 and only after significant delay. By April 1999, Moeller not only refused to deliver the units it had sold to Lencore but refused to accept future orders from Lencore, allegedly because Lencore's payment had been late. In December 1998, defendants allege that William McCann and D. McCord Moody formed Millennium Partners for the purpose of carrying out Moeller's scheme. Millennium Partners is a North Carolina corporation which distributed Moeller equipment. In June 1999, McCann phoned Lencore and stated that his company was interested in hiring Lencore to design and build sound-masking systems in its properties. At McCann's request, Lencore sent McCann marketing materials and also arranged for a Lencore sales representative to travel to North Carolina to give Millennium Partners a presentation about Lencore products. During the presentation, McCann took diligent notes and asked detailed questions about Lencore customers, installers, dealers and other sales partners. Defendants now allege that, had they known that Millennium was a Moeller distributor, they would not have divulged this sensitive information. Two days after the presentation, defendants allege that McCann called one of Lencore's sales partners to solicit him to work with Millennium Partners and Moeller *315 on a job installing sound-masking equipment and urged him not to work for Lencore because of its infringing sales. McCann and Moody allegedly called other Lencore trade partners and told them that they should terminate their working relationships with Lencore. In some cases, it is alleged that Millennium Partners actually stole jobs for which Lencore had been selected to install sound-masking equipment. In addition, it is alleged that, in September 1999, Millennium Partners and Moody formed Archoustics LLC, a North Carolina corporation, as an additional distributor of Scamp equipment. Defendants allege that, in early 2000, Millennium Partners began anonymously sending pleadings in this action to Lencore trading partners. In early 1999, Klaus Moeller recruited John Alberti and Steven Williams, two former Lencore sales representatives, and John Alberti, Inc. (collectively, the "Alberti defendants"), to act as secret Moeller sales representatives. At the time, the Alberti defendants were Lencore's Southern California sales representatives pursuant to an agreement executed in January 1999. The sales agreement allegedly required 60 days notice before termination by Alberti, Inc. Defendants aver that Alberti and Williams, under the pretense of this sales agreement but while actually working in secret for Moeller, attended Lencore meetings, including a sales meeting at a trade show in Chicago in June 1999. During the meeting, Alberti learned confidential and proprietary information concerning Lencore, which they then shared with Moeller. By mid-1999, the Alberti, Inc.'s sales of Lencore equipment ground to a halt. In October 1999, while at a trade show in Los Angeles. Klaus Moeller approached three Lencore representatives and falsely stated to them that Lencore was infringing Moeller's patent. Alberti and Williams made similar statements at the trade show. Soon after, the Alberti defendants terminated their sales representative agreement with Lencore without the sixty days notice allegedly required by the agreement. Six days after their termination, Alberti, Inc., allegedly under the direction of Klaus Moeller, began to do business as Archoustics West, a sales representative for Moeller. In addition, defendants allege that Nicklas Moeller and the Alberti defendants telephoned various other Lencore sales representatives, customers and dealers, falsely stating that Lencore was selling Moeller equipment, and offered several of those sales representatives jobs with Moeller. With the exception of Klaus and Nicklas Moeller, all of the counterclaim defendants — that is, Teres Moeller, William McCann, D. McCord Moody, Archoustics LLC, Millennium Partners, John Alberti, John Alberti, Inc. and Steven Williams — have now moved for dismissal of the counterclaims on the basis of lack of personal jurisdiction. Moving counterclaim defendants argue that personal jurisdiction over Teres Moeller is lacking because the only New York contact alleged by defendants is a phone call Teres accepted from Marcia Reed of Lencore, in which Teres[3] allegedly misled Ms. Reed into believing that Moeller would fulfill Lencore's purchase order of 2000 pieces of Scamp equipment. Similarly they argue that personal jurisdiction *316 over the Millennium counterclaim defendants is lacking because Millennium Partners has no business dealings in New York and that the only New York contact alleged by defendants on the part of Millennium Partners is a phone call from William McCann to Lencore in June 1999 in which McCann represented that Millennium Partners was interested in hiring Lencore. In addition, they argue that neither McCann nor D. McCord Moody is subject to this court's jurisdiction because neither transacts business in or with persons or entities located in New York on behalf of Millennium Partners or Archoustics LLC. They claim that the only two New York contacts alleged by defendants are: (i) McCann's phone call to Lencore and (ii) Moody's communication with several unspecified Lencore sales partners, customers and dealers. As for Archoustics, moving counterclaim defendants argue that most of the conduct alleged by defendants occurred before the formation of Archoustics and had nothing to do with New York and that the company's only New York business involves its installation of a Scamp sound-masking system for Reuters Information Services in Long Island. Like the other moving counterclaim defendants, the Alberti counterclaim defendants also maintain that this court lacks personal jurisdiction over them. As for John Alberti and Steven Williams — the President and Vice President of John Alberti, Inc. — they deny conducting business in New York and claim that the only actions alleged on their part occurred outside New York. The Alberti counterclaim defendants acknowledge, however, that John Alberti, Inc. had a business relationship with Lencore, though they claim that this relationship was formalized in a letter agreement that was negotiated exclusively in California with Lencore's West Coast distributor, that it was executed in California and that it contemplated the sale of Scamp equipment in California only. The Alberti counterclaim defendants also acknowledge that John Alberti, Inc. had telephone contact with Lencore in New York, but that this contact was limited. Discussion I. The 12(b)(2) Standard Personal jurisdiction of a federal court over a non-domiciliary is determined by the law in which the federal court sits. Arrowsmith v. United Press Int'l, 320 F.2d 219, 222-25 (2d Cir.1963). Under New York law, the Court must follow a two-step procedure in order to determine whether there is personal jurisdiction over a defendant: (1) the Court must determine whether New York Civil Practice Law and Rule ("C.P.L.R.") §§ 301 or 302 provide a basis for personal jurisdiction, and (2) if they do, the Court must then conduct a constitutional inquiry to determine whether the exercise of personal jurisdiction over the defendant would offend due process pursuant to International Shoe Company v. Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945), and its progeny. See A.I. Trade Finance, Inc. v. Petra Bank, 989 F.2d 76, 82 (2d Cir.1993); En Vogue v. UK Optical, 843 F. Supp. 838, 842 (E.D.N.Y.1994). The burden of establishing jurisdiction rests on the party asserting it. See, e.g., Spectra Prods., Inc. v. Indian River Citrus Specialties, Inc., 144 A.D.2d 832, 833, 534 N.Y.S.2d 570, 571 (3d Dep't 1988); Cato Show Printing Co., Inc. v. Lee, 84 A.D.2d 947, 446 N.Y.S.2d 710, 712 (4th Dep't 1981). Section 301 provides for general jurisdiction over a non-domiciliary defendant where that defendant is "engaged in such a continuous and systematic course of doing business here as to warrant a finding of [its] presence in this jurisdiction." Beacon Enter., Inc. v. Menzies, 715 F.2d 757, 762 (2d Cir.1983) (quoting Simonson v. *317 Int'l Bank, 14 N.Y.2d 281, 251 N.Y.S.2d 433, 436, 200 N.E.2d 427 (1964)). "The non-domiciliary must be doing business in New York not occasionally or casually, but with a fair measure of permanence and continuity." Id. Here, there is no allegation that the counterclaim defendants "do business" in New York. Thus, § 301 confers no general jurisdiction over these defendants. A plaintiff, however, may also invoke New York's long-arm statute, set forth in C.P.L.R. § 302, to assert specific jurisdiction over a defendant. Section 302(a) provides in relevant part: As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any non-domiciliary ... who in person or through an agent: 1. transacts any business within the state or contracts anywhere to supply goods or services in the state; or 2. commits a tortious act within the state, except as to a cause of action for defamation of character arising from the act; or 3. commits a tortious act without the state causing injury to person or property within the state ... if he (i) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or (ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce; or 4. owns, uses or possesses any real property situated within the state. N.Y. C.P.L.R. § 302(a). In order to defeat a motion to dismiss on the basis of lack of personal jurisdiction, a plaintiff in New York need only make a prima facie showing of jurisdiction. See, e.g., En Vogue, 843 F.Supp. at 842 ("If the Court relies on the pleadings and affidavits alone, the plaintiff need only make a prima facie showing of jurisdiction in order to defeat the motion to dismiss."); see also Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 784 (2d Cir.1999) ("Where a court [has chosen] not to conduct a full-blown evidentiary hearing on the motion, the plaintiff need make only a prima facie showing of jurisdiction through its own affidavits and supporting materials.") (internal quotation marks omitted). The pleadings and affidavits are construed in the light most favorable to the plaintiff, and all doubts are resolved in its favor. Id. (citing CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir.1986)). Moreover, pursuant to Fed.R.Civ.P. 8(a)(1), a pleading need only contain a short and plain statement of the grounds upon which the court's jurisdiction depends. Id. Section 302(a) provides that a court may exercise jurisdiction over a non-domiciliary who "in person or through an agent" performs jurisdictional acts. Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460, 527 N.Y.S.2d 195, 199, 522 N.E.2d 40 (1988). Here, counterclaim plaintiffs have met their burden with respect to Teres Moeller, as they have alleged that she is one of three officers of Moeller and a fifty percent shareholder and would therefore be chargeable with Moeller's acts. Similarly, with respect to McCann and Moody, who are alleged to jointly own and direct Millennium Partners and Archoustics LLC, counter-claim plaintiffs have made a prima facie showing that Millennium Partners and Archoustics had an agency relationship with one another and with McCann and Moody. In addition, *318 counter-claim plaintiffs have alleged that Moeller had an agency relationship with Millennium Partners and Archoustics LLC in that Millennium is alleged to have sold sound-masking equipment and provided related consulting services in New York at Moeller's direction. Finally, with respect to Steven Williams and John Alberti, counter-claim plaintiffs have met their burden by alleging that Alberti, Inc. acted as the agent of Steven Williams and John Alberti for jurisdictional purposes. In addition to recognizing a simple agency theory, courts have defined "agent" broadly to include not only a defendant's formal agents, but also, under certain circumstances, a defendant's co-conspirators. Lehigh Valley Indus., Inc. v. Birenbaum, 389 F. Supp. 798, 806-7 (S.D.N.Y.1975), aff'd, 527 F.2d 87 (2d Cir.1975). Counterclaim plaintiffs here have not specifically pleaded a cause of action that bears the title "conspiracy," but the factual background section of the Answer and Counterclaims states that counterclaim defendants: joined in a common scheme and plan to: (a) raid Lencore's key sales people and steal them away to work for Moeller, (b) drive away Lencore's customers and the remainder of its sales and distribution channels by stating that Lencore had engaged in patent infringement, trademark infringement and other wrongful conduct and (c) destroy Lencore's business and good will by intimidating its personnel and refusing to ship Scamp product to Lencore so it could not fulfill customer orders (collectively, the "Moeller scheme"). (Answer & Countercl., ¶ 96) Moreover, the "scheme" described above is referred to throughout the remainder of the Answer and Counterclaims, including the section discussing the actual counterclaims, as are details of time and place and the alleged effect of this scheme. (Id. at ¶¶ 126-156) Thus, a question arises as to whether, despite the fact that no specific counterclaim specifically entitled "conspiracy" is pleaded, counterclaim plaintiffs may still resort to § 302(a) to establish jurisdiction. Because the cases interpreting § 302(a) hinge jurisdiction on whether facts are alleged which support such a claim, not on whether a particular cause of action bears the label "conspiracy," counterclaim plaintiffs' failure to specifically plead a cause of action for conspiracy will not, for jurisdictional purposes, preclude them from resorting to § 302(a), as long as they allege facts demonstrating the existence of a conspiracy which would put the counterclaim defendants on notice of the nature of the conspiracy.[4] Careful examination of the *319 Answer and Counterclaims in this action reveals that they do allege such facts, and § 302(a) therefore should be available. "Acts committed in New York by a co-conspirator of an out-of-state defendant pursuant to a conspiracy may subject that out-of-state defendant to jurisdiction in New York under § 302(a) of the CPLR." Campaniello Imports, Ltd. v. Saporiti Italia S.P.A., No. 95 Civ. 7685, 1996 WL 437907 at *6 (S.D.N.Y. Aug.2, 1996) (citing Lehigh Valley Industries, Inc., v. Birenbaum, 527 F.2d 87, 93-94 (2d Cir. 1975); Chrysler Capital Corp. v. Century Power Corp., 778 F. Supp. 1260 (S.D.N.Y. 1991); Singer v. Bell, 585 F. Supp. 300, 302 (S.D.N.Y.1984)). Nevertheless, "the bland assertion of a conspiracy or agency ... is insufficient to establish jurisdiction." Id. (citing Lehigh Valley Industries, Inc., 527 F.2d at 93-94; Singer, 585 F.Supp. at 303). Rather, "to establish jurisdiction on the basis of an alleged conspiracy, plaintiffs must allege facts demonstrating prima facie conspiracy, and must allege facts warranting the inference that the defendants were members of the conspiracy." Id. (citing Singer, 585 F.Supp. at 303; Dixon v. Mack, 507 F. Supp. 345, 348 (S.D.N.Y. 1980)). "To establish jurisdiction on this basis, a plaintiff, must clear two hurdles: (1) it must make a prima facie factual showing of a conspiracy; and (2) it must allege specific facts warranting the inference that the defendant was a member of the conspiracy." Id. at 1266 (citing Singer, 585 F.Supp. at 303; Dixon, 507 F.Supp. at 348). "To plead a valid cause of action for conspiracy, a plaintiff in New York must allege the primary tort[5] and four elements: (a) a corrupt agreement between two or more persons; (b) an overt act in furtherance of the agreement; (c) the parties' intentional participation in the furtherance of a plan or purpose; and (d) the resulting damage or injury." Id. at 1267 (citing Kashi v. Gratsos, 790 F.2d 1050, 1055 (2d Cir.1986)). To allege facts warranting the inference that the defendant was a member of the conspiracy, a plaintiff may show that: "(a) the defendant had an awareness of the effects in New York of its activity; (b) the activity of the co-conspirators in New York was to the benefit of the out-of-state conspirators; and (c) the co-conspirators acting in New York acted `at the direction or under the control,' or `at the request of or on behalf *320 of the out-of-state defendant." Id. at 1268-69 (internal citations omitted). Counterclaim plaintiffs here have met their burden of alleging facts which would support a conspiracy by alleging, first, that counterclaim defendants entered into a common plan and scheme to raid and destroy Lencore by stealing its proprietary information and sales representatives. Second, counterclaim plaintiffs have alleged multiple overt acts in furtherance of the agreement, including Moeller's refusal to ship Scamp equipment to Lencore and its furnishing of sound-masking equipment to Reuters on Long Island, Millennium Partners' usurpation of proprietary information, Alberti defendants' termination of their sales representative agreement with Lencore and the formation of various business entities for the purpose of supplanting Lencore's hold on the United States market for sound-masking equipment. Third, counterclaim plaintiffs have alleged facts suggesting that each counterclaim defendant knowingly entered into and participated in a conspiracy to destroy Lencore. Fourth, counterclaim plaintiffs have alleged that Lencore suffered serious harm to its business, including loss of customers, sales representatives and cover costs. In addition to alleging facts that would meet the four elements of a conspiracy claim, counterclaim plaintiffs also have alleged specific facts warranting the inference, at this stage, that counterclaim defendants were members of a conspiracy, including the active recruitment of Lencore sales personnel by counterclaim defendants and their common motivation of eliminating Lencore as a competitor in the distribution and sale of sound-masking equipment in the United States. In addition to making a prima facie showing of a conspiracy, counterclaim plaintiffs have also pleaded facts warranting the inference that each counterclaim defendant belonged to the conspiracy. Counterclaim defendants, it is alleged, knowingly stole Lencore's sales personnel, technology and market for sound-masking equipment and marketed and sold a competing product for their benefit themselves and Moeller and at the direction of Moeller. Counterclaim plaintiffs argue that this court may exercise jurisdiction over counterclaim defendants under C.P.L.R. §§ 302(a)(1), 302(a)(2) and 302(a)(3). Each of these arguments is examined in turn. II. Section 302(a)(1) C.P.L.R. § 302(a)(1) permits a court New York to exercise personal jurisdiction over a nondomiciliary "if two conditions are met: first, the nondomiciliary must `transact business' within the state; second, the claim against the nondomiciliary must arise out of that business activity. A nondomiciliary `transacts business' under CPLR 302(a)(1) when he `purposefully avails [himself] of the privilege of conducting activities within [New York], thus invoking the benefits and protections of its laws.'" Slapshot Beverage Co. v. Southern Packaging Machinery, Inc., 980 F. Supp. 684, 686 (E.D.N.Y.1997) (citing CutCo, 806 F.2d at 365 (citations and quotations omitted)). "No single event or contact connecting the defendant to the forum state need be demonstrated; rather, the totality of all defendant's contacts with the forum state must indicate that the exercise of jurisdiction would be proper." Id. (citing Sterling National Bank and Trust Co. of New York v. Fidelity Mortgage Investors, 510 F.2d 870, 873-74 (2d Cir.1975); Longines-Wittnauer Watch Co. v. Barnes & Reinecke, Inc., 15 N.Y.2d 443, 457 n. 5, 261 N.Y.S.2d 8, 209 N.E.2d 68, cert. denied, 382 U.S. 905, 86 S. Ct. 241 (1965)). Here, Teres Moeller is alleged to have transacted business in New York when she *321 negotiated a distribution agreement, albeit one which never was consummated, with Lencore in its New York offices in February 1995. Although the scheme alleged by counterclaim plaintiffs did not begin until 1998, three years later, that scheme is alleged to have begun in part because of the parties' failed negotiations and therefore is the basis for the counterclaims against her. Teres Moeller also is alleged to have transacted business in New York when she promised a Lencore employee in March 1999 that Moeller would fulfill an order for Scamp sound-masking equipment. Moving counterclaim defendants argue that jurisdiction cannot be predicated on this event because Lencore has not and cannot show that Teres had the requisite control over Moeller's transaction of business in New York. However, their admission that Teres is a Moeller officer combined with their failure to deny that she agreed to fulfill Lencore's order, is convincing evidence that she did in fact possess the requisite control over Moeller's business affairs to subject her to jurisdiction in New York on the basis of Moeller's business dealings with Lencore. Similarly, the Millennium counterclaim defendants transacted business in New York when Millennium Partners initiated discussions with Lencore in which they proposed to hire Lencore to install sound-masking equipment in its properties. Although the presentation Millennium Partners requested never led to a sales representation agreement, Millennium also has acknowledged that it has a sound-masking installation project in Long Island in which Moeller has provided both equipment and guidance. Millennium counterclaim defendants contend that jurisdiction is unavailable because the counterclaims asserted against them do not arise out of the Long Island project. However, Lencore argues, persuasively, that Millennium's performance of the Reuters work is the direct result of Millennium's agreement with Moeller to drive Lencore out of business and the counterclaim, therefore, can fairly be characterized as arising from this activity. As for Archoustics LLC, that company allegedly was created by McCann and Moody at the direction of Moeller for the purpose of profiting from the trade secrets they had stolen from Lencore. To the extent Archoustics was born from the alleged unlawful activity of Millennium Partners, its role in the conspiracy cannot be severed for jurisdictional purposes from that of Millennium Partners. Finally, Alberti defendants undeniably transacted business in New York when they entered into a sales representation agreement with Lencore, a New York company, to sell its sound-masking equipment in California. While Alberti counterclaim defendants take issue with Lencore's characterization that the agreement was negotiated from New York, they admit to frequent telephone calls and facsimile transmissions in connection with that agreement and thus it cannot be said that they do not conduct business in New York. Accordingly, jurisdiction over all moving counterclaim defendants is available under C.P.L.R. § 302(a)(1). III. Section 302(a)(2) Pursuant to its express language, § 302(a)(2) is triggered only where a nondomiciliary commits a tort within New York. Here, Lencore argues in its opposition papers that for jurisdictional purposes, where the tort is fraudulent misrepresentation, the place of the wrong is where the plaintiff suffered injury, not where the misrepresentation was made, and that, here, the alleged fraudulent statements of counterclaim defendants are presumed to have been made in New York *322 because that is where Lencore suffered injury. (Mem. in Opp. 16) Lencore relies on this court's decision in Sun Hill Industries, Inc. v. Holiday Trims, Inc., No. CV-91-1765, 1991 WL 307253 (E.D.N.Y. Sept.13, 1991), a reliance which is misplaced. Plaintiff in Sun Hill Industries alleged patent and copyright infringements. Crucial to this court's holding in Sun Hill Industries that jurisdiction may lie where the passing off "occurs" was the fact that the product that was being passed off was sold in this district. Here, without exception, all of the events relating to the allegedly tortious conduct of the moving counterclaim defendants are averred to have occurred outside New York. The Third Counterclaim (for fraudulent misrepresentation) alleges that Teres Moeller fraudulently stated in March 1999 that Moeller would accept Lencore's purchase order when it had already been decided that no orders from Lencore would be accepted. Lencore eventually had to cover the cost of the equipment that Moeller failed to provide, and there is no allegation linking the alleged misrepresentation to sales in New York. In fact, all of the activities that are alleged in connection with this claim are alleged to have occurred outside of New York. As such, the claim is subject to the well-settled principle that misrepresentations that are made by a non-domiciliary to a party in New York do not constitute torts committed within New York. See, e.g., Kelly v. MD Buyline, Inc., 2 F. Supp. 2d 420, 433 (S.D.N.Y.1998) ("Based on these allegations it could be argued that the alleged tort was committed in New York, in the sense that the fraud involved misleading plaintiff, and that the intended effect, and thus plaintiff's reliance, took place in New York. If so construed, plaintiff's allegations would trigger section 302(a)(2) of the CPLR, and permit assertion of jurisdiction over [defendant] because that provision covers any tort committed within the state. New York case law has not developed in this direction, however, and instead the jurisdictional provision governing torts committed within the state has generally been construed as limited to acts committed while the defendant is physically present within the state.") (internal citations omitted); Mije Assocs. v. Halliburton Services, 552 F. Supp. 418, 420 n. 5 (S.D.N.Y.1982) ("[I]n our case — and in all the cases which illustrate what we believe to be the general rule — the alleged tort was `completed' out-of-state and its financial consequences were felt in New York solely because `the injured person resides or is domiciled there.'") (internal citations omitted). Because the tortious conduct alleged by counterclaim plaintiffs was not committed in New York, personal jurisdiction under § 302(a)(2) is unavailable. IV. Section 302(a)(3) Section 302(a)(3) provides for jurisdiction over a nondomiciliary who "commits a tortious act without the state causing injury to person or property within the state ... if he (i) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or (ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce[.]" C.P.L.R. § 302(a)(3) (emphasis added). Here, moving counterclaim defendants argue that this section cannot provide a basis for personal jurisdiction because the threshold requirement that there be a tortious act "causing injury" cannot be met since the only injury that Lencore alleges it has suffered is pecuniary loss. Moreover, they *323 allege that even if an "injury" occurred in New York, defendants cannot satisfy the requirement that the moving counterclaim defendants "expected" their acts to have consequences in New York. Both arguments are unsupported by the record as it has been developed thus far. Moving counterclaim defendants rely on American Eutectic Welding Alloys Sales Co. v. Dytron Alloys Corp., 439 F.2d 428, 433 (2d Cir.1971) and similar cases, for the proposition that the situs of the injury is not the location in which plaintiff suffered financial loss, but the place "where the critical events associated with the dispute took place." See, e.g., Palace Exploration Co. v. Petroleum Devel. Co., 41 F. Supp. 2d 427, 435 (S.D.N.Y.1998); Kowalski-Schmidt v. CLS Mortg., Inc., 981 F. Supp. 105, 110 (E.D.N.Y.1997); United Bank of Kuwait, PLC v. James Bridges Ltd., 766 F. Supp. 113, 116 (S.D.N.Y.1991); Data Commun., Inc. v. Dirmeyer, 514 F. Supp. 26, 30 (E.D.N.Y.1981). Moving counterclaim defendants' attempt to apply American Eutectic here is misplaced. The Second Circuit, in a decision which found American Eutectic inapplicable, recently stated that "courts determining whether there is injury in New York sufficient to warrant § 302(a)(3) jurisdiction must generally apply a situs-of-injury test, which asks them to locate the `original event which caused the injury.'" Bank Brussels Lambert, 171 F.3d at 791 (citing Hermann v. Sharon Hosp., Inc., 135 A.D.2d 682, 683, 522 N.Y.S.2d 581 (2d Dep't 1987)). "This `original event' is, however, generally distinguished not only from the initial tort but from the final economic injury and the felt consequences of the tort." Id. (citing Hermann v. Sharon Hospital, Inc., 135 A.D.2d 682, 522 N.Y.S.2d 581, 583 (2d Dep't 1987); Fantis Foods, Inc. v. Standard Importing Co., Inc., 49 N.Y.2d 317, 425 N.Y.S.2d 783, 402 N.E.2d 122 (1980); Kramer v. Hotel Los Monteros S.A., 57 A.D.2d 756, 757, 394 N.Y.S.2d 415 (1st Dep't 1977)). The court in Bank Brussels Lambert noted that "[i]n the case of fraud or breach of fiduciary duty committed in another state, the critical question is thus where the first effect of the tort was located that ultimately produced the final economic injury." Id. at 792 ("Although the alleged omissions in this case occurred in Puerto Rico, New York was the place where BBL first disbursed its funds to Arochem. BBL argues that it disbursed these funds only because it was unaware of the information that Chase Puerto Rico conveyed to Fiddler on January 17, 1990. It was also this disbursement that was the first step in the process that generated the ultimate economic loss to BBL.") (citing Hargrave v. Oki Nursery, Inc., 636 F.2d 897, 900 (2d Cir.1980) ("One immediate and direct `injury' Oki's alleged tortious misrepresentations caused to plaintiffs was the loss of the money paid by them for the diseased vines. That injury was immediately felt in New York where plaintiffs were domiciled and doing business, where they were located when they received the misrepresentations, and where the vines were to be shipped."); Marine Midland Bank v. Keplinger & Assocs., Inc., 488 F. Supp. 699, 703 (S.D.N.Y.1980) ("Since all disbursements to ADDM or its creditors were made by MMB in New York, the situs of the injury was in New York."). Cf. also Polish v. Threshold Technology, Inc., 72 Misc. 2d 610, 340 N.Y.S.2d 354 (N.Y.Sup. 1972) (finding jurisdiction under § 302(a)(2) over defendant who sent letter containing affirmative misrepresentation into New York because plaintiff perused fraudulent letter in the state and parted with stock certificates there in reliance on the letter)). *324 Here, the first step in the process that caused the injury to counterclaim plaintiffs in New York was Klaus Moeller's attempt to induce a Lencore employee to come work for Moeller in October 1998 at a trade show in Chicago. This attempt was followed by Teres Moeller's alleged false representation that Moeller would furnish a large equipment order and also by the eventual formation of secret agreements with Lencore representatives, who obtained proprietary information concerning Lencore's distributors, clients, and technology and conveyed it to Moeller. Although the first event occurred outside New York, there is no doubt that its impact was felt by Lencore in New York. Lencore is based in New York and manufactures its sound-masking equipment in New York and, because of the alleged actions of moving counterclaim defendants, Lencore stood to lose not only its good will and customers in New York but also the sales representatives that were vital to the sale and distribution of its New York-manufactured equipment. That American Eutectic does not foreclose jurisdiction under § 302(a)(3) here is also plain from the decision itself, which recognized that "[p]erhaps the case would be different if the discernible local impact of the commercial injury to plaintiffs were greater, e.g., destruction of plaintiffs' business in New York..." American Eutectic, 439 F.2d at 435 (emphasis added); Bank Brussels Lambert, 171 F.3d at 793 ("In American Eutectic, we examined a tort of unfair competition and held that the situs of injury was the place where the plaintiff lost business, which is a holding completely consistent with [Sybron Corp. v. Wetzel, 46 N.Y.2d 197, 205, 413 N.Y.S.2d 127, 385 N.E.2d 1055 (1978)] and with our present analysis of § 302(a)(3). In fact, we noted in American Eutectic that there might even be injury in New York when a defendant's loss of customers occurs outside the state, so long as `the discernible local impact of the commercial injury to plaintiff' in New York is great enough. After we decided American Eutectic, the New York Court of Appeals also explicitly held that the situs-of-injury test applies to `commercial torts[, even] ... where the locus of injury is not as readily identifiable as it is in torts causing [ordinary] physical harm.' Sybron, 46 N.Y.2d at 205, 413 N.Y.S.2d 127, 385 N.E.2d 1055. American Eutectic thus does nothing to bar application of the situs-of-injury test to commercial torts like the ones alleged in this case.") (internal citations omitted); see also Sybron, 46 N.Y.2d at 205, 413 N.Y.S.2d 127, 385 N.E.2d 1055 ("It has been said that remote injuries located in New York solely because of domicile or incorporation here do not satisfy CPLR 302 ... Plaintiff's case does not rest on so narrow a foundation nor does its case depend on whether unfair competition injures it in every State in which it does business. It is, however, critical that it is New York where plaintiff manufactures and relines glass-lined equipment and the alleged trade secrets were acquired, and the economic injury plaintiff seeks to avert stems from the threatened loss of important New York customers.") (internal citations omitted). Plainly, the alleged raiding of Lencore's customers and sales representatives and the extraction of trade secrets by fraudulent means threatened to destroy Lencore's reputation in New York and to divert potential customers, such as the Reuters client, away from Lencore. Having found that the injury to Lencore occurred in New York, the court also finds that the foreseeability requirements of § 302(a)(3) are met, insofar as moving counterclaim defendants knew that their conduct would harm Lencore and its business relationships in New York and derived *325 substantial revenues from their prior business dealings with Lencore and their present dealings with Moeller. Thus, personal jurisdiction may be exercised over the moving counterclaim defendants pursuant to C.P.L.R. § 302(a)(3)(ii). V. Due Process To meet the demands of due process, a defendant's contacts with the forum state must be such that maintenance of the suit does not offend "traditional notions of fair play and substantial justice." Melendez v. Professional Machine & Tool Company, Ltd., 190 A.D.2d 657, 593 N.Y.S.2d 258 (2d Dep't 1993) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 90 L. Ed. 95 (1945)). Having found that the requirements of C.P.L.R. §§ 302(a) and 302(a)(3)(ii) are met, the court also finds that due process considerations are satisfied. See, e.g., Cleopatra Kohlique v. New High Glass, Inc., 652 F. Supp. 1254, 1257 (E.D.N.Y.1987) ("[B]oth the Due Process Clause and the statutory requirement that defendant should reasonably expect New York consequences are satisfied ... It is not necessary that defendant foresee the specific event producing injury in New York; it is sufficient that the defendant foresee the possibility of forum consequences generally.") (citing Fantis Foods, Inc. v. Standard Importing Co., 49 N.Y.2d 317, 425 N.Y.S.2d 783, 402 N.E.2d 122 (1980)). Conclusion For the foregoing reasons, the motion by counterclaim defendants Teres Moeller, William McCann, D. McCord Moody, Archoustics LLC, Millennium Partners, John Alberti, John Alberti, Inc. and Steven Williams to dismiss the counterclaims on the basis of lack of personal jurisdiction pursuant to Fed. R. Civ. 12(b)(2) should be denied. Personal jurisdiction over each of the moving counterclaim defendants is available under C.P.L.R. §§ 302(a)(1) and 302(a)(3)(ii). SO ORDERED. NOTES [1] Teres Moeller's name is misspelled as Therese Moeller in the case caption. [2] Teres Moeller is alleged by defendants to reside in Canada and to be the vice-president, secretary and treasurer of Moeller. She is the wife of Klaus Moeller and mother of Nicklas Moeller. Although defendants have alleged that Teres is the 50% owner of Moeller, she has submitted a declaration in which she states that she is not a shareholder of Moeller and does not control the company. (Teres Decl. ¶ 4) [3] In her declaration, Teres Moeller states that she has visited New York only twice and that neither visit had any connection to the matters at issue in this lawsuit. (Teres Decl. 8) However, Teres acknowledges that during one of these visits, in February 1995, she and her husband had lunch with Jack Leonard, with whom her husband had been doing business, and that, after lunch, they went to Jack Leonard's office, where the two men had a business discussion that lasted several hours but in which she did not participate. [4] The respective roles of Fed.R.Civ.P. 8 and 9 in pleading a conspiracy claim have been interpreted as follows: The general principles of "notice pleading" under Rule 8 apply to pleadings averring conspiracy. However, while Rule 8 demands only a "short and plain statement of the claim showing that the pleader is entitled to relief," in a pleading of conspiracy it is important that within the pleader's ability to do so, and without going into unnecessary detail, the opposing party be informed of the nature of the conspiracy charged, to which he may adequately plead. It is not enough merely to state that a conspiracy has taken place. Where possible, there should be some details of time and place and the alleged effect of the conspiracy. This is not to say that the pleader must plead his evidence; further details may be secured by means of discovery, and related devices. Moreover, great leeway should be allowed the pleader, since by the nature of the conspiracy, the details may not be readily known at the time of the pleading. Kravetz v. Brukenfeld, 591 F. Supp. 1383, 1387-88 (S.D.N.Y.1984) (quoting 2A J. Moore & J. Lucas, Moore's Federal Practice para. 8.17[5], at 8-180 through 8-183 (1984) and concluding that the "conspiracy claim in the instant complaint satisfies these rules [as it] alleges that defendants ... entered into a conspiracy pursuant to which they intended to improperly withdraw money from [plaintiff]'s account[;] alleges the manner in which the conspiracy was to be carried out and the role of the defendants. Although [plaintiff] has not indicated the exact times and places, he has alleged details of the conspiracy sufficiently particular to permit the defendants to respond."). As for Fed.R.Civ.P. 9, its role in conspiracy claims has been described as follows: Rule 9(b) does not work to penalize a plaintiff merely because he was not privy to, and, therefore, cannot plead the details of, the inner workings of a group of defendants who allegedly acted in concert to defraud him .... On the other hand, the allegations supporting a claim of a conspiracy to defraud must be particular enough to give the defendants "fair notice of what the plaintiff's claim is and the grounds upon which it rests." Id. at 1388 (internal citations omitted). [5] "It is well established that civil conspiracy is not an independent tort under New York law.... The charge of conspiracy is merely the string which serves to connect defendants to the actionable wrong and the overt acts which caused injury." Chrysler Capital Corp., 778 F.Supp. at 1267 n. 8 (citing Grove Press, Inc. v. Angleton, 649 F.2d 121, 123 (2d Cir. 1981), ABKCO Industries, Inc. v. Lennon, 52 A.D.2d 435, 384 N.Y.S.2d 781, 783 (1st Dep't 1976), Kajtazi v. Kajtazi, 488 F. Supp. 15, 21 (E.D.N.Y.1978) (citing Rutkin v. Reinfeld, 229 F.2d 248, 252 (2d Cir.1956), cert. denied sub nom. Kaplow v. Reinfeld, 352 U.S. 844, 77 S. Ct. 50, 1 L. Ed. 2d 60 (1956))).

01-03-2023

10-30-2013

https://www.courtlistener.com/api/rest/v3/opinions/2995000/

In the United States Court of Appeals For the Seventh Circuit No. 00-1850 UNITED STATES OF AMERICA, Plaintiff-Appellee, v. REFUGIO RUIZ, Defendant-Appellant. Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 99 CR 493 Rebecca R. Pallmeyer, Judge. ARGUED OCTOBER 27, 2000--DECIDED May 2, 2001 Before EASTERBROOK, KANNE, and ROVNER, Circuit Judges. ROVNER, Circuit Judge. Refugio Ruiz was arrested after police officer Glen Lewellen observed him carrying a bag filled with 10 kilograms of cocaine to a waiting car. A jury convicted him of possessing cocaine with the intent todistribute. Ruiz contends that the district court erred when it permitted Lewellen’s partner to recount Lewellen’s contemporaneous descriptions, via a walkie-talkie, of Ruiz and the actions he saw Ruiz take on the night of his arrest. Ruiz also contends that the court improperly enhanced his sentencing level based on his failure to disclose some of his prior arrests to the probation officer. We affirm Ruiz’s conviction and sentence. I. On July 8, 1999, officers Glen Lewellen and Noel Sanchez, assigned to the narcotics section of the Chicago Police Department’s organized crime division, received a tip that narcotics trafficking was occurring at an apartment house in the southwestern suburb of Aurora. That afternoon, Lewellen and Sanchez set up surveillance outside the house. Lewellen parked his unmarked car 450 to 500 feet away from the back of the building and trained his high-powered binoculars on the rear entrance; Sanchez covered the front and side. The two kept in contact by way of radio and walkie-talkies, reporting to one another any activity that they observed. At approximately 4:30 p.m., Lewellen saw a van pull into the driveway adjacent to the building and drop off a Hispanic male, who subsequently entered the building through the rear doorway. Lewellen later identified this individual as Ruiz. Ruiz’s shirt and pants were white. Over the next three hours, Lewellen saw Ruiz emerge from the building three times. On each occasion, Ruiz walked out onto the back porch of the building (and in one instance onto a nearby sidewalk), looked about for a moment or two, and then re-entered the building. Shortly before 7:30, Lewellen saw a silver car with no license plates pull into the parking lot immediately behind the building and park with its trunk facing the back door of the building. Ruiz appeared on the back porch momentarily, motioned toward the car, and then re-entered the building. Sensing that a narcotics transaction was about to take place, Lewellen moved his vehicle closer to the building. After a few minutes, he saw Ruiz poke his head out of the rear doorway of the building and look around. Still looking to and fro, Ruiz then walked out onto the back porch and down the porch stairs toward the silver car carrying a large yellow bag that appeared to Lewellen to be heavy. Because their backup had not yet arrived, Lewellen and Sanchez had already agreed to break up the apparent transaction before it could be completed. Lewellen therefore drove his car into the lot and pulled up next to the silver automobile, directly in front of Ruiz. Ruiz dropped the bag and fled back into the building, and the silver car sped away from the lot. The bag that Ruiz had abandoned turned out to contain some 10 kilograms of cocaine, with a street value of $1.25 million. Although the silver car was never located, Lewellen and Sanchez quickly found and arrested Ruiz in an apartment just inside of the building’s rear entrance. A consensual search of that apartment produced some $1,800 in cash, hidden within a vacuum cleaner. No drugs, drug paraphernalia, or other signs of drug trafficking were found in Ruiz’s apartment, however. After the search of Ruiz’s apartment was completed, police also knocked on the doors of each of the other apartments in the building and obtained the occupants’ consent to search the premises. They discovered no one else who matched the description of the person Lewellen had seen carrying the cocaine- laden bag to the silver automobile. A grand jury charged Ruiz with possessing cocaine with the intent to distribute, in violation of 21 U.S.C. sec. 841(a)(1). At trial, Lewellen described the actions he had seen Ruiz take on the afternoon and evening in question. Over Ruiz’s objection, Judge Pallmeyer also permitted Sanchez to recount what Lewellen had relayed to him via radio and walkie-talkie regarding the appearance and conduct of Ruiz. The judge found Sanchez’s testimony admissible under the present sense exception to the hearsay rule. See Fed. R. Evid. 803(1). Ruiz himself took the stand and testified that he was not the person that Lewellen had seen carrying the yellow bag of cocaine. The jury obviously believed otherwise, however, given that it convicted him of possession with intent to distribute. In the course of his pre-sentence investigation, the probation officer asked Ruiz about previous arrests and convictions. Ruiz indicated, inter alia, that he had not been arrested in Utah. Subsequently, however, the probation officer determined that Ruiz had been arrested on multiple occasions in that state; at least one of these arrests had culminated in a conviction. Based on Ruiz’s failure to disclose those arrests, Judge Pallmeyer enhanced Ruiz’s offense level for obstruction of justice, pursuant to section 3C1.1 of the Sentencing Guidelines. R. 43-3, Sentencing Tr. 8-9. She ordered Ruiz to serve a prison term of 210 months (the low end of the Guidelines range). R. 35. II. A. After Lewellen described for the jury the actions he had seen Ruiz take in the hours before his arrest, the government called Sanchez to the witness stand. Sanchez, who had been stationed in front of the apartment house, witnessed none of the events that Lewellen had seen take place in the rear of the building. But Lewellen had contemporaneously relayed to Sanchez via radio and walkie-talkie what he saw happening, and over Ruiz’s hearsay objection, the district court allowed Sanchez to repeat some of Lewellen’s statements. Sanchez repeated Lewellen’s statements concerning, inter alia, Ruiz’s appearance and clothing, Ruiz’s conduct on one of the occasions when he walked out onto the back porch of the building, the arrival of the silver automobile, and the actions that Ruiz took after the silver car arrived. R. 43-1, Trial Tr. 94, 97-99. The government argued that Sanchez’s testimony was admissible as a present sense impression, pursuant to Federal Rule of Evidence 803(1), and the court allowed the testimony on that basis. Ruiz contends that the testimony did not meet the criteria for this exception to the hearsay rule, and that in any event, the testimony was in reality offered as evidence of Lewellen’s prior consistent statements for the purpose of bolstering his testimony. Although Ruiz argues otherwise, we believe that Sanchez’s testimony as to what Lewellen told him met the accepted criteria for present sense impression testimony./1 Rule 803(1) indicates that an out-of-court statement is not excludable as hearsay, whether or not the declarant is available to testify, if the statement "describ[es] or explain[s] an event or condition made while the declarant was perceiving the event or condition, or immediately thereafter." Courts have agreed on three principal criteria for the admission of statements pursuant to this rule: (1) the statement must describe an event or condition without calculated narration; (2) the speaker must have personally perceived the event or condition described; and (3) the statement must have been made while the speaker was perceiving the event or condition, or immediately thereafter. See United States v. Mitchell, 145 F.3d 572, 576 (3d Cir. 1998); United States v. Portsmouth Paving Corp., 694 F.2d 312, 323 (4th Cir. 1982); United States v. Campbell, 782 F. Supp. 1258, 1260 (N.D. Ill. 1991); see also 4 Christopher B. Mueller & Laird C. Kirkpatrick, Federal Evidence sec. 434, at 384-88 (2d ed. 1994). A statement that meets these requirements is generally regarded as trustworthy, because the "’substantial contemporaneity of event and statement minimizes unreliability due to defective recollection or conscious fabrication.’" United States v. Parker, 936 F.2d 950, 954 (7th Cir. 1991), quoting United States v. Blakey, 607 F.2d 779, 785 (7th Cir. 1979), overruled sub silentio on other grounds by Idaho v. Wright, 497 U.S. 805, 110 S. Ct. 3139 (1990). Lewellen’s statements to Sanchez satisfy each of these criteria: he saw Ruiz and what Ruiz did, he repeated his observations to Sanchez, and he did so at the same time as, or shortly after, he made these observations. Moreover, although the rule does not require it, Lewellen himself testified, and was of course subject to cross-examination as to the substance of his observations. Ruiz suggests that Lewellen’s statements to Sanchez do not qualify for admission as present sense impressions because Sanchez was not a disinterested party and because there was no independent corroboration of these statements, but we disagree. Sanchez’s motivation as a witness presents a straightforward credibility question. If, as Ruiz suggests, Sanchez had an interest in bolstering his partner’s story, then that interest was no more and no less pronounced with respect to the observations that Lewellen relayed to him than it was vis a vis anything else Sanchez said on the witness stand. The jury was free to give Sanchez’s testimony such weight as it felt was appropriate. As for the second point, courts sometimes focus on the corroboration or the lack thereof in admitting or excluding present sense impressions, see Louisell & Mueller sec. 434 at 383 n.5 (collecting cases), but the truth is that the rule does not condition admissibility on the availability of corroboration. Id.; see also 2 John W. Strong, McCormick on Evidence sec. 271 at 203 & n.28 (5th ed. 1999)./2 The lack of another witness who could independently verify Lewellen’s observations, like Sanchez’s credibility, bore upon the weight owed to this evidence but did not bar its admission. A more persuasive contention is that whether or not Lewellen’s statements to Sanchez qualified as present sense impressions, the government actually elicited Sanchez’s testimony concerning these statements in order to bolster Lewellen’s credibility. At oral argument, the government conceded that Lewellen’s statements to Sanchez were releant insofar as they confirmed what Lewellen recounted in his testimony. To that extent, the statements are perhaps most naturally analyzed as prior consistent statements rather than present sense impressions. See Fed.R.Evid. 801(d)(1)(B); but see also United States v. Andrews, 765 F.2d 1491, 1501-02 (11th Cir. 1985), cert. denied, 474 U.S. 1064, 106 S. Ct. 815 (1986) (analyzing the admissibility of a police officer’s tape-recorded observations alternatively as present sense impressions and prior consistent statements). We are satisfied, however, that Lewellen’s statements also meet the criteria for prior consistent statements. A person’s prior consistent statement is admissible for the purpose of rehabilitating his credibility, provided that (1) the declarant testifies at trial and is subject to cross-examination, (2) his prior statement is indeed consistent with this trial testimony, (3) the statement is offered to rebut an explicit or implicit accusation of recent fabrication, and (4) the statement was made before the declarant had a motive to fabricate. E.g., United States v. Stoecker, 215 F.3d 788, 791 (7th Cir. 2000), cert. denied, 121 S. Ct. 885 (2001), quoting United States v. Fulford, 980 F.2d 1110, 1114 (7th Cir. 1992). Each of these criteria is satisfied here. Lewellen testified at trial and was thoroughly cross-examined as to the subject of his observations. His statements to Sanchez were consistent with his testimony. The government elicited proof of those statements after Ruiz’s counsel, in cross-examining Lewellen, raised the implication that Lewellen’s testimony as to what he saw Ruiz do on the night of his arrest was fictional--for example, by pointing out that Lewellen had not noted in his post- incident report certain of the observations to which he testified. R. 43-1, Trial Tr. 71-74; see United States v. Cherry, 938 F.2d 748, 756 & n.12 (7th Cir. 1991). Finally, Lewellen reported his observations to Sanchez while events were still unfolding, before the officers arrested Ruiz and long before Lewellen’s credibility was put into question. See Andrews, 765 F.2d at 1501-02. B. Following Ruiz’s conviction, the probation officer questioned him on two occasions on the subject of his criminal history. On the first occasion, Ruiz indicated that his criminal history included just one prior arrest in California for driving while intoxicated. The probation officer subsequently learned from the United States Probation Office in the Central District of California that Ruiz had a history of multiple arrests in that jurisdiction. When the probation officer later confronted Ruiz regarding the additional arrests, Ruiz acknowledged them but explained to the probation officer that he had not disclosed them himself because "you didn’t ask." When first questioned, Ruiz also stated that he had not been arrested in Utah. Subsequently, however, the officer learned that Ruiz had also been arrested on multiple occasions in that state and convicted in at least one instance. Notwithstanding Ruiz’s lack of candor as to his criminal history, the probation officer did not initially recommend that Ruiz’s offense level be enhanced for obstruction of justice. After the government filed an objection, however, the officer revised his report to incorporate the enhancement./3 After hearing argu-ment, the district court found that Ruiz had indeed obstructed justice. The court noted that Ruiz had not simply withheld information about his prior arrests, but had gone so far as to affirmatively deny that he had been arrested in Utah when, in fact, he had been arrested in that state on multiple occasions. R. 43-3, Sentencing Tr. 8-9. We review that finding of fact for clear error. E.g., United States v. Craig, 178 F.3d 891, 900 (7th Cir. 1999). We see nothing clearly erroneous in the district court’s determination. The Guidelines call for the obstruction enhancement when the defendant "willfully obstructed or impeded, or attempted to obstruct or impede, the administration of justice during the course of the investigation, prosecution, or sentencing of the instant offense of conviction[.]" sec. 3C1.1 (emphasis supplied). Although the Guidelines do not oblige the defendant to volunteer information to the probation officer, see section 3C1.1 Application Note 2, neither do they permit him to lie about his criminal record. Application Note 4(h) specifically recognizes that a defendant willfully obstructs justice within the meaning of the guideline when he gives "materially false information to a probation officer in respect to a presentence or other investigation for the court." See United States v. Thomas, 11 F.3d 1392, 1401 (7th Cir. 1993). Thomas recognizes that lies about one’s arrest record in particular constitute obstruction of justice deserving of the enhancement. Id. Here, Judge Pallmeyer found that Ruiz’s denial that he had been arrested in the State of Utah to constitute a willful misrepresentation of his record, and that finding is amply supported by the record. Ruiz in fact had been arrested several times in that state, and as the district judge pointed out, several of the arrests were relatively recent--a circumstance that made the possibility of Ruiz having forgotten the arrests implausible. R. 43- 3, Sentencing Tr. 9. Ruiz points out that he had difficulty speaking English and that the district court never held an evidentiary hearing to inquire further into the circumstances concerning his failure to disclose the prior arrests. Neither circumstance rendered the obstruction enhancement inappropriate, however. An interpreter was provided to Ruiz for purposes of the interviews with the probation officer. See R. 41, Pre-Sentence Report, at 17. And although the probation officer did not testify, the Pre-Sentence Report set out the relevant facts in sufficient detail for the district judge to conclude that Ruiz willfully attempted to impede the officer’s investigation into his criminal history. The facts themselves were undisputed; Ruiz and his counsel simply took issue with the conclusion that the government asked the court to draw--and that Judge Pallmeyer ultimately did draw--from those facts. III. Finding no error in the district court’s evidentiary ruling or in its decision to enhance Ruiz’s offense level for the obstruction of justice, we AFFIRM his conviction and sentence. FOOTNOTES /1 The government alternatively suggests that Lewellen’s statements to Sanchez were admissible in part for the non-hearsay purpose of explaining the actions that Sanchez took after the silver automobile arrived. See, e.g., United States v. Lovelace, 123 F.3d 650, 652 (7th Cir. 1997), cert. denied, 522 U.S. 1132, 118 S. Ct. 1088 (1998). Our review of the record discloses that Sanchez recounted far more of Lewellen’s statements than were truly necessary to explain his own actions, however. /2 As at least one commentator has pointed out, when Congress wished to condition the admissibility of certain types of evidence on the presence of corroboration, it imposed that requirement ex- plicitly. McCormick sec. 271 at 203 n.28. /3 The government asserted that the obstruction enhancement was warranted not only because Ruiz had failed to disclose a number of prior arrests, but also because his testimony at trial was false. The probation officer, however, did not address Ruiz’s trial testimony, nor did the district court do so when it imposed the enhance- ment. See R. 43-3, Sentencing Tr. 8-9.

01-03-2023

09-24-2015

https://www.courtlistener.com/api/rest/v3/opinions/2998770/

UNPUBLISHED ORDER Not to be cited per Circuit Rule 53 United States Court of Appeals For the Seventh Circuit Chicago, Illinois 60604 Argued January 25, 2006 Decided February 10, 2006 Before Hon. RICHARD A. POSNER, Circuit Judge Hon. DANIEL A. MANION, Circuit Judge Hon. DIANE P. WOOD, Circuit Judge No. 05-2973 UNITED STATES OF AMERICA, Appeal from the United States District Plaintiff-Appellee, Court for the Northern District of Illinois, Eastern Division v. No. 04 CR 129 WALLACE NUNN, Defendant-Appellant. Charles R. Norgle, Sr., Judge ORDER Wallace Nunn was convicted and sentenced to 70 months’ imprisonment and 3 years’ supervised release after he pleaded guilty to being a felon in possession of a firearm. See 18 U.S.C. § 922(g)(1). On appeal he challenges his sentence, arguing that the district court improperly calculated his offense level and criminal history score when it considered two prior felony convictions to be separate, unrelated crimes. This resulted in a guideline imprisonment range nearly double what it would have been had the district court found those convictions “related.” Because the district court’s determination of relatedness was not clearly erroneous, we affirm Nunn’s sentence. Nunn’s presentence investigation report disclosed two prior Illinois felony convictions, one for armed robbery and one for attempted murder. The armed No. 05-2973 Page 2 robbery consisted of Nunn and another man finding someone washing a Lexus automobile in an alley then stealing the car at gunpoint. It is not clear what Nunn and his accomplice did immediately after stealing the car, but the next day they drove it into a rival gang’s territory to provoke some sort of confrontation. Apparently they got what they were looking for, but they were outnumbered and the other gang surrounded the car. In the process of fleeing the scene, Nunn “bumped” several of the rival gang members with the car. No one was killed, but ultimately he was convicted of attempted murder. The probation officer who calculated the range for Nunn’s federal offense characterized these prior convictions as deriving from two unrelated crimes of violence and recommended a base offense level of 24. See U.S.S.G. § 2K2.1(a)(2). After a three-point reduction for acceptance of responsibility, a total offense level of 21 and a criminal history category of V resulted. The probation officer then determined that the sentencing guidelines range was 70-87 months’ imprisonment and recommended that Nunn be incarcerated for 70 months. Nunn objected to the PSR, arguing that his prior felony convictions are related and should be counted as just one prior conviction instead of two when calculating his offense level and criminal history. See U.S.S.G. §§ 2K2.1 cmt. n.12 (only those felony convictions that are counted separately toward criminal history points affect the base offense level), 4A1.2(a)(2) (“[p]rior sentences imposed in related cases are to be treated as one sentence” in computing criminal history points). According to Nunn, the correct base offense level is 20, see U.S.S.G. § 2K2.1(a)(4), resulting in a total offense level of 17 and a criminal history category of IV. Thus, he claimed, the proper imprisonment range under the guidelines is 37-46 months. As is relevant here, under the sentencing guidelines prior sentences are related if they resulted from offenses that were (1) “part of a single common scheme or plan” or (2) “consolidated for trial or sentencing.” See U.S.S.G. § 4A1.2 cmt. n.3. To prove consolidation, Nunn showed that the two Illinois crimes were charged by the same grand jury, received different but sequential case numbers, and were assigned to the same sentencing judge. He also received identical concurrent sentences on each charge, although the sentences are recorded on separate judgment documents. To show a common scheme, Nunn offered to testify that at the time he stole the car he intended to use it to enter a rival gang’s territory, but not to kill anyone. After considering Nunn’s evidence and proffered testimony, the district court concluded that Nunn’s prior convictions were not related. The district court first noted that Nunn’s evidence concerning sequential case numbering, assignment to the same judge, and concurrent sentencing showed some “issues of relatedness” but No. 05-2973 Page 3 was not dispositive of consolidation. It then reasoned that, because the sentencing court treated the two cases individually when it issued two separate sentences on two distinct crimes, the cases were not consolidated. The district court also explained that the historical record contained no indication that a common scheme or plan existed at the time Nunn stole the car, and it declined to hear Nunn’s proffered testimony. The district court then adopted the probation officer’s guideline calculation, acknowledged that the guidelines were merely advisory, and imposed a 70-month term of imprisonment. On appeal, Nunn argues that the district court miscalculated his offense level and criminal history category when it found his prior Illinois felony convictions to be unrelated crimes of violence. A district court’s determination that cases have been consolidated for sentencing is a question of fact. United States v. Burford, 201 F.3d 937, 942 (7th Cir. 2000). Likewise, its determination whether prior crimes were part of a common scheme or plan is also a question of fact. United States v. Brown , 209 F.3d 1020, 1023 (7th Cir. 2000). We review these factual determinations for clear error. Id.; Buford, 201 F.3d at 942. Nunn first contends that because his cases were reported on the same arrest report, presented to the same grand jury, issued sequential case numbers, assigned to the same sentencing judge, and received identical concurrent sentences, his prior felony sentences were “in fact” consolidated. Thus, he urges finding consolidation under U.S.S.G. § 4A1.2(a)(2) if “the cases were procedurally handled together by the same sentencing Judge.” Consolidation has occurred when (1) the sentencing court issued a formal order of consolidation, or (2) the prior cases were “functionally consolidated.” United States v. Best, 250 F.3d 1084, 1095 (7th Cir. 2001). Functional consolidation occurs when the prior cases “are factually or logically related,” id., and there “is a showing on the record of the sentencing hearing that the sentencing judge considered the cases sufficiently related for consolidation and effectively entered one sentence for the multiple convictions.” United States v. Stalbaum, 63 F.3d 537, 539 (7th Cir. 1995). Simultaneous disposition merely for the sake of administrative convenience is not consolidation under U.S.S.G. § 4A1.2(a)(2). Best, 250 F.3d at 1095. In this case, the record of the sentencing court indicates that, at most, it issued the two sentences at the same time merely for administrative convenience. Nunn concedes that there was no formal order of consolidation. There was no functional consolidation either. Significantly, the cases were issued separate docket numbers, and the judge maintained the separate numbers for sentencing purposes. The No. 05-2973 Page 4 sentencing judge also entered separate judgments on separate documents and imposed separate, albeit concurrent, sentences for each offense. See Best, 250 F.3d at 1095 (finding no consolidation where sentencing court maintained separate docket numbers and entered separate judgments); Burford, 201 F.3d at 939-40 (finding no consolidation where court entered separate judgments and sentences); United States v. Russell, 2 F.3d 200, 203 (7th Cir. 1993) (finding no consolidation where defendant charged with separate crimes, and court issued separate judgments and imposed separate, yet concurrent, terms of imprisonment); see also United States v. Hernandez-Martinez, 382 F.3d 1304, 1308 (11th Cir. 2004); United States v. Paden, 330 F.3d 1066, 1067-68 (8th Cir. 2003). Accordingly, the district court did not clearly err when it found Nunn’s Illinois sentences were not consolidated within the meaning of U.S.S.G. § 4A1.2(a)(2). See Best, 250 F.3d at 1096; Burford, 201 F.3d at 940-42. Nunn next argues that even if the Illinois court had not consolidated his prior felony convictions for sentencing, they were part of a common scheme, and the district court erred when it refused to consider his proffered testimony on this issue. Under U.S.S.G. § 4A1.2(a)(2), a defendant’s crimes are part of a common scheme only if they were jointly planned or one crime entailed commission of the other. Brown, 209 F.3d at 1023; United States v. Joy, 192 F.3d 761, 771 (7th Cir. 1999). Nunn bears the burden of proving that he intended from the outset to commit both attempted murder and armed robbery or that he intended to run down rival gang members with a stolen car which, by necessity, involved stealing a car. See Brown , 209 F.3d at 1023; United States v. Carroll, 110 F.3d 457, 460 (7th Cir. 1997). Nunn never suggested to the district court that he planned to murder anyone with the car at the time he stole it. To the contrary, his proffered testimony, as described by his lawyer, was that he intended only to steal the car to permit quick access into and out of a rival gang’s territory. Although we have held that the district court must allow a defendant to present testimony concerning contested issues of material fact that affect computation of the guidelines sentence, United States v. Dean, 414 F.3d 725, 727-28 (7th Cir. 2005), the proposed testimony must be probative. Nunn’s proposed testimony of his intent to steal the car only as transportation does not show that Nunn intended to use the car as a weapon. The district court therefore was within its discretion when it declined to hear Nunn’s testimony. Moreover, according to Nunn’s argument to the district court, he decided to strike rival gang members with the car only after they gained the upper hand in a fight that occurred the morning after he stole the car. Thus, by Nunn’s own No. 05-2973 Page 5 admission, his decision to use the car as a weapon was not contemplated at the time he took the car, so the two crimes were not a common scheme. See United States v. Ali, 951 F.2d 827, 828 (7th Cir. 1992) (holding that a crime merely “arising out of the commission of a previous crime is not . . . related to the earlier crime in the special sense of being part of a common scheme or plan”). Nunn offered no other evidence to support his contention that the robbery and attempted murder were part of a common scheme. Thus the district court did not clearly err when it rejected this argument. AFFIRMED.

01-03-2023

09-24-2015

https://www.courtlistener.com/api/rest/v3/opinions/2998791/

In the United States Court of Appeals For the Seventh Circuit ____________ No. 04-3664 KATHLEEN SEMIEN, Plaintiff-Appellant, v. LIFE INSURANCE COMPANY OF NORTH AMERICA, a CIGNA COMPANY, and BP LONG TERM DISABILITY (LTD) PLAN, Defendants-Appellees. ____________ Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 03 C 4795—Charles P. Kocoras, Chief Judge. ____________ ARGUED DECEMBER 1, 2005—DECIDED FEBRUARY 6, 2006 ____________ Before FLAUM, Chief Judge, and BAUER and EVANS, Circuit Judges. FLAUM, Chief Judge. The defendant, Life Insurance Company of North America (“LINA”), terminated the payment of long term disability benefits to the plaintiff, Kathleen Semien. In response, Semien filed suit against her benefit plan, BP Long Term Disability Plan, and LINA seeking an order compelling LINA to continue payment of her disability benefits. Additionally, Semien sought to compel discovery in or- der to gather evidence about the relationship between the 2 No. 04-3664 physicians LINA consulted and the insurer. The district court denied Semien’s motion to compel discovery and granted summary judgment in favor of the defendants. Semien appeals the district court’s denial of her discovery requests as well as the district court’s grant of summary judgment to LINA. For the following reasons, we now affirm the judgment of the district court. I. Background Kathleen Semien is a 54-year old woman who began working for BP-Amoco in February 1989 as an environmen- tal remediation manager. On May 15, 2000, when Semien left BP-Amoco, she was employed as a chemical engineer. Her occupation required significant travel, concentration, teamwork, and quick reactions. Upon leaving her job, Semien filed a disability claim with BP’s Long Term Disability Plan. BP established its Consolidated Welfare Benefit Plan (“Plan”) to provide long-term disability benefits to eligible employees. BP adopted a Plan Governance Amendment on January 31, 2000. The Amendment defined an “Adminis- trative Named Fiduciary” as any entity that entered into an Administrative Services Agreement with the Plan Administrator. Administrative Named Fiduciaries were granted the authority to “Exercise such discretion as may be required to construe and apply the provisions of the Plan, subject only to the terms and conditions of the Plan.” On April 1, 2000, LINA entered into an Administrative Services Agreement with Semien’s employer covering long- term disability claims arising out of the Plan. As part of this Administrative Services Agreement, LINA would screen benefits and determine whether claims were payable under the Plan. In addition, LINA insured the benefits of employ- ees under the Plan. No. 04-3664 3 Semien asserts that she suffers from a variety of med- ical conditions: back pain, a herniated lumbar disk, bone spurs in her neck, carpal tunnel syndrome, other prob- lems in her joints and extremities, fibromyalgia (a disease with no known causes or cure, but with symptoms including chronic pain “all over,” fatigue, disturbed sleep, and other problems), and past sickness as a result of Hepatitis C. In addition to her alleged physical ailments, Semien also claims to suffer from chronic depression and mental confusion. She has been described as having suicidal thoughts and “masochistic, schizoid, and narcissistic fea- tures.” Semien is currently taking several medications for pain, sleeping problems, and depressive disorders. LINA received Semien’s initial claim on September 15, 2000. This initial claim was approved on November 15, 2000. The bases for LINA’s approval of benefits were side effects from Hepatitis C, medication, fatigue, and pain. In its initial approval, LINA stated its intent to monitor Semien’s condition and reserved the right to request additional records. To receive benefits for the first 24 months of disability insurance, Semien only needed to show that she could not perform her “Regular Occupation or a Qualified Alternative” at BP. After the initial 24- month period, a more stringent standard applied. During the two-year initial disability period, Semien submitted many medical records to LINA. Semien’s physi- cians also completed assessments on her behalf. Some of these assessments indicated that Semien was capable of performing moderate work, but cautioned that her abilities were limited. Semien received fusion surgery on her back in January 2002. On May 8, 2002, LINA sent Semien a letter stating that she would remain eligible for benefits only if illness prevented her from performing any qualified work or 4 No. 04-3664 earning 80% or more of pre-disability earnings. Addition- ally, during this time period, Semien’s disability payments were reduced in part to offset the money she received from social security disability payments. In a letter dated November 22, 2002, LINA notified Semien that “the information we have on file to date does not establish that you meet the Policy definition of Disabled. Accordingly, [long term disability] benefits are not payable beyond November 14, 2002, under this policy.” LINA further explained, “[Y]our file was . . . reviewed by a Nurse Care Manager and a Behavior Care Specialist. It was noted that the medical documentation does not support your inability to perform your occupation as an Environmental Business Manager[.] . . . Accordingly no additional benefits are payable under the policy.” The language of the long-term disability plan states: After Disability Benefits have been payable for 24 months, the Employee is considered Disabled if, solely because of Injury or Sickness, he or she is either: 1. unable to perform all the material duties of any occupation for which he or she is, or may reason- ably become, qualified based on education, training or experience; or 2. unable to earn 80% or more of his or her Indexed Covered Earnings. On March 25, 2003, Semien appealed LINA’s termination decision. She submitted a great deal of medical evidence to support her appeal. LINA hired an independent psychiatric consultant, Dr. Jack Greener, to review the medical history in Semien’s file. Dr. Greener did not personally examine Semien. Dr. Greener’s report concluded that Semien’s depres- sion was severe enough to prevent her from functioning in a No. 04-3664 5 work setting from January 24, 2003, to February 21, 2003. He stated that, “The psychiatric documentation demon- strates a degree of depression of moderate severity and then of severe degree, which would preclude the client from performing her regular job according to the job description supplied.” In an addendum to his original report, Dr. Greener wrote, “After careful review it is evident that the client is capable of performing a sedentary to light job, which does not require irregular and unplanned hours, evening meetings, responses 24 hours a day, [and] emer- gency responses, which would require immediate attention and travel.” Dr. Eddie Sassoon, a physician retained by LINA, also concluded from a review of Semien’s medical records that she was capable of performing a sedentary or light duty occupation. Semien contends that Dr. Sassoon did not assess her psychiatric impairments or consider records from Dr. Liu or Dr. Nagle. It is unclear from Dr. Sassoon’s evaluation, which consisted of only two pages, exactly what information he reviewed. Dr. Sassoon stated that “the report was completed in the interest of time constraints, based on the documentation provided, which was extensive in nature.” Lynne Lonberg, an independent senior rehabilitation counselor and vocational expert retained by LINA, con- ducted a Transferable Skills Analysis based on the physi- cians’ appraisals. In this analysis, Lonberg listed several “potential occupations Ms. Semien could perform within her skills, education, physical/mental abilities and wage requirement [of 80% of Indexed Covered Earnings.]” Potential suitable occupations included employment as a chemical engineer, chemical research engineer, or ab- sorption and adsorption engineer. In a letter dated June 27, 2003, LINA affirmed its determination that Semien was not disabled under the 6 No. 04-3664 terms of the plan and therefore did not qualify for bene- fits after November 14, 2002. On July 11, 2003, Semien filed suit under the Employee Retirement Income Secu- rity Act (“ERISA”), 29 U.S.C. § 1132(a)(1)(B), seeking an order forcing LINA to award her disability benefits under the Plan. During the course of this litigation, LINA refused to comply with five discovery requests: one interrogatory and four document production requests related to the relationship between LINA and the physicians consulted. Semien filed a motion to compel discovery with the dis- trict court. This motion to compel discovery was denied in an opinion dated April 21, 2004. On October 7, 2004, the district court entered summary judgment for LINA, holding that LINA’s decision on Semien’s claim for benefits was not arbitrary and capri- cious. The district court also added in a footnote that “the denial of benefits would survive even if we applied the de novo standard.” II. Discussion We review a district court’s grant of summary judgment using a de novo standard. See, e.g., Grun v. Pneumo Abex Corp., 163 F.3d 411, 419 (7th Cir. 1998). “That is, we review ‘without deference for the view of the district judge and hence almost as if the motion had been made to us directly.’” Id. (quoting Tobey v. Extel/JWP, Inc., 985 F.2d 330, 332 (7th Cir. 1993)). A. Appropriate Standard of Review Under ERISA The initial question in this appeal is whether the dis- trict court used the proper standard of review when evalu- ating the plan administrator’s denial of benefits. The No. 04-3664 7 standard of judicial review in civil actions under 29 U.S.C. § 1132(a)(1)(B) depends upon the discretion granted to the plan administrator in the plan documents. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989) (“Consistent with established principles of trust law, we hold that a denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo stan- dard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.”). “[T]he presumption of plenary review is not rebutted by the plan’s stating merely that benefits will be paid only if the plan administrator determines they are due, or only if the applicant submits satisfactory proof of his entitlement to them.” Herzberger v. Standard Ins. Co., 205 F.3d 327, 331 (7th Cir. 2000). In order to lower the level of judicial review from de novo to arbitrary and capricious, “the plan should clearly and unequivocally state that it grants discretionary authority to the administrator.” Perugini-Christen v. Homestead Mortgage Co., 287 F.3d 624, 626 (7th Cir. 2002). The district court found that the BP Long Term Disability Plan granted discretionary authority to LINA. Therefore, the plan administrator’s “decision had to be examined under the ‘arbitrary and capricious’ standard of review.” The district court provided two bases for its decision. In an April 21, 2004, opinion denying Semien’s motion to compel discovery, the district court cited the Plan’s Employee Benefits Handbook for authority to use an arbitrary and capricious standard of review. In the October 7, 2004, opinion granting summary judgment, the district court cited the BP Long-Term Disability Plan and a subsequent Administrative Services Agreement between BP and LINA as mandating an arbitrary and capricious standard of review. Semien challenges the validity of the Employee Bene- fits Handbook. She claims that because the handbook 8 No. 04-3664 was not published as part of the plan until after the ini- tial denial of benefits, it may not be considered in evaluat- ing her claim. See Hacket v. Xerox Corp. Long Term Disabil- ity Income Plan, 315, F.3d 771, 774 (7th Cir. 2003); but see Daill v. Sheet Metal Workers’ Local 73 Pension Fund, 100 F.3d 62 (7th Cir. 1996). We need not reach the question of the handbook’s validity. Regardless of whether the hand- book was properly considered, the BP Long-Term Disability Plan, coupled with the Administrative Services Agreement between BP and LINA, established LINA’s authority and requires that decisions by the plan administrator be reviewed under an arbitrary and capricious standard. The BP Long-Term Disability Plan explicitly provides for arbitrary and capricious review of plan administrator determinations: Plan Administration The administration of the Long-Term Disability Plan is the shared responsibility of the claims administra- tor and the Plan Administrator. The claims administra- tor receives, processes and pays all claims for benefits. The claims administrator for the Plan is: Prudential Life Insurance .... The Plan Administrator and the claims administra- tor have the sole discretion and authority to apply, construe and interpret all Plan provisions, to grant or deny all claims for benefits and to determine all benefit eligibility issues. . . . . All decisions or determinations made by the claims administrator and the Plan Administrator will be final and binding on all parties unless such party has acted in an arbitrary and capricious nature. No. 04-3664 9 The Plan Administrator is an officer of the Company with responsibility for employee benefits, as designated by the Board of Directors . . . (emphasis added). While there is no dispute that the quoted language provides for arbitrary and capricious review, Semien claims that BP never properly delegated its discretionary authority to LINA, the new plan administrator. Unlike several of our sister circuits, this Court has not addressed the question of whether the delegation of a plan administrator’s discretion- ary authority need be express. See, e.g., Nelson v. EG & G Energy Measurements Group, Inc., 37 F.3d 1384, 1388-89 (9th Cir. 1994) (benefit decision by an employee not explic- itly given discretion is reviewed de novo); Sanford v. Harvard Indus., Inc., 262 F.3d 590, 597 (6th Cir. 2001) (when a “decision is made by a body other than the one authorized by the procedures set forth in a benefits plan,” the standard of review is de novo); see also McKeehan v. CIGNA Life Ins. Co., 344 F.3d 789, 793 (8th Cir. 2003) (“[I]nsurers are accustomed to de novo judicial review of their decisions, and therefore we do not infer discretionary authority when an employer or plan sponsor has funded its obligations under an ERISA plan by purchasing a stan- dard-form group insurance policy. Rather, we require ‘explicit discretion-granting language’ in the policy or in other plan documents to trigger the ERISA deferential standard of review.” (citations omitted)). Because we find that BP provided LINA with an express delegation of discretionary authority to act as plan administrator, we need not reach the question of whether an implied delega- tion of authority would be sufficient to shift discretionary authority from the original plan administrator to an insurer. Semien contends that only the original plan may be considered in determining if LINA is a fiduciary entitled 10 No. 04-3664 to deference. That contention has been rejected by this Court. Health Cost Controls of Illinois, Inc. v. Washington, 187 F.3d 703, 712 (7th Cir. 1999) (“[O]ften the terms of an ERISA plan must be inferred from a series of documents none clearly labeled as ‘the plan.’ ”); see also Ruiz v. Cont’l Cas. Co., 400 F.3d 986, 990-91 (7th Cir. 2005). Under ERISA, fiduciaries are allowed to designate other individ- uals “to carry out fiduciary responsibilities . . . under the plan.” 29 U.S.C. § 1105(c)(1)(B). In a 2000 Plan Governance Amendment, BP sets out “Procedures for Identification of an Administrative Named Fiduciary.” An Administrative Named Fiduciary may be identified by entering into an Administrative Services Agreement with the Plan. LINA entered into an Administrative Services Agreement with the Plan in April 2000. The Administrative Services Agreement states that “LINA will provide the initial and ongoing screening of claims to determine whether benefits are payable in accordance with the terms of the Plan.” Thus, by the terms of the Administrative Services Agreement, LINA agreed to exercise authority over the plan and was granted the same discretionary authority as the original plan administrator. Additionally, this Court recently stated that the ques- tion of whether an administrator is a fiduciary should be “viewed ‘in functional terms of control and authority over the plan.’ ” Ruiz, 400 F.3d at 990 (quoting Mertens v. Hewitt Assocs., 508 U.S. 248, 262 (1993)). As in Ruiz, this Court must determine whether the delegated entity, in this case LINA, was a fiduciary. 29 U.S.C. § 1002(21)(A)(iii) (A fiduciary is a person who “has any discretionary authority or discretionary responsibility in the administration of such plan.”). Based upon the language of the Administrative Services Agreement, the district court correctly found that LINA was a fiduciary and had discretionary authority over the administration of the plan. Thus, LINA’s decisions as No. 04-3664 11 plan administrator are entitled to review under an arbi- trary and capricious standard. B. LINA’s Denial of Benefits On a motion for summary judgment, the moving party must show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. FED.R.CIV.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). In addition, at the sum- mary judgment stage, all inferences are drawn in favor of the non-moving party. See, e.g., Estate of Moreland v. Dieter, 395 F.3d 747, 758 (7th Cir. 2005). In this case, to affirm the district court’s grant of summary judgment, we must find that when taken in the light most favorable to Semien, there is no evidence LINA’s denial of benefits was arbitrary and capricious. “The arbitrary and capricious standard is the least demanding form of judicial review of administrative ac- tion, and any questions of judgment are left to the adminis- trator of the plan. Absent special circumstances such as fraud or bad faith, the [plan administrator’s] decision may not be deemed arbitrary and capricious so long as it is possible to offer a reasoned explanation, based on the evidence, for that decision.” Trombetta v. Cragin Fed. Bank for Savings Employee Stock Ownership Plan, 102 F.3d 1435, 1438 (7th Cir. 1996) (internal citations omitted). To constitute a full and fair review under 29 U.S.C. § 1133(2), all the evidence that Semien submitted should have been considered by LINA. See 29 C.F.R. § 2560.503- 1(h)(2)(iv) (Claims procedures must “[p]rovide for a re- view that takes into account all comments, documents, records, and other information submitted by the claim- ant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.”). 12 No. 04-3664 The reports by the physicians LINA hired to review Semien’s claim demonstrate a thorough consideration of the available information. These physicians found Semien capable of activities that would disqualify her from long- term disability coverage. Although Semien’s treating physicians reached different conclusions as to her abil- ities, under an arbitrary and capricious review, neither this Court, nor the district court, will attempt to make a determination between competing expert opinions. Instead, an “insurer’s decision prevails if it has rational support in the record.” Leipzig v. AIG Ins. Co., 362 F.3d 406, 409 (7th Cir. 2004). The two physician reports prepared for LINA, coupled with the Transferable Skills Analysis prepared based upon those reports, provide a sufficient basis and rational support for the conclusion that Semien was ineligible for long-term disability benefits. While the conclusions in the medical reports submitted by Semien are also rational, “[r]aising debatable points does not entitle [the claimant] to a reversal under the arbitrary-and-capricious standard.” Sisto v. Ameritech Sickness and Accident Disabil- ity Benefit Plan, 429 F.3d 698, 701 (7th Cir. 2005). No evidence in the record demonstrates bias by the physicians LINA consulted. Nor has any evidence been presented to convince this Court that the appraisals by LINA’s physicians were so inherently flawed as to be rendered arbitrary and capricious. The confines of the ERISA statute and the constraints of judicial resources do not permit this Court, nor the district courts, to engage in the complex weighing of expert testimony when a plan administrator has been granted discretionary authority. Where an insurance plan gives discretionary authority to a plan administrator, ERISA provides a limited Article III review. Engaging in the type of in-depth review Semien advocates not only runs contrary to statutory intent, but No. 04-3664 13 would tax the judicial resources of the district courts and magistrate judges beyond the breaking point. C. Semien’s Discovery Requests Given our determination that, based upon the evidence in the record, the district court was correct to grant summary judgment, the only remaining question for this Court is whether the record relied upon was complete. Put another way, did the district court err by denying Semien’s requests to compel additional discovery? Semien’s discovery requests sought information con- cerning the relationship between LINA and the physi- cians paid to evaluate Semien’s claim. LINA believed that these discovery requests went beyond the scope of discovery allowed in ERISA cases. The district court agreed and refused to compel discovery. “It is well-settled that district courts enjoy broad dis- cretion in controlling discovery. A district court’s exercise of discretion on discovery matters will only be reversed upon a showing of a clear abuse of discretion.” McCarthy v. Option One Mortgage Corp., 362 F.3d 1008, 1012 (7th Cir. 2004) (citing Leffler v. Meer, 60 F.3d 369, 374 (7th Cir. 1995)) (internal citation omitted). Generally, parties may obtain discovery regarding any matter that is relevant and not privileged. FED. R. CIV. P. 26(b)(1). As discussed above, where a plan administrator possesses discretionary authority, the district court reviews his or her decisions under the “deferential ‘arbitrary and capricious’ ” standard. Mers v. Marriott Int’l Group Accidental Death and Dismemberment Plan, 144 F.3d 1014, 1019 (7th Cir. 1998) (citing Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 111 (1989)). The district court’s denial of Semien’s motion to com- pel discovery relied primarily upon Perlman v. Swiss 14 No. 04-3664 Bank Corp. Comprehensive Disability Protection Plan, 195 F.3d 975 (7th Cir. 2000). In Perlman, this Court articulated its reluctance to grant extensive discovery in ERISA cases: [W]hen there can be no doubt that the application was given a genuine evaluation, judicial review is limited to the evidence that was submitted in support of the application for benefits, and the mental processes of the plan’s administrator are not legitimate grounds of inquiry any more than they would be if the decisionmaker were an administrative agency. 195 F.3d at 982. A key component of the Perlman decision is the first line above, “when there can be no doubt the application was given a genuine evaluation.” Id. Thus, Perlman distin- guishes cases in which no evidence of a failure to conduct a “genuine evaluation” has been presented from those cases in which a prima facie showing of bias or conflict of interest has been made. When a prima facie showing of misconduct or bias is made, or a claimant demonstrates a good faith basis to believe that limited discovery will produce such evidence, the district court should engage in a more cautious review. See Van Boxel v. Journal Co. Employees’ Pension Trust, 836 F.2d 1048, 1053 (7th Cir. 1987). “The existence of a sliding scale in judicial review of ERISA trustees’ decisions is suggested by the cases that, while purporting to apply a uniform ‘arbitrary and capricious’ standard, in fact give less deference to a decision the more the trustees’ impartiality can fairly be questioned.” Id. When addressing the impact of a conflict of interest under an “arbitrary and capricious” standard of review, the Supreme Court stated, “Of course, if a benefit plan gives discretion to an administrator or fiduciary who is operating under a conflict of interest, that conflict must be weighed as a ‘facto[r] in determining whether there is an abuse of No. 04-3664 15 discretion.’ ” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989) (quoting RESTATEMENT (SECOND) OF TRUSTS, § 187, Comment d (1959)). When “impartiality can fairly be questioned,” district courts should allow limited discovery. By allowing limited discovery in cases where a prima facie showing of impropriety has been made, district courts ensure that the “arbitrary and capricious” standard of review is not toothless. In the instant case, a substantial amount of medical evidence was analyzed by physicians compensated by LINA. These physicians were not employees of the company, they did not fail to analyze relevant medical evidence, and the claimant has not presented any evidence to demonstrate a prima facie case of misconduct or conflict of interest. The fact that a plan administrator has compensated physicians for their consulting services is not, in and of itself, sufficient to establish a conflict of interest worthy of further discov- ery. Although a plan administrator’s self interest may be a “factor” to “weigh” in evaluating plan determinations, there is no reason to assume independent consultants are not impartial when evaluating medical records. See Perlman, 195 F.3d at 981. Thus, we have no basis to believe that the physicians in this case did not conduct a full and fair evaluation of Semien’s condition. When reviewing a plan administrator’s decision in the ERISA context, the district court has significant discre- tion to allow or disallow discovery requests. This is a fact- specific determination and will not be overturned by this Court absent a clear abuse of discretion. See McCarthy, 362 F.3d at 1012. The ERISA statute does not “impose on plan administrators a discrete burden of explanation when they credit reliable evidence that conflicts with a treating physician’s evaluation,” nor should district courts require such an explanation following a claim denial. Black & Decker Disability Plan v. Nord, 538 U.S. 822, 834 (2003). 16 No. 04-3664 Decisions by plan administrators are not cloaked with the same level of authority as administrative agency determina- tions. See Herzberger v. Standard Ins. Co., 205 F.3d 327, 332 (7th Cir. 2000). Once an ERISA plan grants a plan administrator discretionary authority to evaluate claims, however, the plan administrator’s motivations should not be questioned absent a prima facie showing of some miscon- duct or conflict of interest. See Perlman, 195 F.3d at 981-82. Absent this initial showing, the strong warning of Perlman remains intact: “We have no reason to think that [a plan administrator’s] benefits staff is any more ‘partial’ against applicants than are federal judges when deciding income- tax cases.” Perlman, 195 F.3d at 981. Although discovery is normally disfavored in the ERISA context, at times additional discovery is appropriate to ensure that plan administrators have not acted arbi- trarily and that conflicts of interest have not contributed to an unjustifiable denial of benefits. In these exceptional cases, where a district court allows limited discovery based upon what appears to be a sustainable allegation, the district court must monitor discovery closely. In this supervisory role, the district court should employ all available tools, including the imposition of Rule 11 sanc- tions against those who would abuse the discovery process. Where a claimant makes specific factual allegations of misconduct or bias in a plan administrator’s review proce- dures, limited discovery is appropriate. See Bruch, 489 U.S. at 115 (a conflict of interest is a factor to be considered when reviewing a plan administrator’s denial of benefits); see also Van Boxel, 836 F.2d at 1053 (less deference is appropriate where a trustee’s impartiality can be fairly questioned). A claimant must demonstrate two factors before limited discovery becomes appropriate. First, a claimant must identify a specific conflict of interest or instance of misconduct. Second, a claimant must make a prima facie showing that there is good cause to believe No. 04-3664 17 limited discovery will reveal a procedural defect in the plan administrator’s determination. See Bennett v. Unum Life Ins. Co. of Am., 321 F. Supp. 2d 925, 932-33 (E.D. Tenn. 2004) (“Where . . . an ERISA plaintiff comes forward with a reasonable basis to believe that this conflict of interest has solidified into conscious, concrete policies, procedures, and practices to promote the company’s financial welfare at the expense of a full and fair evaluation of the plaintiff’s claim for benefits, then the plaintiff should be allowed to conduct limited discovery to determine whether such policies, procedures, and practices do actually exist and, if so, to what extent they interfered with the fair review of the plaintiff’s claim for benefits. This information would certainly be relevant to the Court when conducting its review of the decision to deny benefits.”). Semien is correct to note that this standard presents a high bar for individuals whose claims have been denied by a plan administrator with discretionary authority. Discov- ery will be allowed into the motivations of a plan adminis- trator or into the motivations of “independent” physicians only where the claimant has made a prima facie showing of misconduct or conflict of interest. While this standard essentially precludes discovery without an affidavit or factual allegation, we believe that this approach is the only reasonable interpretation of ERISA. “Like a suit to chal- lenge an administrative decision, a suit under ERISA is a review proceeding, not an evidentiary proceeding.” Doe v. Blue Cross & Blue Shield United of Wis., 112 F.3d 869, 875 (7th Cir. 1997). Thus, district courts are correct in limiting discovery except in exceptional circumstances. Congress has not provided Article III courts with the statutory authority, nor the judicial resources, to engage in a full review of the motivations behind every plan adminis- trator’s discretionary decisions. To engage in such a review would usurp plan administrators’ discretionary authority and move toward a costly system in which Article III courts 18 No. 04-3664 conduct wholesale reevaluations of ERISA claims. Imposing onerous discovery before an ERISA claim can be resolved would undermine one of the primary goals of the ERISA program: providing “a method for workers and beneficiaries to resolve disputes over benefits inexpensively and expedi- tiously.” Perry v. Simplicity Eng’g, 900 F.2d 963, 967 (6th Cir. 1990) (internal citation omitted). While claimants who believe they are the victims of arbitrary and capricious benefits decisions should feel free to seek relief in federal court, trial judges must exercise their discretion and limit discovery to those cases in which it appears likely that the plan administrator committed misconduct or acted with bias. In the instant case, Semien has presented no prima facie evidence of misconduct or conflict of interest. As a result, the district court lacked good cause to believe that further discovery would reveal misdeeds by LINA or improper motivations on the part of the consulting physi- cians. Thus, the district court was correct to deny Semien’s motion to compel. III. Conclusion For the foregoing reasons, the judgment of the district court is AFFIRMED. No. 04-3664 19 A true Copy: Teste: ________________________________ Clerk of the United States Court of Appeals for the Seventh Circuit USCA-02-C-0072—2-6-06

01-03-2023

09-24-2015

https://www.courtlistener.com/api/rest/v3/opinions/2995216/

In the United States Court of Appeals For the Seventh Circuit Nos. 00-1523 & 00-2679 United States of America, Plaintiff-Appellee, v. Baldev R. Bhutani and ALRA Laboratories, Incorporated, Defendants-Appellants. Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 93 CR 585--John F. Grady, Judge. Argued April 5, 2001--Decided September 12, 2001 Before Bauer, Ripple, and Evans, Circuit Judges. Bauer, Circuit Judge. A jury found defendants Baldev Raj Bhutani, Neelam Bhutani, and ALRA Laboratories, Inc. guilty of various violations of the Federal Food, Drug, and Cosmetic Act ("FDCA"), 21 U.S.C. sec. 301 et seq. The defendants moved for a new trial, which the district court granted, finding that the government violated Brady v. Maryland, 373 U.S. 83 (1963). The government appealed, and in United States v. Bhutani, 175 F.3d 572 (7th Cir. 1999) we reversed and remanded the case for sentencing. On remand, the defendants again moved for a new trial, which the district court denied. Assuming familiarity with our first opinion, we consider the appeal by the defendants (Neelam does not appeal) from that denial. For the following reasons, we affirm. A. The defendants believe that the government’s position in the first appeal contradicted its trial theory and that the government’s appellate position is newly discovered evidence, and that if the jury had heard the government’s appellate theory it would have decided the case differently. Specifically, they contend that at trial the government said that the defendants had added sodium hydroxide to decomposed Lactulose in hopes of concealing its medical ineffectiveness, but on appeal admitted that the Lactulose was medically effective by iterating that it was within the accepted pH range before the addition of sodium hydroxide. On remand, the district court agreed with the defendants that the government had changed its theory, but the district court refused to entertain the argument, believing that it was foreclosed from doing so since we had held otherwise in our first opinion in this case. The government counters that its focus at trial was not that the Lactulose was outside of the acceptable pH range or medically ineffective, but rather the fact that the defendants added sodium hydroxide to the Lactulose lots because they wanted the 1986 lots to have a pH similar to the 1988 lots so that they could bear the same expiration date and be sold. The government’s position was that the defendants masked the fact that the Lactulose was degrading and past its expiration date in order to make money. We agree with the government. A second read of the trial transcript reveals that the government’s position at trial and on appeal has been consistent. The government did not show at trial that the Lactulose was outside the accepted pH range or medically ineffective; rather it admitted that the pH was at all times within range, but that it was dropping, which signaled degradation, and in order to mask any degradation the defendants raised the pH by adding sodium hydroxide so that the fact that it was being sold past its expiration date could not be detected. The medical efficacy of the Lactulose was only mentioned by the government to explain the significance of expiration dating to the jury. The government wanted to explain why expiration dates are imposed in order to counter the defense theory that the defendants did not intend to put an adulterated product on the market because Lactulose could be stable and medically effective beyond the artificially imposed expiration date assigned by the "paperwork bureaucracy" known as the FDA. The defense again mischaracterizes the thrust of the government’s case and regurgitates its argument from the last appeal, the only difference being that in the first appeal they argued that the newly discovered evidence was the U.S.P. recommendation, see 175 F.3d at 578-79, and here they point to the government’s switch in theories. This supposed difference does not affect our decision. There is no new evidence that would have altered the outcome of this case. B. The defendants submit that reversal is justified because the district court abused its discretion, see United States v. Butler, 71 F.3d 243, 250 (7th Cir. 1995), by permitting the government to elicit impermissibly prejudicial testimony from Dr. John Senior, offered as an expert in gastroenterology and liver disease, see Trial Tr. at 1691 (December 28, 1995), about the medical consequences of taking ineffective Lactulose. The defendants claim that Dr. Senior testified that patients could die from ingesting ineffective Lactulose. Before Dr. Senior testified, the district court had admonished the government to avoid introducing this sort of testimony. The defendants believe that the government violated this admonition. Contrary to the defendants’ characterization of Dr. Senior’s testimony, the transcript reveals that he did not testify in an impermissibly prejudicial manner. Dr. Senior explained that Lactulose works as a substitute liver for patients with liver disease, and that Lactulose would be ineffective if it had degraded into its component parts because the separate sugars would be absorbed into the small intestine before reaching the colon. He also testified that it would be impossible for a physician to know that Lactulose had degraded to the point of ineffectiveness, and therefore a physician might erroneously determine that the Lactulose was ineffective for a patient for some other reason. The sole mention of the possibility of death from ingesting ineffective Lactulose was not presented by the government, but was elicited on cross- examination by the defense: Q. [Mr. Branding, Attorney for ALRA] And [Lactulose] doesn’t cure the underlying liver disease, does it? A. Of course not. Q. It’s only-- A. It’s only a compensation for a failed organ. Q. It’s used to treat the symptoms? A. It’s used to treat--it’s not just symptoms. It’s a whole syndrome that may kill. It’s not just symptoms. Encephalopathy due to liver failure may be fatal. It’s not just symptoms. Trial Tr. at 1710-11 (December 28, 1995). The testimony defendants complain about was never offered, and thus there was no abuse of discretion by the district court. C. The defendants argue that Count Four, which charged that the defendants "[o]n or about August 12, 1988 . . . with intent to defraud and mislead, failed to establish and maintain accurate drug manufacturing batch production records for the generic drug product, Lactulose Syrup USP" in violation of 21 U.S.C. sec. 331(e), along with the correlating conspiracy charge in Count One, failed to state a crime for which they could be convicted. In 1938, Congress enacted the FDCA pursuant to its authority to regulate interstate commerce in order to protect the public from dangerous food and drug products. In 1962, Congress amended the FDCA, adding sec. 355(j) to require drug manufacturers to establish or maintain records about the manufacture and testing of drugs. See The Drug Amendments of 1962, Pub. L. No. 87-781, sec. 103(a), 76 Stat. 780. Thereafter, the failure to establish or maintain records under sec. 331(j) was a prohibited act under sec. 331(e) and subject to the imposition of criminal penalties under sec. 333, such as imprisonment, fine, or both. In 1984, Congress amended the FDCA and the federal patent laws to help make available more low cost drugs by creating an abbreviated procedure for FDA approval of generic drug applications. See Drug Price Competition & Patent Term Restoration Act of 1984, Pub. L. No. 98- 417, sec. 101, 98 Stat. 1585; see also National Ass’n of Pharm. Mfrs., Inc. v. Ayerst Labs., 850 F.2d 904, 907 (2d Cir. 1988). Congress enacted this new abbreviated drug approval process under sec. 355(j) and redesignated the old sec. 355(j) concerning recordkeeping as sec. 355(k). However, Congress did not alter sec. 331(e). Thus, sec. 331(e) still instructed that the failure to establish or maintain records under sec. 355(j) was subject to criminal penalties, even though the new sec. 355(j) did not require recordkeeping. Whether intentional or not, the penalties for failing to establish or maintain records had been in effect eliminated. In 1990, Congress passed a short, technical amendment, which stated: "Section 301(e) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. sec. 331(e)) is amended by striking out ’or (j)’ and inserting in lieu thereof ’or (k).’" Vaccine & Immunization Amendments of 1990, Pub. L. No. 101-502, 104 Stat. 1285. Thus, by simply replacing "(j)" with "(k)," sec. 331(e) again clearly subjected violators to the same criminal penalties as they had been for more than two decades prior to 1984 for failing to establish or maintain records. However, there was a gap between 1984 and 1990 where under the plain statutory language the failure to establish or maintain records under sec. 355(k) was not subject to criminal penalties. This time gap is of import to this case; the defendants’ conduct charged under sec. 331(e) occurred in August of 1988, which raises the delicate question of whether their convictions for these violations may stand, given that the plain language of the statute did not penalize their conduct. As noted, the defendants argue that under the plain language of the statute they cannot be penalized for failing to establish and maintain records. The government argues that the elimination of the penalty was a scrivener’s snafu, and criticizes the defendants’ hyper-technical and illogical reading of the statute. This question has all of the trappings of a law school hypothetical, but with real-world consequences, so although the defendants’ brief fails to support this argument with case law discussion or even citation, we nonetheless address this important issue of criminal law and statutory construction. Generally, courts strictly construe criminal statutes against the government and in the defendant’s favor. See Barrett v. United States, 423 U.S. 212, 218 (1976); 3 Norman J. Singer, Sutherland Statutory Construction sec. 59.03 (5th ed. 1992). This is so to ensure that people are fairly warned about what sort of conduct may expose them to criminal penalties and what sort of penalty may be imposed. See United States v. Bass, 404 U.S. 336, 348 (1971); 3 Sutherland Statutory Construction sec. 59.03. But, in strictly construing a statute, courts ought notdeprive it of the obvious meaning intended by Congress, nor abandon common sense. See United States v. Moore, 423 U.S. 122, 145 (1975); 3 Sutherland Statutory Construction sec. 59.06. Some courts have upheld the imposition of criminal penalties despite the presence of a typographical error in the statute. See United States v. Lacher, 134 U.S. 624, 625-32 (1890) (upholding conviction for embezzling a letter containing an article of value under 18 U.S.C. sec. 318 even though after revision of the statute the wording was alteredbecause "the intention to impose a penalty on [the] commission [of the offense] cannot reasonably be denied; and, although the apparent grammatical construction might be otherwise, the true meaning, if clearly ascertained, ought to prevail"); United States v. Graham, 169 F.3d 787, 790-91 (3d Cir. 1999) (upholding a defendant’s sentence for illegally reentering the United States after finding that Congress intended that the actual term of imprisonment imposed determines whether a defendant is classified as an "aggravated felon" under 8 U.S.C. sec. 1101(a)(43) despite the fact that the statutory section was "obviously missing a crucial verb"); United States v. Warren, 149 F.3d 825, 827-28 (8th Cir. 1998) (affirming the defendant’s sentence of 151 months for manufacturing 32,000 grams of methamphetamine under 21 U.S.C. sec. 841(b)(1) even though "[a]t the time of [the] offense, because of a typographical error, the same amount of a quantity of a mixture--100 grams--was listed as triggering both the five-year and the ten-year mandatory minimum sentences," because Congress intended drug trafficking penalties to be graduated according to drug quantity); United States v. Rossetti Bros, Inc., 671 F.2d 718, 720 (2d Cir. 1982) ("Plainly, Congress did not intend its recodification [of the Interstate Commerce Act] to reduce the reach of [its] penalty, but intended merely to transplant that section, renumbered, into the recodified portion . . . . Congressional drafters unfortunately overlooked [this], but, when construed in light of the intent of Congress and in light of common sense, that section clearly applies to the regulations here in question."); United States v. Scrimgeour, 636 F.2d 1019, 1021-24 (5th Cir. Unit B 1981) (reversing dismissal of indictment under 18 U.S.C. sec. 1623(d) for making false declarations before a grand jury because in finding Congress’ intention in enacting the statute, the court believed Congress inadvertently used an "or" in the statute but meant to use "and"); United States v. Moore, 613 F.2d 1029, 1039-45 (D.C. Cir. 1979) (same); United States v. Babcock, 530 F.2d 1051, 1053-54 (D.C. Cir. 1976) (holding that, in light of "an inadvertent change" by Congress when reorganizing and renumbering the statute, 2 U.S.C. sec. 441(b) was not to be interpreted to mean that a misdemeanor violation under sec. 440 precluded being sentenced to imprisonment); cf. Whitfield v. Scully, 241 F.3d 264, 272 (2d Cir. 2001) ("Although the statute refers to [28 U.S.C.] sec. 1915(a)(2) for the manner of payment, we have recognized that this reference is a typographical error (as it makes the statute unintelligible) and that the actual process for payment of costs is instead described in sec. 1915(b)(2)."); Estate of Kunze v. C.I.R., 233 F.3d 948, 953 (7th Cir. 2000) ("The erroneous cross- reference in [26 U.S.C. sec. 7430(c)(4)(D)] to a misnumbered subparagraph in (4)(A) can hardly be construed to have changed the legislative intent . . . or to have affected the substantive rights of the parties. The import of the subsection remains clear, in spite of the typo."); In re Chateaugay Corp., 89 F.3d 942, 952 (2d Cir. 1996) (agreeing with other courts that the improperly renumbered subsections in 11 U.S.C. sec. 507 were the result of typographical errors by Congress rather than substantive changes in the law). However, some courts have held otherwise. See United States v. Faygo Beverages, Inc., 733 F.2d 1168, 1170 (6th Cir. 1984) (recognizing that Congress unintentionally eliminated a penalty section in recodifying the InterstateCommerce Act, but holding that the defendant was not subject to criminal penalty for his conduct because "it would be unreasonable to require persons confronted with the plain language of a criminal statute to go beyond that statute in order to determine whether Congress really meant what it clearly said"); United States v. RSR Corp., 664 F.2d 1249, 1253-55 (Former 5th Cir. 1982) (noting that Congress inadvertently changed a penalty section in recodifying the Interstate Commerce Act, but holding that the defendant was not subject to criminal penalty for his conduct, stating "although this is what Congress clearly meant to say, intended to say, and wanted to say, still Congress did not say it"). While the plain language of the FDCA clearly prohibited the failure to establish or maintain records, criminal penalties were not clearly imposed. Nevertheless, we agree with the reasoning found in the former set of cases rather than the latter because strictly reading and applying the FDCA as it was at the time of the offense in question would put the plain language at odds with the statute’s purpose and intent. There is no indication in the legislative history that in amending the FDCA Congress intended to eliminate the penalties. The Law Revision Counsel of the House of Representatives, who prepares and publishes the U.S. Code, even placed a footnote in the 1988 edition of the U.S. Code in sec. 331(e) after the proscription on failing to keep records under sec. 355(k), and noted that sec. 335(j) had been redesignated as sec. 355(k). Thus, it seems that the failure to cross-reference the sections was interpreted as a mere typo by the Law Revision Counsel. Also, we agree with the government that Congress would not have eliminated the penalties for failing to establish or maintain records in this part of the statute while retaining the penalties for failing to do so under other sections. Furthermore, the government points out that the 1984 amendments broadened the recordkeeping requirements in the redesignated sec. 355(k), and that Congress would not have intentionally broadened the requirements and at the same time have eliminated the penalties for not complying with the requirements. Finally, the defendants do not argue that because of the typographical error they lacked notice; nor could they since they maintained records believing that they were required to (although they did so inadequately, as this case reveals) under the FDCA. Therefore, we hold that the failure to establish or maintain records under sec. 355(k) was subject to criminal penalties despite the typographical error in sec. 331(e) between 1984 and 1990. D. Baldev Bhutani also raises several challenges to his sentence imposed under U.S.S.G. sec. 2F1.1 (2000). "The district court’s choice of which guideline to apply is a question of law, and we review this choice de novo," United States v. Andersen, 45 F.3d 217, 219 (7th Cir. 1995); we review factual determinations for clear error, see United States v. Vitek Supply Corp., 144 F.3d 476, 490 (7th Cir. 1998). First, the defendant finds error in the district court’s choice of guideline to apply, claiming that he ought to have been sentenced under sec. 2N2.1(a) rather than sec. 2F1.1. Section 2N2.1(a) covers violations of statutes and regulations dealing with, among other things, drug products, and assigns a base offense level of six to such violations; however, subsection (b)(1) instructs: "[i]f the offense involved fraud, apply sec. 2F1.1 (Fraud and Deceit)." Section 2F1.1 "also has a base offense level of six, but provides for substantial increases in offense level based on the amount of loss." Andersen, 45 F.3d at 219. Bhutani’s argument turns on the notion that sec. 2N2.1(a) applies because his wrongs were "knowing, technical" violations of the FDCA, and not as serious as those of other companies that have been prosecuted. This argument is without merit as there is substantial evidence of fraud in this case. See, e.g., id. at 219-20. Second, he submits that sec. 2N2.1(b)(1) does not apply to his case since it was made effective on November 1, 1992, but "the offenses of conviction all occurred prior to November 1, 1992." This is of no matter since "judges must apply the Guidelines in force when a defendant is sentenced." United States v. Perez, 249 F.3d 583, 584 (7th Cir. 2001) (per curiam). Bhutani was sentenced on February 15, 2000, and subsection (b)(1) was then in effect, thus it is applicable. Third, the defendant disputes how the district court measured loss. As noted, sec. 2F1.1 assigns a base offense level of six, which is increased based on the amount of loss attributed to the fraud. In calculating the loss, the district court is not required under the Sentencing Guidelines to "compute the loss with precision; the court need only make a reasonable estimate of the loss based on the information available." United States v. Duncan, 230 F.3d 980, 985 (7th Cir. 2000); see U.S.S.G. sec. 2F1.1, cmt. 9. If it has been shown that the victims of the fraud suffered a loss and a more precise way of measuring the loss is unavailable, the amount of the defendant’s gain may provide a reasonable estimate of the loss. See Andersen, 45 F.3d at 221. Directing us to United States v. Chatterji, 46 F.3d 1336 (4th Cir. 1995), the defendant maintains that his gain was not the appropriate measure because there was no actual loss to consumers as none of the drugs were shown to be medically effective and there was no evidence that anyone fell ill or died. He argues that the calculation should not be based on whether the consumers got what they bargained for, but rather ought to be based on whether the consumers got medically effective drugs. In Chatterji, the defendant, sentenced under U.S.S.G. sec. 2F1.1, submitted two abbreviated new drug applications to the FDA, which were approved. See id. at 1338-40. The defendant had submitted false batch records in its application for one of the drugs, and for the other had changed the formula by adding more of an inactive ingredient after its application had been approved without seeking further FDA approval. The district court held that loss should be measured by the defendant’s gain from the sale of the drugs because the defendant’s fraud voided the FDA approval, thereby stripping the drugs of market value. See id. at 1340. The Fourth Circuit, over dissent, reversed, finding that the defendant’s gain was not the appropriate measure of loss because consumers got medically effective drugs that were exactly what they purported to be. See id. at 1340-43. Relying on United States v. Marcus, 82 F.3d 606 (4th Cir. 1996), the government in our case argues that there was loss to consumers because consumers paid for-FDA- approved drugs, but received drugs that were not manufactured according to the FDCA and FDA regulations; therefore, the government argues that the amount of the defendant’s gain is an appropriate measure of loss. In Marcus, the defendant, sentenced under sec. 2F1.1, had obtained FDA approval to manufacture a drug, but changed the formula by adding two additional inactive ingredients without obtaining additional FDA approval. See id. at 607-08. The district court found that the defendant’s gain was the appropriate measure of loss because the drug did not meet FDA specifications, and therefore, had no value. See id. at 608. The court distinguished Chatterji, which the Fourth Circuit affirmed, reasoning that the formula modification in Chatterji "was merely an insignificant change that implicated only the shelf life of the drug," and not the safety or medical efficacy; however, the formula modification here had a bearing on the medical effectiveness, which would require additional testing to determine whether the drug was still safe and effective. Id. at 610. In this case, the district court agreed with the government’s position and reasoned: I find the analysis in the Marcus case from the Fourth Circuit to be persuasive. I understand that the defendants believe Marcus is distinguishable on the basis that the defendant there agreed that there was an issue as to whether the drug involved there was the bioequivalent of the patented drug. I don’t regard that as a distinguishing feature of the case, because whether the defendants stipulate to it or not, and certainly they do not in this case, I find that there was an issue as to whether these drugs had been properly manufactured. I’m not saying that there was an issue as to whether they would be injurious to health or necessarily even an issue as to whether they would be effective for their pharmaceutical purpose. What I find, rather, is that there was an issue as to whether they had been manufactured in such a way that the consumers of those drugs were being sold something other than what they thought they were buying. I don’t think that any consumer of any of those drugs would have bought those drugs had the consumer known what had happened to them. * * * And I think the essence of the loss here to the consumers was the same thing fact [sic] that the Marcus case was talking about, namely, the fact that they didn’t get the FDA-approved manufactured drugs that they thought they were getting. And I emphasize that I don’t think Marcus applies only in the situation where the drugs could be dangerous. . . . Sentencing Hr’g Tr. at 23-24 (February15, 2000). The district court based the amount of loss on the defendant’s gain, which it estimated at over $200,000, thereby assigning Bhutani a base offense level of fourteen. See U.S.S.G. sec. 2F1.1(b)(1)(I). While we do not agree with the district court’s reading of Marcus or his reliance on it, we wholly adopt the core of its rationale. Indeed, we find the district court’s reasoning to be more sound than that in Chatterji and Marcus./1 The medical effectiveness of the drug or its dangerousness after adulteration ought not be the core of the inquiry; rather, the district court was justified in determining that there was a loss because consumers did not get what they bargained for. We agree with the district court’s decision that there was indeed loss to consumers because consumers bought drugs under the false belief that they were in full compliance with the law. However, the defendant points out that in Andersen we held that the defendant’s gain was not the appropriate measure of loss when there was "no clear evidence that customers or consumers suffered any loss." 45 F.3d at 221. We so held, in part, because the drugs in that case were sold in hand-labeled containers and the customers were aware that the drugs were not FDA approved. See 45 F.3d at 221. That is not so here; here consumers bargained for FDA-approved drugs that were in compliance with the law. This they did not get. We agree with the district court’s determination of what constitutes loss in this sort of case, and that the defendant’s gain is the appropriate measure of that loss. E. The bulk of the defendants’ brief is tinged with hyberbole, lamenting that they ought not to have been prosecuted because what they may have done was not so bad compared to what others have done and that their industry is overregulated by the FDA. The judiciary is not the branch to hear these beefs; rather, they ought to be raised with Congress, who makes the law, and prosecutors, who have broad discretion in instituting criminal proceedings. Furthermore, many of the disputes are no more than an invitation to reweigh the evidence based on the defendants’ attempt to retry this case on appeal. We are at ease with the jury’s work in weighing evidence and assessing credibility and will not engage in second-guessing. The other arguments of the defendants are equally without merit and we shall not address them further. AFFIRMED. FOOTNOTE /1 We decline the defendant’s invitation to apply United States v. Maurello, 76 F.3d 1304 (3d Cir. 1996) by analogy to this case. We also find our decision in Vitek Supply inapplicable because it dealt with whether loss to competitors and down- stream consumers was to be included in the loss calculation. See 144 F.3d at 490-92.

01-03-2023

09-24-2015

https://www.courtlistener.com/api/rest/v3/opinions/2995156/

In the United States Court of Appeals For the Seventh Circuit No. 00-3120 STEPHEN SIMON, Plaintiff-Appellant, v. ALLSTATE EMPLOYEE GROUP MEDICAL PLAN and RODNEY T. DANIELS, Defendants-Appellees. Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 99 C 5212--Harry D. Leinenweber, Judge. Submitted July 23, 2001--Decided August 14, 2001 Before BAUER, COFFEY, and WILLIAMS, Circuit Judges. WILLIAMS, Circuit Judge. Stephen Simon filed this suit under ERISA, 29 U.S.C. sec.sec. 1001-1461, and numerous state and common law theories against the Allstate Employee Group Medical Plan (also known as the ALLCARE Plan) and Plan Administrator Rodney T. Daniels. The district court dismissed Simon’s suit. We affirm and find that his suit was barred on res judicata and collateral estoppel grounds. I. BACKGROUND Simon alleges that in the early 1990s the Humanistic Mental Health Foundation provided medical care to a participant in the ALLCARE Plan identified as "C.R." According to Simon, C.R. assigned his benefits claim to Humanistic, which then reassigned the claim to Simon. Simon does not reveal his relation to Humanistic or why Humanistic assigned its claim to him. Simon’s attempts to collect on the claim were rebuked by the ALLCARE Plan in July 1994. Simon then sued under ERISA, 29 U.S.C. sec. 1132(a), alleging that the ALLCARE Plan improperly denied him benefits. Simon also alleged that Daniels violated his fiduciary duties under ERISA by failing to turn over unspecified plan documents, 29 U.S.C. sec. 1132(c)(3). The district court dismissed Simon’s ERISA claims on the grounds of res judicata and collateral estoppel, noting that Simon had brought a similar claim against the ALLCARE Plan in an earlier lawsuit filed in the Central District of California. In that case, Simon sued 1600 defendants, including the ALLCARE Plan, for recovery of ERISA claims assigned to him by Humanistic and other health care providers. The district court dismissed Simon’s suit on the ground that Simon--as a third party claim assignee who was not a health care provider--did not have standing to sue under ERISA, and the Ninth Circuit affirmed. See Simon v. Value Behavioral Health, Inc., 955 F. Supp. 93 (C.D. Cal. 1997), aff’d, 208 F.3d 1073 (9th Cir. 2000). The district court in the present case noted that Simon was raising the same issues against the same defendant and his claims therefore were barred by res judicata and collateral estoppel. The district court allowed Simon to amend his complaint in order to allege violations of state and common law such as breach of contract, promissory estoppel, fraud, conspiracy, and deceptive trade practices. The district court then dismissed those claims as untimely or preempted by ERISA. On appeal Simon devotes much of his brief to arguing that the decisions of the Central District of California and the Ninth Circuit that he lacked standing to sue under ERISA were incorrect. Simon’s argument misses the point. The doctrine of res judicata bars relitigation of a claim for relief decided on the merits in a previous suit involving the same parties or their privies. See Bethesda Lutheran Homes & Serv., Inc. v. Born, 238 F.3d 853, 857 (7th Cir. 2001); Brzostowski v. Laidlaw Waste Sys., Inc., 49 F.3d 337, 338 (7th Cir. 1995). Simon does not dispute that this suit raises the same ERISA claim against the ALLCARE Plan as his suit filed in the Central District of California and therefore offers nothing to dispel us of the conclusion that res judicata bars his ERISA claim. Furthermore, res judicata also bars Simon’s state and common law claims because Simon could have raised those claims in the prior suit against the ALLCARE Plan. See Brzostowski, 49 F.3d at 338./1 On the other hand, res judicata does not bar Simon’s claim that Daniels breached his fiduciary duties under ERISA because the alleged breach occurred in 1998, well after Simon filed his previous suit in the Central District of California. This breach-of-fiduciary-duties claim, however, was barred by collateral estoppel. The collateral estoppel doctrine bars the relitigation of an issue of law or fact that was litigated and decided in a prior case between the same parties or their privies. See Havoco of Am., Ltd. v. Freeman, Atkins & Coleman, Ltd., 58 F.3d 303, 307-08 (7th Cir. 1995); Kraushaar v. Flanigan, 45 F.3d 1040, 1050 (7th Cir. 1995). In order to be entitled to relief for Daniels’s purported breach of his fiduciary duties under ERISA, Simon must be a participant or beneficiary of an employee benefit plan. See 29 U.S.C. sec.sec. 1024(b)(4), 1132(c)(3). The issue of whether Simon is a participant or beneficiary of the ALLCARE Plan, however, has already been decided against Simon in the Central District of California suit. See Simon, 208 F.3d at 1080-82. Collateral estoppel precludes Simon from relitigating that issue here, and therefore Simon cannot establish that he is entitled to relief on his breach-of-fiduciary-duties claim. We decide this case in a published opinion to alert other federal courts that Simon is flooding the courts with ERISA claims virtually identical to the ones raised here. After the Central District of California dismissed Simon’s suit against 1600 employee benefit plans and employers, Simon filed ten suits in 1999 and three suits in 2000 against individual employee benefit plans and their administrators seeking to recover on ERISA claims. Each suit presented the same basic allegations as the ones raised in this case: that a participant in an employee benefit plan covered under ERISA assigned a claim for benefits to a health care provider/2 which, in turn, assigned the claim to Simon. To date no court has ruled in favor of Simon and in fact four circuits have rejected Simon’s attempts to recover on the ERISA claims because, as a third party assignee who is not a health care provider, Simon is not a participant or beneficiary of the employee benefit plans. See Simon v. Cyrus Amax Minerals Health Care Plan, No. 00-1331, 2001 WL 640410 (10th Cir. June 11, 2001) (unpublished); Simon v. Belwith Int’l, Inc., No. 00-1680, 2001 WL 111651 (6th Cir. Jan. 21, 2001) (unpublished); Simon v. Quaker Oats Employee Benefit Plan, No. 00-2342, 2000 WL 1657967 (7th Cir. Oct. 27, 2000) (unpublished); Simon v. Value Behavioral Health, Inc., 208 F.3d 1073, 1080-82 (9th Cir. 2000). Despite these rulings, Simon has continued his litigious ways by filing 18 new ERISA suits since May 18, 2001. In light of this pattern of repetitious and meritless litigation, we ORDER Simon to show cause within 14 days of this opinion why he should not be sanctioned. AFFIRMED FOOTNOTES /1 We note that the defendants have erroneously agreed that the district court had diversity jurisdiction over Simon’s state and common law claims. See 28 U.S.C. sec. 1332. In his amended complaint and appellate brief, Simon alleged only his residence, not his citizenship. An allegation of residency, however, is insufficient to estab- lish diversity jurisdiction. See Held v. Held, 137 F.3d 998, 1000 (7th Cir. 1998); Guaranty Nat’l Title Co. v. J.E.G. Assoc., 101 F.3d 57, 59 (7th Cir. 1996). Normally we would permit a litigant to correct this error before dismissing the case for lack of jurisdiction, see Held, 137 F.3d at 1000; Guaranty Nat’l Title, 101 F.3d at 59, but we will not insist upon this step here because Simon’s claims are barred by res judicata and collateral estoppel. /2 The health care providers are identified as Holistic Mental Health Foundation, Sunstar Health Care, HolistiCare, Suncrest Hospital, or College Hospital.

01-03-2023

09-24-2015

https://www.courtlistener.com/api/rest/v3/opinions/3520428/

S.P. Turman, the appellant, contracted with one W.W. Green to build a house for Turman, Green to furnish the material and labor and to turn the property over to Turman for a given sum when completed. This is what is known as a lock and key job. The contract provided that W.W. Green was to furnish all materials and labor necessary to complete the seven room and bathroom frame residence according to plans and specifications prepared by one Lester Johnson, with all the addenda to specifications as inserted by pencil, for the sum of $2,120. Green was to furnish all materials and labor, for all plumbing, gas connections, and outlets to each room, and wiring, Green also to furnish the owner with a list of all *Page 36 parties furnishing materials and labor on the job, and upon completion to furnish the owner with release in full of all the lien rights. In consideration of these considerations, Turman agreed to pay Green on Saturday of each week a weekly payment in accordance with the work completed as allowed by Lester Johnson. Money for the materials, plumbing, and electrical work was to be paid at the completion of the building. Green entered upon contract, but, before completing it, decided he was unable to complete it, and turned the house over to Turman with the understanding that if Turman could save any money on the original contract in completing the building, that such saving would be paid to Green. Green had bought certain materials from the Tupelo Brick and Tile Company and had been charged with them upon the books of that Company. Turman completed the house, but at a loss. In other words, he had to pay more in finishing the house than he would have paid under the original contract. Consequently, there was no saving on the contract. The Tupelo Brick and Tile Company did not serve any notice upon Turman prior to the time Green turned the building unfinished over to Turman. Consequently, the Tupelo Brick and Tile Company acquired no lien upon the property. There was no promise in writing by Turman to pay the debt of Green. Under the facts stated, there was no liability by Turman to the Tupelo Brick and Tile Company. The court granted a peremptory instruction for the plaintiff for $90, the amount of this demand, with six per cent interest from the 13th of September, 1937, from which judgment this case is appealed here. We think the court was in error in granting the peremptory instruction for the plaintiff, but that it should have granted the request of the defendant for the peremptory instruction. The judgment will therefore be reversed and judgment rendered here in favor of the defendant, Turman. Reversed and rendered. *Page 37

01-03-2023

07-05-2016

https://www.courtlistener.com/api/rest/v3/opinions/1419969/

721 F. Supp. 230 (1989) Ressia R. BURRELL, Plaintiff, v. TRUMAN MEDICAL CENTER, INC., et al., Defendants. No. 89-0280-CV-W-3. United States District Court, W.D. Missouri, W.D. September 27, 1989. *231 Ressia R. Burrell, Kansas City, Mo., pro se. W. Perry Brandt, Jan Fink Call, Kansas City, Mo., for defendants. ORDER ELMO B. HUNTER, Senior District Judge. Ressia Burrell brings this suit against the Truman Medical Center ("TMC") and five of its employees alleging violations of Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e, et seq. ("Title VII"). Before the Court is a Motion to Dismiss plaintiff's complaint filed by individual defendants John Miers, Sherrell Tyree, Cleo R. Smith, Donald G. Brevold and Stewart Grant (the "individual defendants"). The individual defendants move for dismissal of the claims against them arguing (1) that they are not "employers" subject to Title VII litigation, and (2) that they were not named in plaintiff's charge of discrimination filed with the EEOC and therefore cannot be sued. In addition, the individual defendants request an Order imposing sanctions against plaintiff pursuant to Rule 11, Fed.R.Civ.P. Also pending before the Court is plaintiff's "Affidavit in Support of Pro Se Request to Disqualify Judge for Bias or Prejudice." I. The Motion to Dismiss In order to prevail on this Motion to Dismiss, the individual defendants must establish that plaintiff can prove no set of facts in support of her claim which would entitle her to relief. Haines v. Kerner, 404 U.S. 519, 92 S. Ct. 594, 30 L. Ed. 2d 652 (1972). In passing on the motion, the Court should construe the allegations in the complaint in favor of the plaintiff, Scheuer v. Rhodes, 416 U.S. 232, 94 S. Ct. 1683, 40 L. Ed. 2d 90 (1974), and assume the allegations therein are true. Gardner v. Toilet Good Ass'n., 387 U.S. 167, 87 S. Ct. 1526, 18 L. Ed. 2d 704 (1957). Thus, the facts of the instant case must be stated as follows. In August of 1984, plaintiff was sexually harassed by Cleo Smith, who was then serving as Director of Data Processing for TMC. Plaintiff filed a grievance with the Personnel Department of TMC on August 8, 1984, which was internally resolved. According to plaintiff, Cleo Smith then began discriminating against her in retaliation for having filed the grievance regarding the sexual harassment. She discussed the problem with Sherrell Tyree, the Director of Personnel for TMC, on August 18, 1984. Sherrell Tyree assured plaintiff that the harassment and retaliation would stop. Plaintiff admits that she did not suffer further acts of retaliation for approximately two years. Apparently Donald Brevold replaced Cleo Smith as the Director of Data Processing for TMC in June of 1986. Plaintiff maintains that Donald Brevold began to discriminate against her in retaliation for her 1984 sexual harassment grievance. Plaintiff contends that Donald Brevold learned about plaintiff's previous grievance from Sherrell Tyree. On September 16, 1987, plaintiff filed a charge with the EEOC alleging that she was being discriminated against in retaliation for her 1984 grievance. She claims that the acts of retaliation became so severe that she was forced to seek hospitalization. She was allegedly unlawfully discharged on January 14, 1988. The individual defendants contend initially that John Miers and Stewart Grant should be dismissed from this action because plaintiff's complaint does not contain any allegations relating to these two employees. The Court agrees that plaintiff fails to make any allegations of wrongdoing *232 against John Miers and Stewart Grant. Consequently, plaintiff's complaint against these two employees must be dismissed for failure to state a claim upon which relief can be granted. The remaining individual defendants maintain that they are not proper parties under Title VII which prohibits discrimination by employers. Title VII defines the term "employer" to include "a person engaged in an industry affecting commerce who has fifteen or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar year, and any agent of such a person...." (emphasis added) 42 U.S.C. § 2000e(b) (1974). It is not contested that TMC is an employer for the purposes of Title VII. Thus, the individual defendants may be sued pursuant to Title VII if they qualify as statutory "agents" of TMC. The Court must liberally construe the definition of "employer" to effectuate EEOC's remedial purpose. Baker v. Stuart Broadcasting Co., 560 F.2d 389, 391 (8th Cir.1977). Courts have generally held that to be an "agent" for the purposes of 42 U.S.C. § 2000e(b), an individual must be a supervisory or managerial employee of a Title VII employer, to whom the responsibility for making some employment decisions has been delegated. York v. Tenn. Crushed Stone Ass'n., 684 F.2d 360, 362 (6th Cir.1982). See Mason v. Twenty-Sixth Judicial Dist. of Kansas, 670 F. Supp. 1528, 1532 (D.Kan.1987) ("agent" includes supervisory or managerial employees to whom some employment decisions have been delegated by employer); Hendrix v. Fleming Companies, 650 F. Supp. 301, 302 (W.D.Okla.1986) ("employer" includes an officer, director, or supervisor of a Title VII employer, or an employee otherwise involved in managerial decisions); McAdoo v. Toll, 591 F. Supp. 1399, 1406 (D.Md.1984) ("those individuals who are charged with the responsibility of making — or contributing to — employment decisions...."); Thompson v. Intern. Ass'n. of Machinists and Aerospace Workers, 580 F. Supp. 662, 669 (D.D.C.1984) (individuals are subject to suit as "agents" under § 2000e(b) based on their participation in the decision making process that forms the basis of plaintiff's charge of discrimination); Jeter v. Boswell, 554 F. Supp. 946, 953 (N.D.W.Va.1983) (individual responsible for making the complained of personnel decision is subject to suit as employer); Spirt v. Tchrs. Ins. and Annuity Ass'n., 475 F. Supp. 1298, 1308 (S.D.N.Y.1979), aff'd in relevant part, 691 F.2d 1054 (2d Cir.1982) ("employer" controls some aspects of an individual's compensation, terms, conditions or privileges of employment); see also I A. Larson, Employment Discrimination § 5.34 (1989) ("... the statute also imposes liability on the particular hiring officer or other person who actually made or carried out the discriminatory employment action ... managers with direct control over the effected employee are uniformly found to be agents for the purposes of Title VII."). The individual defendants assert briefly in their Motion to Dismiss that they do not qualify as statutory "agents" under Title VII. However, they have failed to document their employment status on the record. Plaintiff, on the other hand, alleges in her complaint that the individual defendants served as Directors of TMC divisions during the relevant time period involved in this case. Thus, it appears the individual defendants qualify as supervisory or managerial employees of TMC. Furthermore, Sherrell Tyree's position as Director of Personnel indicates she had responsibility for employment decisions. Assuming plaintiff was employed in the data processing department, it can be inferred that Cleo Smith and Donald Brevold, as Directors of Data Processing, controlled aspects of plaintiff's employment at TMC. The Court is hesitant to find on the current record that plaintiff can prove no set of facts tending to establish that the individual defendants are statutory employers under Title VII. Thus, the Court denies the motion of the individual defendants to dismiss plaintiff's complaint on this ground, without prejudice to their right to file an appropriate motion with proper factual documentation *233 at a later stage in these proceedings. The individual defendants contend that even if they meet the statutory definition of an "employer" under Title VII, they cannot be sued because they were not named in plaintiff's charge of discrimination filed with the EEOC. The statute provides that "a civil action may be brought against the respondent named in the charge...." (emphasis added) 42 U.S.C. § 2000e-5(f)(1). As a general rule, a complainant must file a charge against a party with the EEOC before the complainant can sue that party in federal court under Title VII. Hawkins v. Allis-Chalmers Corp., 527 F. Supp. 895, 896 (W.D.Mo. 1981). The dual purpose of this procedural filing requirement is to notify the person charged with the asserted violation and to facilitate conciliation. Stith v. Manor Baking Co., 418 F. Supp. 150, 156 (W.D.Mo. 1976). Several exceptions to the general rule have been recognized.[1] Plaintiff encourages the Court to adopt a policy-based exception to the procedural filing rule developed by the Third Circuit in Glus v. G.C. Murphy Co., 562 F.2d 880 (3d Cir.1977), appeal after remand, 629 F.2d 248 (3d Cir.1980), vacated on other grounds sub nom. Retail, Wholesale & Department Store Union v. G.C. Murphy Co., 451 U.S. 935, 101 S. Ct. 2013, 68 L. Ed. 2d 321 (1981). The Glus court enumerated four factors to be considered in determining whether jurisdiction exists over Title VII defendants who were not named in the plaintiff's EEOC complaint. These factors include: (1) whether the role of the unnamed party could through reasonable effort by the complainant be ascertained at the time of the filing of the EEOC complaint; (2) whether, under the circumstances, the interests of a named are so similar as the unnamed party's that for the purpose of obtaining voluntary conciliation and compliance it would be unnecessary to include the unnamed party in the EEOC proceedings; (3) whether its absence from the EEOC proceeding resulted in actual prejudice to the interests of the unnamed party; (4) whether the unnamed party has in some way represented to the complainant that its relationship with the complainant is to be through the named party. Id. at 888.[2] The Court need not decide whether to adopt the four-part test enunciated in Glus at this stage of the litigation. Instead, the Court chooses to endorse another exception to the EEOC filing rule which appears to apply in this case. A number of courts have recognized the "actual notice exception" to the general rule that a Title VII defendant must be named in the EEOC charge. See 2 A. Larson, Employment Discrimination § 49.1(c)(2) (1989) (the fact the defendant had actual notice of the EEOC charges may serve as an exception in itself). Courts are reluctant to dismiss an unnamed *234 party if he or she had adequate notice of the charge filed with the EEOC and an opportunity to participate in the EEOC proceedings. See Marks v. Prattco, Inc., 607 F.2d 1153, 1156 (5th Cir.1979); Bostic v. Wall, 588 F. Supp. 994, 997 (W.D.N.C.1984), aff'd, 762 F.2d 997 (4th Cir.1985); Vanguard Justice Society, Inc. v. Hughes, 471 F. Supp. 670, 688-89 (D.Md.1979); Williams v. Massachusetts General Hospital, 449 F. Supp. 55, 58 (D.Mass.1978). "[W]here an unnamed party has been provided with adequate notice of the charge, under circumstances where the party has been given the opportunity to participate in conciliation proceedings aimed at voluntary compliance, the charge is sufficient to confer jurisdiction over that party." (citations omitted) Eggleston v. Chicago Journeymen Plumbers' Local Union No. 130, 657 F.2d 890, 905 (7th Cir.1981), cert. denied sub nom. Chicago Journeymen Plumbers' Local Union No. 130 v. Plummer, 455 U.S. 1017, 102 S. Ct. 1710, 72 L. Ed. 2d 134 (1982); see Romain v. Kurek 836 F.2d 241, 245 (6th Cir.1987); Jones v. Singer Career Systems, 584 F. Supp. 1253, 1255 (E.D.Ark. 1988); Feng v. Sandrik, 636 F. Supp. 77, 81 (N.D.Ill.1986); see also Allen v. Colgate-Palmolive Co., 539 F. Supp. 57, 69 (S.D.N. Y.1981). In Greenwood v. Ross, 778 F.2d 448, 451 (8th Cir.1985), the Eighth Circuit indicated it would be amenable to the "actual notice exception" by stating in dictum "[t]he filing of an EEOC charge is unnecessary where an unnamed party has been provided with adequate notice of the charge, under circumstances where the party has been given the opportunity to participate in conciliation proceedings aimed at voluntary compliance." The "actual notice exception" does not frustrate either of the dual purposes of Title VII. It ensures that a Title VII defendant, although unnamed in the EEOC charge, had notice of the charge and an opportunity to participate in the EEOC conciliation efforts. In such cases, demanding full and technical compliance with procedural requirements would have no relation to the purposes for requiring those proceedings in the first instance. See Glus, 562 F.2d at 888. If a defendant had actual notice of the EEOC charge and an opportunity to participate in the EEOC proceedings, the Court will exercise jurisdiction over that defendant. In her response to the individual defendants' motion to dismiss, plaintiff asserts that "the `individual defendants' participated in the conciliation procedures with E.E.O.C. `The individual defendants' were adequately notified of charges filed. And, given the appropriate opportunity to participate in conciliation proceedings with E.E. O.C." In their reply to plaintiff's response, the individual defendants do not refute plaintiff's statement that they had notice of the EEOC charge and an opportunity to participate in the EEOC conciliation proceedings. They have made no attempt to introduce any evidence tending to show that they did not receive notice of or participate in the conciliatory efforts. Consequently, on the present state of the record of this case, each of the individual defendants may be charged with having had actual knowledge of plaintiff's EEOC charge and an opportunity to participate in the EEOC conciliation proceedings. Thus, the motion to dismiss on this ground is denied without prejudice, and may be renewed, with proper factual documentation, as a motion for summary judgment. Accordingly, the individual defendants' request for an Order imposing sanctions on plaintiff pursuant to Rule 11, Fed.R.Civ.P., is also denied. II. Plaintiff's "Affidavit in Support of Pro Se Request to Disqualify Judge for Bias on Prejudice" Plaintiff has filed a request that I disqualify myself due to bias or prejudice. 28 U.S.C. § 455(b)(1) requires a judge of the United States to disqualify himself where "he has a personal bias or prejudice concerning a party...." I assure plaintiff that I am in no way biased or prejudiced against her. Accordingly, her motion for disqualification is denied. III. Conclusion It is hereby *235 ORDERED (1) that the individual defendants' Motion to Dismiss plaintiff's complaint is granted in part and denied in part. The Motion to Dismiss plaintiff's complaint against defendants John Miers and Stewart Grant is granted. The Motion to Dismiss plaintiff's complaint against Cleo Smith, Sherrell Tyree, and Donald Brevold is denied. It is further ORDERED (2) that the Motion by the individual defendants seeking sanctions against plaintiff is denied. It is further ORDERED (3) that plaintiff's Motion for Disqualification of Judge Hunter is denied. IT IS SO ORDERED. NOTES [1] Exceptions to the procedural filing rule include (1) if the defendant is an "indispensable party" pursuant to Rule 19, Fed.R.Civ.P.; (2) if there is a "substantial identity" between the defendant and someone against whom a charge was filed; (3) if an agency relationship exists between the charged party and the defendant. Hawkins, 527 F.Supp. at 897, 897 n. 1; Stith, 418 F.Supp. at 156; Curran v. Portland Super. Sch. Committee, 435 F. Supp. 1063 (D.Me.1977); see also Greenwood v. Ross, 778 F.2d 448, 450-51 (8th Cir.1985); Sedlacek v. Hach, 752 F.2d 333, 336 (8th Cir.1985). The cases which have applied these exceptions have done so only where the purposes of the EEOC filing, notice to the alleged violator and opportunity for voluntary compliance through conciliation efforts, have been effectuated with respect to the unnamed defendants. Kelly v. Richland School Distict 2, 463 F. Supp. 216, 219 (D.S.C.1978). [2] Several courts have cited with approval the four prong Glus test. See Romain v. Kurek, 836 F.2d 241 (6th Cir.1987); Eggleston v. Chicago Journeymen Plumbers' Local Union No. 130, 657 F.2d 890 (7th Cir.1981), cert. denied sub nom. Chicago Journeymen Plumbers' Local Union No. 130 v. Plummer, 455 U.S. 1017, 102 S. Ct. 1710, 72 L. Ed. 2d 134 (1982); Romero v. Union Pacific Railroad, 615 F.2d 1303 (10th Cir.1980); Acampora v. Boise Cascade Corp., 635 F. Supp. 66 (D.N.J.1986); Harrigan v. Sebastian's on the Waterfront, Inc., 629 F. Supp. 102 (D.V.I.1985); Mathews v. Houston Independent School District, 595 F. Supp. 445 (S.D.Tex.1984); Garcia v. Gardner's Nurseries, Inc., 585 F. Supp. 369 (D.Conn.1984); Williams v. Southern Bell Telephone & Telegraph Co., 464 F. Supp. 367 (S.D. Fla.1979).

01-03-2023

10-30-2013

https://www.courtlistener.com/api/rest/v3/opinions/2995080/

In the United States Court of Appeals For the Seventh Circuit No. 00-1215 United States of America, Plaintiff-Appellee, v. Daniel A. Kosth, Defendant-Appellant. Appeal from the United States District Court for the Central District of Illinois. No. 98-40028-001--Michael M. Mihm, Judge. Argued November 13, 2000--Decided July 18, 2001 Before Harlington Wood, Jr., Kanne, and Diane P. Wood, Circuit Judges. Diane P. Wood, Circuit Judge. Daniel Kosth was convicted on four counts of making false statements in violation of 18 U.S.C. sec. 1001 in connection with loans from the Small Business Administration (SBA). His appeal rests principally on a claim that the evidence was insufficient to support those convictions, although he also raises a few other arguments and he claims error in the trial court’s application of the Sentencing Guidelines. We find that the evidence was adequate to support the jury’s conclusions and that no other reversible error occurred, and we therefore affirm the convictions. I The genesis of this case can be found in Kosth’s plans to convert an abandoned 40- acre golf course and recreation area in Orion, Illinois, into the Hillcrest Resort. In the summer of 1992, he approached Charles Azzaline and Peter Gray about purchasing the land and becoming partners in Hillcrest Resort, Inc. He described his idea for the resort, but he did not tell Azzaline and Gray about his own dubious background. Kosth had recently been released from federal prison after serving time on a financial fraud conviction. One of the conditions of his supervised release was that he notify any financial institution with which he did business of his previous offense, his conviction, and his supervised release status. Kosth, aware that his new venture was not likely to succeed if he complied with the terms of his supervised release, hatched a plan. Part one of the plan called for him to avoid disclosing his past to his partners and any financial institutions that he dealt with by concealing his ownership interest in Hillcrest. Part two, which he also implemented, required him to place his one-third stock interest in the Hillcrest Resort, Inc. in his wife name, alleging that he was doing so for tax purposes. These arrangements did not change the fact that Kosth enjoyed all the rights and benefits that come with having a substantial ownership interest in a closely held corporation. His wife, Terri Kosth, had none of them. Terri Kosth’s Hillcrest stock was acquired almost exclusively with in-kind contributions of building supplies; supplies which a reasonable jury could have concluded came from Daniel Kosth’s construction business. It was Kosth who incorporated Hillcrest. He co-signed the deed to purchase the Hillcrest property with Azzaline and Gray. He was named vice president and was empowered to write checks and enter into contracts on Hillcrest’s behalf. He ran Hilcrest monthly board meetings and he regularly voted Terri’s ownership interest. Hillcrest implemented a stock reversion agreement under which, upon the death of any stockholder, the stock would revert to the corporation rather than to the stockholder’s heir. But the agreement included a special provision for the stock held by Terri; her stock was to revert to the corporation upon Daniel Kosth’s death. Finally, when itsuited his purposes, Kosth publicly held himself out to be a one-third owner of Hillcrest. In 1992, Hillcrest Resort Inc. purchased the golf course and recreation area property for $170,000. Kosth negotiated this transaction and subsequently negotiated additional financing for the renovation of the property with Orion Bank. In keeping with his plan, Kosth relied on his nominal non-ownership of Hillcrest to avoid his obligation to disclose his criminal past to Orion Bank. During 1992 and 1993, Orion loaned Hillcrest $70,000 and took a security interest in private property owned by Azzaline, Gray, and Terri Kosth. For Terri, this included a real estate business that she owned, named Quad Cities Property Management, as well as several pieces of real property. Using the proceeds of this initial loan, Hillcrest hired Bi-State Construction to begin the renovation of the golf course. Daniel Kosth was the sole owner and President of Bi-State. Unfortunately, in the summer of 1993 severe rains caused significant damage to the Hillcrest property. Kosth initially requested an additional $400,000 loan from Orion on behalf of Hillcrest. Orion denied his request. It agreed instead that it would loan Hillcrest the money to pay off the $130,000 still owed on the original contract for the property andextend an additional $70,000 in credit, provided that Hillcrest paid off its outstanding debt on the original $70,000 loan. This offer appealed to Kosth, but he needed to find someone to loan him the money to pay off the outstanding debt to Orion. His eye fell on the SBA, which, because of the heavy rains in the area including Hillcrest, had decided thatresidents there were eligible for its low interest disaster assistance loans. Kosth completed preliminary paperwork for the Federal Emergency Management Agency, met with the local SBA representative, and then filled out the SBA disaster loan application. That application required Kosth to identify all the managers of Hillcrest Resort, Inc., and defined a manager as anyone with an ownership interest in the company of greater than 20%. Kosth put down Azzaline, Gray, and Terri Kosth. The application then required Kosth to disclose whether any of the managers had ever been convicted of a crime. None of the managers he had listed ever had, so he put "no." Shortly after he submitted the application, an SBA loss verifier visited the Hillcrest property. Following an inspection of the damage, the loss verifier prepared an estimate for the repairs of $151,000. This estimate had as a built-in component a standard 15% profit margin. The catch was that under the terms of the SBA’s loan agreement with Hillcrest, this profit could not be enjoyed by companies affiliated with Hillcrest (without prior permission of the SBA) or by the immediate family members of Hillcrest’s principals. The language of the agreement to this effect was clear: Borrower will not use any proceeds of this Loan to pay wages or any other compensation for repair work performed by Borrower or members of Borrower’s immediate family. The loan agreement also specified that loan proceeds could be used only to pay for disaster repairs and that any money not needed to complete the repairs had to be returned. Despite this language, Kosth thought he saw a way around it. He submitted a financing proposal to Orion Bank in which he declared that, using his company Bi-State, he could complete all the repairs at Hillcrest and retain a $70,000 profit. He would then take this profit and give it to his wife. She in turn would loan it to Hillcrest, as an officer loan, and Hillcrest would use the loan to pay off its outstanding obligation to Orion. Once this was done, Orion would pay off the $130,000 mortgage on the Hillcrest property and extend a new $70,000 loan to Hillcrest. Recognizing the potential problem created by the terms of the SBA loan agreement, Orion approved the financing proposal contingent upon receipt of a letter from the SBA "evidenc[ing] their full knowledge and approval of the method you plan to use to make the necessary repairs to the resort and retire Hillcrest’s existing indebtedness to the bank." Kosth consulted an attorney to determine what kind of disclosure would satisfy the terms of the loan agreement. Although Kosth gave the attorney all of the relevant documents, he somehow neglected to inform him that he (Kosth) intended to take $70,000 of the $151,000 loan as profit and not to return it to the SBA. Based on the information he had, Kosth’s attorney advised Kosth that everything should be fine if Hillcrest disclosed that one of its partners was married to the owner of Bi-State. Azzaline and Gray--also unaware of Kosth’s plan to take $70,000 profit from the loan--were satisfied with this advice. Kosth then carried out the master plan. Acting on behalf of Hillcrest, he sent a letter stating Hillcrest’s desire to "continue its business relationship" with Bi-State and disclosing that Terri Kosth was married to Bi-State’s owner. With the letter, Kosth enclosed Bi-State’s "Construction Agrement [sic]" with Hillcrest, which included its "bid, work schedule agrement [sic] with payment requirements." This document itemized the proposed repairs and, without indicating any profit line item, projected a total project cost of $151,000. The SBA received the letter and began making disbursements payable to Hillcrest and Bi-State in March of 1994. Between April and November 1994, the SBA approved $190,000 in disaster loan funds for Hillcrest and actually disbursed $176,000 of that total. The increase over the original $151,000 came as a result of several "urgent" requests from Kosth claiming that he needed additional funding to complete the Hillcrest repairs. The SBA also gave Kosth a $15,900 loan for a separate economic injury. The first two SBA disbursement checks, totaling $130,000, were deposited into Bi-State’s account in April and May of 1994. Using this money, Kosth wrote checks totaling $118,800 to Quad Cities Property Management. Terri Kosth then transferred $70,000 of this money to Orion Bank to pay off Hillcrest’s outstanding debt. Orion in turn loaned Hillcrest the $200,000 as promised and released its security interest in the Hillcrest partners’ private property. Terri Kosth then wrote two checks for $45,000 from her Quad Cities account to Hillcrest. Through this money-shuffling, the Kosths managed to use the SBA loan proceeds to put Hillcrest in debt to Terri Kosth and Quad Cities to the tune of $115,000. Shortly after the third loan disbursement check for $21,000 was deposited in Bi-State’s account, Kosth made out several checks for cash. He also paid off over $5,000 in gambling and credit card debts with checks drawn on Bi-State’s account. Things began unraveling in late 1994, when the U.S. Attorney’s office sent a letter to the SBA expressing concern about Kosth’s receipt of SBA funds. That letter prompted the SBA to send an inspector, Karl Dietz, to Hillcrest on November 16, 1994. In preparation for Dietz’s visit, Kosth prepared an accounting of Bi-State’s use of SBA funds. This accounting contained a line item indicating that Bi-State had made $13,275 in profit and incurred $5000 in administrative costs to date. Dietz, seeing the line items, crossed them out and wrote "not eligible." As a result of the information Dietz gathered, the SBA halted any further disbursements of funds to Hillcrest. On June 18, 1998, the grand jury returned a four count indictment against Kosth alleging that he had made numerous false statements to the SBA, all in violation of 18 U.S.C. sec.1001. As we have already noted, a jury convicted Kosth on all four counts. Following his conviction, Kosth moved for a judgment of acquittal and for a new trial, under Fed. R. Crim. P. 29(c) and 33 respectively. The district court denied both motions. On January 13, 2000, Kosth was sentenced to 46 months’ imprisonment and required to pay $128,593 in restitution. Kosth appeals both his conviction and his sentence. II A. Evidentiary Challenges Kosth raises a number of challenges to his conviction. We can dispose quickly of his evidentiary claims, which challenge the district court’s decision to admit evidence of his prior conviction, the terms of his supervised release, and his gambling. These kinds of decisions are reviewed for abuse of discretion. United States v. Van Dreel, 155 F.3d 902, 905 (7th Cir. 1998). In this case, there was none. The government wanted to use, as part of its proof on Count I of the indictment, the fact of Kosth’s prior conviction to show that Kosth lied when he stated on the SBA loan application that none of Hillcrest’s managers had criminal records. It sought to introduce the terms of his supervised release to establish Kosth’s motive for originally establishing the sham ownership arrangement with his wife. Both of these are proper bases for admitting what would otherwise arguably fall within the scope of Fed. R. Evid. 404(b)’s prohibition against the use of other wrongful acts evidence. The court also issued appropriate cautionary instructions that prohibited the government from telling the jury the nature of the previous conviction and clearly delimited the purposes for which the evidence could be considered. The government’s evidence that Kosth spent part of the SBA loan money on gambling was also properly admitted as direct evidence relating to the charges in Count III, which asserted that Kosth falsely represented to the SBA that he would use the SBA loan money only for repairs of the Hillcrest property. B. Jury Instructions Kosth next argues that the district court’s instruction to the jury regarding the government’s "sham ownership" theory was erroneous. We review the district court’s decisions regarding jury instructions for abuse of discretion. United States v. Neville, 82 F.3d 750, 759 (7th Cir. 1996). If jury instructions fairly and accurately summarize the law and have support in the record they will not be disturbed on appeal. United States v. Wimberly, 79 F.3d 673, 676 (7th Cir. 1996). The instruction at issue was worded as follows: Also as to Count I, if the defendant made or used, or caused to be made or used a document containing a statement and that statement represented as true a false front or sham ownership arrangement in an effort to qualify to receive a government loan, such conduct would be unlawful provided the government proves, in connection with that statement, each of the five [elements of a false statement offense]. It is for you to determine whether the ownership arrangements regarding Hillcrest Resorts, Inc. constituted a false front or sham. Kosth contends that this instruction was erroneous because it failed to specify the "elements" of a sham ownership arrangement. In support of this argument, he cites a number of tax liability cases involving sham ownership allegations. See, e.g., Sacks v. Commissioner, 69 F.3d 982, 986 (9th Cir. 1995). The doctrine of sham ownership in the context of tax liability determinations, however, is at most a useful indicator that judges and juries may look beyond formalities to determine questions of income and, in this case, ownership. See, e.g., Buelow v. Commissioner, 970 F.2d 412 (7th Cir. 1992) (noting tax court’s decision that property assigned by defendant to sham trust remained his property for tax purposes). The specific elements of this tax liability doctrine are not applicable here. The government’s theory in this case was straightforward: Kosth was the true owner of the shares in Hillcrest but he used his wife Terri as the paper owner in order to gain access to and control over government benefits to which he otherwise would not have been entitled. The impropriety of this kind of evasion has long been well established in the case law. United States v. Kingston, 971 F.2d 481 (10th Cir. 1992) (defendant who paid sham-buyers to be title-holders in order to get access to HUD and VA loans induced false statements in violation of sec. 1001); Harrison v. United States, 279 F.2d 19 (5th Cir. 1960) (entries in bank’s books indicating loan to city were false statements where mayor was true beneficiary of the loans); United States v. Swaim, 757 F.2d 1530 (5th Cir. 1985) (affirming conviction for scheme to conceal purchase price of building in order to acquire federal loan); Ehrlich v. United States, 238 F.2d 481 (5th Cir. 1956) (scheme to use veterans’ names to obtain subsidized price for properties supported conviction under sec. 1001). Even if the instruction could have been more detailed with respect to the relevant indicia of ownership (an issue Kosth has not raised and thus has waived), the concepts of "sham" and "false front" did not require any further specification to state the law adequately for the jury’s purposes. This instruction, in short, did not give rise to reversible error. C. Sufficiency of the Evidence We come, then, to Kosth’s principal argument, which attacks the sufficiency of the evidence on all four counts. Although Kosth properly preserved both his argument for acquittal as a matter of law and for a new trial in the procedural sense, see United States v. Griffin, 194 F.3d 808, 816-18 (7th Cir. 1999), from a substantive standpoint it is exceedingly difficult to succeed on either ground. On this type of review, the appellate court must consider the evidence in the light most favorable to the verdict. Only if, from this vantage point, the record contains no evidence from which the jury could have found guilt beyond a reasonable doubt, is reversal appropriate. E.g., United States v. Hickok, 77 F.3d 992, 1002 (7th Cir. 1996). Our review of the district court’s denial of the Rule 33 new trial motion is also deferential; as the late Professor Charles Alan Wright’s respected treatise puts it, "[t]he appellate court properly defers to the view of the trial court [on the denial of a Rule 33 motion], and will affirm unless there has been error as a matter of law or a clear and manifest abuse of judicial discretion." 3 Charles Alan Wright, Federal Practice and Procedure: Criminal (2d), sec. 559 at 368 (1982). 1. Count I Count I of the indictment charged Kosth with making a false statement on the SBA disaster loan application in violation of 18 U.S.C. sec. 1001. To convict under this statute the government must prove beyond a reasonable doubt that (1) the defendant made a statement, (2) the statement was false, (3) the statement was material, (4) the statement was made knowingly and willfully, and (5) the statement concerned a matter within the jurisdiction of a federal department or agency. United States v. Ross, 77 F.3d 1525, 1543-44 (7th Cir. 1996). The government alleged that Kosth knowingly made a material false statement when he indicated on the disaster relief application that Terri was a manager of Hillcrest and that no Hillcrest manager had a criminal record. According to Kosth, the government’s case founders on the second and third of the sec.1001 requirements--falsehood and materiality. He claims that he was not required to identify himself as one of Hillcrest’s managers or to disclose his criminal his tory on the SBA disaster relief application because the SBA application defined "manager" as any person owning at least 20% of the company’s stock, and it was Terri who owned 30% of the shares in Hillcrest Resort, Inc. This position implies that the jury was required to accept the superficial arrangements Kosth had made as reality. The government, however, presented evidence intended to convince the jury that Terri Kosth was merely a sham or straw owner of Hillcrest. Although Kosth attacks the sufficiency of the evidence of sham ownership, we are satisfied that there was enough evidence in the record to support the jury’s decision to accept the government’s version of events. There was ample evidence to support findings that Hillcrest Resorts, Inc., was Kosth’s idea; that because of the terms of his probation, he needed a way to conceal his ownership interest in Hillcrest when dealing with financial institutions and the SBA; and that he used his wife for this purpose. Among the most compelling evidence that he was the true owner of the stock was the stock reversion agreement that provided that Terri Kosth’s stock would revert to the corporation in the event of Daniel Kosth’s death. It was also telling that Daniel Kosth regularly voted his wife’s shares, that Terri played no role in the management of the business, and that she acquired 90% of "her" stock interest through in-kind contributions of building materials, goods which Daniel Kosth, as owner of a construction company, was well positioned to supply. This evidence, when considered in conjunction with the extensive evidence of Kosth’s control over the day-to-day operations of Hillcrest, supports the jury’s conclusion that Kosth was the true part-owner and manager of Hillcrest, that he knew this to be the case when he filled out the SBA loan application, and that he made the false statement with the intention of obtaining an SBA loan which he realized he was otherwise unlikely to get. Cf. Ehrlich, 238 F.2d at 483-84 (whether veterans’ statements were true depended on jury’s determination of the nature of the defendant’s scheme). Perhaps recognizing the problem the evidence presented at trial created for his claim of innocence, Kosth tried tointroduce two affidavits with his Rule 29 and 33 motions whose purpose was to buttress the bona fides of Terri’s separate ownership. He has continued to rely heavily on these affidavits in his arguments on appeal. But the district court, while allowing the affidavits to be filed, made clear that they would be considered only for the limited purpose of one of the specific claims of error in Kosth’s motion for a new trial. Kosth did not argue that they were pertinent to the government’s sham ownership claim in that motion, nor were they admitted for that purpose. We therefore do not consider them to be part of the record and decline Kosth’s invitation to treat them as if they were evidence before the jury. We note in addition that they would not have anything like the dispositive effect Kosth attributes to them, even if they were properly here. Kosth stresses, and we agree, that he cannot be convicted under sec.1001 for statements that are literally true, see United States v. Lozano, 511 F.2d 1 (7th Cir. 1975), and that there is no "sham" if the owner of property transfers his entire interest in the property to a third party and then denies ownership of that property. See United States v. Gahagan, 881 F.2d 1380 (6th Cir. 1989). We note at the outset that Kosth did not request a "literal truth" instruction or otherwise assert this defense at trial. Even if it was not waived, a full review of the record shows that the jury did not convict Kosth for literally true statements. The whole point of the government’s evidence was that, unlike the defendant in Gahagan, Kosth had not relinquished the benefits of owning the property at the time he completed the SBA application. To the contrary, he enjoyed all the real indicia of share ownership and he was actively managing both the board and the operations of the company. If, as we conclude it reasonably could have done based on the evidence before it, the jury determined that Terri Kosth’s nominal stock ownership was simply part of Daniel Kosth’s scheme to conceal the fact that he was the part- owner of Hillcrest Resort, Inc., then neither his claim that Terri Kosth was the owner of 30% of the Hillcrest stock, nor his claim that no Hillcrest manager had a criminal record was literally true. 2. Count II Count II charged Kosth with submitting a construction agreement to the SBA that indicated that Bi-State developers (his company) would generate no profit from the proceeds of the SBA loan, even though he knew that Bi-State would reap approximately $70,000 from the Hillcrest loan. Once again, this was alleged to violate the false statement statute, 18 U.S.C. sec. 1001. Kosth submitted the construction agreement at issue together with his letter seeking permission to have loan proceeds go to Bi-State. Kosth argues that nothing he said in the contract made any promises about profits, because the contract simply indicated the total amount that would be necessary for the repairs--$151,000 initially--and that all such estimates include some percentage mark-up for profit. He reasons that the SBA must have known that some part of that $151,000 represented profit, and supports his argument with testimony from SBA estimators who confirmed that it is standard practice to build a profit figure into the projected cost for each item of repair in the estimate. The contract Kosth submitted reproduced the SBA estimator’s figures and made no mention of Bi- State’s expected profits. The government’s case, however, rested on the fact that Kosth was not just an ordinary borrower. Kosth submitted his estimate as part of a request to be exempted from the express terms of the SBA loan agreement. That agreement specifically prohibited use of loan funds to pay the borrower or members of the borrower’s family and it required the loan recipient to retain only those funds needed to make the necessary repairs. The jury heard considerable evidence that, given these terms, Kosth was required not only to get permission from the SBA to have loan proceeds go to Bi-State, but also to have Bi-State take a profit. Moreover, there was evidence that Kosth was well aware that the SBA loan agreement created such a requirement. After evaluating the loan agreement, Orion Bank informed Kosth that he needed to disclose both Bi-State’s relationship to Hillcrest and that he intended to use $70,00 of the loan proceeds to pay off his existing debt to Orion. The fact that Kosth intentionally withheld from his attorney and his partners the fact that he intended to take a profit on the loan, and the fact that he prepared one estimate for Orion with a profit line, and a "carbon copy" for the SBA without one, was also evidence that he understood the SBA’s expectations under the terms of the loan agreement. Instead of requesting permission to retain a portion of the loan proceeds as profit, however, Kosth’s letter to the SBA seeking an exemption only disclosed that Bi-State would be receiving the proceeds of the loan. Absent a disclosure of Kosth’s intent to take a profit, the SBA assumed that Kosth would only request the amount Bi-State actually needed to complete the repairs, and a reasonable jury could conclude that Kosth knew it. Thus, when he submitted to the SBA an estimate for $151,000 without an indication that he would be taking a profit, knowing that in fact this was $70,000 more than what he would need and would be entitled to under the terms of the loan agreement, Kosth made a false statement to the SBA. In sum, while we consider this to be a close call, we believe the jury could reasonably have concluded that, in the context of Kosth’s negotiations with the SBA to escape the prohibitions in the SBA loan agreement, he knew the estimate that he submitted would be assumed by the SBA not to contain a profit and that this was clearly false. Kosth attempts to portray the government’s theory as absurd, suggesting that the government thinks the SBA assumed he would do the work for "free." What the SBA assumed, absent any contrary indication from Kosth, was that Kosth would comply with the terms of the loan agreement and do the work without any additional profit but with all costs covered. 3. Count III This count charged that Kosth made false statements in violation of sec.1001 when he signed the SBA loan agreement and thereby represented that "the proceeds of the loan would be used solely to rehabilitate and replace Hillcrest property damaged and destroyed by disaster flooding," when he knew that "a purpose of the application for an SBA disaster loan was to generate financial profit for Bi-State Developers . . . so that the profit could be used to pay off preexisting debt of Hillcrest." Once again, from the perspective we are required to use in evaluating a jury’s verdict and a district court’s denial of a motion for new trial, we see nothing that requires reversal. According to Kosth, it was just the government’s misfortune that the loan money it gave Bi-State to perform the re pairs was substantially in excess of the amount actually required to do the work. His ability to complete the job while retaining a profit of $70,000 entitled him to a windfall that he could use to retire Hillcrest’s $70,000 debt. Even if we indulge in the economically reasonable assumption that part of the cost of performing work is a profit to the contractor, however, that does not answer the question whether Kosth was entitled to tell the SBA that he needed $151,000 to do the work when he knew all along that he needed only $81,000. As the government argued and the evidence showed, he took the extra money knowing that he (through Bi-State) would spend the excess proceeds to benefit Hillcrest in a manner not permitted by the terms of the loan agreement. Furthermore, the loan agreement itself required him to return any funds that were not required for doing the repair work. The evidence is crystal clear that Kosth planned from the start to use almost half of the loan to pay the Hillcrest debt; his correspondence with Orion leaves no doubt on the point. And this was indeed what he did, along with using other parts of the money for a variety of personal expenditures. It is difficult to see how the jury could have come to any other conclusion on this part of the case. 4. Count IV Last, Count IV charged Kosth with making a materially false statement in violation of sec. 1001 when he submitted a report to the SBA indicating that Bi-State had generated $13,275 in profit from the repair work supported by the loan, when he "well knew, Bi-State Developers already had generated a profit of approximately $70,000" from the loan. The jury had ample evidence before it to support the conviction on this count, for both Rule 29 and Rule 33 purposes. When Kosth was preparing for SBA Inspector Dietz’s visit on November 16, 1994, he prepared an accounting of his use of the SBA funds that included a line item indicating that Bi-State had earned just over $13,275 in profit. He did so at a time after he had already taken $70,000 of the SBA loan proceeds and deposited them in Terri’s account to use for the repayment of the debt Hillcrest owed to Orion Bank. Dietz, seeing the $13,275 line item, crossed it off and wrote "not eligible." The jury saw this as a false statement, and Kosth is hard pressed to challenge that characterization. He does, however, urge that it was not "material" for purposes of sec. 1001, citing United States v. Gaudin, 515 U.S. 506 (1995). His misstatement, he claims, had no "natural tendency to influence" the SBA’s decision, nor was it capable of influencing the agency’s decision. Any profit at all was impermissible under the government’s theory, so why should $13,275 be any different from $70,000? We see no merit to this line of argument. Although the government was alleging that Kosth was not entitled to any profit, it was also asserting that he was using the proceeds of the loan for impermissible purposes. A claim that he was earning approximately 8.8% profit on the work would have made his story of the inclusion of an ordinary profit in the line items far more plausible than a claim that he was earning more than 46% profit on the same work. Moreover, Dietz was there to find out how the money was being used, period: telling him that only $13,275 was profit when the real number was $70,000 changed the entire picture. The district court committed no error when it rejected Kosth’s challenges to his conviction on Count IV. III Kosth has also raised several challenges to his sentence. The district court gave him a two-level enhancement for more than minimal planning, under U.S.S.G. sec. 2F1.1(b) and sec. 1B1.1; it found that he was a leader or organizer under sec. 3B1.1(c); it enhanced his sentence based on the amount of the fraud eight levels under sec. 2F1.1 (finding that $200,000 was involved); and it required him to pay restitution in the amount of $128,593 to the SBA. We find no reversible error in any of the district court’s actions. The district court’s findings about the amount of planning and Kosth’s leadership role were not clearly erroneous. It explained the $200,000 figure by noting that Kosth received or had commitments to receive $205,000 from the SBA when all was said and done. Relying on note 8(d) to sec. 2F1.1, the court found that Kosth diverted the full $205,000 from the intended recipients of SBA loans, even though the agency had not gotten around to disbursing everything by the time the scheme unraveled. We agree that this is the proper way to interpret that guideline. And there is no merit at all to his challenge to the restitution amount, which could have been even higher than the level the court imposed. As for the remaining issues Kosth has raised, suffice it to say that we find nothing that requires reversal, or that merits discussion here. The judgment of the district court is Affirmed.

01-03-2023

09-24-2015

https://www.courtlistener.com/api/rest/v3/opinions/2995082/

In the United States Court of Appeals For the Seventh Circuit Nos. 00-2628 and 00-3348 Kevin Bock, Plaintiff-Appellee, v. Computer Associates International, Inc. and Platinum Technology, Inc., Defendants-Appellants. Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 99-C-5967--Suzanne B. Conlon, Judge. Argued February 12, 2001--Decided July 18, 2001 Before Cudahy, Rovner and Williams, Circuit Judges. Cudahy, Circuit Judge. Kevin Bock sued Platinum Technology, Inc. (Platinum) and Computer Associates International, Inc. (Computer Associates) for breach of a severance pay agreement. The defendants removed the case to federal court, asserting that the agreement was part of an employee benefit plan under the Employee Retirement Income Security Act of 1974, 29 U.S.C. sec. 1001 et seq. (ERISA). The district court found in favor of Bock, and the defendants appeal. I. Platinum and Computer Associates are businesses that service computer networks and sell software. Platinum employed Bock as a salesperson from 1995 through 1999. During that time, he repeatedly surpassed his sales quotas and was ultimately promoted to the executive position of senior vice president of sales. His compensation plan with Platinum consisted of a base salary plus commissions; he did not receive a yearly bonus. Bock’s salary for 1999 was $145,000, and his commission from completed sales for 1998 was $674,333. Bock testified that in 1998, he was credited with $367 million in revenue for the company. In 1998, Platinum set up a severance pay program for its executives. An important purpose of the plan was to keep key employees working hard for Platinum in the face of rumors of a corporate takeover by another company. Under the agreement implementing the program, an employee covered by the program would receive severance benefits if his or her employment was terminated without good cause within two years of a corporate buyout. Larry Freedman, Platinum’s general counsel, submitted the severance agreement carrying out the plan to employees for their acceptance and signature in fall 1998. The severance agreement, as submitted to Bock, provided that employees would receive "aggregate severance pay" consisting of a "bonus amount" added to twice the sum of their highest base salary plus their highest 12-month amount of "incentive compensation." "Bonus amount" was defined as the remaining portion of an employee’s expected yearly bonus. "Incentive compen sation" was undefined. Bock signed the agreement in September 1998. Computer Associates acquired Platinum in the spring of 1999. As a result of the change in ownership, Bock’s employment was terminated on June 7, 1999. Platinum later notified Bock that his severance benefits would consist of $290,000-- double his base salary of $145,000. (Because Bock earned no yearly bonus, he received nothing from the "bonus amount" portion of the severance plan.) Bock sued to enforce the severance agreement as including commission income under the umbrella of "incentive compensation." He sought summary judgment, contending that the agreement unambiguously entitled him to severance pay equal to two times his base salary and commissions. He also claimed that Platinum was estopped to deny him additional severance pay, based on alleged oral representations about whether commissions were included in the severance pay calculation. The district court, finding the term "incentive compensation" ambiguous, denied Bock’s motion for summary judgment. Then, after a bench trial, the court found that Platinum’s board of directors, in adopting the severance plan, did not intend to include commission income in the "incentive compensation" portion of the severance agreement. This interpretation of the term "incentive compensation," the court concluded, was a reasonable one. First, the court concluded that it was "not unreasonable" for the term "incentive compensation" to be a reference to bonus alone. Second, it looked to the summary plan document to support the reasonableness of that interpretation. The summary states that the amount of the severance payment would be calculated "using the sum of base salary and bonus (in addition to making up a lost bonus opportunity)." The summary does not mention commissions (or "incentive compensation") at all. The district court, in addition, found that the company’s decision to exclude commissions was not effectively communicated to the affected employees. Thus, Bock and at least one other participant in the plan questioned Freedman as to whether their commission income was included; Bock did so before signing the agreement. The dis trict court concluded that Freedman, who had directed that all questions regarding the plan be submitted to him, gave answers in response to these questions that suggested, but did not state explicitly, that commission income wasincluded in the definition of "incentive compensation." See Tr. at 380- 82. It thus found that Platinum had violated its fiduciary duty to Bock under ERISA to clearly disclose that exclusion. Consequently, the court reasoned, the defendants were estopped from denying payment of severance benefits that took Bock’s commission into account when calculating severance pay. Bock was awarded a total amount of $1,909,550.97, consisting of benefits he had been denied, pre-judgment interest and attorneys’ fees and costs. II. Platinum’s severance payment plan is governed by ERISA and is properly subject to federal jurisdiction because it is an employee benefit plan, which the Supreme Court has defined as "benefits whose provision by nature requires an ongoing administrative program to meet the employer’s obligations." Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 11 (1987). This does not mean, however, that the individual severance agreements are to be construed entirely under trust principles, as Platinum argues. Platinum seeks to accord great weight to its own alleged intent through application of the trust principle that the settlor’s intent governs the interpretation of a trust agreement. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 112 (1989) (indicating the importance of the intent of the settlor in interpreting terms of trusts); Restatement (Third) of Trusts sec. 4 ("’[T]erms of the trust’ means the manifestation of intention of the settlor . . . ."). But we are dealing here with severance agreements, contractual in form, conferring benefits on the employer as well as the employee and quite distinguishable from vested benefits under a pension plan. See Bidlack v. Wheelabrator Corp., 993 F.2d 603, 616 (7th Cir. 1993) (en banc) (plurality opinion) (Easterbrook, J., dissenting) ("Pensions vest by law . . . health and other welfare benefits are left to contract."); Taylor v. Continental Group, 933 F.2d 1227, 1232 (3d Cir. 1991) ("But trust law cannot be imported wholesale into the ERISA context. Severance plans are often similar to employment contracts, whose interpretation requires determining the intent of both contracting parties."). It has been uniformly held that general principles of contract law--under the federal common law that guides interpretation of ERISA plans--are to be applied to the interpretation of the language of such severance agreements. See Anstett v. Eagle-Picher Indus., Inc., 203 F.3d 501, 503 (7th Cir. 2000) ("the claim for separation benefits [under this ERISA plan] is really a claim to enforce a contract") (citation omitted); Grun v. Pneumo Abex Corp., 163 F.3d 411, 419 (7th Cir. 1998) ("we construe [the severance compensation agreement] in accordance with the federal common law under ERISA and general rules of contract interpretation"); Collins v. Ralston Purina Co., 147 F.3d 592 (7th Cir. 1998); Murphy v. Keystone Steel & Wire Co., 61 F.3d 560 (7th Cir. 1995); Hickey v. A.E. Staley Mfg., 995 F.2d 1385 (7th Cir. 1993); Taylor, 933 F.2d at 1232-33. Platinum argues that, because we are interpreting a plan under ERISA, the intent of the plan’s settlor governs the interpretation of the terms of the severance agreement. For this proposition, Platinum cites Firestone, in which the Supreme Court determined, inter alia, the appropriate standard of review of benefit determinations under ERISA. 489 U.S. at 104-05. The Court concluded there that, for actions under 29 U.S.C. sec. 1132(a)(1)(B) challenging benefit eligibility determinations, courts are guided by principles of trust law, which "make a deferential standard of review appropriate when a trustee exercises discretionary powers." Firestone, 489 U.S. at 111. However, unlike eligibility determinations in which an administrator is given the power to construe uncertain terms, or where a plan’s terms give the administrator’s eligibility determinations deference, where instead no discretion has been conferred, "other settled principles of trust law . . . point to de novo review of benefit eligibility determinations based on plan interpretations . . . ." Id. at 111-12. The Court concluded: "As they do with contractual provisions, courts construe terms in trust agreements without deferring to either party’s interpretation." Id. at 112. Firestone clearly fails to provide support for Platinum’s position that the intent of the settlor governs in the matter before us. It says nothing about applying the law of trusts to interpretation of simple contractual agreements governed by ERISA- -including severance agreements. Likewise, Hickey provides no assistance to Platinum. Platinum argues that Hickey, in which this court construed terms of a severance pay plan, demands that courts must rely on the intent of the plan’s creator. See Hickey, 995 F.2d at 1389. But in that case, the plaintiffs failed to produce any evidence to refute the employer’s interpretation of the plan terms; it was not the intent of the settlor, as such, that governed in opposition to some other intent. Instead, there was no evidence of any other relevant intent in the case. See id. at 1388. It is true that the opinion is peppered with language hinting that its task was to determine the "intent of the plan," but the ultimate conclusion rested on what was--in light of extrinsic evidence presented to explain an ambiguous term--"only one possible interpretation of the term ’participant.’" Id. at 1392. The question was whether the employer’s proposed interpretation of the plan language was unreasonably narrow in excluding the plaintiffs from the plan. There was no evidence of an employer’s secret intent that was not clear to the plan participants; thus, the question was merely a matter of interpreting the employer’s intent as understood by anyone who read the language of the plan. Hickey is further distinguished by the important fact that, as far as we can discern, the plan there was not submitted to the plaintiffs for signature--it was an employee welfare benefit plan but was not implemented by a contractual agreement. Thus, we proceed to evaluate the agreement under general contract principles, without giving special weight to the intent of either party. III. The issue in construing Bock’s severance agreement is whether the agreement included in its prescribed calculations the commissions that comprised a large part of Bock’s total compensation. The answer to this question turns on the meaning of the term "incentive compensation." Bock claimed that the term included commissions. Platinum said it meant bonus. The district court ruled that both Platinum’s and Bock’s proffered meanings of this term were reasonable and, since a contract term capable of more than one reasonable meaning is ambiguous, see Central States, Southeast & Southwest Areas Pension Fund v. Kroger Co., 73 F.3d 727, 732 (7th Cir. 1996), the district court found that the severance agreement was ambiguous and the court turned to extrinsic evidence to establish meaning. The court concluded that "in the context of the agreement" the term "incentive compensation" was subject to more than one interpretation. The district court erred in apparently finding intrinsic ambiguity in the language of the agreement. The term "incentive compensation," which is the operative term, considered within the four corners of the severance agreement, is not ambiguous. The issue of ambiguity here revolves around whether the term "incentive compensation" includes or excludes "commissions." Since under no theory that has been advanced do "commissions" fail to share the characteristics common to all examples of the generic category, "incentive compensation," we can perceive no ambiguity in the use of the latter term. Ambiguity can be present only if it is reasonable to read "incentive compensation" as excluding commissions. There is nothing in the language of the agreement itself to make this a reasonable interpretation. There is no evidence that the term "incentive compensation" had any special meaning to contradict its plain and ordinary meaning as reflected in the dictionary. Platinum general counsel Larry Freedman testified that, as far as he knew, the term "incentive compensation" had no defined content in the software industry. Tr. at 146. Outside the context of the severance pay program, "incentive compensation" did not have a pre-defined meaning for Platinum either, Freedman testified. Tr. at 64-65, 146. Far from undermining the unambiguous meaning that we have found for the term, we think that this testimony merely establishes that "incentive compensation" is not some term of art requiring departure from the plain dictionary definition. In fact, although some authorities have questioned the efficacy of recourse in many cases to dictionaries, see 2 E. Allan Farnsworth, Farnsworth on Contracts sec. 7.10 at 275 (2d ed. 1998) (citing, inter alia, Giuseppe v. Walling, 144 F.2d 608, 624 (2d Cir. 1944) (L. Hand, J., concurring)), the question here involves a plainly descriptive term that lends itself straightforwardly to dictionary definition. Thus, "compensation" means "payment for value received or service rendered." Webster’s Third New International Dictionary 463 (1981). "Incentive" means "serving to encourage, rouse, or move to action." Id. at 1141. Combining these two words means payments that serve to move the payee to increase his or her efforts or output. Incentive compensation is thus an umbrella term that includes, at least as relevant here, commissions and bonuses. It may also include, for example, for industrial workers, piecework compensation. Sales "commissions" are the paradigmatic form of incentive compensation for salespersons and, applying the plain and ordinary meaning of words, "commissions" would necessarily be included in "incentive compensation" unless "commissions" were expressly excluded. Supporting the plain meaning of the term is the definition adopted by labor experts. The term "wage-incentive systems" has been defined as "a method of relating wages directly to productivity, e.g., a piecework system, with a fixed payment for each unit produced." Labor Relations Expediter 751:106 sec. 10 (BNA). Further, commission payments have been defined as "a simple form of incentive practice in the distribution industries." Id. This determination is reinforced by the merger clause in the severance agreement. Paragraph 10(e) of the agreement provides: Subject to the rights, benefits and obligations provided for under any executive compensation . . . plan[ ] of the company, this Agreement represents the entire agreement and understanding of the parties . . . [and] . . . supersedes all prior . . . agreements . . . except as set forth under any executive compensation plan. In this connection, Bock had a "compensation plan" that was revised on a yearly basis. The plan defined his compensation as a combination of base salary and "incentives" in the form of commissions. Platinum argues that this does not demonstrate that under the plan "incentive compensation" included commissions because that term itself does not appear in the compensation plan. This may be correct, but his compensation plan is certainly consistent with the plain meaning we have ascribed to the term "incentive compensation." Written contracts are presumptively complete in and of themselves; when merger clauses are present, this presumption is even stronger. See L.S. Heath & Son, Inc. v. AT&T Info. Sys., Inc., 9 F.3d 561, 569 (7th Cir. 1993) ("the presence of a merger clause is strong evidence that the parties intended the writing to be the complete and exclusive agreement between them"); Sunstream Jet Exp., Inc. v. International Air Serv. Co., Ltd., 734 F.2d 1258, 1265 (7th Cir. 1984) (noting under Illinois law that "’if the contract imports on its face to be a complete expression of the whole agreement, it is presumed that the parties introduced into it every material item, and parol evidence cannot be admitted to add another term to the agreement’") (quoting Pecora v. Szabo, 94 Ill.App.3d 57, 63, 418 N.E.2d 431, 435-36 (1981)). IV. However, here we must find the term "incentive compensation" to be ambiguous based on extrinsic evidence, in spite of the merger clause. Extrinsic evidence can, in some circumstances, be admissible to establish an ambiguity when it is objective and does not depend on the credibility of the testimony of an interested party. See Mathews v. Sears Pension Plan, 144 F.3d 461, 467 (7th Cir. 1998). "’Objective’ evidence is admissible to demonstrate that apparently clear contract language means something different from what it seems to mean . . . ." AM Int’l, Inc. v. Graphic Mgmt. Assoc., Inc., 44 F.3d 572, 575 (7th Cir. 1995). This is called the doctrine of extrinsic ambiguity, which allows the consideration of extrinsic evidence "to demonstrate that although the contract looks clear, anyone who understood the context of its creation would understand that it doesn’t mean what it seems to mean." Mathews, 144 F.3d at 466 (citations omitted). We do not mean to belittle the importance of the terms outlined in the original agreement. Under the objective theory of contract, agreements are generally analyzed in terms of the objective (plain and ordinary) meaning of the terms they contain. See 1 Farnsworth, Farnsworth on Contracts sec. 3.6 (2d ed. 1998); 2 Farnsworth sec. 7.9. This is the meaning that is ascribed to the promisor, and the meaning that creates an expectation in the promisee. Judge Learned Hand has instructed: It makes not the least difference whether a promisor actually intends that meaning which the law will impose upon his words. The whole House of Bishops might satisfy us that he had intended something else, and it would make not a particle of difference in his obligation . . . . Indeed, if both parties severally declared that their meaning had been other than the natural meaning, and each declaration was similar, it would be irrelevant, saving some mutual agreement between them to that effect. When the court came to assign the meaning to their words, it would disregard such declarations, because they related only to their state of mind when the contract was made, and that has nothing to do with their obligations. Eustis Mining Co. v. Beer, Sondheimer & Co., 239 F. 976, 984-85 (S.D.N.Y. 1917). This is the staunchest objectivist stance, but even more lenient jurists agree that the fact that one party to the agreement intends that the terms have something other than their plain and ordinary meaning is irrelevant unless both parties share the same meaning, see 2 Farnsworth sec. 7.9 at 265-67; Restatement (Second) of Contracts sec. 201(1) (1981), or one party knew, or had reason to know, the meaning intended by the other party, see 2 Farnsworth sec. 7.9 at 268-69; Restatement (Second) of Contracts sec. 201(2). "[I]ntent does not invite a tour through [the plaintiff’s] cranium, with [the plaintiff] as the guide." Skycom Corp. v. Telster Corp., 813 F.2d 810, 814 (7th Cir. 1987). See also Laserage Technology Corp. v. Laserage Laboratories, 972 F.2d 799, 802 (7th Cir. 1992) ("[W]hether [the parties] had a ’meeting of the minds’ . . . is determined by reference to what the parties expressed to each other in their writings, not by their actual mental processes."). That said, "the overriding purpose in construing a contract is to give effect to the mutual intent of the parties at the time the contract was made." Alliance to End Repression v. City of Chicago, 742 F.2d 1007, 1013 (7th Cir. 1984) (en banc). Thus, strong extrinsic evidence indicating an intent contrary to the plain meaning of the agreement’s terms can create an ambiguity--provided that the evidence is objective./1 This is what happened here. Along with the severance pay agreement, Platinum submitted to its executives a one-page summary of the agreement to "explain to people what was included in the package . . . ." Tr. at 125 (Freedman testimony)./2 The summary was submitted simultaneously with the agreement to all eligible employees. It indicated that the "amount of severance benefit" is calculated "using the sum of base salary and bonus, in addition to making up lost bonus opportunity." This document supports the notion that Platinum intended that "incentive compensation" meant "bonus." It explained: The payout period for the salary component of the severance benefit program is . . . calculated using the sum of base salary and bonus (in addition to making up lost bonus opportunity). The amount of base salary and bonus is determined based on the maximum amount paid to the executive during any trailing 12 month period during the 36 months prior to the termination of employment. Nowhere are commissions mentioned as part of the severance pay calculation. Thus, the summary plainly evinces Platinum’s intent to exclude commissions (although the summary language does not expressly exclude commissions). More important, had Bock read the summary, he could potentially have known of Platinum’s intent when he signed the agreement. Summaries have an established significance in benefits cases: Our third illustration of the need to tailor the federal common law of contracts to the special characteristics of ERISA plans is the principle that the plan summary generally controls in the case of a conflict with the plan itself because the summary is what the plan beneficiaries actually read. Mathews, 144 F.3d at 466 (citations omitted). Because the summary has introduced an ambiguity into the term "incentive compensation," we are obliged to resolve that ambiguity--to determine the true meaning of the term in this context. We already know, from the district court’s findings (which we choose not to disturb), that Platinum intended to exclude commissions. But Platinum’s undisclosed intentions are not controlling. Thus, Platinum’s persistent plea that it did not intend "incentive compensation" to include commissions is beside the point. The key here is whether both parties shared the same meaning for the term "incentive compensation," or whether Bock knew, or had reason to know, Platinum’s intended meaning. See 2 Farnsworth sec. 7.9. The district court apparently did not attempt to resolve this ambiguity, but instead proceeded directly to the equitable reasons it might find in Bock’s favor. Perhaps this is because the court accepted Platinum’s argument that the intent of the settlor governs. But, as we have noted, the intent of the "settlor" does not govern the interpretation of this contract. Regardless of the reasons for the district court’s conclusions, it never resolved the ambiguity created by the summary. Nor was the contract fully interpreted, except for the finding that ERISA principles required that Platinum be estopped to deny Bock’s purported understanding of the agreement. On remand, the district judge therefore must now make findings on the question whether Bock knew, or had reason to know, Platinum’s intent with respect to commissions (or shared Platinum’s intent in this respect). The findings of the district court may be based either on evidence already received or on additional evidence to be adduced. We therefore must remand this case for that purpose. We make this remand with several caveats. First, knowledge, or constructive knowledge, may not be based solely on the fact that Platinum furnished the summary. Bock testified under cross-examination that, although the summary clearly meant commissions were excluded, he could not recall when he first read it. Tr. at 293. For Bock was under no duty to read the summary, although the fact that Freedman invited employees’ attention to it may be relevant. See Tr. at 77 (Freedman testimony). Further, even if the court were to determine that Bock had read the summary prior to signing the agreement, that fact supports, but does not mandate, a finding that he had reason to know Platinum’s intent. Second, other factors might shed light on the meaning of this now-ambiguous term. For example, Platinum has suggested that its interpretation of the agreement is supported by evidence that Platinum designed the severance program primarily for salaried managers who received bonuses, and not for commissioned salespersons. Platinum suggests that within this context "incentive compensation" has a more restrictive meaning--one that excludes commissions. This sort of restrictive meaning could prevail if both parties intended that a term in a contract have a meaning other than its most plain and ordinary meaning. See Alliance to End Repression, 742 F.2d at 1013. Thus, interpreting a consent decree requires an understanding of the context in which the decree was entered. Cf. Alliance to End Repression, 742 F.2d at 1013 ("[C]ontext, in the broadest sense, is the key to understanding language."). But evidence of context is only of moment if both parties to the contract shared the special meaning imported by the context or if one party conferred a special meaning on language, and the other party knew, or had reason to know, the first party’s special meaning. Here, the only evidence in the record that Bock knew, or had reason to know, Platinum’s intent--i.e., knew that the context of the document indicated that "incentive compensation" was directed at non-sales executives’ bonuses, rather than at sales executives’ commissions--is the fact that he questioned several persons about whether his commissions were included. Shortly after Bock received the agreement, in early September 1998, he called Freedman to ask what was included in the severance pay calculation. Bock testified that Freedman told him "yes, everything is included, Kevin, you’re covered, everything is fine, and that was about the extent of the conversation." Tr. at 235. Bock then signed and returned the agreement. In May 1999, a few months after Computer Associates announced its intent to acquire Platinum, Bock became suspicious. Bock contacted Freedman, Executive Vice President of Sales Tom Slowey and President and Chief Executive Officer Andrew Filipowski to ask whether the severance pay calculation included commissions. However, these are not necessarily the actions of an employee who knew, or had reason to know, that "incentive compensation" did not include commissions. Absent additional evidence, it would be inequitable to regard an employee’s simple search for reassurance as a sufficient basis for concluding that he shared his employer’s intent. Such a search for reassurance, however, if fortified by other evidence, might help support an inference of knowledge of the employer’s intent. As we understand the facts at this point, there is a likely sequence of events. Platinum intended to exclude commissions from the calculation of incentive compensation for sales executives and wanted to recognize only bonus (not generally or substantially applicable to salespersons). However, Platinum made an apparently egregious drafting error in preparing the agreement for presentation to Bock. Platinum made what can be described as a unilateralmistake in failing to exclude commissions. Platinum therefore may have created an expectation in Bock, which he acknowledged by signing the agreement. See 1 Farnsworth sec. 3.9./3 But we have no way of knowing the ramifications of these events without exploring Bock’s understanding of them. We do not adopt the view (although we do not foreclose the possibility) that Platinum’s drafting was intentionally misleading in its effort to avoid forthrightly delivering the bad news to the salespersons. We leave the district court free to make appropriate findings on this point. V. Bock prevailed in the district court because the court concluded that Platinum breached a fiduciary obligation to fully disclose the terms of the severance plan. The court concluded that "the legal principle remains under both contract and ERISA law that one cannot induce an employee to enter into an agreement without disclosing material facts." Tr. at 384-85. But the district court did not appear to consider whether, or to what extent, the summary may have put Bock on notice that commissions were not included in the severance plan. The alleged breach turns entirely on the question for which we are remanding to the district court: did Bock know, or have reason to know, that Platinum intended to exclude commissions? If he did, Platinum may be rescued from the plain and ordinary meaning of the severance agreement itself. If he did not, Bock may prevail as a matter of pure contract interpretation. The district court ruled that Platinum was estopped from denying Bock the full severance benefits, defined as including commissions. The court reasoned that Freedman’s assurances that "everything is included . . . you’re covered" induced Bock to sign the agreement. However, Platinum correctly points out that ERISA estoppel claims require a plaintiff to show "(1) a knowing misrepresentation; (2) made in writing; (3) with reasonable reliance on that misrepresentation . . . (4) to [the plaintiff’s] detriment." Coker v. Trans World Airlines, Inc., 165 F.3d 579, 585 (7th Cir. 1999). We need not consider all Platinum’s objections to the district court’s conclusion because one will suffice: Bock does not prevail on an estoppel theory because there was no showing of detrimental reliance. That element of the estoppel claim requires a showing of economic harm. See Shields v. Local 705, Int’l Brotherhood of Teamsters, 188 F.3d 895 (7th Cir. 1999); Panaras v. Liquid Carbonic Indus. Corp., 74 F.3d 786, 794 (7th Cir. 1996). Bock argues that his continuing in Platinum’s employ when put at risk of termination by a threatened takeover is sufficient detrimental reliance. However, there has been no showing, for example, that Bock refused alternative employment on account of his belief in a generous severance provision. If Bock has additional evidence to proffer on this point or a related one on remand, the district court in its discretion may receive additional relevant evidence. VI. For the foregoing reasons, we VACATE and REMAND to the district court for further proceedings consistent with this opinion. FOOTNOTES /1 To be "objective," extrinsic evidence "must not depend on the credibility of testimony (oral or written) of an interested party-- either a party to the litigation or . . . an agent or employee of the party." Mathews, 144 F.3d at 467. Thus, the evidence "can be supplied by disinterested third parties: evidence that there was more than one ship called Peerless, or that a particular trade uses ’cotton’ in a nonstandard sense." AM Int’l, 44 F.3d at 575. Summaries of benefits plans appear to meet this criterion. See Mathews, 144 F.3d at 468. /2 To preclude consideration of the plan summary under the present circumstances, the merger clause would presumably have had to explicitly exclude the summary. It did not. /3 Farnsworth illustrates the doctrine of unilateral mistake well: [S]o complete is the acceptance of the objective theory that courts unhesitatingly allow recovery for loss of expectation if one party has simply made a mistake in the use of language. If a seller misspeaks and offers to sell "two hundred fifty" bushels of apples at a stated price, meaning to say "two hundred fifteen," a buyer that accepts, neither knowing nor having reason to know of the seller’s mistake in expression, can recover for loss of expectation should the seller fail to deliver 250 bushels.

01-03-2023

09-24-2015

https://www.courtlistener.com/api/rest/v3/opinions/2995252/

In the United States Court of Appeals For the Seventh Circuit No. 00-2603 Robert E. Alexander, Plaintiff-Appellant, v. Wisconsin Department of Health and Family Services, Susan Moritz, Claire Nagel, et al., Defendants-Appellees. Appeal from the United States District Court for the Western District of Wisconsin. No. 99 C 429--Barbara B. Crabb, Chief Judge. Argued November 13, 2000--Decided August 27, 2001 Before Harlington Wood, Jr., Kanne, and Diane P. Wood, Circuit Judges. Kanne, Circuit Judge. Robert Alexander sued his former employer, the Wisconsin Department of Health and Family Services (the "Department"), alleging that he was subjected to unlawful race discrimination and retaliation that resulted in his receiving a ten-day suspension from work without pay and, eventually, his termination. Alexander also filed claims against several Department employees for their involvement in his termination, his ten-day suspension, and a five-day suspension that he received previously. The defendants filed a motion for summary judgment on all of Alexander’s claims. The district court granted this motion, finding that Alexander failed to provide any evidence that the disciplinary action he received was due to his race or in retaliation for his complaining about discrimination in the workplace. Because we find that Alexander is unable to show that the reasons for which he was disciplined were pretext for race discrimination or retaliation, we will affirm the decision of the district court. I. History This appeal is from a grant of summary judgment; therefore, we view the facts in the light most favorable to Alexander, the non-moving party, drawing all reasonable inferences in his favor. See EEOC v. Sears Roebuck & Co., 233 F.3d 432, 436-37 (7th Cir. 2000). Alexander, who is African-American, was hired by the Department in February 1992, as a Food Service Worker at the Central Wisconsin Center (the "Center"), a care center for developmentally disabled residents, and worked there until his termination in December 1996. His claims arise from three separate incidents at the Center that resulted in his being subjected to disciplinary action including a five-day suspension, a ten-day suspension, and his eventual termination. The first of these incidents occurred on August 3, 1995. Alexander was working at the Center in the kitchen area and recalls that it was a very hot day and he was not feeling well. He mentioned to several of his co-workers, including Randy Severin, that he felt dizzy and faint. Severin, who in Alexander’s presence had previously referred to African-Americans as "niggers," responded by suggesting something to the effect of "if you are not feeling well, why don’t you fucking go home?" Alexander became upset with Severin and the two men exchanged heated words. However, when his supervisor, Paul Scallon, told him to sit down and cool down, Alexander complied by taking a chair and sitting approximately fifteen feet away from Severin. Alexander acknowledges that he was very upset with Severin and that he continued to look at him. Severin then left that area of the kitchen. Scallon reported the incident to Susan Moritz, Administrator of the Food Service Department at the Center. As an administrator, Mortiz’s duties included: hiring, disciplining, and terminating employees; enforcing Department policies and procedures; and supervising food service supervisors and employees. Moritz investigated the incident and arranged a pre-disciplinary meeting with Alexander to discuss the altercation. Following this meeting, Alexander was given a five- day suspension because Moritz believed that he was the aggressor in the incident. Severin was not disciplined. In February 1996, Alexander asked Moritz if the two of them could meet with Donna Carlson, a unit supervisor Alexander believed was harassing him. Moritz told Alexander to make a list of his allegations with specific issues and dates and that she would set up the meeting thereafter. Alexander never compiled any such list and no meeting was scheduled. Moritz has acknowledged that it is not her usual practice to require an employee to submit such written documentation before an informal meeting. The second incident for which Alexander was disciplined took place approximately seven months later on February 29, 1996. According to Alexander, his primary responsibility at work that day was to stack trays coming off the tray line in the kitchen area. The tray line was particularly busy, and there was no time for Alexander to step away from the line in order to strap tray carts, another aspect of his job. Whenever the tray line momentarily stopped, however, Alexander used that time to strap carts. Alexander strapped approximately seven carts that were taken downstairs by his co-worker, Jalene Roth, before his supervisor, Donna Carlson, arrived in the area of the line. Carlson’s visit to the tray line area of the kitchen was prompted by a report that Alexander was not doing his job. When she arrived, Alexander was working on the tray line, and it was obvious that the line was operating too quickly. Despite the fact that Alexander was busy working, and other employees were available to help strap carts, Alexander contends that Carlson singled him out, criticized him for not strapping carts, and accused him of not doing his job. Alexander says that he asked Carlson to help, by saying something to the effect of "Can’t you help strap some carts?" Although Alexander insists that his statement was a good faith request for assistance, Carlson responded to Alexander’s request by shouting at him, yelling that strapping carts was his job, not hers, and that he had better strap carts right away, or else it would be insubordination. Alexander claims that he continued to remove trays from the line to keep it from stopping, but that as soon as it did stop, he began to strap the cart closest to him. This was not fast enough for Carlson, however, and she sent Alexander home for insubordination. Carlson reported the incident to Moritz, who investigated the exchange and held a pre-disciplinary meeting on March 4, 1996. Sandra Bohling and Jalene Roth, both of whom were union representatives and witnesses to the incident, accompanied Alexander to the meeting, along with a lawyer from the NAACP, and department affirmative action officer Robert Bentley. Moritz asked George Bancroft, the Director of Institution Management Services, and Robin Gruchow, the Center’s personnel specialist, to attend the meeting. At the meeting, Alexander denied any wrongdoing, and Bohling and Roth expressed their view that Alexander had been mistreated by Carlson. Moritz concluded, however, that Carlson’s description of the incident was more credible, and she recommended that Alexander be disciplined. Alexander subsequently received a ten-day suspension without pay. On the same day as the pre-disciplinary meeting, Alexander filed an informal complaint with Bentley, alleging that Carlson and Moritz discriminated against him on the basis of race. In his complaint, Alexander listed fourteen different acts that he considered to be evidence of racial discrimination. Following up on Alexander’s complaint, Bentley sent written questionnaires regarding the allegations to Carlson and Moritz in April and May of 1996. Carlson was also given the option of answering the questionnaire in person. Carlson showed the questionnaire to Brian Fancher, the human resources director at the Center, seeking advice in how to respond. Fancher reviewed the questionnaire and became concerned because he considered the questions to be hostile and somewhat accusatory. He also thought it was unusual for an affirmative action officer to use written questionnaires as opposed to conducting personal interviews. Gruchow also believed that Bentley’s investigation procedure was unusual. Fancher approached Bentley to discuss the manner in which he was investigating Alexander’s complaint. In response to Fancher’s inquiry, Bentley asked Fancher to put any questions he had about the investigation in writing along with an explanation of his need to know the answer to those questions. Thereafter, Fancher sought guidance on how to proceed from Department Administration, and he instructed Moritz and Carlson to wait to answer the questionnaires until he received a response. Bentley concluded his investigation before Fancher received any directive, however, and Bentley’s report was completed without input from Carlson or Moritz. Bentley submitted the results of his investigation to division administrator, Tom Alt, in a memorandum dated June 26, 1996. His report indicated that he believed that Alexander had been subjected to harassing behavior and he recommended that disciplinary action be taken against Carlson and Moritz for their treatment of Alexander. No such action was taken, however, because the department concluded that the lack of input from Carlson and Moritz rendered the report incomplete and therefore unreliable. On October 9, 1996, Alexander filed a charge of discrimination with the Wisconsin Personnel Commission, alleging that he was subjected to discrimination and harassment at the Center because of his race. The complaint was cross-filed with the EEOC and Alexander received a right to sue letter. The Department learned of the complaint on October 23, 1996. The third and final incident that led to Alexander’s termination took place eight months later on October 24, 1996. Melodie Stumpf, a co-worker of Alexander, accused him of making a throat-slashing gesture at her while passing her in the hall at work. Alexander does not remember passing Stumpf in the hall at work and contends that if he did, he did not say anything to her or make any gestures towards her. Stumpf reported the alleged incident to Claire Nagel, who informed Moritz. Moritz contacted Gruchow, who called Alexander to the personnel office. According to Alexander, Gruchow informed him that he had been accused of making a throat- slashing gesture and placed him on paid administrative leave. On October 30, 1996, Alexander, Alexander’s wife, Bohling, Bancroft, Gruchow, and Moritz attended an investigatory meeting. Alexander denied knowing anything about any threat toward Stumpf, but stated that he knew he was accused of making a throat-slashing gesture because Gruchow had told him as much on October 24. Gruchow denied Alexander’s assertion, explaining that Alexander knew and described the exact manner of the alleged gesture even though he had never told Alexander the full details of the accusation. Prior to this incident, Moritz had met with Alexander and Stumpf, at Alexander’s request, to discuss claims Stumpf had made that Alexander was staring at her in the workplace. At that meeting Stumpf agreed she would let Alexander know when she was unhappy with some aspect of his behavior. Bohling had warned Moritz at that time that Stumpf and other co- workers were intent on harassing Alexander with false accusations. Bohling reiterated this point to Moritz and Gruchow at the investigatory meeting. She also noted that Alexander frequently touched his beard guard at his throat while working, and suggested that Stumpf may have seen Alexander adjusting his beard guard and misconstrued it as a throat-slashing gesture. Gruchow scheduled a meeting with Alexander for December 9, to review his discipline, but Alexander canceled because of car trouble and illness. The meeting was rescheduled for December 10 and then December 11, but Alexander canceled for the same reasons. Gruchow spoke with Alexander’s doctor, but the doctor did not provide Gruchow with a medical excuse. Alexander did have an excuse from his doctor but did not give it to defendants at that time. Gruchow then sent Alexander a letter asking him to respond to the investigation in writing and Alexander complied. Alexander was terminated on December 17, 1996, because management believed Stumpf’s account of the throat-slashing incident and that Alexander was lying. Management doubted Alexander’s credibility because Alexander knew that he had been accused of making a throat- slashing gesture without having been told so by Gruchow and because there had been a long history of Alexander confronting his co-workers. Because Alexander had previously received a five-day and then a ten-day suspension, termination was the next step required by the Department’s progressive discipline program. Alexander filed suit in the Circuit Court of Dane County, Wisconsin, and the defendants removed the action to the United States District Court for the Western District of Wisconsin. Alexander filed an amended complaint in the district court seeking declaratory and injunctive relief for unlawful race discrimination and retaliation by the Department in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. sec. 2000 et seq., stemming from his ten- day suspension and eventual termination./1 Alexander also raised claims under 42 U.S.C. sec.sec. 1981 and 1983, alleging that Moritz, Carlson, and Gruchow discriminated against him and denied him due process through their involvement in his suspensions and termination. The defendants filed a motion for summary judgment on all of Alexander’s claims. The district court granted the defendants’ motion, finding that Alexander failed to produce any evidence indicating that the stated reasons for his adverse employment actions were pretext for discrimination or retaliation. See Alexander v. Wis. Dep’t of Health & Soc. Servs., No. 99-C- 0429-C, slip op. at 21 (W.D. Wis. May 23, 2000). The court also found that in all three instances, the process by which Alexander’s discipline was determined did not violate his due process rights. See id. at 29-31. Alexander now appeals. II. Analysis A. Standard of Review We review a district court’s decision to grant a motion for summary judgment de novo. See Russell v. Bd. of Trs. of the Univ. of Ill. at Chi., 243 F.3d 336, 340 (7th Cir. 2001). Summary judgment is proper when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). A genuine issue of material fact exists "only if there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Baron v. City of Highland Park, 195 F.3d 333, 338 (7th Cir. 1999) (citing Anderson v. Liberty Lobby Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986)). As explained above, when making this determination, we review the record in the light most favorable to Alexander and draw all reasonable inferences in his favor. See Del Raso v. United States, 244 F.3d 567, 570 (7th Cir. 2001). We take this opportunity to briefly address our past use of the phrase "added rigor" in employment discrimination cases. The use of this phrase has raised the question of whether we have been reviewing grants of summary judgment in employment discrimination cases under a heightened level of scrutiny. See, e.g., Webb v. Clyde L. Choate Mental Health and Dev. Ctr., 230 F.3d 991, 997 (7th Cir. 2000) ("We apply this standard with added rigor in employment discrimination cases, where intent and credibility are crucial issues."). We first used the phrase "added rigor" in McCoy v. WGN Cont’l Broad. Co., 957 F.2d 368 (7th Cir. 1992), explaining that the summary judgment standard "is applied with added rigor in employment discrimination cases, where intent is inevitably the central issue." Id. at 370-71. In support of this proposition, we cited Stumph v. Thomas & Skinner, Inc., 770 F.2d 93, 97 (7th Cir. 1985) ("’Summary judgment is notoriously inappropriate for determination of claims in which issues of intent, good faith and other subjective feelings play dominant roles.’") (quoting Pfizer, Inc. v. Int’l Rectifier Corp., 538 F.2d 180, 185 (8th Cir. 1976)), and Visser v. Packer Eng’g Assocs., 924 F.2d 655, 660 (7th Cir. 1991) ("Caution is required in granting summary judgment, especially under a statute that allows for trial by jury, as the age discrimination law does."). Although it is understandable how one might infer from our regular use of this phrase that we meant to communicate a more stringent standard to be used in reviewing employment cases,/2 the original use of this phrase indicates that it was merely included to stress the fact that employment discrimination cases typically involve questions of intent and credibility, issues not appropriate for this court to decide on a review of a grant of summary judgment. Thus, regardless of our inclusion of the phrase "added rigor" in prior cases, we review a district court’s decision to grant a motion for summary judgment on a claim involving issues of employment discrimination as we review any case brought before this court involving the review of a grant of summary judgment. See Wallace v. SMC Pneumatics, Inc., 103 F.3d 1394, 1396 (7th Cir. 1997). B. Alexander’s Title VII and 42 U.S.C. sec. 1981 Claims Alexander appeals the district court’s grant of the Department’s motion for summary judgment on his Title VII claims, arguing that summary judgment was erroneously granted because he has produced sufficient evidence from which a jury could find that the Department’s proffered reasons for his suspension and termination were pretext for discrimination and retaliation. Alexander also challenges the district court’s grant of summary judgment on his claim of racial discrimination against Carlson, Moritz, and Gruchow under 42 U.S.C. sec. 1981. Alexander contends that there are sufficient facts in the record from which a jury could infer that Carlson, Moritz, and Gruchow’s decisions to discipline and terminate him were racially motivated. Title VII explains that it is unlawful for an employer "to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin." 42 U.S.C. sec. 2000e-2(a)(1). Similarly, sec. 1981 states that "[a]ll persons within the jurisdiction of the United States shall have the same right . . . to the full and equal benefit of the laws . . . as is enjoyed by white citizens." 42 U.S.C. sec. 1981. "Because we analyze sec. 1981 and Title VII discrimination claims in the same manner," Eiland v. Trinity Hosp., 150 F.3d 747, 750 (7th Cir. 1998); see also Bratton v. Rdway Package Sys., Inc., 77 F.3d 168, 176 (7th Cir. 1996), we will simultaneously review Alexander’s claims of racial discrimination against the Department and the three individual defendants. Additionally, because the parties agree that the only disputed issue with regard to Alexander’s claims of discrimination and retaliation is whether the stated reasons for his suspension and termination are pretext, we will consider these claims together. A plaintiff alleging race discrimination under Title VII and sec. 1981 can prove such discrimination either by providing direct evidence of an employer’s discriminatory intent or by showing disparate treatment using indirect evidence and the burden-shifting method established in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S. Ct. 1817, 36 L. Ed. 2d 668 (1973). See Contreras v. Suncast Corp., 237 F.3d 756, 759 (7th Cir. 2001). Likewise, a claim of retaliation under Title VII can be proven by "either offer[ing] direct evidence of retaliation or proceed[ing] under a burden-shifting approach." Fyfe v. City of Fort Wayne, 241 F.3d 597, 601 (7th Cir. 2001); see also Sanchez v. Henderson, 188 F.3d 740, 745 (7th Cir. 1999) (explaining that "[a] claim for retaliation under Title VII invokes a variant of the familiar McDonnell Douglas burden-shifting framework"). Because Alexander does not present any direct evidence, he must proceed under the burden-shifting methods. Alexander is required to present sufficient evidence to make out a specific prima facie case for both types of claims. See Contreras, 237 F.3d at 759. In each instance, if a plaintiff successfully makes out a prima facie case, the employer must then present a legitimate, non-discriminatory reason for the allegedly unlawful action. See Stewart v. Henderson, 207 F.3d 374, 376 (7th Cir. 2000); see also Sanchez, 188 F.3d at 746. Once such a reason is presented, the plaintiff must establish by a preponderance of the evidence that the employer’s stated reason is merely a pretext for discrimination or retaliation. See Walker v. Glickman, 241 F.3d 884, 889 (7th Cir. 2001); see also Freeman v. Madison Metro. Sch. Dist., 231 F.3d 374, 379 (7th Cir. 2000). The parties in this case agree that Alexander has made out a prima facie case for his claims of race discrimination and retaliation. They also agree that the Department and the individual defendants have provided legitimate, non- discriminatory reasons for Alexander’s suspensions and his termination. Thus, the sole issue in dispute is whether Alexander can show, by a preponderance of the evidence, that the defendants’ stated reasons for suspending and eventually terminating him "were not [their] true reasons, but were a pretext for discrimination." Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133, 143, 120 S. Ct. 2097, 147 L. Ed. 2d 105 (2000) (internal quotation omitted). Therefore, we will turn directly to the issue of pretext. Alexander may establish that the defendants’ offered reasons for suspending and terminating him are pretext for discrimination and retaliation by providing either direct evidence indicating that the defendants were "more likely than not motivated by a discriminatory reason," or indirect evidence showing that the defendants’ stated reasons are not credible. Sarsha v. Sears, Roebuck & Co., 3 F.3d 1035, 1039 (7th Cir. 1993) (citations omitted); see also Walker, 241 F.3d at 889. Because he does not present any direct evidence that the defendants’ stated reasons for his suspensions and termination were pretext, Alexander must rely on indirect evidence. "Creating a triable pretext issue with indirect evidence is a difficult task which may be accomplished in one of two ways." Guerrero v. Ashcroft, 253 F.3d 309, 313 (7th Cir. 2001). Alexander must show either that the defendants lied about why they took the adverse action that they did or that the defendants’ stated reasons for his suspensions and termination have no basis in fact. See id. Additionally, we recognize that "we are not a super- personnel board and that we may not punish an employer for choices that constitute business decisions alone, no matter how unwise or mistaken they may seem to us." Id. at 314 (citing Reeves, 530 U.S. at 144). That having been said, however, when reviewing a grant of summary judgment, the only question before us is whether the plaintiff has provided evidence from which a rational trier of fact could infer that the employer’s stated reasons for taking the adverse action were lies. See Bell v. E.P.A, 232 F.3d 546, 550 (7th Cir. 2000). "’If the only reason an employer offers for [taking adverse action against] an employee is a lie, the inference that the real reason was a forbidden one . . . may reasonably be drawn. This is the common sense behind McDonnell Douglas.’" Id. (quoting Anderson v. Baxter Healthcare Corp., 13 F.3d 1120, 1124 (7th Cir. 1994)). Thus, "’[b]ecause a fact-finder may infer intentional discrimination from an employer’s untruthfulness, evidence that calls truthfulness into question precludes summary judgment.’" Id. (quoting Perdomo v. Browner, 67 F.3d 140, 145 (7th Cir. 1995)). The district court correctly observed that Alexander "has proffered ample evidence that several of his co-workers were bigots and that their bigotry made his work environment extremely difficult." Alexander v. Wis. Dep’t of Health & Soc. Servs., No. 99-C-0429-C, slip op. at 21 (W.D. Wis. May 23, 2000)./3 Furthermore, the seeming lack of commitment by the Department to prevent or respond to this insensitive behavior in any meaningful manner is troubling; hopefully the Department recognizes that the behavior exhibited by Alexander’s co-workers--state employees no less--is unacceptable. Notwithstanding the behavior of several of Alexander’s co-workers, however, we agree with the district court’s determination that Alexander "has offered no evidence that the disciplinary measures he is challenging were motivated by his race or by his complaints of discrimination rather than by defendant[s’] legitimate belief that such discipline was justified by Alexander’s conduct." Alexander, slip op. at 21. 1. Five-Day Suspension Alexander’s five-day suspension resulted from the confrontation between Alexander and his co-worker Randy Severin that took place on August 3, 1995. Alexander describes the incident as an angry altercation in which both men were equally aggressive and equally at fault, but for which Moritz and Gruchow subjected him to a suspension without pay and did not discipline Severin. Alexander claims that Moritz, Carlson, and Gruchow’s involvement in this adverse employment action constitute discrimination in violation of 42 U.S.C. sec. 1981. We first note that Alexander provides no facts indicating that either Carlson or Gruchow were involved in any capacity with the decision to suspend him. Thus, no further discussion is necessary regarding Carlson and Gruchow; we affirm the district court’s grant of summary judgment as to these two individuals on this claim. With regard to Moritz, Alexander alleges that her decision to discipline him was racially motivated and that her stated reason for this decision was a pretext for said discrimination. Alexander contends that the fact that he received such a severe penalty while Severin was not disciplined supports his claim of pretext. Moritz’s stated reason for suspending Alexander was that she believed he had disobeyed Scallon’s orders and behaved in a threatening manner toward Severin. Scallon, who described the exchange between Severin and Alexander much differently than Alexander, explained that after he called everyone back to the tray line from a break, Severin wanted to begin working on the tray line immediately. Alexander saw this and deliberately slowed down, asking if he could get a drink of water. Scallon allowed Alexander to get a drink but urged him to do so quickly. When Severin saw this, he asked "why can’t we get going?" Scallon recalls that Alexander replied: "I’m not gonna take that shit from a white punk!" Alexander and Severin exchanged heated words and Scallon told them both to be quiet. Scallon reported that Alexander was the aggressor in this confrontation and that Alexander disregarded Scallon’s repeated orders to go to a different part of the kitchen, so as to end the confrontation. Instead, Alexander placed a chair very close to Severin, sat down, and stared at him. Scallon indicated that several of the other workers in the kitchen area began to cry and seemed concerned about what Alexander would do next. The confrontation finally ended when Severin moved to a different section of the kitchen, although Alexander continued to stare at Severin for the rest of the time they worked on the tray line. Scallon also noted that later that day he saw Alexander walking away from Severin’s car, and that Severin told him that Alexander was taunting him. After hearing Scallon and Alexander’s description of the confrontation, Moritz recommended that Alexander be disciplined. Even though we accept Alexander’s version of his confrontation with Severin, as we must, we still find that Alexander has failed to show any evidence from which a rational trier of fact could infer that Moritz’s stated reason for the suspension was pretext for discrimination. Moritz made her decision to discipline Alexander based on Scallon’s description of the exchange between Severin and Alexander. While "[s]ummary judgment generally is improper where the plaintiff can show that an employee with discriminatory animus provided factual information or other input that may have affected the adverse employment action," Eiland, 150 F.3d at 752 n.1 (quoting Dey v. Colt Constr. & Dev. Co., 28 F.3d 1446, 1459 (7th Cir. 1994)), Alexander has presented no such evidence regarding Scallon. Additionally, although the evidence Alexander has offered regarding Moritz, reviewed in the light most favorable to Alexander, might indicate that Moritz could have been more responsive to some of the insensitive comments made by Alexander’s co-workers, Alexander has not shown that Moritz had a discriminatory animus towards him that tainted her assessment of the confrontation between Alexander and Severin. Furthermore, Alexander has presented no evidence that a five-day suspension is unusually severe for his conduct as it was described to Moritz by Scallon. While Alexander correctly notes that in 1990, two white employees who engaged in a physical confrontation did not receive the same level of discipline as Alexander did in this instance, it is undisputed that the Department had, subsequent to the 1990 incident, formulated a more stringent policy regarding violence in the workplace. Therefore, we find that Alexander has failed to show that Moritz’s stated reason for suspending him for five days was pretext for discrimination. 2. Ten-Day Suspension The incident that led to Alexander’s ten-day suspension took place on February 29, 1996. Alexander claims that Carlson singled him out by falsely accusing him of not doing his job and unfairly reprimanding him for insubordination. Alexander further contends that Moritz and Gruchow conducted a sham investigation and pre-disciplinary meeting before subjecting him to a penalty that he alleges is the harshest in Department history for an incident of insubordination. Alexander argues that these actions were the result of race discrimination and retaliation by the Department and race discrimination on the part of Moritz, Carlson, and Gruchow, and that the defendants’ stated reason for this suspension was pretext for discrimination and retaliation. The defendants’ stated reason for Alexander’s ten-day suspension was that Alexander had been insubordinate to his supervisor, Carlson, following his previous five-day suspension. On the day of the incident, Carlson received a report that Alexander was not doing his job. When she went to check out the veracity of this report, Carlson observed that Alexander had not strapped any carts, even when there was a lull in the tray line. Carlson told Alexander that he needed to start strapping carts. According to Carlson, Alexander responded to this instruction by laughing and sticking his tongue out at her. Carlson again directed Alexander to strap carts, to which Alexander suggested "Donna why don’t you strap?" Carlson gave a third instruction to begin strapping the tray carts, but Alexander still made no effort to comply. After Alexander failed to comply with her third directive, Carlson told him to leave work. Alexander responded to this instruction by beginning to strap carts; however, Carlson told him that it was too late, and that she wanted him to leave. Carlson reported the incident to Moritz. After hearing Carlson and Alexander’s description of what happened, Moritz recommended that Alexander be disciplined. Moritz’s reliance on Carlson’s description of the cart strapping incident would not be an acceptable basis for the adverse employment action taken against Alexander if Alexander could show that Carlson harbored racial animus towards him, and that Moritz knew or should have known of Carlson’s bias. See Dey v. Colt Constr. & Dev. Co., 28 F.3d 1446, 1459 (7th Cir. 1994) ("Summary judgment generally is improper where the plaintiff can show that an employee with discriminatory animus provided factual information or other input that may have affected the adverse employment action."). Likewise, Alexander could also undermine the defendants’ stated reason for his suspension by showing that Moritz herself carried a bias towards Alexander. See id. Alexander has not shown, however, that Carlson’s actions reflected a racial animus towards him that Moritz knew or should have known about, or that Moritz herself carried a bias that tainted her role as a decision-maker. The affidavits of Jalene Roth and Sandra Bohling presented by Alexander do not provide evidence indicating that either Carlson or Moritz was racially biased against Alexander. Instead, these affidavits describe their observations of the cart strapping incident and opinions that Alexander was not insubordinate. Moritz heard these opinions, as well as Carlson’s description of the exchange in making her decision. Additionally, although the exact phrasing and tone of Alexander’s statements to Carlson are disputed, Alexander’s own description of his exchange with Carlson acknowledges that instead of complying with Carlson’s orders, he suggested to her that she might assist him with his duties. Alexander has also shown no evidence that his ten-day suspension was unduly harsh. Gruchow, whose duties included handling probationary and permanent employment discipline for the Center, explained that the Department uses a progressive discipline program, and that in most cases, an employee who had already received a five-day suspension would be terminated if any further discipline was necessary. See Gruchow Aff. para. 14. In this instance, instead of being terminated, Alexander received a longer suspension. Thus, because we find that Alexander has failed to show that the Department’s stated reason for suspending him for ten days was pretext for racial discrimination, we will affirm the district court’s grant of summary judgment on this claim. We likewise find that Alexander has failed to show that Moritz, Carlson, or Gruchow discriminated against him in violation of sec. 1981. Alexander also claims that the ten-day suspension was an act of retaliation for his complaining to Moritz about Carlson and other workplace discrimination and that the Department’s stated reason for his suspension was pretext for this retaliation. We cannot agree. Alexander has presented no evidence from which it can be inferred that the Department’s stated explanation that Alexander wasdisciplined because he was found to have been insubordinate was in any way pretext for an act of retaliation against Alexander for his having complained about Carlson and other racial discrimination in the workplace. Therefore, we will affirm the district court’s grant of summary judgment on Alexander’s claim that the ten-day suspension was an act of retaliation. 3. Termination Alexander was terminated after he allegedly made a throat-slashing gesture at co-worker Melodie Stumpf while passing her in the hall at work on October 24, 1996. Alexander contends that he does not remember passing Stumpf in the hall at work, and that if he did, he did not say anything to her or make any gestures towards her. According to Alexander, Gruchow informed him that he had been ac cused of making a throat-slashing gesture towards Stumpf, but later set up Alexander by denying ever having explained the gesture to Alexander and insisting that Alexander knew the exact manner of the alleged gesture without having been told the full details of the accusation. Alexander now argues that Moritz and Gruchow conducted a sham investigation to build a false case for his termination because of his race and the fact that he filed a complaint, and that the defendants’ stated reason for his termination was a pretext for that discrimination and retaliation. The Department’s stated reason for Alexander’s termination was that Moritz and Gruchow believed Alexander had made a threatening gesture towards Stumpf and then lied about the incident. Management believed that Alexander’s denial of the incident was not credible because Alexander knew that he had been accused of making a throat-slashing gesture without having been told so by Gruchow and because there was a documented history of confrontations initiated by Alexander against his co-workers. Because Alexander had already received a five-day and ten-day suspension, termination was the next step in progressive discipline. Alexander has presented no evidence from which it can be inferred that the defendants’ stated reason for his termination was a pretext for discrimination. Gruchow explained to Moritz that despite the fact that he had been careful not to relay any of the specific details of the alleged gesture to Alexander when he spoke with him on October 24, Alexander called him on October 25 and knew that he had been accused of making a throat-slashing gesture. Although Alexander maintains that Gruchow told him about the gesture and then lied about it, he has made no attempt to produce any evidence indicating any discriminatory animus or bias on the part of Gruchow that would render Moritz’s reliance on Gruchow’s explanation improper. Alexander offers Bentley’s report in support of his accusation that the defendants’ stated reason for his termination was pretext for race discrimination. Bentley’s report concluded that the discrimination alleged by Alexander was "likely to have occurred" and recommended that Moritz and Carlson be disciplined. Thomas Alt, Division Administrator of the Department, discussed Bentley’s report and recommendation with Gladys Benavides, who at that time was the Acting Director of the Department’s Office of Affirmative Action/Civil Rights Compliance ("AA/CRC"). Because the report was compiled without any input from Moritz or Carlson, Alt concluded that it was incomplete and decided not to take any action. Let us explain very plainly that an entity cannot undermine the system it has put in place to investigate and remedy problems like discrimination in the workplace in order to escape liability for such discrimination. Thus, if there were evidence that the Department had instructed Fancher to tell Moritz and Carlson not to fill out Bentley’s questionnaires so that the Department could later discard the report as being incomplete and one sided, evidence of such an attempt to hamper the investigation of Alexander’s claim would render this case inappropriate for summary judgment. However, that is not what happened in this case. Besides there being no evidence that Fancher’s decision to seek guidance from other Department officials was an attempt to interfere with Bentley’s investigation, there is likewise no evidence that the determination that the report was unreliable was the result of race discrimination or retaliation. To the contrary, Alt issued a memorandum to Steve Watters, the Interim Director at the Center, directing him to take certain steps to ensure that future investigations were timely, complete, and accurate. Alt instructed Watters to: Clarify with [Center] management and in particular [Center] personnel management that they are expected to cooperate fully with any Department AA/CRC office staff when they are conducting inquiries and reviews. Should conflicts occur in this process they should cooperate first, then raise issues or concerns with theirsupervisor or facility Director. Additionally, there is no link between Fancher’s decision to seek guidance regarding the nature of Bentley’s investigation, thereby delaying Moritz and Carlson’s completion of Bentley’s questionnaires, and Alt’s independent determination that the investigation was not a sufficient basis upon which to take disciplinary action. Thus, Alt’s treatment of the report cannot be characterized as evidence of a Department conspiracy to discriminate against Alexander. Therefore, we find that Alexander has shown no evidence that the defendants’ stated reason for his termination was mere pretext for race discrimination. Alexander has likewise provided no evidence suggesting that the stated reason for his termination was pretext for retaliation for his having filed a complaint with the Personnel Commission. In support of his argument, Alexandercorrectly notes that the Department was notified that he had filed a complaint with the Personnel Commission on October 23, 1996, the day before he was suspended. Although the timing of an adverse employment action can be evidence of an act of retaliation, see King v. Preferred Technical Group, 166 F.3d 887, 893 (7th Cir. 1999), Alexander’s inability to provide "evidence that any of the actors involved in his suspension (Stumpf, Moritz and Gruchow) had any knowledge of his complaint before his suspension," Alexander v. Wis. Dep’t of Health & Soc. Servs., No. 99-C-0429-C, slip op. at 29 (W.D. Wis. May 23, 2000), prevents any such inference to be drawn from the timing of his suspension and eventual termination. Thus, without more, there is no indication that the Department’s stated reason for terminating Alexander was pretext for retaliation. C. Alexander’s sec. 1983 Claim Alexander also appeals the district court’s grant of summary judgment on his sec. 1983 claim, alleging that Carlson, Moritz, and Gruchow denied him of his right to due process. Although he does not articulate his challenge to the district court’s ruling, it appears that Alexander now contends that he provided sufficient evidence from which a jury could conclude that, in all three instances of discipline, he was denied the due process to which he is entitled under the Fourteenth Amendment. "Procedural due process imposes constraints on governmental decisions which deprive individuals of ’liberty’ or ’property’ interests within the meaning of the . . . Fourteenth Amendment." Mathews v. Eldridge, 424 U.S. 319, 332, 96 S. Ct. 893, 47 L. Ed. 2d 18 (1976). For purposes of summary judgment, the individual defendants have conceded that Alexander had the requisite property interest in his continued employment. The Supreme Court has explained that "some form of hearing is required before an individual is finally deprived of a property interest." Id. at 333. Although such a hearing must provide "’the opportunity to be heard at a meaningful time and in a meaningful manner,’" Cooper v. Salazar, 196 F.3d 809, 814 (7th Cir. 1999) (quoting Mathews, 424 U.S. at 333), due process is not a "technical conception with a fixed content unrelated to time, place and circumstances." Mathews, 424 U.S. at 334 (internal quotation omitted). Thus, the precise form and extent of process required in a particular situation will vary from other factual situations. See Soc’y of Lloyd’s v. Ashenden, 233 F.3d 473, 479 (7th Cir. 2000). We must balance three distinct factors in evaluating the sufficiency of the procedural process provided to Alexander: First, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government’s interest. Gilbert v. Homar, 520 U.S. 924, 931-32, 117 S. Ct. 1807, 138 L. Ed. 2d 120 (1997) (internal quotation omitted). We again note, as we did with Alexander’s sec. 1981 claim, that Alexander has set forth no facts indicating that Carlson and Gruchow were involved with the process by which Alexander was suspended for five days. Carlson waslikewise uninvolved in any capacity with the incident that lead to Alexander’s termination. These distinctions are of little consequence, however, as we find that Alexander was provided with adequate procedural due process before each instance of discipline. A pre-disciplinary meeting was conducted by Moritz to discuss and investigate each incident for which Alexander was ultimately disciplined. The record also indicates that Alexander was allowed to explain his version of each incident to Moritz and to present witnesses to support his denials of wrongdoing. Furthermore, Alexander was able to have family members, union representatives, and outside legal advisors accompany him to these meetings. Finally, as we explained before, Alexander has presented no evidence indicating that Moritz possessed a bias or prejudice towards him that would have caused her to be unable to preside at the pre-disciplinary meetings as an unbiased decision-maker. Thus, her participation did not violate his right to due process. See Withrow v. Larkin, 421 U.S. 35, 46, 95 S. Ct. 1456, 43 L. Ed. 2d 712 (1975) ("Not only is a biased decision-maker constitutionally unacceptable but our system of law has always endeavored to prevent even the probability of unfairness.") (internal quotation omitted). Thus, we will affirm the district court’s decision granting the individual defendants’ motion for summary judgment on this claim. III. Conclusion For the abovementioned reasons, we AFFIRM the district court’s decision to grant the defendants’ motion for summary judgment. FOOTNOTES /1 A person claiming discrimination under Title VII is required to file a complaint with either the EEOC or a State Personnel Commission within 300 days of the alleged discrimination. See 42 U.S.C. sec. 2000e-5(e). Alexander filed his complaint with the Wisconsin Personnel Commission on Octo- ber 9, 1996. In his brief opposing defendants’ motion for summary judgment, Alexander conceded that he did not purport to state a claim under Title VII for any incident occurring more than 300 days prior to October 9, 1996. Thus, he does not seek relief under Title VII for the five-day suspension he received in August 1995. /2 A review of our cases reveals that we have used this "added rigor" phrase in some thirty pub- lished opinions involving issues of employment discrimination since McCoy. /3 Evidence of this bigotry included such comments as: "black people don’t like to work," "rap music is jungle bunny music," and "blacks should still be slaves." Additionally, State of Wisconsin employees discussed the possibility of attending an African-American wedding covered in shoe polish and suggested to Alexander that his ap- pearance resembled that of a picture of a bulldog and a newspaper photograph of an orangutan.

01-03-2023

09-24-2015

https://www.courtlistener.com/api/rest/v3/opinions/2997395/

In the United States Court of Appeals For the Seventh Circuit ____________ No. 02-1113 FRANK THOMAS, Plaintiff-Appellant, v. LAW FIRM OF SIMPSON & CYBAK, et al., Defendants-Appellees. ____________ Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 00 C 8211—David H. Coar, Judge. ____________ REARGUED EN BANC JUNE 2, 2004—DECIDED DECEMBER 20, 2004* ____________ Before POSNER, COFFEY, EASTERBROOK, RIPPLE, MANION, KANNE, ROVNER, WOOD, EVANS, and WILLIAMS, Circuit Judges.** WILLIAMS, Circuit Judge. Frank Thomas appeals from the district court’s dismissal of his suit which alleged that * An opinion in this case was originally issued on January 13, 2004. On February 10, 2004, the panel, on its own motion, vacated its opinion and judgment. The case was submitted for circulation pursuant to Circuit Rule 40(e) and a majority of the active judges on the court favored rehearing en banc. ** Chief Judge Flaum and Circuit Judge Sykes took no part in the consideration of this matter. 2 No. 02-1113 General Motors Acceptance Corporation (“GMAC”), the law firm Simpson & Cybak (“Simpson”), and their employees failed to send him a debt validation notice advising him of his rights as a debtor within five days of their initial communication with him, as is required by the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692- 1692o. Two principal questions are raised in this appeal: whether a creditor’s letter to a debtor and whether a debt collector’s initiation of a lawsuit in state court constitute “initial communications” within the meaning of the FDCPA. In dismissing Thomas’s case for failure to state a claim, the district court determined that the creditor’s letter to the debtor constituted an “initial communication,” while the debt collector’s initiation of the lawsuit did not. We disagree with both conclusions. Accordingly, we reverse the district court’s decision to dismiss Thomas’s claim against Simpson, and we remand for further proceedings. I. BACKGROUND In January 1998, Frank Thomas purchased a Chevrolet Blazer from Apple Chevrolet under an installment contract immediately assigned to GMAC. Around January 20, 2000, shortly after Thomas lost his job with GMAC, he received a default letter from GMAC operations manager Kay Candiano on GMAC letterhead informing him that his payment on the vehicle was past due. On March 27, 2000, GMAC, through its attorneys, Simpson & Cybak, sued Thomas in Illinois state court to recover the vehicle. Kathleen Haggerty, a Simpson lawyer, signed the complaint. The complaint included a statement that, “[p]ursuant to the [FDCPA], you are advised that this law firm is a debt collector attempting to collect a debt, and any information obtained will be used for that purpose.” The summons included similar language. Thomas filed suit against GMAC and Simpson under the FDCPA, claiming that neither party sent him a debt vali- No. 02-1113 3 dation notice advising him of his rights as a debtor. See 15 U.S.C. § 1692g(a). The district court granted both defendants’ motions to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Thomas now appeals. II. ANALYSIS We review de novo the district court’s dismissal of Thomas’s complaint for failure to state a claim, accepting as true the well-pleaded allegations in Thomas’s complaint and drawing all reasonable inferences in his favor. Porter v. DiBlasio, 93 F.3d 301, 305 (7th Cir. 1996). The FDCPA requires that “within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector” must send the debtor a written validation notice containing certain infor- mation. 15 U.S.C. § 1692g(a). The notice must inform the debtor of the amount of the debt, the name of the creditor, and state that the debt will be assumed valid if the debtor does not dispute its validity within 30 days of the receipt of the notice. Id. § 1692g(a)(1)-(3). Furthermore, the notice must include a statement that if the debtor disputes the debt within 30 days of the notice, the debt collector will obtain and send the debtor verification of the debt and, up- on written request, send the debtor the name and address of the current creditor, if different from the original credi- tor. Id. § 1692g(a)(4)-(5). Thomas argues that neither GMAC nor Simpson notified him of these debt validation rights. Thomas primarily con- tends that the summons and complaint Simpson filed initiating state court litigation against him constituted an “initial communication” under the FDCPA, and Simpson was therefore required to notify him of his validation rights within five days of the service of that communication. As an initial matter, we must decide whether GMAC’s January 20, 2000 default letter to Thomas constitutes an 4 No. 02-1113 “initial communication” for purposes of the FDCPA. Despite the district court’s finding to the contrary, all parties to this appeal now concede that the letter does not constitute an “initial communication” regarding a debt under the FDCPA. The FDCPA defines a “communication” broadly: “the con- veying of information regarding a debt directly or indirectly to any person through any medium.” 15 U.S.C. § 1692a(2). But, because the Act regulates debt collectors rather than creditors, Schlosser v. Fairbanks Capital Corp., 323 F.3d 534, 536 (7th Cir. 2003), GMAC’s letter to Thomas—a letter from a creditor1—does not qualify as an “initial communication” under the Act. Because the FDCPA makes debt collectors, but not creditors, responsible for notifying debtors of their validation rights, see 15 U.S.C. § 1692g(a), finding that a letter from a creditor constitutes an “initial communi- cation” could create significant unintended obligations for debt collectors. For example, if a letter from a creditor con- stitutes an “initial communication,” debt collectors would be responsible for notifying debtors of their debt validation rights within five days of an “initial communication” that the debt collector did not send, or for one communicated even before the creditor retained the debt collector. Nothing in the FDCPA suggests that Congress intended creditors’ unilateral actions to obligate debt collectors to inform debtors of their rights; rather, the Act is intended to deter debt collectors from employing their own abusive tactics. 1 The district court found that GMAC was a creditor. Thomas v. Law Firm of Simpson & Cybak, No. 00 C 8211, 2001 WL 1516746, at *3 (N.D. Ill. Nov. 28, 2001). A creditor includes “any person who offers or extends credit creating a debt or to whom a debt is owed. . .,” whereas a debt collector includes “any person who uses an instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C. § 1692a(4), (6). No. 02-1113 5 Because we decide that GMAC’s letter to Thomas does not constitute an initial communication for FDCPA purposes, no obligation to inform Thomas of his validation rights arose upon the sending of the letter. The principal question remains, whether Simpson’s service of a summons and complaint, filed in state court, was an “initial communication” within the meaning of the FDCPA, such that its service triggered an obligation to notify Thomas of his validation rights within five days. Simpson concedes that it is a debt collector as defined in § 1692a(6), but argues that pleadings do not constitute “communica- tions.” The courts that have addressed this issue are divided in their analyses. Compare, e.g., Vega v. McKay, 351 F.3d 1334, 1337 (11th Cir. 2003) (holding that a summons and complaint do not constitute “initial communications” trig- gering the debt validation notice requirements of § 1692g), and McKnight v. Benitez, 176 F. Supp. 2d 1301, 1306-08 (M.D. Fla. 2001) (same), with Sprouse v. City Credits Co., 126 F. Supp. 2d 1083, 1089 n.8 (S.D. Ohio 2000) (finding that a summons and complaint served in a state court action constitute “initial communications” under the FDCPA). By its terms, as stated above, the FDCPA’s broad defi- nition of a “communication” encompasses the service of a summons and complaint. When Simpson served the sum- mons and complaint, it conveyed information regarding Thomas’s debt. The plain language of a statute “should be conclusive ‘except in the rare cases [in which] the literal application of a statute will produce a result demonstrably at odds with the intentions of its drafters.’ ” Castellon- Contreras v. INS, 45 F.3d 149, 153 (7th Cir. 1995) (quoting United States v. Ron Pair Enter., Inc., 489 U.S. 235, 242 (1989)). This is not such a case; rather, viewing the service of a summons and a complaint as an “initial communica- tion” is consistent with the drafters’ intent. The statute was intended to “protect consumers from a host of unfair, harassing, and deceptive debt collection prac- tices. . . .” S. Rep. No. 382, 95th Cong. 2d. Sess. 4, 1. Our 6 No. 02-1113 interpretation of the statute furthers this objective because it helps ensure that debtors will be informed about their validation rights and that debt collectors, knowing that they are obliged to advise debtors of these rights, will investigate claims before initiating litigation to collect debts. Defen- dants’ argument that state courts offer sufficient protections to guard against abusive debt collection tactics during litigation is unpersuasive. The FDCPA affords dif- ferent protections than state court; debt collectors who violate its provisions may be subject to civil liability. See 15 U.S.C. § 1692k. Furthermore, to except the service of pleadings from the definition of “communication” would erode the § 1692g re- quirement to inform debtors of their validation rights; debt collectors could avoid their obligation to advise debtors of their validation rights altogether by initiating litigation. Such a loophole, creating an end-run around the validation notice requirement, is inconsistent with the drafters’ intention of protecting debtors from “unfair, harassing, and deceptive” collection tactics, especially because many debtors cannot afford to hire attorneys to represent them in collection actions. Congress was careful to except pleadings from the definition of “communication” where it so in- tended. Section 1692e(11) provides that a debt collector must disclose in its initial communication with the debtor that “the debt collector is attempting to collect a debt and that any information obtained will be used for that pur- pose,” except that the provision does “not apply to formal pleading[s] made in connection with a legal action.” 15 U.S.C. § 1692e(11). No such pleadings exception exists in § 1692g.2 2 We are aware that Congress has proposed a bill amending the FDCPA to specifically exclude formal pleadings from the defi- nition of a communication for purposes of 15 U.S.C. § 1692g, see (continued...) No. 02-1113 7 Defendants contend that we should ignore the FDCPA’s plain language because deeming the service of a summons and complaint an “initial communication” would interfere with litigation by making debt collection lawsuits more cumbersome for attorneys. In Heintz v. Jenkins, 514 U.S. 291 (1995), the Supreme Court considered and, in light of the FDCPA’s plain language, rejected similar arguments. The Court held that the FDCPA applies to lawyers who regularly attempt to collect debts through litigation. Heintz, 514 U.S. at 292. In so holding, the Court considered § 1692c(c), which prohibits debt collectors from communi- cating with consumers if the consumer requests that the debt collector cease communication. The Court recognized, “it would be odd if the Act empowered a debt-owing con- sumer to stop the ‘communications’ inherent in an ordinary lawsuit and thereby cause an ordinary debt-collecting lawsuit to grind to a halt.” Id. at 296. But the Court noted that such a reading was unnecessary, as § 1692c(c) allows communication to “notify the consumer that the debt col- lector or creditor intends to invoke a specified remedy,” an exception that could be read as allowing communications in the form of court-related documents. The Court thought it more prudent to read the § 1692c(c) exception that way than to “create a far broader exception, for all litigating attorneys,” given the absence of such an explicit exception in the Act itself. Id. at 296-97. Thus, the Court’s opinion suggests that to the extent that they can be ameliorated, concerns about interfering with litigation are alone insuf- ficient to warrant ignoring the statute’s plain language. Nonetheless, some of defendants’ concerns warrant further discussion, as they claim our holding will create a host of 2 (...continued) H.R. 3066, 108th Cong. (2003), but as an interpretative body, we must interpret the law as it existed at the time the dispute arose. 8 No. 02-1113 practical difficulties; however, these practical difficulties can be overcome. Section 1692g(b) directs debt collectors to cease their collection efforts if within 30 days of receiving the debt validation notice, the consumer seeks verification of the debt. Thus, a consumer could potentially halt a law- suit by requesting verification of the debt.3 This problem is not insurmountable. A debt collector need not make the summons and complaint its first communication with the debtor; rather, it can have its initial communication with the debtor upwards of 30 days before it intends to initiate litigation. After the thirty-day verification period has ex- pired, the debt collector can then initiate litigation without fear that the debtor will “interfere” with the suit by seeking verification of the debt. Sending the notice in advance also avoids other complica- tions. Some states prohibit the inclusion of other documents with the summons and complaint. A debt collector avoids running afoul of such a rule by sending the notice sepa- rately, either in advance or within five days of the initial communication. After all, the FDCPA does not require debt collectors to notify debtors of their rights in the initial communication itself. See 15 U.S.C. § 1692g(a). Sending the notice along with the pleadings, or shortly thereafter, might also confuse the debtor. A debtor must comply with deadlines imposed by court rules and judges, even if that debtor has requested verification of the debt. While the §1692g notice indicates that the debtor has 30 3 In a typical case this is not a significant problem, as the debt collector can resume its collection activities once it sends the debtor verification of the debt. See Bartlett v. Heibl, 128 F.3d 497, 501 (7th Cir. 1997) (noting that a debt collector simply must “cease his efforts at collection during the interval between being asked for verification of the debt and mailing the verification to the debtor”). But a debtor could act strategically by requesting verification just before a court filing deadline. No. 02-1113 9 days to dispute his debt, in federal court a defendant must answer a complaint within 20 days of its filing. Fed. R. Civ. P. 12(a)(1)(A). Failing to timely file an answer could result in a default judgment. Fed. R. Civ. P. 55(a). Thus, the validation notice could potentially give a debtor the false impression that it has 30 days before it is required to take any action in the lawsuit. Nonetheless, there may be instances when a debt collector believes delay in initiating a lawsuit is unwise, such as when it fears the debtor will dissolve assets. Given the potential for confusion, a debt collector who chooses to send the validation notice either with the summons and com- plaint or shortly thereafter should take care to phrase its notice so as to not mislead. It should make clear that the advice contained in the § 1692g validation notice in no way alters the debtor’s rights or obligations with respect to the lawsuit, emphasizing that courts set different deadlines for filings. As we have in cases addressing other FDCPA provisions, see Miller v. McCalla, Raymer, Padrick, Cobb, Nichols and Clark, L.L.C., 214 F.3d 872, 875 (7th Cir. 2000); Bartlett v. Heibl, 128 F.3d 497, 501-02 (7th Cir. 1997), we think it helpful to suggest explanatory language for debt collectors to use. A debt collector who chooses to send the § 1692g validation notice with the summons or complaint or shortly thereafter can send a carefully worded notice, such as one containing the following language, to comply with the FDCPA without disrupting the litigation process: This advice pertains to your dealings with me as a debt collector. It does not affect your dealings with the court, and in particular it does not change the time at which you must answer the complaint. The summons is a command from the court, not from me, and you must follow its instructions even if you dispute the validity or amount of the debt. The 10 No. 02-1113 advice in this letter also does not affect my rela- tions with the court. As a lawyer, I may file papers in the suit according to the court’s rules and the judge’s instructions. We note that an additional potential complication exists under § 1692c(a)(2), which prohibits debt collectors from communicating with a debtor it knows to be represented by counsel. If pleadings are “communications” under the FDCPA, in any jurisdiction in which a defendant must be personally served, a debtor could arguably thwart service by simply retaining an attorney.4 But other exceptions within § 1692c could be read to allow for service. For instance, § 1692c(a) permits communication with debtors represented by attorneys with the express permission of the court. Court rules permitting service could be interpreted as granting such express permission. The above-referenced practical difficulties are not insur- mountable and, thus, do not warrant overriding the Act’s plain language. See Jenkins v. Heintz, 25 F.3d 536, 539 (7th Cir. 1994), aff’d, 514 U.S. 291 (1995) (commenting that “[w]e should not disregard plain statutory language in order to impose on the statute what we may consider a more reasonable reading.”). Accordingly, we hold that Simpson’s service of the summons and complaint was an “initial com- munication,” which triggered its obligation to notify Thomas of his validation rights. In so holding, we recognize that we part company from the Eleventh Circuit, which reached a contrary result. See Vega, 351 F.3d at 1337. But the Eleventh Circuit relied principally on non-binding Federal Trade Commission (“FTC”) staff commentary issued before 4 We hold today only that the service of a summons and com- plaint is a “communication” for § 1692g purposes. Whether plead- ings constitute “communications” under other provisions of the Act, such as § 1692c, is not before us. No. 02-1113 11 Heintz, see Federal Trade Commission—Staff Commentary on the Fair Debt Collection Practices Act, 53 Fed. Reg. 50097, 50108 (1988), to which we do not give significant weight. See Heintz, 514 U.S. at 298 (declining to give much weight to FTC staff commentary discussing the FDCPA’s application to attorneys). Indeed, the FTC itself, in a more recent Advisory Opinion letter issued in 2000 noted the following: “In light of Heintz, the Commission concludes that, if an attorney debt collector serves on a consumer a court document ‘conveying information regarding a debt,’ that court document is a ‘communication’ for purposes of the FDCPA.” Federal Trade Commission-Staff Opinion Letter of March 31, 2000, at 3, available at http:// www.ftc.gov/os/2000/04/fdcpaadvisoryopinion.htm. The FTC may think it wise to issue advisory opinions providing guid- ance for the many variations that lawyers may encounter in their roles as statutory debt collectors, and 15 U.S.C. § 1692k(e) provides that no liability results from good faith reliance on such opinions. Because we have concluded that the service of a summons and complaint by a debt collector constitutes an “initial communication” under the FDCPA, Thomas has stated a viable claim for violation of 15 U.S.C. § 1692g. III. CONCLUSION For the foregoing reasons, we REVERSE the district court’s dismissal under Rule 12(b)(6) of Thomas’s claim against Simpson and REMAND for further proceedings consistent with this opinion. EVANS, Circuit Judge, joined by COFFEY, MANION, and KANNE, Circuit Judges, dissenting. I agree that the FDCPA’s definition of “communication” could be read to encompass the filing of a summons and complaint by a lawyer. But I don’t think it should be read that way. To do so, I submit, 12 No. 02-1113 leads to a result that is not consistent with the purpose of the FDCPA, nor with the traditional view of what lawyers must do when they take a pivotal step in their relationship with a client—instituting formal legal proceedings in a court of law. No doubt, lawyers can be “debt collectors” when they act like them—by engaging in the kind of “unfair, harassing and deceptive debt collection practices” that the FDCPA is designed to protect against. See Avila v. Rubin, 84 F.3d 222 (7th Cir. 1996) (lawyer sending out dunning letters is a “debt collector” subject to the FDCPA). But in this case, the lawyers were not sending dunning “communications” to Mr. Thomas. Instead, they were doing what lawyers tradition- ally do—filing a lawsuit in state court on behalf of their client. To hold that they must include in their court plead- ings all the notice/validation, etc. information required by the FDCPA seems very odd indeed. And it will also be very confusing—“you have 20 days to answer the complaint” and “30 days to dispute the validity and request verification of the debt.” All of which will make even a sophisticated defendant scratch his head and say “Huh?”. As a general rule, when statutory language is plain, there is no cause to examine other indicia of legislative intent. Indiana Port Comm’n v. Bethlehem Steel Corp., 835 F.2d 1207, 1210 (7th Cir. 1987). But we have long recognized that a section of a statute should not be read in isolation from the context of the statute as a whole. See Nupulse, Inc. v. Schlueter Co., 853 F.2d 545, 549 (7th Cir. 1988). We also have noted that “the Supreme Court has recognized limita- tions on the requirement that statutory language be interpreted literally. A literal construction is inappropriate if it would lead to absurd results or would thwart the ob- vious purposes of the statute.” Smith v. Bowen, 815 F.2d 1152, 1154 (7th Cir. 1987) (citing In re Trans Alaska Pipeline Rate Cases, 436 U.S. 631, 643 (1978)). To include the filing of a summons and complaint in the definition of a “communication” with a debtor under the No. 02-1113 13 FDCPA runs counter to the intent of the statute and creates inconsistency, as Judge Moody, in McKnight v. Benitez, 176 F. Supp. 2d 1301 (M.D. Fla. 2001), astutely observed: The purpose of the Act, as stated in § 1692(e), is “to eliminate abusive debt collection practices by debt collectors, to ensure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to pro- mote consistent state action to protect consumers against debt collection abuses.” That language indi- cates that Congress intended to regulate unscrupu- lous practices of debt collectors and level the playing field for debt collectors who do not use abusive practices. There is no indication whatsoever that Congress considered state law legal remedies to be “abusive,” nor does it appear necessary to alter the procedures for filing state lawsuits to level the playing field. After all, if state lawsuits are used in an abusive manner, protection already exists in the court where the action is brought. Moreover, Congress did not overlook legal actions as being potentially abusive. It made a specific pro- vision in the Act, in a section entitled “Legal Actions by Debt Collectors,” to regulate venue, the place where a lawsuit could be filed. Had it wished to al- ter the timing of the filing or create other changes in existing legal remedies to curb “abuses,” it would have been logical to do so there. Or, specific men- tion of legal actions could have been made within the definition of “communication.” The absence of doing so is one indication that Congress did not intend the revolutionary changes to long-standing judicial remedies which are required if a legal action is considered a “communication” within the mean- ing of the Act. 176 F. Supp. 2d at 1305. 14 No. 02-1113 Recently, the Eleventh Circuit considered whether McKnight was correctly decided and concluded, unequivo- cally, that it was. Vega v. McKay, 351 F.3d 1334 (11th Cir. 2003) (per curiam). To quote our sister circuit: “We now con- clude that the holding of McKnight, that a legal action does not constitute an ‘initial communication’ within the meaning of the FDCPA, accurately states the law.” Id. at 1337. We should not be creating a circuit split on this issue. Finally, as the majority notes, a bill is pending in Congress to amend the FDCPA to specifically exclude formal plead- ings from the definition of a communication under 15 U.S.C. § 1692g, see H.R. 3066, 108th Cong. (2003). While this might well be an indication that Congress considers the FDCPA’s current definition of “communication” to include the filing of a summons and complaint, I think it’s more likely that the purpose of the proposed amendment is to make explicit what is clearly implicit. For what it’s worth, I think the proposed amendment is more easily viewed as an effort to curtail erroneous interpretations, like the one the majority makes here. For these reasons, I respectfully dissent. No. 02-1113 15 A true Copy: Teste: ________________________________ Clerk of the United States Court of Appeals for the Seventh Circuit USCA-02-C-0072—12-20-04

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09-24-2015

https://www.courtlistener.com/api/rest/v3/opinions/2997352/

In the United States Court of Appeals For the Seventh Circuit ____________ No. 04-1088 KELLY MCGOFFNEY, Plaintiff-Appellant, v. VIGO COUNTY DIVISION OF FAMILY AND CHILDREN, FAMILY AND SOCIAL SERVICES ADMINISTRATION, Defendant-Appellee. ____________ Appeal from the United States District Court for the Southern District of Indiana, Terre Haute Division. No. 01 C 119—John Daniel Tinder, Judge. ____________ ARGUED OCTOBER 1, 2004—DECIDED NOVEMBER 23, 2004 ____________ Before FLAUM, Chief Judge, and BAUER and POSNER, Circuit Judges. FLAUM, Chief Judge. Plaintiff-appellant Kelly McGoffney, a black woman, applied for employment at the Vigo County Division of Family and Children, Family and Social Services Administration (“FSSA”) several times between 1998 and 2001. Each of her applications was rejected. In May 2001, McGoffney filed suit against FSSA, alleging racial discrimi- nation in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. The district court granted 2 No. 04-1088 summary judgment in favor of FSSA, and McGoffney ap- peals. For the reasons stated herein, we affirm. I. Background McGoffney was employed by FSSA as a food stamps case- worker from January to June 1989, at which time she resigned from her position. Almost a decade later, she again sought employment with the agency, applying on six separate occasions for the position of Public Assistance Caseworker 5 (“PAC 5”). In response to her first two applications, sub- mitted in July and October 1998, she was neither inter- viewed nor offered a position. Following both her third and fourth applications, submitted in February and October 1999, she was interviewed but not hired. McGoffney’s fifth application, submitted on July 6, 2000, yielded neither an interview nor a job offer. On July 18, 2000, McGoffney filed a complaint with the Indiana Civil Rights Commission, which was forwarded to the Equal Opportunity Employment Commission (“EEOC”), alleging racial discrimination in employment occurring on July 7, 2000. The EEOC dismissed McGoffney’s charge and sent her a right-to-sue letter on February 28, 2001. On February 16, 2001, McGoffney submitted her sixth and final application for a PAC 5 position. FSSA posted an opening for the position on its job bank in March 2001, and considered McGoffney’s application for that opening. She was neither interviewed nor offered a job. On May 1, 2001, McGoffney filed a second EEOC complaint alleging that FSSA refused to hire her for the March 2001 position because of her race and in retaliation for filing the first EEOC complaint. The EEOC dismissed the charge and sent McGoffney a right-to-sue letter on August 6, 2001. McGoffney filed this suit against FSSA in the United States District Court for the Southern District of Indiana on No. 04-1088 3 May 25, 2001. The district court granted summary judg- ment in favor of FSSA with respect to all six employment applications, concluding that: (i) the June 1998, October 1998, and February 1999 applications were discrete acts of alleged discrimination and therefore time-barred by the 300-day statutory period; (ii) McGoffney was precluded from raising her claim based on the October 1999 application because she did not include it in her EEOC charge; (iii) McGoffney was precluded from raising her retaliation claim on summary judgment because she did not include a retaliation claim in her complaint or amend the complaint to include a retaliation claim; and (iv) McGoffney failed to establish a genuine issue of fact as to whether FSSA’s nondiscriminatory reasons for not hiring her in July 2000 and February 2001 were pretextual. On appeal, McGoffney challenges the district court’s order only with respect to her October 1999, July 2000, and February 2001 applications. II. Discussion Summary judgment is appropriate “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). We review the district court’s decision to grant sum- mary judgment de novo. Koszola v. Bd. of Educ. of Chi., 385 F.3d 1104, 1107 (7th Cir. 2004). A. October 1999 Application McGoffney’s first EEOC charge listed “7-7-00” as the date of the alleged discriminatory act. McGoffney contends that despite listing this date, she made clear that she was alleging that FSSA discriminated against her on all em- 4 No. 04-1088 ployment applications within the 300-day statutory period. She relies on the “Statement of Allegations” in the EEOC complaint where she stated in relevant part: I. Respondent has refused to hire me on at least ten (10) different occasions. II. I believe I am being discriminated against based on my race, because I am more than qualified for the positions I have applied for. III.B. I have spoken with other black persons who have applied with Respondent and been rejected as well. Moreover, white persons have been selected for the jobs I have applied for. III.C. On one occasion the job I applied for was in Terre Haute, however, Respondent had me drive about an hour further to Vincennes to go through the application process for no apparent reason. (Supp. App. at 31) (emphases added). McGoffney argues that this language indicates that she was claiming repeated discrimination with respect to mul- tiple job applications, creating a reasonable inference that the entry of “7-7-00” as the date of alleged discrimination was simply mistaken. As we have previously explained, limiting a Title VII plaintiff to claims included in her EEOC charge “serves the dual purpose of affording the EEOC and the employer an opportunity to settle the dispute through conference, con- ciliation, and persuasion, and of giving the employe[r] some warning of the conduct about which the employee is ag- grieved.” Cheek v. W. & S. Life Ins. Co., 31 F.3d 497, 500 (7th Cir. 1994). McGoffney’s vague allegations regarding “positions” and “jobs” for which she had applied were insuf- ficient to place the EEOC or FSSA on notice of the particular job applications to which she was referring. She made no mention of a specific employment action occurring any time No. 04-1088 5 within the year 1999, nor did she mention the individuals involved or provide specific facts that would indicate that she was referring to her fourth job application, submitted in October 1999. Accordingly, the district court was correct in granting summary judgment with respect to this application. B. July 2000 and February 2001 Applications The district court correctly found that McGoffney had not satisfied her burden of creating a triable issue as to whether FSSA’s proffered reasons for rejecting her July 2000 and February 2001 applications were pretextual. Although McGoffney challenges this ruling, none of the arguments she presses on appeal was raised below. FSSA also presents a number of arguments to this Court that it did not raise below. As we have explained on numer- ous occasions, “the requirement that parties may raise on appeal only issues which have been presented to the district court maintains the efficiency, fairness, and integrity of the judicial system for all parties.” Republic Tobacco Co. v. N. Atl. Trading Co., Inc., 381 F.3d 717, 728 (7th Cir. 2004) (quoting Boyers v. Texaco Refining & Mktg., Inc., 848 F.2d 809, 812 (7th Cir. 1988)). Accordingly, we decline to consider the arguments of either party raised for the first time here. III. Conclusion For the foregoing reasons, the decision of the district court is AFFIRMED. 6 No. 04-1088 A true Copy: Teste: ________________________________ Clerk of the United States Court of Appeals for the Seventh Circuit USCA-02-C-0072—11-23-04

01-03-2023

09-24-2015

https://www.courtlistener.com/api/rest/v3/opinions/2997356/

In the United States Court of Appeals For the Seventh Circuit ____________ No. 03-3442 COLETTE LUCKIE, Plaintiff-Appellant, v. AMERITECH CORPORATION, Defendant-Appellee. ____________ Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 01 C 8619—Blanche M. Manning, Judge. ____________ ARGUED SEPTEMBER 28, 2004—DECIDED NOVEMBER 19, 2004 ____________ Before BAUER, EASTERBROOK, and MANION, Circuit Judges. BAUER, Circuit Judge. Plaintiff-Appellant Colette Luckie filed suit against Ameritech Corporation, claiming racial harassment and retaliation in violation of Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §§ 2000e et seq. The district court granted Ameritech’s motion for summary judgment on both claims. Luckie appeals, and we affirm. Background Luckie, an African-American, began her employment with Security Link, a division of Ameritech, in 1995. In 1997, she 2 No. 03-3442 was promoted to the position of Senior Manager of Organi- zational Development and Planning (“OD&P”) in the Human Resources department of the Small Business Services (“SBS”) business unit. SBS later merged with Ameritech’s Enhanced Business Services unit to form a new unit, General Business Services (“GBS”). Orlando Ashford was Luckie’s immediate supervisor and Jane Marvin, Vice- President of Human Resources for GBS, was Luckie’s second-line supervisor. Marvin left Ameritech on April 30, 1999 and was replaced by Gwen Patterson. Patterson had been the Vice-President of Human Resources at Ameritech Information Industry Services (“AIIS”). At the end of May 1999, Ashford also left Ameritech and Luckie began reporting directly to Patterson. In preparation for her new position, Patterson met with the president of GBS, Ronald Blake, who asked her to focus on widespread client dissatisfaction with Human Resources. Blake asked Patterson to talk to the managers of other business units to identify their concerns. As instructed, Patterson contacted several people for their feedback on the Human Resources organization and its employees. As part of this effort, Patterson contacted Marvin, even though she had left the company. During their conversation, Marvin expressed concern regarding Luckie’s performance and communicated her belief that Luckie may have “topped out” and might not be able to meet the expectations of her job. Marvin further noted that a Performance Improvement Plan (“PIP”) might be necessary. A PIP is a formal proce- dure by which an employee is given specific objectives and expectations in order to improve performance; in essence, the employee is given a last chance to improve before being terminated for poor performance. Patterson also contacted the Director of Human Resources, Sharon Krolopp. Krolopp also expressed concern regarding Luckie’s performance. Additionally, Patterson spoke with Doug Heath, Director of the Ameritech Institute, who stated that Luckie had a “toxic effect” on the organization. No. 03-3442 3 Soon after her arrival, Patterson met with Luckie to assess the performance of Luckie’s direct reports. The parties disagree regarding the details of this meeting. Luckie claims that Patterson asked only about the minority employees and wanted Luckie to create performance issues with those employees, or else Luckie would herself be scrutinized. Luckie also contends that Patterson stated that she wanted to “change the complexion” of the department. For her part, Patterson denies asking Luckie to create performance issues with minority employees and denies making the “complexion” comment. Luckie further claims that Patterson later called an African-American employee named Richard Peterson a “dunce.” Finally, as further evidence of discrimination, Luckie also points to an e-mail sent by one of her staff, James Boring, to Blake reflecting his dissatisfaction with the current culture at Ameritech and concern with Patterson’s management style. Though the details of Patterson and Luckie’s meeting are disputed, it is undisputed that Patterson almost immediately began documenting performance problems with Luckie, including inaccessibility during work hours, missed deadlines, inaccurate communications, and failure to keep her credit card account up to date. Luckie contends that any credit card arrearage was due to Patterson not approving her expenses in a timely fashion. Patterson discussed her expectations with Luckie, but Luckie’s performance did not improve. Patterson then met with Krolopp and Blake to discuss Luckie’s continuing perfor- mance problems. With their input, Patterson ultimately decided to put Luckie on a PIP on August 27, 1999. By its terms, Luckie had 30 days to improve her performance; failure to meet the goals and expectations set out in the PIP could result in the termination of her employment. Patterson discussed the PIP with Luckie. During the PIP, Patterson met with Luckie regularly. In addition, Debbie Lewis or Susan Brenkus, who worked for different business 4 No. 03-3442 units and did not report to Patterson, also attended. The consensus among the three was that Luckie was defensive during these meetings and not open to suggestions. At some point in August 1999, Luckie contacted the Ameritech internal EEO hotline to complain about Patterson’s conduct and spoke with EEO representative Mamie Clay. Luckie only identified herself by her first name, and did not name Patterson as the manager about whom she was calling. Luckie asserts that Clay guessed that she was talking about Patterson and said she would talk to Patterson about the problem. Clay denies that she guessed that the manager was Patterson. Regardless, Patterson and Clay have both testified that they have never met or spoken to one another. Luckie contacted Clay at the EEO hotline again later in August, this time with another employee, Wanda Raymond (an Asian-American), on the line. Again, Luckie and Raymond used their first names only, and did not identify Patterson or the business unit in which they worked. At some point after this second call, Luckie visited Clay face-to-face. She still identified herself only as “Colette” and provided no new information. Luckie then retained an attorney, who sent three let- ters to Ameritech beginning on September 16, 1999. The letters claimed that Luckie had been discriminated against and was interested in engaging in discussion to settle her claims. In part, the letters described the dispute between Luckie and Patterson over Luckie’s credit card balance. In response to the letters, Deborah Ingram of Ameritech’s EEO department asked Patterson to provide information about the credit card account balances of all her employees. When she failed to improve her performance under the PIP, Luckie was terminated on October 4, 1999. Both Krolopp and Blake approved Patterson’s decision to fire her. Luckie filed this suit on November 8, 2001. On August 21, 2003, the district court granted summary judgment in favor of Ameritech. No. 03-3442 5 Title VII Claims Summary judgment is appropriate where the “pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” FED. R. CIV. P. 56(c). We review the district court’s grant of summary judgment de novo, construing all facts and reasonable inferences in the light most favorable to the non- moving party. Miller v. Am. Family Mut. Ins. Co., 203 F.3d 997, 1003 (7th Cir. 2000). Racial Harassment Title VII prohibits an employer from engaging in racial harassment that creates a hostile working environment. Johnson v. City of Fort Wayne, Ind., 91 F.3d 922, 938 (7th Cir. 1996). To state a claim for a hostile work environment, Luckie must demonstrate that: (1) she was subject to unwelcome harassment; (2) the harassment was based on her race; (3) the harassment was sufficiently severe or pervasive so as to alter the conditions of her employment and create a hostile or abusive atmosphere; and (4) there is a basis for employer liability. Williams v. Waste Mgmt. of Ill., 361 F.3d 1021, 1029 (7th Cir. 2004). Luckie’s allegations of harassment do not conform to the traditional hostile work environment claim in that she does not allege that she was the target of any racial slurs, epithets, or other overtly race-related behavior. See John- son, 91 F.3d at 938. Nonetheless, Luckie contends that three separate incidents are evidence of a campaign of racial harassment by Patterson. Specifically, she points to: (1) Patterson’s comment that she wanted to “change the complexion” of the Human Resources group; (2) Patterson calling an African-American employee a “dunce”; and (3) an e-mail sent by James Boring which complained of the effect 6 No. 03-3442 that Patterson’s management style was having on several employees and the department as a whole.1 None of these incidents are sufficiently connected to race so as to satisfy the second element of the hostile environment analysis. The conduct at issue must have a racial character or purpose to support a hostile work environment claim. Hardin v. S.C. Johnson & Son, Inc., 167 F.3d 340, 345 (7th Cir. 1999). Among the complained-of incidents, the only comment that arguably has a racial character is Patterson’s statement regarding changing the “complexion” of the department. However, this remark was made in the context of discussing the department’s organization and ways to increase its efficiency. Indeed, Luckie admits that Patterson did not overtly refer to race at all during this discussion, or at any other time. We agree that the statement reflects Patterson’s plans for reorganization, and that no reasonable jury could find that it was racial in character or purpose. Accordingly, the district court correctly held that none of the incidents which Luckie cites have the required racial character and purpose to support a racial harassment claim. Furthermore, the events at issue are not severe or pervasive, as is required to satisfy the third element of a racially hostile work environment claim. A hostile work environment must be both objectively and subjectively offensive. Faragher v. City of Boca Raton, 524 U.S. 775, 787 (1998). To determine whether an environment is objectively hostile or offensive, the court must consider all the circum- stances, including frequency and severity of the conduct, whether it is humiliating or physically threatening, and whether it unreasonably interferes with an employee’s work 1 Luckie also claims that Patterson instructed Luckie to “watch out for those people” in reference to Wanda Raymond. The district court refused to consider this statement because it was not found anywhere in the record and therefore not based on admissible evidence. Luckie does not address this deficiency, so we likewise do not weigh the statement. No. 03-3442 7 performance. McPherson v. City of Waukegan, 379 F.3d 430, 438 (7th Cir. 2004). The incidents of which Luckie com- plains fail to satisfy this objective test. The conduct in question consists of isolated events that were not physically threatening or humiliating and in some cases were not even directed at Luckie. The evidence is insufficient to show a workplace permeated with discriminatory ridicule, intimi- dation, and insult. See Cooper-Schut v. Visteon Auto. Sys., 361 F.3d 421, 426 (7th Cir. 2004). Since Luckie fails to establish all of the elements of a hostile work environment claim, the district court properly granted summary judg- ment to Ameritech. Retaliation An employer may not retaliate against an employee who has complained about discrimination or other practices that violate Title VII. 42 U.S.C. § 2000e-3(a); Sitar v. Ind. Dep’t of Transp., 344 F.3d 720, 727 (7th Cir. 2003). Luckie argues that Ameritech retaliated against her by placing her on a PIP and later terminating her employment because she contacted the EEO hotline to complain about Patterson and hired an attorney who sent letters to Ameritech alleging racial discrimination. A plaintiff has two distinct ways of establishing a prima facie case for unlawful retaliation: the direct method and the indirect method. Stone v. City of Indianapolis Public Util. Div., 281 F.3d 640, 644 (7th Cir. 2002). In order to survive summary judgment under the direct method, Luckie must present direct evidence that: (1) she engaged in statutorily protected activity; (2) she suffered an adverse employment action; and (3) there is a causal connection between the two. Haywood v. Lucent Tech., Inc., 323 F.3d 524, 531 (7th Cir. 2003). Alternatively, under the indirect method, Luckie must establish that: (1) she engaged in statutorily protected activity; (2) she was performing her job 8 No. 03-3442 according to Ameritech’s legitimate expectations; (3) despite her satisfactory performance, she suffered an adverse employment action; and (4) she was treated less favorably than similarly situated employees who did not engage in statutorily protected activity. Williams, 361 F.3d at 1031; Stone, 281 F.3d at 644. Luckie contends that Patterson placed her on a PIP and later fired her in retaliation for her complaints to the EEO office and for hiring an attorney who sent letters to Ameritech which complained of harassment by Patterson. Luckie’s claim fails under the direct method because she cannot prove a causal connection between her complaints and her termination. The key inquiry in determining whether there is a causal connection under the direct method is whether Patterson was aware of the allegations of discrimination at the time of her decisions to place Luckie on a PIP and terminate her employment; absent such knowledge, there can be no causal link between the two. Maarouf v. Walker Mfg. Co., 210 F.3d 750, 755 (7th Cir. 2000). It is not sufficient that Patterson could or even should have known about Luckie’s complaints; she must have had actual knowledge of the complaints for her decisions to be retaliatory. Hayes v. Potter, 310 F.3d 979, 982-83 (7th Cir. 2002); Miller, 203 F.3d at 1008 (“an employer cannot retaliate when it is unaware of any com- plaints”). At minimum, therefore, Luckie must offer evi- dence that would support a reasonable inference that Patterson was aware of Luckie’s allegations of discrimina- tion. Dey v. Colt Const. & Dev. Co., 28 F.3d 1446, 1458 (7th Cir. 1994). Even in the light most favorable to her, there is simply no evidence in the record that would support such an inference. Mamie Clay has testified that she did not discuss Luckie’s allegations with Patterson; in fact, she states that the two have not met or even spoken. Patterson asserts that she didn’t know about Luckie’s complaints at the time she made the decision to terminate her employ- No. 03-3442 9 ment. Furthermore, it is the stated policy of Ameritech’s EEO department to protect the confidentiality of any employee who complains about discrimination. There is nothing in the record that refutes either Clay or Patterson’s statements, nor explains why Clay would deviate from the confidentiality policy of the EEO department. Similarly, there is no evidence that Patterson knew about the letters sent in September from Luckie’s attorney. The sole evidence on which Luckie relies is that Deborah Ingram of Ameritech’s EEO department asked Patterson for informa- tion about the credit card balance history of her employees. Notably, the credit card inquiry was regarding all of Patterson’s employees, not just Luckie. As such, Patterson would have no reason to know that Ingram’s request for information was in response to a claim of discrimination by Luckie, as opposed to any of her other employees. Lacking a causal connection, Luckie’s claim fails under the direct method. Proceeding to the indirect method, the district court correctly found that Luckie failed to establish a prima facie case because she was not performing her job according to Ameritech’s legitimate expectations at the time she was fired. The record unambiguously reflects that Luckie had performance problems before she was placed on a PIP, and that these performance deficiencies were noted by other managers besides Patterson. Ameritech has further shown that Luckie failed to correct these problems while on the PIP. Luckie continued to miss deadlines, the quality of her work product was unacceptable, and she was often inacces- sible during work hours. Luckie’s only response is that she had received positive performance evaluations in the past. However, the fact that Luckie may have met expectations in the past is irrelevant; she must show that she was meeting expectations at the time of her termination. Peters v. Renaissance Hotel Operating Co., 307 F.3d 535, 545 (7th Cir. 2002). By failing to establish this element of the prima 10 No. 03-3442 facie case, Luckie’s claim cannot withstand summary judgment under the indirect analysis. Evidentiary Rulings Luckie also challenges the district court’s rulings on the admissibility of two pieces of evidence. Specifically, she claims that the district court erred by refusing to strike as hearsay: (1) a portion of Patterson’s affidavit pertaining to a conversation with Doug Heath, in which Heath stated that Luckie had a “toxic effect” on the department; and (2) a portion of Marvin’s affidavit relating to her conversations with Patterson regarding Luckie. We review evidentiary rulings for abuse of discretion. Hildebrandt v. Ill. Dep’t of Natural Res., 347 F.3d 1014, 1040 (7th Cir. 2003). To be entitled to relief, Luckie must show not only that the district court erred by failing to exclude evidence, but also that the erroneous ruling prejudiced her substantial rights. Rogers v. City of Chicago, 320 F.3d 748, 751 (7th Cir. 2003). The district court did not err in its evidentiary rulings, therefore we need not consider whether Luckie’s substantial rights were affected. Neither of the two statements at issue is hearsay because they were not offered to prove the truth of the matter asserted. FED. R. CIV. P. 801(c). Rather, each statement was offered to show Patterson’s state of mind at the time she was evaluating Luckie’s performance. See, e.g., EEOC v. Univ. of Chicago Hosps., 276 F.3d 326, 333 (7th Cir. 2002). The evidence was therefore properly considered by the district court. For the reasons set forth above, we AFFIRM the district court’s grant of summary judgment in favor of the defen- dant, Ameritech. No. 03-3442 11 A true Copy: Teste: ________________________________ Clerk of the United States Court of Appeals for the Seventh Circuit USCA-02-C-0072—11-19-04

01-03-2023

09-24-2015

https://www.courtlistener.com/api/rest/v3/opinions/2997381/

In the United States Court of Appeals For the Seventh Circuit ____________ No. 04-1834 INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL 139, AFL-CIO, Plaintiff-Appellee, v. J.H. FINDORFF & SON, INC., Defendant-Appellant. ____________ Appeal from the United States District Court for the Eastern District of Wisconsin. No. 02-C-0358—Charles N. Clevert, Jr., Judge. ____________ ARGUED SEPTEMBER 21, 2004—DECIDED DECEMBER 30, 2004 ____________ Before EASTERBROOK, RIPPLE, and WILLIAMS, Circuit Judges. EASTERBROOK, Circuit Judge. J.H. Findorff & Son belongs to the Allied Construction Employers Association in Milwaukee. On behalf of its members, the Association nego- tiated a collective bargaining agreement with Local 139 of the Operating Engineers’ Union. Members of the Association recognized Local 139 as the bargaining agent for “all heavy equipment operators and other workers in the jurisdiction 2 No. 04-1834 of the Union as set forth in Article VI, and Article IX”. Article IV requires all employers to ensure that, when “work covered by this Agreement” is subcontracted, the subcon- tractor must subscribe to the Agreement and use members of Local 139 to do the work. Findorff was awarded a contract to build a dormitory at the University of Wisconsin’s Milwaukee campus. An older structure at the site had to be gutted. Findorff subcontracted that task to J.C. Construction, whose collective bargaining agreement with the Laborers Union assigned its members most of the work. To help break up and remove concrete floor slabs and old drywall, laborers used skid-steer loaders, forklift-sized machines with fittings for attachments such as scoops and jackhammers that can be swapped to suit the task. (J.C. Construction uses Bobcat skid-steer loaders, whose features are described at .) Local 139 asserted that operating engineers, rather than laborers, should do any of the demo- lition work that required the use of skid-steer loaders. Findorff disagreed, and the dispute proceeded to arbitration. After hearing testimony about how skid-steer loaders are used, and which workers operate them at Findorff, ar- bitrator Neil Gundermann ruled in Findorff’s favor. It is undisputed that employees of many trades—laborers, iron workers, and carpenters, as well as operating engineers— use skid-steer loaders in the course of their work. Arbitrator Gundermann asked how it could be, given the language of Article IV, that laborers on Findorff’s payroll may use skid- steer loaders, but that laborers on a subcontractor’s payroll may not. If all skid-steer work belongs to Local 139, that assignment must hold for Findorff and its subcontractors alike. Witnesses for Local 139 made it clear that they do not claim all skid-steer-loader work, but they insisted that the machine be assigned to Local 139’s members when its use is more than “intermittent.” The arbitrator thus concluded that use of skid-steer loaders is not the bailiwick of operat- No. 04-1834 3 ing engineers alone. Article IV requires subcontractors to use Local 139 for “work covered by this Agreement” but does not define “covered.” Arbitrator Gundermann de- termined that “work covered by this Agreement” is the work that “heavy equipment operators” perform exclusively for the Association’s members under the collective bargaining agreement. As use of skid-steer loaders is not exclusively operating engineers’ work, a subcontractor likewise need not ensure that it is performed by Local 139’s members. The district court vacated the award. As the judge saw matters, the arbitrator had neglected the collective bargain- ing agreement’s plain language. The judge started with lan- guage we have quoted from §1.1—that the bargaining unit comprises “all heavy equipment operators and other workers in the jurisdiction of the Union as set forth in Article VI, and Article IX” plus a comparable provision in §1.3—and moved to Article VI, which says that each employer agrees to assign any equipment within the jurisdic- tion as described below to bargaining unit employ- ees: the operation of all hoisting and portable engines on building and construction work . . . including but not limited to, all equipment listed in Section 9.1 (Wage Classification) of this Agreement. Section 9.1.4 in turn lists: Tamper-Compactors (riding type), Assistant Engineer, A-frames and Winch trucks, Concrete auto breaker, Hydrohammers (small), Brooms and Sweepers, Hoist (tuggers), Stump chippers (large), Boats (tug, safety, work barges and launch), Shouldering ma- chine operator, Screed operator, Stone crushers and Screening plants, Prestress machines, Screed oper- ators (milling machine), Farm or Industrial Tractor mounted equipment, Post hole digger, Fireman (as- phalt plants), Air compressor (over and under 400 CFM), Generators (over and under 150 KW), Augers 4 No. 04-1834 (vertical and horizontal), Air, Electric, Hydraulic Jacks (slipform), Skid steer loaders (with or without attachments). . . . Tracing back through the sequence, the judge found that every piece of equipment listed in §9.1.4 is within the scope of Article VI’s reference and thus must be assigned to oper- ating engineers because of the initial reference to the “ju- risdiction of the Union”. Whatever is in the “jurisdiction of the Union” must be “work covered by this Agreement” for purposes of Article IV’s subcontracting clause. And if Local 139 has not protested Findorff’s assignment of some skid- steer-loader work to other crafts, that toleration does not diminish its rights under the collective bargaining agree- ment, the judge concluded. The district judge’s fundamental assumption is that courts rather than arbitrators interpret collective bargaining agreements. Once the court finds an agreement’s meaning clear, no arbitrator may read it otherwise. In other words, arbitrators may apply agreements but are not free to err in their construction. Yet Findorff and Local 139 agreed that an arbitrator, not a judge, would interpret and apply this contract. As the Supreme Court frequently explains, Courts are not authorized to review the arbitrator’s decision on the merits despite allegations that the decision rests on factual errors or misinterprets the parties’ agreement. Paperworkers v. Misco, Inc., 484 U.S. 29, 36 (1987). We recently reiterated that if an “ ‘arbitrator is even arguably construing or applying the contract and acting within the scope of his authority,’ the fact that ‘a court is convinced he committed serious error does not suffice to overturn his decision.’ ” Eastern Associated Coal Corp. v. Mine Workers, 531 U.S. 57, 62 (2000) (quoting Misco, supra, at 38). It is only when the arbitrator strays from interpretation and application of the No. 04-1834 5 agreement and effectively “dispenses his own brand of industrial justice” that his decision may be un- enforceable. Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 597 (1960). Major League Baseball Players Ass’n v. Garvey, 532 U.S. 504, 509 (2001). If a gaffe authorized a court to set aside the award, there would be little difference between arbitration and litigation other than the extra cost and delay of pre- senting the case to the arbitrator before taking it to court. That would turn arbitration on its head; the process is designed to achieve speed, lower cost, and expertise. That can be accomplished only if courts enforce intellectually honest arbitral decisions, even if the court thinks the arbi- trator’s decision mistaken. It is why “the question for deci- sion by a federal court asked to set aside an arbitration award . . . is not whether the arbitrator or arbitrators erred in interpreting the contract; it is not whether they clearly erred in interpreting the contract; it is not whether they grossly erred in interpreting the contract; it is whether they interpreted the contract.” Hill v. Norfolk & Western Ry., 814 F.2d 1192, 1194-95 (7th Cir. 1987). The principle is the same whether or not the district judge deems the agreement “clear”—a decision that can be made only after the extended and costly process of litigation that arbitration is supposed to avert. Under Garvey and its pre- decessors, misinterpretation of contractual language, no matter how “clear,” is within the arbitrator’s powers; only a decision to ignore or supersede language conceded to be binding allows a court to vacate the award. There is a big difference—a clear difference, a plain difference—between misunderstanding and ignoring contractual language. The district judge did not doubt that Arbitrator Gundermann was construing this collective bargaining agreement rather than supplying a rule that he preferred to the parties’ agreement. Instead the judge applied a 6 No. 04-1834 “plain-meaning exception” to the normal rule that an arbitrator’s power to decide includes the power to err. Apart from what the Supreme Court has had to say about the propriety of such an exception is the fact that what may seem “plain” to a judge is not necessarily plain to persons with greater experience in the business that the agreement is designed to cover. Arbitrators, often chosen because of their expertise in the industry, may see nuances that escape generalist judges. Persons steeped in the specialized language of a trade, or the business norms against which the language was written, often eschew “plain meaning” in favor of context, while generalists use a more text-bound ap- proach because that is easier and less error- prone for outsiders. See generally Frederick Schauer, The Practice and Problems of Plain Meaning, 45 Vand. L. Rev. 715 (1992); Schauer, Statutory Construction and the Coordinat- ing Function of Plain Meaning, 1990 Sup. Ct. Rev. 231. Arbitrator Gundermann doubted the wisdom of a “plain- meaning approach” to this agreement not only because there is neither a “clear” meaning (nor a definition of any kind) for the vital phrase “work covered by this Agreement” in Article IV, but also because the parties themselves did not treat the operating engineers as entitled to perform all work on skid-steer loaders. A collective bargaining agreement is a long-term relational contract, whose interstices properly may be fleshed out with what often goes by the name “the law of the shop.” See, e.g., Consolidated Rail Corp. v. Railway Labor Executives’ Ass’n, 491 U.S. 299, 310-12 (1989). Local 139 acknowledges this form of common law by its own reluctance to claim for its members all skid-steer-loader work at Findorff itself. Witnesses at the hearing estimated that between 80% and 90% of all hours on skid-steer loaders at the Association’s general contractors are logged by workers represented by the Laborers’ Union. No wonder the operating engineers were unwilling to advance the uncondi- tional claim to jurisdiction that the district judge thought No. 04-1834 7 “plain.” Arbitrator Gundermann treated the skid-steer loader as a tool useful to many crafts rather than a job for one craft; that tracks how the parties themselves behaved. Other parts of §9.1.4 demonstrate that this language can- not be read back into Article VI to establish exclusive ju- risdiction. “Brooms and Sweepers” appear in the list. Does Local 139 really have exclusive jurisdiction over every use of a broom at every member of the Association and each subcontractor? What then does the Laborers’ Union cover? Must members of the Carpenters’ Union call on the heavy- equipment operators of Local 139 to sweep sawdust? Must the iron workers summon Local 139’s members to brush away filings and shavings? There is no evidence that the parties’ understand their own arrangement in that implau- sible way. Using “plain meaning” to trump the understanding and practice of both parties to an agreement would do neither side a favor. Some practical leavening was needed; that’s why the parties gave the task to an arbitrator. See Pease v. Production Workers Union, 386 F.3d 819, 823 (7th Cir. 2004). The view that the agreement gives to the operating engineers every use of all equipment listed in §9.1.4 would create a needless jurisdictional war that would require the National Labor Relations Board to step in, for other col- lective bargaining agreements allow members of other unions to use some of the same equipment in their own crafts. Arbitrator Gundermann’s resolution avoided that risk. Anheuser-Busch, Inc. v. Beer & Soft Drink Union, 280 F.3d 1133 (7th Cir. 2002), was the only decision on which the district court relied for the proposition that, if the court deems contractual language “plain,” the arbitrator is for- bidden to select any other interpretation. The judge quoted at length from what he styled the majority opinion in Anheuser-Busch, but what he should have called the lead 8 No. 04-1834 opinion—for the three members of the panel wrote sepa- rately, and none spoke for a majority. Language in the lead opinion, taken out of context, could be understood to sup- port the view that judges may override arbitrators’ decisions by calling the language “clear” or “plain.” The dissenting opinion disagreed with that view. See id. at 1146-49. Judge Rovner, whose concurring opinion tipped the balance, thought that the arbitrator had expressly declared unwillingness to be bound by the contract’s language and had elected to implement a pre-contractual policy instead. Id. at 1145-46. She wrote: “I think it evident that [the arbitrator’s] decision purporting to interpret the 1998 agreement relied substan- tially on the unwritten understandings and lengthy course of conduct that preceded that agreement—and resort to such pre-signing conduct was verboten under the express terms of the contract. To that extent, I agree that the arbi- trator exceeded his authority, and that his award must be vacated.” Id. at 1146. Anheuser-Busch thus does not commit this court to the proposition that a judicial declaration of “plain meaning” displaces an arbitrator’s interpretation. Any such rule would be incompatible with Garvey and its predecessors, as well as Hill and dozens of other decisions in this circuit. The judgment is reversed, and the case is remanded for entry of a judgment enforcing the arbitrator’s award. No. 04-1834 9 A true Copy: Teste: ________________________________ Clerk of the United States Court of Appeals for the Seventh Circuit USCA-02-C-0072—12-30-04

01-03-2023

09-24-2015

https://www.courtlistener.com/api/rest/v3/opinions/2997455/

In the United States Court of Appeals For the Seventh Circuit ____________ No. 03-1384 KEITH B. CANAAN, Petitioner-Appellee, v. DANIEL R. MCBRIDE, Warden,* Respondent-Appellant. ____________ Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 97 C 1847—David F. Hamilton, Judge. ____________ ARGUED NOVEMBER 20, 2003—DECIDED JANUARY 11, 2005 ____________ Before BAUER, ROVNER, and WOOD, Circuit Judges. WOOD, Circuit Judge. In the early morning hours of December 29, 1985, a police officer arrived at Lori Bullock’s apartment in Evansville, Indiana. The apartment had been ransacked and the officer found Bullock dead, with a butcher knife protruding from her throat and almost two dozen stab * Daniel R. McBride is substituted as respondent for Cecil Davis following Canaan’s transfer to the Maximum Control Facility at Westville, Indiana. 2 No. 03-1384 wounds. Keith B. Canaan was arrested two days later and charged with the crime. A jury convicted Canaan of murder, burglary, and attempted criminal deviate conduct. At the sentencing hearing that followed, Canaan’s counsel pre- sented no mitigating evidence. Faced only with two aggra- vating factors, the jury recommended the death penalty. The judge accepted that recommendation and sentenced Canaan accordingly. After unsuccessfully seeking post-conviction relief, Canaan filed a petition for a writ of habeas corpus. The district court granted him relief on three grounds. The first, in which the court found Canaan’s trial counsel ineffective for failing to advise him that he had the right to testify at the penalty phase of his trial, affected only his death sentence. The second and third grounds resulted in the vacation of his conviction for attempted criminal deviate conduct. The court found that the jury instruction for attempted criminal deviate conduct failed to require the State to prove beyond a reasonable doubt that Canaan had acted with specific intent with respect to this crime, that this omission violated his due process rights, and that his counsel was ineffective for failing to object to this jury instruction. We affirm the district court’s judgment granting habeas corpus relief with respect to the death sentence, but we reverse with respect to the conviction for attempted criminal deviate conduct. I The following account of the underlying facts comes from the opinions of the Indiana courts that considered Canaan’s case. One or two weeks before Bullock’s death, Canaan had knocked on the door of Bullock’s apartment and asked her roommates whether he could wait in their living room until their upstairs neighbors arrived. The roommates agreed, and Canaan eventually fell asleep on their couch. The next day, Canaan returned and one of Bullock’s roommates per- No. 03-1384 3 mitted him to use their phone. The evening of Bullock’s murder, Canaan knocked on the door of her upstairs neigh- bor, who later testified that he seemed nervous and “had a strange look.” Canaan then went downstairs and was heard knocking on the door of a first-floor apartment. Bullock lived on the first floor. Around midnight, Canaan was seen at a Bennigan’s restaurant with substantially more money than he had possessed earlier in the day. Several hours later, at another restaurant, he asked a waitress how he could remove blood stains from his shirt. Canaan’s brother testified that Canaan had told him that he killed a “biker” at a bar the night before, and Canaan’s friend testified that the afternoon following the murder, Canaan had noticed some police nearby and said, “I’ve got to get out of here.” Fi- nally, Canaan’s fingerprint was found on a box of spaghetti found in Bullock’s apartment. Canaan was charged with murder, burglary, and criminal deviate conduct, as well as being a habitual offender. The State sought the death sentence based on the charged aggravating circumstance of intentional killing during the crimes of burglary and criminal deviate conduct, IND. CODE § 35-50-2-9(b)(1). The jury convicted Canaan on all three counts. At the penalty phase, it found Canaan guilty of being a habitual offender, thereby making him eligible for an ad- ditional thirty-year sentence. See IND. CODE § 35-50-2-8(h). Next, a death penalty hearing was held before the same jury. Canaan did not testify at this hearing, and his counsel presented no mitigating evidence. The jury recommended that Canaan be sentenced to death. On November 26, 1986, the court found that Canaan intentionally killed Bullock while committing burglary and attempted criminal deviate conduct. In the absence of any mitigating circumstances, it concluded that there was nothing to outweigh the two aggravating factors. On this basis, the court sentenced Canaan to death. 4 No. 03-1384 Canaan appealed his conviction to the Indiana Supreme Court, which affirmed. Canaan v. State, 541 N.E.2d 894 (Ind. 1989) (“Canaan I”), cert. denied, 498 U.S. 882 (1990). Canaan’s trial lawyers also represented him on direct ap- peal. Canaan then filed a petition for post-conviction relief, which the Indiana post-conviction court denied. After un- successfully appealing to the Indiana Supreme Court, Canaan v. State, 683 N.E.2d 227 (Ind. 1997) (“Canaan II”), cert. denied, 524 U.S. 906 (1998), Canaan filed a petition for a writ of habeas corpus. The district court found no flaws in Canaan’s convictions for murder and burglary, but it concluded that “Canaan’s petition must be granted with respect to the death sentence and the conviction for at- tempted criminal deviate conduct.” The court found that Canaan was denied effective assistance of counsel at the death penalty phase when his lawyers failed to discuss with him whether he should testify. The court also concluded that the jury instruction on attempted criminal deviate conduct denied Canaan due process of law because it did not require the jury to find beyond a reasonable doubt the essential element of a specific or conscious intent to penetrate the sex organ of the victim with an object. Finally, the court found that Canaan received ineffective assistance of counsel based on his trial attorneys’ failure to object to those jury instruc- tions. On this basis, the court issued a writ of habeas corpus vacating Canaan’s death sentence and his conviction for attempted criminal deviate conduct. The State has ap- pealed. II A We consider first the order vacating Canaan’s death sen- tence. The district court granted his petition in that respect based on its finding that Canaan received constitutionally ineffective assistance of counsel when his trial attorneys, No. 03-1384 5 Barry Standley and Beverly Harris, failed to consult with him about whether he should testify at the penalty phase of the trial. On appeal, the State argues that his claim that he was “denied the right to testify” was procedurally defaulted because Canaan did not fairly present it to the Indiana Supreme Court. See 28 U.S.C. § 2254(b)(1); Baldwin v. Reese, 124 S.Ct. 1347, 1349 (2004); Harris v. McAdory, 334 F.3d 665, 668 (7th Cir. 2003). The State’s articulation of its argument makes plain the flaw in it: Canaan seeks habeas corpus relief not on the ground that he was “denied the right to testify,” as the State suggests, but rather because he was denied effective as- sistance when his counsel failed to advise him of his right to testify. Because the distinction between these claims is significant, it is necessary to review the evolution of Ca- naan’s ineffective assistance of counsel claim before the Indiana courts. Canaan’s post-conviction petition alleged that he “was denied the effective assistance of counsel as guaranteed by the Sixth and Fourteenth Amendments to the Constitution of the United States [because] . . . [c]ounsel for petitioner failed to call petitioner as a witness during the death penalty phase of the trial.” The Indiana post-con- viction trial court rejected this argument, stating that “[t]he decision not to call Petitioner as a witness during the pen- alty phase of the trial is proper trial strategy.” That court also found that “during the preparation for the trial, both Counsel Standley and Co-Counsel Harris discussed with petitioner his right to testify at both the guilt and penalty phases of the trial.” Harris testified, however, that “when we talked about him testifying at the trial, we were also regarding that towards the penalty phase.” There is no indication that Canaan knew that this was the lawyers’ in- tention, nor that counsel ever advised him about the risks and benefits of testifying at the penalty phase after he lost at the guilt phase. 6 No. 03-1384 On appeal to the Indiana Supreme Court, Canaan argued that his counsel was ineffective not only for “decid[ing] not to call Canaan as a witness at the penalty phase of the trial,” but also for “fail[ing] to consult with him regarding the decision.” Canaan suggested that his sentence might have been different had he been permitted to testify, in that “he could have filled in major gaps in the jury’s knowledge regarding him.” The Indiana Supreme Court never addressed Canaan’s argument that counsel failed to consult with him about the desirability of testifying at the penalty phase, when virtually all of the strategic reasons for refraining from testifying had become moot. It instead addressed only the argument that “counsel was ineffective for not calling him as a witness at the penalty phase,” and on that point it “affirm[ed] the post-conviction court’s conclusion that Canaan ha[d] failed to demonstrate that the decision not to call Canaan as a witness during the penalty phase consti- tuted ineffective assistance of counsel.” Canaan II, 683 N.E.2d at 229-30. In his habeas corpus petition, Canaan reiterated his ineffective assistance of counsel claim, assert- ing among other things that “[n]either of his lawyers even discussed with him whether he should testify during the death sentence hearing,” even though “under the circum- stances, he was the only source of mitigating information.” On this basis, the district court found that Canaan was “entitled to relief from his death sentence.” Although Canaan argued that his counsel was ineffective for failing to advise him that he could testify in his filings to both the Indiana Supreme Court and the district court, the State makes no mention of this claim in its briefs before this court. Rather, it contends only that “a claim that Canaan was denied the right to testify was barred by pro- cedural default.” Likewise, before the district court, the State argued that “to the extent that Petitioner’s claim is that he was denied his right to testify—rather than his right to effective assistance of counsel—that claim is barred by No. 03-1384 7 procedural default as it was not raised in the state courts.” Thus, despite three opportunities to assert procedural de- fault—before the Indiana Supreme Court, the district court, and this court—the State has never done so. The State’s silence is significant because by failing to object to Canaan’s claim on procedural default grounds, the State has waived (or, more properly, forfeited) this argument. See Gregory- Bey v. Hanks, 332 F.3d 1036, 1043 (7th Cir. 2003) (“As a procedural default is not jurisdictional, any argument that [a habeas petitioner] has defaulted his . . . claim can be waived by the government.”); Hernandez v. Cowan, 200 F.3d 995, 997 (7th Cir. 2000) (finding “waiver of waiver, now a well-established doctrine,” where the State failed to object to a habeas petitioner’s failure to seek state supreme court review in his direct appeal and post-conviction proceedings); cf. Momient-El v. DeTella, 118 F.3d 535, 540 (7th Cir. 1997) (refusing to find waiver of waiver by the State where it presented its procedural default argument for the first time on appeal to this court). As we are under no obligation to invent a procedural default argument never raised by the State, we move to the merits of Canaan’s claim. At the outset, we must address the standard under which we review Canaan’s ineffective assistance of counsel claim. Both parties and the district court assume that the stand- ard provided in 28 U.S.C. § 2254(d) of the Antiterrorism and Effective Death Penalty Act of 1996 (AEDPA) governs our analysis, but this position is not necessarily correct. Ordinarily, § 2254(d) requires that we determine whether the state court’s decision was “contrary to, or involved an unreasonable application of, clearly established Federal law, as determined by the Supreme Court,” or “was based on an unreasonable determination of the facts in light of the evidence presented in the State court proceeding.” “This standard only applies, however, to a ‘claim that was adjudicated on the merits in State court proceedings.’ ” Braun v. Powell, 227 F.3d 908, 916 (7th Cir. 2000) (quoting 8 No. 03-1384 28 U.S.C. § 2254(d)); see also Oswald v. Bertrand, 374 F.3d 475, 477 (7th Cir. 2004); Walton v. Briley, 361 F.3d 431, 432 (7th Cir. 2004) (“The Antiterrorism and Effective Death Penalty Act of 1996 does not apply in this case because the state courts did not adjudicate the claim on the merits.”); Ouska v. Cahill-Masching, 246 F.3d 1036, 1044 (7th Cir. 2001). The record in this case gives no indication that the Indiana courts were aware that Canaan had presented to them a claim of ineffective assistance of counsel based on the failure to consult ground. Although he squarely pre- sented this argument to the Indiana Supreme Court, its decision makes no mention of this issue, even to reject it on procedural grounds or to indicate that it found no need to discuss the remaining issues in the case. When a state court is silent with respect to a habeas corpus petitioner’s claim, that claim has not been “adjudi- cated on the merits” for purposes of § 2254(d). See Hough v. Anderson, 272 F.3d 878, 904 n.13 (7th Cir. 2001) (reviewing the petitioner’s claim de novo because “[t]he Supreme Court of Indiana did not address this argument specifically in its opinion”). As a practical matter, a federal court cannot apply the deferential standard provided by § 2254(d) in the absence of any state court decision on the issue. See Fortini v. Murphy, 257 F.3d 39, 47 (1st Cir. 2001) (“AEDPA imposes a requirement of deference to state court decisions, but we can hardly defer to the state court on an issue that the state court did not address.”); Hogan v. Gibson, 197 F.3d 1297, 1306 (10th Cir. 1999) (holding that because the state court “made no findings” as to the merits of the petitioner’s claim, “it is axiomatic that there are no findings to which we can give deference” and thus § 2254(d) does not apply). As we said in Braun, “[a]ccordingly, we shall not employ the standard of review set forth in AEDPA but, rather, must rely upon the general standard as set forth in 28 U.S.C. § 2243,” which requires that we “ ‘dispose of the matter as law and justice require.’ ” 227 F.3d at 917 (quoting § 2243). No. 03-1384 9 See also Maples v. Stegall, 340 F.3d 433, 436 (6th Cir. 2003); Norde v. Keane, 294 F.3d 401, 410 (2d Cir. 2002); Hameen v. State of Del., 212 F.3d 226, 248 (3d Cir. 2000); Mueller v. Angelone, 181 F.3d 557, 570 n.9 (4th Cir. 1999). This understanding of § 2254(d)’s scope is consistent with the Supreme Court’s decision in Wiggins v. Smith, 539 U.S. 510 (2003). Applying § 2254(d), the Court held that the state post-conviction court had relied on an erroneous factual assumption and unreasonably applied Strickland’s performance prong in rejecting the habeas corpus peti- tioner’s ineffective assistance of counsel claim. 539 U.S. at 534. The Court then considered whether the petitioner had satisfied Strickland’s prejudice requirement. Id. In doing so, the Court did not apply § 2254(d), noting that “our review is not circumscribed by a state court conclusion with respect to prejudice, as neither of the state courts below reached this prong of the Strickland analysis.” Id. In light of Wiggins and the consistent decisions of this and other circuits, we conclude that our review of Canaan’s ineffective assistance of counsel claim is governed not by § 2254(d), but by § 2243, such that we must “dispose of the matter as law and justice require.” (We add, however, that our ultimate resolution of the case would not change even if we were asking whether the state court’s silence amounted to an unreasonable application of the law or determination of the facts, for the reasons we discuss here.) Under Strickland, “[f]irst, the defendant must show that counsel’s performance was deficient. . . . Second, the defendant must show that the deficient performance pre- judiced the defense.” 466 U.S. 668, 687 (1984). The State contends that Canaan cannot prevail on his ineffective assistance of counsel claim because he “was advised of his right to testify and accepted his counsels’ advice.” In sup- port, the State cites the Indiana post-conviction court’s find- ing that “during the preparation for the trial, both Counsel Standley and Co-Counsel Harris discussed with petitioner 10 No. 03-1384 his right to testify at both the guilt and penalty phases of the trial.” Despite the deference to which the state courts are entitled, we conclude that this finding cannot stand. The quoted statement is flatly contradicted by Standley’s and Harris’s testimony during Canaan’s post-conviction hearing acknowledging that they had not spoken with him regarding his testifying at the penalty phase. (The testimony Harris offered, to which we referred earlier, does not contradict this statement—as we noted, she did not say that Canaan knew they meant to include the penalty phase, and she certainly did not say that they ever gave Canaan any advice about the penalty phase that took into account the critical facts of the jury’s convictions and findings on habitual offender status.) When asked if he had addressed testifying at the penalty phase with Canaan, Standley stated, “I would say I probably didn’t. It is just not some- thing that ever really crossed my mind that you ought to do.” Harris likewise testified, “I don’t think we asked him if he wanted to testify at the death phase.” The only hint that Canaan’s attorneys raised this issue is Canaan’s own proposed finding of fact to the post-conviction court, which stated: “Petitioner was told by trial counsel that he should not testify at either part of the trial and that he would not be called as a witness.” (Emphasis added.) This statement, however, merely suggests that the earlier generic discussion occurred; it does not indicate that Canaan’s counsel discussed this issue with him at the penalty phase, when the stakes were substantially different from those at the guilt phase. At oral argument, the State conceded that the Indiana post- conviction court made no finding that Canaan’s counsel had consulted with him at the penalty phase regarding his testifying. Moreover, the testimony of Canaan’s counsel shows that this conversation never occurred. The district court thus did not err in finding that “the evidence from Canaan’s lawyers shows that they did not ever discuss with him whether he should testify at the critical penalty phase of the trial.” No. 03-1384 11 We turn, then, to the question whether Canaan’s coun- sel’s failure to advise him that he was entitled to testify at the penalty phase constituted deficient performance. Under Strickland, Canaan must prove that his trial counsel “made errors so serious that counsel was not functioning as the ‘counsel’ guaranteed the defendant by the Sixth Amendment.” Id. at 687. Our review of the adequacy of his counsel’s per- formance must be “highly deferential” and “indulge a strong presumption that counsel’s conduct falls within the wide range of reasonable professional assistance; that is, the defendant must overcome the presumption that, under the circumstances, the challenged action might be considered sound trial strategy.” Id. at 689 (internal quotation marks omitted). The Supreme Court has “declined to articulate spe- cific guidelines for appropriate attorney conduct.” Wiggins, 539 U.S. at 521. Instead, it has “emphasized that ‘[t]he proper measure of attorney performance remains simply reasonableness under prevailing professional norms.’ ” Id. (quoting Strickland, 466 U.S. at 688). We follow the Court’s lead in Strickland and Wiggins by looking first to the ABA Standards for Criminal Justice and the ABA Guidelines for the Appointment and Performance of Defense Counsel in Death Penalty Cases. See Strickland, 466 U.S. at 688 (“Prevailing norms of practice as reflected in American Bar Association standards and the like, e.g., ABA Standards for Criminal Justice, are guides to deter- mining what is reasonable.” (internal citation omitted)); Wiggins, 539 U.S. at 522. While these standards are not determinative, see Strickland, 466 U.S. at 688-89, they nonetheless represent “well-defined norms” on which the Court has routinely relied, see Wiggins, 539 U.S. at 524. These sources confirm that Canaan’s counsel fell short of professional norms when they failed to consult with him regarding his testifying at the penalty phase. Under the heading “The Defense Case Concerning Penalty,” the ABA Guidelines provide that “[c]ounsel should consider, and dis- 12 No. 03-1384 cuss with the client, the possible consequences of having the client testify or make a statement to the sentencing or reviewing body or individual.” ABA Guidelines for the Appointment and Performance of Defense Counsel in Death Penalty Cases Guideline 10.11 (2003) (emphasis added). The ABA’s Commentary to Guideline 10.11 reiterates this standard: “Counsel should also consider, in consultation with the client, the possibility of the client expressing remorse for the crime in testimony, in allocution, or in a post-trial statement.” Id. Guideline 10.11 cmt. Likewise, in its section on Defense Function, the ABA Standards for Criminal Justice provide that “[d]efense counsel should alert the accused to the right of allocution” at sentencing. ABA Standards for Criminal Justice, Defense Function Standard 4-8.1(d) (3d ed. 1993). Finally, the National Legal Aid and Defender Association’s Performance Guidelines state that “[i]n preparing for sentencing, counsel should consider the need to . . . inform the client of his or her right to speak at the sentencing proceeding.” National Legal Aid and Defender Association Performance Guidelines for Criminal Defense Representation 8.3 (1995). In failing to advise Canaan of his right to testify at the penalty phase, Canaan’s counsel also defaulted on their “duties to consult with the defendant on important decisions and to keep the defendant informed of important developments in the course of the prosecution.” Strickland, 466 U.S. at 688; see also IND. RULES OF PROF ’L CONDUCT R. 1.4(b) (“A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.”); Hall v. Washington, 106 F.3d 742, 749 (7th Cir. 1997) (emphasizing that “[i]n the context of a capital sentencing hearing, it is particularly important that counsel not be allowed to shirk her responsibility”). Even apart from these general standards, the conduct of Canaan’s counsel was deficient when viewed in light of the facts and circumstances of his case. See Strickland, 466 U.S. at 688 (“[T]he performance inquiry must be whether No. 03-1384 13 counsel’s assistance was reasonable considering all the cir- cumstances.”). In their testimony at the post-conviction hearing, Canaan’s counsel did not suggest that their failure to advise him that he could testify at the penalty phase arose from any “sound trial strategy.” See id. at 689. Rather, attorney Standley testified that “[i]t is just not something that ever really crossed my mind that you ought to do.” See Wiggins, 539 U.S. at 526 (finding counsel’s conduct unrea- sonable where it “resulted from inattention, not reasoned strategic judgment”). While attorney Harris explained that they decided not to call Canaan as a witness at the guilt phase because “his prior impeachable offenses . . . were just terrible” and he had a cool demeanor, she did not suggest that either of these justifications were persuasive in the context of the penalty phase of Canaan’s trial. Because Canaan’s attorneys opted to conduct his habitual offender status determination before the sentencing phase, the jury already knew about his prior offenses. As we have already noted, his attorneys presented no mitigating evidence at the sentencing hearing, even though the court and the jury had before them two aggravating factors and attorney Standley was aware, in his own words, that Canaan “didn’t have a very good upbringing.” Thus, as Canaan’s counsel acknowl- edged in the post-conviction hearing, “by the time the jury decided the death penalty portion of his trial, the only background information they would have had would have been his prior record.” In the absence of any other miti- gating evidence, counsel should have informed Canaan of his right to testify on his own behalf. Instead of receiving advice from counsel, Canaan received none at the critical moment. We note in this connection that such advice might go either way: a competent lawyer might advise a client like Canaan to testify, but under some circumstances she might equally advise a client not to tes- tify. The point here is that the final choice must be the client’s, after receiving whatever advice the lawyer chooses 14 No. 03-1384 to offer. In Canaan’s case, given the importance of his testi- mony as the only mitigating evidence available to the jury, and the professional norms emphasizing counsel’s obli- gation to advise a defendant of his right to testify at the penalty phase, Canaan’s lawyers were deficient in failing to consult with him about this issue. Canaan can prevail on his Strickland claim, however, only if he can show that his counsel’s deficient performance prejudiced him. To show prejudice in the capital sentencing context, a petitioner must establish “that a reasonable probability exists that, but for counsel’s substandard per- formance, the sentencer ‘would have concluded that the balance of aggravating and mitigating circumstances did not warrant death.’ ” Hall, 106 F.3d at 749 (quoting Strick- land, 466 U.S. at 695). A “reasonable probability” of a different result is one “sufficient to undermine confidence in the outcome.” Strickland, 466 U.S. at 694. “Even if the odds that the defendant would have been acquitted had he received effective representation appear to be less than fifty percent, prejudice has been established so long as the chances of acquittal are better than negligible.” United States ex rel. Hampton v. Leibach, 347 F.3d 219, 246 (7th Cir. 2003). As we have discussed, Canaan’s testimony at the penalty phase would have been the only mitigating evidence the jury heard. The Indiana death penalty statute requires the jury to weigh aggravating and mitigating circumstances before recommending a sentence, IND. CODE § 35-50-2-9(l), and so the effect of presenting no mitigating evidence at the penalty phase was that the jury considered only the two aggravating circumstances. With nothing to put on the mitigating side of the scale, the jury was almost certain to choose a death sentence. The testimony Canaan was pre- pared to offer, which he presented at his post-conviction hearing, may have persuaded the jury to be lenient. Canaan described a deeply troubled history of the kind the Supreme No. 03-1384 15 Court has found relevant at the penalty phase. See Wiggins, 539 U.S. at 535. Specifically, Canaan would have testified to his lifelong struggle with drugs and alcohol and to the physical and emotional abuse he suffered as a child. Ca- naan’s father often beat him until his mother or brother intervened. After Canaan’s father caught him sniffing paint, he spray-painted the entire left side of Canaan’s body. On several occasions, Canaan’s mother forced him and his siblings into the family’s car and drove recklessly towards their house, threatening to kill everyone because “her nerves had about had it.” When Canaan was later placed in a juvenile facility, he was diagnosed as “dangerous to self and others,” and had to go through “reality therapy.” Ca- naan’s testimony also chronicled a lengthy history of sub- stance abuse. At age sixteen, Canaan was charged with auto theft, and the court ordered him to see a psychologist to address his chemical dependency. His parents refused to pay the $50 per visit charge, however, so he never received treatment. Canaan further testified that between the ages 16 and 27, when he was arrested for Bullock’s murder, there were no significant periods of time when he did not regularly use alcohol and drugs, including PCP, marijuana, acid, Quaaludes, and cocaine. During Canaan’s 42-month incarceration at Westville Correctional Institute, from which he was released shortly before he was arrested for killing Bullock, he used cocaine twice a week, as well as marijuana and PCP (an unfortunate comment on the state’s correc- tional institutions, as well as on Canaan). He was addicted to cocaine when released and used alcohol and cocaine until his arrest. This account makes clear that Canaan “has the kind of troubled history we have declared relevant to assessing a defendant’s moral culpability.” Wiggins, 539 U.S. at 535 (citing Penry v. Lynaugh, 492 U.S. 302, 319 (1989) (“[E]vi- dence about the defendant’s background and character is relevant because of the belief, long held by this society, that 16 No. 03-1384 defendants who commit criminal acts that are attributable to a disadvantaged background . . . may be less culpable than defendants who have no such excuse.” (internal quota- tion marks omitted))); Eddings v. Okla., 455 U.S. 104, 112 (1982) (noting that consideration of the offender’s life history is a “part of the process of inflicting the penalty of death” (internal quotation marks omitted)); see also Emerson v. Gramley, 91 F.3d 898, 907 (7th Cir. 1996) (finding prejudice where counsel failed to introduce evidence “of a life that one juror in twelve might find so bleak, so deprived, so har- rowing, [and] so full of horrors” as to refuse to recommend death, particularly “[w]ith no evidence of mitigation before the jury despite irrefutable evidence of aggravating circum- stances”). Where the state death penalty statute, as in Indiana, requires the sentencer to consider all mitigating factors relevant to imposition of the death penalty, we have emphasized that “defense counsel must make a significant effort . . . to ably present the defendant’s fate to the jury and to focus the attention of the jury on any mitigating factors.” Hall, 106 F.3d at 749 (internal quotation marks omitted). Canaan’s counsel fell down in that responsibility. Had the jury been aware of this considerable mitigating evidence, there is a reasonable probability that it would have returned with a different sentence. On this basis, we affirm the district court’s grant of habeas corpus relief to Canaan with respect to his ineffective assistance of counsel claim and hold that he is entitled to a new hearing on his sentence. B The district court also granted Canaan’s petition for habeas corpus relief with respect to his conviction for at- tempted criminal deviate conduct. That conviction, it held, was based on a jury instruction that violated Canaan’s due process rights, because the instruction relieved the State of its burden to prove beyond a reasonable doubt Canaan’s No. 03-1384 17 specific intent to penetrate Bullock’s sex organ with an object. See In re Winship, 397 U.S. 358 (1970). In addition, the court held that Canaan’s counsel was ineffective in fail- ing to object to this jury instruction. On appeal, the State identifies several reasons for reversal: procedural default of the due process claim, an adequate and independent state ground based on the finding of the state post-conviction court of no fundamental error, and no error on the merits. We agree with the last of these points: reading the jury instructions as a whole, we conclude that they adequately established the elements of attempted criminal deviate conduct under Indiana law at the time of Canaan’s trial and sentencing. Canaan therefore cannot prevail on the merits of his due process claim, and we need not reach the State’s procedural default argument. Before addressing the merits of Canaan’s claim, we ad- dress once again the appropriate standard of review. As we have discussed, the deferential standard imposed by 28 U.S.C. § 2254(d) applies only if Canaan’s due process claim was “adjudicated on the merits.” See, e.g., Walton, 361 F.3d at 432. Otherwise, we evaluate his claim under the pre-AEDPA standard of 28 U.S.C. § 2243, which instructs that we “dispose of the matter as law and justice require.” With respect to Canaan’s due process claim, the correct standard is not obvious. The Indiana Supreme Court’s only discussion of Canaan’s claim on post-conviction review consisted of its statement that, “[a]s the post-conviction court properly concluded, this issue was decided adversely to Canaan on direct appeal. It is not available for relitiga- tion here.” Canaan II, 683 N.E.2d at 236 (internal citation omitted). We have repeatedly held, in the context of de- ciding whether a petitioner has procedurally defaulted her claim, that where a post-conviction court has “based its disposition of [the petitioner’s claim] on its conclusion that the merits of the claim ha[s] been resolved previously,” it has conducted “a merit-based determination [that] is not a 18 No. 03-1384 bar to further consideration in a federal habeas action.” Page v. Frank, 343 F.3d 901, 907 (7th Cir. 2003). This language suggests that the Indiana Supreme Court’s dispo- sition of Canaan’s claim on the ground that it was decided adversely to him on direct appeal should qualify as an “ad- judication on the merits” and therefore trigger § 2254(d)’s deferential standard of review. The difficulty with this conclusion is that both the Indiana Supreme Court and post-conviction court erred in finding that Canaan’s due process claim had been decided adversely to Canaan on direct appeal. In fact, Canaan presented this claim for the first time on post-conviction review and therefore neither court considered the merits of the claim on direct appeal. Therefore, as the Indiana Supreme Court only asserted that it had addressed the merits of Canaan’s claim, but in fact it never did so, it is not clear that § 2254(d) governs our analysis. We need not resolve this conundrum, however, as Canaan cannot prevail even under § 2243’s more liberal standard of review. In Winship, the Supreme Court famously stated: “Lest there remain any doubt about the constitutional stature of the reasonable-doubt standard, we explicitly hold that the Due Process Clause protects the accused against conviction except upon proof beyond a reasonable doubt of every fact necessary to constitute the crime with which he is charged.” 397 U.S. at 364. In applying Winship to jury instructions, the Court has emphasized that “[b]efore a federal court may overturn a conviction resulting from a state trial in which th[e] instruction was used, it must be established not merely that the instruction is undesirable, erroneous, or even ‘universally condemned,’ but that it violated some right which was guaranteed to the defendant by the Fourteenth Amendment.” Cupp v. Naughten, 414 U.S. 141, 146 (1973). Thus, the question for us “is not whether the trial court failed to isolate and cure a particular ailing instruction, but rather whether the ailing instruction by No. 03-1384 19 itself so infected the entire trial that the resulting convic- tion violates due process.” Id. at 147. Indeed, it is a “well- established proposition that a single instruction to a jury may not be judged in artificial isolation, but must be viewed in the context of the overall charge.” Id. at 146-47. In light of these standards, we must determine whether the jury instructions in Canaan’s case, read as a whole, failed to instruct the jury in an element of the crime of attempted criminal deviate conduct, thereby relieving the State of its obligation under the Due Process Clause to prove beyond a reasonable doubt every element of the offense. See United States v. Gaudin, 515 U.S. 506, 522-23 (1995); Jenkins v. Nelson, 157 F.3d 485, 492 (7th Cir. 1998). The instruction in question reads as follows: A person attempts to commit a crime when, acting with the culpability required for commission of the crime, he engages in conduct that constitutes a substantial step toward commission of the crime. . . . To convict the defendant of the crime of Attempted Criminal Conduct an included offense of Criminal Deviate Conduct, as charged in Count III, the State must have proved each of the following elements: The defendant 1. knowingly/intentionally 2. engaged in conduct that constituted a substantial step toward commission of the crime of Criminal Deviate Sexual Conduct 3. which conduct was an attempt to penetrate the sex organ of Lori Bullock with an object, to-wit: a knife 4. the defendant used deadly force. The jury instructions also defined the term “deviate sexual conduct” as “an act involving: (1) A sex organ of one person and the mouth or anus of another person; or (2) The pene- tration of the sex organ or anus of a person by an object.” 20 No. 03-1384 Before deciding whether Canaan’s jury instructions re- moved a necessary element of the crime of attempted crim- inal deviate conduct from the jury’s consideration, we must first establish the elements of that crime under Indiana law. At issue is whether, at the time of Canaan’s trial and sentencing in November 1986, the “specific intent” element of the general crime of attempt required proof that the defendant acted intentionally, that is, with a conscious objective, or whether proof that he acted knowingly would suffice. The Indiana Supreme Court discussed the elements of the crime of attempt in Zickefoose v. State, 388 N.E.2d 507 (Ind. 1979), which interpreted Indiana’s then-new general attempt statute, IND. CODE § 35-41-5-1 (1978). The court explained that “[a]lthough there are somewhat varying definitions of what conduct actually constitutes an attempt, there is fundamental agreement on the two necessary ele- ments of the crime. First, the defendant must have been ac- ting with a specific intent to commit the crime, and second, he must have engaged in an overt act which constitutes a substantial step toward the commission of the crime.” Id. at 510; see also Scott v. State, 413 N.E.2d 902, 904 (Ind. 1980) (“[A] specific intent is required to prove an attempt.”). In light of Zickefoose, Canaan contends that the instruction for attempted criminal deviate conduct “fails to inform the jury that before Canaan could be convicted of such offense, they must find that he engaged in the prohibited conduct with the specific intent to commit the crime of criminal deviate conduct.” He argues that the instruction wrongly permitted the jury to convict him “of the offense if he ‘knowingly’ acted against the victim,” rather than requiring that it find “that the conduct concurred with the conscientious objective (or specific intent) to accomplish such penetration.” The State responds that Canaan is mistaken, because under Indiana law “[a]t the time of Canaan’s crime, the required mens rea for an attempt crime could be either knowing or inten- tional.” No. 03-1384 21 The difficulty in evaluating these competing interpre- tations of Indiana law arises from the varied meanings at- tributed to the term “specific intent” by the Indiana courts. See Richeson v. State, 704 N.E.2d 1008, 1009 n.1 (Ind. 1998) (“Review of case law from this Court and the Court of Appeals indicates that the term ‘specific intent’ has several conflicting definitions.”). In light of this ambiguity, it is most helpful to ask whether Indiana law at the time of Canaan’s conviction required the State to prove that it was Canaan’s conscious objective to penetrate the victim’s sex organ or whether it allowed the State to prove that Canaan acted knowingly or with a conscious objective in penetrating the victim’s sex organ. While Canaan relies on Zickefoose’s statement that “the defendant must have been acting with a specific intent to commit the crime,” 388 N.E.2d at 510, in arguing that the instructions were erroneous, he fails to recognize subsequent Indiana Supreme Court cases clarify- ing that the element of “specific intent” can encompass either intentional conduct—that is, conduct resulting from a “conscious objective”—or knowing conduct. In Scott, which was decided after Zickefoose but prior to Canaan’s trial and sentencing, the Indiana Supreme Court reiterated that “a specific intent is required to prove an attempt,” but went on to explain that “[t]he very elements of knowingness or intention which must be proved in order to establish murder satisfy the State’s burden of proving the same elements in an attempt to murder.” Scott, 413 N.E.2d at 904 (emphasis added). The Indiana Supreme Court further clarified its position in Woodford v. State, 488 N.E.2d 1121 (Ind. 1986), which also preceded Canaan’s trial. In Woodford, the defendant asserted that, under Zickefoose, “ ‘knowingly’ is not sufficient culpability for an attempt crime, and a conviction for attempted rape can be sustained only if the State established that the defendant acted ‘intentionally.’ ” Id. at 1123. The court squarely rejected this argument, explaining that Zickefoose “did not involve distinguishing between the terms ‘knowingly’ and ‘intentionally,’ and the 22 No. 03-1384 phrase ‘specific intent’ was used only to generally denote the required culpability.” Id. In light of these cases, Canaan cannot state a due process claim based on failure of the jury instructions to require the State to prove that it was his conscious objective to pene- trate Bullock’s sex organ. Under Indiana law at the time of his trial, it was sufficient for the jury instructions to require that the State prove knowing action on his part. Because the instructions did so, we need not address the State’s additional argument that the Indiana Supreme Court’s subsequent decisions limited Zickefoose’s specific intent rule to cases of attempted murder. See, e.g., Richeson, 704 N.E.2d at 1010. As the instruction for attempted criminal deviate conduct required that the State prove beyond a reasonable doubt that Canaan acted “knowingly/intentionally,” Ca- naan’s due process rights were not violated by this instruc- tion. See Winship, 397 U.S. at 364. Canaan also argues that even if he cannot prevail on his first challenge to the instructions, his due process rights were still violated because the attempted criminal deviate conduct instruction applied the knowing/intentional conduct requirement to “an attempt to penetrate the sex organ of Lori Bullock with an object,” not to the penetration itself. The instruction required the jury to find that Canaan “know- ingly/intentionally engaged in conduct that constituted a substantial step toward commission of the crime of Crimi- nal Deviate Sexual Conduct,” where “conduct” was defined as “an attempt to penetrate the sex organ of Lori Bullock with an object, to-wit: a knife.” Read together, these ele- ments of the instruction required that the jury find that Canaan knowingly/intentionally engaged in an attempt to penetrate the sex organ of Lori Bullock. Canaan contends that the instruction therefore was erroneous, because “the mens rea language modifies only the conduct element of the crime and not the result (harm) element.” The instruction, he continues, fell short in two ways: first, it failed to inform No. 03-1384 23 the jury that the State had to prove that Canaan knowingly or intentionally sought to penetrate Bullock’s sex organ; and second, it did not make clear that the State had to do more than prove that he knowingly or intentionally engaged the conduct that constituted a substantial step towards the penetration of her organ. See Zickefoose, 388 N.E.2d at 510 (stating that to prove attempt, the State must prove that “the defendant must have been acting with a specific intent to commit the crime” (emphasis added)). In evaluating this claim, we heed the Supreme Court’s “well-established proposition that a single instruction to a jury . . . must be viewed in the context of the overall charge.” Cupp, 414 U.S. at 146-47. While the trial court’s articulation of the elements of attempted criminal deviate conduct in the jury instruction may not have been perfect, we must look at the instructions as a whole to determine whether Canaan has presented a valid due process claim. In this regard, the Indiana Supreme Court’s decision in Clemons v. State, 424 N.E.2d 113 (Ind. 1981), is instructive. The trial court in Clemons instructed the jury in attempted murder as follows: To convict the defendant the State must have proved each of the following elements: The defendant James Burnus Clemons, 1. did knowingly or intentionally, 2. shoot a hand gun at and hit the body of Bruce Bur- nett with the bullet 3. that the conduct was a substantial step toward the commission of the crime of Murder. Id. at 118. The defendant objected that “this instruction is incomplete in that it does not set forth the element of spe- cific intent to kill but only mentions the knowing or in- tentional shooting of the gun.” Id. The Indiana Supreme Court found “no merit to this argument since the court 24 No. 03-1384 further instructed the jury on the definition of the crime of murder . . . and the necessary element of the specific intent to kill is correctly set out therein.” Id. On this basis, the court held that the “instructions taken as a whole ade- quately covered the definition of attempted murder.” Id. Under Clemons, even if the attempted criminal deviate conduct instruction in Canaan’s case did not correctly set out the specific intent requirement, it is still possible that the instructions as a whole adequately conveyed the ele- ments of attempted criminal deviate conduct. We find that this is the case here. The jury instruction for criminal de- viate conduct explained that “[a] person who knowingly causes another person to perform or submit to deviate sexual conduct commits deviate sexual conduct.” In addition, the criminal deviate conduct instruction provided: To convict the defendant the State must have proved each of the following elements: The defendant 1. knowingly on or about DECEMBER 28, 1985 TO DECEMBER 29, 1985 2. caused another person, to-wit: LORI L. BULLOCK, to submit to deviate s[e]xual conduct when 3. the defendant used deadly force. This instruction clarifies the intent element of the attempted criminal deviate conduct instruction, particularly in light of the latter instruction’s explanation that “[a] person at- tempted to commit a crime when, acting with the culpability required for the commission of the crime, he engaged in conduct constituting a substantial step toward commission of the crime.” (emphasis added). See Alexander v. State, 520 N.E.2d 99, 100 (Ind. 1988); cf. Smith v. State, 459 N.E.2d 355, 357-58 (Ind. 1984) (finding fundamental error where the attempted murder instruction required only that the defendant “knowingly[ ] [e]ngaged in conduct that consti- tuted a substantial step toward the commission of Murder,” No. 03-1384 25 but the jury was not instructed in the elements of murder). We acknowledge that in Canaan’s case the jury instruction for attempted criminal deviate conduct was not ideal. That said, the jury instructions, when read as a whole, made clear the correct relation and thus communicated the requisite elements of attempted criminal deviate conduct under Indiana law. Canaan therefore cannot establish that the instructions “so infected the entire trial that the resulting conviction violates due process.” Cupp, 414 U.S. at 147. In light of this conclusion, Canaan cannot show that his lawyers were ineffective in failing to object to the instruc- tions. As we have found no constitutional error in the in- structions themselves, the lawyers’ performance with respect to them could not have fallen below the constitutional minimum. III Because Canaan’s counsel was ineffective in failing to con- sult with him regarding his right to testify at the penalty phase of the trial, we AFFIRM the judgment of the district court issuing a writ of habeas corpus on this basis and vacating his death sentence. We REVERSE that part of the district court’s judgment granting Canaan habeas corpus relief based on his claims relating to the attempted criminal deviate conduct conviction. The State of Indiana is free to conduct a new death penalty hearing, providing that the State files appropriate documents seeking such relief within 120 days of the mandate of this court. 26 No. 03-1384 A true Copy: Teste: ________________________________ Clerk of the United States Court of Appeals for the Seventh Circuit USCA-02-C-0072—1-11-05

01-03-2023

09-24-2015

https://www.courtlistener.com/api/rest/v3/opinions/2997488/

In the United States Court of Appeals For the Seventh Circuit ____________ No. 04-1775 LUIS FERNANDO PADILLA, Petitioner-Appellant, v. ALBERTO GONZALES*, Respondent-Appellee. ____________ On Petition for Review of an Order of the Board of Immigration Appeals. No. A41 123 489 ____________ ARGUED DECEMBER 15, 2004—DECIDED FEBRUARY 22, 2005 ____________ Before KANNE, WOOD, and WILLIAMS, Circuit Judges. KANNE, Circuit Judge. Luis Padilla seeks review of a decision of the Board of Immigration Appeals (BIA) affirm- ing an order of removal. An Immigration Judge (IJ) found Padilla inadmissible because he had been convicted of four crimes involving moral turpitude. Padilla challenged that finding on appeal, and the BIA partially affirmed, determining that Padilla’s convictions for sexual abuse of a minor and obstruction of justice were for crimes involving moral turpitude. In his petition for review, Padilla * Pursuant to Fed. R. App. P. 43(c), we have substituted Alberto Gonzales for John Ashcroft as the named respondent. 2 No. 04-1775 challenges the determination regarding obstruction of justice. Because we find that the Illinois crime of obstruc- tion of justice is a crime involving moral turpitude, we dismiss the petition for lack of jurisdiction. I. Background Padilla, a native of Mexico, became a lawful permanent resident of the United States in 1986. In 1989, he pleaded guilty to criminal sexual abuse of a minor in violation of Ill. Rev. Stat., ch. 38, § 12-15(a)(1), and was sentenced to 12 months of probation. In 1991, Padilla pleaded guilty to obstruction of justice in violation of Ill. Rev. Stat., ch. 38, § 31-4(a), for knowingly furnishing false information to a police officer after being stopped for a traffic violation in order to avoid apprehension for driving with a revoked license. He was sentenced to one year of imprisonment. In 1995, Padilla pleaded guilty to aggravated driving under the influence of alcohol and driving with a revoked license for which he was sentenced to 30 months of pro- bation. In May 2000, Padilla presented himself for inspection upon reentering the United States after a trip abroad and was classified as an arriving alien seeking admission. Shortly thereafter, the Immigration and Naturalization Service, whose enforcement functions are now performed by the Department of Homeland Security, initiated removal proceedings against Padilla by filing a Notice to Appear (NTA). The NTA alleged that Padilla was inadmissable under 8 U.S.C. § 1182(a)(2)(A)(i) for committing a crime involving moral turpitude. The NTA listed all four of Padilla’s convictions—sexual abuse, obstruction of justice, driving with a revoked license, and aggravated driving under the influence of alcohol—without specifying whether § 1182(a)(2)(A)(i) applied to one or all of the convictions. No. 04-1775 3 At a hearing before an IJ in June 2001, Padilla admitted that he been convicted of the four crimes listed in the NTA, but denied that any of them involved moral turpitude. Under § 1182(a)(2)(A)(i), an alien who admits to committing or is convicted of a crime involving moral turpitude is inadmissible, unless either of two exceptions applies. Relevant here is the exception for petty offenses: those for which the maximum penalty does not exceed one year of imprisonment, where the alien was not sentenced to more than 6 months of imprisonment. § 1182(a)(2)(A)(ii). This exception applies only to an alien “who committed only one crime.” Id. During the hearing, the government took the position that Padilla’s conviction for sexual abuse did not in itself render him removable because he was not sentenced to one year or more in prison, but that Padilla was nonethe- less removable because obstruction of justice was a crime of moral turpitude and an aggravated felony.1 The IJ determined that all four of Padilla’s crimes involved moral turpitude and that he was thus inadmis- sible. The IJ also found that the petty-offense exception was inapplicable because Padilla had been convicted of more than one crime. Padilla’s application for a waiver of inad- missibility under 8 U.S.C. § 1182(c) and his application for voluntary departure under 8 U.S.C. § 1229(b) were denied, and the IJ ordered him removed to Mexico. 1 We question the wisdom of the government’s concession that criminal sexual abuse falls under the petty-offense exception of § 1182(a)(2)(A)(ii). Padilla was initially sentenced to 12 months of probation for that crime, which is a Class 4 Felony. He later violated his probation and was sentenced to an additional 12 months of probation plus periodic imprisonment, for which he subsequently failed to report. The sentence he received for violating his probation is part of his sentence for criminal sexual abuse. But the government waived the argument that this conviction rendered Padilla removable; thus we need not decide the applicability of the exception. 4 No. 04-1775 Padilla appealed the IJ’s decision to the BIA. The BIA reversed the IJ’s decision that aggravated driving under the influence and driving with a revoked license were crimes involving moral turpitude. The BIA nevertheless affirmed the order of removal, determining that obstruction of justice and sexual abuse were crimes involving moral turpitude that rendered Padilla removable under § 1182(a)(2)(A)(i). The petty-offense exception did not apply, the BIA deter- mined, because Padilla had committed more than one crime involving moral turpitude. Padilla appeals. II. Analysis Padilla’s appeal implicates the jurisdiction-stripping provision of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (IIRIRA). Under that provision, “no court shall have jurisdiction to review any final order of removal” that is based on the commission of a crime covered by § 1182(a)(2). 8 U.S.C. § 1252(a)(2)(C). Nevertheless, we retain “jurisdiction in order to determine jurisdiction,” that is, to determine whether the underlying crime was in fact a crime involving moral turpitude. See Bazan-Reyes v. INS, 256 F.3d 600, 604 (7th Cir. 2001). In determining whether a crime involves moral turpitude, we employ a “categorical” approach; that is, we determine whether a given crime necessarily involves moral turpitude by examining only the elements of the statute under which the alien was convicted and the record of conviction, not the “circumstances surrounding the particular transgression.” DeLeon-Reynoso v. Ashcroft, 293 F.3d 633, 635 (3d Cir. 2002); Nguyen v. Reno, 211 F.3d 692, 695 (1st Cir. 2000). This practice is intended to promote uniformity and avoid “the oppressive administrative burden of scrutinizing the specific conduct giving rise to criminal offenses.” Michel v. INS, 206 F.3d 253, 264 (2d Cir. 2000). Generally, a statute that encompasses both acts that do and do not involve moral turpitude cannot be the basis of a removability No. 04-1775 5 determination under the categorical approach. Hamdan v. INS, 98 F.3d 183, 187 (5th Cir. 1996). However, if the statute is “divisible,” that is, divided into “discrete subsec- tions of acts that are and those that are not” crimes involv- ing moral turpitude, then an alien convicted under a subsection that includes only crimes involving moral turpitude may be found removable. Id. In his petition for review, Padilla argues that he was improperly found removable because obstruction of justice is not a crime involving moral turpitude. He was convicted under 720 Ill. Comp. Stat. 5/31-4(a) (formerly Ill. Rev. Stat., ch. 38, § 31-4(a)), of knowingly furnishing false information “with intent to prevent the apprehension or obstruct the prosecution or defense of any person.” The information charged Padilla with giving officers a false name and driver’s license when stopped for a traffic viola- tion for the purpose of preventing his arrest for driving with a revoked license. Padilla asserts that obstruction of justice, although prohibited by law, is not inherently immoral or malum in se, and thus cannot be properly classified as a crime involving moral turpitude. He further argues that he was convicted under a subsection of a divisible statute that does not define a crime of moral turpitude, because the act of “furnishing false information” lacks an element of fraud or other evil intent. The BIA has often stated that “moral turpitude refers generally to conduct which is inherently base, vile, or depraved, and contrary to the accepted rules of morality and the duties owed between persons or to society in general,” e.g., In re Ajami, 22 I. & N. Dec. 949, 950 (BIA 1999), and reviewing courts apply essentially the same standard, e.g., Itani v. Ashcroft, 298 F.3d 1213, 1215 (11th Cir. 2002); Medina v. United States, 259 F.3d 220, 227 (4th Cir. 2001); Maghsoudi v. INS, 181 F.3d 8, 14 (1st Cir. 1999); Hamdan, 98 F.3d at 185-86. We have recently stated that a crime of moral turpitude is one that is deliberately 6 No. 04-1775 committed and “serious,” either in terms of the magnitude of the loss that it causes or the indignation that it arouses in the law-abiding public. Mei v. Ashcroft, 393 F.3d 737, 740 (7th Cir. 2004). We consider Padilla’s crime with this standard in mind. Padilla’s argument that his crime does not involve moral turpitude because it is malum prohibitum, or pro- scribed by law but not inherently immoral, has no merit. Crimes that are mala in se are those that are contrary to “a society’s basic moral prohibitions,” or “bad in themselves.” United States v. Urfer, 287 F.3d 663, 666 (7th Cir. 2002). In contrast, crimes that are mala prohibita encompass conduct that “not everyone knows is criminal.” Id. We have acknowl- edged that the distinction between crimes that involve moral turpitude and those that don’t corresponds to the distinction between crimes that are mala in se and those that are mala prohibita. Mei, 393 F.3d at 741; see also Ajami, 22 I. & N. Dec. at 950; Beltran-Tirado v. INS, 213 F.3d 1179, 1184 (9th Cir. 2000) (Acts that are mala prohibita are “not generally considered to involve ‘moral turpitude’ ”). But Padilla’s crime of obstructing justice cannot fairly be characterized as malum prohibitum, so the distinction is of no help to him. He argues that furnishing false information to police to prevent apprehension is “not inherently immoral, but becomes so because positive law expressly forbids its commission.” But the language of the statute requires that the defendant knowingly provide false information with the intent “to prevent the apprehension or obstruct the prosecution or defense of any person.” Specific intent is inconsistent with a crime that is malum prohibitum. E.g., United States v. Dyck, 334 F.3d 736, 742 (8th Cir. 2003). Padilla next argues that even if we find that his crime is not malum prohibitum, it nevertheless does not involve moral turpitude. He asserts that the subsection of the obstruction of justice statute under which he was No. 04-1775 7 convicted is divisible from the rest of the statute and does not describe a crime of moral turpitude because it does not contain an element of fraud or evil intent. Padilla’s crime lacks the element of fraud, but his crime entails other conduct that is sufficient to support a finding of moral turpitude, namely, making false state- ments and concealing criminal activity. Although it is settled that “crimes in which fraud [is] an ingredient” involve moral turpitude, see Jordan v. DeGeorge, 341 U.S. 223, 232 (1951), moral turpitude may inhere in crimes that do not contain fraud as an element. Some courts have read “fraudulent intent,” and thus moral turpitude, into conduct “the likely effect of which would be to mis- lead or conceal.” Smalley v. Ashcroft, 354 F. 3d 332, 337-38 (5th Cir. 2003); see also Goldeshtein v. INS, 8 F.3d 645, 648 (9th Cir. 1993). Crimes that do not involve fraud, but that include “dishonesty or lying as an essential element” also tend to involve moral turpitude. See Omagah v. Ashcroft, 288 F.3d 254, 262 (5th Cir. 2002); see also Itani, 298 F.3d at 1216 (“Generally a crime involving dishonesty or false state- ment is considered to be one involving moral turpitude.”). Thus, crimes that involve making false statements have been held to involve moral turpitude. E.g., Zaitona v. INS, 9 F.3d 432, 437 (6th Cir. 1993) (finding moral turpitude where alien made false statements in driver’s license application). Padilla was convicted of knowingly furnish- ing false information, a crime that specifically entails dishonesty and thus implicates moral turpitude. More- over, the information makes clear that he furnished false information to a police officer, and almost all courts have held that “intentionally deceiving the government involves moral turpitude.” Omagah, 288 F.3d at 262. Concealing criminal behavior has also been found to involve moral turpitude. Thus the crime of misprision of a felony involves moral turpitude because it “necessarily involves an affirmative act of concealment or participa- 8 No. 04-1775 tion in a felony, behavior that runs contrary to accepted social duties and involves dishonest or fraudulent activity.” Itani, 298 F.3d at 1216. An alien convicted of being an accessory after the fact to murder was held to have commit- ted a crime of moral turpitude because his actions entailed intentionally assisting the principal in avoiding detection. Cabral v. INS, 15 F.3d 193, 197 (1st Cir. 1994). Similarly, money laundering was found to involve moral turpitude where it involved “intentionally concealing the proceeds of illegal drug sales.” Smalley, 354 F.3d at 338-39. Like these crimes, Padilla’s crime entails an intent to conceal criminal activity, and his crime likewise involves moral turpitude. Moreover, contrary to Padilla’s assertion, his crime involves the “evil intent” that is associated with crimes of moral turpitude. The deliberate decision to commit a serious crime “can certainly be regarded as the mani- festation of an evil intent.” Mei, 393 F.3d at 741. Padilla’s crime was unquestionably deliberate; it was committed with the intent to “prevent the apprehension or obstruct the prosecution or defense of any person.” 720 Ill. Comp. Stat. 5/31-4(a). Given that Padilla’s crime involves furnishing false information, and requires the specific intent to conceal criminal activity, it can fairly be categorized as “contrary to justice, honesty, or morality,” De Leon-Reynoso, 293 F.3d at 633, and it thus involves moral turpitude. Therefore, Padilla is inadmissible under § 1182(a)(2)(A)(i) and we lack jurisdiction to review the order of removal. Because we find that the Illinois crime of obstruct- ing justice is a crime involving moral turpitude, we DISMISS the petition for lack of jurisdiction. No. 04-1775 9 A true Copy: Teste: ________________________________ Clerk of the United States Court of Appeals for the Seventh Circuit USCA-02-C-0072—2-22-05

01-03-2023

09-24-2015

https://www.courtlistener.com/api/rest/v3/opinions/3509533/

1 Reported in 225 N.W. 926. Mandamus to compel a change of the place of trial from the county of Steele to the county of Hennepin of four separate actions brought in the county of Steele by four different plaintiffs against Frank McDonald and Henry Mullenmeister. The proceedings in each case are precisely the same; the only question is whether they were sufficient to effect the change. Plaintiffs oppose the change on the ground that the affidavits are insufficient to authorize it, and on the further ground that defendants failed to pay the required fee to the clerk. The statute provides: "No civil action, appeal, or proceeding shall be entered with the clerk of the district court until the person desiring such entry shall deposit with such clerk the sum of three dollars on account of fees in the case." G. S. 1923 (2 Mason, 1927) § 6991. In State ex rel. Bondy v. Ryberg, 169 Minn. 260, 211 N.W. 11, it was held under a similar statute that in order to effect a change of venue the deposit fee must be paid within the prescribed time. As no deposit fee has been paid in these cases no change of venue was effected, and the writ is discharged. *Page 618

01-03-2023

07-05-2016

https://www.courtlistener.com/api/rest/v3/opinions/4555618/

Nebraska Supreme Court Online Library www.nebraska.gov/apps-courts-epub/ 08/14/2020 08:08 AM CDT - 429 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 State of Nebraska, appellee, v. Jason D. Devers, appellant. ___ N.W.2d ___ Filed July 10, 2020. No. S-19-629. 1. Pretrial Procedure: Appeal and Error. Trial courts have broad dis- cretion with respect to sanctions involving discovery procedures, and their rulings thereon will not be reversed in the absence of an abuse of discretion. 2. Appeal and Error. Appellate courts do not generally consider argu- ments and theories raised for the first time on appeal. 3. Trial: Waiver: Appeal and Error. Failure to make a timely objection waives the right to assert prejudicial error on appeal. 4. Rules of Evidence. In proceedings where the Nebraska Evidence Rules apply, the admissibility of evidence is controlled by the Nebraska Evidence Rules; judicial discretion is involved only when the rules make discretion a factor in determining admissibility. 5. Trial: Evidence: Appeal and Error. A trial court’s determination of the relevancy and admissibility of evidence must be upheld in the absence of an abuse of discretion. 6. Trial: Evidence. Balancing the probative value of evidence against the danger of unfair prejudice is within the discretion of the trial court. 7. ____: ____. Evidence that is irrelevant is inadmissible. 8. Evidence. Relevancy requires only that the probative value be some- thing more than nothing. 9. Rules of Evidence. Under Neb. Rev. Stat. § 27-403 (Reissue 2016), relevant evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice. 10. Evidence: Words and Phrases. Unfair prejudice means an undue tend­ ency to suggest a decision based on an improper basis. 11. ____: ____. Unfair prejudice speaks to the capacity of some concededly relevant evidence to lure the fact finder into declaring guilt on a ground - 430 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 different from proof specific to the offense charged, commonly on an emotional basis. 12. Evidence: Corroboration: Testimony. Evidence may be relevant because it corroborates other testimony. 13. Criminal Law: Evidence. The State is allowed to present a coherent picture of the facts of the crimes charged, and it may generally choose its evidence in so doing. 14. Evidence. Most, if not all, evidence offered by a party is calculated to be prejudicial to the opposing party. 15. Jury Instructions. In construing an individual jury instruction, the instruction should not be judged in artificial isolation but must be viewed in the context of the overall charge to the jury considered as a whole. 16. Evidence: Words and Phrases. Circumstantial evidence is not inher- ently less probative than direct evidence. 17. Verdicts: Appeal and Error. Harmless error review looks to the basis on which the trier of fact actually rested its verdict; the inquiry is not whether in a trial that occurred without the error, a guilty verdict surely would have been rendered, but, rather, whether the actual guilty verdict rendered in the questioned trial was surely unattributable to the error. 18. Convictions: Evidence: Appeal and Error. In reviewing a criminal conviction for a sufficiency of the evidence claim, whether the evidence is direct, circumstantial, or a combination thereof, the standard is the same: An appellate court does not resolve conflicts in the evidence, pass on the credibility of witnesses, or reweigh the evidence; such matters are for the finder of fact. The relevant question for an appellate court is whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential ele- ments of the crime beyond a reasonable doubt. 19. Criminal Law: Aiding and Abetting: Intent: Other Acts. One who intentionally aids and abets the commission of a crime may be respon- sible not only for the intended crime, if it is in fact committed, but also for other crimes which are committed as a natural and probable conse- quence of the intended criminal act. 20. Effectiveness of Counsel: Appeal and Error. In reviewing claims of ineffective assistance of counsel on direct appeal, an appellate court decides only whether the undisputed facts contained within the record are sufficient to conclusively determine whether counsel did or did not provide effective assistance and whether the defendant was or was not prejudiced by counsel’s alleged deficient performance. 21. ____: ____. When a defendant’s trial counsel is different from his or her counsel on direct appeal, the defendant must raise on direct appeal any - 431 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 issue of trial counsel’s ineffective performance which is known to the defendant or is apparent from the record. 22. ____: ____. Once issues of trial counsel’s ineffective performance are properly raised, the appellate court will determine whether the record on appeal is sufficient to review the merits of the ineffective perform­ ance claims. 23. Effectiveness of Counsel: Postconviction: Records: Appeal and Error. In order to know whether the record is insufficient to address assertions on direct appeal that trial counsel was ineffective, appellate counsel must assign and argue deficiency with enough particularity (1) for an appellate court to make a determination of whether the claim can be decided upon the trial record and (2) for a district court later review- ing a petition for postconviction relief to be able to recognize whether the claim was brought before the appellate court. 24. Effectiveness of Counsel: Proof: Appeal and Error. When a claim of ineffective assistance of trial counsel is raised in a direct appeal, the appellant is not required to allege prejudice; however, an appellant must make specific allegations of the conduct that he or she claims constitutes deficient performance by trial counsel. Appeal from the District Court for Douglas County: Timothy P. Burns, Judge. Affirmed. Michael J. Wilson, of Berry Law Firm, for appellant. Douglas J. Peterson, Attorney General, and Austin N. Relph for appellee. Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, Papik, and Freudenberg, JJ. Per Curiam. I. INTRODUCTION Jason D. Devers appeals from convictions, pursuant to a jury verdict, for first degree felony murder and use of a firearm to commit a felony. We find no merit in his claims regarding the termination of a witness’ deposition, admission of controlled substance and firearm evidence, and sufficiency of the evi- dence to support his intentions to commit robbery and use a - 432 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 firearm. Further, he asserts 13 claims of ineffective assistance of trial counsel, but the three that we reach on direct appeal lack merit. We affirm. II. BACKGROUND In the early morning hours of January 6, 2018, Kyle LeFlore was shot and killed outside of Reign Lounge, a bar and night- club in Omaha, Nebraska. Following an investigation, Devers was arrested. The State filed an information charging him with first degree felony murder, 1 use of a deadly weapon to commit a felony, 2 and possession of a deadly weapon by a prohib- ited person. 3 Before delving into the proceedings, a brief summary of the surrounding events is necessary. In accordance with our stan- dard of review, we synopsize them in the light most favorable to the State. On the evening of January 5, 2018, Devers and Larry Goynes went to Reign Lounge. At some point during the evening, Devers told Goynes that he knew of a “lick” (target for robbery). Sometime past midnight, Devers and Goynes left and sat in Devers’ vehicle in the parking lot. Goynes received a message that LeFlore was leaving. Goynes got out of the vehicle, and Devers drove off. Goynes attempted to rob LeFlore, but LeFlore fought back. Goynes shot LeFlore and stole his jewelry. Later that morning, LeFlore died. After shooting LeFlore, Goynes ran down the street to where Devers had moved his vehicle and got in. Following an inves- tigation, law enforcement authorities suspected Devers and Goynes of the murder. During several searches pursuant to warrants, the authorities found a firearm linked to Devers and Goynes and found controlled substances and ammunition in Devers’ home. 1 Neb. Rev. Stat. § 28-303(2) (Cum. Supp. 2018). 2 Neb. Rev. Stat. § 28-1205(1)(a) and (c) (Reissue 2016). 3 Neb. Rev. Stat. § 28-1206(1)(a) and (3)(b) (Supp. 2017). - 433 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 1. Pretrial (a) Motions in Limine (i) Piya Milton’s Deposition Prior to trial, Devers moved to take the deposition of Piya Milton, a witness for the State. The district court granted the motion and ordered that it take place on August 9, 2018. It entered a similar order in a companion case pertaining to Latiba Lemon. At the deposition, with Devers’ counsel present, Milton refused to answer questions, claiming that her life would be in danger if she did. The court was asked to intervene. After Milton informed the court of her belief, the court ordered the deposition to be discontinued and appointed counsel for Milton. The court stated that after Milton received counsel, Devers would be free to file another motion to take Milton’s deposition. At that time, the State indicated that it would not object. Instead of filing another motion to depose Milton, Devers filed a motion in limine asking the court to prohibit the State from calling Milton as a witness, based upon her refusal to cooperate at the deposition. The court’s order overruling the motion recounted the events and reiterated that Devers was free to file an additional motion to take Milton’s deposition. Devers did not do so. (ii) Firearms and Controlled Substances Devers filed a separate motion in limine to prohibit the introduction of several items of evidence, including “[a]ny evidence regarding firearms that were recovered and alleged to have been used in the homicide of . . . Le[F]lore [and a]ny evidence regarding [controlled substances] that were recov- ered from [Devers’] residence on January 6, 2018, pursuant to search warrant.” - 434 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 The district court overruled the motion in limine regard- ing the evidence related to a firearm, stating that it “[could not] make a pretrial ruling on it because it’ll depend on how the evidence comes in.” The State argued that the evidence regarding controlled substances found in Devers’ home was relevant to corroborate the testimony of a jailhouse informant. Regarding the controlled substances, the court took the matter under advisement. (b) Motion to Dismiss Devers filed a pro se motion to dismiss, alleging a violation of his rights to a speedy trial under Neb. Rev. Stat. §§ 29-1207 and 29-1208 (Reissue 2016) and under the Sixth Amendment to the U.S. Constitution. The court overruled his motion. The court’s order discussed the respective claims. Regarding the statutory claim, the court calculated that Devers’ motion for discovery, motion to take Milton’s deposi- tion, and requested continuance resulted in 108 days of exclud- able time. This, the court explained, extended Devers’ trial date several months beyond the date on which he had filed his motion to dismiss. It noted that Devers’ motion for discovery alone, which excluded only 4 days, was sufficient to defeat his motion to dismiss. As to the constitutional claim, the court applied the bal- ancing test from State v. Johnson. 4 It noted that Devers’ trial was scheduled to begin less than a year from the date of the offense. Devers’ counsel, the court explained, “has done any- thing any other criminal defense attorney would have done.” It reasoned that “if Devers’ counsel was not allowed the time to properly prepare for trial, Devers, in the event he was con- victed, would [argue] later in a postconviction motion that he did not receive the effective assistance of counsel.” The court found that Devers had not shown unreasonable delay in bring- ing him to trial, or that he was prejudiced. 4 State v. Johnson, 298 Neb. 491, 904 N.W.2d 714 (2017). - 435 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 2. Trial (a) Reign Lounge Events We now summarize the evidence presented at trial regarding the events of January 5 and 6, 2018, relevant to the assign- ments of error asserted on appeal. (i) Milton Prior to discussing the incident, Milton testified that she had been diagnosed with bipolar depression and, on the night of the incident, was on medication. We now summarize her testimony regarding the events that night. On the evening of January 5, 2018, Milton drove herself and two friends to Reign Lounge. Around 10:15 p.m., they arrived. They left their jackets in Milton’s vehicle, and she gave her car keys to one of her friends. At about 1 o’clock the following morning, Milton had an altercation with another woman. A security guard “pick[ed] [her] up and took [her] out” of the club. The guard refused to allow Milton to retrieve her car keys. She was then outside for 15 to 20 minutes in below-zero temperatures without her jacket or keys. While Milton was outside, she heard a man calling her name. The man got out of the passenger’s seat of a maroon sport util- ity vehicle (SUV), walked toward her, asked if she remembered him, and said he knew her child’s father. After Milton talked to the man, he invited her to warm up in his vehicle. Milton got into the vehicle and sat behind the passenger’s seat. She described the vehicle as “a maroon truck” that was a smaller SUV than her vehicle. Once in the maroon SUV, the man sat in the passenger’s seat, and there was another man in the driver’s seat. The man in the passenger’s seat identified himself as “Ratchet.” She described Ratchet as “heavyset, low cut, brown skin.” Milton identified a picture of Goynes in evidence as depicting Ratchet. She described the driver as “a dark skin dude with a black coat on with braids, or dreads.” She identified the driver as Devers. - 436 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 After Goynes and Milton discussed why she had been kicked out of the club, he showed her a black gun. According to Milton, “[i]t was readily apparent that he was armed with a firearm” and “[h]e had it out the whole time.” Around 1:55 a.m., Goynes received a call or text message; said, “‘Right now, right now’”; and jumped out of the maroon SUV. After Goynes jumped out, Devers drove away. At that point, Milton asked to leave the vehicle, and Devers said, “‘You can’t go out right now.’” Devers drove for a while and then parked by “a whole bunch of trees.” Devers and Milton remained parked for about 20 minutes. While they were parked, Devers identified himself as “‘Little Pockets.’” Milton asked to be returned to Reign Lounge, and Devers stated, “‘We can’t go over there right now.’” After another 10 minutes, Milton saw Goynes running to the maroon SUV. Once Goynes was in the vehicle, Devers asked, “‘What did you get?’” Goynes responded, “‘He really didn’t have nothing.’” Milton testified that “[Goynes] said that [LeFlore] wouldn’t give up nothing so [Goynes] had to shoot him.” Devers asked, “‘You didn’t get nothing?’” In response, Goynes held up “these little chains,” and Devers asked, “‘Can I get one?’” Devers took one of the chains and put it around his neck. Milton stated that she did not know which chain Devers took but that she knew one chain had a cross on it. Devers then drove off, and Milton asked to be taken back to Reign Lounge. Devers responded, “‘No. I can’t go over there.’” Devers drove them to Lemon’s home and told Goynes to “go in there and hide something, take his clothes off and go take a bath, or something like that.” Devers further told Goynes, “‘I’ll get rid of something for you,’” but Milton was unsure what it was. Goynes got out of the vehicle and did not come back. Devers then drove Milton back to Reign Lounge. While he dropped her off, she put his cell phone number in her own cell phone under the name “Pockets.” Due to police presence, - 437 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 Milton was unable to retrieve her vehicle. Milton called Devers, and he picked up Milton and her friends. After Devers dropped off Milton’s friends at home, he drove Milton to his home to sell her marijuana and then drove her home. Several days after the incident, Milton communicated with a family member of LeFlore’s. LeFlore’s family recorded the conversation. Five days after the events, a homicide detective interviewed Milton. Milton signed a consent form allowing the police to search her cell phone. (ii) Marvin Stockdale Marvin Stockdale, a jailhouse informant, testified about conversations he had with Devers in the Douglas County Correctional Center. Stockdale informed the jury that he was interviewed by law enforcement as a jailhouse informant in two cases, one of which pertained to Devers. At the time of trial, Stockdale was facing several charges and potential imprisonment of 73 years. After becoming Stockdale’s cellmate, Devers discussed the incident with Stockdale. At or near the time of the conversation with Devers, Stockdale took notes. At trial, Stockdale’s notes were read verbatim to the jury. Here, we briefly summarize his testimony. Devers told Stockdale that on the evening of the incident, he started out at a gas station selling “ecstasy pills” to some “girls.” The girls were heading to Reign Lounge, and Devers told them he would be there later. Devers went to Reign Lounge with Goynes. When Devers arrived at Reign Lounge, he found the girls from the gas station. He explained that “the Army dude” offered to buy the girls drinks and that the girls then started talking to “the Army dude.” Devers said that he felt it was rude the girls stopped pay- ing attention to him and that he went looking for Goynes. Devers found Goynes and told Goynes that “he had a lick for him.” Stockdale explained that a “lick” means a target for rob- bery. Goynes asked, “‘Where?’” Devers pointed to “the Army - 438 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 dude,” who, Devers said, had a “big wad of cash.” Devers told Goynes that he did not care about the money and that he just wanted “the Army dude[’s]” jewelry. Devers said, “‘I just didn’t think my little cousin stupid ass would kill him. . . . I told him to shoot if he act up, but damn.’” Devers then jumped forward in the story and said that he picked up Goynes “on the corner.” Devers stated that he was in the driver’s seat and that Milton was in the back seat. Devers explained that Milton got into his vehicle because it was cold outside. Stockdale testified that he did not know Milton and had never had a conversation with her. (iii) Michael Sullivan Michael Sullivan, another jailhouse informant, testified regarding conversations he had with Devers in the Douglas County Correctional Center. Sullivan explained that he did not prod for information; rather, Devers just kept talking. Sullivan also took notes of these conversations. After a month of their being in jail together, Devers told Sullivan about his charges. Sullivan said, “‘They must think you’re the shooter.’” Devers responded, “‘No. I was the driver.’” A few weeks later, after Devers returned from a meeting with his counsel, he and Sullivan discussed Devers’ case again. Devers stated that he was going to trial and that the main wit- ness was his “brother’s baby’s mom,” because she overheard him talking about a “lick.” Sullivan testified that he understood a “lick” to mean a robbery of a drug dealer. During their last conversation, Devers told Sullivan, “‘I was selling “X” at the club. I was walking around with baggies in my hand. I think they got me on camera. I’m pretty sure they did. They got me on camera, so they got me.’” (b) Search of Devers’ Home At trial, evidence was presented regarding controlled sub- stances found during a search of Devers’ home. We summarize that evidence. - 439 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 (i) Aaron Hanson Aaron Hanson, a sergeant of the Omaha Police Department, testified about the search. Hanson obtained a search warrant for a North 40th Street residence in Omaha (Devers’ home). The warrant authorized law enforcement to search for firearms and narcotics. On the evening of January 6, 2018, Hanson and other offi- cers executed the search warrant. At that time, four individuals were at the home, including Kenvaughn Glass. Law enforce- ment did not find a firearm but found 9-mm and .22-caliber ammunition. Before the State could present evidence of narcotics found during the search, Devers renewed his motion in limine. The district court overruled the renewed motion, granted Devers a continuing objection, and gave the following limiting instruc- tion to the jury: Members of the jury, this evidence of the seized con- trolled substance, marijuana, located at [Devers’ home] is received for the limited purpose of the potential or the possibility of corroborating the testimony of . . . Milton or a later witness . . . Stockdale. You must consider the evidence only for that limited purpose and no other. Hanson testified that during the search, law enforcement found synthetic marijuana, methamphetamine, and drug pack- aging materials. (ii) Jailhouse Informants Stockdale stated that Devers discussed the search of his home. Devers stated that law enforcement found “some drugs.” Stockdale did not remember what kind of drugs Devers said were found. Sullivan stated that Devers discussed the search. According to Sullivan, Devers stated that law enforcement found “K-2.” Sullivan explained that “K-2” is synthetic marijuana. - 440 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 (iii) Patricia Smith Patricia Smith, the mother of Devers’ children, testified at trial. She testified that in January 2018, she lived at the same address as Devers’ home. At the time, Devers, who had his own set of keys, was staying at the house because Smith’s 7-month-old child had been admitted to the hospital. Smith stated that she did not know that narcotics, firearms, or ammu- nition were in her home. Smith additionally testified that Devers was a “family per- son who spen[t] a lot of time with . . . his family” and that Kenvaughn came over to her home often. (c) Search at Benson Towers At trial, the State also presented evidence regarding a fire- arm linked to the murder. (i) Chae Glass Chae Glass, a juvenile detention specialist at the Douglas County Youth Center, testified regarding a firearm that was found at Benson Towers. Chae was an adopted cousin of LeFlore’s and a maternal uncle to Kenvaughn and Shydale Glass. Devers is a paternal uncle to Kenvaughn and Shydale. On January 6, 2018, Shydale established contact with Chae. Chae picked up Shydale and drove him to Chae’s sister’s home. On their way, Shydale told Chae to stop and pick up Kenvaughn. While in his sister’s home, Chae saw Kenvaughn and Shydale in the bathroom wiping down a firearm with a T-shirt. Chae described the firearm as a chrome and black handgun. After the bathroom observation, Chae did not see either Shydale or Kenvaughn with the firearm. But he stated, “[T]here was a lot of, you know, interchanging going on under the shirt, you know what I’m saying, hiding it.” Chae then drove Kenvaughn and Shydale to Benson Towers. Once at Benson Towers, Chae dropped off Kenvaughn and Shydale and drove a couple of blocks away to make a call - 441 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 to the 911 emergency dispatch service. Chae instructed the police to pull him over. (ii) Hanson Hanson testified about a search of an apartment at Benson Towers that led to the seizure of a firearm linked to the murder. On January 6, 2018, at the end of Hanson’s shift, he received information that led him to Benson Towers. Hanson became aware that Kenvaughn and Devers were related. Hanson began looking for a familial connection to Kenvaughn at Benson Towers. Based upon information from other officers, Hanson found that Kenvaughn was related to Wendy Williams, a Benson Towers resident. The next morning, Hanson and other officers went to Williams’ apartment in Benson Towers for a “knock and talk,” and at the apartment, Williams’ roommate answered the door and allowed law enforcement to enter. Shanequa Dismuke was also present. During the “knock and talk,” Hanson found unlawful items and another officer drafted a search war- rant affidavit. Law enforcement received a warrant and was allowed to search for narcotics and firearms. During the search, law enforcement personnel found and opened a safe. Hanson testi- fied that they found two 9-mm firearms and multiple packages of marijuana. At trial, after Hanson disclosed the contents of the safe, a sidebar was held and the court explained that the testimony must be limited to the firearm that was found wrapped in a T-shirt. Devers renewed his motion in limine and requested a continuing objection. The court granted the continuing objection. Hanson clarified that one of the 9-mm firearms belonged to Dismuke and that the other was found wrapped in a T-shirt. He confirmed that the 9-mm ammunition seized from Devers’ home could be fired by the T-shirt-wrapped firearm found at Benson Towers. - 442 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 3. Final Jury Instructions The final jury instructions contained a specific instruction regarding the evidence of controlled substances found during the search of Devers’ home: “The evidence of the seized con- trolled substances located at [Devers’ home] was received for the limited purpose of the potential or the possibility of cor- roborating the testimony of . . . Milton, . . . Stockdale, and . . . Sullivan. You must consider this evidence only for that limited purpose, and no other.” 4. Verdict and Sentences The jury found Devers not guilty of possession of a deadly weapon by a prohibited person. The jury found him guilty of first degree felony murder and use of a deadly weapon to com- mit a felony. The district court sentenced Devers to life impris- onment for first degree murder and 5 to 5 years’ imprisonment for use of a deadly weapon. The sentences imposed were to run consecutively. Devers filed a timely appeal, in which he is represented by different counsel than at trial. III. ASSIGNMENTS OF ERROR Devers assigns, reordered and restated, that the district court (1) abused its discretion when it terminated the deposition of Milton and overruled his motion in limine to exclude Milton’s testimony and (2) erred in admitting irrelevant and unfairly prejudicial testimony regarding (a) the controlled substances found during a search of his home and (b) the firearm found at Benson Towers. He also assigns that (3) the evidence was insufficient to convict him of first degree felony murder and use of a deadly weapon, because a trier of fact could not find (a) that Devers knew in advance that Goynes intended to rob LeFlore and (b) that Devers knew in advance that Goynes intended to use a firearm. - 443 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 In compliance with our decision in State v. Mrza, 5 Devers assigned 13 claims of ineffective assistance of trial counsel. Twelve claims asserted trial counsel performed deficiently by failing to •  “object to the trial court’s erroneous limiting instruction regarding the drug testimony by Hanson”; •  “submit evidence in support of [Devers’ pro se] motion [to dismiss on constitutional speedy trial grounds] and . . . file an interlocutory appeal of the trial court’s order denying dismissal”; •  “present testimony from Corrections Officer Hall, who would have testified that Devers resisted having Stockdale as a cellmate because Devers knew Stockdale would use the cell assignment as an opportunity to fabricate incriminating state- ments by Devers”; •  “present testimony from Joequana Goynes, . . . Lemon, and Teosha Valentine, who would have testified that Milton admitted (1) that Devers did not knowingly aid in the rob- bery, (2) that prosecutors coached her testimony, and (3) that prosecutors threatened prosecution of Milton if she did not comply”; •  “present testimony from . . . Sullivan’s father, Michael Sullivan, Sr., who would have testified that Sullivan admit- ted to him that he lied to police about his conversations with Devers, and that he received off-the-record promises of leni- ency in exchange for testifying”; •  “present testimony from Corey Finley, who would have tes- tified that he observed Devers in the area of 25th and Fort Streets at the time of the shooting”; •  “present testimony from Emmanuel Jackson and Kaleena Johnson, who both would have testified that . . . Stockdale admitted that he lied to police about his conversations with Devers, and that he received off-the-record promises of leni- ency in exchange for testifying”; 5 State v. Mrza, 302 Neb. 931, 926 N.W.2d 79 (2019). - 444 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 •  “investigate or present testimony from Kenvaughn and Shydale . . . , who both would have testified that the handgun seen in their possession by Chae . . . had no connection to Devers or Goynes, and that they were coerced into remain- ing silent”; •  “obtain or present the recording of Milton made by LeFlore’s family members on January 11, 2019”; •  “consult or call as a witness an expert in pharmacology who would have testified that, on both January 6, 2018 and at the time of trial, Milton’s prescriptions affected her ability to both accurately form and recall memories”; •  “consult with, or call as a witness, an independent telecom- munications expert because he or she would have testified that the cell phone evidence did not support the State’s theory as to Devers’ and Milton’s movements on January 5-6, 2019, but instead was either inconclusive or directly refuted Special Agent Kevin Hoyland’s testimony and demonstrative exhibit”; and •  “investigate and bring to the attention of the trial court and/or the jury the prosecutors’ use of malicious prosecution tactics against . . . Smith to coerce her testimony against Devers.” The last claim asserted that trial counsel “not only . . . pro- vided unreasonable advice that Devers should waive his right to testify, but . . . interfered with Devers’ freedom to decide whether to testify by telling Devers he must abide by [coun- sel’s] advice not to testify.” IV. ANALYSIS 1. Deposition Sanctions (a) Standard of Review [1] Trial courts have broad discretion with respect to sanc- tions involving discovery procedures, and their rulings thereon will not be reversed in the absence of an abuse of discretion. 6 6 State v. Sierra, 305 Neb. 249, 939 N.W.2d 808 (2020). - 445 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 (b) Discussion Devers argues that the district court abused its discretion when it terminated Milton’s deposition and denied Devers’ motion in limine to exclude her as a witness. He contends that there are no rules governing depositions that allow a party to bring the trial judge to terminate the deposition. He further contends that because Milton refused to testify at the depo- sition, the court abused its discretion in denying the motion in limine. [2,3] Devers’ first argument—concerning the lack of dis- covery rules allowing a judge to terminate a deposition—was not raised to the district court. Appellate courts do not gener- ally consider arguments and theories raised for the first time on appeal. 7 And, as noted by the State, when the district court terminated the deposition, Devers failed to object. Failure to make a timely objection waives the right to assert prejudicial error on appeal. 8 Because Devers failed to object to the termi- nation of the deposition and did not raise the termination argu- ment during his motion in limine hearing, we will not address this argument. Regarding Devers’ second argument, the district court entered an order in compliance with its statutory powers. Pursuant to a criminal discovery statute, Devers filed a motion to take Milton’s deposition. 9 During the deposition, Milton refused to answer questions over concerns for her safety and the district court terminated the deposition. Under another criminal discovery statute, when a party fails to comply with criminal discovery procedures, including the statute authorizing depositions, “the court may” 10 either “[p]rohibit the party from calling a witness not disclosed or introducing in evidence the 7 State v. Uhing, 301 Neb. 768, 919 N.W.2d 909 (2018). 8 State v. Swindle, 300 Neb. 734, 915 N.W.2d 795 (2018). 9 See Neb. Rev. Stat. § 29-1917 (Reissue 2016). 10 Neb. Rev. Stat. § 29-1919 (Reissue 2016). - 446 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 material not disclosed” 11 or “[e]nter such other order as it deems just under the circumstances.” 12 In the district court’s order, it specifically stated that “Devers [was] free to file an additional motion to take [Milton’s] deposition . . . .” Because the court’s order was entered in November 2018 and trial occurred in March 2019, significant time remained in which to depose Milton again. Under these circumstances, we agree with the district court that authorizing a second deposition was a sufficient remedy. Accordingly, the district court did not abuse its discretion in denying Devers’ motion in limine. 2. Relevancy and Unfair Prejudice (a) Standard of Review [4-6] In proceedings where the Nebraska Evidence Rules apply, the admissibility of evidence is controlled by the Nebraska Evidence Rules; judicial discretion is involved only when the rules make discretion a factor in determining admis- sibility. 13 A trial court’s determination of the relevancy and admissibility of evidence must be upheld in the absence of an abuse of discretion. 14 Balancing the probative value of evidence against the danger of unfair prejudice is within the discretion of the trial court. 15 (b) Discussion Because both of Devers’ assignments asserting error in the admission of evidence are based on relevancy and unfair preju- dice, we recall general applicable principles. [7,8] Evidence that is irrelevant is inadmissible. 16 “Relevant evidence means evidence having any tendency to make the 11 § 29-1919(3). 12 § 29-1919(4). 13 State v. Lierman, 305 Neb. 289, 940 N.W.2d 529 (2020). 14 State v. Carpenter, 293 Neb. 860, 880 N.W.2d 630 (2016). 15 State v. Thomas, 303 Neb. 964, 932 N.W.2d 713 (2019). 16 Neb. Rev. Stat. § 27-402 (Reissue 2016); State v. Brown, 302 Neb. 53, 921 N.W.2d 804 (2019). - 447 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 existence of any fact that is of consequence to the deter­ mination of the action more probable or less probable than it would be without the evidence.” 17 Relevancy requires only that the probative value be something more than nothing. 18 [9-11] Under Neb. Rev. Stat. § 27-403 (Reissue 2016), relevant evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice. 19 Unfair prejudice means an undue tendency to suggest a deci- sion based on an improper basis. 20 Unfair prejudice speaks to the capacity of some concededly relevant evidence to lure the fact finder into declaring guilt on a ground different from proof specific to the offense charged, commonly on an emo- tional basis. 21 (i) Controlled Substances Devers makes two arguments concerning the admission of controlled substances seized from the search of his home. Neither is persuasive. First, he argues that evidence of methamphetamine, syn- thetic marijuana, and packaging materials had little to no probative value. Second, he argues that the minimal probative value of the drug evidence was substantially outweighed by the danger that the jury believed him to be a “trafficker of danger- ous narcotics.” 22 And, he asserts, the court’s attempt to cure the problem by means of a contemporaneous limiting instruction did not encompass all of the target evidence, and consequently, he “suffered the full prejudicial effects of this wrongly admit- ted evidence.” 23 We disagree. 17 Neb. Rev. Stat. § 27-401 (Reissue 2016). 18 State v. Brown, supra note 16. 19 Id. 20 Id. 21 Id. 22 Brief for appellant at 19. 23 Id. at 20. - 448 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 [12,13] Contrary to Devers’ first argument, the admission of the testimony regarding controlled substances was relevant to corroborate the testimony of Milton, Stockdale, and Sullivan. We have recognized that evidence may be relevant because it corroborates other testimony. 24 This follows from a broader principle: The State is allowed to present a coherent picture of the facts of the crimes charged, and it may generally choose its evidence in so doing. 25 Hanson testified that during the search of Devers’ home, law enforcement seized synthetic marijuana, methamphetamine, and packaging materials. Milton testified that on the night of the incident, she purchased marijuana from Devers. Stockdale testified that during his conversations with Devers, Devers stated that his house was searched and that drugs were found. And Devers told Sullivan that law enforce- ment seized “K-2” from Devers’ home. The evidence was relevant to corroborate the testimony of an eyewitness and jail- house informants. In other words, the evidence had substantial probative value to corroborate both Milton’s testimony that she was with Devers the night of the incident and Devers’ state- ments to Stockdale and Sullivan about the incident. [14,15] Nor was the evidence’s probative value substan- tially outweighed by unfair prejudice. Most, if not all, evi- dence offered by a party is calculated to be prejudicial to the opposing party. 26 But the court’s limiting instruction restricted the use of the evidence only to corroborate the testimony of Milton, Stockdale, and Sullivan. Although the court’s initial limiting instruction, given contemporaneously with Hanson’s testimony, referred only to evidence of “marijuana,” the court’s final jury instructions broadly encompassed the “evidence of seized controlled substances located at [Devers’ home].” In construing an individual jury instruction, the instruction should not be judged in artificial isolation but must be viewed 24 See State v. Freemont, 284 Neb. 179, 817 N.W.2d 277 (2012). 25 Id. 26 State v. Thomas, supra note 15. - 449 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 in the context of the overall charge to the jury considered as a whole. 27 Here, the situation resembled that in another case where we said, “The district court’s limiting instruction restricted the jury’s use of the evidence and minimized the tendency to suggest a decision on an improper basis.” 28 Based on the limiting instructions, taken as whole, we cannot say that the district court abused its discretion in admitting the evidence of controlled substances. (ii) Firearm Devers makes two arguments concerning the admission of the firearm seized at Benson Towers. First, he argues that the firearm evidence had minimal probative value and was substantially outweighed by the danger of unfair prejudice, because “the State introduced little, if any, evidence establish- ing a direct connection between Devers and the handgun . . . at the Benson Towers.” 29 Second, he argues that the prosecutor elicited testimony from Hanson about “‘multiple packages of marijuana’” found in the safe that served only to confuse the issues and unfairly prejudice Devers. 30 To support the first argument, Devers relies upon State v. Sellers. 31 There, the defendant argued that the district court should have admitted the evidence of a handgun seized during the search of the victim. After unsuccessful attempts to serve the victim with a subpoena, the victim was arrested. At the home where the arrest occurred, law enforcement conducted a search and seized several items, including firearms. The district court granted the State’s motion in limine to exclude admission of firearm evidence. On appeal, we reasoned that the proba- tive value of the firearms seized at the arrest was minimal. 27 State v. Ely, 295 Neb. 607, 889 N.W.2d 377 (2017). 28 See State v. Perrigo, 244 Neb. 990, 1001, 510 N.W.2d 304, 311 (1994). 29 Brief for appellant at 28. 30 Id. 31 State v. Sellers, 279 Neb. 220, 777 N.W.2d 779 (2010). - 450 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 There was no proof linking the victim to the handgun, and law enforcement personnel testified that they could not place the handgun as having been in the victim’s possession. We con- cluded that the minimal probative value was outweighed by the danger of prejudice. Here, however, the State relied upon circumstantial evidence to connect Devers to the firearm seized at Benson Towers. Milton stated that after the incident, Devers drove Goynes to Lemon’s house and that Devers told Goynes that Devers would get rid of something for Goynes. It was known that Devers spent a lot of time with family, including Kenvaughn. The next day, Chae picked up Kenvaughn and Shydale and took them to their mother’s home. Chae saw them wipe down a firearm with a T-shirt. Chae then drove Kenvaughn and Shydale to Benson Towers. Later that evening, Kenvaughn was at Devers’ home when law enforcement executed the search warrant. The following morning, law enforcement received a search war- rant for an apartment with a family connection to Kenvaughn and Shydale. Law enforcement seized a handgun wrapped in a T-shirt. Milton described the handgun as black, Chae described the handgun as chrome and black, and Hanson stated that the ammunition found at Devers’ home could be fired by the hand- gun found at Benson Towers. [16] Devers contends that the circumstantial nature of the firearm evidence had minimal probative value and therefore prejudiced him. Circumstantial evidence is not inherently less probative than direct evidence. 32 Unlike the situation in Sellers, the temporal proximity from the shooting to the seizure of the firearm increased the probative value of the cir- cumstantial evidence. 33 And, here, the evidence of the firearm was relevant to the crimes charged. We cannot say that the circumstantial evidence of the firearm was substantially out- weighed by the danger of unfair prejudice. Accordingly, the 32 See State v. Thelen, 305 Neb. 334, 940 N.W.2d 259 (2020). 33 See State v. Sellers, supra note 31. - 451 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 district court did not abuse its discretion in admitting evidence of the firearm. [17] Regarding Devers’ second argument, assuming with- out deciding that admission of the statement about “multiple packages of marijuana” seized in the safe with the firearm was error, we conclude the error was harmless. Harmless error review looks to the basis on which the trier of fact actually rested its verdict; the inquiry is not whether in a trial that occurred without the error, a guilty verdict surely would have been rendered, but, rather, whether the actual guilty verdict rendered in the questioned trial was surely unattributable to the error. 34 In the entirety of the trial, the challenged testimony represented only a single isolated statement. Here, the guilty verdicts were surely unattributable to this sole reference. Any error in admitting that evidence was harmless. 3. Sufficiency of Evidence (a) Standard of Review [18] In reviewing a criminal conviction for a sufficiency of the evidence claim, whether the evidence is direct, circum- stantial, or a combination thereof, the standard is the same: An appellate court does not resolve conflicts in the evidence, pass on the credibility of witnesses, or reweigh the evidence; such matters are for the finder of fact. The relevant question for an appellate court is whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. 35 (b) Discussion (i) Intent to Commit Robbery Devers argues that the jury could not have found him guilty of first degree felony murder, because there was insufficient 34 State v. Dady, 304 Neb. 649, 936 N.W.2d 486 (2019). 35 State v. Montoya, 305 Neb. 581, 941 N.W.2d 474 (2020). - 452 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 evidence to support that Devers “‘intended that the crime be committed[,] or [Devers] knew that the other person intended to commit the crime[,] or [Devers] expected the other person to commit the crime.’” 36 He contends that Milton’s testimony was not credible because a security guard did not identify Devers as the driver of the vehicle and that video surveil- lance footage inside Reign Lounge “did not confirm many of Stockdale’s claims.” 37 This, however, merely invites us to pass on credibility or reweigh the evidence. We decline to do so. The evidence adduced at trial showed Devers knew Goynes intended to commit robbery. Because the testimony showed Devers turned Goynes on to the “lick,” refused to return to Reign Lounge while Goynes was gone, implicitly understood why Goynes left the vehicle, and waited for Goynes to return, there was sufficient evidence for the jury to find Devers intended, knew, or expected Goynes to commit the robbery. Viewed in the light most favorable to the prosecution, there was sufficient evidence for any rational trier of fact to find Devers guilty beyond a reasonable doubt. (ii) Intent to Use Firearm Devers argues that the jury could not have found him guilty of use of a firearm to commit a felony. He argues that Milton’s “evidence that Devers was present in the vehicle outside Reign Lounge such that he had an opportunity to know that Goynes both intended to rob LeFlore and intended to use a firearm to do so” 38 was insufficient to support his conviction. The record shows sufficient evidence that Devers knew Goynes intended to use a firearm to commit the robbery. 36 Brief for apellant at 38. 37 Id. at 39. 38 Id. - 453 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 Stockdale testified that Devers said, “‘I just didn’t think my little cousin stupid ass would kill him. . . . I told him to shoot if he act up, but damn.’” Milton agreed that when she was in the vehicle with Devers and Goynes, it was readily apparent that Goynes was armed with a firearm, and she testi- fied that he “had it out the whole time.” This evidence alone is sufficient. [19] Based on Nebraska’s aiding and abetting statute, 39 the State argues an alternative theory that the reasoning in State v. McClain, 40 which in turn relies upon State v. Mantich, 41 applies here. In Mantich, we explained that “one who intentionally aids and abets the commission of a crime may be responsible not only for the intended crime, if it is in fact committed, but also for other crimes which are committed as a natural and probable consequence of the intended criminal act.” 42 There, we determined that using a firearm was a natural and prob- able consequence of kidnapping, robbing, and terrorizing the victim. And as an aider or abettor of the criminal acts, the defendant could properly be convicted of using a firearm to commit a felony “even if the jury believed that [the defendant] was unarmed.” 43 The same reasoning applies here. The record shows that the State prosecuted Devers as an aider and abettor. Devers intended to rob LeFlore, Goynes shot and robbed LeFlore, Devers aided Goynes by driving the vehicle, and LeFlore died of his wounds. Use of the firearm in the commission of the murder was a natural and probable consequence of the intended act of robbery. Considered in the light most favorable to the prosecution, the evidence was sufficient for any rational trier of fact to find Devers guilty. 39 See Neb. Rev. Stat. § 28-206 (Reissue 2016). 40 State v. McClain, 285 Neb. 537, 827 N.W.2d 814 (2013). 41 State v. Mantich, 249 Neb. 311, 543 N.W.2d 181 (1996). 42 Id. at 327, 543 N.W.2d at 193. 43 Id. at 328, 543 N.W.2d at 193. - 454 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 4. Ineffective Assistance of Counsel (a) Standard of Review [20] In reviewing claims of ineffective assistance of counsel on direct appeal, an appellate court decides only whether the undisputed facts contained within the record are sufficient to conclusively determine whether counsel did or did not provide effective assistance and whether the defendant was or was not prejudiced by counsel’s alleged deficient performance. 44 (b) Legal Framework [21,22] When a defendant’s trial counsel is different from his or her counsel on direct appeal, the defendant must raise on direct appeal any issue of trial counsel’s ineffective perform­ ance which is known to the defendant or is apparent from the record. 45 Once raised, the appellate court will determine whether the record on appeal is sufficient to review the merits of the ineffective performance claims. 46 [23,24] In order to know whether the record is insufficient to address assertions on direct appeal that trial counsel was ineffective, appellate counsel must assign and argue deficiency with enough particularity (1) for an appellate court to make a determination of whether the claim can be decided upon the trial record and (2) for a district court later reviewing a peti- tion for postconviction relief to be able to recognize whether the claim was brought before the appellate court. 47 When a claim of ineffective assistance of trial counsel is raised in a direct appeal, the appellant is not required to allege prejudice; however, an appellant must make specific allegations of the conduct that he or she claims constitutes deficient performance by trial counsel. 48 44 State v. Lierman, supra note 13. 45 Id. 46 Id. 47 Id. 48 Id. - 455 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 (c) Discussion (i) Limiting Instruction Devers argues that trial counsel was ineffective for fail- ing to object to the allegedly deficient limiting instruction that misdescribed the evidence of controlled substances. He contends that at trial, the district court limited the evidence to “marijuana,” but that Hanson’s testimony included evidence of synthetic marijuana, methamphetamine, and packing materials. The claim is sufficiently alleged, and the record is sufficient to review it. Regarding the admission of evidence of controlled sub- stances, the record shows that the district court gave two limit- ing instructions. While the original instruction restricted the jury to consider only the evidence of “marijuana” to corrobo- rate witness testimony, the final jury instruction encompassed evidence of all controlled substances. As we previously deter- mined, the limiting instructions, taken as a whole, removed any prejudice regarding the additional controlled substances. We conclude that this argument is without merit. (ii) Motion to Dismiss Devers argues that trial counsel erred in failing to present evidence that he asserted his constitutional right to a speedy trial early and often in communications with his counsel. Devers further argues that counsel was ineffective for failing to file an interlocutory appeal from the denial of his motion to dismiss. We agree with the State that this claim is sufficiently alleged and that the record is sufficient to review it. Devers’ first argument addresses only a purported failure to present evidence on his constitutional speedy trial claim. The State argues that counsel was not ineffective for fail- ing to produce evidence to support Devers’ motion, because Devers did not argue to the district court that he asserted his constitutional right early and often in communications with counsel. 49 Even if we assume that the State’s argument 49 See Johnston v. Mahally, 348 F. Supp. 3d 417 (E.D. Pa. 2018). - 456 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 is incorrect, Devers was not prejudiced. The district court analyzed Devers’ constitutional speedy trial claim and found no unreasonable delay or prejudice. We agree and find that Devers’ trial counsel’s actions did not prejudice Devers; thus, his claim lacks merit. Devers’ second argument also fails. As the U.S. Supreme Court has stated, “application of the principles articulated in [Cohen v. Beneficial Loan Corp. 50] and [Abney v. United States 51] to [constitutional] speedy trial claims compels the conclusion that such claims are not appealable before trial.” 52 Because denial of a motion to dismiss based upon a consti- tutional speedy trial claim is not a final, appealable order, Devers’ argument lacks merit. (iii) Corrections Officer Hall Devers argues trial counsel was ineffective for failing to present testimony from “Corrections Officer Hall,” who would have testified that “upon learning that Stockdale would be moved into [Devers’] cell, Devers became irate due to his belief . . . Stockdale would use the opportunity to fabricate incriminating statements by Devers in an effort to obtain leniency,” 53 and that Corrections Officer Hall informed Devers he would have to lock Devers down because Devers was so upset about Stockdale’s being moved into his cell. The claim is sufficiently alleged, and the record is sufficient to review part of the claim. Devers’ argument that Corrections Officer Hall would testify that Devers believed that Stockdale would fabricate incrimi- nating evidence is without merit. First, Corrections Officer 50 Cohen v. Beneficial Loan Corp., 337 U.S. 541, 69 S. Ct. 1221, 93 L. Ed. 1528 (1949). 51 Abney v. United States, 431 U.S. 651, 97 S. Ct. 2034, 52 L. Ed. 2d 651 (1977). 52 United States v. MacDonald, 435 U.S. 850, 861, 98 S. Ct. 1547, 56 L. Ed. 2d 18 (1978). 53 Brief for appellant at 46. - 457 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 Hall would not be able to testify to Devers’ personal beliefs, pursuant to Neb. Rev. Stat. § 27-603 (Reissue 2016). And any statements that Devers made to Corrections Officer Hall would be inadmissible hearsay, pursuant to Neb. Rev. Stat. § 27-801 (Reissue 2016). Accordingly, the claim is without merit. The record is insufficient to address the claims concern- ing observations that Corrections Officer Hall made when Devers received the news that Stockdale would be his cellmate and concerning any statements Corrections Officer Hall made to Devers. (iv) Remaining Claims The State concedes that the remaining claims of ineffective assistance of counsel, not addressed above, are sufficiently alleged, but the record is insufficient to review them. We need not address them further. V. CONCLUSION We conclude that the district court did not err in overruling Devers’ motions in limine and did not err in admitting evidence of controlled substances from Devers’ home and evidence of the firearm seized at Benson Towers. We also conclude that the admission of a sole reference to “multiple packages of mari- juana” was, at most, harmless error. Viewing the evidence in the light most favorable to the State, we further conclude that the evidence at trial supported Devers’ convictions. Finally, we conclude that the assignments of ineffective assistance of counsel that we reach on direct appeal lack merit. Accordingly, we affirm Devers’ convictions and sentences. Affirmed. Cassel, J., concurring. In numerous decisions, this court has determined that an allegation of ineffective assistance of trial counsel, asserted by new appellate counsel, was not stated with sufficient speci- ficity where it failed to allege the name of the witness who would have testified and the specific content of the witness’ - 458 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 proposed testimony. 1 This naturally followed from this court’s holding that an appellant must make specific allegations of the conduct that he or she claims constitutes deficient perform­ ance by trial counsel when raising an ineffective assistance claim on direct appeal. 2 As this court stated, “[g]eneral allega- tions . . . are insufficient . . . .” 3 But this court has not insisted upon a specification of the name of a purported expert witness, where the allegation of ineffective assistance of trial counsel asserts a failure to adduce expert testimony for a particular opinion or conclusion. 4 And here, perhaps because of our case law, the State conceded that allegations of ineffective assistance for failing to “consult or call as a witness an expert in pharmacology who would have testified that, on [the date of the events,] Milton’s prescrip- tions affected her ability to both accurately form and recall memories” 5 and failing to “consult with, or call as a witness, an independent telecommunications expert because he or she would have testified that the cell phone evidence did not sup- port the State’s theory as to Devers’ and Milton’s movements on [the dates of the events]” 6 were “sufficiently alleged” 7 or “sufficiently stated.” 8 1 See, e.g., State v. Abdullah, 289 Neb. 123, 853 N.W.2d 858 (2014); State v. Marks, 286 Neb. 166, 835 N.W.2d 656 (2013); State v. McGhee, 280 Neb. 558, 787 N.W.2d 700 (2010); State v. Davlin, 277 Neb. 972, 766 N.W.2d 370 (2009). 2 See State v. Filholm, 287 Neb. 763, 848 N.W.2d 571 (2014). 3 Id. at 770, 848 N.W.2d at 578. 4 See, State v. Mora, 298 Neb. 185, 903 N.W.2d 244 (2017) (failure to retain unnamed expert witness to refute State’s DNA evidence not deemed insufficiently specific); State v. Filholm, supra note 2 (failure to consult and present testimony of unnamed DNA expert witness not deemed insufficiently specific). 5 Brief for appellant at 51. 6 Id. at 52. 7 Brief for appellee at 32. 8 Id. - 459 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 One might wonder whether an assignment of error on direct appeal regarding an unnamed expert is sufficiently specific. In posing this question, I emphasize that I am not criticizing appellate counsel here—either for the degree of specificity of Devers’ assignment or for the State’s concession. Several principles are settled: A criminal defendant has the right to the effective assistance of appellate counsel in his or her first appeal as of right. 9 There is no federal or state constitutional right to an attorney in state postconviction pro- ceedings. 10 When a defendant’s trial counsel is different from his or her counsel on direct appeal, the defendant must raise on direct appeal any issue of trial counsel’s ineffective perform­ ance which is known to the defendant or is apparent from the record. 11 These principles collectively teach that where appellate counsel is different from trial counsel, the state and federal Constitutions provide a defendant only one opportunity for the assistance of counsel in framing allegations of ineffective assistance of trial counsel. Might one then expect that appellate counsel should craft such allegations at least in accordance with the standard used to measure deficient performance? To show deficient perform­ ance, a defendant must show that counsel’s performance did not equal that of a lawyer with ordinary training and skill in criminal law. 12 Should it then follow that such ordinary train- ing and skill includes evaluating the need for expert testimony and determining whether such testimony can be secured? And 9 See, Halbert v. Michigan, 545 U.S. 605, 125 S. Ct. 2582, 162 L. Ed. 2d 552 (2005); Pennsylvania v. Finley, 481 U.S. 551, 107 S. Ct. 1990, 95 L. Ed. 2d 539 (1987); Evitts v. Lucey, 469 U.S. 387, 105 S. Ct. 830, 83 L. Ed. 2d 821 (1985); Ross v. Moffitt, 417 U.S. 600, 94 S. Ct. 2437, 41 L. Ed. 2d 341 (1974); Douglas v. California, 372 U.S. 353, 83 S. Ct. 814, 9 L. Ed. 2d 811 (1963). 10 State v. Custer, 298 Neb. 279, 903 N.W.2d 911 (2017). 11 State v. Lierman, 305 Neb. 289, 940 N.W.2d 529 (2020). 12 State v. Sierra, 305 Neb. 249, 939 N.W.2d 808 (2020). - 460 - Nebraska Supreme Court Advance Sheets 306 Nebraska Reports STATE v. DEVERS Cite as 306 Neb. 429 if there is an expert witness who would testify to a specific proposition, might it demand that appellate counsel locate and name the expert? This could mean that more time may be required to prepare and submit a brief on direct appeal where appellate counsel is different from trial counsel. But is this not merely a necessary consequence of an important principle: The need for final- ity in the criminal process requires that a defendant bring all claims for relief at the first opportunity. 13 In an appropriate case, this court should consider whether allegations of trial counsel’s deficient performance regard­ ing a potential expert witness’ testimony are sufficient with- out naming the expert. The matter was not raised in the case decided today. If it is raised in the future, it deserves this court’s attention. 13 State v. Phelps, 286 Neb. 89, 834 N.W.2d 786 (2013).

01-03-2023

08-14-2020

https://www.courtlistener.com/api/rest/v3/opinions/2995590/

In the United States Court of Appeals For the Seventh Circuit No. 01-2149 IN RE: EDWIN R. SMITH, Debtor-Appellee. APPEAL OF: JERRY WATSON Appeal from the United States District Court for the Southern District of Indiana, New Albany Division. No. 00 C 44--Sarah Evans Barker, Judge. ARGUED NOVEMBER 5, 2001--DECIDED APRIL 11, 2002 Before BAUER, POSNER and RIPPLE, Circuit Judges. RIPPLE, Circuit Judge. Jerry D. Watson appeals from the decision of the district court affirming the bankruptcy court’s confirmation of Edwin R. Smith’s Chapter 13 plan. Ms. Watson contends that Mr. Smith filed his Chapter 13 reorganization plan in bad faith and, therefore, that he should have been denied discharge. For the reasons set forth in this opinion, we affirm the judgment of the district court. I BACKGROUND A. Facts Edwin R. Smith is a Certified Public Accountant who, in the late 1980s, fraudulently induced Jerry D. Watson to loan $75,000 to William Compton. Mr. Smith claimed, falsely, that Ms. Watson’s investment was secured by real property owned by Compton. Mr. Smith, using the power of attorney conferred on him by Ms. Watson, also used her credit cards to their limit, took out a mortgage against her home and put her in debt to her life insurance company. Mr. Smith also borrowed $6,000 from Ms. Watson to buy his daughter a car; he has not repaid the loan. Ms. Watson brought an action in a state court in Kentucky to recover the loan proceeds that had been fraudulently taken. The jury awarded her a judgment of $197,247.88, including punitive damages; that judgment was later affirmed on appeal. With interest, the judgment is now worth about $267,000. Ms. Watson domesticated the judgment in the Circuit Court of Harrison County, Indiana, where Mr. Smith resides. B. Bankruptcy Court Proceedings In March 1999, Mr. Smith filed for Chapter 7 bankruptcy in the United States Bankruptcy Court for the Southern District of Indiana. Ms. Watson filed an adversary proceeding challenging the dischargeability of Mr. Smith’s debt to her. On July 22, 1999, the bankruptcy court granted Ms. Watson’s motion for summary judgment and declared that Mr. Smith’s debt was nondischargeable because of Mr. Smith’s fraudulent representations and his fraud while serving as Ms. Watson’s fiduciary. See 11 U.S.C. sec. 523(a)(2) & (4). Mr. Smith then filed this Chapter 13 proceeding and a reorganization plan ("the Plan"). Ms. Watson is Mr. Smith’s only remaining creditor. Under the more liberal rules of Chapter 13, Mr. Smith’s debt to Watson is dischargeable, subject to certain limitations, which will be discussed below. Ms. Watson again filed an adversary proceeding, arguing that "the plan is not proposed in good faith, that the income has been underreported, that the expenses have been overstated, and that there is more money available to pay on this plan than the debtor is indicating." Bankruptcy Tr. at 5. The bankruptcy court held an evidentiary hearing regarding Ms. Watson’s objection to confirmation of the Plan. The focus of the hearing was Ms. Watson’s charge that Mr. Smith had padded his expenses in the Plan and underreported his income. Ms. Watson’s counsel cross-examined Mr. Smith, suggesting that he claimed household expenses that were not characterized properly as such, that he failed to estimate properly his income over the course of the five-year Plan and that his wife’s income was not properly documented. The court also examined Mr. Smith. Ms. Watson presented documentary evidence in support of her claims. Ms. Watson also testified, describing Mr. Smith’s fraudulent conduct while he was serving as her fiduciary. Ms. Watson described her precarious financial condition, made more difficult by Mr. Smith’s fraud, which had deprived her of much of her savings. She also testified that Mr. Smith "remarked to me after I found out what he had been doing, that he knew how to make it that I would never be able to collect a dime from him. . . . I don’t think he’s done it in good faith." Bankr. Tr. at 67-68. Ms. Watson’s counsel argued that "with the fraud that was involved in this particular debt, I think you ought to hold the debtor to a very high standard of proof that he really does spend each month what he claims to spend each month. . . . [T]here comes a point where you’re padding your expenses so bad that your Chapter 13 plan just isn’t a good faith plan." Bankr. Tr. at 72-73. After hearing the evidence, the court, ruling from the bench, adjusted, and then confirmed, Mr. Smith’s Chapter 13 plan. The court stated, "I just have to make sure that this debtor puts all [his] disposable income into the plan." Bankr. Tr. at 76. The original Plan called for payments of $200 per month; the court accepted this number for the first five months of the Plan. After that period, however, Mr. Smith would pay $250 per month for the next seven months, then $300 per month for a year, and then $350 per month for the final three years of the Plan. As adjusted, the Plan would increase Mr. Smith’s payments to account for any pay raises he receives. After describing these adjustments, the court concluded that "[b]ased upon payment of that [adjusted] level, the Court would find that the plan as submitted is proposed in good faith." Bankr. Tr. at 79. The bankruptcy court issued a written order, using a pre-printed form, which confirmed the details of the Plan as amended at the hearing./1 C. District Court Proceedings Ms. Watson appealed to the district court; she argued that the bankruptcy court had erred in concluding that the Plan was filed in good faith. Ms. Watson submitted to the district court that the disparity between the amount of her state judgment with interest, $267,000, and the amount of the proposed pay out, around $20,000, and Mr. Smith’s pre-petition actions were evidence that the Plan was filed in bad faith. After examining the record made in the bankruptcy court, the district court concluded that Ms. Watson had not raised this latter argument before the bankruptcy court and therefore had waived the right to make it in appellate proceedings. The district court then determined that there was insufficient evidence to support Ms. Wat son’s claim that the bankruptcy court had determined erroneously Mr. Smith’s financial situation and thereby had confirmed a plan with too low a payout. The district court affirmed the judgment of the bankruptcy court on these grounds. II DISCUSSION We apply the same standard of review to the bankruptcy court’s decision as did the district court. The bankruptcy court’s findings of fact are reviewed for clear error, see In re Generes, 69 F.3d 821, 824-25 (7th Cir. 1995); its conclusions of law are reviewed de novo, see Meyer v. Rigdon, 36 F.3d 1375, 1378 (7th Cir. 1994). A bankruptcy court’s determination that a plan was filed in good faith is a factual finding; therefore, we shall reverse only if the court’s finding was clearly erroneous. See In re Love, 957 F.2d 1350, 1354 (7th Cir. 1992). We cannot accept the district court’s determination that Ms. Watson’s good faith argument had been waived by her failure to raise it in the bankruptcy hearing. Ms. Watson, in both her written objections and her counsel’s argument at the hearing, objected to confirmation of Mr. Smith’s Plan on the ground that it was not filed in good faith. She based her objection on three grounds. First, Ms. Watson pointed to Mr. Smith’s pre- petition conduct, including his fraudulent conduct and a statement he made to her that he had arranged things so as to preclude her from recovering her judgment against him, as evidence of his bad faith. The bankruptcy court had some of the records from the fraud trial and was aware of Mr. Smith’s conduct, having previously held that this debt was nondischargeable in Mr. Smith’s Chapter 7 proceeding. Second, Ms. Watson contended that Mr. Smith’s plan was in bad faith because of the low amount of the pay out, relative to the overall debt. Third, Ms. Watson argued that Mr. Smith was padding his expenses, understating his income and had structured his assets in such a way as to prevent her from recovering what she was owed. We note at the outset that the obligation of good faith is imposed on the debtor at two stages of a Chapter 13 proceeding. First, the debtor must file his petition for Chapter 13 bankruptcy in good faith. See In re Love, 957 F.2d at 1354-55. Second, the debtor must file his Chapter 13 plan in good faith. See id.; In re Schaitz, 913 F.2d 452, 453 (7th Cir. 1990); see also 8 Lawrence P. King et al., Collier on Bankruptcy, at 1325-13 (15th ed. 2001). At different times, and at different places in her brief to this court, Ms. Watson has objected to a finding of good faith both in filing the petition and the Plan. In our earlier cases, we have read 11 U.S.C. sec. 1307(c), which provides for dismissal of a Chapter 13 provision "for cause," to include a dismissal premised on a debtor’s bad faith in filing the petition. See In re Love, 957 F.2d at 1354; In re Smith, 848 F.2d 813, 816 n.3 (7th Cir. 1988). Although Ms. Watson has not cited sec. 1307(c), her brief to this court asks us to reverse the bankruptcy court and conclude that neither the petition nor the Plan was filed in good faith. Most of her brief focuses on whether Mr. Smith’s Plan was proposed in good faith, as did almost all of the bankruptcy hearing. We turn first to the petition. On this record, only Mr. Smith’s pre-petition conduct bears on his good faith in filing the petition. Ms. Watson has not pointed toward anything leading up to bankruptcy that would point to a finding of bad faith other than Mr. Smith’s fraudulent conduct with respect to the underlying debt./2 We have held that simply availing oneself of the more liberal provisions of Chapter 13 to discharge a debt that is not dischargeable in Chapter 7 is not sufficient to constitute bad faith. See In re Smith, 848 F.2d at 819. We therefore shall focus our examination on whether the bankruptcy court clearly erred in its determination that the Plan was filed in good faith. Before a bankruptcy court confirms a debtor’s plan under Chapter 13, it must find that the plan was filed in good faith. See 11 U.S.C. sec. 1325(a)(3). "The provisions of 11 U.S.C. sec. 1325 ensure that a Chapter 13 plan . . . will be properly scrutinized by the bankruptcy court before the plan is confirmed, mitigating the danger of abuse." In re Young, 237 F.3d 1168, 1174 (10th Cir. 2001). In considering whether a plan is filed in good faith, the court asks of the debtor: "Is he really trying to pay the creditors to the reasonable limit of his ability or is he trying to thwart them?" In re Schaitz, 913 F.2d at 453. "At base, this inquiry often comes down to a question of whether the filing is fundamentally unfair." In re Love, 957 F.2d at 1357. Whether a plan or petition is filed in good faith is a question of fact based on the totality of the circumstances surrounding the proposed plan. See In re Smith, 848 F.2d at 817- 18. We have articulated several factors that courts should consider in analyzing the totality of the circumstances. See In re Rimgale, 669 F.2d 426, 432 (7th Cir. 1982)./3 Several of those factors are relevant to our inquiry in this case. We consider whether the plan accurately reflects the debtor’s financial condition and affords substantial protection to un secured creditors. If there are inaccuracies, we consider whether these flaws are "an attempt to mislead the bankruptcy court," id.; we also consider whether the plan, taken as a whole, indicates "a fundamental fairness in dealing with one’s creditors," In re Bassak, 705 F.2d 234, 237 (7th Cir. 1983) (quoting Rimgale, 669 F.2d at 432-33). In applying this last factor, we suggested in Rimgale that "the bankruptcy court may wish to examine the timing of the bankruptcy filings, the proportion of the total unsecured debt that is represented by the [tort] judgment, and the equities of classifying together ordinary consumer debt and a judgment debt arising out of intentionally tortious conduct." In re Rimgale, 669 F.2d at 433 n.22. Other courts of appeals have adopted a similar approach, providing courts within their jurisdictions a non-exhaustive list of factors to guide the good faith inquiry. See, e.g., In re Young, 237 F.3d at 1174 (quoting Flygare v. Boulden, 709 F.2d 1344, 1347-48 (10th Cir. 1983)); In re Estus, 695 F.2d 311, 317 (8th Cir. 1982). In this case we are concerned with three factors bearing on Mr. Smith’s good faith, as raised by Ms. Watson: Mr. Smith’s pre-petition conduct, including the nature of the underlying debt, see In re Smith, 848 F.2d at 818-19, the sufficiency of the pay out, see Flygare, 709 F.2d at 1348, and the accuracy of Mr. Smith’s financial disclosures in his Plan, see In re Rimgale, 669 F.2d at 432. Ms. Watson argues that Mr. Smith’s pre- petition conduct demonstrates that his Plan was not filed in good faith. Specifically, Ms. Watson points to Mr. Smith’s fraudulent behavior while serving in a fiduciary capacity and to a statement Ms. Watson alleged Mr. Smith made to the effect that he had so arranged his affairs as to preclude her from recovering her judgment against him. "Under a ’totality of the circumstances’ test, a debt’s nondischargeability under Chapter 7 arising from a debtor’s pre- filing conduct is relevant to the debtor’s good faith." In re Smith, 848 F.2d at 818. There is no question that Mr. Smith’s treatment of Ms. Watson was deplorable and it appears from this record that Mr. Smith abused the trust Ms. Watson placed in him for his own pecuniary benefit. It is also clear, if the Plan is confirmed, that Mr. Smith will not only pay far less than the $267,000 he currently owes to Ms. Watson, but will pay her less than her actual losses, unadjusted for inflation. This consideration alone, however, is not sufficient to defeat Mr. Smith’s plan. Congress has made it clear that some debts, although nondischargeable in Chapter 7, may be discharged under the more liberal rules of Chapter 13. See Johnson v. Home State Bank, 501 U.S. 78, 87 (1991). We are not free to second- guess Congress’ policy choice in this regard. What is required is "that the plan must be ’proposed in good faith,’ not that the debt was incurred in good faith." In re Smith, 848 F.2d at 819 (emphasis in original). "[A] Chapter 13 plan may be confirmed despite even the most egregious pre-filing conduct where other factors suggest that the plan nevertheless represents a good faith effort by the debtor to satisfy his cred itor’s claims." Neufeld v. Freeman, 794 F.2d 149, 153 (4th Cir. 1986). Mr. Smith’s pre-petition conduct, without more, is not sufficient for us to conclude that the bankruptcy court’s decision is clearly erroneous. Ms. Watson contends that this case is controlled by our decision in Smith. See In re Smith, 848 F.2d at 818-21./4 The debtor, who owned and operated a home repair business, defrauded senior citizens by making unnecessary repairs. See id. at 814. The State of Indiana obtained a judgment against him for violations of the state’s Deceptive Consumer Sales Act. See id. Without appealing the judgment, the debtor filed a Chapter 13 petition three months later. See id. We reversed the decision of the bankruptcy court, which had confirmed the debtor’s Chapter 13 plan over the objection of a judgment creditor. See id. at 822. Specifically, we vacated the bankruptcy court’s decision and remanded for further proceedings because the bankruptcy court failed to consider the debtor’s pre-peti tion conduct in making the good faith determination. See id. at 821. We specifically declined to express an opinion on whether the plan should be confirmed on remand. See id. at 822. Smith would be of assistance to Ms. Watson only if she were able to demonstrate that the bankruptcy court failed to consider Edwin Smith’s pre- petition conduct here. Although the bankruptcy judge did not make any explicit findings about the pre-petition conduct, he indicated that he was aware of the nature of Mr. Smith’s debt to Ms. Watson. Further, the same bankruptcy judge had handled Mr. Smith’s Chapter 7 proceeding and had granted summary judgment to Ms. Watson on her objection to discharge in Chapter 7. We therefore are confident that the bankruptcy court considered Mr. Smith’s pre-petition conduct before it confirmed Mr. Smith’s plan. Although the nature of the underlying debt, not dischargeable in Chapter 7, weighs against a finding of good faith, this factor alone cannot defeat confirmation of Mr. Smith’s plan. We also take note of Ms. Watson’s statement that Mr. Smith told her that he had fixed things so that she would not recover. Without any evidence of how he had so arranged his affairs, other than the bankruptcy court’s noting that Mr. Smith did not have a checking account, we cannot say that the bankruptcy court’s conclusion that bad faith had not been established is clearly erroneous. Ms. Watson next points to the low percentage repayment of her debt as evidence of Mr. Smith’s bad faith. Unless he receives significant pay raises over the repayment period, Mr. Smith will end up repaying less than 10% of what he currently owes Ms. Watson. Congress has not adopted a minimum payment for confirmation of a Chapter 13 plan, and we cannot read one into the Code through its good faith requirement. See In re Rimgale, 669 F.2d at 431-32. Further, it is difficult to see how the low percentage of the payout adds anything to the other good faith factors and the other statutory requirements. The percentage repayment is a function of the size of the debt relative to the debtor’s anticipated earnings; this factor is not relevant to determining whether the debtor has acted in good faith. The Code requires a debtor to commit all of his disposable income to repayment of his creditors over the term of his Chapter 13 plan. If this process, honestly and fairly undertaken, produces a payment that is a small percentage of the debt, the Code permits such a payment so long as it is "not less than the amount that would be paid on such claim if the estate of the debtor were liquidated under chapter 7." 11 U.S.C. sec. 1325(a)(4). The Sixth Circuit requires bankruptcy courts to give additional scrutiny to Chapter 13 plans that propose repayment of only a small percentage of a debt that could not be discharged in Chapter 7. See In re Caldwell, 895 F.2d 1123, 1126 (6th Cir. 1990). We have no quarrel with the proposition that a low payout is a red flag, which ought to prompt the bankruptcy court to engage in a particularly careful examination of a debtor’s finances or of a creditor’s challenge to the accuracy or completeness of the debtor’s disclosures. We do not think, however, that the bankruptcy court can be said to have failed in that obligation here. Ms. Watson’s final contention is that Mr. Smith’s Plan is in bad faith because it does not accurately describe his financial position. Chapter 13 requires that a debtor commit all of his disposable income to repayment of his debts. Disposable income is defined as "income which is received by the debtor and which is not reasonably necessary to be expended for the maintenance or support of the debtor or a dependent of the debtor." 11 U.S.C. sec. 1325(b)(2)(A). Although this mandate is independent of the good faith requirement, courts also have considered the accuracy of a debtor’s financial disclosures in determining whether a debtor has dealt fairly with his creditors. Ms. Watsoncontends that Mr. Smith’s Plan was not filed in good faith because he failed to accurately state his income, and because his expenses were padded to include items "not reasonably necessary to be expended for the maintenance or support of the debtor or a dependent of the debtor." 11 U.S.C. sec. 1325(b)(2)(A). "Complete and truthful disclosure is particularly important in a Chapter 13 case because, since creditors do not vote on the plan, there is no disclosure statement as such, and parties in interest and the court must evaluate the debtor’s proposal in a short period of time based on facts mostly revealed by the debtor." 5 William L. Norton, Jr., Norton Bankruptcy Law & Practice, sec. 122 at 18-19 (2d ed. 1997); see also In re Leavitt, 171 F.3d 1219, 1224-25 (9th Cir. 1999); In re Robinson, 987 F.2d 665, 668 n.6 (10th Cir. 1993) (quoting Flygare, 709 F.2d at 1348); In re Caldwell, 895 F.2d at 1126-27; In re Langguth, 52 B.R. 572, 577 (Bankr. N.D. Ill. 1985). In the seminal Seventh Circuit case dealing with the question of good faith in Chapter 13, four of the five factors/5 we enumerated as relevant to the good faith inquiry addressed the accuracy of a debtor’s financial disclosures in his plan. See In re Rimgale, 669 F.2d at 432. The bankruptcy hearing was focused on the accuracy of Mr. Smith’s financial disclosures accompanying his Plan. Ms. Watson’s attorney thoroughly cross- examined Mr. Smith about his income and expenses. Counsel challenged what he claimed were extraneous expenses and inquired about fluctuations in Mr. Smith’s and his wife’s income over the years before bankruptcy, suggesting that Mr. Smith was being less than forthcoming about his likely income over the duration of the Plan. The court examined Mr. Smith about the alleged discrepancies in the schedules accompanying his Plan. Neither examination produced evidence of serious discrepancies in Mr. Smith’s financial disclosures, but the process did raise for the court the question whether Mr. Smith was committing all of his disposable income to the Plan. In an oral ruling, the court modified the Plan and then confirmed it. The court did so after stating that he "closely scrutinizes these cases to determine whether there--the plan is proposed in good faith." Bankr. Tr. at 75. The court was satisfied that Mr. Smith’s disclosures were accurate and that his pre-petition conduct did not warrant denial of confirmation: "I just have to make sure that this debtor puts all [his] disposable income into the plan." Bankr. Tr. at 76. Taking all of the information adduced at the hearing into account, the bankruptcy court, in confirming the Plan, increased Mr. Smith’s payout from $200 per month for the duration of the Plan to $300 per month for the second year and $350 per month for the final three years of the Plan. Finally, the court said: "Based upon payments of that level, the Court would find that the plan as submitted is proposed in good faith." Bankr. Tr. at 79. One could argue that implicit in the court’s above-quoted conclusion is a belief that the Plan as submitted by Mr. Smith was not in good faith and that it was only upon adjustment by the court that the Plan’s payout was sufficient to meet the good faith test. Or one could suppose that the court believed that Mr. Smith was padding his expenses, or understating his income, and adjusted the Plan accordingly. If the court did so believe, it would have been within its discretion to deny confirmation of the Plan. The likely result would have been to return the issue to Mr. Smith, to permit him to file an amended plan and then to return to court to seek confirmation. Essentially, the bankruptcy court skipped that intermediate step and adjusted the Plan in light of the information before him. Mr. Smith did not object to the Plan as adjusted by the court. Ms. Watson does not invite our attention to any evidence ignored or improperly weighed by the bankruptcy court. Our review of the evidence indicates no clear error on the part of the bankruptcy court. The bankruptcy court’s adjustment of the Plan forecloses Ms. Watson’s good faith challenge. In order for Ms. Watson to prevail, she would need to combine the evidence of Mr. Smith’s pre-petition conduct with any discrepancies in Mr. Smith’s financial disclosures in the bankruptcy court. The court’s action increasing Mr. Smith’s payout under the Plan compensates for any irregularities or understatements in Mr. Smith’s proposed Plan and precludes a determination on our part that the bankruptcy court erred. Conclusion The bankruptcy court’s conclusion that Mr. Smith’s plan was proposed in good faith was not clearly erroneous. Therefore, the decision of the district court to affirm its judgment must be upheld. AFFIRMED FOOTNOTES /1 Ms. Watson suggests that this case ought to be remanded for further fact-finding by the bank- ruptcy court. Although appellate review is facil- itated by detailed findings, particularly on a fact-specific issue like good faith under the Bankruptcy Code, see In re Schaitz, 913 F.2d 452, 455-56 (7th Cir. 1990), failure to include a written opinion does not warrant an automatic remand. Ms. Watson had the opportunity to bring forward evidence of Mr. Smith’s bad faith at the evidentiary hearing. There is no need for further fact-finding because there is no indication in the record that the bankruptcy court’s decision was clearly erroneous. /2 Some cases have held that close temporal proximi- ty between a debt coming due and a bankruptcy filing indicates an effort by the debtor to avoid payment of the judgment or to forgo appeal in favor of bankruptcy. See In re Leavitt, 171 F.3d 1219, 1221, 1224-25 (9th Cir. 1999); In re Smith, 848 F.2d 813, 821 (7th Cir. 1988); In re Sana- bria, 52 B.R. 75, 76-77 (N.D. Ill. 1985). Also, serial bankruptcy filings may indicate bad faith. See In re Jackson, 91 B.R. 473, 473-75 (Bankr. N.D. Ill. 1988). Ms. Watson has made no such allegations here. /3 In In re Rimgale, 669 F.2d 426, 432 (7th Cir. 1982), we listed the following factors as a guide to bankruptcy courts evaluating whether a plan had been filed in good faith: (1) whether the plan states the secured and unsecured debts of the debtor accurately; (2) whether the plan states the expenses of the debtor accurately; (3) whether the percentage of repayment of unsecured debts is correct; (4) whether inaccuracies in the plan amount to an attempt to mislead the bank- ruptcy court; and (5) whether the proposed pay- ments indicate a fundamental fairness in dealing with creditors. See In re Rimgale, 669 F.2d at 432-33. We stressed that this list is not exhaus- tive. /4 The debtor in the earlier Smith decision is not the same Mr. Smith as the party here. /5 See note 3, supra.

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