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2022761-9168

RIVES Chief Judge. In view of United States v. Chandler-Dunbar Water Power Co., 1913, 229 U.S. 53, 33 S.Ct. 667, 57 L.Ed. 1063, and United States v. Twin City Power Co., 1956, 350 U.S. 222, 76 S.Ct. 259, 100 L. Ed. 240, forbidding an award against the United States in eminent domain proceedings for hydroelectric power value in an interstate navigable stream, the main problem is to discover the basis, if any, for an award to the Augusta Power Cornpany for its flowage easements over fast lands adjacent to the Savannah River, Thg United States filed and served on Augusta Power Company its petitions for condemnation and declarations of taking in four dvü actions in the South_ em District of Georgia, and also in certain actions in the Western District of South Carolina; which are not invoived in this appeal. In its answers to these petitions, Augusta Power Company, alleged that the lands taken were part of its holdings of approximately 1,257 acres owned in fee and lying on both sides of the Savannah River and approximately 362 acres over which it had flowage easements in the Southern District of Georgia. All issues of just compensation were referred to commissioners under Rule 71A(h), Federal Rules of Civil Procedure, 28 U.S.C.A. The amounts fixed by the Commission as compensation for the tracts over which Augusta Power F°raPaiiy he’d *ee simPle title weire p,ald and ^cepted leaving for con^deration only the five tracts over which Augusta Power Company held flowage easements. The instruments upon which the flow-age easement claims are based, executed in 1906, provided that the rights granted „. „ , , . , were to overflow and back water upon , ,. ¿ , . . .j any such portion of said tract of land and islands as they or their heirs or assigns may deem advisable in the erection any dam or dams f°r devel°P™ent of a waterpower on the Savannah River * * *” The Augusta Power Cornpany conceded that the only use of these flowage easements by anybody would be in connection with and based upon the development of a dam for water power purposes in the Savannah River.” The Commission found that the fee value of the land taken in 1947 was $40 per acre and that the fee value of the land taken in 1950 was $45 per acre. It went on to hold that 70% of the value of the land taken in 1947 and 75% of the value of the land taken in 1950 represented the value of the flowage easements. On this basis the Commission arrived at awards as follows: Tract E-404: 41.7 acres at $40 an acre equals $1,-668 00 70% of o,-, i an which is $1,167.-gQ ’ m . T, „ .<«,r Tract E-442: 101.69 acres at $45 an , acre equals $4,-576.05, 75% of which is $3,-432.04. Tract E-443: 88.59 acres at $45 an acre equals $3,-986.55, 75% of which is $2,-989.91. Tract E-444: 128.39 acres at $45 an acre equals $5,-777.55, 75 % of which is $4,-333.I6. Tract E-458: 37.68 acres at $45 an acre equals $1,-695.60, 75% of which is $1,-271.70. . . . , , „ ,, _ Accordingly the total award of the Commissl°n0 AUIUSt! P°Ter, ?r?any was $13,194.41 with interest at 6% from the respective dates of taking. The district court affirmed the Commission s re- , port m all respects. ^ , i i .i tt .. Both parties have appealed, the United States asserting that no compensation whatsoever should have been allowed for the flowage easements, and Augusta Power Company asserting that the amounts fixed as compensation for the flowage easements are too low. In an extensive opinion accompanying its order affirming the report of the Commission and again in an opinion overruling the motion of the United States for new trial, the district court held that the United States had constructive or actual notice of the flow-age easements of Augusta Power Cornpany, and, hence, that Augusta Power Company was not bound by prior judgments purporting to fix the value of the fee or the entire value in the lands taken “ proceedings of which the Augusta Power Company had no notice. We agree wl™ folding- We agree also with that part of the opinions of the district ,, . , , court holding the easement deeds valid and enforceable as between the owners of „ 1 . , _ „ the fee and Augusta Power Company, * The district court followed opinions of the Fourth Circuit in United States v. 2979.72 Acres of Land, etc., 1956, 235 F. 2d 327, on rehearing, 237 F.2d 165, and in United States v. Twin City Power Company, 1957, 248 F.2d 108, in holding that the decision of the Supreme Court in the Twin City case, supra, does not preclude the payment of substantial cornpensation to the Augusta Power Company for its flowage easements. The district court thought it “quite clear that the government should pay a just compensation for the taking of these lands at a fain value for agricultural and forestry purposes”; and it approved the Commission’s method of apportioning that value, viz.: “The criterion for dividing the value of the land is ‘the difference in ^ yalue of the land with and without the flowage easement’.” We agree that Twin Cjty doeg ^ dg ^ ment of substantial compensation to the A , ^ „ Augusta Power Company for its flowage , . , , easements, but we disagree as to the , , . n , method of measurin^ that compensation, The Government insists that “the Power Company neither had nor claimed anything but a right to flood the lands in connection with the erection of a dam or dams for the development of water power on the Savannah River — the very thing which the Supreme Court has held to be noneompensable as against the United States.” The Twin City opinion, however, expressly “put aside such cases as United States v. Kansas City Life Ins. Co., 339 U.S. 799, [70 S.Ct. 885, 94 L.Ed. 1277] where assertion of the dominant servitude in the navigable river injured property beyond the bed of the stream.” 350 U.S. at page 225, 76 S.Ct. at page 261. In the case referred to, United States v. Kansas City Ins. Co., it was held that “ * * * the navigation servitude does not extend to land beyond the bed of the navigable river.” [339 U.S. 799, 70 S.Ct. 889.] Indeed, Twin City itself approves the test of United States v. Appalachian Electric Power Co., 1940, 311 U.S. 377, 427, 61 S.Ct. 291, 309, 85 L.Ed. 243, If the Government were now to build, the dam, it would have to pay the fair va ue, judicially determined, for the fast land; nothing for the water power. 350 U.S. at page 227, 76 S.Ct. at page 262. Very clearly, the United States is m error when it claims on page 18 of its brief that it “has a dominant servitude which it can exercise m its discretion and without compensation. If Augusta Power Company had been successful in assembling the necessary lands, and in securing approval of the Federal Power Commission, 5and thereafter had actually exercised its easements by permanently flooding the lands, their value for agricultural and forestry purposes would have been destroyed. If, with that status, the United States had condemned the lands, the compensation due would be payable to Augusta Power Company. That compensation would not include the hydroelectric power value, but it would embrace Augusta Power’s property right to destroy the value of the lands for agricultural and forestry purposes. At the other extreme, if factors such as difficulty of assemblage of all necessary lands, the increasing economic advantage of steam plants over hydroelectric plants, the need for additional power in the particular area, etc., had made it certain that the flowage easements would never be exercised by the Augusta Power Company or its assigns, excluding the United States, then such compensation as might be due would be payable to the owners of the fee title and nothing to the Augusta Power Cornpany. Between the two extremes just illustrated, the respective values of the £ee and 0f the easement would fluctuate from time to time depending on the probability or imnrobability of actual exerdse of the easement by the Augusta Power Company or its assigns. H a]1 interested parties were before the Court, ^ maximum which the United States would fce required to pay would be the yalue q£ the landS; not including their vajue for hydroelectric power purposes, That is, however, a maximum, and not necessarily the measure of what the United States would have to pay under any and all circumstances. As said by Mr. Justice Holmes, speaking for the Court in Boston Chamber of Commerce v. City of Boston, 1910, 217 U.S. 189, 195, 30 S. Ct. 459, 460, 54 L.Ed. 725: “But the Constitution does not require a disregard of the mode of ownership, — of the state of the title, jb doeg require a parcel of land to be valued as an unencumbered whole when it is not held as an unencumbered whole. It merely requires that an owner of property taken should be paid for what is taken from him. It deals with persons, not with tracts of land. And the question is what has the owner lost, not what has the taker gained. We regard it as entirely plain that the petitioners were not entitled, as matter of law, to have the damages estimated as if the land was the sole property of one owner * * *.” See also, United States v. Chandler-Dunbar Water Power Co., supra, 229 U.S. at page 80, 33 S.Ct. at page 678.

12393579-16278

ORDER This matter is before the court on the petition for rehearing and rehearing en banc filed by Ms. Ridgell-Boltz. Upon consideration of the petition, the original panel grants panel rehearing in part and only to j;he extent of the changes made to page 11 of the attached revised order and judgment. The clerk is directed to file the revised decision nunc pro tunc to the original filing date of August 10, 2016. In granting limited panel rehearing with respect to the petition, we note and emphasize that the portion of the petition seeking en banc review remains pending. That part of the petition remains under advisement. Attachment UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT LAURA RIDGELL-BOLTZ, Plaintiff-Appellant, v. CAROLYN W. COLVIN, Acting Commissioner, United States Social Security Administration, Defendant-Appellee. No. 15-1361 (D.C. No. l:10-CV-00252-RPM-KLM) (D. Colo.) ORDER AND JUDGMENT Plaintiff Laura Ridgell-Boltz appeals the final judgment of the district court dismissing her hostile-work-environment claim and awarding only about half of the attorney fees and costs that she requested. Exercising jurisdiction under 28 U.S.C. § 1291, we reverse in part, affirm in part, and remand the case with directions. I. Background Ms. Ridgell-Boltz sued her employer, the United States Social Security Administration, alleging that she was subjected to a hostile work environment on account of her gender and age, and that she was wrongfully discharged in retaliation for filing a discrimination complaint. The district court dismissed the age-based claims before trial, and the remaining claims were presented to a jury. At the close of Ms. Ridgell-Boltz’s case-in-chief, the agency moved for judgment as a matter of law. The district court granted the motion in part, and only the wrongful-discharge claim went to the jury, which awarded Ms. Ridgell-Boltz $19,000 in damages. On appeal, this court determined that the hostile-work-environment claim should have gone to the jury, and the case was remanded to the district court for further proceedings. See Ridgell-Boltz v. Colvin, 565 Fed.Appx. 680 (10th Cir. 2014) (unpublished order and judgment). Both parties and the district court assumed initially that this court’s order required a new trial limited to the hostile-work-environment claim. However, the district court on its own initiative subsequently dismissed the claim a second time, concluding that Ms. Ridgell-Boltz had already “been compensated for the emotional injury she sustained and that it was not feasible to attempt to recover additional damages at a second trial.” Aplt. App., Vol. 2 at 563. The same day, the court issued its order awarding attorney fees and costs. This appeal followed. II. Analysis Ms. Ridgell-Boltz argues the district court erred by dismissing (again) her hostile-work-environment claim and by denying some of her requested attorney fees and costs without adequate explanation. She also argues the case should be assigned to a different judge on remand and that she is entitled to attorney fees for this appeal. A. Hostile-Work-Environment Claim Because Ms. Ridgell-Boltz’s hostile-work-environment claim was dismissed mid-trial, the jury heard the evidence she had to support the claim, including the evidence of damages she allegedly suffered as a result of the hostile work environment. After the district court decided to dismiss all but the wrongful-discharge claim, it informed the jury: Members of the jury, during the time of this recess, and after discussing the case with counsel, I have made some rulings on points of law that will—that has nar rowed the focus of this case so that the ultimate question for you to decide at the end of the trial will be whether the Plaintiff, Laura Ridgell-Boltz, was removed from her position with the Social Security Administration, as counsel, in retaliation for her having supported the claims of her coworkers of age and gender discrimination in the Plaintiffs own claim. So the question is the termination of employment, was it retaliatory. Aplt. App., Vol. 1 at 293. During closing argument, the agency’s counsel emphasized that the jury was to consider only the wrongful-termination claim: [O]n Thursday, after Ms. Ridgell-Boltz finished putting on all her evidence and her case, His Honor told you that he narrowed the scope of this case. Gone were the first three questions that I discussed with you last Monday. There were only four; the first three are out, and so that leaves only one question left in this case. Was Ms. Ridgell-Boltz fired because of her EEO activities? That’s the only question you have to decide when you go back to the jury room now. No more harassment, hostile work environment, none of that. None of everything that Ms. Ridgell-Boltz focused on for the first Monday, Tuesday, Wednesday, and almost all of Thursday in this case. Aplt. App., Vol. 2 at 303-04. Ms. Ridgell-Boltz’s counsel argued in closing that the measure of her damages might be calculated based on the number of days between when she was fired and when she resumed working at the agency: Is it worth that to feel bad all day about yourself as a person because of what your boss did to you? Is it bad to feel that way at night? If you agree with the number, give her $200 a day for the whole period of time that she was out of work, 605 days, $200 a day. That’s $120,000. Now, maybe you agree with that number and maybe you don’t. Maybe you don’t even like that approach. But there’s got to be some way you can compensate her for the distress she went through. Id. at 329-30. And specifically with respect to damages, the district court instructed the jury: If you find that the plaintiff was removed from her employment in retaliation for her protected conduct, then you must determine an amount that is fair compensation for the plaintiffs losses. You may award compensatory damages for injuries that the plaintiff proved were caused by the defendant’s wrongful conduct. The damages that you award must be fair compensation, no more and no less. Id. at 313-14. On remand from this court, the district court reviewed the evidence the jury heard in support of Ms. Ridgell-Boltz’s claim for damages, focusing on the testimony of her psychologist. The psychologist had testified that Ms. Ridgell-Boltz suffered from an adjustment disorder with anxiety and depression before she was fired and post-traumatic stress disorder after she was fired. Id. at 328-29. Noting that the jury awarded Ms. Ridgell-Boltz $5,000 for “emotional distress, pain suffering, embarrassment, humiliation, or damages to reputation that she experienced,” Aplt. App., Vol. 1 at 36, the district court concluded that she had already been compensated for the emotional injury she sustained, essentially deeming the hostile-work-environment claim duplicative and moot. Ms. Rid-gell-Boltz argues this was error, and we agree. We review de novo the district court’s dismissal of a claim on unspecified grounds. See Colo. Envtl. Coal. v. Wenker, 353 F.3d 1221, 1227 (10th Cir. 2004). We also review de novo questions of mootness. Rio Grande Silvery Minnow v. Bureau of Reclamation, 601 F.3d 1096, 1122-23 (10th Cir. 2010). To prevail on a hostile-work-environment claim, a plaintiff must prove that she was offended by the work environment and that a reasonable person would likewise be offended. Hernandez v. Valley View Hosp. Ass’n, 684 F.3d 950, 957 (10th Cir. 2012). Relevant factors for determining whether such an environment exists are “the frequency of the discriminatory conduct; its severity; whether it is physically threatening or humiliating, or a mere offensive utterance; and whether it unreasonably interferes with an employee’s work performance.” Id. at 958 (internal quotation marks omitted). In contrast, a wrongful-termination claim based on retaliation requires a plaintiff to establish that she engaged in a protected activity and that there is a causal connection between that activity and her termination. See O’Neal v. Ferguson Constr. Co., 237 F.3d 1248, 1252-53 (10th Cir. 2001). These claims are meant to address different types of injuries—those stemming from enduring a hostile work environment and those stemming from being terminated unfairly. Although the jury heard the evidence supporting Ms. Ridgell-Boltz’s hostile-work-environment claim, it was instructed to reach a decision and submit a verdict form based solely on her termination, “We presume a jury has followed the court’s instructions.” Youren v. Tintic Sch. Dist., 343 F.3d 1296, 1306 (10th Cir. 2003). In the absence of any evidence to rebut this presumption, we must conclude that an award of damages on the hostile-work-environment claim would not necessarily be dupli-cative of those awarded on the wrongful-termination claim. To the contrary, her termination provides a logical and appropriate endpoint for when damages due to the hostile work environment ended and those due to the termination began. To fully compensate Ms. Ridgell-Boltz for the separate damages attributable to these distinct injuries, she must be permitted to seek relief for her hostile-work-environment claim in addition to the relief she already obtained for her wrongful termination. Based on the differences between these two types of claims, we reject the notion that the relief she obtained thus far has rendered her hostile-work-environment claim moot. See Rio Grande Silvery Minnow, 601 F.3d at 1110 (“The crucial question [in determining mootness] is whether granting a present determination of the issues offered will have some effect in the real world.” (internal quotation marks omitted)). Therefore, we reverse the district court’s dismissal of this claim, and remand the case with directions to hold a trial on it. B. Attorney Fees and Costs Ms. Ridgell-Boltz argues the district court erred by denying certain portions of her fee request and by reducing the overall amount awarded by 45% in an effort to impose “proportionality” between the services performed and the results achieved in the case. We disagree in part and agree in part. We generally review an attorney fees award for an abuse of discretion. Browder v. City of Moab, 427 F.3d 717, 719 (10th Cir. 2005). “In reaching that decision, we review de novo whether the district court applied the correct legal standard, and we review its findings of fact for clear error.” Id. A claimant must prove two elements to obtain attorney fees: “(1) that the claimant was the ‘prevailing party’ in the proceeding; and (2) that the claimant’s fee request is ‘reasonable.’ ” Robinson v. City of Edmond, 160 F.3d 1275, 1280 (10th Cir. 1998). Ms. Ridgell-Boltz’s status as a prevailing party is not at issue; therefore, we must assess only the reasonableness of the attorney fees award. “To determine the reasonableness of a fee request, a court must begin by calculating the so-called lodestar amount of a fee, and a claimant is entitled to the presumption that this loadstar amount reflects a reasonable fee.” Id. at 1281 (internal quotation marks omitted). When, as in this case, a prevailing party does not succeed on all of her claims, two additional considerations apply: “(1) whether the plaintiffs successful and unsuccessful claims were related; and (2) whether the plaintiffs overall level of success justifies a fee award based on the hours expended by plaintiffs counsel.” Flitton v. Primary Residential Mortg., Inc., 614 F.3d 1173, 1177 (10th Cir. 2010). 1.OFO Fees Ms. Ridgell-Boltz first appealed her termination to the Merit Systems Protection Board (MSPB). There she was represented by the same counsel who continue to represent her in this case, and although she was reinstated and received back pay, her claims based on discrimination and retaliation were denied. See Boltz v. Soc. Sec. Admin., 111 M.S.P.R. 568 (2009). At that juncture, she had the option of either appealing to the Office of Federal Operations (OFO) or bringing her claims in the district court. She chose the former but was unsuccessful. She then brought this action in federal court. She argues that the district court erred by denying her attorney fees associated with the OFO appeal. We disagree. Ms. Ridgell-Boltz cites no authority for the proposition that a party who unsuccessfully petitions through an optional administrative process is entitled to an award of attorney fees. See Barrett v. Salt Lake Cty., 754 F.3d 864, 870 (10th Cir. 2014) (contrasting a Title VII plaintiff who must exhaust administrative grievance procedures as a precondition to bring, suit in court with one who chooses to participate in an employer’s optional grievance process, and concluding that the latter is not entitled to the fees incurred along the way). Moreover, although she ultimately succeeded on one of her claims in federal court, she cannot argue that she was a prevailing party with respect to the OFO proceedings. See Robinson, 160 F.3d at 1280. We conclude that the district court did not err or abuse its discretion by denying these-fees. 2. Appellate Fees Ms. Ridgell-Boltz also argues the district court erred by denying her fees associated with her first appeal to this court. We disagree. She did not ask this court to award her appellate fees. The district court does not have jurisdiction to award appellate attorney fees in the first instance. Hoyt v. Robson Cos., Inc., 11 F.3d 983, 985 (10th Cir. 1993); see also Flitton, 614 F.3d at 1179 (declining to extend “a narrow exception for interlocutory appeal-related fees in cases brought under Title VII or other fee-shifting statutes”). 3. Costs Taxed Ms. Ridgell-Boltz argues that the district court erred by denying her motion for review of costs taxed in its order awarding attorney fees and costs. The order provides no explanation for why her objections to the costs taxed were denied. “Generally, district courts must give an adequate explanation for their decision regarding requests for attorney’s fees, otherwise we have no record on which to base our decision.” Browder, 427 F.3d at 721. On remand, the district court should specifically address her objections to the costs taxed. 4. Lodestar Analysis As noted above, determining the lodestar amount should be the starting point for assessing the reasonableness of a fee request. Robinson, 160 F.3d at 1281. The district court acknowledged but seemed to bypass this requirement when it stated: The lodestar analysis requires the court to determine the reasonableness of the time spent and the need for the services performed. To sort through all of the time records provided and match the services identified with the large volume of motions filed for the plaintiff on which she prevailed and those which were denied would be an unreasonable burden on this court. Aplt. App., Vol. 2 at 574. Instead, the court determined that a “proportionality reduction” was appropriate and reduced the total amount of the request (less deductions for the OFO proceedings and the appellate fees) by forty-five percent. Id. at 575-76. “The record ought to assure us that the district court did not eyeball the fee request and cut it down by an arbitrary percentage.” Robinson, 160 F.3d at 1281 (internal quotation marks omitted). We conclude that a remand is required in this case so that the court can perform the proper analysis and because it may need to reconsider Ms. Ridgell-Boltz’s overall level of success after a new trial on the merits of her hostile-work-environment claim. C. Different Judge on Remand Noting that the current district court judge has twice dismissed her hostile-work-environment claim and has stated that it is “not feasible to attempt to recover additional damages at a second trial,” Aplt. App., Vol. 2 at 563, Ms. Ridgell-Boltz requests that we direct that the case be assigned to another district court judge on remand. However, we do not agree that this is a case where preserving the appearance of justice requires such an assignment. “Respectful of the extraordinary nature of such a request, we will remand with instructions for assignment of a different judge only where there is proof of personal bias or under extreme circumstances.” Mitchell v. Maynard, 80 F.3d 1433, 1448 (10th Cir. 1996). D. Attorney Fees for This Appeal

1515519-7832

OPINION VANANTWERPEN, Circuit Judge. Thomas Steele (hereinafter “Appellant”) brought suit against the City of Erie and investigating officer Corporal Edward Spagel, Jr. under 42 U.S.C. § 1983. He alleged four causes of action: (1) arrest without probable cause; (2) general failure of the City of Erie to properly train, supervise and discipline its officers; (3) various state tort claims stemming from his arrest; and (4) failure of Corporal Spagel’s supervisors to appropriately supervise, control and discipline him (a John Doe claim). The District Court granted summary judgment in favor of Erie and Corporal Spagel. Appellant now argues only two issues on appeal: that the District Court erred in granting summary judgment when it found, as a matter of law, that probable cause existed to arrest him; and that the District Court erred in granting summary judgment when it found that Appellant’s plea to two summary offenses precluded his § 1983 claim arising from any alleged malicious prosecution. We now affirm the District Court’s rulings as to both these points. I. Factual and Procedural History We shall briefly review the essential facts of this case. Sometime after 1:00 a.m. on October 9, 1999, two pedestrians were injured in a hit-and-run accident at the intersection of West 26th Street and Cherry Street in Erie, Pennsylvania. Corporal Spagel was assigned as the primary investigator of this accident. Soon after the accident, the victims of the hit-and-run stated that they were hit by an eastbound white car they identified as possibly a Grand Am. A black, driver’s side rear view mirror was found at the scene. Spagel soon after learned that a woman, tentatively identified by a tavern patron only as “Lisa,” had stopped at the nearby Dairy Mart two hours after the accident and had inquired about the accident and the victims. The Dairy Mart clerk noticed the woman drove a white car with some damage to the front. Corporal Spagel was unable to discover any further information pertaining to “Lisa.” On November 11, 1999, Corporal Spagel learned from a Wesleyville Police officer that Appellant had had his driver’s side rear view mirror replaced on his 1989 Chevrolet Cavalier. Corporal Spagel contacted Appellant, who denied hitting anyone but did acknowledge his presence in the vicinity of 26th Street and Cherry Street at the approximate time of the accident. Appellant stated he believed the mirror had been knocked off the night of the accident by another pedestrian while Appellant had been driving home. Corporal Spagel also noticed other damage to the front end of Appellant’s car during the conversation, which Appellant attributed to a deer strike occurring the same day as the accident. After reviewing his investigation findings, Corporal Spagel completed an affidavit of probable cause and sought an arrest warrant for Appellant. Nowhere in this affidavit did Corporal Spagel mention “Lisa” or that Appellant had stated he was traveling in a westerly direction the evening of the accident. The warrant was issued, and Appellant was arrested. Appellant was charged with seven violations of the Pennsylvania Motor Vehicle Code, and pleaded no contest to two summary offenses. On or about October 15, 2001, Appellant filed this suit in federal District Court for the Western District of Pennsylvania, alleging his four causes of action. On the recommendation of a Magistrate Judge, the District Court granted Appellees’ motion for summary judgment as to all claims. II. Standard of Review The District Court had jurisdiction over this matter pursuant to 28 U.S.C. §§ 1381 and 1313(a)(8) & (a)(1) and 12 U.S.C. § 1983. We now exercise jurisdiction over this appeal of a final district court order under 28 U.S.C. § 1291. This Court’s review of the District Court’s summary judgment order in favor of Appellees is plenary. See Torres v. McLaughlin, 163 F.3d 169, 170 (3d. Cir.1998). III. Discussion Probable Cause to Arrest Appellant We first resolve Appellant’s claim that no probable cause existed to justify the issuance of an arrest warrant. Appellant here claims that the District Court erred in granting summary judgment as a matter of law with regard to his § 1983 claims. While generally “the question of probable cause in a § 1983 damage suit is one for the jury,” Montgomery v. De Simone, 159 F.3d 120, 124 (3d. Cir.1998), a district court may conclude, as a matter of law, that the evidence, when viewed in the light most favorable to the plaintiff, reasonably would support a finding of probable cause, and may enter summary judgment accordingly. See Sherwood v. Mulvihill, 113 F.3d 396, 401 (3d Cir.1997). It is well-established that probable cause exists where “facts and circumstances [are] sufficient to warrant a prudent man in believing that the [suspect] had committed or was committing an offense.” Sharrar v. Felsing, 128 F.3d 810, 818 (3d. Cir.1997). As we have stated before, in order to succeed in challenging a warrant for want of probable cause, a litigant in Appellant’s position must prove that a warrant was obtained by “knowingly and deliberately, or with a reckless regard for the truth, mak[ing] false statements or omissions that create[d] a falsehood” and that “such statements or omissions are material ... to a finding of probable cause.” Wilson v. Russo, 212 F.3d 781, 787 (3d. Cir.2000). Appellant does not meet this standard. After reviewing the record and scrutinizing Corporal Spagel’s affidavit of probable cause, we are satisfied that, as a matter of law, probable cause existed at the time he petitioned for the arrest warrant. At the time Corporal Spagel sought the warrant, he had a suspect who (1) admitted to being in the vicinity of the accident at the approximate time the accident occurred, (2) drove a car of similar make and color as that identified by the victims, and (3) whose car was damaged in a manner consistent with the damage incurred in striking a pedestrian. Such evidence persuades us that the District Court was correct to find that a prudent police officer in Corporal Spagel’s position would conclude that there was probable cause to arrest Appellant, the only suspect under investigation at the time. Appellant makes much of the facts omitted by Corporal Spagel (namely any refer ence to “Lisa” or Appellant’s claimed westwardly travel direction), and summarily concludes that this evidence is sufficiently exculpatory to counsel against a finding of probable cause. While this evidence may have proved useful in establishing a juror’s reasonable doubt at trial, it is not of such quantum as to amount to a material omission on the part of Corporal Spagel. Nothing in our jurisprudence requires a police officer seeking an arrest warrant to present every scintilla of information acquired during an investigation to satisfy the standard for a finding of probable cause, as long as his submission is made in objectively good faith. Finally, Appellant has not presented any evidence demonstrating that, had Corporal Spagel listed every bit of information concerning his investigation, probable cause would have dissolved. Therefore, it is clear to us that, as a matter of law, probable cause to arrest the Appellant existed, and the District Court properly granted summary judgment. Nolo Contendere Plea Barring Recovery Under § 1983 Since it has been determined that probable cause existed at the time the warrant was issued, no § 1983 action lies. See Montgomery v. De Simone, 159 F.3d at 124 (holding that, in order to prevail in a § 1983 malicious prosecution claim, absence of probable cause for initiation of proceedings must be shown). Nevertheless, we will turn briefly to Appellant’s assertion that the District Court incorrectly found that his plea of nolo contendere to two summary offenses barred recovery under § 1983.

1848758-13869

Opinion by Judge FLETCHER; Concurrence by Judge HALL. FLETCHER, Circuit Judge: Eduardo Perez appeals his conviction after a jury trial for possession of four kilograms of cocaine with intent to distribute, a violation of 21 U.S.C. § 841(a)(1). He argues that all evidence seized pursuant to a traffic stop should be suppressed, for a number of independent reasons. He claims that the stop was pretextual because the officers would not have stopped him absent a desire to search for evidence of more serious crime. He also contends that the officers lacked the requisite reasonable suspicion to question him about criminal matters not related to the purpose of the stop. He contends that he did not consent to the search of his car, and that the scope of the officers’ search exceeded that of any consent he did give. He also argues that the district court erred in refusing his proffer of evidence concerning the racial characteristics of thirty-two other individuals stopped by the officers in question. We affirm. I ‘“A pretextual stop occurs when the police use a legal justification to make the stop in order to search a person or place, or to interrogate a person, for an unrelated serious crime for which they do not have the reasonable suspicion necessary to support a stop.’” United States v. Cannon, 29 F.3d 472, 477 (9th Cir.1994) (quoting United States v. Guzman, 864 F.2d 1512, 1515 (10th Cir.1988)). Our circuit’s caselaw has not been entirely consistent in the test it has applied to determine pretext. Cannon, 29 F.3d at 475. Some cases employ a “subjective” test: a stop is pretextual if “the motivation or primary purpose of the arresting officers” is to use the stop in order to search for evidence of an unrelated crime. United States v. Mota, 982 F.2d 1384, 1386 (9th Cir.1993) (quoting United States v. Smith, 802 F.2d 1119, 1124. (9th Cir.1986)). Recent cases have employed an “objective” test: a stop is pretextual unless a “reasonable officer,” given the same circumstances, “ ‘would have’ made the stop anyway, apart from [his or her] suspicions about other more serious criminal activity.” Cannon, 29 F.3d at 476; United States v. Bowhay, 992 F.2d 229, 231 (9th Cir.1993). The stop here was not pre-textual under either inquiry. Troopers Owens and Roll observed Perez’s van pass them and weave back and forth across the fog line. The officers testified that they thought the van’s driver was possibly either intoxicated or falling asleep at the wheel. As it turned out, the van’s steering was malfunctioning. Whatever the cause, the officers’ decision to stop the van was one any reasonable highway patrol officer would make. We agree with the magistrate judge: in order to find the stop pretextual, this Court would have to find that but for their interdiction duties Troopers Owens and Roll would have irresponsibly’ allowed an apparently impaired driver to continue unimpeded down the highway. The Court rejects such a finding as incogitable. ER at 9. See United States v. Lillard, 929 F.2d 500, 502 (9th Cir.1991) (stop was not pretextual where officer observed car driving erratically); United States v. Smith, 799 F.2d 704, 709 (11th Cir.1986) (stop was not pretextual where officer observed car weaving in and out of its lane). Perez argues that the facts that Owens and Roll (1) had been trained as interdiction officers, and (2) had officer Carlson and his dog on standby, prove they were concerned only with catching drug runners. These facts, however, prove only that the officers were prepared for the possibility that they might develop probable cause to search after making a valid traffic stop. Moreover, Perez’s contention that they pulled him over because they suspected him of drug activity is not supported by the record. No evidence suggests that the officers had reason to be suspicious of Perez’s van before they stopped it. See United States v. Gutierrez-Mederos, 965 F.2d 800, 803 (9th Cir.1992) (rejecting appellant’s contention that primary reason for stop was because his car fit “Narcotics Trafficking Characteristics” profile)* cert. denied, — U.S. —, 113 S.Ct. 1315, 122 L.Ed.2d 702 (1993). In sum, there is no support for Perez’s contention that troopers Roll and Owens stopped him because of a desire to search for contraband. On the contrary, any reasonable officer would have made the stop under the circumstances present here. The district court was correct in concluding that the stop was not pretextual. II Perez contends that even if the officers’ initial stop was justified, officer Owens had no reason to ask him whether he had any guns, drugs, or money in the car. Questions asked during an investigative stop must be “reasonably related in scope to the justification for their initiation.” United States v. Brignoni-Ponce, 422 U.S. 873, 881, 95 S.Ct. 2574, 2580, 45 L.Ed.2d 607 (1975) (quoting Terry v. Ohio, 392 U.S. 1, 29, 88 S.Ct. 1868, 1884, 20 L.Ed.2d 889 (1968)). An officer may broaden his or her line of questioning if he or she notices additional suspicious factors, United States v. Bautista, 684 F.2d 1286, 1290 (9th Cir.1982), cert. denied, 459 U.S. 1211, 103 S.Ct. 1206, 75 L.Ed.2d 446 (1983); see also United States v. Barahona, 990 F.2d 412, 416 (8th Cir.1993), but these factors must be “particularized” and “objective,” United States v. Cortez, 449 U.S. 411, 417, 101 S.Ct. 690, 695, 66 L.Ed.2d 621 (1981). Whether Owens’ questioning was based on a reasonable suspicion is a mixed issue of law and fact; the district court’s determination is reviewed de novo. United States v. Thomas, 863 F.2d 622, 625 (9th Cir.1988). Owens testified that his suspicions were aroused by a number of factors: Perez appeared very nervous, would not make eye contact, was sweating profusely, was not the vehicle’s registered owner, was heading to a city known as a “drug hub,” and had hands whose well-manicured appearance was inconsistent with Perez’s stated work as a mechanic. We must consider these factors first separately, and then cumulatively. Perez’s nervous behavior, his avoidance of eye contact with officer Owens, and his profuse perspiration first caught the officers’ attention. All are suspicious factors, even if they would not, alone, be sufficient to justify continued questioning. United States v. Taylor, 934 F.2d 218, 221 (9th Cir.1991) (defendant’s nervousness at checkpoint constituted “minimal, articulable suspicion”), cert. denied, — U.S. —, 112 S.Ct. 971, 117 L.Ed.2d 136 (1992); United States v. Hernandez-Alvarado, 891 F.2d 1414, 1419 n. 6 (9th Cir.1989) (avoidance of eye contact can be considered suspicious if “special circumstances [] make innocent avoidance of eye contact improbable”) (quoting Nicacio v. INS, 797 F.2d 700 (9th Cir.1986)); United States v. Nikzad, 739 F.2d 1431, 1432-33 (9th Cir.1984) (defendant’s nervousness and failure to make eye contact gave rise to reasonable suspicion). Next, Owens discovered that Perez was not the van’s registered owner. See United States v. Fernandez, 18 F.3d 874, 879 (10th Cir.1994) (“[A] defining characteristic of our traffic stop jurisprudence is the defendant’s lack of a valid registration, license, bill of sale, or some other indicia of proof to lawfully operate and possess the vehicle in question, thus giving rise to objectively reasonable suspicion that the vehicle may be stolen.”); United States v. Gonzalez-Lerma, 14 F.3d 1479, 1484 (10th Cir.1994) (“One recurring factor supporting a finding of reasonable suspicion ... is the inability of a defendant to provide proof that he is entitled to operate the vehicle he is driving.”); see generally United States v. Betancur, 24 F.3d 73, 78 (10th Cir.1994) (permissible to ask about contraband where a driver gave registration in another person’s name); United States v. Barahona, 990 F.2d 412, 416 (8th Cir.1993) (permissible to expand inquiry where driver produced a vehicle rental contract in another person’s name); United States v. Soto, 988 F.2d 1548, 1554-56 (10th Cir.1993) (permissible to ask about contraband where driver could not provide the address of the person from whom he allegedly borrowed the car); United States v. Horn, 970 F.2d 728, 732 (10th Cir.1992) (permissible to ask about contraband where driver produced an un-notarized bill of sale for the vehicle). He then learned that Perez was travelling to Salt Lake City, a known “drug hub.” See United States v. Sutton, 794 F.2d 1415, 1426 (9th Cir.1986) (fact that defendant was observed in “a commonly used smuggling area” contributed to reasonable suspicion) (citing United States v. Hickman, 523 F.2d 323, 327-28 (9th Cir.1975), cert. denied, 423 U.S. 1050, 96 S.Ct. 778, 46 L.Ed.2d 639 (1976)). Finally, Owens noticed that although Perez claimed to work as a mechanic, his hands were very well-kept. This kind of perceived inconsistency can also contribute to a finding of reasonable suspicion. United States v. Oba, 978 F.2d 1123, 1128 (9th Cir.1992) (defendant’s inconsistent accounts are grounds for suspicion); Bautista, 684 F.2d at 1291 (same); see also United States v. Turner, 928 F.2d 956, 959 (10th Cir.1991) (“[djefendant claimed that he was an auto mechanic, but the officer observed that his hands were well-manicured and did not appear to be in the condition of someone who works as an auto mechanic”). The individual factors noticed by officer Owens were legitimate bases for suspicion. “[Tjaken together, they amount to reasonable suspicion.” United States v. Sokolow, 490 U.S. 1, 9, 109 S.Ct. 1581, 1586, 104 L.Ed.2d 1 (1989). Ill Perez argues that he did not consent to the search of his car, and alternatively that his consent was not voluntary. The magistrate judge rightly saw the first issue as a credibility battle: Perez’s word against that of the arresting officers. The magis trate believed the officers, and found Perez’s testimony incredible. We review this determination for clear error. United States v. Ramos, 923 F.2d 1346, 1356 (9th Cir.1991). At the suppression hearing Perez testified that the first question officer Owens asked him was whether he had any babies in the car. He claimed that the officers then almost immediately handcuffed him and began searching his. car with the aid of Mickey the dog. He said that the consent form was produced and signed only after the cocaine was discovered. He testified that he could not read the consent form because officer Owens kept his hand over the part written in Spanish. He also testified that he knows no English except for the words “drivers,” “license,” “registration,” and “babies.” The magistrate judge found Perez’s claim concerning his English incredible in light of Perez’s two years’ residence in the United States. The magistrate found that it was simply too much of a coincidence that officer Owens, in questioning Perez, happened to use the only four English words Perez claimed to know. We agree, and note in addition that Perez fails to explain how, if he knew so little English, he could have responded to Owens’s prior questions about where he was coming from and heading to, about who the van’s owner was. More-r, Owens’ testimony that the officers first ired consent and then searched was eor-jrated by the testimony of officer Carl-Mickey’s handler. The magistrate was clearly erroneous in finding that Perez gave his consent to the search. We are left with the question whether the consent was voluntary. The magistrate judge found that, “[u]nder the factual scenario described by Owens, it is clear that Perez freely and voluntarily consented to the search of his van.” He noted, [Owens] had already returned the driver’s license and registration to Perez, had finished verbally admonishing him for his unsafe driving, was in possession of nothing belonging to Perez, and spoke to Perez in a quiet, non-aggressive voice. ER at 10 n. 8. In reviewing the magistrate’s determination, we must consider Perez’s consent in light of the factors described in United States v. Castillo, 866 F.2d 1071, 1082 (9th Cir.1988). Nothing suggests that the officers exerted any overt coercion on Perez to consent, or told him that they could secure a warrant if he refused. Id. Nor was the situation inherently coercive: Perez was not under arrest or physically detained at the time, and the officers did not have their guns drawn. Id. Perez was briefly detained on a public highway, a' setting held to actually discourage coercion. Berkemer v. McCarty, 468 U.S. 420, 438, 104 S.Ct. 3138, 3149, 82 L.Ed.2d 317 (1984). Perez signed a written consent form which specifically advised him, in Spanish, of his right to refuse consent. The officers did not give a Miranda warning, but it was not required, since Perez was not under arrest at the time. Schneckloth v. Bustamonte, 412 U.S. 218, 231-32, 93 S.Ct. 2041, 2049-50, 36 L.Ed.2d 854 (1973) (failure to give Miranda warning does not render consent invalid if defendant is not subject of custodial interrogation). Viewing the totality of the circumstances, Castillo, 866 F.2d at 1082, we conclude that Perez’s consent was voluntary. See Gutierrez-Mederos, 965 F.2d at 802-03 (finding consent to be voluntary under similar circumstances). IV “The standard for measuring the scope of a suspect’s consent under the Fourth Amendment is that of ‘objective’ reasonableness—what would the typical reasonable person have understood by the exchange between the officer and the suspect?” Cannon, 29 F.3d at 477 (quoting Florida v. Jimeno, 500 U.S. 248, 251, 111 S.Ct. 1801, 1804, 114 L.Ed.2d 297 (1991)). Perez claims that “[n]o reasonable person ... could have foreseen that his consent opened the door to a trained K-9 unit’s examination of their entire automobile.” Blue Brief at 19. Whether a search went beyond the scope of a suspect’s consent is a determination reviewed for clear error.. United States v. Huffhines, 967 F.2d 314, 319 (9th Cir.1992).

3801221-29035

ORDER AND MEMORANDUM OF DECISION EDWARD W. NOTTINGHAM, Chief Judge. This action arises from Plaintiff Richard Galvin’s investment of $299,000 into a gas well project located in Texas (hereinafter “the Project”) and headed, in part, by Defendant Spirit Energy, LLC (hereinafter “Spirit”), which Plaintiff alleges fraudulently induced him to invest in the Project. Plaintiff further alleges that Defendant Brian McCarthy, Chief Operating Officer of Spirit, defaulted on a promissory note (the “Note”) he executed in favor of Plaintiff to secure Plaintiffs investment in the Project. This matter comes before the court on “Omnibus Motion of Defendant Spirit Energy, LLC,” filed June 8, 2007. Jurisdiction is premised upon diversity of citizenship pursuant to 28 U.S.C. § 1332. FACTS 1. Factual Background The following facts are taken from Plaintiffs amended complaint and are presumed true for the purposes of this motion. Plaintiff Richard Galvin is an individual residing in Colorado. (Notice of Removal [hereinafter “Notice of Removal”], Ex. 5 [Am. Compl.] [hereinafter “Am. Compl.”] ¶1 [filed Apr. 30, 2007].) Mr. McCarthy is an individual residing in Texas. (Am.Compl. ¶ 2.) Spirit is an Arkansas limited liability company. (Id. ¶ 3.) Plaintiff invested $299,000 (the “Principal”) in certain oil producing wells known as Smajstria # 1 well and J.C. Diemer # 1 well (the “Wells”). (Id. ¶ 7.) Plaintiff secured this investment (hereinafter the “Investment”) with the Note executed by Mr. McCarthy in favor of Plaintiff. (Id. ¶ 8.) The Note accrues interest at the rate often percent per annum on the unpaid Principal and became due on December 20, 2006. (Id. ¶¶ 9-10.) As of February 6, 2007, Mr. McCarthy had not paid any portion of the amount due on the Note. (Id. ¶ 11.) Defendants collectively induced the Investment by falsely representing to Plaintiff that the Wells were in a proven oil and gas producing area. (Id. ¶¶ 12-13.) Fui ther, “Defendants misrepresented such facts to a significant number of other investors in a continuous cycle of misrepresentations built upon misrepresentations and specifically misrepresented to Plaintiff that it was ‘realistic and very conservative to expect 2.7 [billion cubic feet (“BCF”) of gas] per well.’ ” (Id. ¶ 14.) These misrepresentations induced Plaintiff to purchase the Note. (Id. ¶ 16.) Pursuant to the terms and conditions of the Note, an event of default is deemed to have occurred if “any representation, warrant or information of or regarding the Borrower contained in the ... Note or required to be furnished to the Lender in connection therewith is false or misleading in any material respect on the date made or furnished.” (Id. ¶ 17.) 2. Procedural History On October 20, 2006, Plaintiff filed a complaint in the District Court of Arapahoe County asserting the following claims with respect to the Investment and the Note: (1) Mr. McCarthy defaulted on a negotiable instrument; (2) Mr. McCarthy breached his contract with respect to the Note; (8) Mr. McCarthy breached his guaranty of the Note; (4) Defendants unjustly enriched themselves through the Investment; (5) Defendants engaged in fraud by making misrepresentations to Plaintiff on which he justifiably relied; (6) Defendants engaged in a civil conspiracy to defraud Plaintiff; and (7) Defendants engaged in Rule 10b5 fraud against Plaintiff. (Id. ¶¶ 20-64.) On April 30, 2007, Defendants removed the action to this court. (Notice of Removal.) On May 25, 2007, Spirit filed a motion to dismiss for lack of personal jurisdiction. (Mot. of Def. Spirit Energy, LLC, to Dismiss for Lack of Personam [sic] Jurisdiction [filed May 25, 2007].) On November 27, 2007, I denied Spirit’s motion. (See Order and Memorandum of Decision [filed Nov. 27, 2007] [hereinafter “Order”].) On June 8, 2007, Spirit filed an “omnibus” motion to dismiss based on: (1) improper venue; (2) forum non conveniens; and (3) failure to state a claim for relief. (Omnibus Mot. of Def. Spirit Energy, LLC [filed June 8, 2007] [hereinafter “Def.’s Br.”].) On July 2, 2007, Plaintiff responded to the motion. (Pl.’s Opp’n to Def. Spirit Energy LLC’s “Omnibus Mot. to Dismiss” [filed July 2, 2007] [hereinafter “PL’s Resp.”].) On August 2, 2007, Spirit replied in support of its motion. (Spirit Energy’s Reply to PL’s Resp. to Omnibus Mot. to Dismiss [filed Aug. 2, 2007] [hereinafter “Def s Reply”].) This issue is fully briefed and ripe for review. ANALYSIS 1. Evaluation of Claims Spirit seeks dismissal of Plaintiffs claims against it for the following reasons: (1) improper venue; (2) forum non conve-niens; (3) failure to state a claim for relief as to the entire complaint; (4) failure to plead fraud and mistake with particularity; and (5) failure to properly plead 10b-5 fraud. (See Def.’s Br.) Plaintiff counters that: (1) Defendant has already waived its venue and forum non conveniens arguments; (2) Plaintiff sufficiently pled all claims; and (3) in the event the court finds any claims insufficiently pled, leave should be granted to amend Plaintiffs complaint. (PL’s Resp.) I address each of Spirit’s argument in turn. a. Improper of Venue Without addressing the substance of Spirit’s claims regarding venue, I find dismissal is not warranted on this ground. As Plaintiff points out, when Spirit filed its motion to dismiss for lack of personal jurisdiction on May 25, 2007, it waived its right to move to dismiss based on improper venue at a later time. (See Pl.’s Resp. at 1-4.) Federal Rule of Civil Procedure 12(b) permits the defenses of personal jurisdiction and improper venue to be raised by motion. See Fed.R.Civ.P. 12(b). Further, as written at the time Spirit filed its briefs, Rule 12(g) stated: Consolidation of Defenses in Motion. A party who makes a motion under this rule may join with it any other motions herein provided for and then available to the party. If a party makes a motion under this rule but omits therefrom any defense then available to the party which this rule permits to be raised by motion, the party shall not thereafter make a motion based on the defense or objection so omitted, except a motion as provided in subdivision (h)(2) hereof on any of the grounds there stated. Fed.R.Civ.P. 12(g). Finally, Rule 12(h)(1) made clear that the defense of “improper venue ... is waived [ ] if omitted from a motion in the circumstances described in subdivision (g).” Fed.R.Civ.P. 12(h)(1). Accordingly, by filing Plaintiffs first motion to dismiss based on personal jurisdiction without simultaneously objecting to the allegedly improper venue, Spirit waived any future objection to venue. See Wachovia Bank, N.A. v. Schmidt, 546 U.S. 303, 316, 126 S.Ct. 941, 163 L.Ed.2d 797 (2006) (noting because “venue is largely a matter of litigational convenience ..., it is waived if not timely raised”); cf. Fed. Deposit Ins. Corp. v. Oaklawn Apts., 959 F.2d 170, 175 (10th Cir.1992) (“If a party files a pre-answer motion and fails to assert the defenses of lack of personal jurisdiction or insufficiency of service, he waives these defenses.”). Spirit makes no arguments to the contrary. (See Spirit’s Reply.) Thus, I deny Spirit’s motion to dismiss with respect to improper venue. b. Forum Non Conveniens Spirit next argues that, regardless of venue, the court should exercise its discretion to dismiss the case under the doctrine of forum non conveniens, so that the case can be properly pursued in Texas, if at all. (Def.’s Br. at 6-7.) The Supreme Court has explained the doctrine as follows: Under the federal doctrine of forum non conveniens, when an alternative forum has jurisdiction to hear a case, and when trial in the chosen forum would establish oppressiveness and vexation to a defendant out of all proportion to plaintiffs convenience, or when the chosen forum is inappropriate because of considerations affecting the court’s own administrative and legal problems, the court may, in the exercise of its sound discretion, dismiss the case, even if jurisdiction and proper venue are established. Am. Dredging Co. v. Miller, 510 U.S. 443, 447-48, 114 S.Ct. 981, 127 L.Ed.2d 285 (1994) (internal quotation marks omitted). However, the Supreme Court has also made clear that the doctrine survives only as it relates to dismissal to a foreign forum: [The] transfer of venue function of the forum non conveniens doctrine has been superseded by statute, see 28 U.S.C. § 1404(a), and to the extent we have continued to recognize that federal courts have the power to dismiss damages actions under the common-law forum non conveniens doctrine, we have done so only in “cases where the alternative forum is abroad.” Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 722, 116 S.Ct. 1712, 135 L.Ed.2d 1 (1996) (quoting Am. Dredging Co., 510 U.S. at 449 n. 2, 114 S.Ct. 981; further internal citations omitted). Texas, contrary to the wishes of some of its citizens, is not at this point a foreign forum. Thus, I deny Spirit’s motion to dismiss on forum non conveniens grounds. Nonetheless, I consider Spirit’s arguments under the relevant federal statute. Section 1404(a) of Title 28 of the United States Code states that “[f]or the convenience of the parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.” 28 U.S.C. § 1404(a) (2006) (hereinafter “Section 1404[a]”). A court’s assessment of convenience under Section 1404(a) is “discretionary.” King v. PA Consulting Group, Inc., 78 Fed.Appx. 645, 647 (10th Cir.2003). However, “unless the balance is strongly in favor of the mov- ant[,] the plaintiffs choice of forum should rarely be disturbed.” Id. (quotation marks omitted). Motions for transfer warrant an “ ‘individualized, case-by-case consideration of convenience and fairness.’ ” Chrysler Credit Corp. v. Country Chrysler, Inc., 928 F.2d 1509, 1516 (10th Cir.1991). “[The] party moving to transfer a case pursuant to [Section] 1404(a) bears the burden of establishing that the forum is inconvenient.” Scheidt v. Klein, 956 F.2d 963, 965 (10th Cir.1992). As an initial matter, Plaintiff contends that Spirit has waived any transfer of venue defense under Rule 12(h)(1). (Pl.’s Resp. at 1-3.) I disagree. Transfer of venue is discretionary; a court may transfer an action under Section 1404(a) “at any time during the pendency of a case, even after judgment has been entered.” Chrysler Credit Corp., 928 F.2d at 1516 (emphasis added). Consolidation is required only for those defenses enumerated in Rule 12, which does not include transfer of venue. See Fed.R.Civ.P. 12(b). Accordingly, I find it remains in this court’s discretion to transfer this case pursuant to Section 1404(a). See L & L Constr. Assocs. v. Slattery Skanska, Inc., No. 05-1289, 2006 U.S. Dist. LEXIS 14969, at *6-7, 2006 WL 1102814, *3 (D.C.Cir. Mar. 31, 2006) (“The plain text of the Federal Rules of Civil Procedure clearly state that the waiver provision of Rule 12[g] only applies to the types of motions permitted by Rule 12, namely, motions to dismiss under 12[b]. Rule 12[g] does not apply to motions outside of Rule 12, and thus is not applicable to motions to dismiss under forum non conveniens.”); Dedely v. Watkins, No. 87-3102, 1987 U.S. Dist. LEXIS 10952, at *2, 1987 WL 25211, *1 (E.D.Pa. Nov. 24, 1987) (“Because a [Section 1404(a)] motion to transfer is not one of the motions enumerated in Rule 12[b], it is not governed by the requirement of consolidation and waiver of Rule 12[g] and [h].”). Accordingly, I now proceed with a fact-specific analysis of the fairness and convenience of transferring the instant case to Texas. See Chrysler Credit Corp., 928 F.2d at 1516. Spirit argues for transfer of venue based largely on convenience. More specifically, Spirit asserts: [Essentially all of the evidence relating to Plaintiffs claims' — the person who drilled the wells, the engineer who said where to drill the well, the testimony of Mr. Reynolds, Mr. McCarthy and representatives of Defendant Texas Petroleum Resources, Inc., as well as information about the wells’ production or lack thereof — are in Texas. (Def.’s Br. at 8.) The parties’ disclosures do indeed show that the vast majority of potential witnesses for this case are in Texas. (See Def.’s Reply, Ex. 1 [Pl.’s 26(a)(1) Disclosures]; Ex. 2 [Def.’s 26(a)(1) Disclosures].) In fact, of the fourteen people Plaintiff identified who have information regarding the instant dispute, only two — one of whom is Plaintiff — reside in Colorado. (See id., Ex. 1 [Pl.’s 26(a)(1) Disclosures].) However, the vast majority of the Texas witnesses are Defendants’ executives and employees. (See id.) Thus, although these individuals are outside the reach of the compulsory process of this court, they are not without incentive to attend hearings and a trial in Colorado. Moreover, “proximity to the courthouse is only one factor to consider in a [Section] 1404(a) motion.” Tex. E. Transmission Corp. v. Marine Office-Appleton, 579 F.2d 561, 568 (10th Cir.1978) (finding district court judge did not abuse his discretion in refusing to transfer a case, even though most witnesses did not reside in the district where the trial took place). In the case at bar, because the vast majority of the individuals who are inconvenienced by a Colorado venue are Defendants’ executives and employees, transferring the venue to Texas would merely shift inconvenience from Defendants to Plaintiff. I find such “[a] shifting of inconvenience from one side to another is not a strong reason for transfer” from Plaintiffs chosen forum. Triple A P’ship v. MPL Commc’ns Inc., 629 F.Supp. 1520, 1526 (D.Kan.1986); accord Welch v. Pro-Benefit Staffing, Inc., No. 90-A-426, 1990 U.S. Dist. LEXIS 20138, at *16, 1990 WL 174885, *6 (D.Colo. Nov. 7, 1990). Accordingly, I find the location of witnesses militates weakly in favor of transfer. Spirit also contends that because all of the evidence related to Plaintiffs claim is in Texas, convenience weighs heavily in favor of transfer. (See Def.’s Br. at 8.) Plaintiff counters that the location of this evidence is inconsequential, because it is largely, if not wholly, documentary. (Pl.’s Resp. at 7.) I agree with Plaintiff. Spirit does not list the records that are located in Texas or explain why transmitting such records, either in paper or electronic form, to Colorado is more inconvenient than transferring the information within Texas. (See Def.’s Br. at 8.) Either way, the information and documentation will need to be copied or scanned and delivered to counsel for Plaintiff. Thus, Spirit has failed to show that the location of the evidence weighs in favor of transfer. Plaintiff, on the other hand, argues that the equities weigh against transfer. As I have already found in my order denying Spirit’s motion to dismiss based on lack of personal jurisdiction: “Spirit initiated numerous contacts by phone and mail with Plaintiff in Colorado regarding the Project, traveled to Colorado to solicit funds for the Project, and negotiated and signed the agreements and a promissory note related to the Project in Colorado.” (Order at 7.) Thus, I concluded that Spirit should reasonably have expected to be brought to court in Colorado, Plaintiffs place of residence since 1957. (Pl.’s Resp. at 7-8.) I now further find that Plaintiff should reasonably have expected to be able to sue Spirit in Colorado for misrepresentations it made to him in Colorado. Thus, I find the equities weigh against transfer of venue. Finally, the parties dispute the weight of certain forum-related clauses contained in contracts between them. Spirit points to a clause contained in two contracts between itself and Plaintiff which states: “This agreement, and its application or interpretation, shall be governed by the laws of the United States of America and the State of Texas. Venue for any action arising hereunder shall lie in Hunt County, Texas.” (Def.’s Br. at 5-6.) Plaintiff, however, points out that the contracts at issue in his complaint contains a clause adopting Arkansas law and identifying Arkansas as the forum. (Pl.’s Resp. at 4-6 [citing Am. Comp. ¶¶ 7-8].) Spirit, in turn, apparently contends that the contracts at issue in the complaint were made when Spirit was located in Arkansas, and that when Spirit moved to Texas, the contracts were somehow automatically amended to contain the aforementioned Texas-centric clauses. {See Spirit’s Reply at 2.) Unsurprisingly, Spirit cites no caselaw to support its novel and entirely unpersuasive argument. Needless to say, reading the facts in the light most favorable to Plaintiff, I find the clauses at issue have no impact on my analysis regarding transfer of venue. Considering all of the factors discussed above, I find transfer is not warranted. Fairness clearly weighs against transfer. Convenience militates weakly in favor of transfer. Thus, I decline to transfer this case to Texas. c. Failure to State a Claim Upon Which Relief May be Granted Spirit argues for dismissal based on Plaintiffs failure to state a claim on several fronts. (See Def.’s Br. at 2-5.) First, it contends that Plaintiff did not, himself, invest in Spirit and, thus, has no claim against it. (Id. at 2.) Second, Spirit argues that Plaintiff failed to plead his unjust enrichment and fraud claims with particularity. (Id. at 3-4.) Third, Spirit urges that Plaintiffs securities fraud claim fails because it does not meet the heightened pleading requirements of the Private Securities Litigation Reform Act (PSLRA). (Id. at 4-5.) I address each of Spirit’s arguments in turn. i.Legal Standard Federal Rule of Civil Procedure 12(b)(6) provides that a defendant may move to dismiss a claim for “failure to state a claim upon which relief can be granted.” Fed. R.Civ.P. 12(b)(6) (2007). “The court’s function on a Rule 12(b)(6) motion is not to weigh potential evidence that the parties might present at trial, but to assess whether the plaintiffs complaint alone is legally sufficient to state a claim for which relief may be granted.” Dubbs v. Head Start, Inc., 336 F.3d 1194, 1201 (10th Cir.2003) (citations and quotation marks omitted). Thus, all well-pled factual allegations in a complaint are accepted as true and construed in the light most favorable to the plaintiff. Alvarado v. KOB-TV, LLC, 493 F.3d 1210, 1215 (10th Cir.2007). Further, the court is to make all reasonable inferences in the plaintiffs favor. Timpanogos Tribe v. Conway, 286 F.3d 1195, 1204 (10th Cir.2002). Prior to the Supreme Court’s recent decision in Bell Atlantic Corp. v. Twombly, — U.S. -, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007), dismissal of a complaint was appropriate only when it appeared the plaintiff could prove no set of facts in support of the claims that would entitle him to relief. Coosewoon v. Meridian Oil Co., 25 F.3d 920, 924 (10th Cir. 1994). In Bell Atlantic, however, the Supreme Court articulated a new “plausibility” standard, under which a complaint must include “enough facts to state a claim to relief that is plausible on its face.” 127 S.Ct. at 1974. ii.Plaintiff as an Investor in Spirit Spirit argues Plaintiffs complaint should be dismissed in toto because Plaintiff did not invest in Spirit. (Id. at 2.) Spirit cites nothing in the record to support its assertion. (See id.) The Note at the center of Plaintiffs complaint and attached to the complaint, is signed by Plaintiff. (Am. Compl., Ex. 1 [Promissory Note].); GFF Corp. v. Associated Wholesale Grocers, 130 F.3d 1381, 1384 (10th Cir.1997) (noting that in deciding a motion to dismiss, a court may consider a document referred to in the complaint and that is central to the complaint). Further, Plaintiff s investment in the Wells was memorialized in two oil well contracts between Plaintiff and Spirit Energy. (See Pl.’s Resp., Exs. 3-4 [Participation Agreements].); see GFF Corp., 130 F.3d at 1384. Based on the foregoing, I deny Spirit’s motion to dismiss with respect to Plaintiffs investment in the company. iii.Rule 9(b)’s Particularity Requirement Next, Spirit urges that Plaintiffs claims for unjust enrichment and fraud must be dismissed, because Plaintiff failed to plead them with particularity. (Def.’s Br. at 9-11.) In Plaintiffs complaint, he alleges that Defendants’ misrepresentations permitted their unjust enrichment and constituted fraud. (Am.Comp.¶¶ 44-54.) The averments supporting these claims follow: 12. The Defendants collectively induced the Investment by falsely representing certain material facts to Plaintiff. 13. Specifically, the Defendants continuously misrepresented to Plaintiff that the Wells were in a proven oil and gas producing area. 14. The Defendants misrepresented such facts to a significant number of other investors in a continuous cycle of misrepresentations built upon misrepresentations and specifically misrepresented to Plaintiff that it was “realistic and very conservative to expect 2.7 BCF per wen.” (Id. ¶¶ 12-14.) At the time Spirit filed its motion to dismiss, Federal Rule of Civil Procedure 9(b) stated: “In all averments of fraud or mistake, the circumstances constituting fraud or mistake, shall be stated with particularity.” Fed.R.Civ.P. 9(b). The Tenth Circuit has interpreted Rule 9(b) to require “a complaint alleging fraud ‘to set forth the time, place and contents of the false representations, the identity of the party making the false statements and the consequences thereof ” Koch v. Koch Indus., 203 F.3d 1202, 1236 (10th Cir.2000) (quoting Lawrence Nat’l Bank v. Edmonds (In re Edmonds), 924 F.2d 176, 180 [(10th Cir.1991])); accord Schwartz v. Celestial Seasonings, 124 F.3d 1246, 1252 (10th Cir.1997). The purpose of Rule 9(b) is “to afford defendant fair notice of plaintiffs claims and factual ground upon which [they] are based....” Koch, 203 F.3d at 1236 (quoting Farlow v. Peat, Marwick, Mitchell & Co., 956 F.2d 982, 987 [(10th Cir.1992])). I find Plaintiffs averments do not fully comply with Rule 9(b), because Plaintiff fails to state the time and place the alleged misstatements were made. See id. at 1252. Spirit contends that under Rule 9(b), Plaintiff was also required to state the basis for concluding that the statements made were fraudulent. (See Def.’s Br. at 11-12.) In support, Spirit cites unbinding cases from the Second Circuit and the Colorado Supreme Court. (See id. [citing Koehler v. Bank of Bermuda, 209 F.3d 130 (2d Cir.2000); Ginsberg v. Zagar, 126 Colo. 536, 251 P.2d 1080 (1952) ].) This court’s research has revealed no cases from the Tenth Circuit or this district suggesting such specificity is required, and I see no reason to require it here. Tenth Circuit precedent is clear that a complaint alleging fraud must identify the “contents of the false representations,” and makes no requirement for additionally identifying a plaintiffs basis for concluding the representations were false or misleading. See Koch, 203 F.3d at 1236; Schwartz, 124 F.3d at 1252. Moreover, it is worth noting that “[t]he requirements of Rule 9(b) must be read in conjunction with the principles of Rule 8, which calls for pleadings to be ‘simple, concise, direct, ... and to be construed as to do substantial justice.’ ” See Schwartz, 124 F.3d at 1252 (citing Fed. R.Civ.P. 8[e]). I find a fair and commonsense reading of Plaintiffs complaint conveys that the Wells: (1) were not in an oil and gas producing area as represented by Defendants; and (2) produced less than Defendants’ “realistic and very conservative” estimate of 2.7 BCF per well. (See Am. Compl. ¶¶ 12-14.) Thus, Plaintiffs allegations comports with the Tenth Circuit’s requirement that a complaint alleging fraud identify the “contents of the false representations.” Koch, 203 F.3d at 1236. Still, based on the infirmities identified above, I grant Spirit’s motion to dismiss Plaintiffs unjust enrichment and fraud claims without prejudice. I also grant Plaintiffs request for leave to amend his complaint to plead the aforementioned claims with more particularity. See Koehler, 209 F.3d at 137 (“Leave to amend should be freely granted, especially when dismissal is based on Rule 9(b).”); Anderson v. USAA Cas. Ins. Co., 221 F.R.D. 250, 253 (D.D.C.2004) (“Where the pleading does not satisfy the heightened requirements of Rule 9(b), the court should freely grant leave to amend.”); see also Fed.R.Civ.P. 15(a)(2) (mandating that the court “should freely give leave [to amend the pleadings] when justice so requires”). Spirit does not argue against the court granting such leave. (See Spirit’s Reply.) Accordingly, I dismiss Plaintiffs unjust enrichment and fraud claims without prejudice and with leave to amend. iv. Rule 10b-5 Fraud Finally, Spirit argues that Plaintiffs 10b-5 claim does not meet PSLRA’s pleading requirements. (Def.’s Br. at 4-5.) Rule 10b-5 prohibits certain fraudulent acts committed in connection with securities transactions by providing, in relevant part, that: It shall be unlawful for any person, directly or indirectly, (b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.... 17 C.F.R. § 240.10b-5 (2008). Because Rule 10b-5 claims involve allegations of fraudulent conduct, courts have long required that they be pled in accordance with Rule 9(b) of the Federal Rules of Civil Procedure. City of Phila. v. Fleming Cos., 264 F.3d 1245, 1258 (10th Cir. 2001). Skeptical of Rule 9(b)’s ability to curtail perceived abuses of securities laws by overzealous plaintiffs’ attorneys, Congress enacted the PSLRA in 1995. Fleming, 264 F.3d at 1258. Among other things, the PSLRA substantially modified the standards for pleading securities fraud claims, purportedly establishing standards that were “higher than any federal court had imposed up to that point in time.” Id. at 1259. Under the PSLRA, to plead a valid 10b-5 claim, a plaintiff must: (1) plead with particularity the facts surrounding the alleged fraud, including identifying the specific misleading statements or omissions and the reasons why they are misleading; and (2) plead with particularity the facts permitting a strong inference of scienter. 15 U.S.C. §§ 78u-4(b)(1)-(2) (2006). Thus, Plaintiff must allege sufficient fact to create a “strong inference” that Spirit, in making the alleged misstatements and omission had an “intent to deceive, manipulate, or defraud.” Adams, 340 F.3d at 1105. The Tenth Circuit has stated that it “understand^] ‘strong inference’ of scienter to be a conclusion logically based upon particular facts that would convince a reasonable person that the defendant knew a statement was false or misleading.” Id. The Supreme Court recently held that the “strong inference” of scienter required to make out a Rule 10b-5 claim “must be more than merely plausible or reasonable — it must be cogent and at least as compelling as any opposing inference of nonfraudulent intent.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., -U.S.-, 127 S.Ct. 2499, 2504-05, 168 L.Ed.2d 179 (2007). As I found above, Plaintiff has failed to state with particularity the time and place of the alleged misstatements. (See Analysis § 2[c][iii], supra.) Further, I find Plaintiff has failed to plead sufficient facts to support a finding of scienter- — -that Spirit knowingly misstated and/or omitted material facts in connection with Plaintiffs purchase of the Note. Plaintiffs only allegations regarding scienter are conclusory assertions that Spirit’s misrepresentations were made “knowingly.” (See Am. Compl. ¶¶ 61-62.) Such bald assertions are woefully inadequate to support a “strong inference of scienter.” Brody v. Stone & Webster, Inc. (In re Stone & Webster, Inc., Sec. Litig.), 414 F.3d 187, 205 (1st Cir.2005) (finding PSLRA’s pleading “requirement is not satisfied by pleading which simply asserts that the defendant knew of the falsity”); accord Southland Sec. Corp. v. INSpire Ins. Solutions Inc., 365 F.3d 353, 361 (5th Cir.2004); PR Diamonds, Inc. v. Chandler, 364 F.3d 671, 684 (6th Cir.2004). Thus, I grant Spirit’s motion to dismiss Plaintiffs 10b-5 claim. I now turn to Plaintiffs request for leave to amend his Rule 10b-5 claim. As I noted above, the PSLRA’s pleading requirement is heightened even above that established by Rule 9(b), and caselaw suggests that leave to amend should not be so freely given under the former. See, e.g., Cal. Pub. Emples.’ Ret. Sys. v. Chubb Corp., 394 F.3d 126, 164 (3d Cir.2004). I agree with the Third Circuit’s assessment that: [allowing leave to amend where there is a stark absence of any suggestion by plaintiff[ ] that [he has] developed any facts since the action was commenced, which would, if true, cure the defects in the pleadings under the heightened requirements of PSLRA, would frustrate Congress’s objective in enacting this statute of providing a filter at the earliest stage (pleading stage) to screen out lawsuits that have no factual basis.

4172367-18832

PETERS, District Judge. This is a petition by an insurance company, alleged to have been organized and to be existing under the laws of Illinois and to be a citizen of that state, against certain individuals alleged to be citizens of the state of Maine, asking that a judgment be rendered declaring void a certain liability insurance policy issued by the petitioner to one of the respondents. Answers were filed and the matter has been heard and considered on the equity side of the court. Certain issues were submitted to,a jury in the form of interrogatories as provided by the Declaratory Judgments Act, U.S.C.A. tit. 28 § 400, under which this proceeding was brought. Various motions have been filed, determination of which was reserved and which now require rulings; and the case has to be decided on the basis of the pleadings, evidence, and answers of the jury to the questions submitted. I find the following facts: The petitioner, hereinafter referred to as the insurance company or the company, on February 12, 1936, issued its liability insurance policy in the usual form to the respondent, Josephine Grenier, insuring her, up to a limit of $5,000 for any one person, or $10,000 for any one accident, against' loss from liability for damages consequent upon the operation of a certain Chevrolet automobile described therein, the same insurance being, later, transferred from the Chevrolet to a Plymouth sedan. The policy by its terms expired in one year from February 15, 1936. The policy contained the following provision: “This entire policy shall be void * * * (a) if the interest of the assured in the subject of this insurance be other than unconditional and sole ownership.” Also the following: “This entire policy shall be void if the assured or his agent has concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof; or, in case of any fraud, attempted fraud or false swearing by the assured or his agent touching any matter relating to this insurance or the subject thereof, whether before or after a loss.” The policy also contained a clause to the effect that its provisions covered the operation of the automobile while used by another person with the consent of the assured. In addition to the indemnity against loss from liability for damages, the policy contained a provision obliging the company to defend any suit brought against the assured to enforce any claim covered by the policy, whether groundless or not. On November 7, 1936, the Plymouth automobile described in the policy was being driven by the respondent Raymond L. Grenier, son of Josephine, when it collided with a tree outside the' highway, causing the death of Roland Paquette and Louis Turcotte, who were passengers or guests of Grenier and whose administrators are the other respondents named in this petition. Paquette died after conscious suffering. Turcotte was killed instantly. Grenier had been previously convicted of reckless driving, fined, and had his driver’s license suspended, and by provisions of law in Maine he was prohibited from registering any automobile in his name until he had made arrangements with the secretary of state, by insurance policy or bond, to protect users of the highways against his recklessness. Grenier, knowing that, he was not allowed to drive, purchased the automobiles covered by the insurance policy and, with the connivance of his mother, had them registered in her name, having placed thereon chattel mortgages or conditional sales contracts at the time of purchase. These facts were unknown to the insurance company, which, was led to believe that Josephine Grenier was the actual and the sole owner and only person interested in the cars. The issue at the trial was the validity of the insurance policy. Two questions were submitted to the jury: One was whether Josephine Grenier at the time of the placing of the insurance on the Chev rolet was its unconditional and the sole owner; and the other, whether at the time of the placing of the insurance on the Plymouth she was the unconditional and sole owner of that car; and the answer to each question was in the negative. It being an express condition of the policy that it should be void in case the assured named was not the sole and unconditional owner, it necessarily follows, as a matter of law, from the verdict of the jury, that the policy was void, and judgment should be rendered accordingly unless there appears some reason to the contrary. After the death of Turcotte and Paquette in the accident of November 7th, a suit was brought in the superior court of the state by the administratrix of Turcotte against Josephine and Raymond L. Grenier to recover damages for the negligent driving of the car, causing the death of Turcotte. The plaintiff discontinued as to Josephine Grenier and was awarded a verdict of $1,500 against Raymond L. Grenier. No judgment has been rendered on that verdict, and a motion by the plaintiff for a new trial is pending. The motion was made on the ground that the amount awarded for damages was inadequate. On September 28, 1937, before the trial of that suit, the respondent Raymond L. Grenier, in behalf of his mother and himself, notified the insurance company, in writing, by a letter directed to it at 120 S. LaSalle street, Chicago, 111., that it was the duty of the petitioner to defend the Turcotte suit, and saying “We demand that you comply with this duty. Your lawyers, Robinson and Richardson of Portland, should be notified to defend this suit that they know about.” The company had informed Grenier by letter of November 23, 1936, that it disclaimed all liability under the policy and should take legal measures to have it declared void. The company took no part in the defense of the suit in the superior court. It does not appear that the administrator of Paquette has brought any suit, but the limitation fixed by the statute for so doing has not expired. The Matter of Jurisdiction. The respondents, in various ways and on several grounds, challenge the jurisdiction of this court. This petition for a declaratory judgment was filed September 29, 1937. On October 6th a motion to dismiss was filed by each of the respondents, the language and the grounds for dismissal in each case being substantially the same, to wit: First: “That said petition admits on itk face prior jurisdiction of the Superior Court of the State of Maine of actions brought and now pending of Theodore Paquette, Administrator of the Estate of Roland Paquette against Raymond L. Grenier and Josephine Grenier, and the prosecution of said suit cannot be enjoined by any federal court, said action not arising from any proceeding in bankruptcy.” Second: “That said petitioner having discontinued its business is not authorized to do business in the. State of Maine and is not a citizen of the State of Illinois, and had no legal capacity to appear and prosecute said petition in these proceedings.” It is evident that the motions refer to the suit of Turcotte against Grenier hereinabove mentioned, as only one action was pending in the state court and that was by Turcotte. Assuming these motions to be amended to apply to the only suit pending, it should be said that there is no question of the right of Turcotte to have brought the suit he did in the state court, and no injunction has issued from this court. As for the second ground mentioned, there is no evidence that the petitioner is not authorized to do business in Maine; but, even if a previous permission to do business here had been withdrawn, and it had ceased doing business in Maine, the petitioner would not thereby be deprived of access to the federal courts. The allegation that the petitioner was not a citizen of Illinois is, of course, without effect, because it might be a citizen of any state, other than Maine, and have the same right to sue. The motions to dismiss filed October 6th will be denied. But the jurisdiction of the court, as based on diversity of citizenship, is further questioned in the answers, as follows: The answers of Paquette and Turcotte simply deny “the allegations relative to jurisdiction in the stating part of said petition.” The joint answer of the Greniers states that “the defendants deny that the petitioner * * * is an insurance company organized or existing under the laws of Illinois or any other state except Maine, or that it has any legal place of business in Chicago, in the State of Illinois, or that it is authorized to transact business within the State of Maine, or that it is a citizen of the State of Illinois or any other State except the State of Maine, and demand proof of the same.” The answer' also denied that the respondents are citizens of Maine, but at the trial this point was not pressed and the respondents are admittedly citizens of Maine. These answers, in respect to citizenship, amount to nothing more than denials of the allegations in the petition. The Grenier answer is more comprehensive than the others in that it denies that the petitioner is a citizen of any state excepting Maine. While Maine is excepted from the denial, it is alleged that the petitioner cannot do business in Maine. There is no allegation by either party that the petitioner is a citizen of Maine, and the answers in that particular amount simply to a general denial and demand for proof. This is not a plea to 'the jurisdiction; and, under our practice, it was not incumbent upon the plaintiff to offer proof of its allegations supporting jurisdiction. The following quotations are applicable: “The plaintiff alleged the requisite jurisdictional amount, — the defendant denied it in its answer only. There was no formal plea to the jurisdiction, and it was not therefore incumbent upon the plaintiff to offer proof in support of it.” Wisconsin Elec. Co. v. Dumore Co., 6 Cir., 35 F.2d 555, 557. “The bill contained an express averment that the amount involved in the controversy exceeded,, exclusive of interest and costs, the sum of $5,000 as to each defendant. The defendants not having formally pleaded to the jurisdiction, it was not incumbent upon the complainant to offer proof in support of the averment.” Bitterman v. Louisville & N. R. Co., 207 U.S. 205, 224, 28 S.Ct. 91, 98, 52 L.Ed. 171, 12 Ann.Cas. 693; Bjornquist v. Boston & A. R. Co., infra. However, evidence having been offered at the trial relating to the question of citizenship as affecting jurisdiction, it is fair to consider the case as though a plea in abatement or motion in abatement, raising the jurisdictional question, had been filed. The burden of proof however is on the defendant on this issue. In the Circuit Court of Appeals, in this circuit, in the case of Bjornquist v. Boston & A. R. Co., 250 F. 929, 930, 5 A.L.R. 951, Judge Bingham used the following language in a similar situation: “The defendant * * * filed an answer, denying each and every allegation of the plaintiff's writ and declaration and each and every count thereof. * * * No plea in abatement or answer in abatement, setting forth that the plaintiff was a citizen and resident of Massachusetts, was filed. .Under the practice of Massachusetts, the question of jurisdiction must be raised either by a plea in abatement or an answer in abatement. Rev.Laws 1902, c. 173, §§ 18, 19. And it is held that a plea to the - merits waives all matters in abatement not taken in a plea or an answer in abatement. Craig Silver Co. v. Smith, 163 Mass. 262, 39 N.E. 1116. The plaintiff in his declaration alleged all the facts essential to federal jurisdiction. The allegation of these facts, prima facie, was true. If the defendant had filed a plea in abatement or an answer in abatement, it would have been necessary to have averred therein that the plaintiff was a citizen of the commonwealth of Massachusetts, and under that plea the burden of proof would have fallen upon the defendant. Adams v. Shirk [C.C.A.] 117 F. 801, 805. Evidence, however, relating to the question of jurisdiction having been admitted at the trial, we think we should consider the case as though a plea in abatement or an answer in abatement raising the jurisdictional question had been filed. The burden of proof, however, still remains on the defendant on this issue.” Mutual Life Ins. Co. v. Markowitz, 9 Cir., 78 F.2d 396; Alabama Grocery Co. v. Hammond, 5 Cir., 285 F. 723. The practice in Maine, in the matter of pleading above referred to by Judge Bingham, is substantially the same as , in Massachusetts. Rev.St.1930, c. 96, §§ 36, 37; Littlefield v. Maine Cent. R. Co., 104 Me. 126, 71 A. 657; Chamberlain v. Lake, 36 Me. 388. On the question of citizenship, of the petitioner, certain written evidence was submitted and reserved for consideration, subject to the objections. The petitioner, in support of its allegation of citizenship, submitted a formal certificate, under the hand and seal of the director of insurance of the department of insurance of the state of Illinois, to the effect that the petitioner, Builders & Manufacturers Mutual Casualty Company, was an- Illinois insurance corporation created under the laws of that state. That of course, if true, makes the petitioner a citizen of Illinois. The authenticity of this certificate was supported by a certificate from the secretary of state of the state of Illinois, under the hand of the secretary of state and the great seal of the State. The respondents offered a letter written to one of their counsel in the case from a supervisor of the casualty division of the department of insurance of Illinois, evidently answering a previous inquiry, which letter was to the effect that parties identified with “Builders and Manufacturers Mutual Casualty Company, Chicago, Illinois” had organized another corporation, “the Builders and Manufacturers Casualty Company, a capital stock company,” in which the mutual company had reinsured all of its outstanding business, the stock company assuming the obligations and acquiring the assets of the mutual company as of June 5, 1937. It is obvious that not only does this letter fail to deny that the petitioner herein was an Illinois corporation, but it implies that it was such a corporation. No other evidence was offered. In this situation it is apparent that the allegations in the petition as to the citizenship of the petitioner, which are prima facie true, have not only not been rebutted, but have been, to some extent, supported by the efforts of the respondents. So far as the answers of the respondents are to be taken as a plea to the jurisdiction in respect of citizenship, they are overruled. The allegation that the petitioner is a corporation of Illinois stands as true. Respondents also deny that there is here a controversy involving more than $3,000, as alleged in the petition. In this connection it had better be considered also whether there is a “controversy” between the parties, as that is denied by the respondents. The Declaratory Judgments Act gives the court authority to function only in cases of “actual controversy.” U.S.C.A. tit. 28, § 400. From the above findings of fact it appears that the insurance company made a contract with Josephine Grenier which would also inure to the benefit of her son if he used the insured car with her consent. The company claims that the policy was void. The Greniers claim that it was in full force for the specified term, and have demanded in writing that the company defend a suit against them as provided in the policy. At least one other suit may be brought, which would be in the same category with the first and which the company would be equally bound to defend, if the policy is valid. Certainly here is a clean-cut controversy between the petitioner and the respondents Grenier. It is also an “actual” controversy, because it deals with realities and not an imaginary set of facts. It involves a justiciable dispute concerning the rights of the parties in the very practical situation where one is demanding from the other substantial benefits, and possibly large money payments later on, which demands are being resisted. So here is a “case of actual controversy” where, in the event that this court has jurisdiction otherwise, it is given “power upon petition * * * to declare rights and other legal relations of any interested party petitioning for such declaration.” U.S.C.A. tit. 28, § 400. The jurisdiction of the court to settle the controversy between the insurance company and the Greniers cannot be defeated by the attitude of the other parties who were joined as respondents. It was not a closed controversy. They could come into' it if they desired. They were made parties because they were obviously interested in the question of the validity of the insurance policy. They have appeared and shown their interest and joined the controversy by violently opposing the petition, It was important for the petitioner to join them as parties, because if they should recover judgments against the Greniers, or either of them, based on the liability covered by the policy, they could, under the Maine statutes, proceed directly against the insurance company for payment of the judgments. There is clearly an actual controversy between all the parties to the .petition. As to the amount involved in the controversy, as affecting jurisdiction, the criterion is not what Paquette or Turcotte may claim, but the maximum amount for which the petitioner may be liable under the policy. See Commercial Casualty Ins. Co. v. Humphrey, D.C., 13 F.Supp. 174, 178, and cases cited. The company, under the contract of insurance, may be liable up to $5,000 or $10,000. The only statutory limit in Maine is $10,000 in case of death. The fact that the Maine courts, in certain individual cases, have held verdicts excessive is not pertinent. In other cases they have held verdicts inadequate. Each case stands upon its own merits. The possible liability of the company here is more than $3,000, and, therefore, that jurisdictional condition is complied with. It is further urged by respondents that the petitioner here is not a proper party because it has.disposed of its assets and reinsured its obligations, and that the re-insurer is an indispensable party. The only evidence of such asserted facts is the letter to counsel, above referred to, which was objected to and which is not admissible, and upon which it would be improper for the court to rest a finding of fact; but if the facts were as alleged, jurisdiction of this court would not be defeated. There is no claim that the petitioning corporation has been dissolved. It can sue and be sued. An insolvent condition of a corporation does not prevent its bringing suit. A 'corporation which has insured the risks of the petitioner is not an indispensable party in this proceeding.

738233-11284

ON PLAINTIFFS’ MOTIONS FOR SUMMARY JUDGMENT AND DEFENDANT’S CROSS MOTION FOR SUMMARY JUDGMENT SKELTON, Judge. The plaintiffs, William F. Bielec, John H. Blisard, Seldon Van Buskirk, Herbert Mukhalian, Albert Schooley, James A. Sitley, and Phillip Steinman, filed separate suits against the United States, which were consolidated for trial because all of them involved the same issues. The facts are stipulated by the parties. The plaintiffs are all career civil service employees in the Department of Defense. They claim entitlement to promotions to higher grades and ranks in the service by reason of an alleged upgrading of positions they were temporarily occupying without a corresponding promotion of the plaintiffs to higher grades. They claim that such promotions are mandatory under the law. We have concluded that the plaintiffs are not entitled to recover. The facts on which the plaintiffs base their claims are generally as follows. On October 11, 1963, the Department of Defense directed a Pilot Test for the Defense Contract Administration Services Region (DCASR) and on November 30, 1963, designated Philadelphia, Pennsylvania, as the Pilot Test. On February 28, 1964, authorities were delegated and functional responsibilities were assigned to DCASR pilot test and DCASR became operative on April 20, 1964. Plaintiffs were detailed effective April 20, 1964, for a period not to exceed October 20, 1964, from the various military departments to DCASR, with duties commensurate with their former positions, as follows: On September 1, 1964, DCASR became a permanent field activity of the Defense Supply Agency. Effective November 1, 1964, plaintiffs were, because of a transfer of their functions, transferred permanently to DCASR. On April 15,1965, the first Joint Table of Distribution was issued and became effective for DCASR. This table organized for the first time on a permanent basis the positions and the personnel previously transferred to DCASR, including the plaintiffs, and those to be later placed in the agency. Upon the issuance of the Joint Table, the plaintiffs were assigned positions listed in the following table under the heading “Position Assignment Under Joint Table.” (The plaintiffs had previously accepted positions with DCASR as shown under the heading “Position Assignment Effective November 1,1964”.) The plaintiffs were not satisfied with the assignments given to them under the Joint Table, but claimed they were entitled to assignments to higher positions as shown in the table below under the heading “Position Sought by Plaintiff: ” The plaintiffs appealed to the Philadelphia Regional Office of the Civil Service Commission by separate appeals. The Regional Office denied their appeals by written opinions. The plaintiffs have summarized the decisions of the Regional Office in their brief as follows: “Mr. Bielec’s appeal to the Philadelphia Regional Office and to the Board of Appeals and Review of the Civil Service Commission was denied on September 17, 1965, on a finding that the Commission lacked jurisdiction because the reassignment from Job No. CR-36-S was not a reduction in rank. Mr. Blisard’s appeal to the Philadelphia Regional Office and to the Board of Appeals and Review of the Civil Service Commission was denied on January 12, 1966, on findings that the reassignment was a reduction in rank; was accomplished in accordance with the procedural requirements of Subsection 752.202 of the Commission’s Regulations; was not arbitrary, unreasonable, on capricious; and was for such cause as to promote the efficiency of the service. Mr. Van Buskirk’s appeal to the Philadelphia Regional Office and to the Board of Appeals and Review of the Civil Service Commission was denied on July 27, 1966, on the grounds that the reassignment was a reduction in rank but was accomplished in accordance with the procedural and substantive requirements of Part 752, Subpart B, of the Civil Service Regulations. Mr. Mukhalian’s appeal to the Philadelphia Regional Office and to the Board of Appeals and Review of the Civil Service Commission was denied on July 27, 1966, on a finding that the reassignment was a reduction in rank that was accomplished in accordance with the procedural requirements of Subsection 752.202 of the Commission’s Regulations. Mr. Schooley’s appeal to the Philadelphia Regional Office and to the Board of Appeals and Review of the Civil Service Commission was denied on July 27, 1966, on a finding that the reassignment was a reduction in rank that was accomplished in accordance with Subsection 752.202 of the Commission’s Regulations and was not arbitrary, unreasonable, or capricious. Mr. Sitley’s appeal to the Philadelphia Regional Office and to the Board of Appeals and Review of the Civil Service Commission was denied on July 27, 1966, on a finding that the reassignment was a reduction in rank accomplished in accordance with the procedural requirements of Subsection 752.202 of the Commission’s Regulations. Mr. Steinman’s appeal to the Philadelphia Regional Office and to the Board of Appeals and Review of the Civil Service Commission was denied on April 7, 1966, on a finding that both agencies of the Commission lacked jurisdiction since the action was not an adverse one.” The plaintiffs appealed from the decisions of the Regional Office to the Board of Appeals and Review, which affirmed the decisions of the Regional Office. The plaintiffs then filed this suit and have moved for a summary judgment. The defendant has filed a cross motion for summary judgment. The case has been briefed and argued before the court by the parties. The plaintiffs base their whole case for entitlement to the indicated higher positions and grades on Chapter 335, Subehapter 4-3b, of the Federal Personnel Manual “Promotion Procedure,” which provides as follows: Promotion to positions ungraded without significant change in duties and responsibilities. An agency must provide for an exception to competitive promotion procedures to allow for the promotion of an incumbent of a position which has been upgraded without significant change in duties and responsibilities on the basis of either the issuance of a new classification standard or the correction of a classification error. If the incumbent meets the legal and qualification requirements for the higher grade, he must be promoted non-competitively unless removed from the position by appropriate personnel action. The contentions of the plaintiffs are set forth in their brief as follows: “1. Mr. Bielec, a GS-11, contends that he should have been promoted to GS-12 in the position of Chief, Plant Clearance Branch, a GS-12 job, because he had served in it from April 20, 1964, to June 8, 1965, and was serving in it when it was upgraded on April 15, 1965, to GS-12 without any significant change in duties and responsibilities. “2. Mr. Blisard, a GS-12, contends that he should have been promoted to GS-13 in the position of Chief of the Control Branch of his Division, a GS-13 job, because he had served in it from April 20, 1964, to September 12, 1965, and was serving in it when it was upgraded to GS-13 without any significant change in duties and responsibilities. “3. Mr. Van Buskirk, a GS-13, contends that he should have been promoted to GS-14 in the position of Deputy Director of the Production Directorate, a GS-14 job, because he had served in it from April 20, 1964, to September 12, 1965, and was serving in it when it was upgraded to GS-14 without any significant change in duties and responsibilities. “4. Mr. Mukhalian, GS-13, contends that he should have been promoted to GS-14 in the position of Chief, Financial Services Division, a GS-14 job, because he had served in it from April 20, 1964, to September 5, 1965, and was serving in it when it was upgraded to GS-14 without any significant change in duties and responsibilities. “5. Mr. Schooley, a GS-12, contends that he should have been promoted to GS-13 in the position of Chief, Price/Cost Analysis Branch, a GS-13 job, because he had served in it from April 20, 1964, to September 12, 1965, and was serving in it with it was upgraded to GS-13 without any significant change in duties and responsibilities. “6. Mr. Sitley, a GS-14, contends that he should have been promoted to GS-15 in the position of Deputy Executive Director, a GS-15 job, because he had served in it and the Executive Director’s job from April 20, 1964, to September 15, 1965, and was serving in it when it was upgraded without any significant change in duties and responsibilities. “7. Mr. Steinman, a GS-9, contends that he should have been promoted to GS-11 in the position of Plant Clearance Officer for the region of Western Pennsylvania and Pittsburgh area, a GS-11 job, because he had served in it from April 20, 1964, to July 29, 1965, and was serving in it when it was upgraded without any significant change in duties and responsibilities.” The defendant says that the above-quoted promotion procedure in the Federal Personnel Manual does not apply in this case for various reasons. It contends that the positions held by the plaintiffs in DCASR as of November 1, 1964, were temporary in nature because the positions themselves were temporary and had not been permanently established. The positions were not made permanent until the issuance of the Joint Table Distribution on April 15, 1965. Thus, it was a two-phased program involving first the people, such as plaintiffs, serving on temporary detail, and, secondly, the people who were later placed in the positions when they were permanently established. This was the holding of the court in Cohen v. McNamara, 282 F.Supp. 308 (E.D. Pa.1968), where this identical reorganization was involved. There the court said: * * * Since the transfers of functions involved in the case at bar were two phased — the first involving all those people initially identified with the transfer and the second involving all those people subsequently identified with the transfer — plaintiff’s assignment to the position of Chief as of November 1, 1964, was temporary in nature in that it was subject to change depending upon the rank and grade of those people subsequently identified with the second phase of the transfer of functions. Plaintiff’s assignment to the position of Chief being temporary in nature, he was not deprived of any rights when he was thereafter reduced in rank in the course of the second phase of the transfer of functions since transfer of function regulations were complied with in that plaintiff retained the same grade rating and same pay-level. [Id. at 312.] We agree with this statement of the court in that case. All of the plaintiffs were working in temporary positions which they agreed to accept on November 1, 1964. These positions were subject to change and grade as the program progressed until the final reorganization took place on April 15, 1965. The disappointment of plaintiffs is understandable, but this was unavoidable. The court in the above case put it this way: It is self-evident that a reorganization involving the consolidation of the personnel of four Contract Administration Agencies cannot be accomplished without readjustments which may prove unpalatable to some of the affected personnel. [Id. at 314.]

548479-11272

BAUER, Circuit Judge. Defendant Jones Dairy Farm (the Company) appeals from the district court order granting Local No. P-1236’s motion for summary judgment and permanently enjoining the Company from enforcing the work rule prohibiting its employees from dealing directly with the United States Department of Agriculture (USDA) regarding plant problems. We affirm. The Company, a Wisconsin corporation, processes meat products sold in interstate commerce; the Union represents the production and maintenance workers at the Company plant. On May 11, 1978, William Roberts, a Company employee and president of Local No. P-1236, reported unsanitary plant conditions to USDA inspectors. Although the Company had never reprimanded Roberts when he had reported unsanitary conditions to USDA inspectors in the past, this time the Company sent Rob erts a letter chastising him for bypassing his direct supervisor and warning him against dealing directly with the USD A inspectors in the future. Shortly after the incident, the Company promulgated a new rule which provided that “employees must deal through supervision or designated plant management rather than directly with USD A government inspectors in reporting ... deficiencies, violations, or other plant problems,” and warned that “[a]ny deviation from this rule will result in appropriate disciplinary action . .. . ” Appellant’s br. at 7. The collective bargaining agreement in effect at the time the Company adopted the new rule provided that the Company had exclusive management control of all plant operations, including management of the employees. Despite this provision granting the Company sole authority to direct plant operations, the Union maintained that the rule violated the collective bargaining agreement and the National Labor Relations Act (NLRA). It also maintained that the Company’s reprimand of Roberts and the rule itself violated the first amendment and was against public policy. For these reasons, it filed an unfair labor practice charge with the National Labor Relations Board (NLRB) and a grievance under the collective bargaining agreement. The NLRB issued a complaint with respect to Roberts’ reprimand; however, it refused to challenge the validity of the rule. Ultimately, the parties reached a settlement whereby the Company revoked Roberts’ reprimand but denied that it had violated the NLRA. The Union also pursued its grievance under the collective bargaining agreement to arbitration. An arbitrator conducted a hearing and issued his award in favor of the Company, finding that the rule was not arbitrary, unreasonable, or overbroad and that it did not violate public policy, any statute, or the constitution. Thereafter, the Union filed its complaint in district court, reasserting its public policy and first amendment arguments but omitting the claim that the collective bargaining agreement had been violated. The district court found that the rule was not unconstitutional, but that it was contrary to public policy and violated the collective bargaining agreement. It concluded that merely vacating the arbitrator’s award might not dispel employees’ beliefs that the rule was valid. The employees, in turn, might then refrain from reporting serious problems to the USDA inspectors even when the problems had been reported to the Company but remained uncorrected. Thus, the district court entered an order not only vacating the rule but also permanently enjoining its future enforcement. The Company challenges the district court’s holding on two grounds. First, it maintains that the district court had no authority to review the merits of the arbitration award because there is no evidence that the arbitrator misunderstood the law or refused to apply it. Second, the Company alleges that even if an allegation that the work rule violated public policy provides a proper basis for judicial intervention, no public policy considerations bar enforcement of this rule. Neither of these contentions is persuasive. I The threshold question is whether a district court has the authority to vacate an arbitration award which it believes is contrary to public policy. The district court noted that no Seventh Circuit case has specifically addressed this issue. Nevertheless, relying on Steelworkers’ Trilogy and Alexander v. Gardner-Denver Co., 415 U.S. 36, 94 S.Ct. 1011, 39 L.Ed.2d. 147 (1974), it concluded that the arbitrator’s sole authority was to construe and apply the collective bargaining agreement and that where, as here, the interests of the public as well as the parties to the agreement were involved, the court had no duty to defer to the arbi-tral process. The Company characterizes the public policy issue as a question of law. While conceding that public policy may bar enforcement of a collective bargaining agreement in some circumstances, it argues that the arbitrator already considered, and rejected, the public policy argument before issuing his award. Relying on several cases defining manifest disregard, the Company maintains that, even if the arbitrator misconstrued the public policy considerations, the award may only be vacated where there has been a manifest disregard of the law. The Company insists that the district court’s disagreement with the arbitrator’s analysis of the public policy issue does not indicate that the arbitrator disregarded the law. We agree with the Company that federal courts play a limited role in reviewing the substantive merits of an arbitrator’s award. NLRB v. Pincus Bros., Inc.-Maxwell, 620 F.2d 367 (3d Cir. 1980). Courts lack authority to decide not to enforce an arbitrator’s award when that award “draws its essence from the collective bargaining agreement,” United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 597, 80 S.Ct. 1358, 1361, 4 L.Ed.2d 1424 (1960), even where the arbitrator has committed an error of fact or law in interpreting the agreement. Washington-Baltimore Newspaper Guild v. Bureau of National Affairs, Inc., 83 Lab.L.Rep. (CCH) ¶ 10,480, 97 LRRM 3068 (D.D.C.1978). However, we do not agree with the Company’s application of the law to the facts in this case. We reject the Company’s contentions that the public policy issue is a question of law or that manifest disregard of the law is the only ground on which a court may vacate an arbitrator’s award. See United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 598, 80 S.Ct. 1358, 1361, 4 L.Ed.2d 1424 (1960). Public policy considerations are wholly independent of the collective bargaining agreement. When an arbitrator bases his award on public policy considerations, he has overstepped his authority and the court may review the substantive merits of the award. International Brotherhood of Teamsters, Local 249 v. Western Pennsylvania Motor Carriers Assoc., 574 F.2d 783 (3d Cir. 1978); Ludwig Honold Mfg. Co. v. Fletcher, 405 F.2d 1123, 1129 (3d Cir. 1969); Morales v. Vega, 483 F.Supp. 1057 (D. Puerto Rico 1979). The award here unquestionably involves public policy considerations. It affects not only the Company and its employees but also the consuming public which does not participate in the arbitration but which nonetheless has a very real interest in insuring that meat and meat products are processed under sanitary conditions. See Meat Inspection Act, 21 U.S.C. § 601 et seq. The district court was correct in concluding that it had the authority to review the award on the basis of public policy considerations. II We now consider whether the rule was, in fact, contrary to public policy. While it is beyond dispute that insuring sanitary conditions in meat packing plants is an important public policy, that policy is not necessarily violated by a rule which requires employees to first report violations of the law to the Company. The district court specifically rejected many of the Union’s arguments on the public policy issue. It found that requiring employees to report problem conditions to Company supervisors was not a per se violation of public policy and noted that it was “in the public’s interest that problems identified by line workers be brought to the attention of those who are responsible for remedying them.” Local P-1236, Amalgamated Meat Cutters v. Jones Dairy Farm, 519 F.Supp. 1362, 1371, No. 79 C 377 (W.D. Wis.1981) at 14. Moreover, the district court found no evidence that the rule was promulgated in order to penalize employees who complain about unsanitary conditions. The court also recognized that employees were adequately protected from any retaliatory conduct for complaining about unsanitary conditions because they could file an unfair labor practice charge with the NLRB. Nevertheless, the district court held that the rule was contrary to public policy because it prohibited employees from directly contacting USDA inspectors even if a serious problem remained uncorrected for an unreasonably long period of time after an employee has reported the condition to Company supervisors. We agree with the district court that in balancing the public policy of insuring sanitary conditions in meat processing with the Company’s right to direct its plant operations as it deems most efficient, the public policy outweighs the Company’s interests. Thus, we cannot uphold any rule forbidding employees from contacting inspectors regardless of the circumstances. The Company’s rule is facially defective because it is overly broad and fails to allow for exigent circumstances. Mindful of the important role that arbitration plays in furthering the federal policy of industrial peace, we are aware that when a court bars enforcement of an arbitration award on the basis of public policy, that public policy must be clearly defined. Local 453, International Union of Electrical Workers v. Otis Elevator Co., 314 F.2d 25 (2d Cir. 1963), cited with approval in International Assoc, of Machinists, District No. 8 v. Campbell Soup Co., 406 F.2d 1223 (7th Cir.), cert, denied, 396 U.S. 820, 90 S.Ct. 57, 24 L.Ed.2d 70 (1969). The public policy involved here dictates that: (1) it is essential that the health and welfare of consumers be protected by assuring that meat and meat food products are unadulterated; (2) meat and meat food products be inspected to prevent traffic in diseased and unwholesome meats; (3) standards of sanitation be enforced throughout the plant; and (4) USDA inspectors and the Company be encouraged to join forces to maintain such standards of sanitation. Meat Inspection Act, 21 U.S.C. §§ 602, 603, 606. See also National Pork Producers Council v. Berg-land, 631 F.2d 1353 (8th Cir. 1980), cert, denied, 450 U.S. 912, 101 S.Ct. 1350, 67 L.Ed.2d 335 (1981); Community Nutrition Institute v. Butz, 420 F.Supp. 751 (D.D.C. 1976). Our conclusion that the rule as it is now written is too absolute in its prohibition does not preclude the Company from promulgating a narrower rule which requires employees to first report violations to the management but which permits employees to report directly to the USDA inspectors if the conditions remain uncorrected for a specified time. We merely hold here that the Company may not impose an absolute prohibition against contacting USDA inspectors. Accordingly, the judgment of the district court is AFFIRMED.

1094419-24463

RYAN, J., delivered the opinion of the court. GUY, J. (p. 253), delivered a separate concurring opinion. BOGGS, J. (pp. 253-54), delivered a separate opinion concurring in part and dissenting in part. OPINION RYAN, Circuit Judge. Defendants Melvin Lee Randolph, Jr., Angela Ballard, Anthony Pettis, and Cedric Johnson appeal from their convictions for conspiracy to possess with intent to distribute Schedule I and Schedule II narcotics, in violation of 21 U.S.C. § 841(a)(1). All four, among others, were alleged to be members of a conspiracy engaged in the transportation of cocaine powder, cocaine base, and marijuana between Dallas, Texas, and Jackson, Tennessee. Randolph had previously been prosecuted in a federal district court in Texas for actions in furtherance of the same conspiracy; in that case he entered into a plea agreement with the government. He now claims the earlier plea agreement should have precluded his prosecution in Tennessee. In addition, Randolph asserts a double jeopardy claim and a claim of ev-identiary error; Ballard argues numerous evidentiary, sentencing, and other errors; Pettis argues two sentencing errors; and Johnson argues both an evidentiary error and that the district court erred in denying his request for a special verdict. For reasons we shall discuss, we will VACATE the conviction and sentence of Randolph, VACATE Johnson’s sentence and REMAND his case for resentencing, and AFFIRM the convictions and sentences of Ballard and Pettis. Because issues of precedential importance arise only with regard to defendants Randolph and Johnson, only their appeals will be addressed below. The appeals of defendants Ballard and Pettis will be addressed in an unpublished appendix to this opinion. I. Some time during or before early 1995, defendant Randolph moved from his home in Detroit, Michigan, to Dallas, Texas. Around August 1995, Randolph met Trent Brewer, apparently a large-scale drug dealer. From this meeting blossomed the drug conspiracy with which this case is concerned. Brewer would supply the drugs — mainly cocaine powder and cocaine base, but occasionally marijuana as well— and Randolph would provide the market, specifically connections to drug retailers in Jackson, Tennessee. Randolph’s Tennessee connections were defendants Pettis and Johnson, who are cousins to Randolph’s childhood friend and coconspirator Johnny Mack Bush. The conspiracy involved, in addition to Brewer and Randolph in Texas and Bush, Pettis, and Johnson in Tennessee, at least the following individuals: defendant Ballard, Monica Michelle Infante, Rayóla Burch, and James Johnson, all of whom were drivers or “mules” who transported drugs from Dallas to Jackson by automobile; and Foster Davis, Corrie Harbert, and Terrance Lott, underlings to Brewer in Dallas. Trial testimony revealed that various of the “mules” made numerous trips from Dallas to Jackson, Tennessee, between August 1995 and April 1996 for the purpose of delivering drugs. On each trip, between two and five kilograms of cocaine powder or cocaine base were transported. The beginning of the end of this lucrative narcotics enterprise came during a March 27, 1996, “run” from Dallas to Jackson. According to Brewer’s testimony, Brewer, Lott, Davis, and Harbert met Randolph, Bush, and Ballard in a Cracker Barrel restaurant in De Soto, Texas. Brewer’s group arrived in Brewer’s wife’s Jaguar with three kilograms of cocaine powder and 0.863 kilograms of cocaine base, while Randolph, Bush, and Ballard arrived separately in two vehicles, Randolph’s Suburban and Cadillac. The plan was for Ballard to drive the Jaguar with the narcotics to Jackson; for Randolph, Bush, Davis, and Harbert to follow Ballard in the Suburban; and for Brewer and Lott to return to Dallas in the Cadillac. Brewer and Lott left as planned, but very shortly after the journey began Ballard noticed that there were no insurance papers for the Jaguar and so balked at driving it further. The narcotics were then transferred to the Suburban, which Ballard would drive with Randolph as her passenger. Bush, Davis, and Harbert returned to Dallas in the Jaguar to exchange it for Randolph’s Cadillac before resuming the drive to Jackson. Shortly thereafter, the scheme came unraveled. The Suburban was stopped by state police officers near Sulphur Springs, Texas. The officers found the narcotics in the Suburban, and Randolph and Ballard were arrested on federal drug charges. Meanwhile, the Cadillac caught up with the Suburban and its occupants saw that Randolph and Ballard had been stopped. The police then stopped the Cadillac and searched it; when the search proved fruitless, the vehicle’s occupants were released, whereupon they returned to Brewer’s home in Dallas. A. Randolph and Ballard were prosecuted in the United States District Court for the Eastern District of Texas. At that trial, the district judge, in connection with his ruling in the defendants’ motion to suppress, made the following findings of fact with regard to the Sulphur Springs stop and search of the Suburban. Police officers in a marked police vehicle saw the defendants’ “van” momentarily cross a lane marker, and thereupon pulled alongside the van to look at its occupants. When Randolph and Ballard failed to make eye contact with them, the officers pulled in front of the van and slowed to 30 miles per hour. The van moved to the left lane and proceeded at approximately 60 miles per hour. The police officers resumed highway speed and followed the van for some five miles. The officers reported witnessing at least one vehicle pass the van in the right lane; the posted speed limit was 70 miles per hour. The officers pulled the van over for failure to maintain a lane and impeding traffic. Various colloquies occurred between the officers and the defendants, during which Randolph provided a false name and various false social security numbers before finally admitting his real name. The officers repeatedly asked for permission to search the defendants’ vehicle, but both defendants refused. The defendants were held at the scene while an officer went to a district attorney’s office in order to obtain a search warrant, but the warrant was refused on the ground that there was no probable cause to justify a search. Approximately one hour after the original stop, a drug-sniffing dog and its handler were brought to the scene. Soon thereafter it began to rain, and the whole cavalcade moved to the Sulphur Springs police station to continue the proceedings under a canopy. Randolph was arrested for falsely identifying himself to a police officer. The officers hoped the arrest would give them the right to search the van, but their hopes were dashed when the district attorney informed them that they would still need probable cause to search the vehicle. Finally, approximately one and one-half hours after the original stop occurred, the drug dog alerted to the van. The cocaine was quickly discovered, along with a loaded handgun and a small amount of marijuana, apparently for the personal use of Randolph and Ballard during the long drive. The district judge applied a Terry v. Ohio, 392 U.S. 1, 88 S.Ct. 1868, 20 L.Ed.2d 889 (1968), analysis to the defendants’ motion to suppress the evidence. This necessitated a two-step inquiry: first into the reasonableness of the initial stop, and then into the relatedness of the search to the initial stop’s purpose. The judge found that the “impeding traffic” justification was invalid because the presence of the van in the left lane, where it traveled at nearly the speed limit, was largely a result of the officers’ own actions. He also held that the defendants’ failure to make eye contact with the officers while driving on the highway could not be considered suspicious, and indeed should not even have been considered as an element in the “totality of the circumstances.” However, he found that the “failure to maintain a lane” justification was sufficient to justify the initial stop. However, the judge went on to hold that the permissible duration of a stop for a minor traffic offense is brief. A police officer is permitted to ask questions unrelated to the traffic stop, and these questions can form the basis for prolonging the stop’s duration, but in this instance the matter of Randolph’s identity and the question whether the van might have been stolen were completely settled at least 40 minutes before the dog alerted and provided probable cause for a search of the vehicle. The judge held that this was an unreasonable length of time, and consequently granted Randolph’s and Ballard’s motions to suppress the evidence of all events taking place after Randolph revealed his true identity. This included the discovery of the narcotics. After the evidence from the Sulphur Springs stop was suppressed, Randolph entered into a plea agreement with the government, whereby he pleaded guilty to the lesser charge of using a telephonic device to facilitate a narcotics transaction in violation of 21 U.S.C. § 843(b), and agreed to cooperate with the government’s investigation. For its part, the government agreed to drop the charge of conspiracy to possess with the intent to deliver a Schedule II narcotic. The government also promised “not to further prosecute the defendant for any other offenses of which it may have knowledge prior to sentencing,” but the same paragraph expressly limited the agreement to “the United States Attorney’s Office for the Northern District of Texas and [did] not bind any other federal, state or local prosecuting authorities.” In June 1996, Randolph received a sentence of 48 months’ imprisonment, the maximum available for the charge to which he pleaded. After Randolph complied with the terms of his plea agreement by providing the government with complete information as to his knowledge of the conspiracy and his role in it, the Texas prosecutors evidently felt Randolph was a “bigger fish” than they had theretofore suspected. They then contacted their counterparts in Tennessee, and provided them with all the information obtained as a result of the Texan investigation. B. On November 18, 1996, the case now on appeal before this court began when Randolph, Pettis, Johnson, Bush, and Infante were indicted in the Western District of Tennessee. In August 1997, a superseding indictment charged Randolph, Ballard, Pettis, Johnson, Bush, Infante, and Burch with one count of conspiracy to possess with intent to distribute a Schedule I narcotic and one count of conspiracy with intent to distribute a Schedule II narcotic, both in violation of 21 U.S.C. § 841(a)(1). Pettis, Bush, and Burch all pleaded guilty. Infante absconded, and her whereabouts remain unknown. The remaining defendants went to trial. Randolph’s and Ballard’s cases were severed from those of their codefendants and they were tried jointly, but separately from their alleged coconspirators. Ballard filed a motion that her case be severed from Randolph’s, but this motion was denied. Johnson requested that a special verdict form be submitted to the jury to ascertain whether he was guilty of conspiring to possess cocaine, a Schedule I narcotic, or marijuana, a Schedule II narcotic. The district judge denied this request, stating that “there was one conspiracy ... that on occasions resulted in the distribution of each of the three drugs alleged.” Randolph, Ballard, and Johnson were found guilty after a jury trial. Randolph received a sentence of 360 months, Ballard of 151 months, and Johnson of 188 months. Pettis received a sentence of 151 months after his guilty plea. All four defendants brought timely appeals. II. A. Randolph Randolph brings three assignments of error: (1) that his prosecution in Tennessee was wrongful in that it should have been entirely barred by the plea agreement he entered into with the government in the Northern District of Texas; (2) that his prosecution in Tennessee violated the prohibition against double jeopardy in light of his previous prosecution in Texas; and (3) that the Tennessee district court erred in the degree to which it gave effect to the Texas district court’s order that evidence from the Sulphur Springs traffic stop be suppressed. Because we agree with his first assignment of error — although not with all of the arguments he enlists in its support — we need not reach his second and third theories. Randolph argues first, that the language of his plea agreement precludes his prosecution in Tennessee, because the language is ambiguous and therefore must be construed against the government. It is true, of course, that any ambiguities in the language of a plea agreement must be construed against the government. See United States v. Johnson, 979 F.2d 396, 399 (6th Cir.1992). But that does not lead us to the conclusion for which Randolph argues. The paragraph containing the government’s promise, which Randolph claims is ambiguous, reads in full as follows: The Government agrees not to further prosecute the defendant for any other offenses of which it may have knowledge prior to sentencing. The government further agrees to dismiss the remaining counts of the indictment as to this defendant only at the time of sentencing. The government shall advise the court of the extent of RANDOLPH’S cooperation. Pursuant to § 1B1.8 of the United States Sentencing Guidelines, the government also agrees that any self-incriminating information provided pursuant to this agreement will not be used against the defendant in determining his applicable guideline range. This agreement is limited to the United States Attorney’s Office for the Northern District of Texas and does not bind any other federal, state or local prosecuting authorities. Randolph’s “ambiguity” argument is as unfocused as it is unpersuasive. As we understand it, Randolph is saying that the language of the quoted portion of the agreement is ambiguous because the references to “the Government” and “the United States Attorney’s Office” and, particularly, the manner in which the provisions of the agreement are sequenced, leave it unclear whether Randolph’s “deal” is with the federal government generally or with the U.S. Attorney in the Northern District of Texas. This imprecise language, Randolph argues, must be construed against the government and therefore in favor of Randolph’s interpretation that the language of the agreement precluded the Tennessee federal court prosecution. It is true that the United States Attorney’s Office for the Northern District of Texas is referred to within the agreement as “the United States of America” and as “the Government,” but this is a widespread and customary practice not calculated to give rise to confusion in a defendant represented by counsel. It is also true that the language limiting the effect of the plea agreement to the Northern District of Texas could have been better placed within the structure of the document, so as to be both more salient and more clear in its effect. Nevertheless, under any reasonable interpretation of the document as a whole, the limiting language can only be operative with regal’d to the totality of the agreement. However, Randolph identifies an issue of much greater difficulty when he argues that whatever the technical niceties that govern the contractual meaning of the plea agreement language, it is simply unfair for the government to extract useful information and a guilty plea from Randolph in exchange for a promise not to prosecute him further, and then to do so anyway. To be sure, “[p]lea agreements are contractual in nature. In interpreting and enforcing them, we are to use traditional principles of contract law.” United States v. Robison, 924 F.2d 612, 613 (6th Cir.1991). However, they are more than that. In Santobello v. New York, 404 U.S. 267, 261, 92 S.Ct. 495, 30 L.Ed.2d 427 (1971), the Supreme Court stated that the considerations justifying the practice of plea bargaining “presuppose fairness in securing agreement between an accused and a prosecutor”—a presupposition derived from the constitutional guarantee of due process. Furthermore, this court has stated: Although plea agreements are contractual in nature, a defendant’s underlying right of contract is constitutional, and therefore implicates concerns in addition to those pertaining to the formation and interpretation of commercial contracts between private parties. Therefore, “[b]oth constitutional and supervisory concerns require holding the government to a greater degree of responsibility than the defendant (or possibly than would be either of the parties to commercial contracts) for imprecisions or ambiguities in the plea agreements.” Johnson, 979 F.2d at 399 (citations omitted). Among the constitutional concerns referred to are those pertaining to the due process clause of the Fifth Amendment. The United States Supreme Court has stated that where the consensual nature of a plea agreement is called into question— where “the defendant was not fairly apprised of its consequences”—it can be attacked under the due process clause. Mabry v. Johnson, 467 U.S. 504, 508-09, 104 S.Ct. 2543, 81 L.Ed.2d 437 (1984). The plea agreement Randolph entered into in Texas was a contract without benefit or advantage to him—indeed, as we shall explain, it could only bring him detriment—and as such was offensive both to the fundamental common law canons of contract construction and to the constitutional guarantee of due process. In the agreement, Randolph promised both to plead guilty to the crime of using a telephonic device to facilitate a narcotics transaction and to “cooperate with the government, by giving truthful and complete information and or [sic] testimony concerning his participation in and knowledge of criminal activities,” thereby saving the government time, money, and human resources, both judicial and investigative. In exchange for Randolph’s promises, the government in the Northern District of Texas promised, among other things, “not to further prosecute the defendant for any other offenses of which it may have knowledge prior to sentencing,” and “to dismiss the remaining counts of the indictment.” There was no mention of the possibility that the Texas prosecutors would “silver platter” the results of their investigation— including information gleaned as a result of Randolph’s extensive bargained-for cooperation—to prosecutors in another jurisdiction: thus supporting the prosecution of the defendant for an offense identical to the “remaining count[]” the Texas prosecutors had agreed to dismiss. As interpreted by the district court for the Western District of Tennessee, the effect of the Texas agreement is that the government could bargain with Randolph, extract a benefit from the bargain, and then treat its own promise as illusory. For although Randolph pleaded guilty and cooperated in exchange for what he reasonably believed was immunity from prosecution for the conspiracy charge with which he had been indicted in Texas, in fact the agreement permitted the Texas prosecutors to pass their information to their Tennessee counterparts in order to bring the same conspiracy charge against him in a different courthouse. As far as Randolph was concerned, the result of entering the plea agreement in Texas and then being prosecuted in Tennessee was that the prosecutors in Tennessee had the additional benefit of Randolph’s full cooperation, while Randolph had the additional detriment of the Texas guilty plea and conviction for the telephone charge in his criminal record, neither of which advantages the Texas prosecutors would have enjoyed had Randolph refused the bargain he was offered and chosen to go to trial. In his Tennessee prosecution, Randolph’s Texas conviction was used in the computation of his offense level for sentencing purposes; the amount of narcotics involved in the telephone offense was included at sentencing in Tennessee as being involved in a related offense. However, a rule which would permit federal prosecutors in a second jurisdiction to accept the fruits of an investigation performed in a first jurisdiction, without substantial investigation of their own and knowing that prosecution of a specific offense in the first jurisdiction — here, the conspiracy charge — was blocked by a plea agreement that the first jurisdiction’s prosecutors were seeking to avoid, quite aside from being manifestly unfair, would allow the plea agreement to bring still further detriment to a defendant such as Randolph. It would permit use of the conviction for the charge pleaded to in the first jurisdiction— here, the telephone offense' — to impeach the defendant’s testimony at trial in the second case and to augment his criminal history at sentencing. The most fundamental principles of constitutional fairness do not permit us to abide this patently unjust result. A defendant in Randolph’s position is entitled to presume that a plea agreement would confer some benefit on him. Even if the Northern District of Texas alone was bound by the agreement, such a defendant could reasonably infer that the results of the Northern District’s prosecutors’ investigation would not be handed over to prosecutors from other jurisdictions not bound by the agreement. This inference would hold true with regard only to offenses the Northern District of Texas prosecutors knew about at the time they entered into the agreement with Randolph; the Texas prosecutors would not, of course, be barred from sharing information with other jurisdictions concerning newly discovered offenses, just as they would not be barred from prosecuting Randolph themselves for offenses they learned of only after his cooperation with the government. Indeed, should this reasonable inference prove false, then the agreement Randolph entered into could provide no benefit but only detriment to the defendant, and is thus an unconscionable contract, and unenforceable. The requirement that a defendant be afforded due process of law necessitates that Randolph’s reasonable expectation of benefit from the plea agreement be respected, for it is a violation of due pi'ocess to hold a defendant to an unconscionable agreement in the absence of proof of his fully informed consent to the risk that the bargained-away count of the indictment might return, like Hydra’s head, the stronger for having been once cut off. It is settled law that a plea agreement is unenforceable unless made knowingly and voluntarily. See Mabry 467 U.S. at 509, 104 S.Ct. 2543; Santobello, 404 U.S. at 261, 92 S.Ct. 495. Certainly Randolph was represented by counsel when he entered into this plea agreement; nonetheless we cannot say that he entered into it knowingly or voluntarily, since he was in no way informed as to the illusory nature of the government’s promise. The constitutional guarantee of due process requires us to give weight to Randolph’s reasonable expectation that the plea agreement protected him from prosecution for the conspiracy charge with which he was indicted in the Northern District of Texas, both within that jurisdiction as provided in the text of the plea agreement and in addition without that jurisdiction, unless founded on an investigation independent of that performed by the Texan authorities. But, as we know, the Tennessee authorities were entirely dependent upon the Texan investigation. Drug Enforcement Administration Agent Billy Joe Mundy, who ran the Tennessee investigation, testified that he knew nothing about the Dallas end of the conspiracy until DEA Agent Jeffrey Green, who ran the Texas investigation, told his office about it, which occurred after Randolph, Brewer, and others began to cooperate. For these reasons, the exigencies of due process and the operation of the fundamental canons of contract construction compel us to the conclusion that Randolph’s prosecution in Tennessee was entirely barred by the plea agreement he entered into in the Northern District of Texas. Having so held, we need not address Randolph’s remaining arguments. B. Johnson Johnson appeals on two grounds: (1) that the district court erred in admitting testimony procured by prosecutors in exchange for reductions or promises of reductions in terns of incarceration, in violation of 18 U.S.C. § 201(c); and (2) that the district court erred in denying his request for a special verdict. We will address these issues separately. 1. Federal Antibribery Statute

3990711-5285

PER CURIAM: Appellant Janice Hughes, on behalf of T.H., appeals from an order of the district court affirming the decision of the Commissioner of Social Security to deny her children’s Supplemental Security Income (SSI) benefits. Having considered the complete administrative record, the administrative law judge’s (ALJ’s) decision, and the thorough opinion of the district court, we agree with the district court that the ALJ’s findings are supported by substantial evidence and the district court’s order is affirmed. I. Hughes filed an application on October 24, 2005 for SSI on behalf of T.H., her minor child, alleging disability based on seizure and attention deficit hyperactivity disorders. T.H. was born on October 27, 1998, and was six years old at the time the application was first filed. Hughes’s application was initially denied and again denied on reconsideration. Hughes administratively appealed and a hearing on the appeal was held on October 9, 2007 in which Hughes, on behalf of T.H., represented herself. This appeal concerns the denial of SSI based on the determination that T.H. was not disabled between October 24, 2005 and March 25, 2008. Hughes thereafter filed a second application for benefits on behalf of T.H., this time alleging a disability onset date of April 7, 2008. Hughes also submitted additional evidence in support of her first application. With respect to her second application, T.H. was determined disabled since April 7, 2008, and Hughes was awarded benefits on T.H.’s behalf. With respect to her initial application, the Appeals Council held that the new evidence did not provide a basis for altering the ALJ’s decision that T.H. was not disabled prior to March 25, 2008. Hughes now appeals the decision denying T.H.’s first application for benefits which found no disability between October 24, 2005 and March 25, 2008. The Appeals Council denied review, making the ALJ’s determination the final decision of the Commissioner. The appellant challenged the administrative denial of benefits in the appeal to the district court. The district court in a thorough opinion rejected the appeal and affirmed the denial of benefits. On appeal to this court, appellant contends: (1) the ALJ erred in allowing Hughes to waive representation because she is mentally ill; (2) the ALJ failed to fully develop the record; (3) the ALJ’s decision was not supported by substantial evidence, failed to properly weigh evi dence, failed to explain why the impairments do not meet or equal a listing, and failed to explain credibility findings; and (4) the Appeals Council erred in its “terse denial.” II. Our review is limited to “(1) whether there is substantial evidence in the record to support the decision; and (2) whether the decision comports with relevant legal standards.” Brock v. Chater, 84 F.3d 726, 728 (5th Cir.1996). Evidence is substantial if it is “relevant and sufficient for a reasonable mind to accept as adequate to support a conclusion.” Leggett v. Chater, 67 F.3d 558, 564 (5th Cir.1995). This court “may not reweigh the evidence in the record, nor try the issues de novo, nor substitute [the Court’s] judgment for the [Commissioner’s], even if the evidence preponderates against the [Commissioner’s] decision.” Bowling v. Shalala, 36 F.3d 431, 434 (5th Cir.1994) (first alteration in original) (quoting Harrell v. Bowen, 862 F.2d 471, 475 (5th Cir.1988)). III. We have reviewed the briefs and the record on appeal and are not persuaded by Hughes’s claims of error. The district court thoroughly addressed the arguments Hughes raises on appeal, and we affirm for substantially the reasons set forth in its opinion and order filed on March 12, 2012. The district court made detailed findings after carefully examining the medical evidence in the record and in concluding that the plaintiff failed to satisfy her burden of proof in establishing entitlement to benefits. See Hughes v. Astrue, No. 3:10-cv-586-WHB-LRA (S.D.Miss. Mar. 12, 2012). In summary, Hughes contends the ALJ erred in permitting her to represent T.H. because Hughes herself is mentally ill. While a disability claimant has a right to representation in Social Security proceedings, the right to counsel may be waived when the claimant is given sufficient information to enable her to decide intelligently whether to retain counsel or proceed pro se. See Castillo v. Barnhart, 325 F.3d 550, 552 (5th Cir.2003). The record reflects that during the hearing the ALJ advised Hughes at length of T.H.’s right to be represented at the hearing and Hughes expressly declined representation and signed a waiver of representation. Hughes now argues that she is schizophrenic and should not have been permitted to waive representation and points to a statement and records she submitted to the Appeals Council in April 2010 in which she advised she suffers from schizophrenia. Such evidence was not part of the record before the ALJ. Further, there is no indication from the transcript of the hearing that Hughes was affected by any impairment or was otherwise incapable of waiving representation on behalf of T.H. Even assuming Hughes’s waiver was ineffective, a claimant must also show that she was prejudiced by a lack of representation, and Hughes has not done so here. See id.

36384-10784

JOHN R. GIBSON, Circuit Judge. Larry Lester Gulliekson and Clark Eugene Nelson were convicted of conspiracy to possess marijuana with intent to distribute it, 21 U.S.C. §§ 841(a)(1), 846 (1988), and Nelson was convicted of possessing an unregistered sawed-off shotgun, 26 U.S.C. §§ 5841, 5861(d), 5871 (1988). On appeal, Gulliekson argues that there was insufficient evidence to convict him; that he was entitled to a two point reduction under the sentencing guidelines section 3B1.2 because he was a “minimal participant”; and that the district court failed to depart from the guidelines range because it erroneously believed Gullickson’s post-conviction conduct could not be the basis for a departure. Nelson argues that the district court erred in imposing consecutive terms of supervised release for his two convictions; that the evidence shows he was entrapped as a matter of law; and that the district court abused its discretion in admitting evidence of Nelson’s prior purchases of cocaine. Finally, both Nelson and Gulliekson complain that the government breached its pretrial agreement in failing to produce its informant for them to interview until the eve of trial. We reverse and remand for a new trial on the drug charges. The government caught Nelson and Gullickson in an operation called a “reverse sting,” in which government agents sell illegal drugs to persons whom they believe are in the habit of buying such drugs. (Apparently, in an ordinary “sting,” the government agent buys, rather than sells, the drugs). Government agents planned the sting after one David Huff was arrested on methamphetamine charges and began cooperating with the government to apprehend drug dealers operating in South ern Minnesota. Huff drew up a list of drug dealers he knew, including Nelson. Huff testified that he had sold Nelson cocaine regularly for three years and that he knew Nelson was selling marijuana. As a first step in setting Nelson up, Huff contacted Nelson. Huff testified that in their initial conversation Nelson said he did not want to buy marijuana from Huff because he already had some, but he might buy cocaine. Huff testified that he “kept lead-in’ [Nelson] on” by telling him that he was waiting for his drug supply to arrive. Nelson called Huff later to pursue the cocaine idea, and at Nelson’s request he and Huff had a meeting at the “Office Bar,” which Gullickson attended. At the meeting Nelson and Huff discussed a possible cocaine purchase, and Nelson said that he might also be interested in buying ten to twenty pounds of marijuana because his ordinary source of supply was unavailable. After the meeting, Huff called Nelson to say that he had the drugs available to sell and the two later set up a meeting for Nelson to inspect the marijuana and cocaine. At this point Minnesota Bureau of Criminal Apprehension Agent Tim O’Malley entered the picture. A lawyer and University of Chicago graduate, O’Malley posed as an out-of-town drug dealer who was supplying the drugs for the transaction. O’Malley and Huff met with Nelson at the Maple-view Liquor Store (actually, a bar as well as a liquor store) in Austin, Minnesota on May 10, 1991. Nelson and O’Malley left the bar and got into O’Malley’s car to converse privately. At different points in the conversation Nelson told O’Malley that he had been in the marijuana business for six to seven years, twenty years, and five years, variously. Nelson also said that he could sell fifty pounds of marijuana in two weeks. He said he usually bought the marijuana in Texas and that he currently had $15,000 tied up in a transaction there. O’Malley then introduced Special Agent Michael Perry, who was posing as O’Malley’s cohort, waiting with the marijuana in a nearby car. Perry got the marijuana out of his trunk for Nelson to inspect. Nelson approved the quality of the marijuana, but left without buying any. However, Huff and O’Malley called Nelson and the parties set up a second meeting at the same place on May 14 to arrange a marijuana transaction. Nelson outlined his plan for the transaction: He would show up at the Mapleview bar with $18,500, enough money for fifteen pounds of marijuana. Once O’Malley had counted the money, a “friend” whom Nelson would bring to the bar would leave with Huff in O’Malley’s car, which would contain the marijuana. The “friend” would drive to Nelson’s farm, verify that the marijuana was there, and call Nelson at the bar to let him know everything was fine. Then Nelson could leave and Huff would come back in O’Malley’s car to pick up O’Malley. Huff, O’Malley, Nelson, and Gullickson met at the bar as planned. Nelson gave O’Malley the money, literally under the table. O’Malley asked Gullickson if he was the one who was going to ride with Huff to the farm and Gullickson nodded “yes.” O’Malley asked Gullickson how long it would take, and Gullickson said half-an-hour. O’Malley also told Gullickson that the weight of the marijuana in the car might be over the agreed amount and Gullickson should weigh it and send back the excess. Gullickson said that process would take ten minutes more. Nelson and O’Malley went out to O’Malley’s car for O’Malley to count the money, and Nelson reiterated that Gullickson was to be the person to verify that the marijuana was there and also to package it for resale. O’Malley and Nelson went back inside the bar and shortly thereafter Nelson and Gullickson were arrested. Government agents obtained a warrant to search Nelson’s farmhouse, and they found scales and plastic bags commonly used in the drug trade. They found a small amount of marijuana scattered around the scales. They also seized the sawed-off shotgun from the house. I. Both Gullickson and Nelson argue that the government breached its pretrial agreement to produce David Huff for interview in advance of the trial. The government agreed to make Huff available for interview by defense counsel “within ten days.” The magistrate judge referred to this agreement in ruling motions to disclose the identity of informants moot in a pretrial order in July, 1991. Thus, the agreement was given the imprimatur of the court and was the basis for the court denying the requested relief. The government did not produce Huff at the appointed time and, in response to defense counsel’s inquiries, stated that Huff was out of state. The prosecutor told defense counsel that Huff would be made available November 8, the Friday before trial; again, Huff failed to appear. At the opening of the trial, defense counsel moved to dismiss the case because the government had failed to produce Huff. The court denied the motion on the grounds that: Huff’s identity had been disclosed; Huff was not in the government’s custody or control; and the government would make Huff available for interview that very evening — which was the night before the government presented its case. The court concluded that the government had done all it was required to do. On appeal Nelson and Gullickson argue that Huff’s testimony was key to the case against them and the government’s failure to produce Huff as agreed kept them from being able to prepare their defenses. Nelson and Gullickson rely on Roviaro v. United States, 353 U.S. 53, 77 S.Ct. 623, 1 L.Ed.2d 639 (1957), and our cases interpreting Roviaro, United States v. Barnes, 486 F.2d 776 (8th Cir.1973), and United States v. Padilla, 869 F.2d 372, 376-78 (8th Cir.), cert. denied, 492 U.S. 909, 109 S.Ct. 3223, 106 L.Ed.2d 572 (1989). These cases deal with the government’s obligation to disclose an informant’s identity or produce the informant as a witness. The reasoning in each of these cases hinges on the fact that the informant was not produced before trial and did not appear at trial. Barnes expressly distinguished its holding from a case in which the government produces the informant at trial. According to Barnes, when the informant testifies at trial the defendant has the opportunity to cross-examine the informant and no prejudice results. 486 F.2d at 779. Therefore, neither Roviaro nor our cases interpreting it support the defendants’ arguments. But though the government may not have violated the rule of Roviaro, it violated its pretrial agreement to produce Huff in July without adequate excuse. When the government seeks to be released from a pretrial agreement, the district court must first consider whether the government provided adequate notice of its breach, and second, whether the government’s reason for being unable to perform its agreement outweighs the prejudice to the defendant. See United States v. Jackson, 621 F.2d 216, 220 (5th Cir.1980); United States v. Laboy, 909 F.2d 581, 586-87 (1st Cir.1990). Though the district court has considerable discretion in releasing the government from its promise, Jackson, 621 F.2d at 220, we cannot approve the district court’s ruling in this case. The evidence at trial shows that Huff told his government contact that he was leaving the state after the defendants’ arrest, and the government agent instructed Huff to “call me at least once a month to tell me where he was.” Huff arrived in the area in plenty of time to provide the damning testimony at trial. Though he was not a regular government employee, the government paid him for his part in the reverse sting. Therefore, it is not at all clear from the record that the government was unable to live up to its agreement. Furthermore, Huff's testimony was crucial, particularly to Nelson’s entrapment defense, since it was Huff who caused the government to lay a trap for Nelson and he alone who had the initial contacts with Nelson leading to the transaction. Indeed, Huff admitted “one of the reasons [he] first contacted Clark Nelson” (in addition to government business, of course) was to borrow $600 from Nelson to cover bad checks Huff had written and that at some point he told Nelson he would pay him back out of proceeds from the drug transaction. In sum, Huff identified Nelson as a drug suspect; borrowed Nelson’s money and then suggested to Nelson that repayment of the money hinged on the successful conclusion of the drug deal, for which Nelson was then prosecuted. Obviously, such a person would be a central figure in Nelson’s entrapment defense. The defendants were prejudiced by the government’s failure to produce Huff in time for the defendants to investigate his story and plan their defenses accordingly. We conclude it was an abuse of discretion to permit the government to renege on its agreement, which the court relied on in dismissing the defendant’s motion to disclose identity of informant. We reverse for a new trial on the drug charges. Since Nelson does not make his entrapment argument in regard to the firearms offense, we do not disturb that conviction. II.

1142267-7879

GARZA, Circuit Judge: Petitioner-appellant, Joe Allen Sparkman, together with accomplice, Leroy Goodman, was convicted after a jury trial of aggravated rape in June, 1976. The jury set appellant’s sentence at fifty years and Goodman’s at ninety-nine years. Spark-man’s conviction was affirmed on direct appeal by the Texas Court of Criminal Appeals, where he presented the same arguments which he now presents to this Court. See Sparkman v. State, 580 S.W.2d 358 (Tex.Cr.App.1979). Sparkman thereafter filed applications for habeas corpus relief in the state courts which were summarily overruled. Appellant then filed for federal habeas relief alleging seven grounds of error. His application was referred to a U. S. Magistrate who recommended denial of relief without a hearing. The Magistrate’s recommendations were adopted by the district court, and Sparkman now appeals. Petitioner’s only assertion on appeal is that he was denied due process of law by the introduction of testimony as to his reputation, at the punishment phase of the trial, from Texas Assistant Attorney General (now U. S. Magistrate), Calvin Botley, whose knowledge of Sparkman’s reputation arose from his investigation of a prior conviction set aside, prior to this trial, for ineffective assistance of counsel. The relevant facts underlying this contention are as follows: In 1969, Sparkman was convicted and sentenced to life imprisonment for the offense of robbery. After exhausting his state remedies, Sparkman filed for federal habeas relief in the United States District Court for the Southern District of Texas. A hearing was ordered by the district court, and Assistant Attorney General Botley was charged to represent the State. In the course of preparing for the hearing, Botley had the opportunity to review the entire case file and to speak with various people in the community who knew of Joe Allen Sparkman. The district court granted Sparkman habeas relief in March, 1975, and he was released from imprisonment on June 25, 1975. Three months later the rape for which Sparkman was convicted and now appeals occurred. When Sparkman was brought to trial in January, 1976, the state trial court granted defendant’s Motion in Limine forbidding the State from making any reference to Sparkman’s 1969 arrest and conviction for robbery. Sparkman was then tried and found guilty of aggravated rape. At the punishment phase of the trial, however, the State called Botley for the purpose of testifying as to Sparkman’s reputation in the community. Defense counsel objected to the introduction of Botley’s testimony arguing that it would be impossible to cross-examine the witness without delving into the circumstances surrounding the 1969 robbery conviction. His objection was overruled, and Botley was permitted to testify. After stating his name and employment, Botley testified as follows: Q: Mr. Botley, I’d like to ask you if you are familiar with the general reputation in the community in which he resides and among the people who know him, of Joe Sparkman? A: Yes, sir. Q: And are you familiar with his reputation for being a peaceable and law-abiding citizen? A: Yes, sir. Q: And, is that reputation good or bad? A: Bad. Defense counsel did not attempt to cross-examine Botley. The essence of petitioner’s argument on appeal is that Sparkman was denied due process by the use of Botley’s testimony which he claims was the “fruit of the poisonous tree,” the poisonous tree allegedly being the prior invalid conviction. Petitioner argues that “the question in this case becomes whether Botley’s testimony is tainted by the prior void conviction which was obtained at the expense of Sparkman’s constitutional right to effective counsel.” Relying upon various Fourth Amendment cases, petitioner argues that if Sparkman had not been denied his right to effective counsel in 1969, Botley would never have learned of Sparkman’s reputation and would not have been able to testify. Thus, Botley’s testimony concerning defendant’s reputation was a direct exploitation of the prior unconstitutional violation he had suffered, and, therefore, should have been excluded. Petitioner’s argument fails for several reasons. The exclusionary rule bars evidentiary “fruit” obtained as “a direct result” of an illegal search, illegal course of interrogation, or other illegal action of the police. Wong Sun v. United States, 371 U.S. 471, 485, 83 S.Ct. 407, 416, 9 L.Ed.2d 441, 454 (1963). Exclusion is only appropriate, however, if the “fruit” is sufficiently connected to the illegal “tree.” In Wong Sun, supra, the Supreme Court stated: We need not hold that all evidence is “fruit of the poisonous tree” simply because it would not have come to light but for the illegal actions of the police. Rather, the more apt question in such a case is “whether, granting establishment of the primary illegality, the evidence to which instant objection is made has been come at by exploitation of that illegality or instead by means sufficiently distinguishable to be purged of the primary taint.” Id. at 487-88, 83 S.Ct. at 417, 9 L.Ed.2d at 455, quoting R. Maguire, Evidence of Guilt, 221 (1959). It is questionable in this case whether Botley’s testimony was in any way the “fruit of the poisonous tree.” Botley obtained his knowledge of appellant’s reputation while investigating the facts of an earlier crime, a presumptively valid conviction. This information was equally available to anyone else, and without regard to whether appellant was convicted of the robbery. Petitioner’s conviction was overturned not for insufficient evidence or for any illegal arrest, search or other improper police activity, but because his lawyer was ineffective. In this light, it is difficult to see the direct connection between the alleged “fruit” — Botley’s investigation into a valid conviction — and the “poisonous tree” —the invalid conviction due to ineffective counsel. In any case, where the relationship between the unconstitutional action and the questioned evidence is “so attenuated as to dissipate the taint” the evidence is admissible. Nardone v. United States, 308 U.S. 338, 60 S.Ct. 266, 84 L.Ed. 307 (1939). In this case, Botley’s investigation and testimony were in no way tainted by the fact that appellant’s counsel failed to represent him properly at his robbery trial. Additionally, this Court in United States v. Brookins, 614 F.2d 1037 (5th Cir. 1980) stated: [Rjecent Supreme Court decisions reject earlier statements that portray the exclusion of illegally obtained evidence as constitutionally required and make clear that the exclusionary rule reduces to a “judicially created remedy” to be applied only when it advances its judicial purpose .... In the fourth amendment context, the “single and distinct” purpose for the exclusionary rule is deterrence of police violations of that constitutional protection against unreasonable search and seizures .... In the fifth and sixth amendment context, the “prime purpose” of the exclusionary rule as applied to the fruits of police illegality is deterrence of government denial of the self-incrimination privilege or the counsel right, . . . but a secondary purpose is ensuring the trustworthiness of incriminating statements .... The attenuated connection exception and the independent source exception are justified because it is unlikely that suppression of attenuated or independently discovered derivative evidence would deter police misconduct and would bar untrustworthy evidence .... Id. at 1046-47 (citations and footnotes omitted). Application of an exclusionary rule in this case would not deter any illegal government conduct, since none has occurred. In sum, petitioner asks this Court to make a novel interpretation and extension of the “fruit of the poisonous tree” doctrine. He attempts to create an animal which simply does not exist.

3451236-8945

ORDER GRANTING DEFENDANTS MOTION TO ENFORCE PLEA AGREEMENT ROSEN, District Judge. On January 28, 1991, this Court sentenced Defendant Ennis Flowers (“Defendant”) to 210 months of incarceration for conspiracy to distribute cocaine in violation of 21 U.S.C. §§ 841(a)(1) and 846. Pursuant to a Rule 11 plea agreement, Defendant’s sentence was ordered to run concurrently with his 125-month sentence for a drug possession offense committed during the time frame of the drug conspiracy. See United States v. Flowers, No. 88-CR-80339-1 (E.D.Mich., Gadola, J.), aff'd 909 F.2d 145 (6th Cir.1990). Although Defendant appealed his conviction in the instant case, his appeal apparently was rejected as untimely. Presently before the Court is Defendant’s motion pursuant to 28 U.S.C. § 2255, seeking enforcement of his Rule 11 plea agreement. Specifically, Defendant contends that the Bureau of Prisons (“BOP”) effectively breached the plea agreement by refusing to deem his concurrent 210-month sentence in the instant matter as commencing on the date he began serving his earlier 125-month federal sentence. By instead determining that Defendant’s 210-month sentence commenced on the date it was imposed by this Court, the BOP in essence rendered that sentence only “prospectively” concurrent with Defendant’s earlier 125-month sentence. According to Defendant, the plea agreement required that the 210-month sentence be “retroactively” concurrent with the earlier sentence. In its response, the Government concedes that Defendant has correctly construed the terms of his Rule 11 plea agreement. In particular, the Government cites the following language from that agreement: In imposing sentence, the Court shall ensure that the defendant receives credit for the time he has already served, which is approximately 15 months. In light of this language, the Government agrees that the parties to the plea agreement contemplated that Defendant’s two federal sentences would be fully concurrent, both prospectively and retroactively. Thus, the Government concludes that the Court should ensure compliance with the plea agreement by reducing Defendant’s 210-month sentence to account for the time Defendant had already served on his 125-month sentence pri- or to this Court’s January 28, 1991, sentencing. Given the parties’ consensus on the proper interpretation of the plea agreement, and given the plain language of the agreement itself, this Court’s sole remaining concern is whether there is a legal basis for granting the relief Defendant seeks. By construing the sentence calculation statute as precluding the retroactive sentence credit sought by Defendant, the BOP apparently followed its standard practice, as well as a plausible interpretation of that statute. See 18 U.S.C. § 3585(b) (providing that sentence credit shall be given only for time spent in official detention “that has not been credited against another sentence”). The Supreme Court has expressly held that the Attorney General, acting through the BOP, is charged with the initial responsibility of determining sentence credit under 18 U.S.C. § 3585(b). United States v. Wilson, 503 U.S. 329, 112 S.Ct. 1351, 117 L.Ed.2d 593 (1992). Although Wilson does not exempt such determinations from judicial review, that case might be viewed as implying that the BOP is entitled to some deference in carrying out its statutory duty. In the instant matter, it cannot be said that the BOP has acted arbitrarily or in clear contravention of its statutory authority. Nevertheless, the Court finds that its authority to grant the relief sought by Defendant flows from the plea agreement itself. In this case, the Court is not confronted with a claim that the BOP improperly exercised its discretion to compute sentence credit. The Court doubts whether an allegedly flawed sentence credit determination by the BOP would represent the sort of “grievous wrong” or “complete miscarriage of justice” that warrants habeas relief under 28 U.S.C. § 2255. See Brecht v. Abrahamson, 507 U.S. 619, 632-35, 113 S.Ct. 1710, 1719-20, 123 L.Ed.2d 353 (1993); United States v. Todaro, 982 F.2d 1025, 1030 (6th Cir.), cert. denied, 508 U.S. 943, 113 S.Ct. 2424, 124 L.Ed.2d 645 (1993). In contrast, Defendant here claims— and the Government agrees — that the plea agreement left the BOP with no discretion in determining the effective commencement date of Defendant’s 210-month federal sentence. In essence, Defendant contends that the express terms of his plea agreement override the more general rules the BOP would typically apply in determining sentence credit. The Court agrees, in light of the explicit and uncontested terms of Defendant’s plea agreement. It is clear that “when a plea rests in any significant degree on a promise or agreement of the prosecutor, so that it can be said to be part of the inducement or consideration, such promise must be fulfilled.” Santobello v. New York, 404 U.S. 257, 262, 92 S.Ct. 495, 499, 30 L.Ed.2d 427 (1971); see also United States v. Robison, 924 F.2d 612, 613 (6th Cir.1991) (noting that plea agreements are to be interpreted and enforced in accordance with “traditional principles of contract law”). In this case, the Government concedes that the BOP’s “prospective-only” calculation of Defendant’s sentence has defeated the intentions of both Defendant and the Government when they entered into the plea agreement. As an agency of the same Government that entered into the plea agreement, the BOP is not free to override its binding terms. Cf. Giglio v. United States, 405 U.S. 150, 154, 92 S.Ct. 763, 766, 31 L.Ed.2d 104 (1972) (holding that the Government was bound by a promise made by a prosecuting attorney); Margalli-Olvera v. INS, 43 F.3d 345, 353 (8th Cir.1994) (“[Promises made by an Assistant United States Attorney bind all agents of the United States government.”). Although the Sixth Circuit has not spoken on this precise issue, the Seventh Circuit has held that a federal court has the authority, and indeed the duty, to ensure that a plea agreement’s promise of concurrent sentences is earned out as the parties intended. In Carnine v. United States, 974 F.2d 924, 926-27 (7th Cir.1992), a defendant claimed that his plea agreement in a second federal prosecution called for the same sort of retroactively concurrent sentence Defendant seeks in this case. However, as in the instant matter, the BOP determined that the second sentence commenced on the date it was imposed, rather than the date the defendant had begun serving his first federal sentence. 974 F.2d at 927. The Seventh Circuit held that, should the defendant be able to demonstrate that the plea agreement contemplated retroactively concurrent sentences, he would be entitled to receive the benefit of this bargain. 974 F.2d at 928-32. The court noted that the sentence calculation statute did not affect the outcome of this inquiry, regardless of its interpretation; rather, “[a]t issue here is what the prosecutor promised [the defendant] and what rights he reasonably believed he had contracted to receive.” 974 F.2d at 930 n. 5. Finally, the court found that enforcement of the plea agreement would not be precluded by the partially retroactive nature of the second sentence. Although noting lack of unanimity among courts on this point, the Seventh Circuit concluded that “[a] sentence can begin to run before it is imposed.” 974 F.2d at 929 n. 4; see also U.S.S.G. § 5G1.3, Commentary, appl. note 2 (discussing the use of an “adjusted concurrent sentence” in order to achieve complete concurrency). This Court finds that Camine addresses the questions presented in the instant matter in a well-reasoned fashion, and accordingly adopts the Seventh Circuit’s approach. The parties here agree that, under the terms of the plea agreement, Defendant’s 210-month sentence was to commence on the date his earlier 125-month sentence began to run. Because the BOP, in keeping with its standard practice, declined to follow this agreement, Defendant’s 210-month sentence must be adjusted accordingly. In particular, in order to enforce the agreement that Defendant would be given credit for the time already served on his 125-month sentence, the Court finds that Defendant’s existing 210-month sentence must be reduced to 192 months, 19 days. For the foregoing reasons, NOW, THEREFORE, IT IS HEREBY ORDERED that Defendant’s Motion for Enforcement of Plea Agreement be GRANTED. The Court will issue an amended Judgment and Commitment Order reflecting an amended sentence of 192 months, 19 days. . Including various custody credits granted by the BOP in computing the term of Defendant’s 125-month sentence, it appears that Defendant had served 17 months and 11 days of that sentence prior to this Court’s imposition of the 210-month concurrent sentence. Thus, if the determination of the BOP is permitted to stand, Defendant will serve an effective sentence of 227 months and 11 days.

11410875-19123

DIANE P. WOOD, Circuit Judge. For over a decade, Frank Redisi, Sr. and his son, Frank Redisi, Jr., operated a variety of business entities in the Chicago suburbs that manufactured cable television decoders, which allow one to view all of a cable provider’s scrambled premium or pay-per-view programming free of charge. From 1992 to 1999, the Redisis sold thousands of decoders to customers of the plaintiff CSC Holdings, Inc., which refers to itself as Cablevision here. In May 1999, Cablevision brought suit for violations of the Cable Communications Policy Act of 1984, 47 U.S.C. § 553, and secured a temporary restraining order and asset freeze against the Redisis and their businesses. The district court found against the Redi-sis on summary judgment and after a damages trial awarded Cablevision over $29 million. On appeal, the Redisis assert a statute of limitations defense and also contest numerous discovery rulings and the district court’s damages determination. We reverse and remand for further proceedings. I The Redisis began selling their illegal wares sometime before 1990, initially operating under the name of Teleview Distributors, Inc. By January 1991, FBI agents were investigating the Redisis’ activities and meeting with leaders of the cable television industry, including Robert Astarita, Cablevision’s Senior Vice-President of Corporate Security, to discuss the problem of cable theft. At one point in 1991, Astar-ita sent Teleview Distributors a letter indicating that he had evidence that some of the products Teleview Distributors was selling might be capable of descrambling Cablevision’s signal and that, if so, it should cease and desist immediately. The Redisis failed to respond to the letter. On November 4, 1992, the FBI served a search warrant on Teleview Distributors, obtaining substantial evidence of wrongdoing and shutting down the business. As a direct result, Redisi, Jr. pleaded guilty to one count of violating 47 U.S.C. § 553. The FBI kept Astarita apprised of its progress in fighting cable theft through at least 1995; in particular, it gave him updates on the investigation and the criminal charging of Redisi, Jr. Cablevision claims that after November 1992, it believed that the Redisis had turned from their life of crime, but this proved not to be the case. They very quickly resumed operations and later incorporated as Omega Holdings (owned by the Redisis) and Omega of Elgin (owned by Redisi, Sr.) and shared facilities, equipment, and inventory with various other companies selling decoders (owned by defendants who have settled out of the case). Between November 1992 and May 1999, the Redisis through various corporate identities and affiliates sold 2,756 decoders to probable Cablevision customers. Cablevision began a serious investigation of the Redisis in March 1998, in the course of which it made six undercover purchases of decoders that descrambled all of its programming over the course of the next year. On May 26, 1999, Cablevision filed a motion for a temporary restraining order and asset freeze and sought monetary and injunctive relief. The district court enjoined the Redisis from selling any decoders, froze the Redisis’ personal and corporate assets, and directed the U.S. Marshal to seize business records and computers. When the Redisis appeared in court, they moved unsuccessfully to have the action dismissed. The district court instead granted a preliminary injunction on June 24 and set a briefing schedule under which discovery was to close on September 10. The defendants served written discovery requests on the plaintiffs in July but did not notice any depositions at that time. Cablevision moved for summary judgment on July 29. On Friday, August 27, the Redisis’ attorney noticed depositions for five Cablevision employees to be conducted on the first three days of September. Astarita was scheduled to be deposed on the morning of September 2, six days after the notice was sent. Cablevision informed the Redisis that it would produce four of the employees but would not produce Astarita, representing that he had no knowledge of events relating to the ease that could not be gained from the other four witnesses. The district court then denied the Redisis’ motion to compel Astarita’s deposition, finding that the Redisis had produced no evidence of relevance and that the expedited discovery request would be unduly burdensome to Astarita. On Friday, September 3, one week before the close of discovery, the Redisis again noticed a deposition for Astarita. Cablevision refused to comply with this notice, and the Redisis then sought reconsideration of their original motion to compel. They produced affidavits from FBI agents indicating that Astarita, and thus Cablevision, knew of the Redisis’ actions as early as 1991 and had engaged in extensive discussions with the FBI between 1993 and 1995. They further represented that this fact was important to their statute of limitations defense. The district court denied this motion as well on the ground that the deposition was “not relevant.” In December 1999, it granted Cablevision’s motion for summary judgment as to liability in its entirety, rejecting the Redisis’ statute of limitations defense. Damages discovery led to a repeat of many of the disputes from the liability phase. After deposing Joseph Flaim, Ca-blevision’s principal damages witness, the Redisis moved to bar Flaim’s damages analysis (on the ground that it was based on undisclosed materials) and requested an extension of discovery. The district court denied both motions but did order Cablevision to provide the Redisis with a summary of its damages calculations and supporting materials other than its customer lists. Flaim testified as to his damages analysis at trial, which the district court in large part accepted. The court then awarded Cablevision almost $29.8 million in damages, plus $300,000 in costs and attorneys’ fees. II The parties agree that the relevant statute of limitations is found at 47 U.S.C. § 415(a), which provides, “All actions at law by carriers for recovery of their lawful charges, or any part thereof, shall be begun, within two years from the time the cause of action accrues, and not after.” The Redisis do not seriously dispute that they have violated the law, but they argue that the statute of limitations bars Cablevision’s suit because Cablevision knew of its injuries more than two years before it filed suit in May 1999. In the first place, it should be noted that the Redisis made a number of decoder sales to Cablevision customers during the two years preceding the commencement of this action. Under any theory of the case, Cablevision filed a timely claim as to those sales, as the Redisis’ counsel conceded at oral argument. But at least on the face of the statute, Cablevision’s claims as to 90% or so of the decoders sold would be barred if the Redisis’ statute of limitations argument is correct. Cablevision offers two reasons why it should still be permitted to prosecute its claim in its entirety: (1) the Redisis’ actions amounted to a continuing violation; and (2) the statute of limitations was tolled because Cablevision did not know or have reason to know of the Redi-sis’ violations. “[T]he statute of limitations doesa not begin to run on a continuing wrong till the wrong is over and done with.... ” Taylor v. Meirick, 712 F.2d 1112, 1118 (7th Cir.1983). This is a general legal principle, just as applicable to Title VII and Section 1983 cases as it is to copyright violations or business torts. Heard v. Sheahan, 253 F.3d 316, 319-20 (7th Cir.2001). A continuing violation exists “where it would be unreasonable to require or even permit [a plaintiff] to sue separately over every incident of the defendant’s unlawful conduct.” Id. at 319. The Supreme Court recently clarified the nature of continuing violations in National R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 122 S.Ct. 2061, 153 L.Ed.2d 106 (2002). In Morgan, the Court ruled that a Title VII plaintiff could not recover for “discrete discriminatory acts” that occurred outside the relevant EEOC filing deadlines but could recover for such actions on a hostile work environment theory. Id. at 2071-73. We too have noted the contrast between a continuing wrong, such as deliberate indifference to a prisoner’s medical treatment, and discrete acts, such as consistently underpaying an employee because of her sex. Heard, 253 F.3d at 320. The wrong alleged here is the Re-disis’ “distribution of equipment intended ... for unauthorized reception of any communications service offered over a cable system....” 47 U.S.C. § 553(a)(2). While Cablevision contends that the Redisis’ action was continuing because of their continued sales made over a seven-year span, this belies the actual nature of the claim. The Redisis sold over 2,700 decoders. Each of those sales was a separate and discrete statutory violation for which Ca-blevision could recover. The mere fact that the Redisis made a regular habit of violating the statute is not enough to convert multiple individual violations into one long-continuing wrong. For criminal penalties, the statute expressly declares that the distribution of each individual device “shall be deemed a separate violation.” 47 U.S.C. § 553(b)(3). Because each of the Redisis’ decoder sales is a separate violation, the continuing violation doctrine has no application here.- Statutes of limitations are of course subject to equitable doctrines such as tolling, and the modern tendency is to toll until the plaintiff knew or by reasonable diligence should have known of both the injury and its governing cause. Fries v. Chicago & Northwestern Transp. Co., 909 F.2d 1092, 1095 (7th Cir.1990). An abstract fear of wrongdoing is not enough. Sokol Crystal Prods., Inc. v. DSC Communications Corp., 15 F.3d 1427, 1430 (7th Cir.1994). Nonetheless, the statute begins to run once a plaintiff has knowledge which would lead a reasonable person to investigate the possibility that her legal rights had been infringed. LaSalle v. Medco Research, Inc., 54 F.3d 443, 446 (7th Cir.1995). The Redisis argued below that Cablevision knew or should have known of their actions as early as 1991 and certainly no later than 1995, but the district court rejected this position, instead finding that nothing in the record would have put Cablevision on notice of the defendants’ actions until it began its investigation in 1998. The Redisis point to a variety of information that Cablevision had at its disposal prior to 1995, including advertisements of their illegal wares placed in national magazines, cease and desist letters sent to them by Cablevision’s own Senior Vice-President Astarita, and affidavits from FBI agents and another cable television executive indicating that the FBI communicated several times with Astarita about its “Operation Cable Trap” investigation of decoder sellers including the Redisis. At one such meeting in 1995, the agents specifically noted that Redisi, Jr. and Teleview were advertising nationwide sales of decoders. The briefs of both parties make abundantly clear that the key issues in this case are how much Astarita knew about the Redisis’ activities and when he knew it. When did Astarita first see the Redisis’ advertisements? What did Astarita learn from the FBI meetings? What caused him to launch his investigation in March 1998? Despite the critical importance of Astarita to the case, the district court refused to allow the Redisis to depose Astarita, finding that his testimony would not be relevant to any issue in the case. A party has a general right to compel any person to appear at a deposition, through issuance of a subpoena if necessary, fed. R. Civ. P. 30(a). A district court may quash or modify a subpoena if it fails to allow a reasonable time for compliance or subjects the deponent to an undue burden, fed. R. Civ. P. 45(c)(3)(A). When a district court considers a motion to compel, it must evaluate such factors as timeliness, good cause, utility, and materiality. Farmer v. Brennan, 81 F.3d 1444, 1449 (7th Cir.1996). We will overturn a decision limiting discovery only if: “(1) the record contains no evidence upon which the court could have rationally based its decision; (2) the decision is based on an erroneous conclusion of law; (3) the decision is based on clearly erroneous factual findings; or (4) the decision clearly appears arbitrary.” Stagman v. Ryan, 176 F.3d 986, 993-94 (7th Cir.1999) (citing Gile v. United Airlines, Inc., 95 F.3d 492, 495 (7th Cir.1996)). The sole ground the district court offered for its denial of the Redisis’ motion to depose Astarita was that his testimony would not be relevant. It is true that a district court may deny motions to compel depositions that would not aid in “the exploration of a material issue.” Israel Travel Advisory Serv., Inc. v. Israel Identity Tours, Inc., 61 F.3d 1250, 1254 (7th Cir.1995). In this case, however, it is plain that Astarita’s deposition would have assisted in exploring the material issue of whether the Redisis had a valid statute of limitations defense to the bulk of Cablevision’s claim. The district court’s determination that the motion to compel was “not relevant” was based, as far as the record shows, only on Cablevision’s bare representation that Astarita knew nothing about the case and that four other deposed Cablevision employees knew as much as he did. This is not enough to establish an undue burden under Rule 45 or to show some other exceptional circumstance that would justify prohibiting the deposition altogether. See Kaiser v. Mutual Life Ins. Co., 161 F.R.D. 378, 380 (S.D.Ind.1994). In any event, the record proves that Astarita’s deposition was highly relevant. The Redisis presented in their motions evidence that none of the individuals Cablevision produced had been with the company for more than 14 months, while Astarita had worked there for close to a decade. As director of corporate security with responsibility for cable theft investigations, he alone could provide the answer to the relevant question of whether Cablevision had knowledge sufficient to trigger a duty to investigate more than 24 months before it brought suit. Although discovery rulings are subject to the usual harmless error analysis, see fed. R. Civ. P. 61, we cannot find this ruling to be harmless. To the contrary, it went to the heart of the Redisis’ defense. Therefore, we must reverse the judgment of the district court and remand with instructions to grant the motion to compel Astarita’s deposition. The Redisis ask us to go further and hold that on the record before us it was objectively unreasonable for Cablevision not to have investigated their activities sooner than it did. We decline to take this step. After reviewing Astarita’s deposition and any other additional facts the parties can adduce on remand, the district court will be in the best position to determine whether Astarita or anyone else at Cablevision reasonably should have investigated sooner or whether the information at his disposal was so limited as to toll the statute of limitations. Ill Even in a best-case scenario for the Redisis, we agree with the district court that they are liable for sales within the two-year period of limitations. That means at a minimum that they must account for their post-May 1997 sales of illegal decoders. We therefore find it appropriate to address some of the damages issues the Redisis have raised on this appeal, since some money will be due no matter what. The Redisis bring two distinct challenges to the district court’s calculation of damages totaling over $29 million. First, they argue that there was no basis in evidence for the damages award. Second, they allege that the district court wrongfully denied them the discovery they needed to present their case properly. Cablevision had the option of recovering either statutory damages or “the actual damages suffered ... as a result of the violation and any profits of the violator that are attributable to the violation which are not taken into account in computing the actual damages.... ” 47 U.S.C. § 553(c)(3)(A)(i). Cablevision selected the latter option and computed its damages by making a number of assumptions. First, its damages expert, Flaim, compared Ca-blevision’s subscription list with the names in the Redisis’ “Gross Purchases” database accessed from its seized computers (the Redisis having destroyed all paper records) to create a list of 2,756 customers. He then assumed a useful life of seven years for each decoder and also assumed that each customer purchased only Cablev-ision’s most basic cable services but had access to Cablevision’s entire “Optimum Gold” package (including channels like HBO, Cinemax, and The Movie Channel). In 1999, the difference between these services was $40.25 per month. Flaim also theorized that the average cable thief viewed 15 pay-per-view cable programs per month at a total estimated cost of $114.50. This led to a total loss of $154.75 per month or $1,857 per decoder per year of service and a total loss of $29,767,710. Flaim’s analysis was accepted in its entirety by the district court. Damages based on lost revenues are by their very nature incapable of mathematical precision. Thus we will uphold a district court’s damages determination under the clear error standard as long as the award was based on reasonable estimates. Bob Willow Motors, Inc. v. General Motors Corp., 872 F.2d 788, 798-99 (7th Cir.1989). The real question, however, is how one should determine a cable company’s “actual damages.” Cablevision seems to believe that its damages are equivalent to the cost it would have charged a cable thief for the services she obtained through the use of the Redisis’ decoders. Thus, if a viewer spent a few seconds scanning through twenty or so pay-per-view movies with his remote control, and each movie costs $5, Cablevision would assess its damages at $100. We have difficulty with this method of calculation. Few rational viewers would pay $100 for the privilege of viewing a few seconds of twenty different movies; the action is only taken because through use of the decoder the service becomes free. Another way of stating this fact is that absent the decoder, a viewer would not use the same cost of services. And the marginal costs of providing “Optimum Gold” or a pay-per-view movie to one additional subscriber are surely minimal. Thus, the “actual damages” suffered by Cablevision, i.e., the value of what has been taken from it, is the amount it would have received for the services that its viewers would have demanded absent the decoders, less the cost of providing those services (which may or may not be negligible). One could even assume that viewers willing to accept the risk of discovery and prosecution for cable theft are users who consume large amounts of cable services and would watch more pay-per-view features than the average cable customer. Even so, however, there must be some evidentiary basis for determining what that figure would be.

4180638-30107

MEMORANDUM OPINION AND ORDER AMY BERMAN JACKSON, District Judge. Plaintiff Jonathon Myers brings this action against Alutiiq International Solutions, LLC (“Alutiiq”), a contractor with the U.S. Department of State, and two of its employees, Gregory Dodge and Eric Boyle, for wrongful termination, breach of implied contract, and promissory estoppel. He alleges that he was fired for engaging in whistleblowing activities. Defendants have moved to dismiss the complaint for failure to state a claim upon which relief can be granted. For the reasons stated below, the Court will grant defendants’ motion in part and deny it in part. I. Background Plaintiff alleges that he was hired in 2003 by George Bailey, the Contracting Officer’s Representative (“COR”) for the U.S. Department of State, under a government contract held by Anteon and General Dynamics. Compl. ¶ 14. In 2005, he was promoted to the position of on-site program manager for Anteon and General Dynamics at the Department of State, where he was responsible for managing all of the contract personnel who worked within his organization. Id. ¶ 17. That same year, Bailey directed plaintiff to hire an individual named Lori Strickland, and plaintiff complied despite his concerns about her qualifications. Id. ¶¶ 21-22. Although Strickland was supposed to be under plaintiffs supervision, and plaintiff observed that she did little substantive work, Bailey objected when plaintiff attempted to critique or manage her performance. Id. ¶ 22. In March 2006, Bailey directed plaintiff to hire Strickland’s daughter, Erika. He told plaintiff that he was not interested in any other candidates for the position even though the standard practice was to interview several qualified applicants. Id. ¶ 23. The next year, Bailey also directed plaintiff to hire one of the Stricklands’ friends, and he again stated that he was not interested in any other candidates. Id. During that time, Bailey also recommended another friend of the Stricklands to fill yet another position. Id. In early 2007, defendant Alutiiq won a contract with the Department of State and effectively took over the role previously performed by Anteon and General Dynamics. Id. ¶¶ 18, 24. Alutiiq retained all the employees in the contracts office, including plaintiff and his supervisors, defendants Dodge and Boyle. Id. ¶¶ 10-11, 18. Plaintiff alleges that when he began working for Alutiiq, “he received and reviewed an Employee Handbook and Code of Ethics and Business Conduct.” Id. ¶ 19. He also asserts that Dodge “instructed” him at that time about Alutiiq’s progressive discipline policy, which plaintiff was required to employ with his subordinates. Id. ¶ 19. Plaintiff states that he began hearing complaints from other Alutiiq employees about Lori Strickland’s close personal relationship with Bailey. Id. ¶ 24. In April 2007, plaintiff counseled Strickland to refrain from involvement in a social relationship with Bailey to avoid violating government contracting regulations. Id. ¶25. In response to plaintiffs admonition of Strickland, Bailey removed her from plaintiffs direct supervision and placed her under his sole supervision, an action that plaintiff alleges was in violation of government contracting regulations. Id. ¶ 26. Plaintiff alleges that as a result of the close relationship, and at Bailey’s insistence, Lori Strickland received several unmerited raises and promotions over plain tiffs objections. Id. ¶¶ 28. Plaintiff notes that Strickland’s salary exceeded that of more qualified Alutiiq employees. Id. Plaintiff repeatedly asked Dodge and Boyle to address the situation created by the inappropriate relationship between Bailey and Strickland. Id. ¶ 30. He asserts that they declined to do so because they did not want to anger Bailey and jeopardize Alutiiq’s government contract. Id. ¶ 31. Not satisfied with their response, in September 2009, plaintiff reported his concerns to Bailey’s supervisor, Martin Kraus. Id. ¶ 32. After Kraus performed an informal investigation, he forwarded the information to the Department of State Office of Inspector General (“OIG”), which initiated a formal investigation in 2009. Id. ¶¶ 33-34. Plaintiff cooperated with the OIG investigation through multiple interviews and by providing e-mails to support his allegations. Id. ¶ 34. The OIG concluded that three out of four serious allegations against Bailey were well-founded and substantiated by evidence provided by plaintiff and by other evidence gathered during the investigation. Id. ¶ 35. Bailey was then removed as the COR on the contract at issue, and Lori Strickland was terminated — at OIG’s direction — on May 14, 2010. Id. After the OIG completed its investigation, but before Lori Strickland was terminated, plaintiff directed a new receptionist, Louise Jefferson, to limit the amount of time she spent socializing with Lori and Erika Strickland at her desk. Id. ¶ 36. He told her that the government was paying close attention to the level of professionalism in the office, but did not mention anyone’s name or the OIG investigation. Id. Dodge then instructed plaintiff to “drop” the issue with Jefferson. Id. ¶ 37. On May 12, 2012, Jefferson sent an e-mail to plaintiff, Dodge, Boyle, and Bailey complaining about “office politics” and the “hostile work environment” created by plaintiffs discussion with her about the socializing. Id. ¶¶ 37-38. According to plaintiff, “[h]is experience as a Program Manager, coupled with the tone and content of Ms. Jefferson’s e-mail, gave [plaintiff] the impression that she had been instructed to send this e-mail and include key terms such as ‘hostile workplace,’ a term which is often used as a precursor for administrative action.” Id. ¶ 38. Plaintiff responded to Jefferson’s e-mail, which he found to be an inaccurate characterization of the event, that afternoon. Id. ¶ 39. Dodge and Boyle then telephoned plaintiff and instructed him not to send further email correspondence about the matter. Id. Plaintiff alleges that he did not. Id. On May 17, 2012 — the next business day after Lori Strickland was terminated — defendants Dodge and Boyle told plaintiff that he was being terminated from Alutiiq for insubordination. Id. ¶ 40. On November 5, 2010, plaintiff filed his complaint in the Superior Court for the District of Columbia against Alutiiq, Dodge, and Boyle. Defendants removed the action to this Court on November 29, 2010, and then moved to dismiss the complaint for failure to state a claim under Fed.R.Civ.P. 12(b)(6). In Count I, plaintiff alleges he was wrongfully terminated in retaliation for reporting wrongdoing by Bailey and Lori Strickland. Count II alleges a breach of an implied contract arising out the progressive discipline policy, which plaintiff claims was breached when he was summarily fired. Count III alleges promissory estoppel. This claim is based on ai leged promises made by defendants that they would not retaliate against plaintiff for cooperating with the OIG investigation, and that a progressive discipline policy would be applied before any termination. Plaintiff alleges that he relied on this promise and did not seek another job before participating in the OIG investigation. Plaintiff seeks compensatory and punitive damages, including back pay and future pay; costs and expenses; and equitable relief, consisting of the re-characterization of his departure as “resignation” instead of “termination,” and a favorable reference from Alutiiq. Compl. at 16. II. Standard of Review “To survive a [Rule 12(b)(6) ] 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, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (internal quotation marks omitted); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). In Iqbal, the Supreme Court reiterated the two principles underlying its decision in Twombly: “First, the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” 129 S.Ct. at 1949. And “[s]econd, only a complaint that states a plausible claim for relief survives a motion to dismiss.” Id. at 1950. A claim is facially plausible when the pleaded factual content “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 1949. “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. A pleading must offer more than “labels and conclusions” or a “formulaic recitation of the elements of a cause of action,” id. at 1949, quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955, and “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. When considering a motion to dismiss under Rule 12(b)(6), the complaint is construed liberally in plaintiffs favor, and the Court should grant plaintiff “the benefit of all inferences that can be derived from the facts alleged.” Kowal v. MCI Commc’ns Corp., 16 F.3d 1271, 1276 (D.C.Cir.1994). Nevertheless, the Court need not accept inferences drawn by the plaintiff if those inferences are unsupported by facts alleged in the complaint, nor must the Court accept plaintiffs legal conclusions. See id.; Browning v. Clinton, 292 F.3d 235, 242 (D.C.Cir.2002). In ruling upon a motion to dismiss under Rule 12(b)(6), a court may ordinarily consider only “the facts alleged in the complaint, documents attached as exhibits or incorporated by reference in the complaint, and matters about which the Court may take judicial notice.” Gustave-Schmidt v. Chao, 226 F.Supp.2d 191, 196 (D.D.C.2002) (citations omitted). III. Analysis A. Count I: Wrongful Termination i. Plaintiff states a claim against Alutiiq for wrongful termination Defendants argue that because plaintiff was an at-will employee, his cause of action for wrongful termination fails because he does not allege a sufficient public policy to sustain his claim. The Court disagrees. “Under District of Columbia law, ‘employment is presumed to be at will, unless the contract of employment expressly provides otherwise.’ ” Liberatore v. Melville Corp., 168 F.3d 1326, 1328 n. 3 (D.C.Cir.1999), quoting Carl v. Children’s Hosp., 702 A.2d 159, 162 (D.C.1997). “An employee who serves at the will of his or her employer may be discharged ‘at any time and for any reason, or for no reason at all.’ ” Id. at 1329, quoting Adams v. George W. Cochran & Co., 597 A.2d 28, 30 (D.C.1991). But there is a public policy exception to this general rule. In Adams, the D.C. Court of Appeals held that an at-will employee stated a cause of action for wrongful discharge where the employee would have been forced to violate the law in order to avoid being terminated. 597 A.2d at 34. The court described it as a “very narrow exception to the at-will doctrine” limited to “when the sole reason for the discharge is the employee’s refusal to violate the law, as expressed in a statute or municipal regulation.” Id. The court also held that this cause of action is an intentional tort. Id. The D.C. Court of Appeals expanded this public policy exception in Carl v. Children’s Hospital, 702 A.2d 159 (D.C.1997). In Carl, the D.C. Court of Appeals held that the public policy exception was not limited to instances where an at-will employee was discharged for an outright refusal to violate the law. The court concluded that “the ‘very narrow exception’ created in Adams should not be read in a manner that makes it impossible to recognize any additional public policy exceptions to the at-will doctrine that may warrant recognition.” Id. at 160. The exception may exist where the employee acted in furtherance of a public policy “solidly based on a statute or regulation that reflects the particular public policy to be applied, or (if appropriate) on a constitutional provision concretely applicable to the defendant’s conduct.” 702 A.2d at 163 (Terry, J., concurring). The plaintiff in Carl claimed she was wrongfully discharged because she advocated for patients’ rights and against her employer’s interests before the Council of the District of Columbia and as an expert witness in court. The D.C. Court of Appeals read a provision of the D.C. Code that prohibits anyone from threatening any witness from testifying before the Council “as a declaration of policy by the Council seeking to ensure the availability of information essential to its legislative function by imposing criminal penalties on anyone who seeks to impede Council access to such information.” Id. at 165. The court concluded that there was an adequately “close fit” between that public policy and the plaintiffs termination because termination of employment is “the most severe and most effective” way for an employer to affect an employee’s testimony before the Council. Id. Plaintiffs complaint raises the question of whether reporting wrongdoing in connection with government contracting falls within the public policy exception to an at-will employment relationship. 5 U.S.C. § 2302 reflects a clear public policy of encouraging government employees to come forward and report possible problems in federal programs, and there are many other whistleblower protection statutes that protect not only government employees, but private sector employees as well. See, e.g., 15 U.S.C. § 2087 (Consumer Product Safety Improvement Act); 18 U.S.C. § 1514A (Sarbanes-Oxley Act); 29 U.S.C. § 660 (Occupational Safety & Health Act). The Federal Acquisition Regulations (“FAR”) express a policy that contractors avoid or mitigate organizational conflicts of interests and state that “[e]ach individual contracting situation should be examined on the basis of its particular facts and the nature of the proposed contract.” 48 C.F.R. § 9.505. The FAR also prohibits personal conflicts of interest: Government business shall be conducted in a manner above reproach and, except as authorized by statute or regulation, with complete impartiality and with preferential treatment for none. Transactions relating to the expenditure of public funds require the highest degree of public trust and an impeccable standard of conduct. The general rule is to avoid strictly any conflict of interest or even the appearance of a conflict of interest in Government-contractor relationships. While many Federal laws and regulations place restrictions on the actions of Government personnel, their official conduct must, in addition, be such that they would have no reluctance to make a full public disclosure of their actions. 48 C.F.R. § 3.101-1. The FAR further prohibit employers from “discharging], demoting] or otherwise discriminating] against an employee as a reprisal for disclosing information to ... an authorized official of an agency ... relating to a substantial violation of law related to a contract....” 48 C.F.R. § 3.903. Plaintiff alleges that the close personal relationship between the COR, Bailey, and a government contractor, Lori Strickland, violated federal contracting regulations. Compl. ¶ 45. He further alleges that his employers knew that he reported those violations to his supervisors and to the OIG. Id. ¶ 46. Finally, he alleges that he was fired immediately after the OIG concluded that most of his allegations were substantiated and that Bailey and Lori Strickland were subject to discipline. Id. ¶ 47. Accepting plaintiffs allegations as true and resolving all inferences in his favor, as the Court must do at this juncture, plaintiff in this case has alleged sufficient facts to state a claim under the Carl public policy exception to the general rule against wrongful discharge claims by at-will employees. See Ware v. Nicklin Assocs., Inc., 580 F.Supp.2d 158 (D.D.C.2008) (finding that plaintiff stated a wrongful discharge claim where she alleged she had knowledge of an illegal billing scheme, her employers were aware of her knowledge, and she was fired because of that knowledge). Defendants argue that plaintiff “cannot and does not explain how COR Bailey’s alleged actions constituted a ‘substantial violation of law’ under these sections so as to make applicable FAR 3.903.” Defs.’ Reply at 3. But plaintiff is not required to establish here that his employers violated any particular provision of the FAR; the FAR provisions are relevant to this motion because they are illustrative of the strong public policy against conflicts of interest and favoring the protection of whistleblowers. In Vreven, the plaintiff had reported concerns to her supervisors that the defendant was evading taxes in violation of the Internal Revenue Code. 604 F.Supp.2d at 11. The court held that the plaintiff stated a claim for wrongful discharge under Twombly and the Carl standard even though she had not specified the manner in which the defendant allegedly violated its tax exempt status. The court found that the allegations “make plausible the conclusion that defendant discharged plaintiff as a result of her objections to alleged violations of defendant’s tax exempt status.” Id. at 14. Here, plaintiff has alleged sufficient facts to make plausi ble the conclusion that defendants fired him in retaliation for reporting alleged violations of federal contracting regulations, ii. Plaintiff states a claim for wrongful termination against the individual defendants The individual defendants argue that they cannot be held liable as a matter law for a wrongful termination claim. Although the D.C. Court of Appeals has not addressed this question directly, a review of its opinions in the employment area suggests that it would not bar claims for wrongful discharge against individual employees if the facts established that the individuals acted improperly or illegally. Because the Court must draw all reasonable inferences in plaintiffs favor at this stage, it will allow the wrongful termination claim against the individual defendants to proceed. Defendants cite decisions of other states holding that individual supervisors cannot be held liable for wrongful termination. Defs.’ Mem. at 11. While it is true that some states prohibit wrongful termination suits against individual supervisors, it is equally true that several states allow such claims. See Physio GP, Inc. v. Naifeh, 306 S.W.3d 886, 892 n. 2 (Tex.App.2010) (Hudson, J., dissenting) (collecting cases on the split of authority). The states recognizing individual liability reason that individuals are liable for their own torts, even as agents acting on behalf of their employers. See, e.g., Jasper v. H. Nizam, Inc., 764 N.W.2d 751, 775-76 (Iowa 2009); Ballinger v. Del. River Port Auth., 172 N.J. 586, 800 A.2d 97, 110-11 (2002); Harless v. First Nat’l Bank in Fairmont, 169 W.Va. 673, 289 S.E.2d 692, 698-99 (1982). According to that logic, employees can be liable for a wrongful discharge claim just as any other tort. See, e.g., Jasper, 764 N.W.2d at 775-76; Ballinger, 800 A.2d at 110-11; Harless, 289 S.E.2d at 698-700. These courts “reason that individual liability promotes deterrence and better decision making because it allows the active wrongdoer to be held directly responsible.” Physio, 306 S.W.3d at 888, citing Borecki v. E. Int’l Mgmt. Corp., 694 F.Supp. 47, 59 (D.N.J.1988); Jasper, 764 N.W.2d at 776. On the other hand, the states that do not allow wrongful termination claims against individual supervisors explain that “the employment relationship is the source of the duty in wrongful discharge torts.” Physio, 306 S.W.3d at 888. That relationship exists only between employer and employee and not between two employees, and only the employer has the power to terminate an employee. Id. (citations omitted). These courts further reason that individual liability is unnecessary to deter employees “because liable employers will likely take their own measures to deter agents or employees from wrongfully exercising termination authority.” Id. at 889. Indeed, fear of liability could discourage supervisors from terminating employers under legitimate circumstances. Id. (citations omitted). Finally, these courts express the concern that it can be difficult to determine which individuals should be liable for a decision to terminate. Id. (citations omitted). The Court finds the reasoning of the states that have allowed claims against individual employees to be more consistent with the law of the District of Columbia. Although the D.C. Court of Appeals has not directly ruled on this issue in the context of a wrongful discharge action, it has recognized that there may be some circumstances where an individual supervisory employee can be liable for tortious interference with another employee’s contractual relations with the employer. In Sorrells v. Garfinckel’s, Brooks Bros., Miller & Rhoads, Inc., 565 A.2d 285 (D.C.1989), the court held that while ordinarily, employees acting within the scope of their employment are sufficiently identified with the employer that they cannot incur individual liability for actions taken on its behalf, see Press v. Howard University, 540 A.2d 733 (D.C.1988), an individual supervisory employee may be hable for intentional interference with contractual relations when the employee “procures the discharge of the plaintiff for an improper or illegal purpose.” Sorrells, 565 A.2d at 291, citing W. Keeton, Prosser & Keeton on the Law of Torts § 129, at 990 (5th ed. 1984). In Sorrells, it was the fact that the individual defendant was shown to have acted with malice that differentiated the case from the general rule articulated in Press, but the opinion does not indicate that a finding of malice is a necessary predicate for individual liability. The court set forth a list factors to consider in deciding whether an actor’s conduct in intentionally interfering with a contract is improper, including the actor’s motive and the social interests involved. Id. at 290. According to the D.C. Court of Appeals, when the facts underlying each of those considerations combine to demonstrate wrongdoing by an employee, the employee’s “qualified privilege to act properly and justifiably” toward fellow employees and the employer “is vitiated.” Id. at 291. This holding is in keeping with the reasoning of the courts in other states that allowed wrongful termination claims against individual employees because individuals are liable for their own torts, even as agents acting on behalf of their employers. Therefore, reading Sorrells in conjunction with Carl, the Court finds that the D.C. Court of Appeals would allow claims against individual supervisors for wrongful discharge if it was shown that their conduct was sufficiently wrongful and violative of an important public policy. This holding is consistent with the approach that another court in this district took in Bowie v. Gonzales, 433 F.Supp.2d 24, 30-31 (D.D.C.2006). In Bowie, the court did not specifically address whether a wrongful termination claim could proceed against the individual defendants, but it granted summary judgment in favor of those defendants on the grounds that there was no violation of public policy that could support an exception to the at-will doctrine. The Bowie court’s apparent assumption that individual employees could be liable for wrongful termination under a different set of facts underscores this Court’s view that such claims may be brought in certain circumstances. Whether Dodge and Boyle could be found to be individually liable under D.C. law — that is, whether this case is more like Sorrells than like Press — may also turn on the nature of their employment at Alutiiq. The Sorrells opinion observed: In Press the individual defendants were officers of the university, not just supervisory employees; ... [a]s officers acting within the scope of their official duties, they served as the alter ego of the university and had the power to bind the university. In the instant case, however, [the defendant] was not an officer of [the defendant employer]. She did not have the power to fire [the plaintiff]; only an officer ... could do that. “ ‘Employer,’ in the context of a corporation, is a ‘person who is realistically the alter ego of the corporation’ and not ‘merely a foreman, supervisor or manager.’ ” 565 A.2d at 290, quoting Rustin v. District of Columbia, 491 A.2d 496, 501 (D.C.), cert. denied, 474 U.S. 946, 106 S.Ct. 343, 88 L.Ed.2d 290 (1985). The Court cannot determine from the face of the complaint alone whether or not it will turn out to be appropriate to view the two individual defendants as the company’s alter egos. For the purposes of the instant motion, accepting the facts as true and drawing all reasonable inferences in plaintiffs favor, the complaint alleges that defendants Dodge and Boyle were the driving force behind plaintiffs termination, and that their action was in retaliation for plaintiffs cooperation with the OIG investigation. Whether these defendants can ultimately be held liable for wrongful discharge will depend on the facts that are developed on the question of whether their conduct was improper and, to some extent, what their position was at Alutiiq. At this stage, the Court simply concludes that plaintiff has stated a claim for wrongful termination against them. Therefore, the Court will deny defendants’ motion to dismiss Count I. B. Count II: Breach of Implied Contract Defendants argue that plaintiffs cause of action for breach of an implied contract should be dismissed because, as an at-will employee who can be terminated at any time, plaintiff cannot reasonably rely on any oral promise about how he would be disciplined. Because plaintiff has not alleged the existence of a written policy that conflicts with his at-will employment status, plaintiff has not stated a claim upon which relief can be granted. “Under District of Columbia law, ‘employment is presumed to be at will, unless the contract of employment expressly provides otherwise.’ ” Liberatore v. Melville Corp., 168 F.3d 1326, 1328 n. 3 (D.C.Cir.1999), quoting Carl, 702 A.2d at 162. “The at-will employment presumption may be rebutted ‘by evidence that the parties intended the employment to be for a fixed period, or subject to specific preconditions before termination.’ ” Austin v. Howard Univ., 267 F.Supp.2d 22, 25 (D.D.C.2003), quoting Nickens v. Labor Agency of Metro. Washington, 600 A.2d 813, 816 (D.C.1991). See also Shankle v. DRG Fin. Corp., 729 F.Supp. 122, 124 (D.D.C.1989) (“The presumption of terminable-at-will employment can be rebutted only by a clear statement of the parties’ intention to do so.”). Moreover, “the terms of an employer’s personnel or policy manual may be sufficient to raise a jury question as to whether the manual creates contractual rights for the employee ... [since] contractual rights may arise from language in employee manuals.” Strass v. Kaiser Found. Health Plan of Mid-Atl., 744 A.2d 1000, 1013 (D.C.2000). But “such implied contractual rights can be disclaimed, and ‘the legal effect of such a disclaimer is, in the first instance, a question for the court to decide.’ ” Futrell v. Dep’t of Labor Fed. Credit Union, 816 A.2d 793, 806 (D.C.2003), quoting Strass, 744 A.2d at 1011. Here, plaintiff has alleged that he was verbally “instructed” about Alutiiq’s policy of progressive discipline, which he was required to apply to his subordinates. Compl. ¶ 19. This policy allegedly included requiring employees to receive verbal and written warnings before being terminated. Id. ¶ 54. He further alleges that these policies created an implied contract that plaintiff would not be terminated until certain preconditions are satisfied. Id. Alutiiq counters that plaintiff explicitly acknowledged the at-will nature of his employment by signing an acknowledgement form of the employee handbook. Defs.’ Mem. at 12. It therefore argues that any oral representations about a progressive discipline policy are contrary to the at-will nature of his employment and cannot be enforced because “the two are mutually exclusive.” Id. at 13. The Court finds that plaintiff has failed to state a claim for breach of an implied contract. Plaintiff received an employee handbook and signed an acknowledgement form that clearly describes the at-will nature of his employment at Alutiiq. See Mot. to Dismiss, Exs. A, B. It is true that “[n]ot in every case will a contractual disclaimer clause be adequate to relieve an employer of obligations specified in its regulations.” Strass, 744 A.2d at 1013 (emphasis added). But Alutnq’s employee handbook does not specify any obligation by Alutiiq to apply a progressive discipline policy, and plaintiff admits that the employee handbook did not create an implied contract. Pl.’s Opp. at 12. Plaintiff does not allege the existence of a written progressive discipline policy in his complaint; indeed, the only written policy referenced in the complaint — the employee handbook — does not include such a policy. Instead, plaintiff merely alleges that he was “instructed” that he was to apply such a policy to the employees under his supervision, and he suggests in his opposition to the motion that it is “likely” that the policy is memorialized somewhere. Compl. ¶¶ 19, 53; P’s Opp. at 12. Given these facts, the Court cannot find that it is plausible that defendants are liable for breach of an implied contract. Plaintiff has failed to raise more than the sheer possibility of misconduct, and that is insufficient to state a claim upon which relief can be granted. Iqbal, 129 S.Ct. at 1949. Therefore, the Court will dismiss Count II of plaintiffs complaint without prejudice. C. Count III: Promissory Estoppel i. Plaintiff states a claim against Alutiiq for promissory estoppel Defendants also argue that plaintiffs claim for promissory estoppel should be dismissed because he could not have reasonably relied on any assurances that he would be subject to progressive discipline when he was an at-will employee.

6052178-8947

Opinion for the Court filed by Circuit Judge KAVANAUGH. KAVANAUGH, Circuit Judge: David McCurdy is President and CEO of the Alliance of Automobile Manufacturers. In November 2007, McCurdy fired his assistant, Karen Vatel. McCurdy asserted that he dismissed Vatel because they had incompatible styles of work and her performance therefore did not meet his expectations. Vatel sued, claiming that McCurdy fired her because of her race and gender. Finding that Vatel had produced insufficient evidence to undermine McCurdy’s stated reason for firing her, the District Court granted summary judgment to McCurdy and his employer. We agree with the District Court and therefore affirm. I In June 2006, the interim president of the Alliance of Automobile Manufacturers (known as the AAM) hired Karen Vatel as his assistant. In December 2006, the AAM hired David McCurdy as the new President and CEO. Although McCurdy could have hired someone new as his assistant, he chose to retain Vatel after a positive lunch interview with her. But problems quickly developed in the working relationship between McCurdy and Vatel. Beginning in May 2007, Lori Johnson, the AAM’s human resources manager, met regularly with Vatel to explain that McCurdy was frustrated with Vatel’s performance. McCurdy ultimately fired Vatel on November 1, 2007, telling her that their styles were incompatible. McCurdy later explained that he expected his assistant to be “strategic” and “proactive,” but found Va-tel rigid and unable to address problems before they affected him. Vatel filed suit against the AAM and McCurdy in the District of Columbia Superior Court. Vatel alleged that McCurdy terminated her because of her race and gender, in violation of the District of Columbia Human Rights Act, D.C.Code §§ 2-1402.01 and 2-1402.11(a). The defendants removed the action to the U.S. District Court for the District of Columbia based on diversity of citizenship among the parties. After discovery, the District Court granted the defendants’ motion for summary judgment. Vatel appealed to this Court. We review the District Court’s summary judgment de novo. II We analyze discrimination claims under the D.C. Human Rights Act in the same way that we analyze discrimination claims under the federal anti-discrimination laws. See Gaujacq v. EDF, Inc., 601 F.3d 565, 576 (D.C.Cir.2010). Once an employer has offered a legitimate reason for an employee’s dismissal, the question at the summary judgment stage is whether the employee has “produced sufficient evidence for a reasonable jury to find that the employer’s asserted non-discriminatory reason was not the actual reason and that the employer intentionally discriminated against the employee on the basis of race, color, religion, sex, or national origin.” Brady v. Office of the Sergeant at Arms, 520 F.3d 490, 494 (D.C.Cir.2008). McCurdy asserted that he dismissed Va-tel because they had incompatible working styles and Vatel therefore did not meet his expectations for an assistant. This is a highly subjective explanation, which makes it difficult for Vatel to produce evidence casting doubt on it. We thus treat McCurdy’s explanation “with caution.” Aka v. Washington Hosp. Ctr., 156 F.3d 1284, 1298 (D.C.Cir.1998) (en banc). That said, Vatel does not dispute that incompatible working styles is a legitimate basis for a manager to fire an assistant. With that background in mind, we turn to the question whether Vatel has produced sufficient evidence that McCurdy’s assertion — that he fired Vatel because of incompatible working styles — is pretextual and that McCurdy intentionally discriminated against her. The record contains no direct evidence of discrimination— for example, a statement that itself shows racial or gender bias in the decision — that would generally entitle a plaintiff to a jury trial. The nature of Vatel’s position means, moreover, that many of the methods that employment discrimination plaintiffs ordinarily use to demonstrate pretext are not available to Vatel. For example, Vatel cannot show that McCurdy treated other similarly situated employees differently based on race or gender, because, as the lone assistant, she had no similarly situated peers. Cf. Brady, 520 F.3d at 495. Vatel nonetheless claims that a jury could infer from the record evidence that McCurdy fabricated his explanation to mask his true motive: animus based on Vatel’s race, gender, or both. Vatel’s argument faces a significant initial hurdle in that McCurdy himself selected Vatel to be his assistant less than a year before her dismissal. If McCurdy did not want to work with Vatel because of her race or gender, it would be odd to select her and then immediately start ginning up reasons to dismiss her. See Waterhouse v. District of Columbia, 298 F.3d 989, 996 (D.C.Cir.2002). In affirming summary judgment in Waterhouse, we noted: “ ‘when the person who made the decision to fire was the same person who made the decision to hire, it is difficult to impute to [that person] an invidious motivation that would be inconsistent with the decision to hire,’ especially ‘when the firing has occurred only a short time after the hiring.’ ” Id. (quoting Grady v. Affiliated Cent., Inc., 130 F.3d 553, 560 (2d Cir.1997)). The same is true here. Although the fact that McCurdy initially selected Vatel does not alone suffice for summary judgment, it is probative evidence that McCurdy did not discriminate against Vatel on account of her race or gender when he dismissed her later that year. See Czekalski v. Peters, 475 F.3d 360, 368-69 (D.C.Cir.2007). Vatel has tried to undermine McCurdy’s explanation by contending that they in fact had a positive working relationship and that McCurdy was (or should have been) satisfied with her performance. That argument is simply not tenable. By Vatel’s own admission, Lori Johnson, the AAM’s human resources manager, consistently said that McCurdy was frustrated with Vatel’s performance, and Vatel herself stated that “McCurdy tried to avoid [her] at all costs.” Vatel Dep. 128-29, 133, Sept. 15, 2008. The undisputed facts in this case overwhelmingly demonstrate problems in the working relationship; indeed, that was the reason for the regular meetings between Vatel and Johnson. In light of the record evidence, Vatel’s mere personal opinion that she and McCurdy had a positive working relationship is insufficient to surmount summary judgment. It is settled that “it is the perception of the decision maker which is relevant, not the self-assessment of the plaintiff.” Hawkins v. PepsiCo, Inc., 203 F.3d 274, 280 (4th Cir.2000) (quotation marks and alterations omitted). Under the precedents, it is McCurdy’s perception that is relevant. Here, the evidence overwhelmingly shows that McCurdy honestly and reasonably believed that their working styles were incompatible. That evidence requires summary judgment for the defendants. See Brady, 520 F.3d at 496 (“The question is not whether the underlying ... incident occurred; rather, the issue is whether the employer honestly and reasonably believed that the underlying ... incident occurred.”); George v. Leavitt, 407 F.3d 405, 415 (D.C.Cir.2005) (“[A]n employer’s action may be justified by a reasonable belief in the validity of the reason given even though that reason may turn out to be false.”). Vatel offers some subsidiary arguments, but none suffices to defeat summary judgment. For example, Vatel contests what was said in her meetings with Johnson, the human resources director. But the outcome of that dispute is immaterial. Even if Johnson failed to tell Vatel how to improve her performance, and even if Vatel did not expressly refuse to change, those facts would not undermine McCurdy’s assertion that he did not find their working styles to be compatible. Vatel also takes issue with some of McCurdy’s statements in his deposition-— in particular, his discussion of travel difficulties on a trip to Germany. Vatel denies that she was to blame for those problems. But Vatel’s focus on the Germany trip does not advance her argument. To begin with, Vatel was-not fired because of the Germany trip; she was fired because of an overall breakdown in the working relationship that caused her boss to lose confidence in her. In addition, the question whether Vatel was actually at fault for McCurdy’s problems on the Germany trip is irrelevant if McCurdy believed she was. He clearly did (and still does), and Vatel has provided no evidence that McCurdy did not think she was responsible. See Fischbach v. District of Columbia Dep’t of Corr., 86 F.3d 1180, 1183 (D.C.Cir.1996) (“Once the employer has articulated a non-discriminatory explanation for its action ... the issue is not the correctness or desirability of the reasons offered but whether the employer honestly believes in the reasons it offers.”) (quotation marks and alterations omitted); see also Brady, 520 F.3d at 495-96; George, 407 F.3d at 415.

3609737-12335

ORDER AND REASONS JAY C. ZAINEY, District Judge. Before the Court is Defendant’s Motion for Partial Summary Judgment (Rec. Doc. 19) filed by defendant United States Fidelity and Guaranty Company (“USF & G”). Plaintiff, Tropland, LLC, opposes the motion. The motion, set for hearing on January 28, 2008, is before the Court on the briefs without oral argument. For the reasons that follow, the motion is DENIED. I. BACKGROUND The instant dispute arises out of damage to Plaintiffs shopping center as a result of Hurricane Katrina and its aftermath. (Petition ¶ 3). Plaintiff subsequently demolished the entire building and removed the debris from its property, even though some portions of the budding were undamaged. (Id.) At the time relevant to this dispute, the property was insured by USF & G through Travelers. The facts leading to Plaintiffs procurement of an insurance policy with USF & G are alleged as follows. Zurich was the original insurer of the property. In 2002 Tropland contacted Hibernia Insurance Agency and requested property insurance for the shopping center in the amount of $650,000, the purchase price of the property. (Pla. Mem. in Opp. p. 2; Def. Repl. Mem. p. 1). Hibernia advised that Zurich required the property to be insured at replacement value. (Pla. Mem. in Opp. p. 2). Subsequently, the Hibernia agent sent an erroneous square footage amount of 15,900 to the insurer, although the correct square footage of the property was 23,376. (Id.) Utilizing the 15,900 square foot value, Zurich calculated the replacement value of Tropland’s property at $1.1 million. (Id.) Tropland purchased insurance at this amount. (Id.) Zurich did not renew the policy in 2003. Hibernia submitted an application for coverage to USF & G, supplying the same square footage and replacement cost values as in the Zurich policy. (Def. Repl. Mem. p. 2) (citing Pla. Exh. A, Affidavit of Wayne Swenson). Hibernia sent Tropland an insurance quote from USF & G which provided replacement cost coverage for the shopping center in the amount of $1.1 million; Tropland purchased property insurance based on that quotation. (Id.) (citing Pla. Exh. A, Swenson Affidavit). USF & G issued a policy of insurance to Plaintiff covering Tropland for the loss of its building, cost of demolition and debris removal, and business interruption, which was in full force and effect on the date of the hurricane. (Petition ¶ 4). On August 29, 2005, a fire occurred at the shopping center. St. Paul declared it a total loss and paid Plaintiff just under $1.2 million. (Pla. Mem. in Opp. p. 3). Trop-land alleges that it submitted a proof of claim to USF & G, seeking the cost of replacement of the building and the increased cost of demolition pursuant to the terms of the policy. (Petition ¶ 5). According to Plaintiff, USF & G denied Trop-land’s claim for replacement cost in the amount of $2,356,000.00, arguing that the policy provided for a replacement value of only $1,187,131.10, after applying a 3% property value automatic increase. (Id. at ¶ 6). In addition, USF & G denied Plaintiffs claim for the increased demolition cost, contending that there were no undamaged portions of the building. (Id.) Plaintiff initiated the instant action on August 25, 2006, in the Civil District Court for the Parish of Orleans, alleging that due to the negligence of USF & G and Hibernia “in failing to adequately calculate the replacement cost of plaintiffs building, plaintiff was underinsured and will be left with insufficient funds to reconstruct its building.” (Id. at ¶ 8). In addition, Plaintiff claims penalties and attorney’s fees pursuant to La. R.S. 22:1220, due to USF & G’s alleged arbitrary and capricious refusal to pay Plaintiff the full sum of $100,000.00 for the increased cost of demolition within the time specified by law. (Id. at ¶ 10). USF & G removed the action to this Court on October 19, 2006 on the basis of diversity jurisdiction pursuant to 28 U.S.C. § 1332(a), arguing that Tropland’s claims against Hibernia are preempted by the terms of La. R.S. 9:5606 and that, as a result, Hibernia was improperly joined. (Notice of Removal, p. 2, 5). On January 24, 2007, the Court denied Tropland’s Motion to Remand (Rec. Doc. 3), finding that Plaintiffs claims against Hibernia are per-empted and Hibernia’s citizenship does not affect removal. (Rec. Doc. 8). As such, the case was properly removed pursuant to diversity jurisdiction because Plaintiff and USF & G are of diverse citizenship and the amount in controversy exceeds $75,000. (Id.) USF & G moves for partial summary judgment on the grounds that Travelers is not liable for claimed damages that exceed the limit of insurance provided in the insurance policy issued to Tropland. USF & G contends that it is entitled to summary judgment on two grounds: (1) the insurance policy issued to Tropland provides that the most USF & G will pay per loss is the limit of insurance shown in the Property Coverage Part Declarations; and (2) USF & G did not breach its contract with Tropland by failing to recalculate the replacement cost of the insured property, as the policy imposes no duty on the insurer to recalculate the replacement cost value of the insured’s property. (Def. Mem. in Supp. p. 1). Tropland opposes the motion. In arguing that summary judgment is not appropriate, Tropland contends that USF & G had a duty to alert the insured to the “measurement error” and to adjust the face amount of the policy to reflect the higher replacement cost estimate. (Pla. Mem. in Opp. p. 1). According to Trop-land, USF & G’s duties in this regard stem from its capacity as insurer and its capacity as agent (Id. at p. 4, 7). Moreover, Tropland argues that a factual issue exists as to whether USF & G breached its duty to the insured. (Id. at p. 10). In reply, USF & G submits that no Louisiana court has held that an insurer has a duty to assist the insured in estimating the replacement cost of its building. (Def. Repl. Mem. p. 5). In addition, USF & G notes that it did not assume the duty of calculating the replacement cost of the insured’s property. (Id. at p. 7). Responding to Plaintiffs allegation that USF & G had a duty to inform Tropland of the calculation discrepancy, USF & G argues that it learned of the square footage discrepancy after the 2005 policy renewed. (Id. at p. 8). Finally, USF & G charges that Tropland is a commercial property owner and is in the best position to know the value of its own property. (Id.) II. DISCUSSION A. The Parties’ Contentions 1. Plaintiff Tropland does not dispute the fact that the policy contains a building insurance limit of $1,166,990 with a property guard increase of 3%. Rather, Tropland cites Louisiana cases in which the courts found that the insurer acquired duties toward the client after a long relationship, during which time the insurer became familiar with the insured’s business. (Pla. Mem. in Opp. p. 6). Tropland acknowledges that a long relationship is not present here. However, Tropland argues that “it is not asking too much of [USF & G] to compute the replacement-cost estimate with the building’s correct square footage once it had this figure.” (Id.) Plaintiff contends that USF & G previously recalculated the replacement value on May 29, 2004, November 23, 2004, and December 27, 2004, when the square footage and building type had not changed, yet USF & G failed to recalculate the replacement value in February 2005, after receiving the results of the ISO report which reflected a significant increase in square footage. (Id.) (citing Exhibits 2-4 to the Theisman Deposition). Tropland emphasizes that a report using the correct data was not run at the time USF & G first received the ISO report with the new information; rather, a report using the correct data was run by Beth Theisman on November 1, 2007 at her deposition. (Id.) According to Trop-land, had the correct information been entered into the software, it would have yielded a value of $1,459,860, which Plaintiff submits is 25% higher than the policy limit of $1,166,900 derived from the 15,900 square foot measure. (Id. at p. 3). As such, the difference between the estimates is $292,870. (Id. at p. 4). In addition, Plaintiff cites the deposition of Beth Theisman, underwriting director at USF & G, in which she acknowledges that she would have run an ITV if confronted with the difference in square footage and construction involved in this matter. (Def. Exh. A, p. 57:9-25). Further, Theisman stated that in instructing other underwriters, she would advise trainees to run an ITV if faced with differences in values such as these. (Id. at p. 58:25-59:3). Moreover, Plaintiff charges that once Defendant undertook to assist Tropland in estimating the replacement cost, thereby assuming a duty, it was incumbent on USF & G to discharge this obligation responsibly. (Pla. Mem. in Opp. p. 7). In addition, Tropland argues that USF & G assumed duties of an agent toward Tropland. 2. Defendant In responding to Plaintiffs allegations, USF & G explains its internal procedures to the Court, citing the deposition of Ms. Theisman to support its assertions. According to USF & G, its internal procedures dictate that a policy is issued with the value provided on the application of insurance submitted by the agent. (Def. Repl. Mem. p. 2) (citing Def. Exh. A, Deposition of Beth Theisman p. 10). The accuracy of the agent’s information is then checked through USF & G’s internal storage system, “The Foundation System,” by accessing the Marshall/Swift and Boeck system, an estimating system used for the purpose of estimating the replacement cost of the property, or ITV (insurance to value). (Id.) (citing Def. Exh. A, p. 26-27). USF & G explains that an ITV is an “estimate using limited data to confirm that the value provided by the agent is reasonable.” (Id.) (citing Def. Exh. A, p. 33-35). USF & G clarifies that while “[gjenerally [it] relies upon the accuracy of the information of the agent”, “if there is a gross discrepancy between the value provided by the agent and the ITV, USF & G would go back to the agent to resolve the discrepancy.” (Id. at p. 2-3) (citing Def. Exh. A, p. 35-37). The “general rule of thumb” is that an ITV should be within plus or minus 20% of the policy stated value, although “[t]his is not a black and white line.” (Id. at p. 3) (citing Def. Exh. A, p. 35). At the time material to this dispute, USF & G alleges that its internal procedures required that an ISO report be ordered every three years for properties exceeding $500,000 in value. (Id.) St. Paul requested an ISO for the Tropland property in December 2004. (Id.) (citing Def. Exh. A, p. 43). The ISO report was received on February 16, 2005, which USF & G submits was two weeks after the February 2, 2005 renewal of the 2005-2006 policy. (Id.) (citing Def. Exh. A, Deposition of Beth Theisman, Exhibit P-8). USF & G acknowledges that the ISO report revealed discrepancies in square footage and type of building construction. (Id.) (citing Def. Exh. A. p. 56-58). Defendant specifies that the information the agent originally provided showed that the building was 15,-900 square feet and of fire resistant construction, whereas the ISO report indicated that the building was 23,376 square feet with construction of non-combustible material. (Id. at p. 3 n. 15). However, USF & G contends that the “discrepancies tended to offset each other in determining replacement cost,” adding that an ITV run using the increased square footage and correct building construction “would have revealed a deviation of -20.06%, which is within the plus or minus (+/-) 20% rule of thumb, and was therefore, acceptable.” (Id.) (citing Def. Exh. A, Deposition of Beth Theisman, Exh. P-6). Defendant reiterates that the policy terms and conditions for the 2005-2006 policy period had already been established and accepted by the agent and the insured. (Def. Repl. Mem. p. 3-4) (citing Def. Exh. A p. 58). Based on the foregoing, Defendant explains that “because the ITV was only an estimate and it was within the plus or minus (+/-) 20% rule of thumb, according to USF & G’s internal procedures, there was no reason to send the ITV to the insured or to effect any changes on the policy.” (Def. Repl. Mem. p. 4) (citing Def. Exh. A p. 60). B. Law and Analysis

3066004-20901

OPINION McGARRAGHY, District Judge. This action was originally brought by the Retail Store Employees Union, Local 400, and fifty-two licensed pharmacists against the pharmacists’ employer, Drug Fair-Community Drug Company, Inc., for overtime pay allegedly due under the Fair Labor Standards Act. (Act of June 25, 1938, C. 676, 52 Stat. 1060; 29 U.S. C. § 207; hereinafter “the Act.”) Drug Fair is a large retail drug store chain which operates approximately one hundred nineteen stores in the Metropolitan Washington, D. C. area. At all times material, Drug Fair has received from its operations gross sales in excess of $1,000,000.00 annually and each of defendant’s individual retail drug stores in which each of the plaintiffs is or was employed had annual gross sales receipts in excess of $250,000.00. This action has been dismissed as to plaintiffs, Retail Store Employees Union and forty-seven of the individual pharmacists. The remaining five plaintiffs contend that, in violation of the Act, as interpreted by the lawful regulations of the Wage and Hour Administrator, defendant has failed to pay the plaintiffs any overtime compensation (time-and-a-half) for hours worked in excess of forty-four hours during the period September 3, 1963 to September 3, 1964; and for hours in excess of forty-two hours from September 3, 1964 to September 3, 1965; and for the the hours in excess of forty hours from September 3, 1965 to June 30, 1969. Pursuant to Section 16(b) of the Act, plaintiffs seek the unpaid overtime, an equal amount in liquidated damages, attorneys’ fees and costs. Jurisdiction is conferred on this court by the provisions of 28 U.S.C. § 1337. Section 13(a) (1) provides that “executive, administrative and professional employees” are exempt from the overtime requirements of Section 7. Defendant contends that the plaintiffs, as pharmacists, are employed by the defendant in a bona fide “professional” capacity within the meaning of Section 13(a) (1) and the Regulations issued thereunder, and are,. therefore, exempt from overtime compensation benefits of the Act. Defendant also contends that coverage of the plaintiffs under the Act on the basis of their being employees of an “enterprise” engaged in commerce, as defined by Section 3(s) (1) is beyond any power of Congress to regulate commerce. Defendant also contends that the provisions of Section 13(a) (1) granting authority to the Secretary of Labor or his delegate to establish regulations “defining and delimiting” what is meant by an executive, administrator or professional is an unconstitutional delegation of legislative authority, and further, that such regulations defining a professional employee in terms of his form of compensation are vague, unreasonable and capricious. The court will consider the above constitutional issues first. Until the 1961 Amendments to the Act, the Fair Labor Standards Act did not apply to employees in retail establishments like Drug Fair. Section 3(s) applied the so-called “enterprise doctrine” to retail establishments. The enterprise doctrine meant that instead of only extending protection to employees individually connected to interstate commerce, the Act now covered all employees of any enterprise engaged in commerce. The court is of the opinion that Drug Fair squarely falls within the scope of Section 3(s) of the Act. Therefore, its employees are covered by the Act. The constitutionality of the enterprise doctrine has been firmly established by the reasoning in United States v. Darby, 312 U.S. 100, 61 S.Ct. 451, 85 L.Ed. 609, 1941, and by Maryland v. Wirtz, 392 U.S. 183, 188-193, 88 S.Ct. 2017, 2019-2022, 20 L.Ed.2d 1020, 1026-1029, 1967, and needs no further comment here. It is also well established that the regulations issued by the Wage and Hour Administrator are valid and binding as a reasonable exercise of delegated authority. Craig v. Far West Engineering Company, (9th Cir., 1959), 265 F.2d 251, 257, 72 A.L.R.2d 1143, 1150, cert. den. 361 U.S. 816, 80 S.Ct. 57, 4 L.Ed.2d 63; Sun Publishing Company v. Walling, (6th Cir., 1944), 140 F.2d 445, 449, cert. den. 322 U.S. 728, 64 S.Ct. 946, 88 L.Ed. 1564. See also Fanelli v. United States Gypsum Co., (2nd Cir. 1944), 141 F.2d 216, 218, and Walling v. Yeakley, (10th Cir. 1944), 140 F.2d 830, 832. Defendant attacks the Wage and Hour Administrator’s Regulation requiring that an “executive, administrative or professional” employee receive a minimum salary before being exempt under the Act as arbitrary and capricious. However, numerous courts have held these regulations to be a reasonable exercise of authority delegated to the Administrator. Walling v. Yeakley, supra; Helliwell v. Haberman, (2nd Cir. 1944), 140 F.2d 833, 834; Craig v. Far West Engineering Company, supra, 265 F.2d pp. 259-260; Tripp v. May (7th Cir. 1951), 189 F.2d 198, 201-202; Wirtz v. Mississippi Publishers Corp. (5th Cir. 1966), 364 F.2d 603, 608; Chepard v. May (D.C.S.D.N.Y. 1947), 71 F.Supp. 389, 391-392. This court is of the opinion that the Regulation attacked here (29 C.F.R. 541.3) is entirely reasonable and well within the authority delegated to the Administrator, and that the court is bound by it. As was said in Craig v. Far West Engineering Company, supra, 265 F.2d at p. 259: * * * We agree with the other circuits that this particular regulation pertaining to “salary basis” compensation must be taken to mean precisely what it says, and that it is a reasonable exercise of authority delegated to the Administrator. We say this because upon examination of the history behind the promulgation of these regulations, it becomes clear that the rationale underlying them is sound and apparently the one practical method of “defining and delimiting” the rather vague and ambiguous terms used in the statute. Employers, even more than employees, desire some certainty in the law. The report and recommendations of the presiding officer who conducted hearings on proposed amendments to the regulations in 1940 indicates that the employers participating in the hearings — were nearly unanimous in approving the salary test because “a salary qualification in the definition of the term ‘executive’ is a valuable and easily applied index to the ‘bona fide’ character of the employment for which exemption is claimed” * * * The court now turns its attention to the central issue in this case. The question presented is very clear, if not its resolution. If the plaintiffs are not within the scope of the exemptions enumerated in Section 13(a) (1), then they are covered by the Act and are entitled to compensation for overtime pay. Section 13 provides, in pertinent part, that: * * * the provisions of sections six and seven (relating to minimum hours and overtime pay) shall not apply with respect to any employee employed in a bona fide executive, administrative, or professional capacity * * *. The Regulations of the Wage and Hour Administrator establish five basic criteria which an employee must meet to be considered an exempt professional employee. The Regulation, at 29 C.F.R. 541.3 provides, in pertinent part: The term “employee employed in a bona fide * * * professional capacity” in section 13(a) (1) of the Act shall mean an employee: (a) Whose primary duty consists of the performance of work requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study * * * (b) Whose work requires the consistent exercise of discretion and judgment in its performance, (c) Whose work is predominantly intellectual * * * (d) Who does not devote more than 20 percent of his hours worked in the workweek to activities which are not an essential part of and necessarily incident to the work described in paragraphs (a) through (c) * * * (e) Who is compensated for his services on a salary or fee basis at a rate of not less than $115 per week * * * Plaintiffs have the burden of proof as to all elements of their claim for relief. They must prove that there exists an employee-employer relationship; that there was engagement in activities within the coverage of the Act; that the employer violated the wage requirements ; and that a definite amount of compensation is due. But the burden is clearly on the employer to affirmatively show that their employees are within the scope of a particular exemption. Idaho Sheet Metal Works, Inc. v. Wirtz, 1966, 383 U.S. 190, 206, 86 S.Ct. 737, 747, 15 L.Ed.2d 694, 704, rehearing den. 383 U.S. 963, 86 S. Ct. 1219, 16 L.Ed.2d 305; Arnold v. Ben Kanowsky, Inc., 1960, 361 U.S. 388, 392-394, 80 S. Ct. 453, 456, 4 L.Ed.2d 393, 396, rehearing den. 362 U.S. 945, 80 S.Ct. 803, 4 L.Ed.2d 772; Walling v. General Industries Co., 1947, 330 U.S. 545, 547-548, 67 S.Ct. 883-884, 91 L.Ed. 1088, 1090; Craig v. Far West Engineering Company, supra, 265 F.2d 257. It is unnecessary to discuss whether plaintiffs comply with all five of the criteria mentioned at 29 C.F.R. 541.3. The parties have stipulated that plaintiffs did comply with the first four criteria. (29 C.F.R. 541.3(a) through (d)). The real matter in dispute in this case is whether plaintiffs are “compensated on a salary basis” under subsection (e). A Regulation at 29 C.F.R. 541.118 defines, at length, what constitutes a salary: (а) An employee will be considered to be paid “on a salary basis” within the meaning of the regulations if * * * he regularly receives each pay period on a weekly, or less frequent, basis a predetermined amount constituting all or part of his compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed. Subject to the exceptions provided below, the employee must receive his full salary for any week in which he performs any work without regard to the number of days or hours worked * * * (emphasis added) The courts have accepted these regulations as binding. Therefore, as a matter of law, if an employee is paid a salary in excess of $115.00 a week and he complies with the other criteria at 29 C.F.R. 541.3, he is considered an “executive or professional” and is not entitled to overtime compensation. Craig v. Far West Engineering Co., supra, 265 F.2d p. 260. The court must determine from the facts whether plaintiffs’ form of compensation can be construed to be a “salary” or one computed on an hourly basis. In 1961, just prior to the time the Act applied to retail enterprises, Drug Fair adopted the pay practices in dispute here. Drug Fair kept its stores open a certain number of hours a week. Over the years in question, most of the stores were open either 93, 99 or 104 hours per week. There are five or six stores open 24 hours a day. We shall use the 99-hour week for illustration. Typically, this store would be open from 7 a. m. to 10 p. m. six days a week. On Sunday, the store would open at 10 a. m. and close at 7 p. m. Generally, two pharmacists were employed in each such store. One phar macist had to be on duty at all times the store was open. Between them, the pharmacists would cover the store. While there is dispute as to whether the pharmacists or Drug Fair set up the working schedule, it is clear that such a schedule did exist for the pharmacists. Generally, pharmacists would work a short week one week and a long week the following week. At the end of a two-week period, each pharmacist would have worked the same number of hours unless one pharmacist worked extra hours in his regular store or as a relief pharmacist in another store. The basic schedule varied among the pharmacists. Some worked 39 hours one week and 60 hours the next. Others had a 45-54 hour schedule. Normally, it is not difficult to ascertain by what means an employee is compensated — whether salary or hourly rate. However, in the case at bar, it is impossible to completely rely on what the parties call the form of compensation. Drug Fair records refer to a pharmacist’s “salary”, his “hourly equivalent”, and his “hourly rate”. After close scrutiny of the evidence and of the memoranda submitted by counsel, the court is of the opinion that Drug Fair failed to carry its burden of proving that the pharmacists were exempt from the Act as professional employees. Drug Fair did not pay its pharmacists a salary within the meaning of the Act. Therefore, these employees were not exempt from the minimum wage and hour sections of the Act and are entitled to overtime pay. Clearly, Drug Fair pharmacists did not receive in “each pay period” a “predetermined amount” of compensation. There were no written contracts of employment specifying the form of compensation. While there were discussions of a “weekly salary” with new pharmacists by Drug Fair recruiters, the figures used appear to have been merely one-half of the basic two-week work schedule. Rather than a predetermined amount, the weekly or biweekly compensation of the pharmacists was directly dependent on the number of hours worked. The numerous time cards, pay stubs and employee status-change cards which were introduced in evidence clearly show this dependency. Every pay stub shows a direct correlation between hours worked, rate of pay, and gross pay. One of the plaintiffs', Mr. Henry Gwiazda, pay stub for the week ending January 6, 1964 shows 53.5 hours worked with a gross pay of $195.28. Reference to Mr. Gwiazda’s personnel jacket shows an hourly rate of $3.65 per hour. Of course, 53.5 times $3.65 equals $195.28. This computation can be repeated with every pay stub. Several letters from Drug Fair to individual plaintiffs concerning pay increases were introduced. These letters purport to increase the “weekly salary” to the “equivalent hourly rate” of such- and-such a figure. Considered alone, these letters are ambiguous; considered together with the pay stubs, the time cards, and the status-change forms, they are inaccurate. While Drug Fair may call the form of compensation a salary, the time cards and pay stubs which reflect how the payroll was actually computed each pay period clearly belie this characterization. Defendant insists that the pharmacists were guaranteed a bi-weekly work schedule of 99 hours. It maintains that each pharmacist was required to work 99 hours during the two-week schedule. This was a condition of his employment. Defendant apparently believes that since pharmacists were expected to work 99 hours, they were guaranteed that amount of money which accrued by working 99 hours at a certain hourly rate or hourly equivalent. Yet it is clear that the pharmacists were not guaranteed any predetermined amount of money. It was impossible to tell what compensation a pharmacist would receive for a given pay period without referring to the number of hours worked and the hourly rate. It cannot be said that merely because an employee was expected to work a certain number of hours per week that he always did so. Nor can it be said that because an employee was expected to work a certain schedule that he was in any sense guaranteed a certain compensation. The eases cited by defendant are clearly inapplicable. In those cases there was no doubt that some amount of money was guaranteed to the employees. In Walling and McReynolds, the guarantee came under the form of a guaranteed number of shifts of work. Instead of being guaranteed a certain sum of money for a week of work, an employee can be guaranteed that he will be able to work a comparable number of shifts or be paid their equivalent. He must be guaranteed the work or the equivalent pay though. In other words, if the employee is able to work he must be paid that which he was guaranteed — be it a set sum of money or a sum of money which would have accrued had the employee been able to work the shifts he had been guaranteed. At Drug Fair, a pharmacist was never guaranteed any set salary. True, he had a basic schedule, but this is necessary for the efficient operation of any business. This basic schedule was often changed either by working extra hours or by working less. In every instance, the pharmacist’s compensation, for the pay period, varied directly according to the number of hours worked. While it is not necessary to decide so, since the court is convinced that no amount of money was guaranteed on a weekly or a bi-weekly basis, the court is of the opinion that a predetermined amount of compensation must be guaranteed for each pay period. Regulation 29 C.F.R. 541.118(a) states that an employee is compensated on a salary basis if he receives “each pay period * * * a predetermined amount * * * of compensation”. Simply stated, a pay period is that amount of time worked for which a paycheck is issued. Since Drug Fair paid its pharmacists every week, they were on a weekly pay period. A glance at the plaintiffs’ pay stubs will show that there was no predetermined amount paid every week. Defendant also claims that it in good faith relied on the inaction of the Wage & Hour Administrator. Such reliance does not exonerate Drug Fair from liability for overtime compensation. Defendant’s reliance on Section 10 of the Portal-to-Portal Act (29 U.S.C. § 259) is misplaced. That section frees the employer from liability if he in good faith relied on “any written administrative regulation, order, ruling, approval, or interpretation” or “any administrative practice or enforcement policy” of the Wage & Hour Administrator. The Regulations at 29 C.F.R. 790.13-790.19 clearly provide that reliance can only be placed on affirmative action by the Administrator which is in writing. There was never any affirmative policy statement issued by the Wage & Hour Administrator concerning Drug Fair employees. The court is of the opinion that the plaintiffs are entitled to judgment for the unpaid overtime compensation. Therefore, according to stipulation by counsel, and in light of this opinion, this case will be referred to the Court Auditor for recommendation as to the amount of money each plaintiff is entitled to receive. Pursuant to Section 16(b) of the Act, plaintiffs have claimed an amount equal to the unpaid overtime compensation as liquidated damages, a reasonable attorney’s fee, and costs of the action. In Overnight Motor Transportation, Inc. v. Missel, 1942, 316 U.S. 572, 62 S.Ct. 1216, 86 L.Ed. 1682, the Supreme Court established the rule that an award of liquidated damages is mandatory on the courts. A legislative intent to modify this rule is found in Section 11 of the so-called Portal-to-Portal Act. This section vests the courts with discretion concerning liquidated damages “if the employer shows to the satisfaction of the court that [his] act or omission giving rise to such action was in good faith and that he had reasonable grounds for believing that his act or omission was not a violation of the Fair Labor Standards Act.” The court is of the opinion that the employer has shown sufficient good faith to require denial of any sum for liquidated damages. A quick purview of the cases shows that practically any showing of good faith will obviate an employee’s demand for liquidated damages. Of course, such is not the case in discussing whether good faith frees the employer from liability for the overtime. In that situation, as discussed above, strict compliance with Section 10 of the Portal-to-Portal Act is necessary. The court is of the opinion that Drug Fair had a reasonable belief that the plaintiffs were exempt, that Drug Fair did not wilfully intend to violate the Act, and that Drug Fair was reasonable in continuing its compensation practices because, though aware of these practieés, no action was taken by the Wage & Hour Administrator. For these reasons, no liquidated damages will be allowed. Section 16(b) also provides that employees who recover judgment are entitled to reasonable attorneys fees and costs. There has been no legislative modification of this rule. This award is mandatory and is not subject to judicial discretion. Wright v. Carrigg (4th Cir., 1960) 275 F.2d 448, 449; Foster v. Irwin d. b. a. Irwin Truck Line, (D.C.La., 1966) 258 F.Supp. 709, 712. The case will be referred to the Auditor for recommendation as to the amount due each plaintiff. The court will withhold its decision as to a reasonable attorney’s fee until the proceedings before the Auditor are complete. This Opinion will be treated as the court’s Findings of Fact and Conclusions of Law. . 29 U.S.C. § 216(b) . 29 U.S.C. § 213(a) (1) . 29 U.S.C. § 207 . 29 U.S.C. § 203(s) . See the Report and Recommendations of the Presiding Officer in the matter of the Proposed Amendments to Part 541 of the Regulations with respect to the definition of the terms “executive, administrative, and professional employee.” October 10, 1940. OOH Labor Law Reporter, § 31,302, (3rd ed. 1940). . See also OCH, Labor Law Reporter, Wage & Hour Volume 2, § 25,920.611 and § 25,920.675 and cases cited therein.

3696215-12647

MORROW, Circuit Judge. This action was commenced in the superior court of this state, for the county of Lassen, by the plaintiff, to recover from defendant the sum of $6,000 and interest, claimed to be due on a contract for the use of water for irrigation purposes during the years 1898, 1899, and 1900. The complaint was filed in the state court on February 5, 1902. It is alleged in the complaint that the defendant is a foreign corporation, having its office and principal place of business in the city of New York, state of New York; that from July 27, 1897, up to and including the time of the filing of the complaint, the defendant has been engaged in carrying on the business of farming agricultural lands in Lassen county, state of California; that the defendant has failed to designate a person residing in the state upon whom process issued by authority or under the law of the state may be served; and that the defendant has failed to execute and file any such designation in the office of the secretary of the state, as provided by an act of the legislature of the state of California entitled “An act in relation to foreign corporations,” approved April 1, 1872, and the acts supplementary and amendatory thereof. Section 1 of the act of April 1, 1872, as amended by the act of March 17, 1899 (Statutes and Amendments of the Codes of California 1899, p. 111), provides as follows: “Section 1. Every corporation heretofore created by the laws of any other state or foreign country, and doing business in this state, shall, within ninety days after the passage of this act, and any corporation hereafter created by the laws of any other state or foreign country and doing business in this state, within forty days from the time of commencing to do business in this state, designate some person residing in this state upon whom process, issued by authority by or under any law of this state, may be served, and within the time aforesaid shall file such designation in the office of the secretary of state, and a copy of such designation, duly certified to by the secretary of state, shall be sufficient' evidence of such appointment and of the due incorporation of such corporation, and it shall be lawful to serve on such person so designated, or in event that no such person is so designated then on the secretary of state, any process issued as aforesaid. Such service shall be made on such person so designated, or the secretary of state, in such manner as shall be prescribed in case of service required to be made on foreign corporations, and such service shall be deemed a valid service thereof on such corporation.” It is claimed that the summons issued upon the complaint filed in this case and served upon the secretary of state on the 27th day of February, 1902, was a legal constructive service, under this statute. On the 2d day of April, 1902, the plaintiff had the default of the defendant entered in the clerk’s office of the superior court of Lassen county, and on the 3d day of April, 1902, the court filed its findings of fact and conclusions of law; upon the same day entering a judgment in favor of the plaintiff and against the defendant in the sum of $6,945, and costs of suit, taxed at $11. On the 20th of September, 1902, the defendant appeared by counsel and filed a. motion with the clerk of the court to recall the execution issued in the case, to vacate and set aside the default and judgment, and quash the service of summons. The motion was supported by the affidavit of W. E. Smythe, the president of the corporation defendant. In this affidavit it is averred: “That said defendant, the Associated Colonies, is, and for more than five years last past has been; a corporation organized and existing under the laws of the state of New York, and that the business for the carrying on of which it was incorporated and the objects of the incorporation of said company were to colonize, irrigate, and sell lands for homes and farming purposes, and to buy, sell, and deal in mortgages, bonds, and securities. That ever since its incorporation the said defendant has had its office and principal place of business in the city of New York, in the state of New York. That affiant is now, and was at all the times hereinafter mentioned, and ever since its incorporation, the president of the said defendant corporation. That prior to the 1st day of January, 1900, said defendant company had owned certain real and personal property in the county of Lassen, state of California, and for a period of about one year prior thereto had, through its tenants and agents, cultivated a small portion of its said lands in the said county of Lassen, state of California, but never at any time, or ever at all, carried on, transacted, or did any business in the state of California, other than the cultivation of said portion of its said lands as aforesaid. That on or about the 2d day of January, 1900, the said defendant corporation transferred, sold, and conveyed all of its said property, real and personal, in the state of California, and abandoned all intention of carrying on business in the state of California, and since said date has neither owned nor been in possession or use of any property, real or personal, of any kind, in the state of California. That since said 2d day of January, 1900, the said defendant has not done or carried on any business in the state of California, and has not been doing business in the state of California, and was not at the commencement of this action, or at the date of the attempted service of summons herein, or at the date of the said default or of said judgment, engaged in any business, trade, or calling in the state of California, and was not on either of said dates doing its or any business in the state of California, and did not on either of said dates, or ever or at all, since the 2d day of January, 1900, maintain any .office or agent in the state of California. That the summons in this action was never personally served upon said defendant corporation, or upon any of its officers or agents, and that affiant, individually or as president of the said defendant corporation, never knew that this case had been begun by plaintiff against said defendant until on or about the 8th day of Hay, 1902, when he was advised that the said plaintiff had recovered a judgment against said defendant corporation; but even then affiant did not know upon what plaintiff based his claim or brought his suit, or when the suit had been begun, or where. That affiant was not fully informed of the facts or particulars of plaintiff’s claim, or of the nature of his cause of action, or of the amount of the judgment, or its date, or where or when the suit was brought, until on or about the 1st day of August, 1902, when he was advised of those facts by W. F. Williamson, Esq., his attorney, who had made inquiry in that regard at his instance and request.” It is further averred that the defendant is advised by its attorney that it has a good, valid, meritorious, and legal defense on the merits. On the same day that defendant filed its motion to recall execution, vacate and set aside the judgment, and quash the service of summons, it presented its petition to the court for removal of the case to this court, alleging diverse citizenship, and that the amount involved exceeded the sum of $2,000, exclusive of costs and interest; and, upon giving the proper bond, the case was brought to this court. The matter now before the court is the motion to recall the execu tion, vacate and set aside the judgment, and quash the service of summons. The determination of this motion depends upon the question whether the service of process made upon the secretary of state gave the superior court of Lassen county jurisdiction over the defendant. Section i of the amended act of the legislature of March 17, 1899, providing for the service of process upon the secretary of state, is made applicable to any corporation created by the laws of any other state or foreign country, and “doing business in the state.” The defendant was a corporation created by the laws of the state of New York, and it had not designated any person residing in this state upon whom the process might be served. If, then, the defendant was “doing business in this state,” the service of process on the secretary of state was sufficient, under the statute, to obtain constructive service upon the defendant. Was the defendant “doing business in this state”? It is objected that this court cannot examine into this question, on the ground that it had already been judicially determined by the state court that it had such jurisdiction. It would be a sufficient answer to this objection to say that when this case was removed to this court the superior court of Lassen county had authority, under section 473 of the State Civil Code of Procedure, to relieve the defendant from the judgment entered in the case. That section provides, among other things, that: “The court may * * * also upon such terms as may be just, relieve a party or his legal representative from a judgment, order, or other proceeding taken against him through his mistake, inadvertence, surprise or excusable neglect: provided, that application therefor be made within a reasonable time, but in no case exceeding six months after such judgment, order, or proceeding was taken. When from any cause the summons in an action has not been personally served on he defendant, the court may allow, on such terms as may be just, such defendant or his legal representative at any time within one year after the rendition of any judgment in such action, to answer to the merits of the original action.” The judgment by default was entered on April 3, 1902. Defendant’s motion to vacate and set aside the default judgment and to quash the service of summons was made on September 20, 1902, or within six months after the judgment and order was entered. The state court had authority, while the case was still pending in that court, to determine upon such a showing whether the defendant was entitled to be relieved from the judgment or not, and upon the removal of the case that authority was vested in this court. The suggestion of the plaintiff that the case be remanded to the state court to have this motion determined cannot be entertained. This court cannot abdicate its authority or duty in any case in favor of another jurisdiction. Hyde v. Stone, 20 How. 170, 175, 15 L. Ed. 874. Moreover, the appearance of the defendant in the state court, under the circumstances, was not a waiver of objection to the jurisdiction. The appearance must be treated as a special appearance to secure the removal of the case to this court. Railway Co. v. Brow, 164 U. S. 271, 279, 17 Sup. Ct. 126, 41 L. Ed. 431. But the authority of this court to determine whether the state court had jurisdiction .of the defendant to make the order and enter the judgment contained in the record has a wider scope than the power conferred upon the state court to set aside defaults, as provided in section 473 of the State Code of Civil Procedure. In Goldey v. Morning News, 156 U. S. 518, 523, 15 Sup. Ct. 559, 30 L. Ed. 517, the supreme court of the United States declared that this authority was not limited by the laws of the state, but was dependent upon its constitutional jurisdiction under the laws of the United States. The court said: “The jurisdiction of the circuit court of the United States depends upon the acts passed by congress pursuant to the power conferred upon it by the constitution of the United States, and cannot be enlarged or abridged by any statute of a state. The legislature or the judiciary of a state can neither defeat the right given by a constitutional act of congress to remove a case from a court of the state into the circuit court of the United States, nor limit the effect of such removal.” In that case the defendant was a corporation organized and existing under the laws of the state of Connecticut, and was engaged in doing business in that state, having no place of business, officer, agent, or property in the state of New York, where service of summons in the case was made upon the president of the corporation, a citizen and resident of the state of Connecticut. The service of summons was made upon the president while he was temporarily in the state of New York. Such a service had been held valid by the court of appeals of the state of New York, but invalid by the circuit courts of the United States held within that state. In the supreme court the latter opinion was upheld. The court, speaking upon this subject, said:

3723985-9720

POSNER, Circuit Judge. This motion to dismiss an appeal in a case arising under the First Amendment’s establishment clause presents a novel jurisdictional issue: whether a municipal land use case can come within the exception to the doctrine of mootness for cases that are capable of repetition yet elude review. There is also an issue of timeliness. The City of South Bend bought a tract of land with the intention of transferring it to a Catholic high school adjoining the tract, on which the school wanted to build an athletic complex. The City asked in exchange only the right to use the athletic complex at specified times. Before the transfer took place, several residents of South Bend sued to enjoin it on the ground that it was effectively a gift of public property to a religious institution and thus violated the establishment clause, since no effort had been made to attach a pecuniary value to the use right that was the only compensation the City sought. The district court granted a preliminary injunction. The merits of the controversy are not before us. The City could of course have appealed from the grant of the injunction, 28 U.S.C. § 1292(a)(1), but did not. Instead it filed a motion to modify the injunction to permit it to sell the land to the high school at a price equal to the average of two appraisals of the property (we’ll call that price the “appraised value”). The district court denied the motion on the ground that by not opening the property to bidding the City was sending a message of endorsement of Catholicism. Again the City did not appeal, as it could have done, since a refusal to modify a preliminary injunction is an appealable order. Id.; Ford v. Neese, 119 F.3d 560, 562 (7th Cir.1997); Fama v. Indiana University of Pennsylvania, 7 F.3d 332, 337 (3d Cir.1993). Instead it moved for another modification, essentially to allow it to sell the property to the highest bidder — so it was throwing in the towel. Naturally the district court agreed to the modification, and the City sold the property to the highest bidder — which was the high school. No surprise there; the property was adjacent to the school and needed by it for the planned athletic complex. The plaintiffs were content, and the litigation, one might have thought, was at an end. Not so. The City has appealed. The plaintiffs have moved to dismiss the appeal on the ground that it is both untimely and moot, either being of course a sufficient ground; they turn out to be interrelated. The appeal is from the final judgment, dissolving the injunction after the sale of the property, but it does not challenge that dissolution; the City has sold the property to the high school and does not seek to undo the sale. Instead it challenges two interlocutory orders denying motions it made in the course of the litigation. It characterizes the first motion, which asked the district court to modify the injunction to allow the sale to the high school at the appraised value, as also asking the court to reconsider its refusal to allow the sale in exchange just for a use right; and it describes the second motion as asking the court not only to allow sale to the highest bidder at an open auction but also to reconsider its ruling that the City could not sell the property at the appraised value. We’ll accept the City’s characterization of the motions to modify the injunction as also seeking reconsideration of the denials of previous relief sought by the City. Had the district judge refused to dissolve the injunction after the City asked that it be modified to allow sale of the property to the highest bidder, and the City appealed, it could have argued that the injunction should have been dissolved because either the sale in exchange for use rights or the sale at the appraised value— the City’s preferred options — should have been allowed. But it cannot appeal from the dissolution of the injunction because that hasn’t harmed it. There can be no question of reinstating the injunction, now that the land has been sold to the high school. The City is challenging the grant of the initial injunction long after it was granted, along with the refusal of the district court to modify that injunction to allow the sale at the appraised value long after that refusal. Although the City is thus challenging two appealable orders — the initial injunction and the denial of the first modification that it sought (the modification that if granted would have permitted sale to the high school at the appraised value of the land) — the challenge is untimely. Had the City challenged the district court’s final order, the order dissolving the injunction, it could also have challenged any interim rulings that had not become moot. E.g., Rubin v. Islamic Republic of Iran, 637 F.3d 783, 790-91 (7th Cir.2011); Pearson v. Ramos, 237 F.3d 881, 883 (7th Cir.2001). But the final order — the dissolution of the injunction — was sought by the City. A party cannot appeal a judgment that it won, unless it seeks a modification of the judgment, see, e.g., Board of Trustees of University of Illinois v. Organon Teknika Corp., 614 F.3d 372, 374-75 (7th Cir.2010); Mueller v. Reich, 54 F.3d 438, 441 (7th Cir.1995); In re Montgomery County, 215 F.3d 367, 372 (3d Cir.2000), which the City does not. The only orders the City could have appealed from it failed to appeal from in time. The appeal is moot as well as untimely. The City does not want to unwind the sale to the high school at the price bid by the school — it does not ask to be allowed to give the money back in exchange for the use right that the City originally sought, or to give back so much of the money that it received in the sale as exceeds the appraised value. Against dismissing the appeal on the ground of mootness the City invokes the principle that decisions of cases capable of repetition but evading review are reviewable even though moot. Norman v. Reed, 502 U.S. 279, 287-88, 112 S.Ct. 698, 116 L.Ed.2d 711 (1992); Weinstein v. Bradford, 423 U.S. 147, 149, 96 S.Ct. 347, 46 L.Ed.2d 350 (1975) (per curiam); Bowens v. Quinn, 561 F.3d 671, 673 (7th Cir.2009); Tobin for Governor v. Illinois State Board of Elections, 268 F.3d 517, 528-29 (7th Cir.2001). For example, a pregnant woman can challenge a prohibition of abortion even after she gives birth to the child that she had wanted to abort in its fetal state, if it wouldn’t have been possible for her to litigate the case to judgment before it was too late for the abortion and if she might become pregnant again and want to abort again. Roe v. Wade, 410 U.S. 113, 125, 93 S.Ct. 705, 35 L.Ed.2d 147 (1973); Fitzgerald v. Porter Memorial Hospital, 523 F.2d 716, 717 n. 3 (7th Cir.1975); Doe v. Poelker, 497 F.2d 1063, 1066-67 (8th Cir.1974). The City argues that the reason it didn’t appeal from either the grant of the initial injunction or the denial of its first motion to modify the injunction was that the high school needed to begin construction of the athletic complex immediately in order to complete it by the beginning of the 2012 school year. It argues that the district court’s rulings establish precedents that will prevent the City from transferring land to religious institutions in the future and that if and when that happens the negative effect of litigation delay on plans for the development of land will again prevent it from appealing the foreseeable injunction. A district court decision does not have precedential effect, Midlock v. Apple Vacations West, Inc., 406 F.3d 453, 457-58 (7th Cir.2005); Colby v. J.C. Penney Co., 811 F.2d 1119, 1124 (7th Cir.1987) — that is, it is not an authority, having force independent of its reasoning, and to which therefore a court with a similar case must defer even if it disagrees, unless the circumstances that justify overruling a precedent are present. But the district court’s decision might place a cloud over future transactions similar to the one that led to the issuance of the injunction. However, the fact that a dissolved injunction may have consequences even though the case in which it was issued is now moot is not a permissible ground for invoking the doctrine that allows the appeal of moot cases that are capable of repetition but evade review. It is true that when the timing of a project, whether it is a real estate development, a merger, the licensing of a patent, or the unveiling of a new product, is critical, an injunction, though immediately appealable, may kill the project before the appellate court can act. But to allow this as a ground for permitting moot cases to be appealed would bring an unmanageable host of such cases into the appellate courts. A court would have to wrestle in every case with uncertain questions about whether an injunction that had not been appealed had had or would have a future impact that should justify allowing an appeal even though it had become moot. The City admits that it has found no precedent for so broad and vaguely bounded an exception to the rule of the nonappealability of moot cases. There is more that is wrong with the City’s appeal to the exception to mootness for cases capable of repetition but eluding review. The exception applies only when the subject is likely to arise again between the same litigants. See Weinstein v. Bradford, supra, 423 U.S. at 149, 96 S.Ct. 347; Sosna v. Iowa, 419 U.S. 393, 399-400, 95 S.Ct. 553, 42 L.Ed.2d 532 (1975). That is unlikely in this case. And the exception should not apply when the party seeking to invoke it made the case moot by its deliberate action, as the City did by failing to appeal from two appealable orders, then proposing a modification that if adopted precluded a further appeal by mooting the case.

10525449-28249

LEVIN H. CAMPBELL, Circuit Judge. Under the doctrine of relation back, an amended complaint can be treated, for purposes of the statute of limitations, as having been filed on the date of the original complaint. This diversity case presents several questions concerning choice of federal or state relation back law, the result dictated by that law, and the procedural mechanisms by which relation back questions may be raised and ruled upon. I On May 12, 1979, appellant George Pes-sotti suffered severe burns when gasoline fumes were ignited by the pilot light on his kitchen stove. Pessotti had been using gasoline as a solvent in order to remove his kitchen carpet, which was glued to the linoleum floor. On July 29, 1980, Pessotti filed a complaint in the District Court for the District of Massachusetts against Magic Chef, Inc., the manufacturer of the stove. Asserting that jurisdiction existed because of diversity of citizenship, Pessotti alleged that his injuries had been caused by Magic Chef's failure to warn him of the hazards of the stove’s continuously burning pilot light. At a trial, which took place ten years later in the summer of 1990, Pessotti testified to having believed at the time he filed his complaint against Magic Chef that the manufacturer of the gasoline can was also responsible for his injuries. However, he said he had been unable to identify the manufacturer of the can until four years after filing suit, when, in late 1984, his expert discovered a roll of undeveloped photographic negatives in the files of the Westford, Massachusetts police department. This was apparently the first time anyone working on behalf of Pessotti had checked the police files, even though two police officers had investigated at the scene on the day of the accident. After developing the photographs, Pessotti determined that the can in which he had brought the gasoline into his kitchen had been manufactured by appellee Eagle Manufacturing Company. On January 11, 1985, Pessotti moved to amend his complaint to add Eagle as a defendant. The motion was allowed, and Pessotti filed an amended complaint on February 12,1985 and a corrected amended complaint on November 26, 1986. The amended complaints alleged that Eagle’s failure to warn him of the hazards of using gasoline near hidden ignition sources constituted negligence, breach of warranty and unfair or deceptive trade practices, in violation of Massachusetts common and statutory law. The statute of limitations had expired in 1982 as to the negligence and warranty claims against Eagle, and in 1983 as to the unfair trade practice claim. When Pessotti moved successfully to amend his complaint so as to add Eagle as a defendant, and when the amended complaints were filed, the crucial question of whether or not the claims against Eagle would relate back to the date of the original complaint was left undecided. Nor did the court then consider whether Massachusetts or federal law should control that determination. The plaintiff raised these issues in a memorandum of law submitted in support of the amendment, but, as Eagle was not then a party, the amendment was allowed unopposed. Much later, during the trial proceedings in 1990, the district court commented that, pursuant to its normal practice under the Federal Rules of Civil Procedure, it had allowed the complaint to be amended subject to a later determination of whether it would relate back. In its answer to Pessotti’s corrected amended complaint, Eagle pleaded that Pessotti’s claim was “barred by the applicable statutes of limitation and/or the doctrine of laches.” Eagle did not, however, move for judgment on this ground until after the trial commenced. During the interim, in January 1988, Pessotti settled with Magic Chef for $15,000, leaving Eagle as the sole defendant. A jury trial on Pessotti’s claims against Eagle was held in late July and early August 1990. At the close of plaintiff’s case, Eagle moved for a directed verdict on the grounds of limitations and laches, as well as of the insufficiency of the evidence and other grounds related to the merits of the action. A hearing was held at which the only limitations issue discussed was whether the amended complaint related back under either Massachusetts or federal law. The motion was denied, and the jury returned a verdict for the plaintiff. Judgment on the verdict was entered on August 9,1990. On the day following, Eagle filed a motion for judgment notwithstanding the verdict asserting grounds the same as those in its earlier motion for a directed verdict. Regarding the alleged insufficiency of the evidence and other questions pertaining to the jury verdict, Eagle’s motion was denied. 774 F.Supp. 669. The district court ruled that Eagle’s motion had raised “close and debatable issues,” but that “the evidence [was] barely sufficient to present a jury question.” On the relation back issue, however, the court held for Eagle. It ruled that relation back was governed by Rule 15(c) of the Federal Rules of Civil Procedure, which clearly indicates that the amended complaint did not relate back to the date of filing of the original complaint. In the alternative, the court held that the same result would obtain under Massachusetts law. The district court also rejected Pessotti’s arguments that it was precluded from ruling on the relation back question because the matter had been presented for the first time in a motion for judgment notwithstanding the verdict several years after the court had allowed the complaint to be amended so as to bring in Eagle. Pessotti presents several arguments on appeal. He challenges the timing and procedure of the court’s relation back ruling, arguing that the district court could not consider that question when it did because (i) if Massachusetts law controls, relation back was automatic once the amendment was allowed, (ii) judgment notwithstanding the verdict may only be granted on the merits of an action, not on a limitations defense, and (iii) Eagle was barred by waiver and estoppel from raising its limitations defense several years into the litigation. On the relation back question itself, Pessot-ti argues that Massachusetts law governs and causes his claim against Eagle to relate back to the time he sued Magic Chef. Eagle cross appeals, arguing that the district court erred in denying its motion on insufficiency of evidence and other merits grounds. We uphold the district court’s determination that Pessotti’s claim against Eagle did not relate back and was, therefore, barred by the statute of limitations. In our view, the fact the court at first allowed the complaint to be amended so as to join Eagle as a defendant — ruling against plaintiff on relation back and limitations grounds only much later, when granting defendant’s motion for judgment notwithstanding the verdict — was not procedurally fatal. We also think that the court’s substantive disposition of the relation back question was correct under both Massachusetts and federal law. We need not, therefore, consider the choice of law question nor do we reach the legal sufficiency of plaintiff’s case. II A. Procedure and Timing Issues We first consider Pessotti’s arguments concerning the timing and mechanics of the district court’s relation back decision. Pessotti contends that Eagle forfeited its statute of limitations defense (including any right to object to the relation back of Pessotti’s claim) by failing promptly to contest the court’s order allowing the complaint to be amended. Pessotti’s argument rests on the twin assumptions that Massachusetts law controls the relation back issue, and that the district court was bound by a particular aspect of the Massachusetts relation back rule, to wit, that an amended complaint automatically relates back to the filing date of the original complaint. Under Pessotti’s theory, Eagle could not simply rely on its answer to the amended complaint to raise and preserve its statute of limitations defense. Rather, Eagle had to timely move the court to reconsider its order amending the complaint to include the new claim against Eagle. As this was not done, Pessotti argues, the amendment stood, and, under Massachusetts requirements, it automatically related back. Subsequent arguments about whether or not it related back were simply meaningless, since under Massachusetts law, amendments once allowed, always relate back, as a matter of black-letter law. Pessotti’s argument only works, of course, if Massachusetts relation back law applies. If federal relation back law applies, the mere fact a court allowed an amendment to the complaint would not determine whether the amended complaint related back. Under federal law it is clear that the question whether Pessotti’s claim against Eagle related back remained open for later adjudication as a separate and distinct matter. But even if Massachusetts relation back law is controlling here, we do not agree with Pessotti’s position that the court’s allowance of the amendment was a procedural event that permanently resolved the question of relation back. The district court, in its subsequent consideration of the relation back issue, commented that it had allowed the amended complaint, pursuant to the Federal Rules of Civil Procedure, subject to later determination of the consequences of my allowance of the amendment. Surely, whether a federal court allows an amendment with a view to later determining its effect (given then unsettled questions of law), rather than considering all of the potential consequences of a proposed amendment before deciding whether to allow the motion to amend, it is a matter of procedural law on which a United States district court may apply federal rather than Massachusetts law. Accordingly, I rule that under federal law it is appropriate for me now to declare explicitly that my procedural order was not meant to decide, and did not have the effect of deciding, the unsettled question as to whether the amendment would relate back to the time of filing of the original complaint. My present ruling has the same legal effect as vacating my order of January 1985 [allowing the amended complaint], and if it is necessary to characterize it in this way in order to achieve the intended effect consistently with Massachusetts law, I hereby do so. We think the district court analyzed the question properly. Even assuming, ar-guendo, that choice of law principles were later found to require application of Massachusetts substantive rules concerning relation back, the district court’s procedural matrix rests on federal law — and federal law treats amendment and relation back as raising separate issues. When and in what procedural setting a court rules on a particular question is normally a “procedural” issue controlled by a forum’s own law. Under “outcome determinative” principles, we doubt that a party would select a forum in these circumstances simply on the basis of whether a substantive relation back rule would be resolved at the time of amendment or later. See Hanna v. Plumer, 380 U.S. 460, 468-69, 85 S.Ct. 1136, 1142, 14 L.Ed.2d 8 (1965). Indeed, the cart would be put before the horse if, in order merely to determine when and in what setting it would resolve a relation back issue, a court had, first, to decide one of the grounds underlying the latter issue, i.e., choice of law. Rather we think the court should consult its own law in order to ascertain procedural ground rules of this sort. Hence, here, the district court properly treated relation back as a separate question, in conformity with the scheme of the federal rules. At the time it allowed the amended complaint, it had no practical way of knowing whether federal or Massachusetts (or some other) law would ultimately control, and it had no intention of resolving relation back merely by allowing the amendment. Eagle timely raised the statute of limitations bar in its answer, and both parties and the court thereafter accepted that Eagle had objected to the allowance of the amended complaint on relation back grounds. Although he made related arguments concerning waiver and estoppel, Pessotti never argued in the district court that no proper objection had been raised. At hearings held on both the directed verdict and judgment notwithstanding the verdict motions, the parties argued extensively about both federal and Massachusetts law concerning relation back. Fully aware of the procedural distinction between Massachusetts and federal relation back law, and of the guiding substantive rules in both jurisdictions, the court then ruled in favor of Eagle. It would make no sense to hold that this ruling, rendered after full argument by both sides, was a nullity because no objection fully satisfying Massachusetts procedures had been raised at the time the complaint was amended. Pessotti next argues that it was error for the district court to, in effect, vacate its earlier order allowing the amended complaint by granting a judgment notwithstanding the verdict. Pessotti claims that a motion for judgment notwithstanding the verdict is an improper vehicle for presenting a limitations related defense because such a judgment may be granted only where the evidence does not support the verdict on the merits. To support this proposition, Pessotti points to authorities stating that a judgment notwithstanding the verdict should be granted where no reasonable construction of the evidence could support the verdict. E.g., Conway v. Electro Switch Corp., 825 F.2d 593, 598 (1st Cir.1987). However, we read these authorities as stating only the standard for deciding a sufficiency of the evidence claim when such claim is presented in a motion for judgment notwithstanding the verdict, not as limiting the issues which can be presented via such a motion. Federal Rule of Civil Procedure 50(b) does not on its face limit the legal questions which may be raised, and we see no reason why a limitations defense may not be presented in a motion for judgment notwithstanding the verdict. See Borden v. Paul Revere Life Insurance Co., 935 F.2d 370, 376 (1st Cir.1991) (affirming a district court’s rejection of a limitations defense presented in a motion for directed verdict and ruled upon after judgment, without noting any procedural problem). Pessotti also argues that Eagle should have moved for judgment sooner in the proceedings, rather than waiting several years to do so. To the extent that this argument is based on the doctrine of waiver, we reject it. Eagle’s assertion of a limitations defense in its answer made clear its intent to raise that defense. We need not decide whether it would be proper for a district court, in appropriate circumstances, to avoid wasted effort by requiring that a defense raised in a responsive pleading be argued and ruled upon before trial. Such a decision concerns the efficient management of the litigation and is properly left to the discretion of the district court. Here, the district court determined that it was appropriate to consider the defense at the end of trial proceedings. In the circumstances, we do not find any abuse of its discretion. Finally, we also reject Pessotti’s related argument that, because of Eagle’s failure to move for judgment on limitations grounds early in the proceedings, Eagle was estopped to raise its limitations defense at the time it did. Pessotti claims that Eagle’s failure to assert its limitations defense earlier led him to believe that it would not do so, and that he relied to his detriment on this belief by settling with Magic Chef for a small amount, assuming that he could obtain a “meaningful recovery” against Eagle. Estoppel requires “reasonable reliance.” Phelps v. Federal Emergency Management Agency, 785 F.2d 13, 16 (1st Cir.1986). We simply do not think it would have been reasonable, absent some express representation by Eagle, for Pessotti to assume that Eagle would not pursue a defense it had pleaded. Furthermore, the merits of Pessotti’s claim were vigorously disputed by Eagle. Therefore, even assuming that it was reasonable for Pessotti to believe that Eagle would not pursue its limitations defense, it would still have been unreasonable for Pessotti, in deciding whether to settle with Magic Chef, to assume he could recover a significant amount from Eagle. B. Relation Back We have held above, notwithstanding structural differences between Massa chusetts and federal relation back practice, that there was no error in the timing and procedure followed in making the relation back decision under the law of either jurisdiction. We next consider whether the district court erred substantively in deciding that the amended claim against Eagle did not relate back. We think not. It is not disputed that under Federal Rules of Civil Procedure 15(c) Pessotti’s amended complaint would not relate back. Because we find that the identical result obtains under Massachusetts law, we need not decide which law applied. In 1988 the Massachusetts legislature enacted St.1988 c. 141, § 1, which allowed amendment of a complaint if the party requesting amendment sought “recovery for the injury for which the action was intended to be brought.” 1988 Mass.Acts c. 141 § 1, codified at Mass.Gen.L. ch. 231, § 51. The legislature further provided that the act was to apply to all actions pending as of July 14, 1988. 1988 Mass.Acts c. 141, § 2. This case would, therefore, be governed by that statute, which permits the amendment of a complaint to bring in a new party under a new theory of liability. As already noted, if an amended complaint is allowed, it automatically relates back. Mass.Gen.L. ch. 231, § 51. Because relation back is automatic upon the allowance of an amended complaint, the factors which would counsel against relation back must be considered by the trial court in deciding whether to allow the amendment. Thus, the Massachusetts Supreme Judicial Court has stated: [t]he decision whether to allow a motion to amend a pleading is a discretionary decision and depends upon a judge’s weighing of several factors. Factors to be considered in making such a decision include undue delay by the moving party, imminence of trial, and undue prejudice to the opposing party, [citations omitted]. Barbosa v. Hopper Feeds, Inc., 404 Mass. 610, 621-22, 537 N.E.2d 99, 106 (1989). Subsequent Massachusetts cases appear to provide that “undue delay” alone is a sufficient reason to deny the amendment of a complaint, and that an explicit showing of some other factor such as prejudice is not required. The Supreme Judicial Court recently held that “unexcused delay in seeking to amend is a valid basis for denial of a motion to amend.” Mathis v. Massachusetts Electric Co., 409 Mass. 256, 265, 565 N.E.2d 1180, 1185 (1991). Furthermore, the Massachusetts Appeals Court has held that “[t]he policies which support the extin-guishment of claims after limitations periods speak against allowing such amendments against new defendants.” Christopher v. Duffy, 28 Mass.App. 780, 785, 556 N.E.2d 121, 124 (1990). One of the policies of a statute of limitations is that a bright line cutoff is needed because one can never be sure whether or not the passage of time has prejudiced a defendant. This policy would, of course, counsel against requiring an explicit showing of prejudice. Nevertheless, because Massachusetts law on this question is not completely settled, we shall assume for present purposes that prejudice as well as undue delay is required before a court may deny an amendment under these circumstances. See id. at 784, 556 N.E.2d at 123 (“We need not consider whether undue delay in seeking amendment can on occasion be itself sufficient to warrant a court’s denying the leave”). The district court expressly found that Eagle “was prejudiced by undue delay.” As a combination of prejudice and undue delay is sufficient reason under Massachu setts law for a court to refuse to allow an amendment, the district court’s decision may be overturned here only if this finding is clearly erroneous. Cf. Robertson v. Gaston Snow & Ely Bartlett, 404 Mass. 515, 525, 536 N.E.2d 344, 350 (1989) (standard of review of findings of fact in bench trial is clear error). The district court’s finding of undue delay is supported by the record. Pessotti testified at trial that, at the time he sued Magic Chef, he believed the manufacturer of the can, as well as Magic Chef, was responsible for his injuries. However, he said he could not determine the manufacturer of the can because it had been thrown away on the day of the accident, and only when his expert discovered the negatives did he determine that Eagle had manufactured the can. The district court found that “with just a bit more diligence, plaintiff and others acting on his behalf would have discovered the crucial photographs long before the limitation period expired.” The police report, prepared on May 12, 1979, stated that “Officer] Chan-donait arrived and took photos. He also took possession of the can_” Pessotti’s neighbor, John Resnik, testified at trial that he had seen a police officer come out of Pessotti’s home carrying a gasoline can with a picture of an Eagle on the side. Given that the manufacturer’s identity could have been, and ultimately was, determined from the police report, and Pessotti’s neighbor recalled that the police had been on the scene and removed the can, we think the record supports the district court’s conclusion that Pessotti’s delay in naming Eagle was undue. The district court’s finding of prejudice is likewise supported by the record. Pessotti argues that this finding was error because the only contested issue in the case concerned the adequacy of the warnings on the can, which did not depend on prompt investigation or fresh memories. Even though the trial centered on the adequacy of the warnings, however, there was significant evidence which did in fact depend on witnesses’ memories. Westford Police Sergeant David Hogg testified that an ambulance attendant had told him that Pessotti, immediately after the accident, said the fumes must have been ignited by the pilot light. This evidence tended to show that Pessotti knew his stove’s pilot light was on at the time of the accident, so that a warning on the gasoline can concerning the hazards of continuously burning pilot lights would have been superfluous. However, in subsequent testimony, Hogg stated that, after giving his original testimony, he had questioned its accuracy. He had then called the ambulance driver to discuss their conversation on the day of the accident, and noted his concerns to Pessotti’s lawyer and the court. As a result, Hogg was recalled and testified that it was he, not Pessotti, who had speculated that the fumes had been ignited by the pilot light. Sergeant Hogg’s changed testimony clearly damaged Eagle’s case. We cannot know what Sergeant Hogg would have said if the case had been tried earlier, but we think that, given the inconsistencies in this important testimony, presented eleven years after the incident, the district court did not clearly err in finding that Eagle had been prejudiced by Pessotti's four year delay in bringing it into the case. Conclusion Under Massachusetts law, the district court’s decision that the amended corn- plaint should not have been allowed was not an abuse of discretion. Nor did federal procedural law bar the district court from reconsidering its earlier order allowing amendment when it ruled on the motion for judgment notwithstanding the verdict. As the same result would obtain under federal relation back law, Eagle must prevail on its limitations defense. We need not consider, therefore, whether the evidence supports the verdict on the merits. The judgment of the district court in Pessotti’s appeal, No. 90-2182, is affirmed. As affirmance of the judgment in No. 90-2182 moots Eagle’s appeal in No. 90-2188, that appeal is dismissed. Costs are awarded to Eagle against Pessotti in No. 90-2182; both parties shall bear their own costs in No. 90-2183. . “Any amendment allowed pursuant to this section or pursuant to the Massachusetts Rules of Civil Procedure shall relate to the original proceedings." Mass.Gen.L. ch. 231, § 51. . Federal Rule of Civil Procedure 15(a) sets forth the conditions under which a party may amend his complaint without mentioning whether an amendment relates back. Rule 15(c) then provides the limited conditions under which an amended complaint will relate back. (It is undisputed those conditions were not met here.) Thus, unlike in Massachusetts, the mere allowance of an amendment does not resolve the relation back issue favorably to the amending party. . In a memorandum submitted to the district court in opposition to the judgment notwithstanding the verdict, Pessotti argued that Eagle should have objected to the amended complaint soon after it was brought into the case in order to allow Pessotti to present evidence concerning lack of prejudice to Eagle. He also argued that Eagle was estopped to raise the issue, and that the allowance of the amended complaint was a discretionary ruling that could not be altered after judgment. In addition to rejecting these arguments, the district court ruled, sua sponte, that federal procedural law permitted it to reconsider its earlier ruling. However, the specific argument that no proper objection had been raised because Massachusetts law provides that an amended complaint automatically relates back was not presented to the district court. . Pessotti also argues that Eagle's answer only asserted a limitations defense without noting the relation back issue or challenging the allowance of the amended complaint. We think it would have been unreasonable for Pessotti to assume that Eagle would not pursue its limitations defense because it did not immediately raise all the underlying arguments necessary to support that defense. . While they do not merit extended discussion, we reject several additional arguments of Pes-sotti. First, it was not error to grant the judgment notwithstanding the verdict on relation back grounds because judgment had already been entered on the jury verdict. Pessotti argues that this would interfere with the finality of judgments or appear to have been motivated by a disagreement with the jury verdict on the merits. This argument ignores that the district court expressed grave doubts on the relation back question at the hearing on Eagle’s motion for a directed verdict, but decided to submit the case to the jury because a jury verdict for Eagle would moot the question. This is a common and well accepted practice, which did not constitute error. Second, we must reject Pessotti's argument that the decision to amend the complaint was, under Massachusetts law, a procedural decision which could not be changed after judgment. In addition to ignoring the district court’s reason for submitting the case to the jury, this argument ignores the fact that the court, unsure whether Massachusetts or federal law would apply, had only allowed the original complaint subject to a later determination as to whether the complaint would relate back. Third, we think that the issues presented in Eagle’s motion for judgment notwithstanding the verdict were preserved by its motion for a directed verdict. Although Eagle's motion for a directed verdict stated only that Pessotti's complaint was "barred by laches and/or the applicable statute of limitations” (among other merits related grounds), at a hearing on the motion the parties argued extensively about Massachusetts law concerning the amendment of complaints. Thus we reject Pessotti’s argument that the issue ruled upon by the court in the judgment notwithstanding the verdict had not been presented in Eagle’s motion for a directed verdict. Finally, we reject Pessotti’s argument that the district court should have imposed an abuse of discretion standard on itself in vacating its earlier order. If any ruling by the district court was entitled to deference by the district court itself, it was the judgment notwithstanding the verdict which, unlike the allowance of the amended complaint, was made after full briefing and argument.

11289812-7249

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT GADOLA, District Judge. Plaintiff Cheryl Walker was terminated by defendant ACA Management Services Company, an operating division of Amoco Oil Company (“Amoco”). Plaintiff claims that she was discharged in breach of a just cause employment contract. Amoco contends that plaintiffs employment was terminable at will, and that in any event, plaintiff was fired for cause. Before the court is Amoco’s motion for summary judgment. For the reasons stated below, the court will grant its motion. I. Facts Plaintiff was employed by Amoco from April 30, 1991 until April 28, 1992. Initially, she was hired as a cashier at an Amoco Food Shop. Plaintiff later became a management trainee and was made the temporary manager of a food shop in November of 1991.- In April of 1992, plaintiff was fired due to alleged shortages in cash and inventory at her store that had occurred over a period of several months. Plaintiff claims, however, that the shortages were not her fault. II. Standard of Review Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment may be granted “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.” “A fact is ‘material’ and precludes grant of summary judgment if proof of that fact would have [the] effect of establishing or refuting one of the essential elements of the cause of action or defense asserted by the parties, and would necessarily affect [the] application of appropriate principle^] of law to the rights and obligations of the parties.” Kendall v. Hoover Co., 751 F.2d 171, 174 (6th Cir.1984) (citation omitted) (quoting Black’s Law Dictionary 881 (6th ed. 1979)). The court must view the evidence in a light most favorable to the nonmovant as well as draw all reasonable inferences in the nonmovant’s favor. See United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 993, 8 L.Ed.2d 176 (1962); Bender v. Southland Corp., 749 F.2d 1205, 1210-11 (6th Cir.1984). The movant bears the burden of demonstrating the absence of all genuine issues of material fact. See Gregg v. Allen-Bradley Co., 801 F.2d 859, 861 (6th Cir.1986). The initial burden on the movant is not as formidable as some decisions have indicated. The moving party need not produce evidence showing the absence of a genuine issue of material fact. Rather, “the burden on the moving party may be discharged by ‘showing’ — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party’s case.” Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986). Once the moving party discharges that burden, the burden shifts to the nonmoving party to set forth specific facts showing a genuine triable issue. Fed.R.Civ.P. 56(e); Gregg, 801 F.2d at 861. To create a genuine issue of material fact, however, the nonmovant must do more than present some evidence on a disputed issue. As the United States Supreme Court stated in Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50, 106 S.Ct. 2505, 2510-11, 91 L.Ed.2d 202 (1986), There is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party. If the [nonmovant’s] evidence is merely colorable, or is not significantly probative, summary judgment may be granted. (Citations omitted). See Catrett, 477 U.S. at 322-23, 106 S.Ct. at 2552-53; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 1355-56, 89 L.Ed.2d 538 (1986). The standard for summary judgment mirrors the standard for a directed verdict under Fed.R.Civ.P. 50(a). Anderson, 477 U.S. at 250, 106 S.Ct. at 2511. Consequently, a nonmovant must do more than raise some doubt as to the existence of a fact; the nonmovant must produce evidence that would be sufficient to require submission to the jury of the dispute over the fact. Lucas v. Leaseway Multi Transp. Serv., Inc., 738 F.Supp. 214, 217 (E.D.Mich.1990), aff'd, 929 F.2d 701 (6th Cir.1991). The evidence itself need not be the sort admissible at trial. Ashbrook v. Block, 917 F.2d 918, 921 (6th Cir.1990). However, the evidence must be more than the nonmovant’s own pleadings and affidavits. Id. III. Analysis Michigan law provides that employment relationships are terminable at will. Toussaint v. Blue Cross & Blue Shield, 408 Mich. 579, 292 N.W.2d 880 (1980). Without an express contractual provision to the contrary, an employee can be terminated at any time without cause. Valentine v. General Am. Credit, Inc., 420 Mich. 256, 258-59, 362 N.W.2d 628 (1984). Discharge only “for cause” may become part of the employment contract by express agreement or “as a result of an employee’s legitimate expectations grounded in an employer’s policy statements.” Toussaint, 409 Mich. at 598, 292 N.W.2d 880. Plaintiff contends that a “Conditions of Employment” form issued by Amoco created an expectation of a just cause contract. The form lists “some” of the misconduct that she could be disciplined for while she was an employee of Amoco. It did not detail a disciplinary procedure. Among the reasons that could “warrant disciplinary action up to and including immediate termination of employment” was “(1) continued cash and/or stock shortages.” The court finds that a legitimate expectation of a just cause contract was not created by the written policies of Amoco. In Rowe v. Montgomery Ward & Co., 437 Mich. 627, 473 N.W.2d 268 (1991), the Michigan Supreme Court examined a document similar to the “Conditions of Employment” form at issue in this ease. In Rowe, the court looked at a “Rules of Personal Conduct” form that listed possible reasons for discharge. The court found that the mere enumeration of reasons for discharge is insufficient to create a just cause contract. Id., at 646; see also Dell v. Montgomery Ward & Co., 811 F.2d 970 (6th Cir.1987). None of the documents given to the plaintiff during her employment suggested that the conduct enumerated in the “Conditions of Employment” form were the only possible reasons for dismissal. In fact, the document is entirely consistent with an at-will employment policy. Furthermore, the ACA Station Manual discusses “employment policies for the station manager.” It states as follows: Employment at Will The policies and procedures set forth in this manual are an informational guide for employees and are subject to change any time without prior notice. They are not intended to create, nor shall they be construed to form, a contract between Amoco and any one or all of its employees. A similar provision is included in the Employee Handbook. Plaintiff also alleges that an elaborate system of progressive discipline was in place to guide the conduct of employees. For example, she points to certain verbal representations by supervisors that cashiers could not be fired without four written reprimands pri- or to discharge. As a manager, she was also under the impression that warnings had to be given before discharging an employee.

4114516-9035

MEMORANDUM OPINION ON UNITED STATES TRUSTEE’S MOTION FOR SUMMARY JUDGMENT JAMES S. STARZYNSKI, Bankruptcy Judge. This matter is before the Court on the United States Trustee’s (“UST”) Motion for Summary Judgment on Debtors’ Request for Attorney’s Fees Pursuant to the Equal Access to Justice Act (“EAJA”)(the “Motion”) (doc 66), Debtors’ Response (doc 68), Debtors’ Exhibits (doc 69) and the UST’s Reply (doc 70). The court will grant the Motion. This is a core proceeding. In an earlier Memorandum Opinion (doc 59), the Court addressed the preliminary issue of whether the Debtors could be considered “prevailing parties” such that the EAJA would be available to them. In that Memorandum Opinion the Court described the background facts, quoted the fee shifting statute found in the EAJA, and set out the four part test that a petitioner must satisfy to be awarded attorney fees. Familiarity with the earlier opinion is assumed and the Court will not reiterate. The Court then found that the Debtors could be considered “prevailing parties,” which satisfied the first prong of the test. The Motion now before the Court is the UST’s attempt to demonstrate that Debtors have failed to establish the other prongs of the test. There are several relevant facts in addition to those set out in the earlier Memorandum. Debtors filed their Chapter 7 case on May 8, 2007. On May 18, 2007, the UST sent a letter to Debtors’ attorney requesting the following documentation: 1) six months of pay advices for the debtors, 2) the most recent Federal tax return, 3) supporting documentation for a claimed monthly health care expense of $100.00 and a monthly charitable contribution of $25.00. The letter requested the documents by June 4, 2007. On June 4, 2007 the UST received the Debtors’ 2006 tax return and payment advices for 3/4/07 and 5/12/07 only. Debtors’ first meeting of creditors was held and concluded on June 14, 2007. On June 21, 2007 the UST filed a statement on the docket as follows: “Having reviewed the documents, if any, filed by the debtor and any additional documents provided to the United States Trustee, the United States Trustee is currently unable to determine whether the debtor’s case would be presumed to be an abuse under Section 707(b) of the Bankruptcy Code.” On an unknown date before July 18, 2007, Debtors transmitted additional payment advices to the UST, allowing a calculation of Debtors’ income for the four months preceding the filing of the petition: January through April, 2007. Based on the available information, the UST recomputed the Form 22A, which now showed monthly disposable income of $463.53 and 60-month disposable income of $27,811.73. (Doc 25-2, Motion to Dismiss for Abuse, Exhibit B). On July 18, 2007, the UST filed a statement on the docket as follows: “The United States Trustee has reviewed all materials filed by the debtor and has determined that the debtor’s case is presumed to be an abuse under Section 707(b).” On July 23, 2007 the UST filed the Motion to Dismiss under § 707(b)(2) and (3). (Doc 25). Mr. Mendez lost his job during October, 2007. The UST withdrew its Motion to Dismiss for Abuse on November 7, 2007. (Doc 38). On December 6, 2007, Debtors’ attorney filed this Motion for fees under the EAJA. Summary judgment is proper when there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. Bankruptcy Rule 7056(c). In determining the facts for summary judgment purposes, the Court may rely on affidavits made with personal knowledge that set forth specific facts otherwise admissible in evidence and sworn or certified copies of papers attached to the affidavits. Fed.R.Civ.P. 56(e). When a motion for summary judgment is made and supported by affidavits or other evidence, an adverse party may not rest upon mere allegations or denials. Id. The court does not try the case on competing affidavits or depositions; the court’s function is only to determine if there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). New Mexico LBR 7056-1 governs summary judgment motions. It provides, in part: The memorandum in support of the motion shall set out as its opening a concise statement of all of the material facts as to which movant contends no genuine issue exists. The facts shall be numbered and shall refer with particularity to those portions of the record upon which movant relies. A memorandum in opposition to the motion shall contain a concise statement of the material facts as to which the party contends a genuine issue does exist. Each fact in dispute shall be numbered, shall refer with particularity to those portions of the record upon which the opposing party relies, and shall state the number of the movant’s fact that is disputed. All material facts set forth in the statement of the movant shall be deemed admitted unless specifically controverted. The UST’s Memorandum has a Statement of Undisputed Material Facts (which in future cases should be “numbered” per the LBR) with citations to the record. The Memorandum attaches the affidavit of Michele Lombard, an employee of the UST, which in turn has three admissible exhibits attached to it. Debtors’ Response does not track the UST’s Statement of Undisputed Material Facts, specifically admitting or denying each one. Therefore, all material facts set forth in the UST’s statement are deemed admitted. Furthermore, Debtors’ exhibits are not supported by an affidavit and are inadmissible hearsay. The Court will not consider them in the defense to the Motion. Rather, Debtors’ Response makes legal arguments: 1) that discovery has been stayed in this case and Debtors were hampered in their ability to respond to the UST’s Motion, and 2) that the UST’s statement of presumed abuse was untimely and therefore provided no basis for a 707(b) motion. The Debtors’ first argument is not well taken. Fed.R.Civ.P. 56(f) provides: If a party opposing the motion shows by affidavit that, for specified reasons, it cannot present facts essential to justify its opposition, the court may: (1) deny the motion; (2) order a continuance to enable affidavits to be obtained, depositions to be taken, or other discovery to be undertaken; or (3) issue any other just order. “The affidavit must include the nature of the uncompleted discovery; how the facts sought are reasonably expected to create a genuine issue of material fact; what efforts the affiant has made to obtain those facts; and why those efforts were unsuccessful.” Dubai Islamic Bank v. Citibank, N.A, 126 F.Supp.2d 659, 665 (S.D.N.Y.2000)(quoting Paddington Partners v. Bouchard, 34 F.3d 1132, 1138 (2nd Cir.1994)). And, filing of the affidavit is an absolute prerequisite for making this argument. Boling v. Romer, 101 F.3d 1336, 1339 n. 3 (10th Cir.199§)(citing International Surplus Lines Ins. Co. v. Wyoming Coal Ref. Sys., Inc., 52 F.3d 901, 905 (10th Cir.1995)). Debtors filed no affidavit in this case that would meet the Rule 56(f) requirements. Debtors’ second argument is also not well taken. It focuses on the timeliness of the Motion to Dismiss. Debtors argue that § 704(b)(1) establishes a 10-day deadline after the first meeting of creditors for the UST to file a statement of presumed abuse; unless the presumed abuse statement is filed the UST cannot file a motion under § 707(b) that is based on the presumption. The Court does not need to and may not address the merits of this argument at this time. The motion has been withdrawn and the Court may not issue an advisory opinion. However, the Court does note that this issue has not been decided in the Tenth Circuit and there is at least one case to the contrary. See In re Cadwallder, 2007 WL 1864154 at *6 (Bankr.S.D.Tex.2007) (“[T]he Court believes that § 704(b) establishes a duty, but does not establish the penalty for failure to perform that duty, and therefore even if a U.S. Trustee failed to comply strictly with his § 704(b) duties, his motion to dismiss would not (merely for that reason) be time-barred.”) Furthermore, the “majority” of bankruptcy courts that have addressed the issue have held that § 704(b)(2) does not impact motions brought under § 707(b)(1) or § 707(b)(3) which are not based on the presumption of abuse. In re Perrotta, 390 B.R. 26, 28-29 (Bankr.D.N.H.2008). And, finally, the Court has seen no cases dealing with whether § 704(b)(1) is a jurisdictional requirement or whether it is more in the nature of a statute of limitations which could be waived if not timely raised by the Debtor. The real issue is whether the government’s position in pursuing the litigation was substantially justified. 28 U.S.C. § 2412(d)(1)(B). The Court finds it was. The UST requested documents from the Debtors early in the case; not all were provided by the time of the creditors meeting. From what was provided, the Bankruptcy Analyst calculated income higher than reported and unallowable or unsubstantiated deductions on Form 22C.

4070642-15066

DECISION and ORDER TELESCA, Chief Judge. Plaintiffs Mark Soucie, Gregg Soucie, and Virginia Soucie commenced this action pursuant to 42 U.S.C. § 1983, alleging that the defendants unlawfully disseminated and publicized confidential youthful offender information contained in a pre-sentence report. Defendants County of Monroe, County of Monroe Department of Probation and Laura Dennany now move to dismiss plaintiffs’ complaint. Defendant Tanzi seeks a vacatur of an earlier entry of default, and a similar order of dismissal. For the reasons discussed below, I find that plaintiffs Gregg and Virginia Soucie, as parents, lack standing to join in this action and that the remainder of Mark Soucie’s complaint must be dismissed except with respect to his § 1983 claim against Laura Dennany individually. In June of 1987, Virginia and Mark Soucie provided personal information to the Monroe County Probation Department in compliance with its pre-sentence investigation of Mark Soucie, a then youthful offender. This information was subsequently incorporated into Mark Soucie’s pre-sentence report and placed on file with the County. Under New York law, such a record is considered “confidential” and may not be made available to the public except “by statute or specific authorization of the court.” N.Y.Crim.Prac. Law § 720.35 (McKinney 1984). The plaintiffs allege, however, that defendant Laura Dennany, while an employee of the County, “deceptively” obtained and “maliciously” disclosed the contents of the pre-sentence report without plaintiffs’ knowledge or consent. The plaintiffs also claim that Laura Dennany revealed this information to her sister, defendant Vicky Tanzi, who then similarly publicized it. The plaintiffs now allege a federal cause of action for violation of their constitutional right of privacy, as well as state law claims for intentional infliction of emotional distress, public disclosure of a private fact, and per se negligence for a statutory violation. DISCUSSION 1. Standing Although not raised by the parties, the requirement of standing comprises an element of subject matter jurisdiction which the court may raise sua sponte. Bender v. Williamsport Area School Dist., 475 U.S. 534, 540-42, 106 S.Ct. 1326, 1330-32, 89 L.Ed.2d 501 (1986), reh’g denied 476 U.S. 1132, 106 S.Ct. 2003, 90 L.Ed.2d 682 (1986). To have standing, a plaintiff must allege “(1) a personal injury in fact, (2) a violation of his or her own, not a third-party’s, rights, (3) that the injury falls within the zone of interests protected by the constitutional guarantee involved, (4) that the injury is traceable to the challenged act, and (5) that the courts can grant redress for the injury.” In re Application of Dow Jones & Co., Inc., 842 F.2d 603, 606 (2d Cir.), cert. denied, — U.S. -, 109 S.Ct. 377, 102 L.Ed.2d 365 (1988) (citing Valley Forge Christian College v. Americans United for Separation of Church & State, Inc., 454 U.S. 464, 472-74, 102 S.Ct. 752, 758-60, 70 L.Ed.2d 700 (1982)); Seneca Falls School Dist. v. Liverpool School Dist., 728 F.Supp. 910, 912 (W.D.N.Y.1990). In their complaint, the plaintiffs allege that they have suffered embarrassment and humiliation as a result of defendants’ disclosure of confidential personal and family information contained in Mark Soucie’s pre-sentence report. Without directly addressing the question of whether each of the plaintiffs has suffered the requisite injury in fact, it is clear that the claims of Virginia and Gregg Soucie do not fall within the zone of constitutionally protected privacy interests at issue here. As discussed more fully below, the plaintiffs’ constitutional right of privacy claim is predicated in large part upon the statutory safeguards which prohibit public dissemination of information pertaining to youthful offender adjudications. See N.Y.Crim. Prac.Law § 720.35. These safeguards are designed solely to protect juveniles, and not their parents, from the social stigma of a prior criminal conviction. United States v. Canniff 521 F.2d 565, 569 (2d Cir.1975), cert. denied, 423 U.S. 1059, 96 S.Ct. 796, 46 L.Ed.2d 650 (1976); People v. Cruickshank, 105 A.D.2d 325, 333, 484 N.Y.S.2d 328, aff'd, 67 N.Y.2d 625, 499 N.Y.S.2d 663, 490 N.E.2d 530 (1985); People v. Cook, 37 N.Y.2d 591, 595, 376 N.Y.S.2d 110, 338 N.E.2d 619 (1975). Accordingly, Virginia and Gregg Soucie lack standing to rely upon those provisions and the claims on their behalf are dismissed from this action. 2. Right of Privacy It is by now well established that the Constitution accords individuals some right of privacy. Nixon v. Administrator of General Services, 433 U.S. 425, 455-65, 97 S.Ct. 2777, 2796-2801, 53 L.Ed.2d 867 (1977); Whalen v. Roe, 429 U.S. 589, 598-604, 97 S.Ct. 869, 875-879, 51 L.Ed.2d 64 (1977); Igneri v. Moore, 898 F.2d 870, 873 (2d Cir.1990). Although rather “difficult to articulate precisely,” id., this privacy right clearly protects at least two kinds of priva cy interests: “[o]ne is the individual interest in avoiding disclosure of personal matters, and another is the interest in independence in making certain kinds of important decisions.” Whalen, 429 U.S. at 599-600, 97 S.Ct. at 876; See also Nixon, 433 U.S. at 457, 97 S.Ct. at 2797. The plaintiffs privacy claim involving the unauthorized publication of youthful offender information is clearly predicated upon the first strand of this right. Whether the Constitution in fact protects against the type of disclosure alleged to have occurred here depends upon whether the plaintiff had a reasonable expectation of privacy in the information. Nixon, 433 U.S. at 458, 97 S.Ct. at 2797; Kimberlin v. United States Dep’t of Justice, 788 F.2d 434, 438 (7th Cir.), cert. denied, 478 U.S. 1009, 106 S.Ct. 3306, 92 L.Ed.2d 719 (1986); Slayton v. Willingham, 726 F.2d 631, 635 (10th Cir. 1984); Doe v. Webster, 606 F.2d 1226, 1238 n. 49 (D.C.Cir.1979); Plante v. Gonzalez, 575 F.2d 1119, 1135 (5th Cir. 1978), cert. denied, 439 U.S. 1129, 99 S.Ct. 1047, 59 L.Ed.2d 90 (1979). This in turn depends upon the relevant statutory restrictions governing disclosure, Kimberlin, 788 F.2d at 438-39, as well as upon the nature of the information itself, Whalen, 429 U.S. at 605, 97 S.Ct. at 879. Section 720.35(2) pertaining to the filing of “Youthful Offender Adjudication” reports provides in pertinent part: Except where specifically required or permitted by statute or upon specific authorization of the court, all official records and papers, whether on file with the court, a police agency or the division of criminal justice services, relating to a case involving a youth who has been adjudicated a youthful offender, are confidential and may not be made available to any person or public or private agency, other than an institution to which such youth has been committed, the division of parole and a probation department of this state that requires such official records and papers for the purpose of carrying out duties specifically authorized by law. N.Y.Crim.Prac.Law § 720.35(2). Construed broadly, People v. J.K., 137 Misc.2d 394, 395-96, 520 N.Y.S.2d 986 (N.Y.Sup.Ct. 1987), this provision clearly provides ample ground upon which the plaintiff might reasonably believe that his pre-sentence disclosures would remain private. The statute itself declares such information “confidential” and prohibits disclosure except for purposes of adjudication, parole and probation, correction, or where permitted by statute or court authorization. The policies underlying youthful offender adjudications further support plaintiffs privacy expectations. Such proceedings are conducted in an atmosphere of confidentiality to ensure that juvenile defendants are not made to suffer the stigma and practical consequences which typically accompany criminal adjudication. People v. Cook, 37 N.Y.2d at 595, 376 N.Y.S.2d 110, 338 N.E.2d 619. This policy is particularly true, and the expectations of privacy all the more reasonable, during the pre-sentence investigation period when the youthful offender is encouraged to disclose the full nature of his personal and family history- I find defendants' reliance on Paul v. Davis, 424 U.S. 645, 96 S.Ct. 1155, 47 L.Ed.2d 366 (1976), in this regard unpersuasive. In that case, the Supreme Court held that police circulation of the fact of respondent’s arrest for shoplifting did not violate his constitutional right to privacy. The Court acknowledged that while “zones of privacy” created by more specific constitutional guarantees may impose limits upon governmental power, respondent’s claim did not implicate “fundamental” personal privacy rights or those “implicit in the concept of liberty.” Id. at 712-714, 96 S.Ct. at 1165-1167. The Court further stated: The activities detailed as being within this definition ... [are] ones very different from that for which respondent claims constitutional protection — matters relating to marriage, procreation, contra ception, family relationships, and child rearing and education. In these areas it has been held that there are limitations on the state’s power to substantively regulate conduct ... [The respondent’s] claim is based, not upon any challenge to the state’s ability to restrict his freedom of action in a sphere contended to be “private,” but instead on a claim that the state may not publicize a record of any official act such as an arrest. None of our substantive privacy decisions hold this or anything like this, and we decline to enlarge them in this manner. Id. at 713, 96 S.Ct. at 1166. Were this the Supreme Court’s last statement on this issue, I might be persuaded to adopt the defendants’ position. One year later in Whalen and Nixon, however, the Court explicitly recognized that the right to privacy encompasses both an individual’s interest in avoiding disclosure of personal matters, as well as those autonomy rights discussed in Davis. See Whalen, 429 U.S. at 599-601, 97 S.Ct. at 876-877; Nixon, 433 U.S. at 457-58, 97 S.Ct. at 2797-98. The Court in Whalen, in fact, indicated that the issue presented here remained open, warning that it did not “decide any question which might be presented by the unwarranted disclosure of accumulated private data — whether intentional or unintentional.” Whalen, 429 U.S. at 605-06, 97 S.Ct. at 879. I am likewise unpersuaded by the defendant’s reliance on the Sixth Circuit’s decision in J.P. v. DeSanti, 653 F.2d 1080 (6th Cir.1981). In that case, a class of juvenile offenders sought to enjoin the juvenile court’s statutorily permitted use of their social histories for purposes of probation on the grounds that it violated their constitutional right of privacy. Although acknowledging that Whalen and Nixon “somewhat clouded” the “otherwise dispositive effect of Paul v. Davis,” id. at 1088, the Sixth Circuit nonetheless declined to construe a general constitutional right to privacy from what it perceived to be isolated statements in those cases, absent a clearer indication from the Supreme Court. Id. at 1089. The Court expressed its concern that such a “vague” and “all-encompassing” notion of individual privacy is ultimately analytically indistinguishable from the general “right to be let alone” that Justice Brandéis once called for, but which has never been accepted by the Supreme Court. Id. I find the Sixth Circuit’s conclusion needlessly overbroad. By holding in favor of the plaintiff’s privacy interests, I do not attempt to carve out such an expansive constitutional privacy right. See DeSanti, 653 F.2d at 1090 n. 5. The plaintiff’s interest in non-disclosure of youthful offender information is predicated upon statutorily conferred expectations of privacy, and is thus well-founded and to a large extent defined by Fourth Amendment privacy notions. Thus, I do not agree that my holding today somehow forces an inquiry any more difficult than that required with other recognized constitutionally protected privacy interests. Cf. Osborne v. Ohio, — U.S. -, 110 S.Ct. 1691, 109 L.Ed.2d 98 (1990) (suggesting First Amendment privacy right to read and observe what one pleases in privacy of own home, absent “compelling” state interests to the contrary (citing Stanley v. Georgia, 394 U.S. 557, 89 S.Ct. 1243, 22 L.Ed.2d 542 (1969), United States v. 12200-Ft. Reels of Super 8 MM. Film, 413 U.S. 123, 126-28, 93 S.Ct. 2665, 2667-69, 37 L.Ed.2d 500 (1973))); Griswold v. Connecticut, 381 U.S. 479, 484, 85 S.Ct. 1678, 1681, 14 L.Ed.2d 510 (1965) (various Bill of Rights provisions create “zones of privacy,” including Fifth Amendment’s Self Incrimination Clause which creates zone of privacy protecting individual against compulsory and prejudicial surrender). To the extent that other courts may have reached a contrary result, I decline to follow their reasoning. See, e.g., McCrary v. letter, 665 F.Supp. 182, 186 (E.D.N.Y.1987) (youthful offender has no privacy right in picture contained in file). 3. Liability of the County Defendants It is well settled that municipalities may not be held liable under § 1983 for the unconstitutional acts of their employees solely on a theory of respondeat superior. Monell v. Department of Social Services, 436 U.S. 658, 98 S.Ct. 2018, 56 L.Ed.2d 611 (1978); Powell v. Gardner, 891 F.2d 1039, 1045 (2d Cir.1989). For the municipality to be held liable, the plaintiff must show that the constitutional deprivation was caused by a municipal custom or policy. Pembaur v. City of Cincinnati, 475 U.S. 469, 478-79, 106 S.Ct. 1292, 1297-98, 89 L.Ed.2d 452 (1986); City of Oklahoma City v. Tuttle, 471 U.S. 808, 818, 105 S.Ct. 2427, 2433, 85 L.Ed.2d 791 (1985); Monell, 436 U.S. at 694, 98 S.Ct. at 2037. Only in such a case can it be said that the municipality itself is responsible for, and the “moving force [behind] the constitutional violation.” City of Canton v. Harris, 489 U.S. 378, 109 S.Ct. 1197, 1205, 103 L.Ed.2d 412 (1989) (quoting Monell, 436 U.S. at 694, 98 S.Ct. at 2038, Polk County v. Dodson, 454 U.S. 312, 326, 102 S.Ct. 445, 454, 70 L.Ed.2d 509 (1981)). The plaintiff alleges that the County is responsible for the constitutional deprivation here because it failed to adequately train Laura Dennany as to the confidentiality of juvenile pre-sentence reports. The county may be held liable under such a “failure to train” theory only where its policymakers adopted or maintained training practices which they knew or clearly should have known were inadequate with respect to the tasks assigned. City of Canton, 109 S.Ct. at 1205-06. It is therefore not enough to show mere inadequacy. The need for more or different training must have been “so obvious, and the inadequacy so likely to result in the violation of constitutional rights, that the ... [County] can reasonably be said to have been deliberately indifferent to the need.” Id. at 1206. See also id. at n. 10. Under such circumstances, the failure to provide proper training amounts to an actionable municipal “policy” or “custom” for which the County is responsible, and for which it may be held liable if it causes injury. Id. at 1206.

3580298-3979

DECISION MILLER, Judge: Tried by general court-martial, consisting of military judge alone, the accused was convicted, pursuant to his pleas, of three acts of sodomy, two acts of taking improper and indecent liberties, and six acts of lewd and lascivious conduct in violation of Articles 125 and 134, Uniform Code of Military Justice, (UCMJ), 10 U.S.C. §§ 925,934. The victims were five boys, ranging in age from 12 to 16 years. The approved sentence extends to a dishonorable discharge, confinement at hard labor for 18 years, forfeitures of $300.00 per month for two years, and reduction to airman basic. The sole assertion of error on appeal is that the court-martial lacked jurisdiction to try four of the specifications because they occurred outside the limits of the military installation. The accused, a staff sergeant, assigned to and living on Nellis Air Force Base, was also a member of, and officer in, the Clark County, Nevada, Civil Air Patrol (CAP). This organization is a part of the Civil Air Patrol which is an auxiliary of the United States Air Force. Part of its function is to train its Cadet members, who range in age from 12 through 17, in citizenship, character development, leadership, customs and courtesies of the service, and exercise of command through self-government in the Cadet organization. The accused’s activities with the Civil Air Patrol were not related to his assigned military duties as an “egress technician”, and his activities with the Civil Air Patrol were conducted in a “civilian” rather than a “military” capacity. However, his status as an active duty Air Force member, wearing an Air Force uniform with distinctive Civil Air Patrol lapel insignia while participating in an auxiliary Air Force organization, was viewed by the leadership of that organization and the public as setting forth a role model of Air Force personnel for CAP Cadet members to emulate. All the offenses of which the accused was convicted, both on and off base, shared the following common characteristics. Each of the five victims was a dependent of active duty Air Force personnel, residing on Nellis Air Force Base. The accused’s initial meeting with each victim occurred either on Nellis Air Force Base or at a Civil Air Patrol meeting. The accused’s initial conversations with each of his victims centered around participation in Civil Air Patrol activities. He engaged each victim in discussions concerning homosexuality and a “book” he was purportedly writing on the subject while transporting them in his vehicle between their on-base residences and off-base Civil Air Patrol activities. He employed each of the victims to babysit at his on-base residence, where he showed each of them erotic literature. Each offense was committed following these other activities, either on Nellis Air Force Base, or while the accused was transporting the victim between the victim’s on-base residence and purported Civil Air Patrol activity off base. Based upon these facts, we make the following findings, with regard to the four off-base offenses: (a) that the accused used his status as an active duty Air Force member in a scheme to prey upon Civil Air Patrol Cadet victims; (b) that he used his on-base housing and erotic materials contained therein, in this same scheme; (c) that he used his Air Force status, and re sultant access to base, to victimize Air Force dependents whom he picked up in his car at their on-base residences; and (d) that, by such conduct, he violated the personal security of Air Force families residing on an air force base, and disgraced the public image of both the United States Air Force and its auxiliary Civil Air Patrol. We believe the military’s interest in prosecuting the off-base portion of the charged offenses far exceeds that of the adjacent community wherein the offenses were committed. Accordingly, the approved findings of guilty and the sentence are AFFIRMED. ARROWOOD, Senior Judge, and MAHO-NEY, Judge, concur.

4045059-20564

MEMORANDUM DECISION RE “SECURITIES” TASHIMA, District Judge. BACKGROUND In January 1989, the Court heard and ruled on numerous motions for summary judgment in these multidistrict cases. Included in those motions were motions by defendants National Mortgage Equity Corporation (“NMEC”), David A. Feldman, Lord, Bissell & Brook (“LB & B”), Leslie Michael, Wells Fargo Bank, William Van Zile and The Lomas & Nettleton Company, successor to Advance Mortgage Company (“Advance”) for summary judgment on plaintiffs’ securities-based claims on the ground, inter alia, that the pooled, mortgage-backed certificates (“Certificates”) at issue in these cases are not “securities” under federal and California state securities laws. Because of the need for a prompt ruling on the motions, the rulings were made without providing an explanation of the basis therefor. The purpose of this Memorandum Decision is to set forth the basis of the Court’s ruling that the Certificates are not “securities.” Earlier in this litigation the Court declined to decide this issue on Rule 12(b)(6) motions to dismiss, noting that, given the complexities of these cases, the issue could not be decided at the pleading stage, but required development of a factual record. In re National Mortgage Equity Corp. Mortgage Pool Certificates Sec. Litig., 636 F.Supp. 1138, 1163-64 (C.D.Cal.1986) (“NMEC I”). That record has now been extensively developed on these motions for summary judgment. “The principal purpose of the securities act is to protect investors by promoting full disclosure of information necessary to informed investment decisions____ We must focus on the economic realities of this particular transaction to determine whether these investors are in need of the protections of the securities act.” Matek v. Murat, 862 F.2d 720, 728 (9th Cir.1988). De spite plaintiffs’ professed belief that the Certificates were securities, the economic reality of the sale and servicing of the Certificates leads to a contrary conclusion: the Certificates are not securities. THE UNCONTROVERTED FACTS The Certificates were marketed by NMEC through its own employees and through the use of brokers. All sales were made on a private placement basis. Two brokers, MEBAC and MorVest, handled the vast majority of the sales as co-brokers. Once MEBAC received information about available Certificates from NMEC, it relayed that information to MorVest. MorVest then contacted financial institutions through a variety of means, and sent out form offering letters. The brokers solicited at least eighty-five savings and loan associations and savings banks between 1981 and 1984. If a prospective purchaser expressed interest, NMEC or the broker transmitted additional information. Next, either Feldman or another NMEC employee negotiated with the potential investor about the terms of the mortgage pool. If negotiations proved successful, the parties then signed a commitment letter. All of the letters outlined the same basic transaction: the Investor Institution obligated itself to purchase a pool of second mortgages, collateralized by residential properties, yielding a standard pass-through rate. Despite the standard structure of the transaction (and unlike other mortgage-backed instruments, such as Ginnie Maes), the commitment letters included a number of negotiable terms. For example, the letters listed the origination standards that NMEC had to employ when “underwriting” the individual loans prior to accepting them for a mortgage pool. The purchasing institutions could, and did, negotiate changes to those standards. Similarly, various Investor Institutions negotiated for the right to: approve replacements for mortgages paid off in the pools’ first four years, replace the financial guarantee bonds if the insurer proved unacceptable, extend the loans for six months beyond the five-year call period, and receive a guaranteed rate of return during the escrow period. After signing the commitment letters, the Investor Institutions funded the escrow accounts, while NMEC purchased mortgages for the pools. NMEC never had direct access to the funds and could only order disbursement by the escrow agent to the title companies. During the funding process, a number of the Investor Institutions rejected loans that NMEC chose, obligating NMEC to replace those loans. Once the loans were purchased and the necessary documents assembled in the escrow account, NMEC issued a Certificate representing ownership of the pool at a formal closing. Each Certificate represented that the holder was the registered owner of a “200/200th fractional undivided interest in a trust which includes as its principal asset a pool (the ‘Pool’) of conventional single-family mortgage loans.... ” The trust fund also included any other assets credited to the Certificate account including property acquired by foreclosure and insurance proceeds. Although NMEC contemplated selling fractional interests in the pools, all the Investor Institutions owned a 100 percent undivided interest in their respective pools. At the closing, the Investor Institutions also signed Pooling and Servicing Agreements (“PSA”) that detailed the rights and obligations of NMEC, the servicer (Advance or NMEC), the trustee (Wells Fargo or Bank of America), and the Investor Institutions. The PSA granted the Certifi cate holder broad access to information about the underlying loans, the right to remove the trustee, and the power to amend the PSA. For a specified period after each PSA was signed, NMEC had to fix any defective documents and cure all breaches of the representations and warranties. If NMEC could not solve a problem, it had to repurchase the loans. The PSA also contemplated that NMEC would act as a general administrator, overseeing the servicer and trustee. NMEC agreed to make advances to the Certificate holders if any mortgage payments were delinquent, but these payments were entirely voluntary and made at NMEC’s sole discretion. Attachments to the PSA provided the Investor Institution with a record of the addresses of the mortgaged properties in the pool, the names of the mortgagors, the adjusted principal balance of each loan, the interest rate and scheduled monthly payments of principal and interest, and the maturity date of the mortgage note. An exhibit restating the origination standards listed in the commitment letters, and additional “credit underwriting” standards was also attached. DISCUSSION In order for the Certificates to constitute “investment contracts” under the Court’s test in SEC v. Howey, 328 U.S. 293, 66 S.Ct. 1100, 90 L.Ed. 1244 (1945), the transaction must involve “[1] an investment of money [2] in a common enterprise [3] with profits to come solely from the efforts of others.” Id. at 301, 66 S.Ct. at 1104. Furthermore, “[t]he nature of the instrument is to be determined at the time of issuance, not at some subsequent time.” Danner v. Himmelfarb, 858 F.2d 515, 520 (9th Cir. 1988), quoting Great W. Bank & Trust v. Kotz, 532 F.2d 1252, 1255 (9th Cir.1976). A. Investment of Money The Ninth Circuit has formulated a “risk capital” test to aid in analyzing the investment prong in Howey. Great W. Bank & Trust v. Kotz, 532 F.2d at 1256—58. “To determine whether the transaction under review involves an ‘investment’ in return for ‘securities’ within the meaning of the securities laws, we analyze the nature and degree of risk accompanying the transaction to the party providing the funds.” Id. at 1256. When distinguishing between a “risky loan” and “risk capital,” a court must look beyond the label given to the instrument to the underlying economic reality of the transaction. Tcherepnin v. Knight, 389 U.S. 332, 336, 88 S.Ct. 548, 553, 19 L.Ed.2d 564 (1967). Further, in making that determination, the Ninth Circuit examines six non-exclusive factors: 1) the time the money is at risk; 2) the existence of collateral; 3) the form of the obligation; 4) the circumstances of issuance; 5) the relationship between the amount borrowed and the size of the borrower’s business; and 6) the contemplated use of the proceeds. No one of these factors is necessarily dispositive. If some of the factors point towards the Certificates being a security, this Court can evaluate the other factors to determine whether the Investor Institutions took steps to protect themselves from any risk which may have been created. Amfac Mortgage Corp. v. Arizona Mall of Tempe, Inc., 583 F.2d 426, 432 (9th Cir.1978). In general, the longer someone controls another person’s money, the greater the risk of loss becomes. Kotz, 532 F.2d at 1257. Case law does not provide a bright line rule of how much time is necessary to transform a loan into a security. Compare, e.g., Underhill v. Royal, 769 F.2d 1426 (9th Cir.1985) (callable notes having maturities of one to three years held to be securities); with Deauville Sav. & Loan Assn. v. Westwood Sav. & Loan, 648 F.Supp. 513, 517 (C.D.Cal.1986) (loan and participation interest with ten-year term held not a security because variety of circumstances could lead to shorter term). However, the length of the investment pe riod has significance) only to the extent that the investor’s money is “unsecured” during that time. Amfac, 583 F.2d at 432-33. In Amfac, the court decided that only a portion of the lender’s money was actually at risk for the entire twenty-four month period of the loan because the investment depended upon the progress of construction and the assurances of lease commitments. The lender had exclusive control to cease loan disbursements for a variety of reasons. Moreover, in the event of default, the lender could accelerate under the agreement and demand immediate payment of principal and interest. In light of these factors, the court concluded that the lender’s money was not at risk for any substantial length of time. Id. at 433. Plaintiffs argue that their funds were at risk for at least five years because although they could call the loans in five years, they could not accelerate payment in the event of default. If, however, the risk is analyzed in light of the collateral and insurance which secured the Certificates, plaintiffs’ money should never have been at risk. The funds were either in the possession of the escrow agent or the title companies. Once the mortgages were purchased the funds were fully secured by the underlying properties and backed by guarantees of the originating loan brokers. In addition, the mortgages were bonded by an insurance company for 100% of the principal of the loans. In theory, the Investor Institutions’ money was no more at risk than money lent for traditional mortgages. Plaintiffs raise two arguments in opposition. First, they claim that the collateral underlying the NMEC pools should not be considered because the Investor Institutions could not select or evaluate that collateral. In Underhill, 769 F.2d at 1431, the court found the collateral to be of limited significance because the choice of collateral was restricted to notes secured by trust deeds selected exclusively by the promoter. “Thus, the reliability of the underlying security was left to the skill and business judgment of the [promoters].” Id. The Investor Institutions relied upon NMEC to the extent that NMEC employed the appraisers who determined the value of the collateral. In contrast to the plaintiffs in Underhill, however, the Investor Institutions had the opportunity to negotiate the origination criteria used to select the collateral. Moreover, the purchasers knew the identity of the collateral property and could review the loan documents in the Trustee’s possession. Second, plaintiffs argue that the Certificates’ collateral must be discounted because that collateral was either non-existent or inadequate from the inception. A comparison of NMEC’s appraisals of the properties with later appraisals done by independent appraisers retained by plaintiffs lends credence to this contention. Despite this evidence of fraud, however, the Certificates still must be evaluated as they were originally conceived. When they made the investment, the Investor Institutions believed the Certificates were backed by collateral and insurance. The “circumstances of issuance” also cut against a finding that the Certificates are securities. By its numbers alone, NMEC’s targeted solicitation of financial institutions did not rise to the level of other large offerings where courts found the investments to be securities. See Underhill, 769 F.2d at 1429 (program advertised by radio, newspapers and brochures); United States v. Farris, 614 F.2d 634, 641 (9th Cir.1979) (large offering to many unsophisticated purchasers including widows, widowers, and the elderly), cert. denied, 447 U.S. 926, 100 S.Ct. 3022, 65 L.Ed.2d 1120 (1980); Los Angeles Trust Deed & Mortgage Exch. v. SEC, 285 F.2d 162, 168 (9th Cir.1960) (brochure and newspaper solicitation resulted in sales to over 9,000 members of general public), cert. denied, 366 U.S. 919, 81 S.Ct. 1095, 6 L.Ed.2d 241 (1961). More important than the numbers of investors involved is the actual nature of the transaction. Unlike uninformed investors swept into an offering made to the general public, the Investor Institutions had full access to all the information they needed to make informed decisions. Plaintiffs concede that a number of the purchasers reviewed mortgage and loan files and inspected collateral properties; the fact that not every purchaser took advantage of the right to receive information does not transform those purchasers into “passive investors.” Likewise, the Investor Institutions were able to negotiate their purchases to suit their needs. A transaction does not involve a security when “negotiated one-on-one by the parties.” Marine Bank v. Weaver, 455 U.S. 551, 560, 102 S.Ct. 1220, 1225, 71 L.Ed.2d 409 (1981). See also Mace Neufeld Prods., Inc. v. Orion, 860 F.2d 944, 947 (9th Cir.1988) (“... ordinary, individually negotiated private commercial loan transactions” do not involve the purchase or sale of securities). Turning to the other three Kotz factors, the “contemplated use of funds” also suggests that the Investor Institutions were making a risky loan rather than “investing risk capital.” The funds went towards the purchase of loans rather than an investment in NMEC as a business venture. Any profit NMEC received was as a broker rather than as a manager. Second, the “relationship of amount borrowed to the size of the borrower’s business” factor provides little insight because NMEC was not the borrower — it merely channeled the funds to the mortgagors. The last Kotz factor, the “form of obligation” does provide some support to plaintiffs’ position because the majority of the documents used to effectuate the transaction labelled the Certificates as “securities.” Although the form of the obligation is not controlling, it could “lead a purchaser justifiably to assume that the federal securities laws apply.” United Housing Found., Inc. v. Forman, 421 U.S. 837, 850, 95 S.Ct. 2051, 2059-60, 44 L.Ed.2d 621 (1974). Thus, some investors may have been lulled into believing they were purchasing a security. The mortgage pools, however, frequently were referred to as something other than securities. Moreover, many of the references to “securities” were made by laymen. LB & B insists it referred to the Certificates as securities in order to be prudent; this action cannot transform a loan into a security. See Equitable Life Assurance Soc’y v. Arthur Andersen & Co., 655 F.Supp. 1225, 1244 (S.D.N.Y.1987) (inclusion of legend that instruments “have been offered solely for investment and not for resale” did not mean instrument was a security). Although the Investor Institutions may have believed they were purchasing a security, their access to information and control over negotiations was too great for this belief to require the protection of the securities law. The Investor Institutions purchase of the Certificates did not constitute an investment of money as required by the test in Howey. Because that prong of the Howey test has not been satisfied, the Court need not look any further. Analysis of the other two prongs, however, further confirms why the Certificates cannot be considered securities. B. Common Enterprise The second prong of the Howey test requires a “common enterprise” among the participants of the transaction. 328 U.S. at 301, 66 S.Ct. at 1104. A common enterprise is a venture “in which the fortunes of the investor are interwoven with and dependent upon the efforts and success of those seeking the investment of third parties.” It is not necessary that the funds of investors are pooled; what must be shown is that the fortunes of the investors are linked with those of the promoters, thereby establishing the requisite element of vertical commonality. Thus, a common enterprise exists if a direct correlation has been established between success or failure of [defendants’] efforts and success or failure of the investment. SECv. Goldfield Deep Mines Co., 758 F.2d at 463 (citations omitted). The court in Goldfield found a direct correlation between the defendants’ potential failure and the investors’ losses because both were dependent upon the success of the defendants’ unique ore processing technique. In contrast, the success of the Investor Institutions’ investment depended solely upon whether the borrowers on the underlying mortgages met their obligations to repay the loans. The success or failure of NMEC, and the success or failure of any particular mortgage pool, had no connection. In fact, a number of key officers at the Investor Institutions conceded that if NMEC went bankrupt, the mortgage pools would not lose value. Conversely, NMEC could prosper while the value of the properties in an individual pool declined or was destroyed by adverse developments, such a fluctuations in the real estate market. See Brodt v. Bache & Co., 595 F.2d 459, 461 (9th Cir.1978) (success or failure of the brokerage house did not correlate with the individual investor's profit or loss). Thus, the present case can be distinguished from United States v. Carman, 577 F.2d 556 (9th Cir.1978). In Carman, the court held that the sale of federally insured student loan packages by a trade school to a credit union involved a common enterprise. Although the loans were guaranteed by the federal government and carried a fixed return, a risk of loss existed because the package included a repurchase clause and a guarantee that the school would cover any refund liability accruing from students who did not complete the programs. Because the investors faced a substantial risk of loss if the trade school failed, they were engaged in a common enterprise with the school. In contrast, NMEC’s repurchase clause covered a limited time period, and applied only in specified situations. Moreover, NMEC never guaranteed that it would advance funds on delinquent loans, but only made non-enforceable promises. C. Entrepreneurial Efforts of Others The third prong of the Howey test requires that the investment in a common venture be “premised on a reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others.” Forman, 421 U.S. at 852, 95 S.Ct. at 2060. The Ninth Circuit has interpreted “entrepreneurial efforts” to mean “whether the efforts made by those other than the investor are the undeniably significant ones, those essential managerial efforts which affect the failure or success of the enterprise.” SEC v. Glenn W. Turner Enter., Inc., 474 F.2d 476 (9th Cir.), cert. denied, 414 U.S. 821, 94 S.Ct. 117, 38 L.Ed.2d 53 (1973). Thus, the investor might be involved to some degree in the managing of his investment, but if the manager or promoter’s efforts are those which make or break the investment, then the interest may be considered a security. Matek, 862 F.2d at 725. Plaintiffs claim they relied on NMEC’s (and Feldman’s) skill prior to the closing to choose the loans because the origination standards granted NMEC some discretion as to which loans to select. Thus, their expectation of return depended upon NMEC’s ability to choose “good” loans, i.e., loans that would not go into default, and backed by adequate collateral. Plaintiffs’ argument carries little weight, however, because they negotiated those origination standards and had the right to reject any loans that did not conform to those standards. These rights of control and discretion cannot be equated with reliance upon another’s skill.

1579586-13085

MEMORANDUM AND ORDER ATLAS, District Judge. Plaintiff Carlos Cartegena has moved for remand of this action pursuant to 28 U.S.C. § 1447(c). Defendant Continental Airlines, Incorporated opposes, arguing that the Federal Aviation Act of 1958 implicitly preempts Plaintiffs claims. BACKGROUND FACTS Plaintiff was a passenger aboard Continental Flight No. 267, a direct flight from Newark, New Jersey to San Juan, Puerto Rico, on June 25, 1995. While the aircraft was enroute to Puerto Rico, the flight encountered severe weather conditions allegedly causing 23 of its 257 passengers to sustain a multitude of injuries. Plaintiff claims he sustained serious injuries during this flight. Specifically, Plaintiff claims he was rendered unconscious and suffered debilitating injuries to his head, neck and spine, such as herniated discs at C4-C5 and C5-C6, as well as spinal cord compression, allegedly resulting in neck pain, numbness and frequent headaches. Defendant owns and operates the aircraft on which Plaintiff traveled on June 25, 1995. Plaintiffs pertinent allegations are as follows: At all pertinent times, Defendant, as a common carrier, was under a continuous duty to provide a high degree of care for the safety of all its passengers. The following acts and omissions of Defendant constitute a breach of their duty in the following manners: 1. failure to exercise due care in the maintaining a safe flight path so as to avoid dangerous weather conditions; 2. failure to exercise due care in requiring and supervising the passengers to wear seat belts; 3. failure to properly control the aircraft in a safe manner; 4. failure to exercise due care in observing and supervising the passengers on board the flight; 5. failure to recognize that Plaintiff was seriously injured and provide proper medical attention and assistance upon disembarking from the aircraft. As a direct and proximate result of the negligent acts stated in items 1-4 above, Plaintiff was catapulted from his seat causing Plaintiffs head to strike the luggage compartment directly above his seat. As a direct and proximate result of the blow to his head, Plaintiff was injured. Plaintiffs injuries were aggravated by the negligent acts stated in item 5 above. All acts stated above constitute a conscious disregard for Plaintiffs safety. Plaintiff filed this lawsuit against Defendant in the 190th District Court of Harris County, Texas, as Case No. 97-32964. On July 25,1997, Defendant timely filed a Notice of Removal pursuant to 28 U.S.C. § 1446(d), arguing that diversity jurisdiction under 28 U.S.C. § 1332(a)(1) supported jurisdiction. Defendant, citing City of Burbank v. Lockheed Air Terminal, Inc., 411 U.S. 624, 93 S.Ct. 1854, 36 L.Ed.2d 547 (1973), also argued that the Federal Aviation Act of 1958 (“FAA”), as amended in 1978 (Airline Deregulation Act (“ADA”)), implicitly preempts state law claims governing flight operations and air safety. 49 U.S.C. § 1301 et seq., amended as 49 App. U.S.C. § 1301 et seq., and later repealed by Pub.L. 103-272, § 7(b), July 5,1994,108 Stat. 1379. Although not referenced by the parties, the ADA was again amended in 1994 by the Federal Aviation Administration Authorization Act of 1994 (“FAAAA”), and codified as 49 U.S.C. § 40101 et seq. Pub.L. 103-272, § 1(e), July 5, 1994, 108 Stat. 1143, and amended again Pub.L. 103-305, Title VI, § 601(b)(1), (2)(A), Aug. 23, 1994, 108 Stat. 1605,1606. Plaintiff has filed his motion and brief in support thereof seeking remand under 28 U.S.C. § 1447(c). Plaintiff argues that (i) diversity jurisdiction does not support removal because Defendant is a resident of this federal court’s forum state, and (ii) the “Federal Aviation Act of 1958” does not preempt Plaintiffs tort cause of action. The Court agrees with Plaintiffs arguments, although the applicable statutes are different from the ones cited by the parties. DISCUSSION I. Diversity Jurisdiction. It is clear that there is diversity of citizenship between the parties, since Plaintiff is a citizen of New Jersey and, according to Defendant’s Notice of Removal, Defendant is a citizen of Texas. See Doc. # 1. However, “even if complete diversity does exist, the case may not be removed from state to federal court if any defendant is a citizen of the state in which the action is brought.” Getty Oil Corp. v. Insurance Co. of North America, 841 F.2d 1254, 1258 (5th Cir.1988); Riebe v. Nat'l Loan Investors, L.P., 828 F.Supp. 453, 455 (N.D.Tex.1993); Dollar v. General Motors Corp., 814 F.Supp. 538, 543 (E.D.Tex.1993). Since Defendant is a citizen of Texas, the state in which this Court sits, Defen dant may not base removal jurisdiction on the diversity of citizenship of the parties. Therefore, there is no diversity jurisdiction in this case. II. Preemption. Defendant argues that “Plaintiffs claims relate to airline operations, flight safety, and standards of care. For these reasons, ... Plaintiffs claims are implicitly preempted by federal law and thus, fit the exception to the general rule. Therefore, this Court has jurisdiction of this cause pursuant to- 28 U.S.C. § 1441(b) .” Defendant’s Response and Brief in Opposition to Plaintiffs Motion to Remand, at 2; id. at 9. Defendant has failed to correctly interpret the applicable authorities. General Removal Principles.— The Fifth Circuit in Sam L. Majors Jewelers v. ABX, Inc. recently set forth concisely the salient principles on removal jurisdiction in eases involving the statutes regulating airlines that Defendant contends are involved in this case. Generally, [fjederal jurisdiction exists when a federal question is presented on the face of a plaintiffs properly pleaded complaint. Id. at 392,107 S.Ct. at 2429. The existence of a defense based upon federal law is insufficient to support jurisdiction. Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 8-12, 103 S.Ct. 2841, 2845-47, 77 L.Ed.2d 420. Sam L. Majors Jewelers v. ABX Inc., 117 F.3d 922, 924 (5th Cir.1997) (holding no preemption in cases claiming losses of property shipped on airlines, but holding that the federal common law supported federal court jurisdiction). The Court of Appeals went on to explain, however, that: There are three theories that might support federal question jurisdiction in a case such as this one. First, jurisdiction may be found when the complaint raises art express or implied cause of action that exists under a federal statute. Second, jurisdiction will lie if an area of law is completely preempted by the federal regulatory regime. Finally, if the cause of action arises under federal common law principles, jurisdiction may be asserted. 5}s ‡ * ij* iji ' 5*5 Although a preemption defense will not support jurisdiction, in exceptional circumstances courts may find that a federal regulatory regime is so extensive and comprehensive that it is possible to .infer that' Congress intended any related cause of action to be governed under federal law. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64, 107 S.Ct. 1542, 1546-47, 95 L.Ed.2d 55 (1987); Aaron v. National Union Fire Ins. Co. of Pittsburg, 876 F.2d 1157 (5th Cir.1989) (discussing at length the complete preemption doctrine). This “complete preemption” occurs only when Congress intends not merely to preempt a certain amount of state law, but also intends to transfer jurisdiction of the subject matter from state to federal courts. See Metropolitan Life, 481 U.S. at 65-66, 107 S.Ct. at 1547-48. Unless Congress clearly manifests an intention to transfer jurisdiction to federal courts, there is no basis for invoking federal judicial power. See Malone v. White Motor Corp., 435 U.S. 497, 504, 98 S.Ct. 1185, 1189-90, 55 L.Ed.2d 443 (1978); Stamps v. Collagen Corp., 984 F.2d 1416, 1420 (5th Cir.), cert. denied, 510 U.S. 824, 114 S.Ct. 86, 126 L.Ed.2d 54 (1993). ABX, Inc., 117 F.3d at 924-25. Federal Aviation Administration Authorization Act.— Defendant argues that the case before the Court relates to “flight operations” and that therefore the claims are preempted. This argument is patently incorrect. See Hodges v. Delta Airlines, Inc., 44 F.3d 334, 335-36 (5th Cir.1995) (en banc). The issue before the Court is whether Plaintiffs claims in tort involve questions about the “operation” or “maintenance” of the aircraft, in which case there is no preemption, or the claims relate to “rates, routes or services” of Defendant, in which event, the claims are preempted. The Court holds that it lacks subject matter jurisdiction following the reasoning set forth in Hodges, 44 F.3d at 336-39, interpreting the FAA, the predecessor to the current airline regulatory laws, the FAAAA, and concluding that plaintiff Hodges’ claims involved the operation and maintenance of the aircraft. In Hodges v. Delta Airlines, Inc., Judge Edith Jones, speaking for the Fifth Circuit en banc squarely held that under § 1305(a)(1) of the Airline Deregulation Act of 1978, 44 F.3d 334, 335 (5th Cir.1995) (en banc), the breadth of the express preemption of state law embodied in § 1305(a)(1), which preempts the states from enforcing any law relating to rates, routes or services of any carrier, does not reach claims for personal injury occurring during flights on airplanes. Thus, the Hodges Court held that federal preemption of state laws by the FAA provision “related to services” of an air carrier does not displace state tort actions for personal physical injuries or property damage caused by the operation and maintenance of aircraft. Hodges, 44 F.3d at 336. In 1994, Congress amended the ADA and enacted a new preemption provision codified at 49 U.S.C. § 41713, which provides in pertinent part: (b) Preemption.— (1) Except as provided in this subsection, a State, political subdivision of a State, or political authority of at least 2 States may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route or service of an air carrier that may provided air transportation under this subpart. This provision is the same as in the ADA, 49 App. U.S.C. § 1305(a)(1). When claims relate to “rates, routes or services,” the claims are preempted. 49 U.S.C. § 41713, formerly 49 App. U.S.C. § 1305(a)(1); Morales v. Trans World Airlines, Inc., 504 U.S. 374, 383, 112 S.Ct. 2031, 2036-37, 119 L.Ed.2d 157 (1992); Hodges, 44 F.3d at 336. Under the FAAAA, just as under the ADA, however, if the claim relates to “operation” or “maintenance” of the aircraft, then there is no preemption. 49 U.S.C. § 41112, formerly 49 App. U.S.C. § 137l(q); Hodges, 44 F.3d at 335-36. See Cipollone v. Liggett Group, Inc., 505 U.S. 504, 518, 112 S.Ct. 2608, 2618, 120 L.Ed.2d 407 (1992) (applying “presumption against the preemption of state police powers”). A review of the statutory language reveals that the terms “routes” or “services” could not have meant the same as “operation” or “maintenance” of an aircraft, since the latter two terms are used in the statute for purposes distinct from the former. Section 41112(a), and its predecessor § 1371(q)(l), required each air carrier to maintain insurance to cover “amounts for which ... such air earner may become hable for bodily injuries to or the death of any person, or for loss or damage to properties of others, resulting from the operation or maintenance of aircraft.” 49 U.S.C. § 41112(a), replacing 49 U.S.C.App. § 1371(q)(l) (emphasis added). Therefore, the terms “routes” or “services” in § 41713 (former § 1305(a)(1)) cannot include operation or maintenance of an aircraft and still give meaning to § 41112, former § 1371(q)(l). Therefore, whether Defendant’s argument that Plaintiffs claims related to “flight operation” is taken literally, or its argument is construed to mean that Plaintiffs claims relate to “routes or service” of the aircraft, Defendant’s contentions are without merit. The Court concludes that the claims asserted by Plaintiff relate to the operation of Defendant’s aircraft, and not to the routes or service of the plane, and therefore, there is no federal question jurisdiction over Plaintiffs personal injury claims occurring during flight on Defendant’s aircraft Defendant’s removal was improper. Attorneys’ Fees.— The Court declines to award Plaintiff his attorneys’ fees. While Defendant had no basis for the removal of this case, Plaintiff failed to cite the Court to the applicable statutes or cases. No fees shall be recovered by either party in connection with the removal and remand of this action. CONCLUSION This Court lacks subject matter jurisdiction over this removed action and the case must be remanded. It is therefore ORDERED that Plaintiffs Motion to Remand is GRANTED. This ease is remanded to the 190th District Court of Harris County, Texas. It is further ORDERED that Plaintiffs Request for Attorneys’ Fees is DENIED. . The removal statutes provide that any other such action shall be removable only if none of the parties in interest properly joined and served as defendants is a citizen of the state in which such action is brought. 28 U.S.C. § 1441(b).

4171627-12385

ROGERS, Circuit Judge. Joseph and Barbara Starkey appeal the district court’s dismissal of several state law claims that they brought against JPMorgan Chase. This dispute arises out of a 2012 letter the Starkeys received from Chase concerning the National Mortgage Settlement. The letter said that Chase was releasing the Starkeys’ mortgage loan associated with an account number ending with x2307 as a part of the settlement. That account number referred to an old mortgage that the Starkeys allege had been discharged in bankruptcy. But the Starkeys also had a new mortgage loan with Chase associated with an account number ending in x5S99. The Starkeys believed that the letter must have referred to the newer loan. They called Chase, and a representative allegedly confirmed that Chase was discharging their new loan. The Starkeys stopped paying their mortgage, but soon began receiving delinquency notices. In response, the Starkeys filed this lawsuit alleging common law fraud, conversion, and unjust enrichment, as well as federal statutory claims no longer pursued on appeal. However, the Starkeys’ fraud claim is implausible, and their conversion and unjust enrichment claims are time-barred. Furthermore, the district court did not err in dismissing the Starkey’s complaint with prejudice. The Starkeys bought property in Cincinnati in 1999. To pay for their new home, the Starkeys executed a note and mortgage in favor of Bank One, N.A. The Star-keys entered bankruptcy in September 2001. The Starkeys’ bankruptcy lawyer learned that Bank One had failed to record the mortgage, and so Bank One was treated like a general, unsecured creditor during the bankruptcy. The trustee paid Bank One approximately $45,000 in bankruptcy disbursements. Following the Starkeys’ discharge in 2004, they executed a new note and mortgage on their property in Cincinnati, this time with Integrity Funding Corporation. Integrity recorded the mortgage, and eventually transferred it to Chase Manhattan Mortgage, a predecessor to JPMorgan Chase. The Starkeys filed a second bankruptcy in 2007, but that proceeding had no effect on their 2004 mortgage obligation. Meanwhile, Chase purchased and merged with Bank One. On September 12, 2012, the Starkeys received a letter from Chase. In the letter, Chase explained that, as a part of the National Mortgage Settlement, Chase was cancelling a loan the Starkeys had with the bank. The letter further explained that the release applied to the loan associated with an account number ending in x2037. The Starkeys believed that the letter referred to the 2004 mortgage, although exactly why they held that belief is unclear. According to their Reply Brief, due to the 2001 bankruptcy, the Starkeys “were unclear which mortgage loan” Chase meant to release in the September 2012 letter. The Starkeys called Chase for clarification. The complaint says: Upon information and belief, Plaintiffs via only telephonic communications with [Chase] customer service, were told their [2004] mortgage obligation ... had been released. Based on this Informa tion, Plaintiffs did cease to make mortgage payments to Chase. In early 2013, Chase began sending delinquency notices to the Starkeys. These notices referred to a mortgage loan associated with an account number ending in x5399. Confused, the Starkeys contacted the Ohio Attorney General and the Consumer Financial Protection Bureau. In response to those inquiries, Chase explained that it had “released the mortgage recorded in 1999,” “asserted [its] rights to continue to collect on the 2004 mortgage,” and sent the Starkeys an account history for the 1999 mortgage, which was apparently associated with the account number ending in x2037. The Starkeys sued Chase in federal district court in September 2013. The complaint included two federal claims— violations of the Real Estate Settlement Procedures Act and the Home Affordable Modification Program — and four state-law claims — common law fraud, conversion, unjust enrichment, and an action to quiet title. Chase filed a motion to dismiss that the district court granted. The district court dismissed the fraud claim because the Starkeys failed to allege plausibly that Chase acted knowingly or recklessly and because they failed to make a plausible allegation of detrimental reliance on any false statement made by Chase. The district court held that conversion and unjust enrichment claims, which involve payments that Bank One allegedly collected after the 1999 mortgage was discharged in bankruptcy, were time-barred. The Starkeys appeal the dismissal of only these three claims, and also argue that the district court abused its discretion by dismissing their complaint with prejudice. The Starkeys’ complaint fails to allege a plausible fraud claim. “The elements of fraud under Ohio law are: ‘(a) a representation or, where there is a duty to disclose, concealment of a fact, (b) which is material to the transaction at hand, (c) made falsely, with knowledge of its falsity, or with such utter disregard and recklessness as to whether it is true or false that knowledge may be inferred, (d) with the intent of misleading another into relying upon it, (e) justifiable reliance upon the representation or concealment, and (f) a resulting injury proximately caused by the reliance.’ ” Lee v. Countrywide Home Loans, Inc., 692 F.3d 442, 449 (6th Cir.2012) (quoting Gaines v. Preterm-Cleveland, Inc., 33 Ohio St.3d 54, 514 N.E.2d 709, 712 (1987)). The Starkeys contend that Chase committed fraud by “misrepresent[ing] that the September 2012 letter pertained to the Starkeys’ 2004 Mortgage Loan.” However, the Starkeys’ theory is implausible. They allege that Chase, seeking to trick them into defaulting on their mortgage, sent the couple a release letter pertaining to their 1999 mortgage. Over the phone, Chase representatives misled the Starkeys into believing the letter concerned their 2004 mortgage. The Starkeys fell for the ruse and stopped paying their mortgage. Putting aside the improbability of this theory, the allegations describing the alleged phone call are inadequate. The paragraph of the complaint addressing the phone call with Chase representatives says: “Upon information and belief, Plaintiffs via only telephonic communications with customer service, were told their [2004] mortgage obligation ... had been released.” It is true that pleading on information and belief may be permissible in certain circumstances. For example, sometimes a plaintiff may lack personal knowledge of a fact, but have “sufficient data to justify interposing an allegation on the subject” or be required to “rely on information furnished by others.” Wright & Miller, 5 Fed. Prac. & Proc. Civ. § 1224 (3d ed.2012). “However, pleading on information and belief is not an appropriate form of pleading if the matter is within the personal knowledge of the pleader.” Id. Because one of the Starkeys was on the other end of line when he or she spoke with Chase representatives, the Starkeys must have had personal knowledge of whether Chase said the September 2012 letter pertained to the 2004 mortgage or not. Pleading this allegation on information and belief was improper under these circumstances. Absent the deficient allegations regarding the phone call, all of the facts in the complaint indicate that the September 2012 Letter concerned the 1999 mortgage. The September 2012 letter referred to a loan associated with an account number ending in x2037. Nothing in the complaint suggests that this account number is associated with the 2004 mortgage. In fact, the Starkeys themselves appear to recognize that this account number pertains to the 1999 mortgage based on their argument that the September 2012 letter proved that Chase wrongfully tried to collect on the 1999 mortgage after it was discharged. Furthermore, the delinquency notices concerned account number x5399, which was not the number listed in September 2012 letter. And Chase confirmed all of this in letters responding to the Ohio Attorney General and the CFPB. “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. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal quotation marks and citations omitted). The facts of this complaint indicate that the letter pertained to the 1999 mortgage. The only possible misrepresentation occurred during the phone call, but because those allegations were pled on information and belief, it appears that not even the Starkeys are sure whether Chase told them the September 2012 letter pertained to the 2004 mortgage or not. This court cannot reasonably draw an inference that Chase knowingly or reckless made a false statement on these facts. The Starkeys’ conversion and unjust enrichment claims are time-barred. According to their complaint, Bank One, Chase’s predecessor, accepted payments on the 1999 mortgage up until 2005 even though the 2001 bankruptcy discharged that obligation. This court need not address whether that conduct could support a claim for conversion or unjust enrichment because these claims are time-barred. Ohio has a four-year statute of limitations for conversion, O.R.C. § 2305.09, and a six-year period for unjust enrichment claims, O.R.C. § 2305.07. Furthermore, the “discovery rule” applies to the Starkeys’ conversion claim. Toledo Museum of Art v. Ullin, All F.Supp.2d 802, 807 (N.D.Ohio 2006). This means that the statute of limitations began running when the Star-keys knew or should have known that their property was being converted. Hamble-ton, 465 N.E.2d at 1301. The Starkeys’ conversion claim accrued in 2005 at the latest. The Starkeys contend that they “could not have known that Chase Bank should not have been collecting amounts on their 1999 Mortgage until after receipt of the September 2012 Letter.” This argument is implausible considering the fact that the Starkeys elsewhere contend that their 2001 bankruptcy discharged their 1999 mortgage as an unsecured debt. A reasonable person would have inquired into why he was being billed for and paying a debt he no longer owed. Thus the Starkeys’ conversion claim accrued when they began paying Bank One for a debt they believed had been discharged. At the very latest, their claim accrued in 2005, when those payments stopped. Thus the statute of limitations period elapsed in 2009 at the latest. The district court reasoned along these lines, but the Starkeys say the court misapprehended their argument. Rather, “the Complaint is actually alleging that Chase Bank converted the Starkeys’ funds by accepting payments on the 1999 mortgage even though, as revealed in the September 2012 Letter, Chase Bank has no right to payment on the 1999 Mortgage.” Exactly how the district court misconstrued the Starkeys’ argument is unclear. But even if the district court did misread the Starkeys’ arguments, nothing in the letter indicates that Chase acted improperly in the past. The September 2012 letter states in large, bold letters: “We are can-celling the remaining amount you owe Chase!” (emphasis added) The letter further states that, “you will owe nothing more on the loan.” (emphasis added) Both statements clearly imply that the Starkeys would owe Chase nothing else going forward, not that Chase wrongfully collected money in the past. The unjust enrichment claim is also time-barred. The parties and district court assumed that the discovery rule applies to unjust enrichment claims. However, the Ohio courts actually apply a similar but slightly different rule. In Ohio, an unjust enrichment claim does not accrue “until the last point in time that the plaintiff conferred and a defendant unjustly received a benefit.” Desai v. Franklin, 177 Ohio App.3d 679, 895 N.E.2d 875, 885 (2008); see also Med. Mut. of Ohio v. K. Amalia Enters. Inc., 548 F.3d 383, 393 n. 6 (6th Cir.2008). The Starkeys’ unjust enrichment claims would accrue on the date of the last unjust payment, i.e. sometime in 2005. Thus the statute of limitations period ended sometime in 2011, two years before the Starkeys’ suit was filed.

336389-7809

DOBIE, Circuit Judge. This is a civil action to enjoin and set aside orders of the Interstate Commerce Commission, hereinafter referred to as the Commission, which granted White House Sightseeing Corporation, hereinafter referred to as White House, an extension of its certificate of public convenience and necessity. This case is before the three-judge District Court on plaintiffs petition for (a) a temporary restraining order; (b) an interlocutory order of injunction; (c) permanent injunction. White House and other protesting carriers have been permitted to intervene. The complaint, filed only by the Alexandria, Barcroft and Washington Transit Company, hereinafter referred to as A. B. & W., seeks to have the orders of the Commission set aside and annulled on the grounds: I. That plaintiff operates within the territory and over the routes covered by the application of White House before the Commission, and that there is no evidence of record that the interstate service provided by plaintiff between the District of Columbia, on the one hand, and on the other, points and places in Virginia, is inadequate. 2. That the orders of the Commission would authorize White ITouse to “duplicate and blanket existing services and facilities” of the plaintiff, and that “there is no evidence of record to support the conclusions of Division 5 that public convenience and necessity require the additional services of White House in competition with the existing operations of plaintiff * * *.” 3. That “the authorized certificate to be issued to White House will substantially duplicate existing services and facilities of the plaintiff to the irreparable injury and damage to the plaintiff, contrary to the provisions of the Interstate Commerce Act,” and that “the evidence of record shows and, in fact, the proposed operations of White House authorized by the Commission, attacked herein, will endanger and impair the operations of plaintiff * * *,” and that “the findings and conclusions made therein are arbitrary, capricious, and unsupported by the record.” 4. That “such Commission action is also unlawful, void, and arbitrary in that its prescription of authority to White House authorizing special operations consisting of round-trip sightseeing or pleasure tours is meaningless and without definition. Such authority can be construed to authorize directly competitive operations with the plaintiff, contrary to the law and Commission decisions thereunder.” Under Section 205(a) of the Interstate Commerce Act, 49 U.S.C.A. § 305(a), the application of White House was referred to Joint Board No. 68. After a hearing, the Joint Board recommended a denial of the White House application. Division 5 of the Commission, upon exceptions, reversed the Joint Board, made the necessary findings of public convenience and necessity and decided in favor of the White House application. Petitions for reconsideration of the decision of Division 5 by the entire Commission were denied. Under an old certificate, MC-110258, White House was authorized to engage in the transportation over irregular routes of passengers and their baggage, in special operations in roundtrip sightseeing or pleasure tours, beginning and ending at Washington, D. C., and extending to points in Maryland and Virginia within the Washington, D. C. commercial zone as defined in 48 M.C.C. 460, limited, however, to the transportation of not more than six passengers not including the driver thereof, and not including children under 10 years of age wlio do not occupy a separate seat or seats. White House also holds appropriate authority to operate passenger buses in providing intrastate sightseeing service between points in the District of Columbia. In its application for the new certificate (which forms the basis for the suit before us) White House sought authority to operate “as a common carrier of passengers, via irregular routes, between points and places within the commercial zone of Washington, D. C. as defined by the Interstate Commerce Commission, in special and charter sightseeing service, via limousines and buses.” The difference between the authority already held under docket MC-1'10258 and that applied for in MC-110258, Sub-No. 1 is that the Sub 1 application did not restrict the operations to tours originating and terminating in Washington, D. C., and did not restrict the operations to limousines having a capacity of not more than six adult passengers; and permitted the tours to be conducted partially by limousines and partially by buses. In its more important legal aspects, this case is quite similar to the decision of this Court in Norfolk Southern Bus Corp. v. United States, D. C., 96 F.Supp. 756, affirmed per curiam 340 U.S. 802, 71 S.Ct. 68, 95 L.Ed. 590, where this Court (District Judge Bryan dissenting) sustained an order of the Interstate Commerce Commission removing a “closed-door” restriction, thus permitting a motor common carrier of passengers to improve its service to the public by picking up passengers that formerly were passed by. We think it is necessary to add little to what was said in the opinion in that case, for, in the light of that opinion, the instant suit must be dismissed. There is no force in A. B. and W.’s contentions that the Commission failed to make adequate findings or that those findings were not supported by adequate and substantial evidence. The Commission (quite properly, we think) found that public convenience and necessity require the operation for which authority was sought by White House, and that White House was fit, willing and able to perform this service and to conform to the Commission’s re-quirements, rules and regulations. These essential findings were supported by proper subsidiary findings. One of the most important of these was the finding that no competing carrier was performing the precise service which White House proposed to render under the new certificate. No useful purpose would be served by an attempt to review the convincing evidence that clearly supports the findings of the Commission. This evidence is quite elaborately set out and analyzed in the brief of the Commission. Particularly strong was the testimony of Paris, President of White House, which found adequate support in the testimony of witnesses Smith, Ford, Abrams, Elswick, Curry, Stokely, Martin, Mitchell, Burroughs and Thrailkill. A. B. and W. failed signally to offer any convincing evidence that the new service of White House would have the effect of seriously decreasing A. B. and W.’s operating revenue. Pertinent here are ■our observations (with ample citation of authorities) in Norfolk Southern Bus Corp. v. United States, 96 F.Supp. at page 761: “Competition among public carriers may be in the public interest and the carrier first in business has no immunity against future competition. * * * Even though the resulting competition causes a decrease of revenue from one of the carriers, the public convenience and necessity may be served by the issuance of a certificate to a new competitor. * * * “In lifting the restriction here, the Commission was not instituting a new service but was simply permitting an improvement of an existing service.” And see, particularly, the very strong language of Circuit Judge Magruder, in Hall & Sons v. United States, D. C., 88 F.Supp. 596, 602. We find no merit in the contention that the Commission has failed to comply with the provisions of the Administrative Procedure Act. We answered a similar contention in the Norfolk Southern Bus case, 96 F.Supp. at page 760. There is no occasion here for us to add to what was said there. It seems, too, that the question of any alleged violation of the Administrative Procedure Act was not raised by any pleading filed by plaintiff before the Commission.

6052706-19253

OPINION GRIFFIN, Circuit Judge. The Federal Railroad Safety Act (the “FRSA”), which prohibits a railroad carri- . er from retaliating against employees who report work-related injuries and potential safety violations, provides that “[a]n employee may not seek protection under both this section and another provision of law for the same allegedly unlawful act of the railroad carrier.” 49 U.S.C. § 20109(f). This case presents the question whether § 20109(f) precludes a railroad employee from filing an FRSA claim with respect to an adverse employment decision if he has already claimed that the employment decision violated his collective bargaining agreement and has arbitrated that dispute under the provisions of the Railway Labor Act (the “RLA”). We conclude that it does not and therefore deny Norfolk Southern’s petition for review. I. To give context to the parties’ arguments, we begin with the relevant statutory background. In the mid-1920s, Congress realized that labor disputes between railroad employee unions and railroad carriers had the potential to cripple interstate commerce by bringing the railroad industry to a standstill. See Union Pac. R.R. Co. v. Bhd. of Locomotive Eng’rs & Trainmen Gen. Comm. of Adjustment, 558 U.S. 67, 72, 130 S.Ct. 584, 175 L.Ed.2d 428 (2009); Bhd. of Locomotive Eng’rs v. Baltimore & Ohio R.R. Co., 372 U.S. 284, 290, 83 S.Ct. 691, 9 L.Ed.2d 759 (1963). In an attempt to diminish the likelihood of strikes and to “encourage use of the nonjudicial processes of negotiation, mediation and arbitration for the adjustment of labor disputes,” Congress passed the Railway Labor Act in 1926. Bhd. of R.R. Trainmen, Enter. Lodge, No. 27 v. Toledo, P. & W. R.R., 321 U.S. 50, 58, 64 S.Ct. 413, 88 L.Ed. 534 (1944). Under the original version of the RLA, the parties were encouraged — but not required — to submit “minor disputes” (that is, “grievances arising from the application of collective bargaining agreements to particular situations” as opposed to disputes over the formation of collective bargaining agreements) to voluntary arbitration. Union Pac. R.R. Co., 558 U.S. at 72, 130 S.Ct. 584 (citation omitted). But the original version of the RLA was largely ineffectual. Many of the railroads refused to participate in voluntary arbitration, and even arbitrated disputes frequently deadlocked, given that management and labor representatives were equally represented on the arbitration boards. See Union Pac. R.R. Co. v. Price, 360 U.S. 601, 610, 79 S.Ct. 1351, 3 L.Ed.2d 1460 (1959). Dissatisfied with the voluntary nature of arbitration under the RLA, railroad labor organizations urged Congress to amend it by mandating arbitration of “minor disputes” before either the National Railroad Adjustment Board or an otherwise agreed-upon arbitration board, each of which would be composed of equal representatives from management and labor, supple mented by neutral tie-breakers. Id. at 611-12, 79 S.Ct. 1351; see also 45 U.S.C. § 153 Second. As a concession for forcing the railroad carriers into arbitration, railroad employees agreed that “[arbitration] awards on grievances submitted by or on behalf of employees were to be final and binding upon the affected employees. The employees were willing to give up their remedies outside of the statute provided that a workable and binding statutory scheme was established to settle grievances.” Price, 360 U.S. at 613, 79 S.Ct. 1351. In 1934, Congress amended the RLA consistent with the unions’ request, thereby mandating arbitration 'of grievances and “barrfing] the employee’s subsequent resort to the common-law remedy after an adverse determination of his grievance by the Adjustment Board.” Id. at 608-09, 79 S.Ct. 1351. See 45 U.S.C. § 153 First (i); Andrews v. Louisville & Nashville R.R. Co., 406 U.S. 320, 322, 92 S.Ct. 1562, 32 L.Ed.2d 95 (1972). The pertinent provisions of the RLA have remained intact to this day. Thus, a railroad employee may pursue a grievance under his collective bargaining agreement only pursuant to the scheme of arbitration mandated by the RLA, and — except in extremely narrow circumstances — may not seek judicial review of the outcome in any court. Price, 360 U.S. at 617, 79 S.Ct. 1351; see Bhd. of Locomotive Eng’rs & Trainmen v. United Tramp. Union, 700 F.3d 891, 899-902 (6th Cir.2012). At the same time that it was working to achieve nondisruptive resolution of labor disputes, Congress was leveraging its commerce power to address another issue related to the railroad industry: railroad safety. According to contemporary sources, one of the quickest ways to get killed in the late nineteenth century was to start working for a railroad. “In 1888 the odds against a railroad brakeman’s dying a natural death were almost four to one,” and a railroad switchman could be expected to die, on average, after only seven years on the job. Bhd. of R.R. Trainmen v. Virginia ex rel. Va. State Bar, 377 U.S. 1, 3, 84 S.Ct. 1113, 12 L.Ed.2d 89 (1964). In response to the railroads’ substantial human toll, Congress began enacting legislation requiring that the industry comply with improved, minimal safety standards. See, e.g., Wilkerson v. McCarthy, 336 U.S. 53, 68, 69 S.Ct. 413, 93 L.Ed. 497 (1949) (Douglas, J., concurring) (noting purpose of Federal Employers’ Liability Act); Johnson v. S. Pac. Co., 196 U.S. 1, 19, 25 S.Ct. 158, 49 L.Ed. 363 (1904) (noting laws requiring safer methods of railway car coupling); cf. Norfolk & W. Ry. Co. v. Hiles, 516 U.S. 400, 406, 116 S.Ct. 890, 134 L.Ed.2d 34 (1996); Ries v. Nat’l R.R. Passenger Corp., 960 F.2d 1156, 1158 (3d Cir. 1992). Congress continued in this vein when it enacted the Federal Railroad Safety Act in 1970, a statutory scheme intended to “promote safety in every area of railroad operations and reduce railroad-related accidents and incidents.” Norfolk S. Ry. Co. v. Shanklin, 529 U.S. 344, 347, 120 S.Ct. 1467, 146 L.Ed.2d 374 (2000) (quoting 49 U.S.C. § 20101). Although. the original version of the FRSA did not prohibit railroad carriers from retaliating against employees who alerted authorities about a violation of federal safety regulations, Congress amended the Act in 1980 to include an anti-retaliation provision. See Federal Railroad Safety Authorization Act of 1980, Pub.L. 96-423, § 10, 94 Stat. 1811 (1980); Rayner v. Smirl, 873 F.2d 60, 63 (4th Cir.1989). But the anti-retaliation provision came with a catch: it contained an election-of-remedies provision that required an employee seeking protection “under any other provision of law in connection with the same allegedly unlawful act of an employer” to choose “either to seek relief pursuant to this section [i.e., the FRSA] or pursuant to such other provision of law.” Pub.L. 96-423, § 10, sec. 212(d). According to the member of Congress who managed the bill in the House of Representatives, the election-of-remedies provision was intended to clarify!] the relationship between the remedy provided here and a possible separate.remedy under OSHA. Certain railroad employees, such as employees working in shops, could qualify" for both the new remedy provided in this legislation, or an existing remedy under OSHA. It is our intention that pursuit of one remedy should bar the other, so as to avoid resort to two separate remedies, which would only result in unneeded litigation and inconsistent results. 126 Cong. Rec. 26532 (Sept. 22, 1980) (statement of Rep. Florio). Under the 1980 version of the statute, employees who sought to bring an FRSA retaliation claim were required to do so pursuant to the mandatory arbitration procedure-established under the Railway Labor Act. See Pub.L. 96-423, § 10, sec. 212(c)(1); Procedures for the Handling of Retaliation Complaints Under the National Transit Systems Security Act and the Federal Railroad Safety Act, 75 Fed.Reg. 53,-522, 53,523 (Aug. 31, 2010); Araujo v. N.J. Transit Rail Operations, Inc., 708 F.3d 152, 156 (3d Cir.2013). Thus, an FRSA claim, like a workplace grievance, was adjudicated by an arbitration board under the RLA. Following the 9/11 Commission Report, however, the FRSA was amended yet again. See Implementing Recommendations of the 9/11 Commission Act of 2007, Pub.L. No. 110-53, § 1521, 121 Stat. 266, 444 (2007) (codified at 49 U.S.C. § 20109). Most significantly, the 2007 amendments permitted employees to file FRSA claims with the Secretary of Labor, rather than requiring them to proceed through the RLA arbitration process. See 49 U.S.C. § 20109(d). Several other provisions were added to § 20109, as well. Among them was subsection (h), which now provides, “Nothing in this section shall be deemed to diminish the rights, privileges, or remedies of any employee under any Federal or State law or under any collective bargaining agreement. The rights and remedies in this section may not be waived by any agreement, policy, form, or condition of employment.” 49 U.S.C. § 20109(h). According to the pertinent conference report, the 2007 FRSA amendments were intended to “expand! ]” the protections for railroad employees, to “enhance! ]” employees’ “administrative and civil remedies,” and “to ensure that employees can report their concerns without the fear of possible retaliation or discrimination from employers.” H.R.Rep. No. 110-259, at 348 (2007), 2007 U.S.C.C.A.N. 119, 181 (Conf. Rep.); Norfolk S. Ry. Co. v. Solis, 915 F.Supp.2d 32, 38 (D.D.C.2013). Nevertheless, the 2007 amendments to the statute did not remove the preexisting election-of-remedies provision in § 20109(f), which purports to prohibit an employee from “seeking] protection under both this section and another provision of law for the same allegedly unlawful act of the railroad carrier.” Id. II. The facts relevant to the parties’ dispute in this case are not complicated. Marcus Kruse, a train conductor employed by Norfolk Southern, was injured on the job in March 2010, reported his injury, and took leave until August 2010. Shortly after he returned to work, Kruse was given a thirty-day suspension without pay for exceeding train speed limits. Kruse’s union appealed the suspension on his behalf under section 3 of the Railway Labor Act, 45 U.S.C. § 153 First (i), claiming that the suspension violated Kruse’s collective bargaining agreement inasmuch as it was not supported by good cause. Both the on-property investigation and the arbitration board (convened under § 153 Second) concluded that Norfolk Southern “was justified” in holding Kruse responsible for the train’s speed, although the board mitigated Kruse’s punishment by reducing his suspension to a thirty-day deferred suspension with pay for lost time. While his grievance-related appeal was still pending before the arbitration board, Kruse filed an FRSA complaint with the Department of Labor, claiming that his suspension was in retaliation for reporting his prior work-related injury. A hearing was held before an administrative law judge (“ALJ”). Norfolk Southern moved for a summary decision on .Kruse’s claim, arguing that FRSA’s election-of-remedies provision barred his claim, given that he had already challenged his suspension in arbitration. The ALJ denied Norfolk Southern’s motion and ultimately found in favor of Kruse on the merits of his FRSA claim, holding that Norfolk Southern had suspended him in retaliation for reporting his workplace injury. Norfolk Southern appealed to the Department of Labor’s Administrative Review Board (the “Board”), challenging only the ALJ’s election-of-remedies ’ruling. The Board affirmed the ALJ, citing its previous decision in In re Merrier; No. 09-121, 2011 WL 4889278 (ARB Sept. 19, 2011), which had held that an employee’s prior arbitration of a grievance under the RLA did not trigger the FRSA’s election-of-remedies provision. See id. at *5. Norfolk Southern petitions for review of the Board’s decision. See 49 U.S.C. § 20109(d)(4). III. The only issue contested by the parties is whether the Board erred in concluding that Kruse’s FRSA claim was not barred by the FRSA’s election-of-remedies provision. A petition for review of an order entered by the Board pursuant to the FRSA is governed by the Administrative Procedure Act, see 49 U.S.C. § 20109(d)(4), meaning that the Board’s legal conclusions are reviewed de novo. See 5 U.S.C. § 706 (“[T]he reviewing court shall decide all relevant questions of law.”); Consol. Rail Corp. v. U.S. Dep’t of Labor, 567 Fed.Appx. 334, 338 (6th Cir.2014). Norfolk Southern argues that arbitration under the RLA is encompassed within the plain meaning of § 20109(f)’s directive that no employee shall “seek protection under both this section and another provision of law for the same allegedly unlawful act of the railroad carrier.” If the statutory language is unambiguous— either in favor of Norfolk Southern or against it — then there is no need for us to engage in any Chevron analysis, as Congress could not have intended for an agency’s policy expertise to give definition to a gray area if Congress did not leave the area gray. See Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984); see also Util. Air Regulatory Grp. v. EPA, — U.S. -, 134 S.Ct. 2427, 2445, 189 L.Ed.2d 372 (2014). Although the parties muddy the waters by relying on previous versions of § 20109(f) in an attempt to determine what the current wording of the statute means, “[t]he starting point in discerning congressional intent is the existing statutory text, and not the predecessor statutes.” Lamie v. U.S. Trustee, 540 U.S. 526, 534, 124 S.Ct. 1023, 157 L.Ed.2d 1024 (2004) (internal citation omitted). We agree with the Secretary that the plain language of § 20109(f) defeats Norfolk Southern’s position. Notably, however, Norfolk Southern is correct about at least one portion of the analysis: there is no question both that the RLA is “another provision of law” and that a collective bargaining agreement is not. The terms of a statute must be interpreted “as taking their ordinary, contemporary, common meaning,” Sandifer v. U.S. Steel Corp., — U.S. -, 134 S.Ct. 870, 876, 187 L.Ed.2d 729 (2014) (citation omitted), and it is beyond dispute that a federal statute ordinarily is a “provision of law” whereas a private contract is not. The parties’ long discussions regarding judicial glosses of phrases like “all other law” as used in different statutes are irrelevant to the meaning of the much narrower “provision of law” language used in the FRSA. See, e.g., Norfolk & W. Ry. Co. v. Am. Train Dispatchers Ass’n, 499 U.S. 117, 120, 111 S.Ct. 1156, 113 L.Ed.2d 95 (1991) (construing the meaning of the phrase “all other law”). Given that the RLA clearly is a “provision of law,” the parties’ extended duel over whether the RLA is the precise type of legal provision envisioned by § 20109(f) is somewhat off the mark. Instead, as the Seventh Circuit recognized when deciding the same election-of-remedies issue, the operative question is not whether the RLA is a “provision of law” within the meaning of § 20109(f) but is instead whether Kruse sought “protection” under the RLA when he arbitrated his grievance against Norfolk Southern regarding his suspension. See Reed v. Norfolk S. Ry. Co., 740 F.3d 420, 423 (7th Cir.2014). Of course, as the Seventh Circuit also observed, these considerations are interrelated. See id. at 423 n. 2. In other words, the Secretary’s argument that the RLA is not “another provision of law” within the meaning of § 20109(f) amounts to an argument that the RLA is not the type of law that one can “seek protection” under. In the Secretary’s view, the RLA establishes only a procedural framework'that can be used in order to seek protection under something else— namely, a collective bargaining agreement. Although we do not doubt that the arbitration procedures mandated by the RLA provide railroad carriers and employees with significant substantive benefits, we agree with the Secretary that the FRSA’s election-of-remedies provision does not reach employees in Kruse’s circumstances. A railroad employee does not “seek protection” under the RLA within the plain meaning of § 20109(f) by invoking RLA-mandated arbitration when pursuing a grievance under a collective bargaining agreement. We must presume that Congress says what it 'means and means what it says, Conn. Nat’l Bank v. Germain, 503 U.S. 249, 254, 112 S.Ct. 1146, 117 L.Ed.2d 391 (1992), and therefore must apply a statute as it is written, giving its terms the ordinary meaning that they carried when the statute was enacted. Sandifer, 134 S.Ct. at 876. Generally, to “protect” means “to defend or guard from attack [or] loss ...,” to “cover or shield from injury or danger,” or to “screen [or] shelter.” Webster’s Unabridged Dictionary of the English Language 1553 (2d ed.2001). To seek “protection,” in turn, ordinarily means to seek “shelter, defen[s]e, or preservation from harm.” Oxford English Dictionary 678 (2d ed.1989). Taking the terms of § 20109(f) at face value, we conclude that an employee “seeks protection” under a statute only if he seeks to use it as a shelter — that is, only if the statute is the source of the substantive remedy for the harm that the employee is attempting to avert. The rights guaranteed to the employee in the statute must be the barrier that is interposed between the employee and the threatened harm; it is not enough if the statute guarantees the employee only a procedural mechanism that enables him to shelter behind some other, independent legal bulwark. Thus, an employee possibly could “seek protection” under the RLA if he sought to validate his right to arbitrate against a railroad carrier that did not want to participate in arbitration. In that scenario, the RLA’s guarantee of mandatory arbitration would be the legal provision that prevents the harm that the employee is attempting to avoid. See Reed, 740 F.3d at 424. But where an employee seeks to validate rights located in a collective bargaining agreement, he is not seeking a remedy for a right that is guaranteed to him by the RLA. Certainly, he must leverage the RLA in order to obtain redress for the violation of the rights located in his collective bargaining agreement, but at that point he is not “seeking protection” under the, RLA; he is simply availing himself of it. At bottom, it is the collective bargaining agreement — not the RLA — that is his shield. Both the Fifth and Seventh Circuits have construed § 20109(f) in largely the same way, and we see no need to vary significantly from their approach. See Grimes v. BNSF Ry. Co., 746 F.3d 184, 191 (5th Cir.2014); Reed, 740 F.3d at 423. As Reed observed, such a reading fits harmoniously both with the remainder of § 20109(f) itself and within the context of the 2007 amendments, which added subsection (h)’s disclaimer that “[n]othing in this section shall be deemed to diminish the rights, privileges, or remedies of any employee under any Federal or State law or under any collective bargaining agreement.” See Reed, 740 F.3d at 425-26. See also Util. Air Regulatory Grp., 134 S.Ct. at 2441 (“[T]he words of a statute must be read in their context and with a view to their place in the overall statutory scheme.” (citation omitted)).

5752429-12962

CLAY, Circuit Judge. Defendant Ruben Steven Ranke pleaded guilty to one count of mailing child pornography, in violation of 18 U.S.C. § 2252A(a)(l), following an order by the district court that denied Defendant’s motion to suppress evidence discovered in his residence pursuant to a search warrant. The district court reasoned that the search warrant was supported by probable cause and that the good faith exception otherwise applied. For the reasons that follow, we AFFIRM. BACKGROUND In March of 2008, authorities at the Federal Correctional Institution in Ray Brook, New York (FCI Ray Brook) intercepted the incoming mail of an inmate named Adam Brown, who was serving time for violations of federal child pornography law. Among Brown’s incoming mail was an Easter greeting card mailed from Flint, Michigan. Inside the card, authorities discovered four photographs of a naked male minor depicted masturbating with his genitals exposed. Prison officials then searched Brown’s cell and seized several items, including multiple handwritten letters and Brown’s personal address book. The only entry in Brown’s address book matching Michigan was a listing for one “Steve Ranke” at “5065 State, # 273, Saginaw, MI.” Brown also had in his possession two handwritten letters signed by a “Steve.” The letters described, in crude code, the author’s desire to engage in sexual activity with young boys. “Steve” used a musical band as a metaphor to describe his fantasies, describing sex as “a jam session,” other child molesters as “band members,” and “playing the flute” and “playing the drums” to describe oral and anal sex with minor boys. “Steve” also suggested that he possessed, viewed, and transmitted child pornography. In one letter he described in detail a “.jpg” of a “musician” who “wore a black ski mask” during a “jam session” with “a nice set of bongo drums.” In the same letter, “Steve” noted that he was “sending some pics with this letter.” In another, “Steve” mentioned “sending some .jpgs with this letter” and signed the correspondence, “Enjoy.” “Steve” also alluded to acts that went beyond mere fantasy, describing how he introduced a ten-year-old boy to anal sex and how he hoped to adopt a “needy kid[ ] needing a family.” “Steve” also wrote about the rewards and challenges involved with his employment working with developmentally delayed elementary school students. He described fantasizing about several ninth grade students in another of his classrooms. Prison authorities confronted Brown about the greeting card and the photographs recovered from his incoming mail, as well as the letters seized from his cell. Brown told prison officials that if they “did their due diligence on Ranke in Saginaw, they were on the right track.” Acting on Brown’s tip and the evidence recovered from his cell, officers tracked the address listed in Brown’s book to a UPS store located in Saginaw, Michigan. Box number 278 was rented to Defendant. Using various law enforcement databases, officers confirmed that Defendant used the mailbox as his mailing address, and they tracked Defendant a second mailbox at the same UPS store. Officers also connected Defendant to residential address located at 4049 Ann Street in Saginaw. Officers confiscated trash left outside the Ann Street residence and found small amounts of marijuana and several pieces of mail addressed to various individuals, none of whom were Defendant. On April 29, 2008, a state district judge signed a search warrant for the two UPS mailboxes and the Ann Street residence. After executing the warrants on the mailboxes, officers learned that Defendant also rented two storage units and obtained additional search warrants for the units. When officers went to execute the search warrant on the Ann Street address that same day, they learned that the house was the residence of Defendant’s sister, Shelly Fulton. Fulton told officers that Defendant sometimes used the house as a mailing address, but that he never lived there. Fulton explained that Defendant lived with his parents at 1749 Wood Street, also in Saginaw. In addition, Fulton informed the officers that Defendant worked with autistic children at an area public school. Through public records, officers confirmed that the 1749 Wood Street address was owned and occupied by Defendant’s father. Based on this information, officers applied for and obtained an additional search warrant for the 1749 Wood Street residence. On April 30, 2008, officers executed the search warrant at 1749 Wood Street. Family members provided officers with a key to Defendant’s locked, second-story bedroom. There, officers seized several video recording and movie-making devices, a laptop computer with four external hard drives, VHS tapes, DVDs, and floppy disks. Officers also seized numerous firearms, several marijuana plants, and drug paraphernalia. A subsequent forensic examination of the digital media seized from Defendant’s room revealed a large amount of child pornography. Subsequently, Defendant pleaded guilty in state court to possession of a firearm while in commission of a felony, in violation of Mich. Comp. Laws § 750.227b. He was sentenced to two years incarceration in state prison on December 2, 2009. While Defendant was in the custody of the State of Michigan awaiting trial on the firearms charge, a federal grand jury for the Eastern District of Michigan returned a two-count indictment charging Defendant with one count of mailing child pornography, in violation of 18 U.S.C. § 2252A(a)(l), and one count of possessing child pornography, in violation of 18 U.S.C. § 2252A(a)(5)(B). After Defendant completed his state sentence, he was immediately taken into federal custody for trial on the federal child pornography charges. On August 3, 2010, Defendant moved to suppress all evidence and derivative evi dence discovered from the searches of the UPS mailboxes, the storage units, 4049 Ann Street, and 1749 Wood Street. The government stipulated that the only items it intended to use were those recovered from the search of 1749 Wood Street. Accordingly, the district court dismissed without prejudice Defendant’s suppression motions related to the other locations. On October 29, 2010, the district court entered a lengthy order denying Defendant’s motion to suppress the evidence seized from 1749 Wood Street. Following the unfavorable ruling, Defendant pleaded guilty to one count of mailing child pornography. Pursuant to a plea agreement, the possession of child pornography charge was dismissed, and Defendant preserved his right to appeal the district court’s suppression decision. Shortly thereafter, Defendant lodged this timely appeal. Original jurisdiction exists under 18 U.S.C. § 3231; this Court takes jurisdiction under 28 U.S.C. § 1291. ANALYSIS On appeal, Defendant challenges the district court’s denial of his motion to suppress. Defendant contends that the motion should have been granted because the evidence seized from 1749 Wood Street was obtained pursuant to a search warrant affidavit that did not establish probable cause. This Court applies a mixed standard of review in evaluating a district court’s ruling on a motion to suppress. United States v. Howard, 621 F.3d 433, 450 (6th Cir.2010). We review a district court’s findings of fact for clear error and any of its related conclusions of law de novo. Id. The Fourth Amendment provides the “right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures ...” and demands that “no Warrants shall issue, but upon probable cause, supported by Oath or affirmation.” U.S. Const, amend. IV. “In deciding whether to issue a search warrant, the Fourth Amendment requires ‘the issuing magistrate ... simply to make a practical, common-sense decision whether, given all the circumstances set forth in the affidavit before him ... there is a fair probability that contraband or evidence of a crime will be found in a particular place.’ ” United States v. Terry, 522 F.3d 645, 648 (6th Cir.2008) (quoting Illinois v. Gates, 462 U.S. 213 238, 103 S.Ct. 2317, 76 L.Ed.2d 527 (1983)). Probable cause “requires only a probability or substantial chance of criminal activity, not an actual showing of such activity.” Gates, 462 U.S. at 243 n. 13, 103 S.Ct. 2317. Additionally, there must be “a nexus between the place to be searched and the evidence sought.” United States v. Gardiner, 463 F.3d 445, 470 (6th Cir.2006) (internal citations omitted). “When judging the sufficiency of an affidavit to establish probable cause in support of a search warrant, the Supreme Court has repeatedly said that after-the-fact scrutiny should not take the form of a de novo review. Rather, reviewing courts are to accord the magistrate’s determination ‘great deference.’ ” United States v. Lapsins, 570 F.3d 758, 763 (6th Cir.2009) (quoting Gates, 462 U.S. at 236, 103 S.Ct. 2317) (additional internal citations and quotations omitted). “When an affidavit is the basis for a probable cause determination, the affidavit ‘must provide the magistrate with a substantial basis for determining the existence of probable cause.’ ” United States v. Thomas, 605 F.3d 300, 307 (6th Cir.2010) (quoting Gates, 462 U.S. at 239, 103 S.Ct. 2317). “Search warrant affidavits are to be judged on the totality of the circumstances, not line-by-line scrutiny.” Id. (internal citations omitted). Detective Brian Pitt submitted a four-page affidavit to establish probable cause to search 1749 Wood Street. The affidavit described the circumstances in which the Easter card and the four images were seized by prison officials from Brown’s incoming mail. Significant to Defendant’s appeal, the affidavit described the images found in the card as “ ‘computer generated photographs’ of a minor male” that “displayed that male naked, exposing his genital areas and apparently masturbating.” The affidavit also described the address book, with its entry for “Steve Ranke,” the two letters authored by “Steve” that were discovered in Brown’s cell, and Brown’s statement to prison authorities that if they investigated “Ranke in Saginaw” they would be “on the right track.” The two letters were attached to the affidavit; however, the photographs were not. Finally, Detective Pitt detailed the authorities’ follow-up investigations linking Defendant first to the UPS mailboxes and to the address on Ann Street and then, by virtue of the statements made by Defendant’s sister and further public records searches, to the address on Wood Street. In contending that these facts did not establish probable cause, Defendant highlights several specific alleged deficiencies with the affidavit. In Defendant’s primary argument, he seizes upon the affidavit’s description of the images as “computer generated photographs.” Defendant points to Ashcroft v. Free Speech Coalition, 535 U.S. 234, 122 S.Ct. 1389, 152 L.Ed.2d 403 (2002), the Supreme Court case which held certain portions of the Child Pornography Prevention Act of 1996 (CPPA) overbroad and unconstitutional. Under Free Speech Coalition, so-called “virtual” child pornography which does not involve real children, but instead uses so-called “computer generated images” (CGI images) to depict minors engaged in sexually explicit acts, is speech protected under the First Amendment. See United States v. Fuller, 77 Fed.Appx. 371, 379 (6th Cir.2003). Defendant contends that the images, as described in the affidavit as “computer generated,” would not have been illegal; therefore, they could not have provided probable cause to support a search warrant. Defendant’s argument is without merit. Although the affidavit’s mention of the term “computer generated” is somewhat problematic given commonly-used computer terminology and the legal distinction drawn by Free Speech Coalition, Defendant ignores the fact that the phrase “computer generated” was also immediately coupled with the description of the images as “photographs.” Calling the images “photographs” suggested that the images were, in fact, those of a real child and not CGI depictions. At best, the affidavit’s phrasing was internally contradictory. Although this minor, technical contradiction might have warranted further inquiry by the state judge, it does not merit suppression of the seized evidence on appellate review. Furthermore, we note that Defendant now admits that the images were, in fact, photographs of a real minor child. Next, Defendant argues that the affidavit was insufficiently detailed. He points out that the affidavit does not indicate how Detective Pitts determined that the images were of a minor and that Detective Pitts’ description of a boy “apparently masturbating” suggests that he never actually viewed the images personally. Defendant claims these deficiencies were compounded when Detective Pitts failed to attach the images to the affidavit for the state court judge’s independent review.

6105077-6005

FINDINGS OF FACT, CONCLUSIONS OF LAW AND MEMORANDUM OPINION ALEXANDER L. PASKAY, Chief Judge. THIS IS a Chapter 7 liquidation case and the matter under consideration is the Complaint filed by the Deere Credit Services, Inc. (Deere) objecting to dischargeability of a debt. Deere alleges in its complaint that the debt owed by John W. Thomas (the Debtor) to Deere in the amount of $5,234.80 should be excepted from the overall protection of the general discharge pursuant to § 523(a)(6) of the Bankruptcy Code. The facts established at the Final Eviden-tiary Hearing, which are relevant to the disposition of Deere’s claim of nondis-chargeability, are as follows: In November, 1987, John'Deere, Deere’s predecessor in interest, sold a tractor to the Debtor on credit. John Deere financed the transaction, and to secure the payment of the balance due on the purchase price, John Deere obtained and duly perfected a security interest in the tractor. It is undisputed that the Debtor sold the tractor at a yard sale in Ohio in October, 1988 without Deere’s permission, and that as of November, 1988, Deere’s record showed that the Debtor still had an outstanding balance of $5,234.80 on the purchase contract. According to Deere, the Debtor never paid this money and the balance is still due and owing by the Debtor. Based on the foregoing, Deere asserts that the Debtor “willfully and maliciously converted” its collateral, and therefore, the Debtor’s debt to Deere should be excepted from the overall protection of the general discharge pursuant to § 523(a)(6). According to the Debtor, after he sold the tractor for $5,500.00, he called Deere to inquire about his account balance and was directed to a representative in the payoff department. The representative allegedly informed the Debtor that his balance on the tractor contract was $5,120.00. Shortly after the yard sale, the Debtor left Ohio one evening with $7,000 cash, and claims to have purchased money orders the following morning at a bank in Kentucky. According to the Debtor, one of the money orders was to be used to pay the balance owed to Deere. The Debtor claims that he mailed the money orders to some of his creditors, including Deere. The Debtor failed to produce any duplicate copies of the money order sent to Deere, and he does not remember the name of the bank or the name of the city where he allegedly purchased and mailed the money order to Deere. As noted, Deere has no record of ever receiving this money order allegedly sent to it by the Debtor. In January 1989, Deere contacted the Debtor at his home in Ft. Myers regarding the outstanding balance on the tractor contract. The Debtor informed Deere that he had paid the balance in full. The Debtor’s former roommate also talked to a Deere representative two or three times, and she told the representative that the Debtor had paid Deere in full. The Debtor’s roommate was unable to recall the name of the Deere representative with whom she spoke. The representative allegedly told her that Deere had received an unspecified amount of money, but that Deere was unable to identify the account to which the payment should be credited. When she told the representative the approximate amount that the Debtor paid to Deere, the representative replied that the amount was close to the amount Deere had received and was to credit to an unknown account. The Deere representative then concluded that the money should be credited towards the Debtor’s balance, and he acknowledged that the Debtor’s balance was paid in full. These are the basic facts which, according to Deere, are sufficient to find that the debt claimed to be owed by the Debtor to Deere should be excepted from the protective provisions of the general bankruptcy discharge pursuant to § 523(a)(6) of the Bankruptcy Code. It should be noted at the outset that the underlying purpose of the Bankruptcy Code is to give the Debtor a new opportunity in life and clear field for future efforts, unhampered by pressures of existing debt. Lines v. Frederick, 400 U.S. 18, 91 S.Ct. 113, 27 L.Ed.2d 124 (1934). The discharge provisions of the Bankruptcy Code were designed to give the Debtor a fresh start, free from obligations associated with previous business misfortunes. Therefore, exceptions to discharge are construed strictly against the creditor, and liberally in favor of the Debtor. Furthermore, the creditor must prove his case by clear and convincing evidence. In the Matter of Bonanza Import and Export, 43 B.R. 577 (Bankr.S.D.Fla.1988); In re Garner, 881 F.2d 579 (8th Cir.1989). As noted earlier, Deere’s claim of non-dischargeability is based on Section 523(a)(6) of the Bankruptcy Code which provides: (а) A discharge under ... this title does not discharge an individual debtor from any debt— (б) for willful and malicious injury by the debtor to another entity or to the property of another entity. Under this Section, the Plaintiff must establish by clear and convincing evidence a willful, malicious injury to another entity or to the property of another entity. The mere failure to pay over to a creditor money received from the sale of secured property is not necessarily a willful and malicious conversion. In re Cline, 52 B.R. 301 (Bankr.W.D.Ky.1985); Davis v. Aetna Acceptance Co., 293 U.S. 328, 55 S.Ct. 151, 79 L.Ed. 393 (1934). This leaves for consideration the alternative ground for excepting a debt from discharge under § 523(a)(6): a willful malicious injury to the property of another. It is true that the tractor in question was not Deere’s property; rather, the tractor was Deere’s collateral which was to secure the unpaid balance on the tractor contract. It is now recognized that the unauthorized sale of collateral may form the basis of a valid claim of nondischarge-ability under Section 523(a)(6) of the Bankruptcy Code, provided that the sale effectively destroyed the security interest and that it was done willfully and maliciously. In re Langer, 12 B.R. 957 (Bankr.D.N.D.1981).

10513583-12192

HANSEN, Circuit Judge. Gordon W. Kenyon, Jr., pled guilty to one count of conspiracy to possess with intent to deliver cocaine. The district court imposed a 210-month sentence, and Kenyon appealed. We affirm Kenyon's conviction but remand for resentencing. I. Kenyon's drug-trafficking activities began in June 1991, when he agreed with co-defendants Mike Wichner and Jim Breyfogle to obtain cocaine from Colorado and resell it in South Dakota. Between July 1991 and February 1992, Kenyon and his four co-defendants made five trips to Colorado to obtain cocaine. On November 5, 1991, after Kenyon's fourth trip to Colorado, law enforcement officers executed a search warrant. The door was barricaded, and before the officers could enter, Kenyon disposed of an estimated nine ounces (255 grams) of cocaine by flushing it down a toilet. Officers eventually found drug paraphernalia, marijuana residue, cocaine residue, loaded shotguns, and an illegal firearm. On January 16, 1992, a federal grand jury returned a one-count indictment against Kenyon, charging him with possession of an unregistered firearm in violation of 26 U.S.C. § 5861(d). A warrant for Kenyon's arrest was issued, but the docket sheet shows he was neither arrested nor arraigned. On February 27, 1992, following his fifth trip to Colorado to obtain cocaine, Kenyon attended a party in Vermilion, South Dakota, where drugs were present. Law enforcement officers raided the party and arrested Kenyon and others. On March 9, 1992, Kenyon was indicted in Clay County, South Dakota, for possession of cocaine, possession of methamphetamine, possession of less than one-half pound of marijuana, and inhabiting a room where controlled substances were stored or used. On March 18, 1992, he pled guilty in Clay County to one count of possession of cocaine and was sentenced to five years in the South Dakota State Penitentiary, the sentence to run concurrent with any sentence later imposed for pending federal charges. Meanwhile, federal authorities also were investigating Kenyon's drug-trafficking activities. On March 26, 1992, the government filed a superseding indictment in this case adding allegations of conspiracy to possess with intent to distribute cocaine, possession with intent to distribute cocaine, and engaging in interstate travel in aid of a racketeering enterprise. On May 17, 1992, Kenyon and the government entered into a plea agreement. On June 15, 1992, Kenyon entered a plea of guilty to conspiracy to possess with intent to distribute cocaine. On September 14, 1992, the district court heard objections to the presentence report, received evidence, and sentenced Kenyon to 210 months of imprisonment and six years of supervised release. Kenyon now appeals, challenging his sentence and the representation he received from his trial counsel prior to his plea. 1:1. Kenyon first contends that he received ineffective assistance from his trial counsel. See U.S. Const. amend. VI; Strickland v. Washington, 466 U.S. 668, 687, 104 S.Ct. 2052, 2064, 80 L.Ed.2d 674 (1984). He believes his trial counsel should not have advised him to plead guilty in state court before criminal proceedings in federal court, should have properly advised him of the likely sentencing range, and should have objected to the presentence report’s statements that he obstructed justice and was a leader of the conspiracy. Kenyon has raised these issues for the first time in this appeal. Claims of ineffective assistance of counsel are best presented on motions filed pursuant to 28 U.S.C. § 2255. This court will not consider an ineffective assistance claim on direct appeal if the claim has not been presented to the district court so that a proper factual record can be made. See United States v. Petty, 1 F.3d 695, 696 (8th Cir.1993); United States v. Williams, 994 F.2d 1287, 1290-91 (8th Cir.1993). Thus, we decline to address the merits of this argument. III. Kenyon challenges the district court’s finding that he is responsible for 19 ounces (539 grams) of cocaine. Kenyon argues that the district court should have found that, on his third trip to Colorado, he brought only two ounces (57 grams) of cocaine into South Dakota, not four ounces (113 grams). This court will reverse a district court’s finding on this issue only if the district court’s findings are clearly erroneous. 18 U.S.C. § 3742(e) (1988); United States v. Edwards, 994 F.2d 417, 422-23 (8th Cir.1993). At the sentencing hearing, Duane Dahl, Special Agent of the South Dakota Division of Criminal Investigation, testified on direct examination that Kenyon transported four ounces of cocaine from Colorado to South Dakota on his third trip. (Sent. Tr. at 8-9, 14-15.) Dahl based this conclusion on statements made by co-defendants Jim Breyfogle, Vicki Breyfogle, and Mike Wichner. (Id. at 15.) Although Dahl’s testimony on cross-examination is somewhat confusing, (id. at 17), he did not clearly contradict his conclusion that the third trip yielded four ounces of cocaine. The district court could properly have found that Dahl’s conclusion was credible and that his testimony, as a whole, was sufficient to meet the preponderance-of-the-evidence standard. See United States v. Funk, 985 F.2d 391, 394 (8th Cir.) (“questions] of witness credibility and weight of the evidence ... are entitled to particularly great deference”), cert. denied, — U.S. -, 113 S.Ct. 2948, 124 L.Ed.2d 695 (1993). The district court’s finding that Kenyon transported four ounces (113 grams) of cocaine from Colorado to South Dakota on his third trip is not clearly erroneous. IV. Kenyon next challenges the adjustment to his offense level based on his role in the offense. The district court increased Kenyon’s offense level by four levels after finding that Kenyon was an “organizer or leader” of the drug conspiracy. See U.S.S.G. § 3Bl.l(a). Kenyon did not object to this finding at the sentencing hearing. He contends on appeal, however, that the criminal activity did not involve five or more persons and was not otherwise extensive. He further contends that, even if the conspiracy involved five or more persons or was extensive, he was not an organizer or a leader but merely a “manager or supervisor (but not an organizer or leader),” and thus should receive only a two-level increase in his offense level. See U.S.S.G. § 3Bl.l(b). Ordinarily, this court would reverse a district court’s finding on this issue only if the district court’s findings are clearly erroneous and “we are left with the definite and firm conviction that a mistake has been made.” United States v. Harry, 960 F.2d 51, 53 (8th Cir.1992). Because Kenyon did not object to this finding at the district court, we will reverse only if the district court committed plain error. See Fed.R.Crim.P. 52(b); United States v. Olano, — U.S. -, - -, 113 S.Ct. 1770, 1776-79, 123 L.Ed.2d 508 (1993); United States v. Montanye, 996 F.2d 190, 192 (8th Cir.1993) (en banc). By any standard of review, Kenyon’s argument is without merit. First, four other co-defendants were convicted and sentenced for crimes related to the criminal activity of which Kenyon is guilty. Because Kenyon himself is counted as a participant in the criminal activity, see Harry, 960 F.2d at 54, five persons constituted the criminal organization. Thus, Kenyon’s criminal activity was sufficiently extensive to allow a four-level increase in his offense level. Second, the record demonstrates in several ways that Kenyon organized and led the criminal activity. When Kenyon and Wichner started the conspiracy in July 1991, only Kenyon knew the Colorado person who supplied the cocaine. Kenyon traveled to Colorado five times to obtain cocaine, but no co-defendant was present on more than three of these five trips. And defense counsel stated at the sentencing hearing that “everybody has called [Kenyon] the ringleader in a series of sentencings that [the court] has had here and, you know, we have to commend Mr. Kenyon for accepting that.” (Sent. Tr. at 24.) Thus, the district court did not commit plain error when it increased Kenyon’s offense level by four levels due to his role in the offense. V. Kenyon next challenges the adjustment to his offense level .on the ground that he obstructed justice. The district court increased Kenyon’s offense level by two levels after finding that Kenyon obstructed the administration of justice on November 5, 1991, when he flushed cocaine down a toilet. See U.S.S.G. § SC1.1. Kenyon did not object at sentencing to this finding. He contends on appeal, however, that the district court misapplied the Sentencing Guidelines. We ordinarily would review a district court’s interpretation of the Guidelines de novo. United States v. Baker, 961 F.2d 1390, 1392 (8th Cir.1992). Because Kenyon did not object at the district court, we will reverse only if the district court committed plain error. See Fed.R.Crim.P. 52(b); Olano, — U.S. at -, 113 S.Ct. at 1776-79; Montanye, 996 F.2d at 192. A district court should adjust a defendant’s offense level upward by two levels “[i]f the defendant willfully obstructed or impeded, or attempted to obstruct or impede, the administration of justice during the investigation, prosecution, or sentencing of the instant offense.” U.S.S.G. § 3C1.1. Obstruction of justice includes threatening or intimidating witnesses, committing or suborning perjury, falsifying records, making false statements, escaping from custody, or failing to appear at judicial proceedings. See U.S.S.G. § 3C1.1, comment. (3). In some circumstances, a defendant may receive a two-level adjustment for destroying material evidence. If, however, a defendant destroys material evidence “contemporaneously with arrest” and has not thereby caused a “material hindrance” to the investigation, prosecution, or sentencing, then his conduct is, by itself, insufficient to justify a two-level adjustment for obstruction of justice. U.S.S.G. § 3C1.1, comment. (3(d)); United States v. Lamere, 980 F.2d 506, 515 & n. 6 (8th Cir.1992). Kenyon essentially concedes in his briefs to this court that he disposed of cocaine by flushing it down a toilet on November 5, 1991. Kenyon argues, however, that the district court should not have adjusted his offense level under § 3C1.1 because his conduct was contemporaneous with his arrest and did not materially hinder the judicial process. The government concedes that Kenyon disposed of evidence contemporaneously with the officers’ execution of the search warrant, but it argues that Kenyon’s destruction of evidence was a material hindrance to the investigation, prosecution, and sentencing. Law enforcement officers had credible information that Kenyon was in possession of cocaine on November 5, 1991. Because of Kenyon’s destruction of the evidence, agents were able to seize only cocaine residue. The government did not initiate a drug prosecution at that time. In our view, Kenyon could have had no other intent than to hinder his potential prosecution when he destroyed the evidence of his criminal wrongdoing. It appears that agents did not have physical evidence of Kenyon’s drug-trafficking activities until they arrested him at the Vermillion party on February 27, 1992. Kenyon’s destruction of evidence thus caused a four-month delay in the investigation. The district court could have reasonably concluded that Kenyon’s destruction of evidence materially hindered the investigation and prosecution of his criminal activities. See United States v. Sykes, 4 F.3d 697, 699 (8th Cir.1993) (holding that defendant materially hindered investigation when he destroyed evidence, forcing investigators to wait for the evidence to be reconstructed); see also United States v. Perry, 991 F.2d 304, 312 (6th Cir.1993) (holding that defendant did not materially hinder investigation when he disposed of evidence because he "did not subvert the investigation" and "did not effect a delay in the prosecution of his crime"). We hold that the district court correctly adjusted Kenyon's offense level for his obstruction of justice. We further conclude that the district court's determination of Kenyon's final adjusted offense level of 32 is correct. VI.

4241732-8494

CONNALLY, District Judge. This action is one by the employer-compensation carrier (“employer” hereafter) to restrain the enforcement of a compensation award made under date of April 29, 1952, by the defendant Deputy Commissioner under the Longshoremen’s and Harbor Workers’ Act, 33 U.S.C.A. § 901 et seq. The facts are undisputed and are completely covered by a stipulation of the parties, to which I refer. The only question presented is one of interpreting certain statutory phraseology. Counsel advise me that it is a case of first impression, although it presents a situation which seemingly would have arisen many times. It well may be that the language of the statute is sufficiently clear that heretofore its interpretation has not been questioned in the courts. On October 10,1948, M. L. Williamson died as result of a compensable injury which he received while in the employ of the plaintiff employer. He was survived by a widow and four minor children. Compensation was promptly paid to the beneficiaries by employer in the amount and to the extent provided by law. In due course, the beneficiaries of the deceased elected to assert an action against Waterman Steamship Company as a negligent third party, and such libel was instituted in this Court. While awaiting trial, a settlement was arrived at between the parties and an agreed judgment entered here, under terms of which the minor plaintiffs recovered $13,500, which was promptly paid by the defendant Waterman. In the course of the judgment, this Court approved an attorney’s fee in the amount of $3,900 to counsel for plaintiffs, and directed that the amount of $1,742.58 be paid to the intervening compensation carrier, and that the balance be paid to the guardian of the four minor plaintiffs for their use and benefit in equal shares. No recovery was allowed the widow. Section 933(f) of Title 33 U.S.C.A., in providing for the compensation to be paid in the event beneficiaries seek recovery against a third person, provides in part as follows: “* * * the employer shall be required to pay as compensation under this chapter a sum equal to the excess of the amount which the Secretary determines is payable on account of such injury or death over the amount recovered against such third person.” In making the award which is in issue here, the Deputy Commissioner has interpreted the language “the amount recovered against such third person” as though it read “the net amount recovered” or “the amount recovered less attorneys’ fees”, and has allowed the employer credit only for $9,600, rather than for $13,500. Employer, in my opinion, is clearly right in its contention that it is entitled to credit in the amount of $13,-500, as “the amount recovered against such third person.” This is true for several reasons, as hereinafter set out. The phraseology chosen by the Congress is singularly clear and unambiguous. The term “amount recovered” in a particular action normally means the total amount of the judgment which is awarded by the Court to the successful litigant. When to the term “amount recovered” is added “against such third person”, there could be no doubt that the amount thus referred to is that sum with which such third person was charged. I see no suggestion or inference in the statutory language that the plaintiffs’ attorney’s fee or other expense of litigation should be deducted. In providing for the disposition of the proceeds in the event such third-party action is instituted by the em ployer, Section 933(e) provides in substance that the employer, from “Any amount recovered by such employer” (emphasis added), shall deduct his expenses, including a reasonable attorney’s fee, etc., and shall pay the balance into a trust fund to be used as the statute thereafter provides. The fact that specific reference is made to attorneys’ fees and other expenses of litigation where the action is instituted by the employer, and omitted a few lines later in providing for action by the employee or his beneficiaries, indicates clearly that the Congress was fully cognizant of these expenses of litigation, and negatives any inference that their omission from the later section of the same Act was inadvertent or accidental. Where “amount recovered” so clearly was intended to mean “total amount recovered” in Paragraph (e) of Section 933, it cannot be construed to mean “net amount recovered” in Paragraph (f) of the same section. Of further persuasive effect is the fact, pointed out by counsel for employer, that the Workmen’s Compensation Law of the State of New York, McKinney’s Consol. Laws, c. 67, upon which the Longshoremen’s and Harbor Workers’ Compensation Act was modeled, was given a similar interpretation upon this point by the courts of that State. In providing that, where the employee pursued and recovered from the third person, the employer was to contribute the difference between “the amount of the recovery against such other person actually collected, and the compensation provided or estimated by this chapter” (emphasis added), N.Y. Workmen’s Comp. Law, Sec. 29, Subdiv. 4, the emphasized language was construed by the New York courts to mean the gross amount of recovery actually collected, rather than the amount collected less attorneys’ fees, Curtin v. City of New York, 287 N.Y. 338, 39 N.E.2d 903, 142 A.L.R. 166, and cases there cited. Similar language in compensation acts in other states has been afforded a similar construction by local courts; in Alabama (Georgia Casualty Co. v. Haygood, 210 Ala. 56, 97 So. 87); Georgia (Keating v. Periodical Pub. Ser. Bureau, Inc., 56 Ga.App. 62, 192 S. E. 80); Iowa (Roessler v. Chain Groc. & Meat Co., Iowa, 196 N.W. 1020); Massachusetts (Meehan’s Case, 316 Mass. 522, 56 N.E.2d 23); New Jersey (Deuchar v. Standard Acc. Ins. Co., 117 N.J.L. 375, 189 A. 61); Washington (Lowry v. Department of Labor, 21 Wash.2d 538, 151 P.2d 822). In a number of these states (including New York), it is noted that the statute has been amended to provide for the exclusion of attorneys’ fees in making the calculation after the statute was so construed. To the contrary, the Deputy Commissioner cites Southern Quarries & Contracting Co. v. Hensley, 313 Ky. 640, 232 S.W.2d 999, interpreting the Kentucky statute, and Hardware Mutual Casualty Co. v. Butler, 116 Mont. 73, 148 P.2d 563, interpreting the Montana statute. The latter authority in particular, by reason of the peculiar circumstances which prevailed at the time of its submission, is considered of little weight. Dealing with the Longshoremen’s and Harbor Workers’ Act, the authority most analogous in point of fact is Jarka Corp. of Boston v. Monahan, D.C., 48 F.2d 283; Jarka Corp. v. Monahan 1 Cir., 62 F.2d 588. There, a surviving widow was held entitled to the maximum compensation benefits of $7,500 for the death of her husband. She elected to institute a third-party action and recovered the sum of $5,500 by compromise. Of this amount, $250 was allotted to her attorneys. Thus, the employer was liable for additional compensation in an amount by which the $7,500 compensation benefits exceeded the amount recovered. The Deputy Commissioner made an award of $2,250, thus declining to give the employer credit for the $250 attorneys’ fees (as was done in the instant case). The district court, with certain qualifying language, upheld the amount of this award, on the theory that the finding of the Deputy Commissioner that the amount of the recovery was only $5,250 was a finding of fact and not subject to judicial review. However, the district judge enjoined enforcement of the award on other grounds, and returned the matter to the Deputy Commissioner who thereupon made another award. This time the award was only for $2,000 (62 F.2d 588). Thus, it would appear that the Deputy Commissioner, in making the second award, receded from his original position and in fact gave credit for the $250 in question. The defendant here urges the district court opinion upon me, not so much upon the main issue, but in support of the proposition that the finding of the Deputy Commissioner as to the “amount recovered” is binding. Where the facts are undisputed, and only an interpretation of the statute is called for, I do not consider that an administrative agency may designate its statutory construction as a “finding of fact” and thus preclude judicial review. I am not at all sure that this is the basis of the district court holding, but if it is, I decline to follow it.

476496-18966

EVANS, Circuit Judge. Petitioner’s appeal is from an order of the United States District Court for the Northern District of Indiana, denying his petition for a writ of habeas corpus. Petitioner is incarcerated in the Indiana State Prison at Michigan City, Indiana, pursuant to a state court judgment based upon conviction on indictments charging him with being an accessory before and after the fact to murder and to burglary. Another count, charging him with conspiracy, was also included. After conviction on the above-designated charges, on January 4, 1936, he was committed to the state penitentiary for life. At the time of his indictments he was a citizen of Illinois and- was twenty years of age. He informed the court that he was without funds, and an attorney was appointed to defend him. He alleges that the appointment of this attorney, one of the negro race, and allegedly inexperienced, constituted a denial of his constitutional right to be represented by competent counsel. Avery v. Alabama, 308 U.S. 444, 60 S.Ct. 321, 84 L.Ed. 377. He also charges that his counsel erroneously informed him that he could not seek a change of venue, but could have a change of judge, and he so petitioned the court. A practicing attorney (provided for by Indiana statute) was appointed, as special judge, to sit and hear his case. Petitioner pleaded not guilty. His attorney, allegedly without his consent, presented a stipulation of facts; no trial was had nor witnesses heard. He asserted that because of the inexperience of his counsel no appeal was taken within the time provided by statute for taking an appeal. Petitioner invokes the jurisdiction of the Federal court, because of the lapse of time for appeal in the Indiana court, and because his only redress is in the Federal court, due to the fact that the Supreme Court of the State of Indiana has so curtailed the remedy of habeas corpus that on a state of facts such as above stated, a petition for habeas corpus by him addressed to the Supreme Court of Indiana, would be denied. Its prosecution would be a futile proceeding. Haden v. Dowd, Ind.Sup., 23 N.E.2d 676, 677. He sought no relief in the Indiana State Court through habeas corpus proceedings. The Indiana statute, Burns Ind.Stats. Ann., 1933, § 3-1901, reads: “Every person restrained of his liberty, under any pretense whatever, may prosecute a writ of habeas corpus, to inquire into the cause of the _ restraint, and shall be delivered therefrom when illegal.” In the case of Haden v. Dowd, supra (Supreme Court of Indiana, 1939), the petitioner therein sought to be discharged through habeas corpus proceedings, on several grounds, one of them being that “he was not represented by counsel, and was not sufficiently advised of his constitutional right to have counsel; that ‘he did not intelligently waive his right to be represented by counsel and did not intelligently enter plea of guilty.’ ” The Indiana Supreme Court there held the Indiana Circuit Court had no jurisdiction to entertain the petition for habeas corpus, unless the state court which entered the judgment in the criminal case had no jurisdiction to hear the case. Since it was evident the criminal court had jurisdiction, there was, under the Indiana rulings, no remedy by habeas corpus in the state court for violation of constitutional rights, such as representation by competent counsel. The Supreme Court of Indiana was cognizant of the fact that the Federal Statute might be broader than their state statute, but denied relief. The court said: “The Superior Court * * * has general jurisdiction to try criminal cases within that county. * * * The Superior Court had jurisdiction to construe the statute and the law, and determine what judgment could be and should be entered against him. It had power and jurisdiction to decide whether he desired counsel, and whether he waived the right to counsel with a full understanding of his constitutional rights. It has often been said that jurisdiction to decide involves the power to decide wrong or erroneously. Since the Superior Court * * * acquired jurisdiction of the defendant’s case and of him, no' other state court of general jurisdiction can wrest from that court jurisdiction to decide questions arising in that case, and no other state court of general jurisdiction has jurisdiction to pass upon and determine whether the Superior Court * * * acted erroneously or abused its judicial discretion. * * * We are concerned only with the jurisdiction of the Circuit Court * * * to decide whether or not the Superior Court * * * was guilty of error or abuse of discretion. That it has no such jurisdiction has been repeatedly decided by this court. * * * “The appellant relies upon Johnson v. Zerbst, Warden, 1938, 304 U.S. 458, 58 S.Ct. 1019, 82 L.Ed. 1461, in which it is held that one federal district court has power to investigate the manner in which another federal court of equal jurisdiction has conducted the trial of a criminal case, and if there was an abuse of discretion in respect to furnishing counsel for the defendant, or if it is believed that the defendant had not intelligently and competently waived the right to counsel, the applicant might be discharged upon the theory that the judgment of the court in which the conviction was had is void for want of jurisdiction. * * * this court has noted that jurisdiction of the federal courts to entertain petitions for habeas corpus has been broadened by statute. This court has not been unmindful of the constitutional provisions, both state and federal, insuring the advice of counsel to a defendant in a criminal case. * * * But we are not here concerned with constitutional rights. Where constitutional rights are invaded or denied by courts of general jurisdiction, there are well-known remedies provided. The sole question with which we are concerned here is one of jurisdiction. “Assuming that the trial court erred in the sentence as charged, and that the defendant’s right to have counsel was not adequately protected,' the remedy does not lie within the jurisdiction of the Circuit, Court * * *. The Act of Congress broadening the jurisdiction of federal courts with respect to habeas corpus does not affect in any way the jurisdiction of our courts of general jurisdiction.” The question raised by this appeal necessitates its division into two narrower inquiries: (a) The determination of the reviewable facts bearing upon the accused’s constitutional right to have competent counsel represent him when charged with a serious felony. (b) The permissible scope of review, of a state court sentence, by an “inferior Federal court” in a habeas corpus proceeding. The first inquiry necessitates the separation of reviewable from non-reviewable facts. (a) Release from the imprisonment which is here sought is based, inter alia, upon the alleged constitutional right to be represented by competent counsel, as recognized in Powell v. Alabama, 287 U.S. 45, 53 S.Ct. 55, 77 L.Ed. 158, 84 A.L.R. 527; and Johnson v. Zerbst, 304 U.S. 458, 58 S.Ct. 1019, 82 L.Ed. 1461. As petitioner was represented by counsel, our inquiry is narrowed to the necessity of, and the presence of, competent counsel in this case. The specific objections to the counsel’s competency are that he was colored, and he lacked experience, being young and without a background of extensive trial work. We assume that a court appointing counsel for one charged with a felony should take many things into consideration. He should consider the existence or, absence of friends, the age and the experience of accused, the seriousness of the charge, and .the statements of counsel which tend to inform him of the existence of factual disputes, etc., particularly on the question of criminal intent. It would seem tolerably clear, that an accused is entitled, if he desires counsel, not only to be represented by one admitted to the bar, but to be represented by competent counsel, — by a capable practitioner. The fact that one is admitted to practice law in the state where the crime was committed is not, of itself, sufficient, if incompetency be charged and proven. Doubtless admission to practice, and the presence of counsel’s name on the roll of attorneys in the court where the accused is to be tried, create a presumption of competency. The presumption, however, is rebuttable, not conclusive. A fact issue is raised. Who is to determine the issue? On what evidence? To what extent is the trial court’s action reviewable? These are questions which the petition presents. Unfortunately, the record before us is incomplete,’ due to the fact that the District Court dismissed the petition before respondent had time to file an answer. No evidence was received. We have, however, been favored with an oral statement made at the time of argument, over which there was apparently no dispute, which clarifies the fact allegations of the petition. The criticism herein made that due process was denied-because counsel, appointed by the court, was a negro, is untenable. It is legal competency, not social status, distinction or qualification, that counts and controls. Good sense and good judgment necessitate the trial judge’s weighing these matters in making a selection, to-wit, age of counsel, color of counsel, if that question be present, position, standing at the bar, especially if counsel’s reputation be bad, or is known as questionable. When the selection is made, it must be given respect, and proof strong enough to support a finding of abuse of discretion presented, before a reviewing court in a habeas corpus proceeding will grant relief. The fact that petitioner’s counsel was colored, in a county where the great majority of citizens (and foreigners) were white (400 lawyers were white, and only five were negroes) should not have prejudiced petitioner. It did not prejudice the state judge.. It does not prejudice us. We must assume in this case that the state judge, before whom the accused was brought, was as anxious, as we, to see that this youth of twenty, who had participated in a robbery and a murder, was given a fair, trial and also given a punishment which was just and proper — a question, we might add, so serious and difficult that only the ignorant and the intolerant would pronounce judgment with a self-sufficient certitude which bespeaks a. failure to appreciate responsibility. Fortunately, too, the offense was tried in the State of Indiana, and no suggestion is, or can fairly be, made that this community is so prejudiced against the negro that a white man charged with commission of a felony, represented by a negro as his attorney, could not get a fair trial, even though it appeared that the appointment of such counsel was by the court. -To reach any other conclusion would be to reflect on the intelligence and fairness of- a community in this circuit and assume a factual situation which i§. at variance with our judicial knowledge and information. This leaves the youthfulness and inexperience of counsel to sustain the charge of incompetency. Here, again, we enter a field where the boundary lines, which separate the aces from the deuces, which distinguish between the brilliant lawyer who dazzles but does not illumine courts and the stolid, plodding counsel who knows his objective and pursues it, are not particularly distinct. There is a rather well-defined recollection on the part of the court, backed by our observations, that all lawyers must have their first cases, that in said first case diligence and anxious effort are often quite the equivalent of experience. It is also observable that counsel with much experience often have co-pending matters of importance which necessitate the division of time and attention, whereas the young counsel is unvexed and unperplexed by other matters and questions, and not bothered by more profitable and insistent clients. He may, therefore, give to his client full, valuable and vigorous service, which will compare favorably with that which his more experienced and better established brethren of the Bar render. And this observation is strengthened when we assume, what our experience and observation have taught us to be sound, namely, that the facts are not of the making of counsel and that the facts do and should determine most criminal cases, despite the efforts and skill of counsel, whether able and experienced, or young and new in trial work. Experience accumulated over the years is productive of wisdom — generally. The enthusiasm and drive of youth are helpful aids in the trial of hard cases — generally. But, always, the inexorable, unyielding, convicting facts overcome the wisdom of experience or the irresistible enthusiasm of youth. The petition and oral statement here justify the statement that petitioner and two other young men stopped outside a filling station for the purpose of holding up and robbing the owner thereof; that the criminal conspiracy was executed; that the owner of the station refused or declined to be held up and was shot dead; that the petitioner, though he remained in the car while his two associates executed the plan, —that is, held up the proprietor and shot him — participated as an accessory before and after the fact. Now, obviously, it would take a lot of experience of counsel and superior knowledge of the law to extract from the facts just described, the prejudice which a court or a jury would naturally draw therefrom. In other words, the facts overwhelm the situation, and no skill or experience of counsel could avoid or overcome the righteous indignation which would arise from the recital of such a cold-blooded, brutal murder. In fact, it is not the legitimate province of counsel who represent the accused to encourage perjury or subornation of perjury, or to tolerate it. The duty of faithful, capable counsel representing accused, when appointed by the court, is not different and carries no lesser obligation than would be the case if counsel were privately employed to represent the accused. Our experience has included cases where able counsel, appointed by the court to represent indigent persons accused of crime, out of an overly keen sense of duty and responsibility, have taken appeals without merit. In many cases where judgments have been entered, and privately employed counsel represent the defendant, no appeals have been taken because no prejudicial error was committed. This is as it should be. Like considerations should govern counsel in taking appeals where he is appointed by the court. The complaint is made that the counsel appointed by the court was unfamiliar with Supreme Court practice and never had a case in the Indiana Supreme Court. In passing, it might be observed that petitioner’s counsel has not suggested any ground for appeal (save incompetent counsel) to which might be added, that it is not the number of’ appeals which counsel may have taken, but how he handled the appeals which he has taken, that counts. Surely, taking an appeal, just for experience or practice, without knowing what error to assign or whether the assignment is meritorious, is not commendable practice. In the last analysis, counsel for accused should not overlook the fact that he has a duty to society, as well as the accused, to perform. When the cold, undisputed, and inexplainable facts point with certainty to the commission of a felony by his client, it is not part of counsel’s duty, whether employed by the accused or appointed by the court, to undertake to overthrow the facts by false and perjured testimony or by practices which it has been here intimated are within the knowledge of experienced counsel but outside the ken of the beginner. This case impresses us as one where the real question was not of guilt of petitioner, but rather one where the punishment was the debatable question. There is an allegation in the petition which is somewhat outside the charge of incompetency of counsel, which would necessitate the issuance of the writ were it not for the jurisdictional question, hereafter discussed. The petitioner alleged in substance that he pleaded not guilty to the charge set forth in the indictments, that thereafter, without his knowledge and consent, his counsel consented to an agreed statement of facts, which facts established petitioner’s guilt. We, of course, do not know what fact might be established on the trial respecting this allegation, for the respondent has not answered and no evidence was received. In the absence of dispute, either by answer> or by evidence, we must accept this allegation as true. On this assumption, we must hold that the court could not have validly pronounced sentence .upon petitioner on such a record. Accused’s counsel had no authority to change his plea nor to stipulate facts without his consent. To hold otherwise would constitute a denial of several rights guaranteed the accused by the Bill of Rights. The proper course for the court, to whom the petition for habeas corpus is addressed, to pursue, is stated in the recently decided case of Walker v. Johnston, 61 S.Ct. 574, 85 L.Ed.-, announced by the Supreme Court, February 10, 1941. That practice calls for an examination ,of the petition to ascertain its legal sufficiency. If a factual allegation is there asserted which would justify the issuance of the writ, the. writ should issue and be directed to the person in whose custody the prisoner is detained. Such officer must make a return, and if a factual issue is presented, the cause shall be set for early hearing and a trial, including the taking of oral testimony. Before a hearing is necessitated, however, or the writ issues, the court must determine whether “it appears from the petition itself that the party is not entitled thereto.” The District Court, in the instant application, undoubtedly following this requirement, concluded that the petition on its face showed, as a matter of law, that the petitioner was not entitled to the writ. We conclude that the above considered allegations of fact would necessitate the issuance of a writ in this case’ but for the objection which involves the discussion of the second question stated in the forepart of this opinion, namely, the decisions which restrict “inferior Federal courts” from unnecessarily and improperly interfering with the judgments of state courts even where the guaranties of the Federal Constitution are, allegedly, violated. This brings us squarely to the consideration of said second question, to-wit, of the permissible scope of review of the state court sentence by an inferior Federal court, in a habeas corpus proceeding. (b) The petition has failed to show a fact situation which would justify a Federal inferior court in a habeas corpus proceeding, in reviewing and avoiding a state court sentence, where the ground for relief is the alleged violation of a right given the accused by the Fourteenth Amendment to the Federal Constitution.

1719967-18226

Opinion by Judge TROTT; Dissent by Judge O’SCANNLAIN. TROTT, Circuit Judge: The New People’s Army (“NPA”) is a violent, revolutionary Communist group which actively opposes the Philippine government. The NPA has a well-documented history of political violence, including the murder of its opponents. The 1995 Country Profile issued by our State Department says that “the NPA ... is known to engage in killings and other violence.” In testimony found by an immigration judge to be credible, consistent, forthright, and “sincere in all respects,” petitioner Teresita Moral Borja related a series of hostile encounters with the NPA in Manila in her native Philippines. She argues that her unchallenged testimony compels the conclusion that the NPA persecuted her, and that they did so-at least in part-on account of her political opinion; and she maintains that this persecution qualifies her under our laws for political asylum. Because we agree with her analysis of the compelling effect of her evidence, we grant this petition for review. I On September 22, 1992, armed NPA operatives confronted Ms. Borja while she was working in her parents’ business and shoe factory. These men were interested in accomplishing two related objectives. First, they asked Ms. Borja to join and support their organization. She refused, telling them she was “pro-government” and that she would not enlist. Because the facts of this confrontation are essential to our conclusion, we quote verbatim from her testimony: Q. (By Attorney Gadda) What happened after [you told them you were pro-government and refused to join]? A. (By Ms. Borja) They get mad at me. They pointed a gun at me and then I thought they were going to kill me because I argued with them that I don’t want their, I don’t their organization because they kill people, women and children and they get mad and I thought they were going to kill me. They pointed a gun at me and I told them just that I will pay taxes if I needed to so that they would not kill me. (emphasis added) The NPA responded by demanding 3,000 pesos from her as “revolutionary taxes”: Q. (By Mr. Thompson for the INS) Did they ask (sic) you for money after you turned down-you refused to join them? A. (By Ms. Borja) Yes. Q. And that amount was 3,000 pesos? A. Yes. Q. Did you pay them the 3,000 pesos immediately? A. Yes, I did. The men left, telling her they would return monthly for another payment and that she would be killed if she called the police or the “authorities,” apparently meaning the military. The men surfaced every month to collect on their demands. Ms. Borja believed they were armed on each occasion. In February 1993, the NPA doubled its demand to 6,000 pesos. When Ms. Borja said she did not have that amount of money and could not pay, the NPA agents became angry, beat her, put a gun to her head, and slashed her with a knife. This wound left a scar which she displayed on request to the immigration judge at her hearing. After suspending their attack, the men departed, telling her they would murder her if she didn’t get the money. In short order, Ms. Borja sought medical treatment (including stitches for her arm), moved out of her house, went into hiding (“I was so scared that any time they might find me and Mil me”), and sought a visa to flee the country. At her hearing, her attorney asked her if she was aware of the recent amnesty the government supposedly had arranged with the NPA. She acknowledged the arrangements, but said, “it’s not working because the rebels ... wouldn’t agree to conditions.” Her attorney then asked her if she had considered moving to another part of the Philippines to escape the NPA’s threat. Her considered response was, “No, because the NPAs are everywhere and they have this vast network of intelligence and they can find people.” She concluded her testimony with this plea: “I would like to beg Your Honor to please let me stay in this country because if I go back, I am sure they will kill me.” II In the posture that this case comes to us, we must answer one central question: Does the evidence Ms. Borja presented to the BIA compel the conclusion that the NPA subjected her to persecution on account of her political opinion under the Immigration and Nationality Act. 8 U.S.C. §§ 1101(a)(42)(A) (West Supp.1998). See INS v. Elias-Zacarias, 502 U.S. 478, 479, 112 S.Ct. 812, 117 L.Ed.2d 38 (1992). An answer in the affirmative entitles her to eligibility for asylum. The BIA’s contrary determination “can be reversed only if the evidence presented by [Ms. Borja] was such that a reasonable factfinder would have to conclude that the requisite fear of persecution existed.” Id. at 481, 112 S.Ct. 812. However, as the Second Circuit observed in Osorio v. INS, 18 F.3d 1017, 1028 (2d Cir.1994), “[t]he plain meaning of the phrase ‘persecution on account of the victim’s political opinion,’ does not mean persecution solely on account of the victim’s political opinion. That is, the conclusion that a cause of persecution is economic does not necessarily imply that there cannot exist other causes of the persecution.” As the United Nations’ Handbook on Procedures and Criteria for Determining Refugee Status says, “[W]hat appears at first sight to be primarily an economic motive for departure may in reality also involve a political element, and it may be the political opinions of the individual that expose him to serious consequences, rather than his objections to the economic measures themselves.” Osorio, 18 F.3d at 1029 (quoting U.N. Handbook at §§ 62-64). To quote the Board’s decision in this case, “An applicant for asylum need not show conclusively why persecution occurred in the past or is likely to occur in the future. However, the applicant must produce evidence from which it is reasonable to believe that the harm was motivated, at least in part, by an actual or implied protected ground.” In re T-M-B-, Interim Dec. No. 3307 (BIA Feb. 20, 1997). See also Singh v. Ilchert, 63 F.3d 1501, 1509-10 (9th Cir.1995) (“Persecutory conduct may have more than one motive, and so long as one motive is one of the statutorily enumerated grounds, the requirements have been satisfied.”). 111 Given this test, we conclude that Ms. Borja’s undisputed testimony compels the conclusion that she was persecuted by the NPA, at least in part, on account of her political opinion. In contrast to the record in Elias-Zacarias, which did not contain any clear evidence of the guerillas’ motive, either direct or circumstantial, Ms. Borja articulated her political opposition to the NPA as the reason for her refusal to join. We know that the NPA agents acted in direct response to her statement of political opposition and revulsion at their methods because their immediate reaction was to “get mad” and point a gun at her. When Ms. Borja saw their anger at her vocal resistance, she thought they were going to kill her at that very moment. The record shows that she interrupted that distinct possibility by changing the subject to their demand for money: “They pointed a gun at me and I told them just that I will pay taxes if I needed to so that they would not kill me.” Under these telling circumstances, we believe that no reasonable fact-finder could fail to see the role her outspoken political opinion played both then and thereafter in what happened to her at the hands of the NPA. We agree with the Board’s majority in their en banc opinion that she demonstrated “economic extortion,” but we find no support for their conclusion that the extortion was exclusively “non-political.” With all respect to the majority of the divided Board, Member Rosenberg’s analysis in dissent is correct: “The case before us is an example of what we might call ‘extortion plus.’ ” Had she not interjected her willingness to pay, the evidence strongly suggests that the NPA would have taken her life as a response to her political statement. Quite possibly, other NPA episodes of robbery and extortion have been purely economic in nature, but this one clearly had mixed motives. We note that Ms. Borja did not waver from her political refusal to join the NPA, remaining in their eyes their political adversary. Once Ms. Borja drew a political line in the sand, her every contact with the NPA became a life or death situation, and the probability of death became almost certain in February 1993, when she could not and did not pay her “taxes.” As the immigration judge wrote in his decision, The NPA members then became angry and started slapping and hitting [Ms. Borja]. One of them threatened her with a gun. The other took out a knife and cut her right shoulder and/or right arm area. They also told her that they would be back and that she was to have the money ready when they returned; if not she would be killed. Printed Oral Decision of the Immigration Judge, August 8, 1995. Wounded and no longer able to buy her life with money as she had in September, no reasonable person could doubt the sincerity and validity of her fear of immediate death at the vengeful hands of her political enemy, fear that drove her from her home and into hiding. Had she joined the NPA’s cause, it is unreasonable to assume they would have slashed her shoulder and drawn her blood when she could not produce 6,000 pesos on demand. The evidence viewed as a whole compels the inescapable conclusion that the harm and continuing death threats the NPA inflicted upon Ms. Borja were motivated not just by an isolated desire for money, but in fact were triggered by her initial hostile political confrontation with its agents. There is no substantial evidence in the record to the contrary. Only by closing one’s eyes to the escalating nature of this confrontation could one see the ensuing events as strictly economic with no political component. The connection drawn by Ms. Borja between her political confrontation with the NPA and their hostile treatment of her has the unmistakability of a dinosaur in a haystack. As in the case of Lazo-Majano v. INS, 813 F.2d 1432, 1434 (9th Cir.1987), the fact that she surrendered initially to their demands “does not alter the persecutory character of her treatment.” In February 1993, when she could not pay, the NPA took up where it had left off in September and escalated its pressure with life-threatening violence: words turned to wounds. This is not the first time we have concluded that beatings and assaults for the purpose of financial extortion constitutes persecution on account of political opinion. In Desir v. Ilchert, 840 F.2d 723, 725 (9th Cir.1988), petitioner Desir was arrested, threatened, and assaulted by Haitian Ton Ton Macoutes because he refused to pay bribes in return for fishing privileges. The BIA rejected his asylum request because he “had not shown that his refusal to pay the bribes was an expression of political opinion” or that the Macoutes interpreted his failure to pay as politically motivated. See id. On the facts, we disagreed with the BIA, noting that “the treatment endured by Desir is more properly understood as motivated by ‘political’ rather than ‘personal’ interests.” Id. at 728. Our conclusion in Desir was fueled, as it is here, by an understanding of the context of the refusal to submit to the aggressors’ demands. We said, “Desir’s refusal to accede to extortion in a political system founded on extortion resulted in his classification and treatment as a subversive.” Id. at 727. The factual setting that Ms. Borja brings to us is similar to the plight of the petitioner in Gonzales-Neyra v. INS, 122 F.3d 1293 (9th Cir.1997), as amended, 133 F.3d 726 (9th Cir.1998). In that case, Gonzales-Neyra was first approached anonymously by the Peruvian Shining Path as “a target for money because he was a successful businessman.” Id. at 1296. When he discovered their political identity, he rejected their demands and told them he did not support their revolutionary armed struggle against the government. In response, the guerrillas threatened to kill him. The BIA concluded that Gonzales-Ney-ra failed to establish his eligibility for a grant of asylum. Over the government’s opposition, we concluded that he was eligible, and we granted his petition for withholding of deportation, saying, The government’s focus on the Shining Path’s economic motivation for the extortion demands is misplaced, as was the immigration judge’s and the BIA’s.... Thus, the fact that the guerrillas may have initially chosen Gonzales-Neyra as a target for money because he was a successful businessman, does not relate to their subsequent motivation for persecuting him. The persecution of which Gonzales-Neyra complains is not the extortion, but the threats upon his life and business that were made after the guerrillas learned of his political orientation. Id. at 1296. IV Because Ms. Borja has demonstrated that she suffered past persecution, she is entitled to the legal presumption that she has a well-founded fear of future persecution. See 8 C.F.R. § 208.13(b)(l)(i); Prasad v. INS, 101 F.3d 614, 617 (9th Cir.1996). In order to rebut this presumption, the INS must show by a preponderance of the evidence that conditions in the Philippines have changed to such an extent that Ms. Borja no longer has a well-founded fear that she would be persecuted, should she return there. See id. To rebut this presumption, the INS invokes our State Department’s 1995 Profile of Asylum Claims and Country Conditions regarding the Philippines. The INS highlights the Profile’s description of an amnesty program; an NPA declining in numbers and geographical presence; an NPA that “in most instances”-but implicitly not all-is not interested in the political opinion of its victims, but in their wealth; and that “generally [it is] possible to seek internal resettlement” in cases with credible threats, (emphasis added). What the INS does not highlight is the Profile’s unreassuring statements that there are “fewer” disappearances and politically-related killings, and that peace talks involving the NPA were “adjourned indefinitely” in 1994 because of “dissension.” The report also says the number of “NPA instigated killings in recent years” is “declining.” This information leads us to conclude that, although the current tide of violence may be receding, based on this record it still exists. The Profile says also that some asylum claimants try to distance themselves from the NPA, and that those claimants may be aware that “if they do not distance themselves from the NPA, which is known to engage in killings and other violence, they may risk having their applications denied on the grounds that they themselves engaged in persecution.” (emphasis added). The Profile continues with an acknowledgment that one faction of the NPA targets “business figures for vigilante-style assassinations as ‘enemies of the people.’ ” Ms. Borja would appear to be a “business figure.” Reading the Profile in its entirety gives us no sense whatsoever that Ms. Borja does not have a reason to fear death at the hands of the NPA. In fact, the Profile fully corroborates Ms. Borja’s testimony that the NPA is a dangerous group that murders people who oppose them. This conclusion leads us to our second problem with the country conditions information: the BIA failed to apply the relevant facts in the Profile to the specific threat faced by Ms. Borja. “Our cases hold that ‘individualized analysis’ of how changed conditions will affect the • specific petitioner’s situation is required. Information about general changes in the country is not sufficient.” Garrovillas v. INS, 156 F.3d 1010, 1017 (9th Cir.1998). The BIA erred as a matter of law in failing to do the requisite analysis. For these reasons, the presumption that Ms. Borja has a well-founded fear stands unrebutted. V We conclude that Ms. Borja (1) did suffer past persecution and (2) that she has convincingly shown a genuine and well-founded fear of future political persecution should she return to the Philippines. Under these circumstances, she is eligible for a discretionary grant of asylum. We conclude also that her proof demonstrates a “clear probability of persecution” which entitles her to mandatory withholding of deportation, sometimes known as “nonrefoulement,” required by section 243(h)(1) of the Act. 8 U.S.C. § 1253(h)(West 1970). When Ms. Borja last saw the NPA, they told her she would die if she did not pay. She did not pay. Under these circumstances, on returning to her native land this young woman could only be expected once again to go into hiding to protect her life. The record compels a conclusion that it is “more likely than not” that she would be subject to persecution by the NPA on account of her political beliefs. See INS v. Stevic, 467 U.S. 407, 429-30, 104 S.Ct. 2489, 81 L.Ed.2d 321 (1984). This record is full of evidence that the NPA’s promises are not idle. It does not take much of an imagination to understand what will happen to her if the gunmen who drew her blood discover that she has been returned to her home. This plight is precisely the type of life-threatening predicament that the withholding of deportation is designed to accommodate. As the Supreme Court observed in INS v. Cardoza-Fonseca, 480 U.S. 421, 449, 107 S.Ct. 1207, 94 L.Ed.2d 434 (1987), “Deportation is always a harsh measure; it is all the more replete with danger when the alien makes a claim that he or she will be subject to death or persecution if forced to return to ... her home country.” VI Finally, we note that we have taken care not to exceed our authority, and not to second-guess the BIA. Our decisions simply give effect to the will of Congress making eligibility for political asylum and withholding of deportation available to refugees like Ms. Borja who can demonstrate factually a compelling case for such relief. In conferring upon us the responsibility to review these petitions, we believe that Congress expects no less. We remand this case to the BIA with instructions to present this matter to the Attorney General for the exercise of her discretion under 8 U.S.C. § 1158(b), not inconsistent with this opinion, and for an appropriate order withholding deportation of this petitioner. PETITION GRANTED.

3504461-4682

ORDER ON DEFENDANT’S MOTION TO DISMISS WHITE, Hearing Officer. House Resolution 69, 98th Congress, 1st Session, referred H.R. 1232, 98th Congress, 1st Session, to the Chief Judge of the United States Claims Court, and directed him to “proceed with the same in accordance with the provisions of sections 1492 and 2509 of title 28 of the United States Code.” H.R. 1232 is a bill which, if enacted, would authorize the payment of an unspecified sum of money for the benefit of the Alabama Coushatta Tribe of Texas and the Coushatta Tribe of Louisiana, respectively, in full settlement of all claims of the two tribes “arising from the taking by the United States of land owned or occupied by such tribes without payment for such lands of compensation agreed to by such tribes, and claims based upon fair and honorable dealings that are not recognized by any existing rule of law or equity, and other claims which otherwise, except for the lapse of time and the failure to timely file, would have been compensable under the Indian Claims Commission Act, section 70 of title 25 of the United States Code.” The two tribes subsequently filed separate complaints with the Chief Judge of the Claims Court. The present proceeding relates to a motion filed by the United States to dismiss the claim of the Alabama Coushatta Tribe of Texas, on the ground that “this court lacks jurisdiction over the subject matter.” In the introduction to its memorandum in support of the motion to dismiss, the defendant states as follows: In this Congressional Reference, the Alabama Coushatta Tribe of Texas sues for failure of the government to recover its aboriginal lands from third parties. The government moves to dismiss because that claim is outside the scope of the referring legislation and therefore beyond the jurisdiction of the Court. The complaint filed by the Alabama Coushatta Tribe of Texas, after asserting that it lost possession of most of its aboriginal land due to the actions of third parties, contains in paragraph 10 a sentence stating that “The United States continues to fail in its duty and obligation to the Tribe in that it has never taken steps to recover the land for the Tribe.” If this sentence delimited the claim of the Texas tribe, it might be proper to advise the Congress that the Texas tribe’s claim is invalid, inasmuch as the obligation of the United States to protect Indian tribal lands does not include any duty to recover such lands after they have been taken by third parties, even if the taking was wrongful. See Seneca Nation of Indians v. United States, 173 Ct.Cl. 912, 916 (1965). The Texas tribe’s claim, however, is based upon factual allegations much broader than the alleged failure of the United States to recover tribal land from third parties. The complaint alleges—and the allegations in the complaint must be regarded as true and correct in considering the motion to dismiss—that at the time when Texas was admitted to statehood in 1845, and for a long time thereafter, the tribe exclusively used and occupied, and had aboriginal title to, a large area of land in East Texas, which now includes 17 named counties; that beginning at a time after Texas was admitted to the Union, the tribe lost possession of virtually all of its aboriginal land “through acts of third parties unauthorized by the United States”; and that the United States “failed in its duty and obligation to secure the Tribe in possession of its land as required by the Constitution, the Indian Nonintercourse Act, and federal common law,” by failing “to lend any aid or assistance to the Tribe,” and by permitting “the Tribe to be exploited and unconscionably deprived of possession of its land without payment of compensation.” In the prayer, the complaint asks that Congress be informed “(1) that the United States breached its fiduciary duty to protect the Tribe in possession of its lands, and (2) that Plaintiff is entitled to an award of all damages proximately caused by the United States’ breach of trust * * Thus, the sentence in the complaint stating that “The United States continues to fail in its duty and obligation to the Tribe in that it has never taken steps to recover the land for the Tribe” is a relatively minor part of the Texas tribe’s claim. H.R. 1232 proposes that the Congress recognize “claims based upon fair and honorable dealings that are not recognized by any existing rule of law or equity.” Section 2 of the Indian Claims Commission Act (60 Stat. 1050; 25 U.S.C. § 70a (1976)) similarly authorized the recognition of claims by Indian tribes “based upon fair and honorable dealings that are not recognized by any existing rule of law or equity.”

1615177-30176

Opinion for the Court filed by Circuit Judge SILBERMAN. SILBERMAN, Circuit Judge: Local Union 1395, International Brotherhood of Electrical Workers, AFL-CIO, petitions for review of an order of the National Labor Relations Board dismissing an unfair labor practice complaint. The complaint charged that the Indianapolis Power & Light Company violated Sections 8(a)(1) and 8(a)(3) of the National Labor Relations Act, 29 U.S.C. § 158(a)(1), (3) (1982), by suspending an employee who had refused to cross a picket line in the course of his duties. The Board held that the employee’s right to engage in this “sympathy strike” had been waived in Local 1395’s collective bargaining agreement with Indianapolis Power, which contained a no-strike clause. Because the Board failed to address relevant evidence of the parties’ intent underlying this no-strike clause, however, we reverse the Board’s decision and remand the case to the Board for further consideration. I. Since 1972, Local 1395 and Indianapolis Power have entered into a series of collective bargaining agreements. Each of these agreements has contained a clause providing: During the term of this agreement, and any extension or renewal thereof, the Union and each employee covered by the agreement agree not to cause, encourage, permit, or take part in any strike, picketing, sit-down, stay-in, slow-down, or other curtailment of work or interference with the operation of the Company’s business, and the Company agrees not to engage in a lock-out. In August 1983, employee Herbert King was assigned to read the meters on the premises of one of Indianapolis Power’s customers. Arriving on the scene, however, King encountered a picket line set up by workers on strike against the company. King refused to cross the picket line despite his supervisors’ instructions to do so. As a result, King was threatened with termination and suspended from work for two-and-one-half days. In response, Local 1395 filed an unfair labor practice charge, and, subsequently, the NLRB’s General Counsel issued a complaint alleging that the discipline imposed upon King violated Sections 8(a)(1) and 8(a)(3) of the Act. After a hearing, an administrative law judge issued a decision sustaining the complaint. The ALJ noted that the Board, in Operating Engineers Local 18 (Davis-McKee, Inc.), 238 N.L.R.B. 652 (1978), had held that “broad no-strike clauses, without more, are insufficient to establish waiver of the right to engage in sympathy strikes.” Id. at 654. Accordingly, the AU concluded that the collective bargaining agreement’s no-strike clause would not effectively waive the right to honor picket lines unless extrinsic evidence of the parties’ specific intent (such as bargaining history and past practice under the agreement) conclusively established such a waiver. The AU regarded the evidence on this point as equivocal at best; he found that the parties had expressed different views at the bargaining table over whether the no-strike clause covered sympathy strikes and had, in effect, agreed to disagree on the issue. Thus, the AU held, the right had not been waived, King’s refusal to cross the picket line was protected conduct, and Indianapolis Power’s sanctions against him ran afoul of the Act. On January 31, 1985, the Board issued a decision reversing the AU. Rejecting the basic approach announced in Davis-McKee, the Board maintained that it could “discern no logical or practical basis for the proposition that the prohibition of all ‘strikes’ does not include sympathy strikes merely because the word ‘sympathy’ is not used.” 273 N.L.R.B. No. 211, 1984-85 NLRB Dec. (CCH) II 17,040 (1985) slip op. at 2-3. A broadly-phrased no-strike clause, according to the Board, should properly be read to encompass sympathy strikes unless the contract as a whole or extrinsic evidence demonstrates that the parties intended otherwise. See id. The Board stated generally that it agreed with the AU that the extrinsic evidence of the parties’ intent was uncertain and inconclusive; but the Board did not discuss the AU’s specific finding that the parties had expressed different meanings about the scope of the no-strike clause at the time they entered the agreement. Instead, the Board regarded the no-strike clause’s plain meaning as dispositive. The Board held that employees had waived their right to honor picket lines, and so concluded that Indianapolis Power was entitled to discipline King for refusing to carry out his work assignments. Local 1395 filed this petition for review. This court has jurisdiction pursuant to Section 10(f) of the Act, 29 U.S.C. § 160(f) (1982). II. A. We begin with settled principles. Under Section 7 of the Act, 29 U.S.C. § 157 (1982), employees enjoy the right to observe lawful picket lines that they encounter in the course of their duties. See, e.g., United States Steel Corp. v. NLRB, 711 F.2d 772, 775-76 (7th Cir.1983); NLRB v. Southern Cal. Edison Co., 646 F.2d 1352, 1363-64 (9th Cir.1981). This right, however, may be waived by employees in collective bargaining agreements. See NLRB v. Rockaway News Supply Co., 345 U.S. 71, 79-80, 73 S.Ct. 519, 524-25, 97 L.Ed. 832 (1953); News Union of Baltimore v. NLRB, 393 F.2d 673, 677 (D.C.Cir.1968). Still, waiver of the right to engage in sympathy strikes, like waiver of other rights under the Act, must be “clear and unmistakable.” Metropolitan Edison Co. v. NLRB, 460 U.S. 693, 708, 103 S.Ct. 1467, 1477, 75 L.Ed.2d 387 (1983); IBEW Local 1466 v. NLRB, 795 F.2d 150, 153 (D.C.Cir.1986). In this proceeding, the Board altered its basic approach toward analyzing collective bargaining agreements for a waiver of the right to honor picket lines. Under Davis-McKee, the Board apparently would find such a waiver only if a contractual no-strike provision specifically referred to sympathy strikes or if extrinsic evidence unambiguously established that the parties intended such a waiver. Now the Board regards a broadly-phrased, comprehensive no-strike clause as sufficiently “clear and unmistakable” evidence that employees intended to waive the right to engage in sympathy strikes, unless the contract as a whole or extrinsic evidence demonstrates the contrary. In reviewing the Board’s orders, courts customarily defer to the Board’s exercise of its “special function of applying the general provisions of the Act to the complexities of industrial life.” NLRB v. Erie Resistor Corp., 373 U.S. 221, 236, 83 S.Ct. 1139, 1150, 10 L.Ed.2d 308 (1963). This deference is not withheld simply because the Board has departed from a prior policy. See NLRB v. Local Union 103, Iron Workers, 434 U.S. 335, 350-51, 98 S.Ct. 651, 660-61, 54 L.Ed.2d 586 (1978). However, while it is settled that the Board may interpret collective bargaining agreements when they are raised as defenses in unfair labor practice proceedings, see NLRB v. C & C Plywood Corp., 385 U.S. 421, 87 S.Ct. 559, 17 L.Ed.2d 486 (1967), it is less clear whether such interpretations are entitled to judicial deference. Compare, e.g., NLRB v. Southern Cal. Edison Co., 646 F.2d 1352, 1362 (9th Cir.1981) (deference is appropriate), with Pacemaker Yacht Co. v. NLRB, 663 F.2d 455, 458 (3d Cir.1981) (deference is inappropriate). The approach reflected in cases of this Circuit appears to be that deference is extended to the Board’s factual findings on matters bearing on the intent of the parties, see News Union of Baltimore v. NLRB, 393 F.2d 673, 677-78 (D.C.Cir.1968), but not to the ultimate legal conclusion attached to the parties’ words and conduct. See Retail Clerks Int’l Ass’n Local 455 v. NLRB, 510 F.2d 802, 805 (D.C.Cir.1975). The reason for this approach is not simply that contract interpretation simpliciter has traditionally been thought to be peculiarly within the expertise of the judiciary. Courts have often found it appropriate to give weight to the interpretation of regulated parties’ agreements by an administrative agency charged with the primary enforcement of a statutory mandate. See, e.g., Kansas Cities v. FERC, 723 F.2d 82 (D.C.Cir.1983). The added factor here is that the courts’ role under the labor laws goes beyond merely seeing that the Board stays within the bounds of its delegated authority. Congress has authorized the courts independently to entertain suits brought to enforce collective bargaining agreements under Section 301 of the Labor-Management Relations Act, 29 U.S.C. § 185 (1982), and has directed them to formulate the principles of federal contract law to be applied in these suits. See Textile Workers v. Lincoln Mills, 353 U.S. 448, 456-57, 77 S.Ct. 912, 917-18, 1 L.Ed.2d 972 (1957). If deference were afforded the Board’s interpretation of collective bargaining agreements, the Board would be free to apply different (if sufficiently reasonable) standards of interpretation than those applied by the courts in Section 301 suits. That result would surely undermine the voluntary collective bargaining process that lies at the heart of federal labor policy. As the Supreme Court stated in Local 174, Teamsters v. Lucas Flour Co., 369 U.S. 95, 82 S.Ct. 571, 7 L.Ed.2d 593 (1962) (in the context of holding state contract law preempted by Section 301): The possibility that individual contract terms might have different meanings [in different forums] would inevitably exert a disruptive influence upon both the negotiation and administration of collective agreements. Because neither party could be certain of the rights which it had obtained or conceded, the process of negotiating an agreement would be made immeasurably more difficult by the necessity of trying to formulate contract provisions in such a way as to contain the same meaning under two or more systems of law which might someday be invoked in enforcing the contract. Once the collective bargain was made, the possibility of conflicting substantive interpretation under competing legal systems would tend to stimulate and prolong disputes as to interpretation. 369 U.S. at 103-04, 82 S.Ct. at 576-77 (footnote omitted). See also Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 105 S.Ct. 1904, 1910-11, 85 L.Ed.2d 206 (1985). We find in these concerns powerful reasons to adhere to the view expressed by former Chief Judge Bazelon in Retail Clerks that the Board’s interpretation of contractual provisions is entitled to “no particular deference.” 510 F.2d at 805. B. Before turning to the particular contract before us, we address the question— vigorously disputed by the parties — of how the standard governing the waiver of statutory rights ought to be applied. Local 1395 maintains that the Board’s new approach, which treats waiver of sympathy strikes essentially as a matter of straightforward contract interpretation, is inconsistent with the “clear and unmistakable” standard. According to Local 1395, this standard is addressed to an employee’s subjective intention to give up a statutory right, rather than to an objectively reasonable construction of a contract that binds the employee. The petitioner contends that the clear and unmistakable test represents a more exacting standard than that employed by courts in suits brought under Section 301 to enforce collective bargaining agreements (or, for that matter, by arbitrators). Under this view, while a court or arbitrator would not be precluded, under “accepted principles of traditional contract law,” Lucas Flour, 369 U.S. at 105, 82 S.Ct. at 578, from reading a general no-strike clause to cover sympathy strikes, the Board could not find a waiver of the right to honor picket lines without more specific contractual language or compelling extrinsic evidence. Local 1395’s argument, ably presented by counsel, is not without intuitive appeal. At first blush, one might well think that finding a “clear and unmistakable waiver” of a statutory right requires more elaborate evidentiary support than simply placing an objective construction on a contract. But that is not in fact the approach adopted by the Supreme Court. In NLRB v. Rockaway News Supply Co., 345 U.S. 71, 73 S.Ct. 519, 97 L.Ed. 832 (1953), which held that a general no-strike clause waived employees’ right to engage in sympathy strikes, the Supreme Court stated that resolution of the case required “no determination of rights or duties respecting picket lines broader than this contract itself prescribes.” Id. at 79, 73 S.Ct. at 524. Similarly, in Mastro Plastics Corp. v. NLRB, 350 U.S. 270, 76 S.Ct. 349, 100 L.Ed. 309 (1956), upon which the petitioner principally relies, the Court stated that the question of waiver “turns upon the proper interpretation of the particular contract before us.” Id. at 279, 76 S.Ct. at 356. The relevant cases simply do not support the proposition that waiver hinges upon employees’ subjective intent rather than the mutual consent reflected in a contractual commitment. Local 1395 relies upon cases such as Johnson v. Zerbst, 304 U.S. 458, 58 S.Ct. 1019, 82 L.Ed. 1461 (1938), which discuss the requirements governing the waiver of constitutional rights. The distinction between those cases and the present one, we think, is that waiver of constitutional rights is disfavored. By contrast, no federal policy is disserved when a union is permitted freely to enter into agreements limiting its recourse to economic weapons in exchange for “gains it considers of more value to its members.” Metropolitan Edison Co. v. NLRB, 460 U.S. 693, 707, 103 S.Ct. 1467, 1477, 75 L.Ed.2d 387 (1983). In our view, federal labor policy is more threatened by the interposition of artificial rules of construction upon the parties’ mutual intent when “waiver” of sympathy strikes is at stake than by the Board’s practice of giving effect to the clear import of contractual language. See generally Note, Coterminous Interpretation: Limiting the Express No-Strike Clause, 67 Va.L.Rev. 729, 742-45 (1981). A grudging or stilted inter pretation of collective bargaining agreements tends to encroach upon the fundamental national policy favoring the ordering of the employer-employee relationship by voluntary bargaining rather than governmental fiat, cf. H.K. Porter Co. v. NLRB, 397 U.S. 99, 90 S.Ct. 821, 25 L.Ed.2d 146 (1970); it injects into the collective bargaining process an uncertainty that diminishes the prospects for successful bargaining. See United States Steel Co. v. NLRB, 711 F.2d 772, 780 (7th Cir. 1983); Pacemaker Yacht Co. v. NLRB, 663 F.2d 455, 460 (3d Cir.1981). For the same reason we reject the petitioner’s contention that the standards governing the question of waiver in unfair labor practice proceedings before the Board differ markedly from the contract interpretation practiced by courts under Section 301. Precedents from these two forums regarding interpretation of collective bargaining agreements have typically been cited interchangeably. Courts deciding cases arising under Section 301 have relied upon Board decisions about waiver of the right to strike, e.g., Lucas Flour, 369 U.S. at 105, 82 S.Ct. at 577, and have applied the “clear and unmistakable” standard, e.g., Ryder Truck Lines, Inc. v. Teamsters Local 480, 727 F.2d 594, 600 (6th Cir.) (en banc), cert. denied, 469 U.S. 825, 105 S.Ct. 103, 83 L.Ed.2d 48 (1984); Delaware Coca-Cola Bottling Co. v. Teamsters Local 326, 624 F.2d 1182, 1184 (3d Cir.1980); cf. Drake Bakeries v. Local 50, American Bakery & Confectionary Workers Int’l, 370 U.S. 254, 265, 82 S.Ct. 1346, 1352, 8 L.Ed.2d 474 (1962) (citing Mastro Plastics); conversely, courts reviewing decisions of the Board regarding waiver have discussed the reasoning of Section 301 cases, e.g., NLRB v. Magnavox Co., 415 U.S. 322, 325, 94 S.Ct. 1099, 1102, 39 L.Ed.2d 358 (1974); Metropolitan Edison, 460 U.S. at 708 n. 12, 103 S.Ct. at 1477 n. 12; cf. Rockaway News, 345 U.S. at 80, 73 S.Ct. at 524 (deferring to arbitrators’ interpretation of collective bargaining agreement’s no-strike clause). Indeed, in formulating its prior approach toward no-strike clauses in Davis-McKee, the Board explicitly relied upon its reading of the Supreme Court’s Section 301 decisions. See 238 N.L.R.B. at 654. Although this process of cross-fertilization has taken place largely without analysis or conscious approval, we think it follows quite naturally from the policies of the labor laws. A divergence of interpretive standards “would inevitably exert a disruptive influence” on the voluntary collective bargaining process central to federal labor policy. Lucas Flour, 369 U.S. at 103, 82 S.Ct. at 576. As the Supreme Court has instructed, a uniform approach to the interpretation of labor agreements is necessary to a healthy system of voluntary collective bargaining. See supra pp. 1030-1031. The petitioner concedes that under its view, an employer could obtain an award of damages in a Section 301 suit against a union on the theory that a sympathy strike violated a no-strike clause, but the employer would be guilty of unfair labor practices if it disciplined employees for the same conduct. This is precisely the sort of “conflicting substantive interpretation under competing legal systems” that the Court has regarded as destructive of the collective bargaining process. Lucas Flour, 369 U.S. at 104, 82 S.Ct. at 577. We cannot accept the view that Congress sanctioned such an anomalous result. We conclude, then, that the standards governing the question of whether a contract “waives” statutory rights (and thereby provides a defense to an unfair labor practice charge) do not differ significantly from those applied in breach-of-contract suits under Section 301. In neither context, however, is it appropriate to interpret collective bargaining agreements in a vacuum, solely in accordance with “abstract definitions unrelated to the context in which the parties bargained and the basic regulatory scheme underlying that context.” C & C Plywood, 385 U.S. at 430, 87 S.Ct. at 565. Rather, collective bargaining agreements must be read in light of the realities of labor relations and considerations of federal labor policy, see Lucas Flour, 369 U.S. at 105, 82 S.Ct. at 577, which make up the background against which such agreements are entered. See Mastro Plastics, 350 U.S. at 279-83, 76 S.Ct. at 356-58. To be sure, the clear and unmistakable test dictates that the waiver of statutory rights may not be inferred casually. But that test also cannot be applied woodenly; whether rights have been waived with the requisite clarity depends crucially upon context and “the specific circumstances of each case.” Metropolitan Edison, 460 U.S. at 709, 103 S.Ct. at 1478. Examination of the leading cases reveals that the explicitness with which a waiver must be stated in a contract varies with the nature of the right at issue. At one end of the spectrum lies Mastro Plastics. In that case, the Supreme Court held that a general no-strike clause did not waive employees’ right to strike against flagrant unfair labor practices. The employees had struck to protest a campaign of intimidation by their employer designed to oust their incumbent representative, conduct “destructive of the foundation on which collective bargaining must rest.” 350 U.S. at 281, 76 S.Ct. at 357. It seems highly unlikely, to say the least, that a union would agree to give up its members’ right to strike against such conduct — in effect, to forfeit its means of self-preservation — and the Court held that a general no-strike clause did not by itself establish that concession. By contrast, in Lucas Flour, the Court unhesitatingly implied an obligation not to strike over arbitrable grievances from a collective bargaining agreement’s arbitration clause. See 369 U.S. at 104-06, 82 S.Ct. at 577-78. Despite the absence of an express no-strike clause, the Court deemed it reasonable to presume that the union gave up the right to strike over arbitrable disputes in exchange for the. employer’s promise to submit such disputes to arbitration. See id. at 104-05, 82 S.Ct. at 577-78; see also Gateway Coal Co. v. UMW, 414 U.S. 368, 381-82, 94 S.Ct. 629, 638-39, 38 L.Ed.2d 583 (1974). Thus, where strikes over purely “economic” matters are at stake and the context strongly suggest that waiver was intended, “there does not have to be an express waiver.” Metropolitan Edison, 460 U.S. at 708 n. 12, 103 S.Ct. at 1477 n. 12. Somewhere between these two polar examples, we think, lies the question of waiver of the right to honor picket lines. Essentially, sympathy strikes are a type of economic weapon available to employees; because union members expect that the refusal to cross picket lines will be reciprocal, the practice rests on employees’ self-interest as well as “sympathy.” See Southern Cal. Edison, 646 F.2d at 1363-64, and cases cited therein. Still, we also recognize the right to honor picket lines is one that many union members cherish and, indeed, regard as fundamental to the union movement. For that reason, it might be thought that collective bargaining representatives would not lightly give up such a right. In assessing whether a broadly-phrased no-strike clause covers sympathy strikes, however, the unexpressed reservations of employees cannot be treated as dispositive; since a union’s surrender of the right is not disfavored by reason of national labor policy (as, for instance, in Mastro Plastics), a court's task is simply to interpret the parties’ manifestations of mutual consent. And in determining the meaning to be ascribed to a general no-strike clause, our starting point must be Rockaway News. In that case, the Supreme Court held a sympathy strike to be within the purview of a general no-strike clause. The Court’s conclusion appears to have rested primarily on the language of the clause itself. See 345 U.S. at 79-80, 73 S.Ct. at 524-25. Rockaway News thus establishes, at a minimum, that nothing in the Act prevents the Board or a court from finding a waiver of the right to honor picket lines in a contractual no-strike clause of sufficient breadth. To counter the weight of Rockaway News, the petitioner relies upon cases in which it is stated that a union’s no-strike obligation constitutes the quid pro quo for an employer's agreement to arbitrate specified disputes. See, e.g., Lincoln Mills, 353 U.S. at 455, 77 S.Ct. at 917. A general no-strike clause, Local 1395 contends, is ordinarily intended to cover only strikes over arbitrable grievances, and because sympathy strikes do not result from any immediate (and arbitrable) dispute between employer and employee, but rather from an employee’s respect for a “stranger” picket line, such strikes are not covered by a general no-strike clause. We think, however, that the petitioner’s argument proceeds from an overbroad premise. In a case like Lucas Flour, in which a no-strike obligation is implied, it is certainly reasonable to presume that the no-strike obligation is no broader than the duty to arbitrate from which it is inferred. However, this common-sense notion offers less guidance in interpreting an express no-strike clause. See United States Steel, 711 F.2d at 776-77; Delaware Coca-Cola Bottling, 624 F.2d at 1192 (Rosenn, J., concurring). In some situations, it will be apparent from the language and structure of an agreement that its no-strike and arbitration clauses are functionally linked. See, e.g., Gary Hobart Water Corp. v. NLRB, 511 F.2d 284 (7th Cir.), cert. denied, 423 U.S. 925, 96 S.Ct. 269, 46 L.Ed.2d 252 (1975). In other contexts, the inclusion of an express no-strike clause may evidence the parties’ intent to reach beyond strikes over arbitrable matters (which would be banned by implication from an arbitration clause even absent an express no-strike clause). A no-strike clause may well constitute the quid pro quo, not merely for the promise to arbitrate disputes, but for the promise not to engage in lock-outs or for other concessions by the employer. The question “[ultimately ... depends on the intent of the contracting parties.” Gateway Coal, 414 U.S. at 382, 94 S.Ct. at 639. And in discerning the intent of the parties underlying an express no-strike clause, Rockaway News is directly on point and Lucas Flour is not. C. The question remains whether this no-strike clause effectively waives the right to honor picket lines. From the language of the clause itself, we would be inclined to conclude that it does. The clause has extraordinary breadth: in the style of the draftsman determined to allow no loopholes, it refers to “any strike, picketing, sit-down, stay-in, slow-down, or other curtailment of work or interference with the operation of the Company’s business.” Significantly, too, the clause binds “the Union and each employee covered by the agreement,” (emphasis added) — which precludes any argument that only union-authorized strikes are covered. Fairly read, then, the clause would seem to embrace the scenario of an employee’s refusal to cross a picket line to discharge work assignments even though it does not specifically use the words “sympathy strike.” See W-I Canteen Serv. v. NLRB, 606 F.2d 738, 745 (7th Cir.1979). The no-strike clause, moreover, is contained in a section of the agreement separate from the arbitration clause and appears to be fully independent of that clause; one cannot readily infer that the no-strike clause covers only arbitrable disputes. See United States Steel, 711 F.2d at 778. Finally, other provisions of the agreement strongly evidence the employees’ commitment to facilitate the delivery of the uninterrupted service expected of a public utility. This commitment is hardly consistent with a privilege to refrain from reading meters or performing other services on the premises of Indianapolis Power’s customers because of the presence of picket lines on the site. Local 1395 contends that because a collective bargaining agreement must be read “in the light of the law relating to it when made,” Mastro Plastics, 350 U.S. at 279, 76 S.Ct. at 356, it is entitled to the benefit of the Board’s prior Davis-McKee approach toward interpreting no-strike clauses. This contention is misplaced for several reasons. To begin with, when the no-strike clause was drafted in 1972, the Board was quite willing to find a waiver of the right to honor picket lines in a general no-strike clause. See, e.g., Local 12419, UMW(Nat’l Grinding Wheel Co.), 176 N.L.R.B. 628 (1969). In effect, then, the petitioner’s argument rests on the hypothesis that the parties, in later ratifying preexisting contractual language without change, necessarily intended to incorporate changes in the law sub silentio. Even if it were appropriate to indulge such speculation, however, we note that Davis-McKee was not “the law” in the Seventh Circuit, where the agreement was entered and ratified. See W-I Canteen Serv. v. NLRB, 606 F.2d 738 (7th Cir.1979) (rejecting Davis-McKee approach). In any event, it is simply wrong to assume that “the law” to which parties refer in entering collective bargaining agreements is exclusively, or even primarily, Board law. As we have noted, see supra pp. 1030-1033, collective bargaining agreements are interpreted by arbitrators and courts as well. Moreover, it is our distinct impression, that the Board’s Davis-McKee decision represents something of a sport among the corpus of the law of collective bargaining agreements viewed as a whole. We therefore reject Local 1395’s suggestion that although it agreed to an undoubtedly broad no-strike clause, it could nonetheless rest assured (in reliance upon Davis-McKee) that that clause would not be interpreted as covering sympathy strikes. Were we faced only with the language of the agreement itself, we would have little trouble upholding the Board’s order. But the words parties use in drafting contracts are only evidence of their intent; the words are not themselves the parties’ intent. The Board may not, in the guise of enforcing the “plain meaning” of contractual language, erect an inflexible presumption on an issue turning on the parties’ actual intent. Cf. Scenic Artists Local 829 v. NLRB, 762 F.2d 1027 (D.C.Cir.1985). The intent of the parties to collective bargaining agreements is not to be discerned by reference to “abstract definitions unrelated to the context in which the parties bargained,” C & C Plywood, 385 U.S. at 430, 87 S.Ct. at 565, especially where bargaining history is crucial to an understanding of that intent. In the proceeding below, Local 1395 introduced evidence that when the contract was negotiated the parties had asserted different interpretations of the no-strike clause and that neither party had acquiesced in the other’s view. The AU concluded that the parties had agreed to disagree over whether sympathy strikes were covered by the clause. If accepted, this factual finding would be controlling: absent mutual consent on the issue, there could be no binding contractual commitment, see Restatement (Second) of Contracts §§ 20, 201 (1979), and, a fortiori, no clear and unmistakable waiver of the right to honor picket lines. See George Banta Co. v. NLRB, 686 F.2d 10, 20 (D.C.Cir.1982), cert. denied, 460 U.S. 1082, 103 S.Ct. 1770, 76 L.Ed.2d 344 (1983). While stating generally that it agreed with the ALJ’s conclusions respecting the extrinsic evidence of the parties’ intent, the Board did not address this specific finding. Instead, the Board stated only that “there is insufficient extrinsic evidence establishing the parties’ intent to exclude sympathy strikes from the no-strike provision’s scope.” 273 N.L.R.B. No. 211, slip op. at 3. This assertion unfortunately assumes the very point at issue, i.e., whether sympathy strikes fall within the clause’s scope. And in this regard, the Board’s opinion fails to discuss relevant and perhaps dispositive evidence of the parties’ intent. The Board appears to have failed to do what its opinion acknowledges it must do in interpreting a no-strike clause: “give the parties’ intent controlling weight,” id., whether that intent is established by the language of the clause itself, by inferences drawn from the contract as a whole, or by extrinsic evidence. See IBEW, Local 387 v. NLRB, 788 F.2d 1412, 1414 (9th Cir.1986).

4169650-23895

ORDER DENYING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AND GRANTING DEFENDANT’S CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT JAMES E. MASSEY, Bankruptcy Judge. Plaintiff H. Wiley Allen seeks a judgment against Defendant and Debtor Denise Almond Morrow that a debt owed by Morrow to Allen embodied in a judgment of the Superior Court of Fulton County, Georgia is not dischargeable pursuant to 11 U.S.C. § 523(a)(2) and (a)(6). Plaintiff moves for summary judgment, asserting that the doctrine of collateral estoppel bars Morrow from relitigating the issues of liability and damages allegedly found by the Superior Court and that those findings satisfy the elements of his claim based on alleged fraud under section 523(a)(2) of the Bankruptcy Code. Defendant filed a cross-motion for summary judgment, asserting that collateral estoppel does not apply and that the facts alleged in the adversary complaint fail to state a claim for relief under section 523(a)(2)(B) of the Bankruptcy Code, which makes a debt for money obtained by the use of a false statement in a writing concerning the debtor’s financial condition on the which the plaintiff reasonably relied nondischargeable. I. Facts In 2005, Denise Almond Morrow as Trustee of the Almond Family Trust (the “Trustee”) borrowed $35,000 from H. Wiley Allen. The loan is evidenced by a note dated June 15, 2005 in the amount of $35,000 and signed by the Defendant in her capacity as Trustee. The interest rate was 20% per annum with a default rate of 32% per annum. The note was payable monthly in the amount of $585 beginning on July 15, 2005 with the balance of the debt due and payable on December 31, 2005. The note recites that it is secured by “the Deed To Secure Debt and Security Agreement, date of even date herewith,” but apparently no such document then existed. It is undisputed, however, that the note is secured by real property known as 3683 Ashwood Drive, Smyrna, GA 30080 pursuant to a deed to secure debt dated October 4, 2005 and recorded on October 27, 2005 in the office of the Clerk of the Superior Court of Cobb County, Georgia. The Trustee defaulted on the note by failing to pay the balance due on December 31, 2005. In October 2007, Allen sued Morrow in her capacity as Trustee and individually in the Superior Court of Fulton County, Georgia. Complaint, Doc. No. 1, Ex. C, pp. 19-40. The complaint alleged claims for relief against “Defendants” for damages for breach of contract (though Morrow in her individual capacity is not alleged to have had a contract with Allen), for an accounting, for damages for “fraud in the inducement,” for damages against Morrow individually, for punitive damages, and for attorney’s fees, costs and expenses of litigation. Morrow answered the complaint in the state court action. Thereafter, Allen served Morrow with requests for admission, to which she never responded. The request for admissions demanded that Morrow admit the following statements: 17. Prior to the execution and delivery of the Note, and in furtherance thereof, Morrow represented to Plaintiff that full payment would be forthcoming pursuant to the express provisions of the Note. 18. Morrow’s representation that full and timely payment would be made was a material inducement for Plaintiff to accept the Note and the subsequent Deed to Secure Debt, and loan Trustee the subject monies. 19. In making such representations, Morrow intended for Plaintiff to rely on such representations, thereby inducing Plaintiff to accept the Note and subsequent Deed to Secure Debt, and loan Trustee the subject monies. 20. Plaintiff has suffered damages as a proximate result of Morrow’s misrepresentations and is entitled to monetary damages from Morrow. 21. Defendant Trustee’s actions and omissions were at the specific direction and behest of Defendant Denise Almond-Morrow, individually. 22. Defendant Trustee and Defendant Morrow acted with disregard for and recognition of the trust entity, and with malice and evil intent to cause harm to Plaintiff. 23. Based on her conduct, Defendant Morrow, individually, is jointly and severally liable with Defendant Trustee for the obligations under the Note and Deed to Secure Debt. 24. Morrow’s fraudulent conduct as set forth in Plaintiffs Complaint demonstrates a specific intent to cause harm, willful misconduct, malice, fraud, wantonness and oppression, and the entire want of care that constitutes conscious indifference to the consequences. 25. Morrow should be held liable to Plaintiff for punitive damages in accordance with O.C.G.A. § 51-12-5.1. 26. Morrow has acted in bad faith and in a stubbornly litigious manner, entitling Plaintiff to an award of his attorney’s fees. Complaint, Doc. No. 1., Ex. D, pp. 41-56. Allen moved for summary judgment in the Superior Court, relying solely on admissions made by Morrow based on her failure to respond to the requests for admission. Plaintiffs Motion for Summary Judgment, Doc. No. 7, Part 8. The Superi- or Court granted Allen’s motion in an Order and Final Judgment (“OFJ”) filed on August 5, 2008. Complaint, Doc. No. 1., Ex. E, pp. 57-59. The OFJ did not state the facts on which the judgment was based. Rather, the OFJ concluded that there was no genuine issue of as to any material fact, granted summary judgment “in favor of Plaintiff against Defendants as to all claims asserted by Plaintiff,” and more specifically: ORDERED that a Judgment be entered jointly and severally against Defendants Denise Almond-Morrow, in her representative capacity as Trustee of the Almond-Morrow Family Trust, and Denise Almond-Morrow, individually, and in favor of Plaintiff as follows: a. Judgment for Plaintiff and an award of damages against Defendants, jointly and severally, for Defendants’ breach of contract/breach of promissory note in the principal amount of thirty-five thousand and 00/100 dollars ($35,000.00); b. Judgment for Plaintiff and an award of damages against Defendants, jointly and severally, for contractual interest in the amount of thirty thousand six hundred six and 72/100 dollars ($30,616.72), accrued as of June 30, 2008; c. Judgment for Plaintiff and an award of damages against Defendants, jointly and severally, for contractual prejudgment interest at the per diem rate of thirty-three and 56/100 dollars ($33.56) accruing from July 1, 2008, to the date of judgment; d. Judgment for Plaintiff and an award of damages against Defendants, jointly and severally, for Plaintiffs costs of collection, including reasonable attorney’s fees, costs, and expenses associated with this action, in the amount of three thousand four hundred twenty-one and 51/100 dollars ($3,421.51); and e. Judgment for Plaintiff and an award of punitive damages against Defendants, jointly and severally, in the amount of six hundred ninety thousand two hundred eight-two dollars and 30/100 ($690,-282.30), which represents an award of ten times (lOx) Plaintiff’s compensatory damages. Id. On September 28, 2012, Defendant Morrow filed a petition under Chapter 7 of the Bankruptcy Code commencing Case Number 12-74087. On December 20, 2013, Allen filed a complaint commencing this adversary proceeding. The complaint contains one count, even though it asserts two distinct claims for relief under 11 U.S.C. §§ 523(a)(2) and 523(a)(6). The complaint includes, in addition to many conclusions of law, the allegation, not included in the state court complaint, that “Morrow never intended to honor her obligations to Allen. Rather, at the time of the initial transaction and thereafter, Morrow had no intention of fully paying on the Note....” Complaint, Doc. No. 1, pp. 5-6. II. Discussion The parties’ motions present the following issues: (A) whether the doctrine of collateral estoppel is applicable in this adversary proceeding with respect to Plaintiffs claim based on alleged fraud, (B) whether Plaintiffs motion includes his claim under section 523(a)(6) of the Bankruptcy Code, and (C) whether Defendant is entitled to partial summary judgment based on the contention that the complaint fails to state a claim under section 523(a)(2)(B) of the Bankruptcy Code upon which relief can be granted. A. Summary Judgment Standards. Pursuant to Fed.R.Civ.P. 56(c), made applicable by Fed. R. Bankr.P. 7056, a party moving for summary judgment is entitled to prevail 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.” Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A fact is material for the purposes of summary judgment only if it “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, 2510, 91 L.Ed.2d 202, 211 (1986). The moving party bears the initial burden to establish that no genuine factual issue exists or alternatively, that the non-moving party cannot prove its case at trial. Celotex, 477 U.S. at 323-326, 106 S.Ct. 2548; Exigent Tech., Inc. v. Atrana Solutions, Inc., 442 F.3d 1301, 1307-1309 (Fed.Cir.2006). The movant must point to the pleadings, discovery responses or supporting affidavits that tend to show the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. The court must construe this evidence in the light most favorable to the non-moving party. Anderson, 477 U.S. at 249, 106 S.Ct. 2505; Rollins v. TechSouth, Inc., 833 F.2d 1525 (11th Cir.1987). “If there is a conflict between the parties’ allegations or evidence, the non-moving party’s evidence is presumed to be true and all reasonable inferences must be drawn in the non-moving party’s favor.” Shotz v. City of Plantation, Fla., 344 F.3d 1161, 1164 (11th Cir.2003). B. Collateral Estoppel. Plaintiff asserts that Defendant is barred by the doctrine of collateral estoppel from challenging any aspect of his fraud claim based on section 523(a)(2) of the Bankruptcy Code, so that the debt embodied in the OFJ is nondischargeable. (Plaintiff did not distinguish between section 523(a)(2)(A) and (a)(2)(B), but his sole focus insofar as supported by factual allegations in the complaint is on the false representation portion of section 523(a)(2)(A). ) The doctrine of collateral estop-pel applies in dischargeability cases in bankruptcy. Grogan v. Garner, 498 U.S. 279, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991); Hoskins v. Yanks (In re Yanks), 931 F.2d 42 (11th Cir.1991). The U.S. Supreme Court held in Marrese v. American Academy of Orthopaedic Surgeons, 470 U.S. 373, 381-82, 105 S.Ct. 1327, 1332-33, 84 L.Ed.2d 274 (1985), that in a ease involving issues previously considered by a state court, a federal court must give preclusive effect to the state court’s judgment to the same extent other courts in that state would do so, unless a federal statute creates an exception to the full faith and credit provisions of 28 U.S.C. § 1738. There is no such exception to section 1738 in the Bankruptcy Code. See St. Laurent v. Ambrose (In re St. Laurent), 991 F.2d 672, 675-76 (11th Cir.1993). Thus, the question presented is the extent to which Georgia courts would give preclusive effect to the OFJ so as to bar relitigation of facts underpinning the OFJ. Under Georgia law, a party may assert the doctrine of collateral estoppel when the following elements have been satisfied: (1) the parties in the earlier case in which a judgment was rendered are the same in the later case in which the doctrine of collateral estoppel or issue preclusion is asserted; (2) the issues insofar as collateral estoppel is asserted are the same; (3) the issues were actually litigated and a final judgment was entered as to all such issues; (4) the determination of the issue was essential to the prior judgment; and (5) the parties had a full and fair opportunity to litigate the issues in question. Shields v. BellSouth Advertising & Pub. Corp., 273 Ga. 774, 777, 545 S.E.2d 898, 900 (2001); Stott v. Mody, 257 Ga. App. 738, 572 S.E.2d 83, 85 (2002); Stiltjes v. Ridco Exterminating Co., Inc., 197 Ga.App. 852, 399 S.E.2d 708 (Ga.App.1990). The plaintiff bears the burden of proving that the necessary elements of collateral estoppel have been met. Usher v. Johnson, 157 Ga.App. 420, 422, 278 S.E.2d 70, 72 (1981); Dixie National Life Insurance Co. v. McWhorter (In re McWhorter), 887 F.2d 1564, 1566 (11th Cir.1989). 1. Identity of Parties. The parties in the action in the Superior Court and in this adversary proceeding are identical. Hence, the first element of collateral es-toppel is satisfied. 2. Identity of Issues. The factual elements of a claim that a debt arose from a false representation under 11 U.S.C. § 523(a)(2)(A) are identical to the elements of a claim under Georgia law for a false representation. See SEC v. Bilzerian (In re Bilzerian), 153 F.3d 1278, 1281 (11th Cir.1998); Sterling Factors, Inc. v. Whe-lan, 245 B.R. 698, 705-706 (N.D.Ga.2000). Hence, the issues are identical and the second element of collateral estoppel is satisfied. 3. Actual Litigation of the Issues and Entry of Final Judgment on All Issues. An issue is deemed “actually litigated” when the “issue is properly raised, by the pleadings or otherwise, and is submitted for determination, and is determined.” Community State Bank v. Strong, 651 F.3d 1241, 1267-68 (11th Cir.2011) (applying Georgia law). The issue of fraud was raised in Allen’s state court complaint and contested by Morrow. The complaint and the requests for admissions of fact in the state court alleged some facts relevant to the gravamen of the fraud count, which was a false representation. A careful reading of the complaint and the requests for admission show that the alleged facts, as opposed to conclusions of law, fail to cover all of the elements of a claim for fraud based on a false representation. See Meyer v. Waite, 270 Ga.App. 255, 257-258, 606 S.E.2d 16, 19-20 (Ga.App.2004). Nonetheless, the necessary allegations may be supplied where the defendant fails to respond to request for admissions that include conclusions of law on the ultimate legal issue. In G.H. Bass & Co. v. Fulton County Bd. of Tax Assessors, 268 Ga. 327, 329, 486 S.E.2d 810 (1997), on which Allen relies, the Georgia Supreme Court held that under O.C.G.A. § 9 — 11—36(b), a party failing to respond to a request for admission of a conclusion of law admits that legal conclusion “so long as the legal conclusions relate to the facts of the case.” Allen requested that Morrow admit she committed fraud; she failed to respond to the request; and the OFJ states that the Plaintiff was entitled to judgment on all counts. Morrow argues that the ease was not actually litigated because the requests for admission on which the judgment is based impermissibly sought conclusions of law, also relying on G.H. Bass. But Morrow misreads that case. In affirming the trial court, the Georgia Court of Appeals ruled a request to admit that “[t]he Plaintiff is entitled to a personal property/inventory/freeport exemption of $23,241,497.00 for the 1994 tax year” was impermissible because it was not factual but addressed the ultimate legal issue. G.H. Bass & Co. v. Fulton County Bd. of Tax Assessors, 222 Ga.App. 118, 473 S.E.2d 253 (Ga.App.1996). It ruled that the Board of Tax Assessors had made no admission even though it failed to respond to the request to admit. The Georgia Supreme Court reversed, opining that “[w]e need not reach the issue whether Bass’ request for admission comes within the permissible scope of OCGA § 9-11-36 because the record reveals that the Board, upon the filing of Bass’ requests for admission, did not respond, assert objections, request deferment of its obligation to respond to the requests, or seek a protective order.” G.H. Bass & Co., 268 Ga. at 330, 486 S.E.2d 810. O.C.G.A. § 9 — 11—36(b) makes an admission under that Code section conclusively established unless the court permits withdrawal or amendment but also provides that “[a]ny admission made by a party under this Code section is for the purpose of the pending action only and is not an admission by him for any other purpose, nor may it be used against him in any other proceeding.” This section would clearly prevent Allen from introducing as evidence in this adversary proceeding admissions made by Morrow under this section in the state court case. But it would not appear to bar Allen’s reliance on collateral estoppel, even though he is asserting that the OFJ should be read to imply findings of fact based on such admissions. Although Morrow admitted fraud, the OFJ does not show that the Superior Court made a determination that she committed fraud. In the demand section of the state court complaint, Allen specified the amount due for principal, interest and late fees as of October 1, 2007 and sought the default rate of interest on the note to the date of judgment, which relate to the breach of contract claim. But with respect to Count III asserting fraud, Allen sought unspecified damages “in an amount to be proved at trial.” Complaint, Doc. No. 1, p. 29. The OFJ made no specific findings of fact showing fraud, though it did grant judgment for Allen against Morrow in her Trustee capacity and individually “as to all claims asserted by Plaintiff.” But the OFJ awarded no damages on Count III. The damage awards for principal, interest, and attorney’s fees all relate to the breach of contract claim. The computation of the punitive damage award was based not on damages caused by fraud but rather on the compensatory damages for breach of contract and attorney’s fees awarded in the OFJ. A determination of the amount of damages is a necessary element to prove fraud in the form of a false representation. Meyer v. Waite, 270 Ga.App. 255, 257-258, 606 S.E.2d 16, 19-20 (Ga.App.2004). The OFJ is self-contradictory in granting judgment for Plaintiff on all counts (including the fraud count) but in failing to include a damage award based on fraud. Hence, at best the OFJ is ambiguous on the questions of whether Morrow committed fraud and whether Allen incurred any damage based on fraud. For this reason, the third element of collateral estoppel requiring a determination of issues actually litigated is not satisfied. 4. The Requirement That the Determination Be Essential. The fourth element of collateral estoppel under Georgia law limits the doctrine’s applicability to “those issues that necessarily had to be decided in order for the previous judgment to have been rendered.” Waldroup v. Greene Co. Hosp. Auth., 265 Ga. 864, 866(2), 463 S.E.2d 5 (1995). Issue preclusion thus does not apply merely because the judgment was on the merits but rather applies only to issues that must have actually been decided. Id. The primary purpose of this “necessarily decided” requirement is that it “prevents judgments that rest on ambiguous grounds from having issue preclusive effect.” Community State Bank v. Strong, 651 F.3d 1241, 1268 (11th Cir.2011). Therefore, when a judgment could be supported by two or more grounds, and it does not specify the ground on which it rests, the “judgment cannot have issue preclusive effect as to either issue, for neither is definitively the ground of the judgment.” Id. (citing Restatement of Judgments § 27, cmt. i). The Superior Court made no specific findings of fact showing fraud, but Allen argues that the award of punitive damages gives rise to an inference of such findings. Under Georgia law, however, punitive or exemplary damages for fraud may not be recovered if there is no entitlement to compensatory damages for fraud. Preferred Risk Ins. Co. v. Boykin, 174 Ga.App. 269, 277, 329 S.E.2d 900, 908 (Ga.App.1985) (Carley, J.); Chrysler Corp. v. Marinari, 177 Ga.App. 304, 305-306, 339 S.E.2d 343, 344-345 (Ga.App.1985) (Carley, J.). As pointed out, the Superior Court did not award any damages caused by fraud, and that circumstance made an award of punitive damages for fraud impermissable, creating the possibility that the award of punitive damages was not based on fraud. As a matter of law, punitive damages are not available in a breach of contract claim. Trust Co. Bank v. C & S Trust Co., 260 Ga. 124, 126(1), 390 S.E.2d 589 (1990). But trial judges are human and sometimes make mistakes of law. The Superior Court might have erred by awarding punitive damages on a contract claim. In seeking punitive damages in Count V of his state court complaint, Allen included language from O.C.G.A. § 51-12-5.1, the punitive damage statute, alleging “intent to cause harm, willful misconduct, malice, fraud, wantonness and oppression, and the entire want of care that constitutes conscious indifference to the consequences.” Complaint, Doc. No. 1, p. 28. Georgia’s punitive damages statute is, however, written in the disjunctive, allowing punitive damages to be awarded for any tort action showing “willful misconduct, malice, fraud, wantonness, oppression, or the entire want of care that constitutes conscious indifference to the consequences.” O.C.G.A. § 51-12-5.1(b)(emphasis added). Count IV of the state court complaint sought to hold Morrow liable for “disre gard for and recognition of the trust entity, and with malice and evil intent individually to cause harm to Plaintiff.” Hence, the punitive damage award could have been based on this conduct rather than fraud. The OFJ did not refer to O.C.G.A. § 51-12-5.1, which also clouded the basis for the punitive damage award. In short, it is impossible to know for certain the basis on which the Superior Court awarded punitive damages or whether there was any such basis. Because the punitive damages awarded in the OFJ could have been based on grounds other than fraud, the finding of fraud was not essential to the ultimate judgment. For that reason, Plaintiff has failed to show that the fourth element of collateral estoppel has been met. 5. A Full and Fair Opportunity to Litigate. Morrow argues that because she was not represented at the time of the hearing on the motion for summary judgment, she did not have a full and fair opportunity to litigate. In her affidavit attached to her response to Allen’s motion for summary judgment, she stated she did not understand the import of not answering the Requests for Admissions. Defendant’s Response, Doc. No. 8 Part 2. But the Request for Admissions was served on her attorney on February 27, 2008. Complaint, Doc. No. 1, Exhibit D, pp. 41-48. In her affidavit, she stated that the Superior Court entered on order on March 14, 2008 permitting her counsel to withdraw. Defendant’s Response, Doc. No. 8 Part 2. Hence, she was represented when the requests for admissions were served. She did not show that she could not have obtained another attorney or that her counsel did not advise her to answer the Request for Admissions. Defendant’s Response, Doc. No. 8, Part 2. It therefore appears that the judgment did not result in a lack of fair opportunity to litigate the case. 6. Summary. The Court must apply collateral estoppel separately to the liability and damages portion of an order and may give preclusive effect to either, both or neither. See Sterling Factors, Inc. 245 B.R. at 708. Because the OFJ makes no finding of liability on the basis of fraud or award damages attributable to fraud, it cannot be conclusively read as a determination that Morrow committed fraud or that Allen incurred damages attributable to fraud. The punitive damage award is tied to the damages for breach of contract and cannot be conclusively linked to any other count of the complaint. Because Allen cannot show that all of the requirements for collateral estoppel under Georgia law have been met, the Court cannot give the OFJ issue preclusive effect with respect to the factual elements of Allen’s fraud claim.

3829514-22074

ORDER JAMES D. WHITTEMORE, District Judge. BEFORE THE COURT are Petitioner’s Amended Motion to Vacate, Set Aside, or Correct Sentence Pursuant to 28 U.S.C. § 2255 (hereinafter “amended motion”) (CV Dkt. 2), the Government’s Response (CV Dkt. 5), and Petitioner’s Reply (CV Dkt. 9). After consideration and a review of the record, this Court finds that the amended motion should be DENIED. Background On March 10, 1999, a grand jury returned a 20-count indictment charging Petitioner, GERALD PAYNE (hereinafter “Petitioner” or “Payne”), and five others who were principals in Greater Ministries International Church, with having engaged in a fraudulent investment scheme that took in more than $400 million between 1996 and 1999 (CR Dkt. 3). After a jury trial, Petitioner was convicted of mail fraud conspiracy, money laundering conspiracy, mail fraud, money laundering, conducting unlawful monetary transactions, and unlawfully structuring financial transactions (CR Dkt. 433). Petitioner was sentenced to a total of 324 months in prison (CR Dkt. 551). Petitioner’s convictions and sentences were affirmed on appeal (CR Dkt. 1028). See United States v. Payne, 88 Fed.Appx. 380 (11th Cir.2003). Discussion In his motion, Petitioner raises six grounds of ineffective assistance of counsel. Counsel is presumed to be competent to assist a defendant. United States v. Cronic, 466 U.S. 648, 104 S.Ct. 2039, 80 L.Ed.2d 657(1984). The burden, therefore, is on the accused to show that counsel was ineffective. Id. In order to do so, Petitioner must prove that his counsel was deficient, which requires a showing that counsel’s performance was unreasonable under current professional norms. Strickland v. Washington, 466 U.S. 668, 688, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984). Petitioner must also prove that the deficiency prejudiced the defense, which requires a showing that there is a reasonable probability that but for counsel’s errors, the resulting conviction or sentencing would have been different. Id. at 694, 104 S.Ct. 2052. Ground One In Ground One, Petitioner contends that his trial counsel rendered ineffective assistance when he advised Petitioner that Petitioner should not testify at trial. According to Petitioner, after the Court denied his motion in limine and authorized his 1979 conviction for making a false statement to a grand jury to be used as impeachment if he testified, his attorney advised him that: 1) he should not testify at trial; 2) that the Court’s ruling on the motion in limine was contrary to clearly established law; and 3) even if he did not testify at trial, his argument that his right to testify at trial was chilled by the Court’s ruling on the motion in limine would be preserved for appellate review. Petitioner asserts that based on his counsel’s advice, he decided not to testify at trial. He argues that his attorney’s advice was “erroneous” and therefore his decision not to testify at trial was not “knowingly, voluntarily, and intelligently” made. Petitioner’s contention is without merit. A defendant’s right to testify at a criminal trial is a fundamental and personal right which cannot be waived by defense counsel. See United States v. Teague, 953 F.2d 1525, 1532 (11th Cir.1992) (en banc), cert. denied, 506 U.S. 842, 113 S.Ct. 127, 121 L.Ed.2d 82 (1992). In Teague, the Eleventh Circuit held that it is defense counsel’s responsibility to advise the defendant of this right and the strategic implications and “that the appropriate vehicle for claims that the defendant’s right to testify was violated by defense counsel is a claim of ineffective assistance [under Strickland].” Id. at 1534. Teague reasoned that an attorney’s performance would be deficient under the first prong of the Strickland test if counsel refused to accept the defendant’s decision to testify and would not call him to the stand or, alternatively, if defense counsel never informed the defendant of the right to testify and that the ultimate decision belonged to the defendant. Id. In Teague, the defendant’s ineffective assistance of counsel claim was rejected because the trial court found that counsel had advised the defendant of his right to testify, had advised him that he should not exercise that right and the defendant did not protest. Teague, 953 F.2d at 1535. An evidentiary hearing on this issue is unnecessary. It is apparent from Petitioner’s allegations that he was well aware of his right to testify, that he and his attorney discussed it, that his attorney advised Petitioner not to testify based on the Court’s ruling on his motion in limine, and that Petitioner agreed with his attorney’s recommendation. Moreover, during trial, Court conducted a colloquy with Petitioner concerning his right to testify and Petitioner acknowledged that it was his decision not to testify (CR Dkt. 733 at 12-14). He also advised the Court that he decided not to testify because he believed he might jeopardize the other defendants (Id. at 13). His decision not to testify was therefore not based solely on his counsel’s advice. Counsel’s performance was not constitutionally deficient. Moreover, “[a] decision regarding trial tactics cannot be the basis for a claim of ineffective assistance of counsel unless counsel’s tactics are shown to be ‘so ill chosen that it permeates the entire trial with obvious unfairness.’ ” Teague v. Scott, 60 F.3d 1167, 1172 (5th Cir.1995). “Even if many reasonable lawyers would not have done as defense counsel did at trial, no relief can be granted on ineffectiveness grounds unless it is shown that no reasonable lawyer, in the circumstances, would have done so.” Rogers v. Zant, 13 F.3d 384, 386 (11th Cir.1994). To the extent Petitioner contends that his attorney’s advice was unreasonable, Petitioner’s contention is likewise without merit. Petitioner explains that his attorney’s advice not to testify was based on this Court’s decision to permit his impeachment with the 1979 conviction for making a false statement to a grand jury. That advice was based on arguably sound tactical reasons. Petitioner fails to establish that under these circumstances no reasonable lawyer would have advised Petitioner not to testify at trial. See United States v. Teague, 953 F.2d at 1533 n. 9 (“There are good tactical reasons why it may not be best for the defendant to testify in some circumstances. Some examples might be if the defendant might provide evidence of missing elements of the crime on cross-examination, if the defendant might be prejudiced by revelation of prior convictions, or if the prosecutor might impeach the defendant using a prior inconsistent statement.”) (emphasis added). Ground Two In Ground Two, Petitioner contends that his attorney was ineffective for failing to object to the manner in which the Court calculated his sentence as to Count Two, which alleged a money laundering conspiracy under 18 U.S.C. § 1956(a)(Z)(A)(i) and 18 U.S.C. § 1957. Count Two alleged that the objects of the money laundering conspiracy were mail fraud and money laundering. Petitioner complains that the jury did not specify which object of the conspiracy it found in reaching its verdict and that counsel was ineffective in not objecting to that and the Court’s application of the sentencing guidelines as to Count Two. Petitioner’s contentions are without merit. Moreover, Petitioner cannot show any prejudice as a result of the jury not identifying which offense was the object of the conspiracy since it had no effect on his sentence. In determining the applicable sentencing guideline range, the Court grouped the offenses of conviction pursuant to USSG § 3D1.2, since the offense level of the crimes of conviction all were to be determined “largely on the basis of the total amount of harm or loss” and none were excluded from the purview of that provi sion. See USSG § 3D1.2(d). Using that provision, since the offenses of conviction involved “offenses of the same general type,” the guideline calculation began with the “offense guideline that produce[d] the highest offense level.” USSG § 3D1.3(b). That was an offense level 23, which this Court used as its starting point because the defendants had been convicted of the crime of money laundering [18 U.S.C. § 1956(a)(l)(A)(I) ] in Counts Eight through Twelve. See USSG § 2S1.1 (a)(1). As the calculations began at level 23, any question as to which offense, or both for that matter, the jury found to have been the object of the money laundering conspiracy charged in Count Two made no difference whatsoever. Regardless of which object of the conspiracy the jury found in reaching its verdict, the calculation of Petitioner’s guideline sentence range as to Count Two started at base offense level 23. Because Petitioner cannot show prejudice, he fails to establish an ineffective assistance of counsel claim under Strickland. Ground Three In Ground Three, Petitioner claims that his attorney was ineffective for failing to object to the Court’s sentence of 324 months, contending that it exceeded the statutory maximum, twenty years. Petitioner argues that his attorney was ineffective in not objecting to the Court not grouping the offenses of conviction “in order to give Mr. Payne a higher sentence.” Petitioner’s contentions ai'e without merit. Initially, the Court did group the counts pursuant to USSG § 3D1.2(d). Accordingly Petitioner fails to show his counsel was ineffective for failing to object to the Court’s “refusal to group the counts in order to give him a higher sentence.” {See CR Dkt. 872 at 48; Presentence Investigation Report at 18). The essence of Petitioner’s claim is that counsel should have objected to the 324 month sentence as being in excess of the twenty year statutory maximum for Counts 2, 8, 9, 10, 11 and 12. Petitioner’s contention is likewise without merit. The 324 month sentence was a result of consecutive terms of imprisonment as to certain counts and no sentence as to any particular count exceeded the statutory maximum. Petitioner’s sentencing guideline range was calculated based on a final adjusted offense level of 41 and a Criminal History Category I (CR Dkt. 551). The resulting sentencing guideline range of imprisonment was 324-405 months. Petitioner was sentenced to a total of 324 months in prison: 60 months as to Counts 1, 3, 4, 6, 7,18, 19, and 20, concurrent; 240 months as to Counts 2, 8, 9, 10, 11, and 12, concurrent; and 84 months as to Counts 13, 14, 15, 16, and 17, concurrent with the other counts, but consecutive to Counts 2, 8, 9, 10, 11, and 12 (CR Dkt. 551). U.S.S.G. § 5G1.2(d) provides: “[i]f the sentence imposed on the count carrying the highest statutory maximum is less than the total punishment, then the sentence imposed on one or more of the other counts shall run consecutively, but only to the extent necessary to produce a combined sentence equal to the total punishment. In all other respects, sentences on all counts shall run concurrently, except to the extent otherwise required by law.” The sentence imposed (240 months) as to the counts carrying the highest statutory maximum, Counts 2, 8, 9, 10, 11, and 12 (money laundering and conspiracy to com mit. money laundering), was less than the total punishment range of 324 to 405 months. The imposition of consecutive sentences under U.S.S.G. § 5G1.2(d) was therefore mandatory. United States v. Davis, 329 F.3d 1250, 1254 (11th Cir.2003), cert. denied 540 U.S. 925, 124 S.Ct. 330, 157 L.Ed.2d 225 (2003). Accordingly, pursuant to U.S.S.G. § 5G1.2(d), the Court ordered the 84 month sentence on Counts 13, 14, 15, 16, and 17 run consecutively to the sentences imposed as to Counts 2, 8, 9, 10, 11, and 12 in order to produce a combined sentence equal to the total punishment of 324 months. The sentence is consistent with the Sentencing Guidelines and counsel was not ineffective in failing to object to a correct application of the sentencing guidelines. Petitioner further argues that the sentence violates Apprendi v. New Jersey, 530 U.S. 466, 120 S.Ct. 2348, 147 L.Ed.2d 435 (2000). However, “[t]he rule in Apprendi only applies where a defendant is sentenced above the statutory maximum sentence for an offense ... [it] does not prohibit a sentencing court from imposing consecutive sentences on multiple counts of conviction as long as each is within the applicable statutory maximum.” Id. Here, each sentence was within the statutory maximum for the respective counts. Therefore, the sentence did not violate Apprendi. Accordingly, Petitioner’s counsel was not ineffective for failing to object to Petitioner’s sentence and Petitioner fails to establish any prejudice as a result of counsel’s failure to object to his sentence. Ground Four In Ground Four, Petitioner essentially asserts that his sentence violates the mandates of Blakely v. Washington, 542 U.S. 296, 124 S.Ct. 2531, 159 L.Ed.2d 403 (2004), and United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005). Blakely claims are not retroactive, and nothing in Booker indicates that Blakely claims are retroactive. Further, the Eleventh Circuit Court of Appeals has expressly held that the Blakely/Booker rule “falls squarely under the category of new rules of criminal procedure that do not apply retroactively to § 2255 cases on collateral review.” Varela v. United States, 400 F.3d 864, 868 (11th Cir.2005). Accord Schriro v. Summerlin, 542 U.S. 348, 124 S.Ct. 2519, 2526-27, 159 L.Ed.2d 442 (2004). As a result, Petitioner’s claim is without merit. Ground Five In Ground Five, Petitioner claims that his appellate counsel was ineffective for failing to raise “dead-bang winner” claims on appeal. The issues that Petitioner asserts were “dead-bang winners” are: 1) his sentence should not have been enhanced for abuse of trust; 2) it was plain error to use his conviction on Count Two when calculating his sentence when the jury failed to specify the object of the conspiracy; 3) the sentence was in excess of the statutory maximum; and 4) the Sentencing Guidelines were unconstitutionally applied to him. As discussed, Petitioner’s contentions in claims 2, 3, and 4 are without merit. Petitioner does not demonstrate that appellate counsel was objectively unreasonable for failing to raise those issues on appeal nor can Petitioner demonstrate prejudice as a result of counsel’s failure to raise those issues on appeal. Strickland’s standards for effective assistance of counsel govern claims of ineffective assistance by appellate counsel. See Duest v. Singletary; 967 F.2d 472, 477 n. 4 (11th Cir.1992). To prevail on his claim, Petitioner must show that appellate counsel was objectively unreasonable in not raising the omitted issue. Smith v. Robbins, 528 U.S. 259, 120 S.Ct. 746, 145 L.Ed.2d 756 (2000). However, appellate counsel who files a merits brief need not raise every nonfrivolous claim. Jones v. Barnes, 463 U.S. 745, 754, 103 S.Ct. 3308, 77 L.Ed.2d 987 (1983). The exercise of judgment involved in framing an appeal make it “difficult to demonstrate that (appellate) counsel was incompetent” under Strickland for omitting a particular argument. Smith v. Robbins, 528 U.S. at 285-86, 120 S.Ct. 746 (citing Gray v. Greer, 800 F.2d 644, 646 (7th Cir.1986)). In reviewing counsel’s decision to omit an issue on appeal, our “scrutiny ... must be highly deferential.” Id. at 689, 104 S.Ct. 2052. “A fair assessment of attorney performance requires every effort be made ‘to eliminate the distorting effects of hindsight, to reconstruct the circumstances of counsel’s challenged conduct, and to evaluate the conduct from counsel’s perspective at the time.’ ” Dever v. Kansas State Penitentiary, 36 F.3d 1531, 1537 (10th Cir.1994) (quoting Strickland, 466 U.S. at 689, 104 S.Ct. 2052). “Counsel is strongly presumed to have rendered adequate assistance and made all significant decisions in the exercise of reasonable professional judgment.” Id. Strickland’s performance and prejudice prongs “partially overlap when evaluating the performance of appellate counsel.” Miller v. Keeney, 882 F.2d 1428, 1434 (9th Cir.1989). The Sixth Amendment does not require an attorney to raise every nonfrivolous issue on appeal. See Jones v. Barnes, 463 U.S. 745, 751, 103 S.Ct. 3308, 77 L.Ed.2d 987 (1983). Consequently, appellate counsel engage in a process of “ ‘winnowing out weaker arguments on appeal and focusing on’ those more likely to prevail.” Smith v. Murray, 477 U.S. 527, 536, 106 S.Ct. 2661, 91 L.Ed.2d 434 (1986) (quoting Jones, 463 U.S. at 751-52, 103 S.Ct. 3308). The weeding out of weak claims to be raised on appeal “is the hallmark of effective advocacy,” Tapia v. Tansy, 926 F.2d 1554, 1564 (10th Cir.1991), cert. denied, 502 U.S. 835, 112 S.Ct. 115, 116 L.Ed.2d 84 (1991), because “every weak issue in an appellate brief or argument detracts from the attention a judge can devote to the stronger issues, and reduces appellate counsel’s credibility before the court.” Miller, 882 F.2d at 1434. Consequently, “appellate counsel will ... frequently remain above an objective standard of competence ... and have caused her client no prejudice ... for the same reason — because she declined to raise a weak issue.” Id.; see also McBride v. Sharpe, 25 F.3d 962, 973 (11th Cir.1994) (counsel’s actions were not deficient in part because counsel omitted a weak issue to avoid “cluttering the brief with weak arguments”), cert. denied, 513 U.S. 990, 115 S.Ct. 489, 130 L.Ed.2d 401 (1994); Bond v. United States, 1 F.3d 631, 635 n. 2 (7th Cir. 1993) (“Counsel’s strategy decisions — including the decision not to pursue a plethora of issues on appeal — ordinarily do not violate the Sixth Amendment’s guarantee of effective assistance of counsel.”). Conversely, an appellate advocate may deliver deficient performance and prejudice a defendant by omitting a “dead-bang winner,” even though counsel may have presented strong but unsuccessful claims on appeal. Page v. United States, 884 F.2d 800, 302 (7th Cir.1989). Although courts have not defined the term “dead-bang winner,” we conclude it is an issue which was obvious from the trial record, see, e.g., Matire v. Wainwright, 811 F.2d 1430, 1438 (11th Cir.1987) (counsel’s failure to raise issue which “was obvious on the record, and must have leaped out upon even a casual reading of [the] transcript” was deficient performance), and one which would have resulted in a reversal on appeal. By omitting an issue under these circumstances, counsel’s performance is objectively unreasonable because the omitted issue is obvious from the trial record. Additionally, the omission prejudices the defendant because had counsel raised the issue, the defendant would have obtained a reversal on appeal. United States v. Cook, 45 F.3d 388, 395 (10th Cir.1995). Petitioner contends that his appellate counsel was ineffective for failing to argue on appeal that his sentence was erroneously enhanced for abuse of position of trust. Petitioner argues: [his] sentence should not have been enhanced for abuse of trust for the reasons presented before the sentencing court and those given by the Eleventh Circuit in his co-defendant HAYWOOD HALL’s case, see, United States v. Hall, 349 F.3d 1320 (11th Cir.2003), cert. granted, affirmed at 543 U.S. 209, 125 S.Ct. 687, 160 L.Ed.2d 611 (2005)[.] (Dkt. 2 at 17) (emphasis in original). In assessing counsel’s effectiveness on appeal, the Court initially must “eliminate the distorting effects of hindsight ... and evaluate the conduct from counsel’s perspective at the time.” Dever, 36 F.3d at 1537. At the time of Petitioner’s appeal, counsel did not have the benefit of the opinion in Hall. Therefore, merely because Petitioner’s co-defendant, Hall, prevailed on appeal on the “abuse of trust” issue does not render Petitioner’s counsel’s performance ineffective. Moreover, the evidence at trial distinguished Petitioner’s role with the church and Hall’s role as pastor during the “road shows.” The evidence at trial established that Petitioner was the head of the Greater Ministries church, its board of elders, and controlled the church, including its finances. (CR Dkt. 733 at 24, 31-32). Petitioner was intimately involved in promoting the Faith Promises Program, used by the defendants collectively to generate contributions to perpetuate the scheme charged in the Indictment. From the evidence, as this’Court found at sentencing, as pastor, Petitioner occupied a position of trust with respect to the church, its congregants and the investors. The scheme was operated out of the church headquarters under Petitioner’s directive. Many of those investors attended the church or counseled with Petitioner concerning the spiritual basis for the Faith Promises Program. Unlike Hall, who served as pastor on the road during the evangelical “road shows,” Petitioner served in that capacity at church headquarters. Several church members testified during trial. While some disclaimed being victimized, it was apparent and this Court so found that Petitioner’s pastoral role played a significant part in the successful promotion of the religious based scheme, premised on biblical passages. U.S.S.G. § 3B1.3 provides: Abuse of Position of Trust or Use of Special Skill If the defendant abused a position of public or private trust, or used a special skill, in a manner that significantly facilitated the commission or concealment of the offense, increase by 2 levels. This adjustment may not be employed if an abuse of trust or skill is included in the base offense level or specific offense characteristic. If this adjustment is based upon an abuse of a position of trust, it may be employed in addition to an adjustment under § 3B1.1 (Aggravating Role); if this adjustment is based solely on the use of a special skill, it may not be employed in addition to an adjustment under § 3B1.1 (Aggravating Role). At sentencing, this Court found that Petitioner occupied a position of trust in the church and abused that position. Therefore, Petitioner’s offense level was enhanced 2 points pursuant to § 3B1.3 (CR Dkt. 872 at 19-23).

4067499-11695

CARL E. STEWART, Chief Judge: This appeal arises from the district court’s grant of summary judgment for Plaintiff-Appellee Jonibach Management Trust, trading as Bumbo International Trust (“Bumbo”), on counterclaims by Wartburg Enterprises, Inc. (“Wartburg”) alleging breach of contract. For the rea sons herein, we affirm in part and reverse in part. I. From 2003 to 2010, South African company Bumbo sold plastic baby seats to a United States distributor, Wartburg, which in turn supplied them to retailers including Wal-Mart, Toys “R” Us, and Babies “R” Us. There was never any written contract between the parties. Eventually, the parties’ relationship soured. Although the circumstances surrounding this deterioration are not crystal clear, Wart-burg’s inability to pay for merchandise in a timely manner and Bumbo’s decision to enter into an agreement with another distributor were factors. On February 25, 2010, Bumbo filed a complaint against Wartburg seeking specific performance of an oral distribution agreement between the companies. Bumbo also sought a temporary restraining order (“TRO”) and preliminary injunction requiring Wartburg to distribute Bumbo’s baby seats to three retailers: Walmart, Toys “R” Us, and Babies “R” Us. Bumbo asserted that Wartburg was refusing to distribute goods Bumbo had delivered, but for which Wartburg had not yet paid, to the retailers for whom the goods were intended. According to Bumbo, this refusal was in retaliation for Bumbo’s decision to retain a different distributor. The district court granted the temporary injunction, finding that “Bumbo and Wartburg had a clear course of dealing over several years that strongly suggests an enforceable oral distribution agreement.” Soon thereafter, Wartburg filed counterclaims against Bumbo for breach of contract, fraud, and quantum meruit. On February 16, 2011, the district court dismissed with prejudice all of Bumbo’s claims and lifted the temporary injunction against Wartburg. The next day, the district court granted Bumbo’s motion to dismiss Wartburg’s fraud and quantum meruit counterclaims, leaving only Wartburg’s counterclaims for breach of contract. These breach of contract counterclaims are the only claims at issue in this appeal. In these counterclaims, Wartburg alleges that Bumbo breached the parties’ agreement in three ways. First, Wartburg claims Bumbo breached their contract by “refusing to sell and/or provide its products to Wartburg for sale to Wartburg’s customers” (“refusal of sale claim”). Wartburg further accuses Bumbo of breaching by “taking over Wartburg’s customer relationships” (“customer relationships claim”). These two claims stem in part from the recall by the Consumer Products Safety Commission of Bumbo’s baby seat in 2007, during which time Bumbo allegedly offered Wartburg exclusive distributorship rights in the United States in exchange for serving as Bumbo’s representative during the recall and handling product issues in the United States with regard to Toys “R” Us, Babies “R” Us, Wal-Mart, and Target. Lastly — and most importantly for this appeal — Wartburg alleges that Bumbo committed a breach by “demanding] that Wartburg only sell its inventory to certain retailers, e.g., WalMart, Toys “R” Us, and Babies “R” Us (“retailer limitation claim”). The parties dispute whether this claim arises out of the exclusive distributorship agreement at issue in the refusal of products claim and the customer relationships claim, or out of the initial contract on which Bumbo’s preliminary injunction was based. Bumbo moved for summary judgment on these counterclaims, which the district court granted. The district court explained that all three contract claims arose “not as a result of any initial oral agree ment between the parties, but out of an alleged later oral modification or agreement under which Bumbo granted Wart-burg exclusive rights to distribute Bumbo seats in the United States.” Wartburg had introduced no evidence of a written agreement to any modification. The district court determined that, therefore, summary judgment was appropriate because the alleged modification was barred by the statute of frauds. Wartburg thereafter made a motion for new trial under Federal Rule of Civil Procedure 59. It argued that the district court’s dismissal of its contract counterclaims on statute of frauds grounds was at odds with the court’s earlier grant of injunctive relief to Bumbo. Specifically, Wartburg argued that in granting the preliminary injunction to Bumbo against Wartburg, the district court found that Bumbo and Wartburg had an enforceable oral distributorship agreement. The district court denied the motion for a new trial, reiterating that the initial oral agreement was distinct from the later, unproven oral modification on which Wartburg’s counterclaims were based. It further explained that the injunction order concerned goods that had already been delivered by Bumbo and accepted by Wartburg and thus were not subject to the statute of frauds. See Tex. Bus. & Com.Code Ann. § 2.201(c)(3). Wartburg timely appealed the summary judgment. II. We review summary judgment de novo, applying the same standards as the district court. Antoine v. First Student Inc., 713 F.3d 824, 830 (5th Cir.2013); see also Fed.R.Civ.P. 56(a) (“[Summary judgment is proper] if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”). There is no genuine issue of material fact “[i]f the record, taken as a whole, could not lead a rational trier of fact to find for the non-moving party.” Dediol v. Best Chevrolet, Inc., 655 F.3d 435, 439 (5th Cir.2011) (citing Floyd v. Amite Cnty. Sch. Dist., 581 F.3d 244, 247 (5th Cir.2009)). Under Texas law, “a contract for the sale of goods for the price of $500 or more is not enforceable ... unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought....” Tex. Bus. & Com.Code Ann. § 2.201(a); see also Hugh Symons Group, plc v. Motorola, Inc., 292 F.3d 466, 469 (5th Cir.2002). However, “[a] contract which does not satisfy the [the writing] requirements of Subsection (a) but which is valid in other respects is enforceable ... with respect to goods for which payment has been made and accepted or which have been received and accepted.” Tex. Bus. & Com.Code Ann. § 2.201(c)(3). Furthermore, an unwritten contract is enforceable “if the party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a contract for sale was made.” Id. at § 2.201(c)(2). In such a situation, “the contract is not enforceable ... beyond the quantity of goods admitted.” Id. As explained above, this appeal concerns the district court’s grant of summary judgment for Bumbo on three counterclaims alleging breach of contract: the refusal of sale claim, the customer relationships claim, and the retailer limitation claim. Wartburg contends that the district court erred by determining that these counterclaims stemmed not from the original oral contract at issue in the earlier preliminary injunction — -which the district court indicated was enforceable based on a clear course of dealing over several years — but from a later, unproven oral modification to the initial oral agreement. According to Wartburg, the district court reached this conclusion by mistakenly focusing only on the two counterclaims alleging Bumbo breached the exclusivity portion of the agreement — the refusal of sale claim and the customer relationships claim. Wartburg contends that the district court ignored its retailer limitation claim, which asserted that Bumbo’s insistence that Wartburg supply only certain retailers — in part through the preliminary injunction— constituted a breach. Wartburg insists that the retailer limitation claim is based on the same contract at issue at the preliminary injunction phase. Therefore, Wartburg argues that just as the statute of frauds did not bar Bumbo from suing to enforce an oral contract allegedly requiring Wartburg to distribute product solely to three retailers, it likewise does not bar Wartburg from counterclaiming that the same contract contained no such limitation. Furthermore, even if the statute of frauds otherwise applies, Wart-burg argues that Bumbo was estopped from denying the existence of an enforeéable oral distributorship agreement based on its numerous representations to the contrary. Specifically, Wartburg contends that the doctrines of judicial estoppel, judicial admission, and quasi-estoppel bar Bumbo’s statute of frauds defense. The district court was correct that the refusal of sale claim and the customer relationships claim are rooted in a later oral modification relating to exclusive distribution. There was no written evidence of this modification to the original contract. The modification does not fall into any of the exceptions to the statute of frauds. Nor did Bumbo make any sworn statements or judicial admissions relating to this modification; it never took the position that there was such a modification. As such, this oral modification is not enforceable under Texas’s statute of frauds. The district court correctly granted summary judgment to Bumbo as to the refusal of sale claim and the customer relationships claim. Therefore, the only question for us to resolve is whether the district court erred in granting summary judgment on Wartburg’s retailer limitation claim. We agree with Wartburg that this claim is based not on the modification, but on the initial contract. This is apparent on the face of the counterclaims and in the exhibits attached to the response to Bumbo’s motion for summary judgment. As stated above, Wartburg’s retailer limitation claim alleged that Bumbo committed a breach by “demanding] that Wartburg only sell its inventory to Walmart, Toys “R” Us, and Babies “R” Us. Meanwhile, Bumbo’s motion for a TRO and preliminary injunction asserted that Wartburg breached its distributorship agreement with Bumbo by refusing to distribute to Wal-Mart, Toys “R” Us, and Babies “R” Us. It asked for a TRO “preventing Wartburg from selling or otherwise disposing of the Bumbo products to anyone other than Wal-Mart, Toys “R” Us, and Babies “R” Us and a preliminary injunction “mandating that Wartburg distribute the Bumbo products it has in stock to Wal-Mart and Toys “R” Us, as it is supposed to.” Wartburg’s claim alleging that the parties did not agree that it must supply these retailers is clearly rooted in the same contract as Bumbo’s earlier claim that they did agree to this limitation. Ac cordingly, Wartburg’s retailer limitation claim stems from the initial oral contract. Moreover, the exhibits to Wartburg’s response to Bumbo’s motion for summary judgment make clear that Wartburg’s retailer limitation claim arises from the same contract at issue in the preliminary injunction phase. For example, Wartburg’s second exhibit, a transcript of the deposition of Wartburg Vice President Mark Buchanan, contains the following text: Q: The second breach outlined by Wartburg in their [ ] first amended counterclaim states, “Bumbo demanded that Wartburg only sell its inventory to certain retailers, Wal-Mart, Toys “R” Us and Babies “R” Us, to the exclusion of Wartburg’s other customers.” ... Is that associated with a motion for injunction that was filed by Bumbo requesting the Court to require Wartburg to deliver to Wal-Mart, Toys “R” Us and Babies “R” Us? A. Yes. Q. Does that refer to any other time frame or is it just that particular instance? A. Referring to that instance.

645442-17007

BAUER, Circuit Judge. Tanya Cooper-Schut, an African-American woman, began working for Visteon on May 22, 2000. She was employed as a supervisor in the FS-10 Compressor Department. During her brief employment with the company she says she was the victim of numerous hostile encounters with various co-workers. Cooper-Schut resigned on September 11, 2000. Some of her complaints are mild in nature, some are serious. The following is a list of those complaints: Cooper-Schut says that when she began working at the plant her supervisors created a hostile environment. She claims that her supervisors discussed rumors about the assistant plant superintendent having an affair with another African-American female employee. The rumors were discussed in Cooper-Schut’s presence during meetings. The discussions were derogatory toward the woman involved in the affair. In another incident, in May of 2000, a co-worker told Cooper-Schut that Cooper-Schut’s group leader, John Warren had ridiculed her by trying to rhyme her name with the word “slut.” Cooper-Schut was not present when Warren said this. Later, Warren (an African-American man) informed Cooper-Schut that “black women will take you to the cleaners” — a comment made in reference to his recent divorce. Cooper-Schut also complains of an incident where another group leader, Greg Bonwell, reprimanded her in front of other employees for a work-related incident. She believes that Bonwell went out of his way to criticize her for an issue unrelated to the topic of the meeting, and that he was unprofessional in “screaming” at her. Cooper-Schut does not believe he treats male employees in the same way. Cooper-Schut also had trouble with her subordinates. She complains that Douglas Fields, a white man who worked below her, told her that “I don’t like women, and women don’t like me.” Shortly thereafter, Fields left a business card on her desk with the name of a shop where he purchased guns. Cooper-Schut felt this was done to intimidate her. She felt that he was openly hostile to her, and insubordinate and she did not feel physically safe in his presence. On September 8, Cooper-Schut and Fields had a confrontation over a job assignment she gave to him. Cooper-Schut attended a meeting with Fields to discuss the incident, Fields said during the meeting she was, “shaking [her] head and acting like Sha-nay-nay.” Cooper-Schut believes this was racially derogatory and was intended to portray her as a “stereotypical black female who is ... ignorant.” (Appellant’s Br. at 11.) Cooper-Schut also had difficulty with another subordinate employee, James Augustine. She encountered hostility from him when she confronted him regarding his absence from work and refused to accept his excuse of medical problems. At this time Augustine became visibly irate and pushed a heavy industrial basket toward Cooper-Schut, exclaiming that he was “sick of this shit.” This behavior she says intimidated her. Another employee, Will Taylor, told Cooper-Schut that a competition existed among employees at the plant to see who would be first to have sex with her. In addition to these smaller hostilities, Cooper-Schut reports some serious and disturbing incidents at Visteon. She says that on August 15, 2000 she was injured by a falling tray and was taken to the hospital to receive medical attention for an injury to her ankle. Initially, Cooper-Schut believed the tray fell as a result of an accident that occurred while a maintenance employee was clearing a jam on a conveyor belt; later she believed that because of the size of the tray and the way the trays were stacked it could not have accidently fallen. She believes that it was intentionally thrown at her from above by another employee, Ted Couch. Cooper-Schut was told by other workers that Couch later remarked: “that nigger should not have been in the way.” On her first day back following the injury, a second tray was thrown at Cooper-Schut but did not hit her. On September 6, 2000 Cooper-Schut found a derogatory caricature taped to the refrigerator in her work area. The caricature was of her and was accompanied by the following phrases: “Please show me how to run my dept, the right way,” “Nigger Bitch,” and “I need help!” Cooper-Schut immediately reported this to Donald Vincent, the Human Resources Manager at the plant. The next day Vincent directed John Donner to conduct an investigation of the incident. Donner had a new employee, Jennifer Stewart, interview the various employees who worked directly with Cooper-Schut. Cooper-Schut told Stewart that she feared for her safety; Stewart told her she could not guarantee Cooper-Schut’s safety at the plant. Cooper-Schut then resigned. After the district court granted summary judgment for Visteon, Cooper-Schut filed this appeal. Cooper-Schut takes issue with 1) the district court’s determination that she did not establish a claim for a Title VII violation, and 2) the district court’s treatment of some evidence. We discuss these below. Title VII Claims We review the district court’s grant of defendant’s motion for summary judgment de novo. Phelan v. City of Chicago, 347 F.3d 679, 681 (7th Cir.2003). In doing so, we consider all evidence in the light most favorable to the non-moving party. Id. Summary judgment is proper when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). Title VII makes it unlawful for an employer “to discriminate against any individ ual 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. § 2000e-2. There are several ways to frame a Title VII claim; we consider Cooper-Schut’s claims of a hostile work environment and constructive discharge. Hostile Work Environment An employer violates Title VII if it is responsible for a “hostile work environment.” Mason v. Southern Ill. Univ. at Carbondale, 233 F.3d 1036, 1043 (7th Cir.2000). A hostile environment is one that is “permeated with discriminatory intimidation, ridicule and insult.” Shanoff v. Ill. Dept. of Human Servs., 258 F.3d 696, 704 (7th Cir.2001). In order to state a claim under Title VII for a hostile work environment, a plaintiff must be able to demonstrate that: “1) he was subject to unwelcome harassment; 2) the harassment was based on his race [or sex]; 3) the harassment was severe [or] pervasive so as to alter the conditions of the employee’s environment and create a hostile or abusive working environment; and 4) there is basis for employer liability.” Mason, 233 F.3d at 1043 (7th Cir.2000). While we find some of Cooper-Schut’s complaints disturbing, we do not find that she stated an actionable hostile work environment claim under Title VII. Although the incidents Cooper-Schut experienced at Visteon may have been “severe or pervasive” enough to rise to an actionable level, there is no basis for employer liability; Visteon responded reasonably on the few occasions when Cooper-Schut alerted it to workplace hostilities that violated Title VII. Employer liability is evaluated on two levels. First, an employer may be liable if a supervisor is responsible for the harassment. That argument is not raised here. (Appellant’s Br. at 35.) Second, an employer may be liable if the harassment is done by a co-worker and the employer is shown to have been negligent in failing to prevent the harassment. Baskerville v. Culligan Int’l Co., 50 F.3d 428, 432 (7th Cir.1995). An employer is deemed negligent if it fails to take reasonable steps to discover and remedy harassment. Id. In evaluating whether an employer’s response was reasonable, we must consider the “gravity of the harassment.” Id. The first step in this inquiry is whether the employer was on notice of the harassment. When an employee reports harassment to her employer, the employee must give the employer “enough information to make a reasonable employer think there was some probability that she was being sexually [or racially] harassed.” Zimmerman v. Cook County Sheriff's Dept., 96 F.3d 1017, 1019 (7th Cir.1996); see also Perry v. Harris Chernin, Inc., 126 F.3d 1010, 1014 (7th Cir.1997) (noting that an employer cannot be held liable if the employee does not report sexual harassment and the employer would not have reasonably discovered through other channels). As we will discuss below, one of the main failings of Cooper-Schut’s reporting (in the incidences she did report ) is that the majority of conflicts with co-workers were work-related and did not involve racial or sexual insults, and Cooper-Schut did not report that she believed them to be racially or sexually motivated. While Vis-teon may have been on notice that she was experiencing friction with her co-workers, it did not have reason to believe the majority of these problems fell under the more serious umbrella of race or sex discrimination. Although Cooper-Schut began experiencing problems with co-workers as early as May 2000, she did not report these problems immediately. Her reports to supervisors occurred about a month preceding her resignation. They are as follows: On August 31, 2000 she reported to the Human Resources Manager, Donald Vincent, that she had been told that John Warren had rhymed her last name with “slut.” In response Vincent immediately had Henry Morrissey (the Area Manufacturing Manager) interview Warren about the remark. He also interviewed two other employees who were present at that meeting; they denied that he made the remark. Also, Cynthia Holm (the Equal Employment Opportunity Commission) interviewed Warren and three other supervisors. All those interviewed denied that Warren had called Cooper-Schut a slut; because of this, no discipline was implemented. Visteon’s response of immediately conducting multiple interviews with the employees involved was a reasonable response, and was not negligent. See Perry, 126 F.3d at 1014-15 (holding an employer’s response to a complaint of sexual harassment was reasonablé when the employer investigated the incident, but the alleged harasser and supervising employee denied that the incident occurred). Regarding her confrontations with subordinate employee Douglas Fields, Cooper-Schut sought involvement from Vis-teon on two occasions. On August 11, 2000 she reported an incident involving a hostile confrontation with Fields to her supervisor, Warren. That confrontation was work-related and did not involve racial or sex-based-comments. On September 8, Fields again exhibited hostility toward Cooper-Schut; later that day a meeting was held with Warren and union representatives to address the situation. This hostility was again related to work issues, and did not involve race or sex-based comments. During the meeting to discuss the incident Fields did make a comment that Cooper-Schut was acting like “Sha-nay-nay.” Cooper-Schut felt this was a derogatory term for African-American women. Cooper-Schut told Warren that she wanted to discipline Fields. Warren told her to prepare a write-up of the days events to assist in determining discipline- — -she quit three days later without preparing a writeup. Later, Fields was one of the employees with whom Visteon individually reviewed its zero tolerance policies. We think that Visteon’s responses to these reports were reasonable. Aside from the “Sha-nay-nay” comment, these incidents were neither sex-or race-based. With regard to the “Sha-nay-nay” comment, we first note that “Sha-nay-nay” is an ambiguous term. However, Cooper-Schut felt that Fields meant it to be racially and sexually derogatory, which, in all fairness, may be true. Cooper-Schut’s supervisors tried to follow up with discipline but were hampered by her failure to complete the necessary write-up of the incident. See Perry, 126 F.3d at 1015 (finding the “reasonableness” of an employer’s response to a complaint of harassment may be affected by the cooperation — or lack thereof — by the complaining employee.). Ultimately, Visteon recognized that Fields was especially hostile toward Cooper-Schut and spoke with him individually about Visteon’s adherence to its zero tolerance policy. Cooper-Schut also reported to Warren an incident on August 22, 2000 involving James Augustine. This incident arose when Cooper-Schut refused to accept Augustine’s reason for missing work. Augustine became angry and yelled that he was, “sick of this shit.” This incident did not involve racial or- sex-based comments; Cooper-Schut did not report that it did. Cooper-Schut was hit by the tray on August 15, 2000 and had a second tray thrown at her several days later. While Cooper-Schut reported to Donald Vincent that she believed in both incidents the trays were intentionally thrown at her, she did not tell Vincent that she believed the motivation for throwing the trays was sexual or racial, and Vincent had no reason to suspect they were. Visteon’s safety investigation of the incident and counseling of the employee responsible for the trays was a reasonable response. Finally, on September 6, 2000 Cooper-Schut showed Vincent the offensive caricature she found posted on the refrigerator. This conduct was clearly related to both her race and sex. In response, Cooper-Schut was interviewed that day by Vincent, Morrissey, and Eric Laval-ette, a Labor Relations associate, regarding the caricature. The next day Human Resources began a complete investigation. Part of that investigation, interviewing the hourly employees in Cooper-Schut’s department, was delegated to a new employee, Jennifer Stewart. In addition to the interviews, Visteon retained a forensics expert to analyze the handwriting on the caricature to determine who made it. Visteon could not determine who was responsible for the picture. Instead of disciplining employees, it reviewed its zero tolerance policy concerning racial and sexual harassment with all employees at the plant. Stewart also met individually with particular employees (Fields, Augustine and Charles Masters — those with whom Cooper-Schut had had specific problems) to review the policy. Cooper-Schut resigned prior to the completion of this investigation. While we lament that such behavior occurred, we find that when Vis-teon became aware of the problems, it took reasonable actions to remedy the violations. Constructive Discharge Cooper-Schut also claims that Vis-teon violated Title VII by constructively discharging her. When a plaintiff seeks to show this through indirect evidence she must employ a burden-shifting framework. The plaintiff must prove the following pri-ma facie case: “(1) that she was a member of a protected class; (2) that she was performing her job satisfactorily; (3) that she experienced an adverse employment action; and (4) that similarly situated individuals were treated more favorably.” Traylor v. Brown, 295 F.3d 783, 788 (7th Cir.2002). When the “adverse employment action” that the plaintiff complains of is a constructive discharge it is simply a claim that she was forced to quit because the work conditions became unbearable. It is difficult for a plaintiff to show a constructive discharge. We have noted that “[a]bsent extraordinary conditions, a complaining employee is expected to remain on the job while seeking redress [for Title VII violations].” Grube v. Lau Industries, Inc., 257 F.3d 723, 728 (7th Cir.2001) (quoting Perry, 126 F.3d at 1015); see also Tidwell v. Meyer’s Bakeries, Inc., 93 F.3d 490, 494 (8th Cir.1996) (“An employee who quits without giving his employer a reasonable chance to work out a problem has not been constructively discharged.”). In this case, Cooper-Schut’s constructive discharge claim fails for two reasons: First, because whatever racial and sexual harassment she experienced was, for the most part, mild. See Hertzberg v. SRAM Corp., 261 F.3d 651, 658 (7th Cir.2001) (noting that a plaintiff needs to show facts that go beyond an “ordinary” Title VII violation; drawing a distinction between conditions that are “unreasonable” — in which case the employee must continue working — and those that are “intolerable”). Second, Cooper-Schut quit before Visteon had a chance to complete its investigation of the caricature. Case law illustrates that an employee has not acted reasonably if she assumes the employer will fail to protect her without allowing the employer a chance to try. See Tidwell, 93 F.3d at 494. For these reasons, Cooper-Schut’s constructive discharge claim fails. Evidentiary Issues Cooper-Schut also challenges the district court’s use of several pieces of evidence. We review evidentiary rulings for abuse of discretion. Hildebrandt v. Ill. Dept. of Nat. Res., 347 F.3d 1014, 1040 (7th Cir.2003). Additionally, we will only reverse if failure to do so would be “inconsistent with substantial justice.” Id. That is to say, we will reverse the district court’s ruling only if it was erroneous, and the error affected the outcome of the case.

5661229-9475

ORDER ON MOTION TO DISMISS PRATT, Chief Judge. On December 8, 2005, Plaintiff filed the above-captioned action in the Iowa District Court for Polk County, claiming Breach of Contract, Negligence, and Breach of Bailment. Following a Motion to Dismiss for Improper Service, the Iowa District court judge ordered Plaintiff to make service of process on Defendant no later than April 28, 2006. Plaintiff successfully served Defendant with process on April 24, 2006, and Defendant removed the action to this Court on May 15, 2006, claiming that Plaintiffs cause of action is governed exclusively by 49 U.S.C. § 14706 (the “Car-mack Amendment,” formerly 49 U.S.C. § 11707). See Clerk’s No. 1. On May 23, 2006, Defendant filed a Motion to Dismiss Plaintiffs State Law claims, arguing that such claims are preempted by the Car- mack Amendment. Clerk’s No. 5. Plaintiff filed a resistance (Clerk’s No. 8), and Defendant replied (Clerk’s No. 10). The matter is fully submitted. I. MOTION TO DISMISS In addressing a motion to dismiss under Rule 12(b)(6), this Court “is constrained by a stringent standard.... 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.” Parnes v. Gateway 2000, Inc., 122 F.3d 539, 545-46 (8th Cir.1997) (quoting Fusco v. Xerox Corp., 676 F.2d 332, 334 (8th Cir.1982) (citation omitted) (emphasis added)). In addition, the complaint must be liberally construed in the light most favorable to the plaintiff and should not be dismissed simply because the court is doubtful that the plaintiff will be able to prove all of the necessary factual allegations. See Parnes, 122 F.3d at 546. Finally, when considering a motion to dismiss for failure to state a claim, a court must accept the facts alleged in the complaint as true. See Cruz v. Beto, 405 U.S. 319, 322, 92 S.Ct. 1079, 31 L.Ed.2d 263 (1972). The Supreme Court has articulated the test as follows: When a federal court reviews the sufficiency of a complaint, before the reception of any evidence either by affidavit or admissions, its task is necessarily a limited one. The issue is not whether a claimant will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims. Indeed it may appear on the face of the pleadings that a recovery is very remote and unlikely but that is not the test. Moreover, it is well established that, in passing on a motion to dismiss, whether on the ground of lack of jurisdiction over the subject matter or for failure to state a cause of action, the allegations of the complaint should be construed favorably to the pleader. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974), overruled on other grounds by Davis v. Scherer, 468 U.S. 183, 191, 104 S.Ct. 3012, 82 L.Ed.2d 139 (1984). A motion to dismiss should be granted “only in the unusual case in which á plaintiff includes allegations that show on the face of the complaint that there is some insuperable bar to relief.” Frey v. City of Herculaneum, 44 F.3d 667, 671 (8th Cir.1995). II. LAW AND ANALYSIS Plaintiffs Complaint alleges that on June 27, 2005, Defendant agreed to provide services to the Plaintiff, consisting of moving an EMC Clariion CX700 storage array from Bellevue, Nebraska, to Plaintiffs facilities in Sioux City, Iowa. See Compl. ¶ 3. The services were to be provided pursuant to a Professional Services Contract entered into between the parties on October 13, 2003. Id. ¶ 4. Plaintiff claims that Defendant failed to comply with a provision of the contract requiring the highest degree of care possible and, while attempting to move the storage array, dropped it to the floor causing damage of approximately $213,392.00. Id. ¶¶ 5-7. “With the enactment in 1906 of the Carmack Amendment, Congress superseded diverse state laws with a nationally uniform policy governing interstate carriers’ liability for property loss.” New York, N.H. & H.R. Co. v. Nothnagle, 346 U.S. 128, 131, 73 S.Ct. 986, 97 L.Ed. 1500 (1953). The Carmack Amendment, in substance, provides that a carrier is liable for the actual loss or injury it causes to a shipper’s property. See Cont. Grain Co. v. Frank Seitzinger Storage, Inc., 837 F.2d 836, 839 (8th Cir.1988). The Carmack Amendment has consistently been found to preempt state law causes of action if the cause of action involves loss of goods or damage to goods caused by the interstate shipment of those goods by a common carrier. See Adams Express Co. v. Croninger, 226 U.S. 491, 505-06, 33 S.Ct. 148, 57 L.Ed. 314 (1913); Fulton v. Chicago, Rock Island & P.R. Co., 481 F.2d 326, 331-32 (8th Cir.1973) (“[T]he Carmack Amendment has preempted suits in specific negligence by holders of bills of lading against their carriers.... ‘[W]hen damages are sought against a common carrier for ... negligent performance of ... an interstate contract of carriage, the Car-mack Amendment governs.’ ”) (quoting Am. Synthetic Rubber Corp. v. Louisville & N.R.R. Co. 422 F.2d 462, 466 (6th Cir.1970)). Plaintiff does not dispute that the Car-mack Amendment generally preempts state law causes of action, but urges that the Carmack Amendment does not apply in this case because “Plaintiff and Defendant entered into a contract of carriage pursuant to which Defendant was to provide specified services to Plaintiff under specified rates and conditions.” Pl.’s Resistance Br. at 2. Title 49 U.S.C. § 14101(b) provides: (1)In general. — A carrier ... may enter into a contract with a shipper, other than for the movement of household goods ... to provide specified services under specified rates and conditions. If the shipper and carrier, in writing, expressly waive any or all rights and remedies under this part for the transportation covered by the contract, the transportation provided under the contract shall not be subject to the waived rights and remedies and may not be subsequently challenged on the ground that it violates the waived rights and remedies. The parties may not waive the provisions governing registration, insurance, or safety fitness. (2) Remedy for breach of contract.— The exclusive remedy for any alleged breach of contract entered into under this subsection shall be an action in an appropriate State court or United States district court, unless the parties otherwise agree. 49 U.S.C. § 14101(b). Plaintiff argues that, because the Professional Services Contract entered into between the parties provided specified rates and conditions, the exclusive remedy for Defendant’s actions is provided by filing an action in the appropriate state court, which is what Plaintiff did. Section 14101 essentially permits parties to avoid liability under the Car-mack Amendment when they “in writing, expressly waive any or all rights” thereunder. See e.g., Travelers Indem. Co. of Illinois v. Schneider Specialized Carriers, Inc., 2005 WL 351106, at *5 (S.D.N.Y. Feb. 10, 2005) (“To escape the reaches of the Carmack Amendment, the parties must ‘in writing, expressly waive any or all rights and remedies under this part for the transportation covered by the contract.’ ”) (quoting 49 U.S.C. § 14101); Atlantic Mut. Ins. Co. v. Yasutomi Warehousing and Distribution, Inc., 326 F.Supp.2d 1123, 1126 (C.D.Cal.2004) (citing § 14101(b) for the proposition that “[a] motor carrier may limit its liability by entering into a contract with the shipper, agreeing to limit the carrier’s liability”); Transit Homes of Am., Div. of Morgan Drive Away, Inc. v. Homes of Legend, Inc., 173 F.Supp.2d 1192, 1195 (N.D.Ala.2001) (“[T]he primary importance of § 14101(b)(1) is not simply that it permits contracting by camers who are not transporting household goods. Rather, the importance of the subsection lies in its specific allowance for such carriers and parties with whom they deal expressly to contract around certain federal obligations and remedies, in particular the Carmack Amendment, established as default rules by Congress.”) (citing Stephen G. Wood, Multimodal Transportation: An American Perspective on Carrier Liability and Bill of Lading Issues, 46 Am. J. Comp. L. 403, 411 (1998)); Custom Cartage, Inc. v. Motorola, Inc., 1999 WL 965686, at *12 (N.D.Ill. Oct.15, 1999) (concluding that the Carmack Amendment was applicable where there was no express agreement between the parties opting out of the Amendment’s protections). Plaintiff cites no express waiver of any provisions of the Carmack Amendment, and a review of the Professional Services Contract reveals none. The closest item the Court can identify as attempting to limit liability in any way is a provision providing: “In the event of any dispute arising under this Contract, it is agreed between the parties that the law of the State of Iowa will be given the interpretation, validity and effect of this Contract without regard to the place of execution or place of performance thereof.” See Clerk’s No. 1 at 50 (Professional Services Contract at PG-14.) The Court cannot say that this provision is sufficiently explicit to express an intent to avoid the rights and remedies of the Carmack Amendment. See e.g., Celadon Trucking Servs., Inc. v. Titan Textile Co., Inc., 130 S.W.3d 301 (Tex.Ct.App.2004) (requiring that any waiver of Carmack Amendment liability be expressly stated). On the present facts, then, the Court concludes that the Carmack Amendment preempts Plaintiffs state law claims.

4208893-16017

MEMORANDUM OPINION AND ORDER RICHARD H. KYLE, District Judge. INTRODUCTION In this action, Plaintiff Steve Sawczyn alleges the automated teller machines (“ATMs”) of Defendant BMO Harris Bank National Association (“BMO”) were not ac cessible to him as a legally blind individual, in violation of Title III of the Americans with Disabilities Act, 42 U.S.C. § 12101 et seq. (“ADA”) and its implementing regulations. BMO now moves to dismiss for lack of subject-matter jurisdiction, asserting Sawczyn lacks standing and the action is moot. For the reasons set forth below, the Court will deny BMO’s Motion. BACKGROUND The ADA protects the rights of individuals with disabilities with respect to places of public accommodation, commercial facilities, transportation, and other places or services. Specifically, Title III of the ADA prohibits public accommodations from discriminating against persons with disabilities and requires them to be readily accessible to and independently usable by persons with disabilities. 42 U.S.C. §§ 12181-89. The Department of Justice has promulgated rules implementing Title III, including the 2010 Standards for Accessible Design (“2010 Standards”). The 2010 Standards set forth various standards for banks, as places of public accommodation under Title III, to follow in order to make ATMs accessible to persons with disabilities. At issue here are several of the 2010 Standards specifically aimed at making ATMs accessible to and independently usable by visually impaired individuals. For example, the guidelines require ATMs to be speech enabled and to have tactilely discernible input controls, function keys with specific tactile symbols, Braille instructions for initiating speech mode, and a headphone jack to allow for privacy while using speech mode. The deadline for conforming to the 2010 Standards was March 15, 2012. In this action, Sawczyn alleges BMO’s ATMs violated these standards. He alleges he visited two of BMO’s ATMs, located at 522 Snelling Avenue, Saint Paul, Minnesota, and 5050 France Avenue, Edina, Minnesota, sometime after March 15, 2012. (Am.Compl^ 9.) These ATMs are located approximately eleven and three miles from his home, respectively, and are within the “geographic zone that Plaintiff typically travels as part of his regular activities.” (Id. ¶ 10.) When he visited the ATMs with his bank card and headphones intending to use them, he discovered neither had a voice-guidance feature and the France Avenue ATM’s function keys did not have the proper tactile symbols (both of which are required by the 2010 Standards) and he could not independently operate the ATMs as a result. (Id. ¶¶ 45-46, 49-50.) He alleges that, as of the date of his Amended Complaint, he remained unable use these ATMs and that further investigation on his behalf revealed more than fifteen of BMO’s ATMs were noncompliant. (Id. ¶ 51.) Sawczyn alleges he will continue to attempt to use BMO’s ATMs in the future to test their compliance in an effort “to identify convenient accessible ATM options” near him and “to increase ATM accessibility for the blind community, generally.” (Id. ¶ 52.) In August 2013, Sawczyn commenced the instant action (and eleven similar actions in this District against other financial institutions) seeking injunctive relief under the ADA for BMO’s failure to accommodate him and other legally blind persons who have tried to use its ATMs. BMO now moves to dismiss, asserting Sawczyn lacks standing and the action is moot because its ATMs are now in compliance with the 2010 Standards. The Motion has been fully briefed and is ripe for disposition. STANDARD OF DECISION BMO moves to dismiss for lack of subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1). On a Rule 12(b)(1) motion&emdash;unlike a Rule 12(b)(6) motion&emdash;the Court may consider matters outside the pleadings without converting the motion into a summary-judgment proceeding. Osborn v. United States, 918 F.2d 724, 729-30 & n. 6 (8th Cir.1990). In this Motion, the parties have submitted affidavits addressing BMO’s ADA compliance, among other matters, which the Court will consider. But as the parties have yet to undertake discovery, the Court will take Sawczyn’s allegations as true to the extent they remain uncon-tradicted by the very limited record. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) (“At the pleading stage, general factual allegations of injury resulting from the defendant’s conduct may suffice, for on a motion to dismiss we presume that general allegations embrace those specific facts that are necessary to support the claim.”) (quotation omitted). If the Court determines at any time it lacks jurisdiction&emdash;whether upon motion or on its own&emdash; it must dismiss the action. Fed.R.Civ.P. 12(h)(3); Harris v. P.A.M. Transp., Inc., 339 F.3d 635, 637 n. 4 (8th Cir.2003). Accordingly, the parties may challenge jurisdiction more than once throughout the course of litigation. ANALYSIS I. Standing BMO challenges whether Saw-czyn has standing to pursue his claim, that is, whether he “is entitled to have the court decide the merits of the dispute.” Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975). To meet the constitutional minimum of standing, a plaintiff must establish “that he or she has suffered an ‘injury in fact’ that is ‘concrete and particularized’ and ‘actual or imminent, not conjectural or hypothetical’; that there is ‘a causal connection between the injury and the conduct complained of; and that it is ‘likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.’ ” Constitution Party v. Nelson, 639 F.3d 417, 420 (8th Cir.2011) (quoting Lujan, 504 U.S. at 560-61, 112 S.Ct. 2130). When, as here, a plaintiff seeks injunctive relief, he must demonstrate a “real and immediate threat of future injury by the defendant.” City of Los Angeles v. Lyons, 461 U.S. 95, 101-02, 103 S.Ct. 1660, 75 L.Ed.2d 675 (1983). In the context of the ADA, a plaintiff may demonstrate an “injury in fact” by establishing his intent to return to the noncompliant public accommodation. Sawczyn alleges (1) he has visited the noncompliant ATMs in the past, (2) the ATMs are located approximately three and eleven miles from his home (Am. Comply 10), and (3) he “will continue to attempt to use the Subject ATMs because he wants to identify convenient accessible ATM options within the zone that he typically travels as part of his regular activities, and [because] he wants to increase ATM accessibility for the blind community, generally” (id. ¶ 52). Of these allegations, BMO challenges only Sawczyn’s intent to use the ATMs in the future. While there is no definitive test in the Eighth Circuit for determining whether a plaintiff intends to return to a noncompli-ant accommodation, see Miller v. Ataractic Inv. Co., Civ. No. 11-3509, 2012 WL 2862883, at *3 (W.D.Mo. July 11, 2012), courts often consider factors such as (1) the plaintiffs proximity to the accommodation; (2) the frequency of plaintiffs nearby travel; (3) the plaintiffs past patronage; and (4) the definiteness of plaintiffs plans to return. E.g., Steelman v. Rib Crib No. 18, Civ. Nos. 11-3433, et al., 2012 WL 4026686, at *2 (W.D.Mo. Sept. 12, 2012). Accordingly, the Court will use these factors to guide its analysis. Sawczyn’s proximity to the BMO ATMs and his frequency of nearby travel both weigh in favor of standing. He alleges the ATMs are located only three and eleven miles from his home and BMO’s investigation confirms this estimate. {See Nowak Deck ¶ 4 (averring the ATMs are located 3.8 and 11.5 miles from his home address).) He also alleges they lie within the zone he “typically travels as part of his regular activities.” (Id. ¶ 10.) More specifically, he frequents Edina (where the France Avenue ATM is located) to visit restaurants and shop and he travels to Saint Paul (where the Snelling Avenue ATM is located) to visit friends and attend outreach events. (Id. ¶ 11.) Contrary to BMO’s argument, Sawczyn need not establish BMO’s ATM is the nearest ATM to his home nor the most convenient. Rather, he need only allege that the ATMs he visited are near enough and convenient enough that he might reasonably be expected to visit them again. Therefore the statistics BMO painstakingly compiled regarding how many other ATMs are as close or closer to Sawczyn’s home (see Def.’s Mem. at 11-13) are ultimately beside the point. Sawczyn lives less than twelve miles from the ATMs and frequents the surrounding areas, both of which lend credence to his allegation that he will return to use them in the future. Cf., e.g., Houston v. Marod Supermarkets, Inc., 733 F.3d 1323, 1340 (11th Cir.2013) (finding standing where plaintiff lived 30 miles from accommodation and frequently visited his attorney’s office nearby); Daniels v. Arcade, L.P., 4177 Fed.Appx. 125, 129-30 (4th Cir.2012) (finding standing where plaintiff alleged he “lives near the Market, had visited the Market before the filing of the amended complaint,” and “ ‘intends to continue to visit the [Market] in the future for his shopping needs’ ”). BMO contends the last two factors — his past patronage and the definiteness of his plans to return — undercut Sawczyn’s standing, but the Court disagrees. These two factors are largely inapplicable to Sawczyn’s case and therefore carry little to no weight in the Court’s analysis. See Daniels, 477 Fed.Appx. at 129-30 (declining to require a “more specific” allegation of when the plaintiff intended to return to the noncompliant accommodation and concluding plaintiffs litigation history was irrelevant). Sawczyn’s past patronage is admittedly thin. He is not a BMO customer and he alleges that he visited each ATM only once. As he has not returned to the ATMs since his first visit, BMO contends he never will. But requiring a history of patronage is incongruous in an ADA case like this one. While Sawczyn certainly could have returned to BMO’s ATMs— knowing he was unable to use them — in order to manufacture standing, it would be poor policy to require him to. Plaintiffs are not required to make futile attempts at using noncompliant public accommodations in order to sue under the ADA, 42 U.S.C. § 12188(a)(1), nor should they be required to do so for standing purposes, see Pickern v. Holiday Quality Foods Inc., 293 F.3d 1133, 1138 (9th Cir.2002); Steger v. Franco, Inc., 228 F.3d 889, 892 (8th Cir.2000). Accordingly, the Court will not hold Saw-czyn’s failure to revisit the noncompliant ATMs against him in its analysis. The final factor is the definitiveness of Sawczyn’s plans to return. Insofar as courts have interpretéd this to require a plaintiff to plead particulars of when he will return, the Court finds this factor equally inappropriate to Sawczyn’s case. In Lujan, the Supreme Court announced that general “some day” intentions to return were insufficient allegations of future injury for the purpose of standing. 504 U.S. at 564, 112 S.Ct. 2130. It explained: “such ‘some day’ intentions [to return]&emdash; without any description of concrete plans,- or indeed even any specification of when the some day will be&emdash;do not support a finding of the ‘actual or imminent’ injury that our cases require.” Id. But in Lujan, the plaintiffs needed to travel halfway across the globe on a mission to observe endangered species in order to suffer the “imminent” future injury they alleged. Id. at 563-64, 112 S.Ct. 2130. A trip of that sort requires scheduling, coordination, and preparation&emdash;in other words, it requires concrete and advanced plans. Visiting a nearby ATM, on the other hand, does not. Given the spontaneous nature of ATM visits, Sawczyn need not allege when specifically he will return to use BMO’s ATMs in order for the Court to consider his professed intent to return credible and definite. Cf. Parr v. L & L Drive-Inn Rest., 96 F.Supp.2d 1065, 1079 (D.Haw.2000) (where noncompliant public accommodation is fast-food restaurant, “specification as to a date and time” of return visit is “impossible” due to the “spur of the moment” nature of fast-food visits). Therefore, this final factor weighs little in the Court’s analysis. Overall, based on the pleadings and limited record before it, the Court concludes Sawczyn’s alleged past use of BMO’s local ATMs and his intent to use them again are sufficient to create a concrete, imminent threat of future harm and Sawczyn therefore has standing to pursue his claim. II. Mootness A plaintiff must have standing throughout the life of a case, not just at the beginning, in order, for it to constitute a justiciable “case or controversy” under Article III. See U.S. Parole Comm’n v. Geraghty, 445 U.S. 388, 397, 100 S.Ct. 1202, 63 L.Ed.2d 479 (1980). Otherwise, the case becomes moot. . Stated differently, “mootness [is] the doctrine of standing in a time frame. The requisite personal interest that must exist at the commencement of the litigation (standing) must continue throughout its existence (mootness).” Id. (quotation and citation omitted). BMO asserts this case is moot because its alleged ADA violations have been rectified, leaving Sawczyn with nothing to gain from his requested injunctive relief. “It is well settled that a defendant’s voluntary cessation of a challenged practice does not deprive a federal court of its power to determine the legality of the practice. If it did, the courts would be compelled to leave the defendant free to return to his old ways.” Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 189, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000) (quotations, citation, and alterations omitted). The defendant carries a “heavy burden” of demonstrating not only that it has voluntarily ceased the offending conduct but also that it is “absolutely clear” the offending conduct “could not reasonably be expected to recur.” Id. Thus, BMO must establish that its ATMs are ADA-compliant and that they will remain compliant. Based on the record before it, the Court cannot conclude as a matter of law that BMO has satisfied this “heavy burden.” First, despite BMO’s assertion, the evidence does not conclusively show that BMO’s ATMs are currently ADA compliant. BMO relies on the declaration of its Vice President, Brenda Pino, to establish its compliance. Pino avers that BMO investigated the France and Snelling Avenue ATMs on September 4, 2103, after Saw-ezyn commenced the instant suit and found they lacked functioning headphone jacks to enable users to access the voice-guidance feature. (Pino Aff. ¶ 5.) It then surveyed its other ATMs in the Twin Cities area for voice guidance or software issues and found two more ATMs without functioning headphone jacks. (Id. ¶ 8.) According to Pino, BMO replaced each of these jacks. (Id. ¶ 7-8.) But apart from these nonfunctioning jacks, Pino does not acknowledge any other ADA violations. She avers that the software on the France and Snelling Avenue ATMs was working properly and that they had “proper decals and Braille lettering.” (Id. ¶ 6.) In contrast, Sawezyn alleges that the France Avenue ATM lacked proper tactile symbols. As Pino does not concede this alleged violation, she does not describe any measures taken to correct it. Nor does she address whether BMO’s other ATMs have proper tactile symbols. Thus, the Court is left unsure whether its ATMs are fully compliant or just have functioning software and voice-guidance features. While the implication of Pino’s declaration is that the ATMs are compliant (at least according to BMO’s counsel), she never states this. Instead, she states she has “not been made aware of any new or recurring problems with any of the BMO [] ATMs” in the Twin Cities since BMO corrected the headphone jacks. (Id. ¶ 9.) But this offers little consolation when she acknowledges that she was also unaware of any accessibility problems with BMO’s ATMs before Sawezyn filed this suit. (Id.)

3709027-28553

Opinion by Judge STAFFORD; Dissent by Judge TASHIMA. OPINION STAFFORD, Senior District Judge: Collins Max Christensen appeals the sentence imposed by the district court following his pre-indictment guilty plea to one count of wire fraud in violation of 18 U.S.C. § 1343. Christensen’s sentence— 60 months in prison — was 19 months above the high end of the applicable advisory guideline range and 27 months above the recommended sentence set out in the plea agreement. We have jurisdiction under 28 U.S.C. § 1291, and we affirm. I. Christensen waived indictment by a grand jury and pleaded guilty to a one-count information charging wire fraud. The plea agreement revealed that, between 2006 and 2008, Christensen managed the operations of at least six land development companies, which — in turn— managed multiple real estate projects spearheaded by Christensen. By soliciting individual investors, Christensen received a total of approximately $2,385,959 from fourteen individuals who agreed to invest in one or more of Christensen’s projects. Over time, Christensen diverted a significant amount of the investors’ funds, using the diverted funds for undisclosed purposes. Indeed, Christensen admitted that he misappropriated approximately $985,994 of investors’ funds using the interstate wires to further his criminal scheme. Christensen further admitted that he diverted investors’ funds not only for use on undisclosed real estate projects but also for his own personal use. In the Presentence Investigation Report (“PSR”), the probation officer summarized the losses sustained by the various “victims” of Christensen’s offense of conviction. Only those persons who had some or all of their investment funds unlawfully diverted by Christensen were listed as “victims” of Christensen’s offense. Consistent with the plea agreement, the total “victim” loss reported by the probation officer was $985,994. Given the loss amount reported in the PSR and admitted by Christensen, the probation officer calculated a total offense level of 20, including a three-level reduction for acceptance of responsibility. With a criminal history category of I, the recommended sentencing range under the Guidelines was 33 to 41 months. Christensen agreed with the probation officer’s Guidelines calculations. The probation officer included in the PSR a sampling of the written statements that Christensen’s “victims” submitted to the court. In his informal objections to the PSR, which were submitted to the probation officer before sentencing, Christensen complained that one of the victim impact statements was “misleading.” He did not provide specifics, and he did not otherwise object to the content of any of the victim impact statements quoted in the PSR. After the probation officer amended the PSR in response to Christensen’s informal objections, Christensen did not again complain about the victim impact statements. One day before sentencing was scheduled to begin, the district court advised counsel that — for “a number of reasons”— it was considering an upward variance to Christensen’s sentence. To that end, the district judge requested that the government provide information concerning the amount of investor monies that Christensen diverted to his own personal use. Given the last-minute notice concerning a possible upward variance, Christensen’s counsel requested and obtained a continuance of the sentencing hearing. As directed by the district court, the government filed a spreadsheet itemizing Christensen’s use of $507,805 for personal expenses. Among other things, the spreadsheet revealed that Christensen used investor monies for personal investment properties held in his wife’s name, to pay his more-than-$13,000-per-month home mortgage, to make payments , to his ex-wife, to make a car payment for his daughter, to pay his daughter’s college tuition, and to gamble at a casino in Biloxi, Mississippi. According to the FBI, $507,805 was a “conservative figure” for the amount of diverted funds used for Christensen’s personal expenses. Christensen did not contest the accuracy of the personaluse transactions listed in the government’s spreadsheet. Christensen instead argued — both in a written sentencing memorandum and in open court at sentencing — that an upward variance based on his personal use of diverted funds would constitute improper double-counting because the total loss amount — $985,994— had already resulted in a 14-level increase in Christensen’s offense level pursuant to U.S.S.G. § 2Bl.l(b)(l)(H). The district court was unpersuaded by Christensen’s double-counting argument. At the first of two sentencing hearings, the district court overruled Christensen’s informal objections to the PSR and, on the record, adopted the findings in the amended PSR, determining them to be “true and correct as modified.” Included in the findings adopted by the district court was the total loss — $985,994—resulting from Christensen’s criminal offense. Although a number of Christensen’s victims spoke at that first hearing, Christensen failed to call the district court’s attention to any false or misleading information provided by those victims. Indeed, Christensen offered no objection at all to the victims’ statements. At the second sentencing hearing, after hearing from both counsel and Christensen himself, the district court explained its reasons for an upward variance as follows: The sentencing factors require the Court to impose a sentence that is sufficient, but not greater than necessary to comply with the purposes set forth in 18 U.S.C. Section 3553(a)(2). And if the Court is going to vary, the Court has to state its reasons for varying upward. And focusing on the nature and circumstances of the offense, and the nature and characteristics of the defendant, ... it concerns the Court ... that in effect [Christensen] used his positions to influence innocent victims to invest at a time when he knew that he was not going to use the money for those purposes, without disclosing that to them. He diverted $985,994, which has been the agreed upon sum in terms of loss in this case. After adding that (1) Christensen apparently learned nothing from a 28-year-old felony conviction for obtaining money by false pretenses and (2) Christensen’s numerous victims included “vulnerable, retirement age victims, victims that trusted Mr. Christensen,” the district court continued: Mr. Christensen indicated that he did not set out to bilk his investors. I accept that. But, again, that’s only half the story. At some point he did consciously and intentionally decide to bilk his investors, and that conduct continued for a period of years, and it involved a number of different investors in the same type of conduct. And I found interesting Mr. Christensen’s statement to the Court in which he explained, at least attempted to explain why he did what he did. And he wrote in there that he’s the type of person in which he believes that failure is not an option. I’ve heard that phrase over and over again by many people. And in this case, it clearly was an option. It’s clearly what you should have done. You should have accepted failure. Sometimes you learn more from your failures than you do from your successes. But it certainly would have saved not only your family, but all of these victims who have made statements, submitted loss statements to the Court, from having to postpone their retirement, have their marriages destroyed, lose their jobs or lose their homes. The Court believes, therefore, for those reasons, and specifically given the — as in Schlueter, the fact that I don’t think the sentencing guideline range adequately accounts for the harm that Mr. Christensen’s fraud caused his victims, I believe that given the egregiousness of his conduct, including lying, covering up, using funds for personal purposes, destroying the victims’ lives, cheating victims out of significant sums of money that they needed, and taking advantage of personal relationships, that the guideline range doesn’t adequately account for the harm that his conduct has caused. There is a need — despite the fact that there has been almost 28 years between his last conviction, there still is a need I believe in this case to protect the public from further crimes. For all these reasons, the Court believes an upward variance is appropriate and, given the loss in this case, that a sentence of 60 months is appropriate and sufficient, but not greater than necessary to satisfy the sentencing requirements imposed by the Court. At the conclusion of the sentencing hearing, Christensen offered only two objections to the sentence imposed. Christensen first objected to the purported lack of notice regarding the basis for an upward variance. Specifically, Christensen asserted that he had not been given notice that the court might base an upward variance on the victims’ statements. He did not assert that the district court committed procedural error by relying on clearly erroneous facts, speculative evidence, and unreliable victim statements. Second, Christensen objected to the district court’s alleged “discounting” of his acceptance of responsibility. He offered no other objections to the sentence imposed. II. A. Christensen raises a number of issues, only two of which were properly preserved for appeal — namely, whether the district court committed procedural error by imposing a non-Guidelines sentence based on factors already incorporated into the Guidelines and whether the district court improperly “discounted” Christensen’s acceptance of responsibility. We find no merit to either issue. We review a sentence for reasonableness; “only a proeedurally erroneous or substantively unreasonable sentence will be set aside.” United States v. Carty, 520 F.3d 984, 993 (9th Cir.2008) (en banc). “Procedural errors include, but are not limited to, incorrectly calculating the Guidelines range, treating the Guidelines as mandatory, failing to properly consider the [18 U.S.C.] § 3553(a) factors, using clearly erroneous facts when calculating the Guidelines range or determining the sentence, and failing to provide an adequate explanation for the sentence imposed.” United States v. Armstead, 552 F.3d 769, 776 (9th Cir.2008). Christensen has only challenged the procedural reasonableness of his sentence. We review the district court’s construction and interpretation of the Guidelines de novo, United States v. Nielsen, 694 F.3d 1032, 1034 (9th Cir.2012), and the district court’s application of the Guidelines for abuse of discretion, United States v. Holt, 510 F.3d 1007, 1010 (9th Cir.2007). We review the district court’s factual determinations for clear error. United States v. Tulaner, 512 F.3d 576, 578 (9th Cir.2008). We review the first of Christensen’s preserved issues — whether the district court engaged in impermissible double-counting — for abuse of discretion. See Holt, 510 F.3d at 1010. As the Fifth Circuit correctly noted in United States v. Williams, 517 F.3d 801 (5th Cir.2008), “[t]he Supreme Court’s decision in [United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005),] implicitly rejected the position that no additional weight could be given to factors included in calculating the applicable advisory Guidelines range, since to do otherwise would essentially render the Guidelines mandatory.” Id. at 809 (internal footnote omitted). “This necessarily means that the sentencing court is free to conclude that the applicable Guidelines range gives too much or too little weight to one or more factors, either as applied in a particular case or as a matter of policy.” Id. Here, when selecting an above Guidelines sentence for Christensen, the district court was not prohibited from considering the extent to which the Guidelines did not sufficiently account for the nature and circumstances of Christensen’s offense, including the amount of the loss, the number of victims, or the harm to the victims, even though the Guidelines account for these factors either implicitly or explicitly, to some extent. The district court did not err by concluding that the Guidelines did not properly take into account the harm caused by “the egregiousness of [Christensen’s] conduct, including lying, covering up, using funds for personal purposes, destroying the victims’ lives, cheating victims out of significant sums of money that they needed, and taking advantage of personal relationships.” The district court’s conclusion is supported by the record and did not constitute impermissible double-counting. We review Christensen’s second preserved issue — whether the district improperly discounted his acceptance of responsibility — for clear error. United States v. Cortes, 299 F.3d 1030, 1037 (9th Cir.2002). Christensen was, in fact, awarded a 3-level reduction for acceptance of responsibility; the district court expressly denied that it discounted “in any way the fact that [Christensen] accepted responsibility;” and the record otherwise belies Christensen’s suggestion that the district court “turned his acceptance of responsibility on its head by using it as a justification for the upward variance.” To determine that the district court clearly erred, we must be “left with the definite and firm conviction that a mistake has been committed.” Easley v. Cromartie, 532 U.S. 234, 242, 121 S.Ct. 1452, 149 L.Ed.2d 430 (2001). Mere evidence that Christensen received a 3-level reduction, but ended up with an above Guidelines sentence is insufficient, in this case, to leave us with a “definite and firm conviction” that the district court erred. Rather, the district court acknowledged that Christensen was entitled to an acceptance of responsibility reduction and based the upward variance on Christensen’s behavior wholly independent of his acts constituting acceptance of responsibility. We have no basis for questioning whether the district court did, both in word and in fact, award Christensen a 3-level reduction for acceptance of responsibility. B. Christensen contends that the district court committed procedural error by, among other things, (1) failing to resolve factual conflicts in the PSR regarding victim impact and loss amounts as required by Federal Rule of Criminal Procedure 32(i)(3)(B); (2) failing to provide advance notice of the precise grounds for the 19-month upward variance in his sentence in violation of the Due Process Clause; and (3) improperly relying on clearly erroneous facts, speculative evidence, and unreliable victim statements, also in violation of the Due Process Clause. Because Christensen failed to raise these alleged procedural errors before the district court, we review for plain error. United States v. Burgum, 633 F.3d 810, 812 (9th Cir.2011). To secure reversal under the plain error standard, Christensen must show that: (1) there was error; (2) the error was plain; and (3) the error affected Christensen’s substantial rights. United States v. Joseph, 716 F.3d 1273, 1277 (9th Cir.2013). “If these three conditions [are satisfied], [we] may exercise [our] discretion to notice a forfeited error that ... seriously affects the fairness, integrity, or public reputation of judicial proceedings.” Id. (internal quotation marks omitted) (quoting United States v. Ameline, 409 F.3d 1073, 1078 (9th Cir.2005) (en banc)). A sentencing error prejudices the substantial rights of a defendant when there is a reasonable probability that he would have received a different sentence had the district court not erred. Id. at 1280. The defendant bears the burden of showing a reasonable probability that he would have received a different sentence absent the error. Id. When a defendant fails to make specific allegations of factual inaccuracy in a PSR, a district court has no obligation under Rule 32(i)(3)(B). United States v. Petri, 731 F.3d 833, 841-42, No. 11-30337, 2013 WL 1490604, at *7 (9th Cir. Apr. 12, 2013). Because Christensen never made specific factual objections to the PSR regarding victim impact and loss amounts, Rule 32 was never triggered. Id. We find that the district court committed no error, much less plain error, under Rule 32(i)(3)(B). We likewise find that the district court committed no error, much less plain error, by failing to provide advance notice of the precise grounds upon which the 19-month upward variance to Christensen’s sentence was based. A district court is not required — either by the Federal Rules of Criminal Procedure or by the Due Process Clause — to give advance notice of its intent to impose a sentence outside the advisory Guidelines range. Irizarry v. United States, 553 U.S. 708, 713-16, 128 S.Ct. 2198, 171 L.Ed.2d 28 (2008). It follows that, if a district court is not required to give advance notice of its intent to vary upward, it is also not required to give advance notice of the precise grounds upon which it might base an upward variance. To the extent Christensen complains, in general, that the district court erred by taking into account the “uncorroborated,” “unsworn,” and “untested” statements of victims, his claim of error is without merit. The Federal Rules of Evidence do not apply at a sentencing hearing. Fed.R.Evid. 1101(d)(3). Indeed, “a sentencing judge may appropriately conduct an inquiry broad in scope, largely unlimited either as to the kind of information he may consider, or the source from which it may come.” Nichols v. United States, 511 U.S. 738, 747, 114 S.Ct. 1921, 128 L.Ed.2d 745 (1994) (internal quotation marks omitted). By statute, there is “[n]o limitation ... on the information concerning the background, character, and conduct of a person convicted of an offense which a court of the United States may receive and consider for the purpose of imposing an appropriate sentence.” 18 U.S.C. § 3661. The Federal Rules of Criminal Procedure, moreover, provide that the presentence report must contain “information that assesses any financial, social, psychological, and medical impact on any victim.” Fed.R.Crim.P. 32(d)(2)(B). As a general matter, then, a district court may consider victim impact statements, whether sworn or not, at sentencing. United States v. Santana, 908 F.2d 506, 507 (9th Cir.1990) (per curiam). To the extent Christensen complains that the district court proeedurally erred and his due process rights were violated by the district court’s purported reliance on “erroneous facts” provided by the victims, we are presented with a closer question. Specifically, Christensen points to statements made by the district court at sentencing regarding victim losses and impacts. The district court referred, for example, to the statement of one victim (Jennifer R.) who said she invested her entire life savings ($330,000) in one of Christensen’s projects, only to lose it all and her 19-year marriage to boot. In the PSR, that particular victim’s loss' — -or, more precisely, the portion of her overall invest ment that was attributed to Christensen’s diversion of investor funds ($90,000) that was lost — was reported to be only $23,017. The district court noted that another investor had been unable to retire as planned, although the PSR stated that the portion of that victim’s overall investment that was subject to misappropriation ($20,-000) only resulted in a loss of $5,496. The district court also referred to the statement of another individual (W.H. Mehr), who said that he would not have invested his “$128,000 plus dollars” had Christensen been truthful with him. Mehr was not listed as a “victim” in the PSR at all, and his losses were not included in the $985,994 loss figure reported in the PSR, apparently because his investment dollars were not diverted by Christensen. Finally, the district court repeated the claims of various victims regarding the impacts they suffered — foregone vacations, delayed retirement, a ruined marriage, sale of the family homes, lost savings — without separating (perhaps an impossible task) the impacts attributable to Christensen’s criminal behavior from the impacts attributable to non-criminal investment losses. Christensen bears the burden of showing that the district court relied on clearly erroneous facts, affecting his substantial rights, when either (1) calculating the Guidelines range or (2) determining his sentence. See Armstead, 552 F.3d at 776. Christensen does not argue that the district court relied on any clearly erroneous fact in calculating the Guidelines range. In fact, Christensen agreed with the calculated Guidelines range, including the loss amount that the district court accepted, and reiterated numerous times as the basis for the loss calculation in the case, in arriving at that calculation — $985,994. Thus, the only question is whether the district court relied on any clearly erroneous fact in determining the sentence. Again, to find clear error, we must be “left with the definite and firm conviction that a mistake has been committed.” Easley, 532 U.S. at 242, 121 S.Ct. 1452. We are left with no such conviction that a mistake has been committed in this case. It is clear that, at sentencing, the district court expressly adopted the findings reported in the PSR, including the $985,994 loss suffered by Christensen’s “victims.” During its recitation of reasons for varying upward, moreover, the district court expressly stated that (1) Christensen “diverted $985,994, which has been the agreed upon sum in terms of loss in this case;” (2) “this case ... involved almost a million dollars;”, and (3) “the Court believes an upward variance is appropriate ... given the loss in this case.” It thus seems clear that the district court based its variance on “the agreed upon sum in terms of loss in this case,” a sum — $985,-994 — that included only victim losses attributable to Christensen’s criminal conduct. In addition to explaining that the upward variance was based on “the agreed upon sum in terms of loss in this case,” the district court iterated the following additional reasons for its upward variance: (1) Christensen took advantage of personal relationships to solicit large sums of investment monies from people who trusted him; (2) Christensen used over $500,000 of investor monies to enrich himself — to invest in properties held in his wife’s name, to pay his home mortgage, to make payments to his ex-wife, to pay his daughter’s college tuition, and to gamble at a casino in Biloxi, Mississippi; (3) Christensen repeatedly and continually lied to his victims, not only about the true state of project affairs but also about the uses to which he was putting their investment dollars, enabling him to keep his unlawful scheme going for a period of years; (4) Christensen’s unlawful scheme caused his victims to lose sums of money they could ill afford to lose; and (5) Christensen apparently-learned nothing from a 28-year-old unscored conviction for obtaining money by false pretenses. Christensen did not and does not dispute the factual basis for the above reasons iterated by the district court. Each of those reasons, moreover, constitutes a proper sentencing factor under 18 U.S.C. § 3553(a), and together they provide sufficient support for the district court’s decision to vary upward. The district court included another reason for the upward variance when it referred to the “life-destroying impacts” described by Christensen’s victims. As noted by the district court, these victim-reported impacts included loss of homes, a failed marriage, postponement of retirement, foregone vacations, loss of life-savings, and loss of the ability to pay for children’s private schooling. The victims reported the impacts they suffered from having lost all of their investment dollars, without differentiating losses that were solely attributable to Christensen’s diversion of investor funds. These “life-destroying impacts” undoubtedly went beyond the stipulated losses to investors based on Christensen’s diversion of funds. These “life-destroying impacts,” however, were proper for the district court to consider even if not tied to the loss Christensen caused by misappropriating investor funds. There is “[n]o limitation ... on the information concerning the background, character, and conduct of a person convicted of an offense which a court ... may receive and consider for the purpose of imposing an appropriate sentence.” 18 U.S.C. § 3661; see also Pepper v. United States, — U.S. -, 131 S.Ct. 1229, 1240, 179 L.Ed.2d 196 (2011) (“Permitting sentencing courts to consider the widest possible breadth of information about a defendant ‘ensures that the punishment will suit not merely the offense but the individual defendant.’ ”) (quoting Wasman v. United States, 468 U.S. 559, 564, 104 S.Ct. 3217, 82 L.Ed.2d 424 (1984)). These “life-destroying impacts,” supported by victim statements, provide greater insight into Christensen’s “background, character, and conduct” that the district court was entitled to rely on in determining that for a specified loss resulting from criminal conduct, the Guidelines did not adequately account for the seriousness of Christensen’s offense, provide adequate deterrence, or sufficiently protect the public and innocent investors from the infliction of further harm at the hands of Christensen. See 18 U.S.C. § 3553(a)(2). Moreover, it was not the dollar amount of these victims’ losses that the district court relied on in imposing this upward variance; rather, it was the intangible nature of Christensen’s conduct. As the district court stated: I believe that given the egregiousness of his conduct, including lying, covering up, using funds for personal purposes, destroying the victims’ lives, cheating victims out of significant sums of money that they needed, and taking advantage of personal relationships, that the guideline range doesn’t adequately account for the harm that his conduct has caused. There is a need — despite the fact that there has been almost 28 years between his last conviction, there still is a need I believe in this case to protect the public from further crimes. In addition, we note that many of the “life destroying impacts” were indivisible. For example, Jennifer R. attributed the dissolution of her 19-year marriage to Christensen’s conduct. The dissent argues that it was inappropriate for the district court to consider this divorce because the PSR indicates that Jennifer R. lost only $23,017 due to Christensen’s fraud. Dis. Op. at 1108-09. In so doing, the dissent assumes Jennifer R.’s divorce was a matter of simple arithmetic: it resulted from the loss of a certain sum of money, and that sum must have been greater than $23,017; therefore, because Jennifer R. lost only $23,017, the district court was required to ignore her claim that Christensen’s conduct had caused her divorce. This argument ignores the indivisible nature of the harm. The fact of the matter is that we do not know how much financial stress Jennifer R.’s marriage could have withstood. What we do know is that Jennifer R. and her husband entrusted their life savings to Christensen, that he fraudulently diverted a portion of it, that their marriage never recovered from the stress, and that neither the causes nor the impacts of a divorce break down neatly into dollars and cents. This is precisely the type of situation in which the Guidelines do not adequately account for the seriousness of the offense. As a result, it was proper for the district court to consider Jennifer R.’s divorce, together with the other “life destroying impacts” described by Christensen’s victims. If the district court had used non-offense “losses” to erroneously calculate the Guidelines range, this would be a much different case. But, where as here, the district court used the correct loss calculation to arrive at the correct Guidelines range, and appears to have only relied on extrinsic evidence as support for the Guidelines inadequate accounting for the harm caused by Christensen, we cannot say that the district court clearly erred in any manner. Therefore, we conclude that the district court committed no error in this regard. Even assuming that the district court did err, Christensen has fallen short of establishing that his substantial rights were affected by any such error. Indeed, while the record provides ample support for the district court’s 19-month upward variance, the record provides no basis for concluding that there is a reasonable probability Christensen would have received a more lenient sentence absent the asserted error.

11102569-14590

MEMORANDUM — DECISION & ORDER McAVOY, District Judge. Plaintiff commenced the instant action pursuant to 42 U.S.C. § 1983 claiming that a stop and search by Defendants New York State Police Investigator Lance Agu-iar and New York State Police Trooper Barry Friedman violated her First, Fourth, Fifth, Eighth, and Fourteenth Amendment rights. Presently before the Court is Defendants’ motion for summary judgment pursuant to FED. R. CIV. P. 56 seeking dismissal of the Complaint in its entirety. 1. BACKGROUND On December 6, 1998, at approximately 2:15 a.m., Plaintiff Colene Garcia was driving a vehicle also occupied by three males. Defendants Aguiar and Friedman were driving Westbound in their trooper vehicle on State Route 299 in the Town of Lloyd when they observed a vehicle traveling Eastbound at an apparently high rate of speed. Trooper Friedman operated the radar device and determined Plaintiff to be driving 66 miles per hour in a 55 mile per hour zone. The Troopers then proceeded to stop Plaintiffs vehicle for a violation of the New York State Vehicle & Traffic Law. Upon approaching the vehicle, the officers detected the scent of burned marihuana coming from inside the vehicle. Friedman inquired who had the marihuana. Plaintiff denied having any marihuana. None of the other passengers responded to Friedman. After obtaining Plaintiffs driver’s license and the vehicle registration, Friedman asked Plaintiff to exit the vehicle. Friedman escorted Plaintiff to the front of the police car and conducted sobriety tests, including a breathalyzer test. Friedman then advised Plaintiff that he was going to search her. Friedman frisked Plaintiffs legs by “patt[ing] them down with both hands on one leg and then c[oming] up and ... put[ting] his hands on the inner thigh up towards the groin area, eupp[ing] it, and then c[oming] down the other side.” PL Dep., at 63. Friedman then “came up and put his hand between [Plaintiffs] breasts.” PI. Dep. at 68. More specifically, Friedman ran the side of his hand, with the little finger touching Plaintiff, perpendicularly down the middle of Plaintiffs breasts. Next, Friedman “lifted one breast up and the other one up and then he continued around the back.” PI. Dep. at 74. According to Plaintiff, Friedman “cupped the bottom half [of her breast], lifted it up went to the other one, lifted the other one. He didn’t like grab my whole breast.” PI. Dep. at 75. Plaintiff further testified that this was a fairly quick process and Friedman “wasn’t being perverted.” PL Dep. at 76. Friedman then patted down Plaintiffs rear pockets. At that point the search ended. After Friedman concluded searching Plaintiff, Aguiar came over with a marihuana pipe he had found in Plaintiffs purse and inquired who owned the pipe. Plaintiff responded that it was hers. The troopers found marihuana residue in the pipe. Plaintiff was issued a speeding ticket and an appearance ticket for the unlawful possession of marihuana. Plaintiff ultimately pleaded guilty to a violation of N.Y. VEH. & TRAFFIC LAW § 1110(a) in satisfaction of the charges against her. Plaintiff then commenced the instant action pursuant to 42 U.S.C. § 1983 claiming that she was unlawfully and/or improperly restrained, searched, and imprisoned by Defendants. Compl. ¶ 15. Presently before the. Court is Defendants’ motion for summary judgment pursuant to FED. R. CIV. P. 56 seeking dismissal of the Complaint in its entirety. II. DISCUSSION A. Summary Judgment Standard In addressing Defendants’ motion, the Court will apply the familiar standard for summary judgment, which need not be restated here. Roman v. Cornell Univ., 53 F.Supp.2d 223, 232-33 (N.D.N.Y.1999); Phipps v. New York State Dep’t of Labor, 53 F.Supp.2d 551 (N.D.N.Y.1999); Riley v. Town of Bethlehem, 44 F.Supp.2d 451, 458 (N.D.N.Y.1999). B. Plaintiffs Opposition Papers The Court rejected Plaintiffs opposition papers because they failed to comply with N.D.N.Y.L.R. 7.1. On or about March 19, 2001, Plaintiff completed new opposition papers and served them on Defendants along with a request for an extension of time within which to file the opposition papers. Defendants then sent the opposition papers and the request for an extension of time to the Court for filing. The Court will now address Plaintiffs request for an extension of time. First, Plaintiff failed to comply with the requirements of FED. R. CIV. P. 6(b) regarding seeking enlargements of time. Once the period of time for performing an act has expired, a party must make a motion for an enlargement of time. FED. R. CIV. P. 6(b)(2). Under N.D.N.Y.L.R. 7.1(b)(1), Plaintiff was required to file proper opposition papers within twenty-one days after having been served with Defendants’ motion. Plaintiff met this deadline, but with papers that did not comply with the local rules. These papers were, therefore, rejected. N.D.N.Y.L.R. 7.1(b)(3). Plaintiffs time to respond has now expired. Thus, to seek an extension of time, Plaintiff was required to move pursuant to FED. R. CIV. P. 6(b)(2), which she did not do. Second, Plaintiff failed to demonstrate excusable neglect for the failure to file timely conforming opposition papers, as is also required by Rule 6(b)(2). In his letter to the Court, Plaintiffs attorney states “I was away on vacation during the period immediately following the defendants’ service of the motion papers and my initial papers submitted in opposition were rejected inasmuch as I did not comply with Local Rule 7.1(a)(3).” Mar. 20, 2001 Metzger Letter. This falls far short of excusable neglect. As noted, although Plaintiff initially submitted timely opposition papers, they failed to conform with the requirements of N.D.N.Y.L.R. 7.1. It is unclear how or why Attorney Metzger’s vacation affected his ability to submit conforming papers. Moreover, failure to comply with the local rules does not constitute excusable neglect. All attorneys admitted to this District are expected to be familiar with the local rules, particularly with respect to motion practice. Plaintiffs attorney’s failures are all the more egregious in the instant situation in light of the fact that Defendants’ Notice of Motion explicitly references and explains the non-movant’s obligations under N.D.N.Y.L.R. 7.1(a)(3). Thus, Plaintiffs attorney should have prepared conforming opposition papers in the first instance and his failure to comply with such clear and well-settled principles of motion practice in this District does not constitute excusable neglect. Third, N.D.N.Y.L.R. 7.1(b)(3) provides that “[a]ny papers required under this Rule that are not timely filed or are otherwise not in compliance with this Rule shall not be considered unless good cause is shown.... Failure to comply with this Rule may result in the imposition of sanctions by the Court.” (Emphasis in original). As noted, Plaintiffs initial opposition papers did not conform with the requirement of Rule 7.1. They were, therefore, properly rejected under Rule 7.1(b)(3). Plaintiffs second set of opposition papers are untimely. In neither instance has Plaintiff demonstrated sufficient cause why the Court should consider such papers. Because Plaintiff failed to: (1) timely submit conforming opposition papers as required by N.D.N.L.R. 7.1(b)(3); (2) make a proper motion for leave to file untimely opposition papers as required by FED. R. CIV. P. 6(b)(2); (3) demonstrate excusable neglect why the Court should afford Plaintiff an enlargement of time within which to file opposition papers as required by Rule 6(b)(2); and (4) demonstrate good cause why the Court should accept timely or non-conforming opposition papers as required by N.D.N.Y.L.R. 7.1(b)(3), and because of Rule 7.1(b)(3)’s mandatory language (“shall not be considered”), the Court hereby denies Plaintiffs request to file untimely opposition papers, rejects Plaintiffs opposition papers, and Orders that they be stricken from the record. The Court will now turn to the merits of Defendants’ summary judgment motion. C. False Arrest It does not appear that Defendants actually arrested Plaintiff. Even assuming they did, for the following reasons, her false arrest claim must be dismissed. Lack of probable cause is an essential element of a false arrest claim. Smith v. Edwards, 175 F.3d 99, 105 (2d Cir.1999). Here, Plaintiff admits to speeding and, thus, Defendants had probable cause to stop the vehicle. United States v. Scopo, 19 F.3d 777, 781 (2d Cir.), cert. denied, 513 U.S. 877, 115 S.Ct. 207, 130 L.Ed.2d 136 (1994). Having had probable cause to stop Plaintiff for speeding, Defendants were justified in asking Plaintiff to get out of the car. Ohio v. Robinette, 519 U.S. 33, 117 S.Ct. 417, 421, 136 L.Ed.2d 347 (1996); Pennsylvania v. Mimms, 434 U.S. 106, 98 S.Ct. 330, 333 n. 6, 54 L.Ed.2d 331 (1977). Because the officers personally observed Plaintiff speeding in violation of N.Y. VEH. & TRAFFIC LAW § 1180, they were authorized under state law to make an arrest .(which they opted not to do), N.Y. CRIM. PRO. LAW § 140.10(l)(a); N.Y. VEH. & TRAF. LAW § 155; N.Y. PENAL LAW § 10.00(1); Scopo, 19 F.3d at 781-82, and had probable cause to do so. Scopo, 19 F.3d at 781-82. Further, having pleaded guilty to a violation of N.Y. VEH. & TRAFFIC LAW § 1110(a), Plaintiff is precluded from challenging the validity of her arrest for purposes of a claim under 42 U.S.C. § 1983. Maietta v. Artuz, 84 F.3d 100, 102 n. 1 (2d Cir .), cert. denied, 519 U.S. 964, 117 S.Ct. 386, 136 L.Ed.2d 303 (1996). Accordingly, Plaintiffs false arrest claim must be dismissed. D. Unlawful Search and Seizure Plaintiff also contends that the search of her person was unlawful and that Friedman improperly touched her during the course of the search. “[0]nce the police had probable cause to stop and arrest [Plaintiff], they were entitled to search both h[er] and h[er] ‘grab space’ in the car.” Scopo, 19 F.3d at 782. Moreover, upon approaching the vehicle, Defendants smelled what they believed to be burned marihuana. This gave them probable cause to believe that one or more of the vehicle’s occupants unlawfully possessed marihuana. United States v. Peltier, 217 F.3d 608, 610 (8th Cir.2000); United States v. Ibarra-Sanchez, 199 F.3d 753, 760 (5th Cir.1999); United States v. Parker, 72 F.3d 1444, 1450 (10th Cir.1995); United States v. Jackson, 652 F.2d 244, 252 n. 6 (2d Cir.), cert. denied, 454 U.S. 1057, 102 S.Ct. 605, 70 L.Ed.2d 594 (1981); United States v. Cantu, 548 F.2d 1243, 1244 (5th Cir.1977). Thus, the officers were entitled to pat frisk Plaintiff and their doing so did not run afoul of the Fourth Amendment. United States v. Little, 945 F.Supp. 79, 83 (S.D.N.Y.1996). The final issue pertains to the pat frisk of a female suspect by a male police officer. Plaintiff argues that she was inappropriately touched and patted during the course of the search. PI. Resp. to Inter-rogs., ¶ 6. This contention is meritless and need not detain the Court long. The relevant inquiry is not whether Defendants violated any state law procedures or New York State Police internal procedures, but whether their actions fan afoul of the Fourth Amendment. Abbott v. City of Crocker, Mo., 30 F.3d 994, 997 (8th Cir.1994); United States v. Smith, 9 F.3d 1007, 1014 (2d Cir.1993); United States v. Pforzheimer, 826 F.2d 200 (2d Cir.1987); see also Cooper v. California, 386 U.S. 58, 87 S.Ct. 788, 790, 17 L.Ed.2d 730 (1967) (“[T]he question here is not whether the search was authorized by state law. The question is rather whether the search was reasonable under the Fourth Amendment. Just as a search authorized by state law may be an unreasonable one under that amendment, so may a search not expressly authorized by state law be justified as a constitutionally reasonable one.”); Tucker v. County of Jefferson, 110 F.Supp.2d 117, 120 (N.D.N.Y. 2000). Again, Plaintiff contends that she ought to have been searched by a female officer and that the search was inappropriate under the Fourth Amendment because Officer Friedman “cupped” her crotch and breasts. Plaintiffs own deposition testimony reveals that Friedman conducted a pat frisk that consisted of patting down one leg, moving up her leg across her crotch and down the other leg, placing the side of his little finger down the middle of her breasts, checking under each breast, and then patting Plaintiffs rear pants pockets. Plaintiff admitted that Friedman was polite, he was not groping her in a sexual manner, he did not grab her crotch or breasts, he did not touch underneath her clothing, and the search of each area was fairly quick. Friedman patted each area only once. Plaintiff candidly admitted Officer Friedman was not being “perverted.” PI. Dep. pp. 75-76. While we may all prefer to be searched by the person of our choice and by a person of the gender of our choice, the Fourth Amendment is not that protective under the circumstances of this limited search. Police officers, whether male or female, have a job to perform to and, provided they act appropriately and professionally, their actions in searching an individual whom they have probable cause to believe may be in possession of marihuana and may be of the opposite gender does not constitute a Constitutional transgression. Furthermore, contrary to Plaintiffs contentions, the search described is precisely what a search should entail. The officer had to check those areas where a suspect could reasonably secrete contraband such as marihuana. With all suspects, male and female, this includes the crotch area, pockets, and the legs. With female suspects, it reasonably includes her cleavage and under each breast. There is simply no evidence before the Court from which a fair-minded jury could reasonably conclude that Friedman touched Plaintiff in an offensive or inappropriate manner. To the contrary, a jury could only reasonably conclude that Friedman touched Plaintiff only to that degree necessary to perform the search. The Court also finds that it was reasonable as a matter of law for Friedman to have conducted the search himself. “[I]t would be unduly burdensome on police to require that, when a female is to be arrested, a female police officer be available on the scene to conduct the search.” Acquino v. Englert, 1996 WL 668518, 1996 U.S. Dist. Lexis 21092 (E.D.Pa.1996). Accordingly, Plaintiffs claim in this regard must be dismissed. E. Qualified Immunity Even assuming, arguendo, Defendants violated Plaintiffs constitutional rights, for the following reasons, they would, nonetheless, be entitled to qualified immunity. 1. False Arrest

6100390-5958

ORDER GRANTING MOTION FOR SUMMARY JUDGMENT R. GUY COLE, Jr., Bankruptcy Judge. I. Preliminary Matters The matter presently before the Court is a Motion for Summary Judgment (“Motion”) filed by Century Surety Insurance Company, the plaintiff in this adversary proceeding. The Court has jurisdiction over this case pursuant to 28 U.S.C. § 1334(b) and the General Order of Reference entered in this district. This is a core proceeding which the Court has authority to hear and determine in accordance with 28 U.S.C. § 157(b)(1) and (2)(I). The plaintiff has filed a complaint to determine the dischargeability of a debt owed by defendant/debtor, Sandra S. Rain-er (“Debtor’). The gravamen of the complaint is that the debt is nondischargeable pursuant to 11 U.S.C. § 523(a)(6). Specifically, plaintiff’s complaint alleges that the Debtor’s involvement in the arson of her property, as well as her misrepresentations, constitute a willful and malicious injury to the plaintiff and plaintiffs property. The plaintiff has moved for summary judgment arguing that there is no genuine issue as to any material fact and that the plaintiff is entitled to judgment as a matter of law. See Bankruptcy Rule 7056. According to the plaintiff, a judgment entry of the Common Pleas Court of Ross County, Ohio, dated December 16, 1988, entered against the Debtor herein in the state court action has established “uncontested facts” which entitle plaintiff to judgment in the instant action. See plaintiffs Motion for Summary Judgment at 3-4. II. Legal Discussion Summary judgment is governed by Rule 56 of the Federal Rules of Civil Procedure, which 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 judgment as a matter of law. “[Tjhis standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986) (emphasis in original); Kendall v. The Hoover Co., 751 F.2d 171, 174 (6th Cir.1984). The standard to be applied by the Court on a motion for summary judgment mirrors the standard for a directed verdict. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 2550, 91 L.Ed.2d 265 (1986); Anderson, 106 S.Ct. at 2512. The primary difference between the two motions is procedural; summary judgment motions are usually made before trial and decided on documentary evidence, while directed verdict motions are made at trial and decided on the evidence that has been admitted. Bill Johnson’s Restaurants, Inc. v. NLRB, 461 U.S. 731, 745 n. 11 [103 S.Ct. 2161, 2171 n. 11, 76 L.Ed.2d 277] (1983). In essence, though, the inquiry under each is the same: whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law. Accordingly, although summary judgment should be cautiously invoked, it is an integral part of the Federal Rules which are designed “to secure the just, speedy and inexpensive determination of every action.” Celotex, 106 S.Ct. at 2555, (quoting Fed.R.Civ.P. 1); Anderson, 106 S.Ct. at 2512. In a motion for summary judgment the moving party bears the “burden of showing the absence of a genuine issue as to any material fact, and for these purposes, the [evidence submitted] must be viewed in the light most favorable to the opposing party.” Adickes v. S.H. Kress Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970) (footnote omitted); accord, Adams v. Union Carbide Corp., 737 F.2d 1453, 1455-56 (6th Cir.1984), cert. denied, 469 U.S. 1062, 105 S.Ct. 545, 83 L.Ed.2d 432 (1985). Inferences to be drawn from the underlying facts contained in such materials must be considered in the light most favorable to the party opposing the motion. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962); Watkins v. Northwestern Ohio Tractor Pullers Assoc., Inc., 630 F.2d 1155, 1158 (6th Cir.1980). Additionally, “unexplained, gaps” in materials submitted by the moving party, if pertinent to material issues of fact, justify denial of a motion for summary judgment. Adickes, 398 U.S. at 157-60, 90 S.Ct. at 1608-10; Smith v. Hudson, 600 F.2d 60, 65 (6th Cir.), cert. dismissed, 444 U.S. 986, 100 S.Ct. 495, 62 L.Ed.2d 415 (1979). If the moving party meets its burden and if adequate time for discovery has been provided, summary judgment is appropriate if the opposing party 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, 106 S.Ct. at 2554. The mere existence of a scintilla of evidence in support of the party’s position will be insufficient; there must be evidence on which the jury could reasonably find for the opposing party. Anderson, 106 S.Ct. at 2512. As is provided in Fed.R.Civ.P. 56(e): When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be entered against him. Thus, “a party cannot rest on the allegations contained in his ... [pleadings] in opposition to a properly supported motion for summary judgment against him.” First Nat’l. Bank v. Cities Service Co., 391 U.S. 253, 259, 88 S.Ct. 1575, 1577-78, 20 L.Ed.2d 569 (1968) (footnote omitted).

10520453-17872

CUDAHY, Circuit Judge. We are faced with an interesting problem regarding our diversity jurisdiction. Gus Poulos, a resident (and citizen) of Illinois, worked as a sales representative for Naas Foods, whose principal place of business is in Indiana. Ranks, Hovis, McDou-gall, PLC Group (RHM Holdings U.S.A. Inc.) (RHM) owns Naas and has its principal place of business in Illinois. Naas terminated its relationship with Poulos, apparently unhappy with his performance. Soon thereafter Poulos sued both Naas and RHM in Wisconsin state court, alleging violations of the Wisconsin Fair Dealership Law, Wis. Stat. § 135 (1989-90) (WFDL). After a fair amount of discovery, the Wisconsin court granted summary judgment for RHM, finding that Poulos had failed to present any evidence to support holding RHM liable under the WFDL. Nonetheless, the court gave Poulos leave to reinstate his claim against RHM should relevant evidence turn up. With RHM gone from the case, Naas removed the proceedings to the federal district court for the Eastern District of Wisconsin. Naas alleged that the citizenship of the remaining parties was completely diverse and that the amount in controversy exceeded $50,000. See 28 U.S.C. § 1332(a) (1988). Poulos moved to remand the case to state court. He argued that although the state court had dismissed RHM from the case, removal was inappropriate because the dismissal was involuntary. The district court denied the motion, on the ground that RHM had been fraudulently joined. 132 F.R.D. 513, 519 (1990). Later, when Poulos refused to turn over his tax returns in response to a court order, the court dismissed the case with prejudice. Order of Dismissal (Nov. 19, 1990). Poulos appeals, arguing that the district court should have remanded the case to state court, should not have compelled him to produce his tax returns and should not have dismissed the case with prejudice when he refused. We affirm. 1. Jurisdiction Broadly speaking, the purpose of federal diversity jurisdiction is to provide a neutral forum for lawsuits between parties from different states. Unsympathetic to the expansion of our jurisdiction, however, and deferential to the prerogatives of state courts, we have traditionally interpreted our diversity jurisdiction narrowly. An example of our strict construction of our jurisdictional statutes is the complete diversity rule of Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267, 2 L.Ed. 435 (1806). In Straw-bridge, the Court held that a statute granting federal jurisdiction over civil actions “between a citizen of a state where the suit is brought, and a citizen of another state” (now 28 U.S.C. § 1332) applied only to cases in which no party shared common citizenship with any party on the other side of the dispute. Id. 7 U.S. at 267. In the case before us, because Poulos and RHM are both Illinois citizens, there could be no federal diversity jurisdiction until RHM dropped out. There are two ways for a diversity suit to wind up in federal court. A plaintiff may bring an action to federal court directly, or a defendant may remove a case to federal court from state court within 30 days of its inception. 28 U.S.C. § 1446 (1988). There is another wrinkle, however. Under some circumstances, a state court dispute that cannot be removed to federal court in its original incarnation may become removable later. In relevant part, 28 U.S.C. § 1446(b) provides: If the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable, except that a case may not be removed on the basis of [diversity of citizenship] more than 1 year after commencement of the action.. In this case, Naas filed its notice of removal within 30 days of the entry of summary judgment for RHM, an “order or other paper” from which it ascertained that the parties were now completely diverse and the case was removable. A. The Voluntary/Involuntary Rule Before 1949, when the language just quoted was added to the removal statute, the Supreme Court held that cases with non-diverse parties did not become removable just because a non-diverse defendant was dismissed from the case. Whitcomb v. Smithson, 175 U.S. 635, 638, 20 S.Ct. 248, 250, 44 L.Ed. 303 (1900); American Car & Foundry Co. v. Kettelhake, 236 U.S. 311, 316, 35 S.Ct. 355, 356, 59 L.Ed. 594 (1915). Instead, the Court held that such suits were removable only if the plaintiff voluntarily dismissed a non-diverse defendant. Kettelhake, 236 U.S. at 316, 35 S.Ct. at 356; see also Self v. General Motors Corp., 588 F.2d 655, 657-58 (9th Cir.1978) (discussing history and collecting cases). Poulos argues that this lawsuit should have been remanded to state court because the dismissal of RHM was involuntary. Naas argues that the voluntary/in voluntary rule has been overruled by section 1446(b). This circuit has never addressed the question. The voluntary/involuntary rule serves two purposes. First, the rule contributes to judicial economy. Removal following an involuntary dismissal may be only temporary: the plaintiff may appeal the dismissal in state court, and success on appeal would lead to the reinstatement of the non-diverse party, destroying federal jurisdiction and compelling remand to the state court. Quinn v. Aetna Life & Casualty Co., 616 F.2d 38, 40 n. 2 (2d Cir.1980). We are anxious to avoid this sort of yo-yo effect. Second, some courts have invoked a general principle of deference to the plaintiffs choice of forum. See, for example, Self, 588 F.2d at 659; Insinga v. La Bella, 845 F.2d 249, 253 (11th Cir.1988). Allowing removal only when the plaintiff voluntarily dismisses a defendant ensures that the plaintiff will not be forced out of state court without his consent. Of course, this principle of deference is entirely inconsistent with the apparent purpose of the removal statute — to give defendants a means to escape the plaintiffs hometown forum— but it is consistent with our general desire to limit federal jurisdiction. See, for example, Louisville & N.R. Co. v. Mottley, 211 U.S. 149, 152, 29 S.Ct. 42, 43, 53 L.Ed. 126 (1908) (announcing the “well-pleaded complaint” rule: plaintiff may avoid federal jurisdiction by presenting only state law claims, even if defense raises federal question); see also 28 U.S.C. § 1359 (1988) (prohibiting collusive creation of federal jurisdiction, but not prohibiting collusive destruction of jurisdiction). Every court of appeals that has addressed the voluntary/involuntary rule has held that it survived the enactment of section 1446(b). Weems v. Louis Dreyfus Corp., 380 F.2d 545, 548 (5th Cir.1967); Self, 588 F.2d at 657-60 (assuming that voluntary/involuntary rule applies without discussion of § 1446(b)); De Bry v. Transamerica Corp., 601 F.2d 480, 486-88 (10th Cir.1979); Quinn, 616 F.2d at 40 n. 2 (dictum); In re Iowa Mfg. Co., 747 F.2d 462, 464 (8th Cir.1984); Higgins v. E.I. Du Pont de Nemours & Co., 863 F.2d 1162, 1166 (4th Cir.1988) (dictum); see also 1A James W. Moore, et al., Moore’s Federal Practice It 0.168[3.-5-6] at 597 & n. 7 (2d ed. 1991). The district courts in this circuit agree. Ushman v. Sterling Drug, Inc., 681 F.Supp. 1331, 1334-37 (C.D.Ill.1988); Vidmar Buick Co. v. General Motors Corp., 624 F.Supp. 704, 706-07 (N.D.Ill.1985) (dictum). We will not buck the trend, nor will we rehash the legislative history. Suffice it to say that when Congress referred to “a case which is or has become removable,” in section 1446(b), Congress apparently intended to incorporate the existing definition of “removable,” a definition that included the voluntary/involuntary rule. S.Rep. No. 303, 81st Cong., 1st Sess. (1949), reprinted in 1949 U.S.Code Cong.Serv. 1248, 1268 (amendment is “declaratory of the existing rule laid down by the decisions”); see also Weems, 380 F.2d at 548; and Ushman, 681 F.Supp. at 1336. In sum, the district court’s scholarly analysis of this issue is quite correct. 132 F.R.D. at 519. Absent other considerations, the court should have remanded this case to state court under the voluntary/involuntary rule. B. Fraudulent Joinder As the discussion to this point indicates, the complete diversity rule and the voluntary/involuntary rule make it difficult for an out-of-state (diverse) defendant to remove a case to federal court if an in-state (non-diverse) defendant has ever been party to the lawsuit. But there is one more route to removal. If Naas can show that the joinder of RHM was fraudulent, then removal will be allowed. Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97, 42 S.Ct. 35, 37, 66 L.Ed. 144 (1921). This court has never before addressed fraudulent joinder, and the parties dispute the meaning and application of the doctrine. Poulos argues that he presented his claim against RHM in good faith and that “a parent corporation of a wholly owned subsidiary may be liable to answer for a subsidiary depending upon the factual circumstances.” Poulos Br. at 3-4. Naas questions Poulos’ intentions but argues that they are irrelevant. It is enough, Naas argues, that Poulos failed to state a viable claim against RHM. When speaking of jurisdiction, “fraudulent” is a term of art. 14A Charles A. Wright, et al., Federal Practice and Procedure § 3723 at 354 (2d ed. 1985). Although false allegations of jurisdictional fact may make joinder fraudulent, B., Inc. v. Miller Brewing Co., 663 F.2d 545, 549 (5th Cir.1981), in most cases fraudulent joinder involves a claim against an in-state defendant that simply has no chance of success, whatever the plaintiff’s motives. Chicago, R.I. & P.R. Co. v. Whiteaker, 239 U.S. 421, 424, 36 S.Ct. 152, 153, 60 L.Ed. 360 (1915); Insinga, 845 F.2d at 254; Dodd v. Fawcett Publications, Inc., 329 F.2d 82, 85 (10th Cir.1964); Chilton Private Bank v. Norsec-Cook, Inc., 99 B.R. 402, 403 (N.D.Ill.1989); Kocot v. Alliance Machine Co., 651 F.Supp. 226, 227 (S.D.Ill.1986). This definition of “fraudulent” accords with the purpose of the doctrine. No matter what the plaintiff’s intentions are, an out-of-state defendant may need access to federal court when the plaintiff’s suit presents a local court with a clear opportunity to express its presumed bias — when the insubstantiality of the claim against the in-state defendant makes it easy to give judgment for the in-state plaintiff against the out-of-state defendant while sparing the in-state defendant. An out-of-state defendant who wants to remove must bear a heavy burden to establish fraudulent joinder. The defendant must show that, after resolving all issues of fact and law in favor of the plaintiff, the plaintiff cannot establish a cause of action against the in-state defendant. B., Inc., 663 F.2d at 549. At the point of decision, the federal court must engage in an act of prediction: is there any reasonable possibility that a state court would rule against the non-diverse defendant? If a state court has come to judgment, is there any reasonable possibility that the judgment will be reversed on appeal? Turning now to the merits, we agree with the district court that Poulos failed to state any claim against RHM. Under Wisconsin law, a parent corporation may be liable for its subsidiary’s delicts if “ ‘applying the corporate fiction would accomplish some fraudulent purpose, operate as a constructive fraud, or defeat some strong equitable claim.’ ” Consumer’s Coop v. Olsen, 142 Wis.2d 465, 475, 419 N.W.2d 211, 214 (1988) (quoting Milwaukee Toy Co. v. Industrial Comm’n, 203 Wis. 493, 496, 234 N.W. 748 (1931)). Although Poulos alleged that RHM controlled Naas, he alleged no impropriety or disregard of Naas’ corporate form. Id. 142 Wis.2d at 488, 419 N.W.2d at 219 (disregard of corporate formalities must be egregious or control pervasive). Perhaps more importantly, there is simply no indication that RHM’s presence in the suit was required to avoid any possible fraud: Poulos did not allege (nor, truthfully, could he allege) that the assets of Naas would be insufficient to satisfy a judgment on his claims. Id. at 484-85, 419 N.W.2d at 218. Poulos argues that some facts might turn up to support a claim against RHM. He reminds us that the Wisconsin judge gave him leave to reinstate RHM should such facts turn up. Naas disputes Poulos’ characterization of the court’s action, arguing that the judge merely indicated his potential willingness to reconsider, but the characterization doesn’t matter. Although Naas bears a heavy burden to establish fraudulent joinder, it need not negate any possible theory that Poulos might allege in the future: only his present allegations count. Dodd, 329 F.2d at 85. If Poulos’ theory were right, he could defeat diversity jurisdiction by joining his grandmother as a defendant — surely some set of facts might make her liable. Based on the allegations in his complaint, Poulos had no chance of recovering damages from RHM in a Wisconsin court. Moreover, at no point in the state or federal proceedings did Poulos attempt to fill the gaps in his complaint. Thus we may conclude that the joinder of RHM was fraudulent without deciding whether Poulos could have cured the problem with his complaint by amending it while in federal court. See Kruso v. International Tel. & Tel. Corp., 872 F.2d 1416, 1426 n. 12 (9th Cir.1989) (refusing to consider unfiled amended complaint for purposes of jurisdictional inquiry), cert. denied, — U.S. —, 110 S.Ct. 3217, 110 L.Ed.2d 664 (1990). The finding of fraudulent joinder was correct, and jurisdiction was proper. II. Production of Tax Returns At various points in the proceedings, Naas asked Poulos to document his income. Naas made the request so that it could determine whether a “community of interest” existed between Poulos and Naas so as to make Poulos a dealer under the WFDL. See Wis.Stat. § 135.02 (1989-90); Ziegler Co. v. Rexnord, Inc., 139 Wis.2d 593, 605-06, 407 N.W.2d 873 (1987). Further, Poulos' income was relevant to the amount of his damages after Naas terminated him. In response to repeated requests, Poulos provided his Schedule C income tax reports for the years 1987, 1988 and 1989. He also provided an affidavit supplying income tax information for the same years. In both the state and the federal proceedings, Poulos’ attorney repeatedly assured Naas that he would eventually provide Poulos’ tax returns, but he never did. Finally, Poulos announced that he simply would not produce his tax returns, on Fifth Amendment grounds. Poulos argued that his tax returns were presumptively privileged and thus shielded from discovery. The district court disagreed, deciding that whether or not the tax returns bore some “qualified immunity,” Naas had overcome any possible presumption against disclosure. Of course, Poulos had probably already waived any objection to production by failing to object when disclosure was due. Fed.R.Civ.P. 34(b) (“The party upon whom the request is served shall serve a written response within 30 days.... ”); Krewson v. Quincy, 120 F.R.D. 6, 7 (D.Mass.1988). But the district court did not reach the issue of waiver, and as we do not need to, we will avoid it as well. Tax returns in the hands of a taxpayer are not privileged. St. Regis Paper Co. v. United States, 368 U.S. 208, 219, 82 S.Ct. 289, 296, 7 L.Ed.2d 240 (1961) (dictum); June v. George C. Peterson Co., 155 F.2d 963, 967 (7th Cir.1946). Nonetheless, a variety of courts, including district courts in this circuit, have also opined that “a public policy against unnecessary public disclosure arises from the need, if the tax laws are to function properly, to encourage tax payers to file complete and accurate returns.” Premium Service Corp. v. Sperry & Hutchinson Co., 511 F.2d 225, 229 (9th Cir.1975); see also SEC v. Cymaticolor Corp., 106 F.R.D. 545, 547 (S.D.N.Y.1985); Shaver v. Yacht Outward Bound, 71 F.R.D. 561, 563 (N.D.Ill.1976); Federal Sav. & Loan Ins. Corp. v. Krueger, 55 F.R.D. 512, 514 (N.D.Ill.1972). We express no opinion at this time on the validity or proper formulation of this policy against disclosure. But under any formulation of this “qualified immunity,” Poulos was properly compelled to produce his tax returns. First, Poulos himself put the level and sources of his income at issue both by claiming to be a dealer under the WFDL and by claiming damages following the termination of his contract with Naas. Krueger, 55 F.R.D. at 514 (production of tax returns may be compelled where litigant puts the amount of his income into issue). Second, there was no reasonable alternative source for the information requested. Cf. Eastern Auto Distributors, Inc. v. Peugeot Motors of America, Inc., 96 F.R.D. 147, 149 (E.D.Va.1982) (plaintiff could disentangle defendant’s corporate structure by reference to public records). Poulos’ offer to provide the information about his income by way of affidavit does not count as an alternative source — Naas wanted Poulos’ tax returns because it needed to dispute Poulos’ personal accounting. Shaver, 71 F.R.D. at 564 (“It is not enough that he examine the contents of the returns and swear by affidavit to what they contain.”). Finally, if we were to recognize some sort of presumption against disclosure, we would certainly leave enforcement of the policy to the discretion of the trial court, Powers v. Chicago Transit Authority, 890 F.2d 1355, 1359 (7th Cir.1989) (decision to compel production of potentially privileged material is committed to discretion of trial court), and there was no abuse of discretion here. III. Dismissal Rule 37(b)(2)(C) of the Federal Rules of Civil Procedure authorizes district courts to dismiss cases or to enter default judgments against parties who refuse to comply

10541363-8951

DAVID R. THOMPSON, Circuit Judge: OVERVIEW This appeal involves the interpretation of a consent decree approved by the district court in 1979. The decree was designed to remedy racial and gender discrimination in the hiring and promotion practices of the San Francisco Police Department. We affirm the district court’s holding that the promotional obligations under paragraph 10a(4) of the decree do not continue to accrue until the decree is terminated. We also conclude the district court erred in determining that Louis Calabro’s motion to intervene in the case was untimely. Accordingly, we affirm in part, but vacate the district court’s judgment regarding the issue of intervention and remand for the district court to determine if Calabro satisfies the requirements to intervene as of right under Federal Rule of Civil Procedure 24(a)(2). FACTS AND PROCEEDINGS In 1973, individual plaintiffs and Officers for Justice (“OFJ”), an organization representing various minority interests, brought suit against the San Francisco Civil Service Commission, the San Francisco Police Commission, and the Chief of the San Francisco Police Department. The suit alleged racial and gender discrimination in the employment practices of the San Francisco Police Department. In 1977, the San Francisco Police Officers Association (“POA”) intervened as a defendant. The United States subsequently brought suit against the City and County of San Francisco for discriminatory employment practices. This suit was consolidated with the suit brought by OFJ. In 1979, the parties entered into a consent decree. The district court approved the decree on March 30, 1979. The parties to the decree are the City and County of San Francisco, the Civil Service Commission, the OFJ, the United States, and the POA. The decree prohibits the City from using methods in its hiring and promotions that have an adverse impact on women and minorities. The decree also requires the City to exercise good faith in increasing the opportunities for women and minorities within the San Francisco Police Department. Paragraph 10b(6) of the decree obligates the City to make a specified number of promotions to the ranks of captain and lieutenant over a four-year period. Paragraph 10a(4) obligates the City to promote a specified number of persons annually to the ranks of assistant inspector and sergeant “through the termination date of this decree.” Paragraph 20 of the decree governs the effective period of the decree: This Decree shall continue in full force and effect for a period of ten years from and after the date of final approval hereof by the Court. The Decree shall terminate upon filing of an order of dismissal with prejudice by defendants at any time after the expiration of this ten year period, unless plaintiffs show good cause upon motion served and filed prior to termination why the Court’s jurisdiction should be continued. Because of delays in administering promotional examinations, the City failed to make most of the promotions required by the decree. In response to this failure, the district court entered a “Supplemental Or der” on October 27, 1986. This order established a schedule for the administration of the promotional examinations and was designed to accelerate the decree’s promotional opportunities. By 1988, the City still had not made most of the required promotions. Because the parties were nearing the end of the ten-year period specified in paragraph 20, the district court held hearings to resolve questions pertaining to the expiration date of the decree. In a hearing on March 21, 1989, the district court ruled the decree does not terminate automatically by its own terms on March 30, 1989; rather, the City must move to terminate it and obtain a court order to this effect. One of the issues in this appeal is whether the promotional obligations in paragraph 10a(4) continue to accrue annually beyond March 30, 1989. On August 10, 1989, the district court initially held that the promotional obligations continue to accrue until the City moves to terminate the decree and the court grants the motion. The City moved for reconsideration on August 25, 1989. The district court granted this motion on November 15, 1989, and on reconsideration determined that the promotional obligations under paragraph 10a(4) do not continue to accrue after March 30, 1989. On September 22, 1989, Louis Calabro, a white male and a lieutenant in the San Francisco Police Department, sought to intervene on behalf of the City in its motion for reconsideration. The district court denied Calabro’s motion to intervene, but allowed Calabro to address the court during a hearing on the City’s motion for reconsideration. Calabro then filed a second motion to intervene. The district court again denied the motion but accepted Calabro’s Memorandum of Points and Authorities as amicus curiae. The POA appeals the district court’s November 15th order in which it held that the promotional obligations under paragraph 10a(4) do not continue to accrue after March 30, 1989. Calabro appeals the district court’s denial of his motion to intervene. A. Interpretation of the Consent Decree We review de novo the district court’s interpretation of the consent decree. Jeff D. v. Andrus, 899 F.2d 753, 759 (9th Cir.1989). However, we give deference to the district court’s interpretation based on the court’s extensive oversight of the decree from the commencement of the litigation to the current appeal. Vertex Distrib., Inc. v. Falcon Foam Plastics, Inc., 689 F.2d 885, 893 (9th Cir.1982); Brown v. Neeb, 644 F.2d 551, 558 n. 12 (6th Cir.1981). We conclude the district court did not err in its interpretation of the decree. The number of promotions required by paragraph 10a(4) and paragraph 10b(6) are based on the annual number of promotions historically made by the San Francisco Police Department. Because the accrual of promotions to assistant inspector and sergeant under paragraph 10a(4) would be inconsistent with the limitation on the number of promotions to captain and lieutenant under paragraph 10b(6), the district court concluded the parties to the decree did not intend the paragraph 10a(4) obligations to accrue after the ten-year period which expired March 30, 1989. The district court reasoned: It would be unreasonable to assume that the Decree intended to alter the histori cally-maintained proportion in appointments to the various rank levels by having some promotion obligations continue to accrue while others ceased to do so. This determination is supported by the language of the decree. In paragraph 10a(4), the decree provides that the City will make annual promotions to assistant inspector and sergeant “from and after August 1, 1981, through the termination date of this decree.” In paragraph 10b(6), the decree requires the City to make a specified number of promotions to lieutenant and captain “between August 1, 1985 and the termination date of this de-cree_” Paragraph 10b(6) further provides that this obligation “shall be measured over this four year period_” The phrase “this four-year period” defines “the termination date of this decree” in paragraph 10b(6). Thus, the promotional obligations under paragraph 10b(6) terminated on March 30, 1989. Inferentially, the phrase “termination date” in paragraph 10a(4) would have the same definition. We conclude, as did the district court on reconsideration, that promotions under paragraph 10a(4) of the decree do not accrue beyond March 30, 1989. B. Intervention Calabro attempted to intervene pursuant to Federal Rule of Civil Procedure 24(a)(2) after the district court initially held that the promotional obligations under paragraph 10a(4) would continue to accrue after March 30, 1989, the ten-year period specified in paragraph 20. Calabro contends his opportunities for promotion have been harmed by the decree in violation of his civil rights. If allowed to intervene, Calabro would argue that the decree expired by its own terms on March 30, 1989, and thus the decree’s provisions, other than those affected by the Supplemental Order, are no longer in effect. The district court denied Calabro’s motion to intervene. The district court found that Calabro’s motion to intervene was untimely because he filed it approximately sixteen years after the complaint had been filed and ten years after the court had approved the decree. We review for abuse of discretion the district court’s determination that Calab-ro’s intervention motion was untimely. County of Orange v. Air California, 799 F.2d 535, 537 (9th Cir.1986), cert. denied, 480 U.S. 946, 107 S.Ct. 1605, 94 L.Ed.2d 791 (1987). Because the district court erroneously focused on the amount of time that had passed since the commencement of the litigation, we vacate the district court’s judgment and remand for consideration of whether Calabro satisfies the requirements of Federal Rule of Civil Procedure 24(a)(2).

3881579-17001

MEMORANDUM OF DECISION ZOBEL, District Judge. In December 2012, the Securities and Exchange Commission (“SEC”) filed an enforcement action against plaintiffs BioChernies, Inc. (“BioChemics”) and John Masiz, alleging they had violated the federal securities laws. Plaintiffs have now sued defendant AXIS Reinsurance Company (“AXIS”), which issued their directors and officers (“D & 0”) liability insurance. Plaintiffs claim their D & 0 insurance policy obligates AXIS to defend them against the pending enforcement action, and against subpoenas issued by the SEC in January and March 2012. AXIS has refused to provide plaintiffs any defense against the subpoenas or against the enforcement action, claiming those matters are not covered under plaintiffs’ policy. Plaintiffs have now moved for summary judgment, and AXIS has responded by moving for discovery under Federal Rule of Civil Procedure 56(d). I. Background BioChemics is a specialty pharmaceutical company focused on transdermal drug delivery systems, including medicated lotions. Masiz is BioChemics’s president and chief executive officer. In May 2011 and September 2011, the SEC served document subpoenas on BioChemics requesting a broad range of documents regarding the company’s operations from 2007 on. Those subpoenas indicated that the SEC had issued a formal order authorizing the pending investigation. At the time, BioChemics held a year-long D & O policy issued by Greenwich Insurance Company, a member of the XL Group. That policy was written on a claims-made basis, meaning it only covered claims made against BioChemics or its officers during the policy period. In November 2011, when its D & O policy expired, BioChemics did not pur chase a new policy from the same insurers; instead, it took out a new policy from AXIS. The new AXIS policy was also issued on a claims-made basis, covering claims first made between November 13, 2011 and November 13, 2012. Section Y.A of the policy, titled “Limits of Liability,” contained the following language: All Claims, including all D & 0 Claims ... arising from the same Wrongful Act ... and all Interrelated Wrongful Acts shall be deemed one Claim and such Claim shall be deemed to be first made on the earlier date that: (1) any of the Claims is first made against an Insured under this Policy or any prior policy Docket #30, Ex. A (Policy), § V.A. The same section also stated the basic principle of a claims-made policy: “Coverage under this Policy shall apply only with respect to Claims deemed to have been first made during the Policy Period and reported in writing to the Insurer in accordance with the terms herein.” Id. The policy defined a “Claim” broadly to include, inter alia, any “written demand against any Insured for monetary or nonmonetary relief,” or any “civil, arbitration, administrative or regulatory proceeding against any Insured commenced by ... the filing of a notice of charge, investigative order, or like document.” Id. § III.B.2(a), (b)(ii). In January 2012, two months after the AXIS policy came into effect, the SEC served deposition subpoenas on Masiz and two other individuals. In March 2012, the SEC served document subpoenas on BioChemics and Masiz. Those subpoenas all issued under the same SEC matter identification and number—In the Matter of BioChemics, Inc. (B-02641)—that the 2011 subpoenas had. The March document subpoena to Masiz also emphasized that Masiz was not required to produce any documents that had already been provided in response to the 2011 subpoenas to BioChemics. See Docket # 30, Ex. G, Subpoena Attachment at 3-4. BioChemics notified AXIS of the January and March 2012 subpoenas. However, AXIS denied coverage. It took the position that the entire SEC investigation was a single “claim” that was first made in May 2011, when the SEC issued its first document subpoena to BioChemics — before plaintiffs’ AXIS policy took effect. The SEC filed its enforcement action in December 2012, alleging that from 2009 until mid-2012 BioChemics and Masiz had engaged in a fraudulent scheme to sell BioChemics securities by misleading investors about the company’s value. Some of the misrepresentations alleged in the SEC complaint took place before the SEC issued its first document subpoena in May 2011. Others, including alleged misrepresentations about a clinical trial of BioChemics’s topical ibuprofen product, took place after the May and September 2011 subpoenas had issued. AXIS has taken the same position with respect to the SEC enforcement action as it did with respect to the 2012 subpoenas: namely, it has refused to defend BioChemics and Masiz, asserting that the enforcement action is part of a single “claim” that was first made when the first SEC subpoena issued in May 2011, before the AXIS policy period began. Plaintiffs now move for partial summary judgment, insisting that the present record is enough to conclusively determine whether AXIS owes them a duty to defend. In response, AXIS has moved for discovery under Rule 56(d), arguing that it is entitled to examine all the communications between plaintiffs and the SEC to determine whether it has any duty to defend. II. Analysis Rule 56(d) applies when a party opposing summary judgment shows that for lack of time or lack of discovery, “it cannot present facts essential to justify its opposition.” Fed.R.Civ.P. 56(d). Under those circumstances, the court may deny the summary judgment motion, defer consideration, provide additional time- for discovery, or issue any other appropriate relief. Id. To invoke Rule 56(d), the party must submit a statement that “(i) explains his or her current inability to adduce the facts essential to filing an opposition, (ii) provides a plausible basis for believing that the sought-after facts can be assembled within a reasonable time, and (iii) indicates how those facts would influence the outcome of the pending summary judgment motion.” Nieves-Romero v. United States, 715 F.3d 375, 381 (1st Cir.2013) (quoting Velez v. Awning Windows, Inc., 375 F.3d 35, 40 (1st Cir.2004)). Here, the parties dispute only whether the facts that AXIS seeks would influence the outcome of plaintiffs’ summary judgment motion. Plaintiffs insist that AXIS will owe them a defense no matter what further discovery might reveal; AXIS disagrees. A. Extrinsic Evidence Plaintiffs argue their D & 0 insurance policy establishes on its face that AXIS owes them a duty to defend against the SEC proceedings. The relevant insuring clause of the policy states that AXIS will pay “all Loss on behalf of any Insured arising from any D & 0 Claim for a Wrongful Act ... first made against such Insured ... during the Policy Period. ” Policy § I. Because the defined term “Loss” includes the cost of defending against claims, see id. §§ III.A.2, III.A.7, plaintiffs argue that AXIS must pay for their defense against the 2012 subpoenas and the subsequent SEC enforcement action. AXIS counters that the 2012 subpoenas and the enforcement action are part of a single, ongoing claim that was “first made” before the policy period began. As described above, the policy provides that “all D & 0 Claims ... arising from the same Wrongful Act ... and all Interrelated Wrongful Acts shall be deemed one Claim.” Id. § V.A. It defines the term “Interrelated Wrongful Acts” to mean “any and all Wrongful Acts that have as a common nexus any fact, circumstance, situation, event, transaction, cause, or series of causally or logically connected facts, circumstances, situations, events, transactions, or causes.” Id. § III.A.6. AXIS contends that after discovery, it could prove that the ‘Wrongful Acts” underlying the 2011 subpoenas shared a common nexus with the Wrongful Acts” underlying the 2012 subpoenas and the enforcement action. If so, AXIS argues, any claims arising from those “Interrelated Wrongful Acts” would be deemed a single “Claim” that arose when the first subpoena was filed — before the policy period began. That would place the entire SEC investigation outside the scope of AXIS’s duty to defend under the policy. AXIS therefore seeks discovery of materials related to the plaintiffs’ dealings with the SEC, to show that the entire investigation arises from a single set of “Interrelated Wrongful Acts. ” Plaintiffs respond with a line of cases holding that in general, insurers cannot rely on extrinsic evidence to deny their duty to defend. Instead, normally speaking, “the question of the initial duty of a liability insurer to defend third-party actions against the insured is decided by matching the third-party complaint with the policy provisions.” Fed. Ins. Co. v. Raytheon Co., 426 F.3d 491, 496 (1st Cir.2005) (quoting Cont'l Cas. Co. v. Gilbane Bldg. Co., 391 Mass. 143, 461 N.E.2d 209, 212 (1984)). That rule establishes, for instance, that an insurer cannot avoid its duty to defend by claiming that the suit against its insured lacks merit. See Bos. Symphony Orchestra v. Commercial Union Ins. Co., 406 Mass. 7, 545 N.E.2d 1156, 1159 (1989) (“The merits of the claim are, likewise, not a ground upon which an insurer can refuse to defend its insured.... [T]he right to a defense inures even if any of the allegations of the suit are groundless, false, or fraudulent.” (quotation marks omitted)). Extrapolating from this rule, plaintiffs argue that AXIS can only avoid its duty to defend if the later SEC subpoenas and complaint themselves make clear, within their own four corners, that they arise from the same “Interrelated Wrongful Acts” as the earlier subpoenas. Cf. Raytheon, 426 F.3d at 496-97 (determining the scope of a prior and pending litigation exclusion by looking to the allegations of the complaints at issue); Ryan v. Nat’l Union Fire Ins. Co., 692 F.3d 162, 167-68 (2d Cir.2012) (under Connecticut law, finding insurer had a duty to defend where based solely on the allegations in the complaint it was “possible” that not all the alleged losses arose from earlier wrongful acts). According to plaintiffs, no factual discovery is necessary because AXIS’s duty to defend rests solely on the subpoenas and the complaint. AXIS, unsurprisingly, takes a different view. It argues that the rule against using extrinsic evidence applies only where the insurer seeks to challenge the allegations of the third party’s complaint, not where the insurer is challenging an “extrinsic fact ... that will not be litigated at the trial of the underlying action.” Farm Family Mut. Ins. Co. v. Whelpley, 54 Mass.App. Ct. 743, 767 N.E.2d 1101, 1104 (2002). That approach finds support in the case law. For instance, the First Circuit has held — applying Maine law — that a court may look to extrinsic evidence to determine whether the insured party under a claims-made policy timely reported the claim. Edwards v. Lexington Ins. Co., 507 F.3d 35, 40-41 (1st Cir.2007). It stated that the rule against extrinsic evidence “cannot be rigidly applied in the context of claims-made policies where the determinative event is the timing of the claim, a fact that likely will be ... irrelevant to the merits of the underlying tort suit, and therefore absent from the pleadings.” Id. at 41. So too here. The determinative question is whether the later subpoenas and enforcement action arose from alleged wrongful acts that shared a common nexus with the alleged wrongful acts that triggered the earlier subpoenas. The existence vel non of that common nexus is not relevant to the validity of the subpoenas or the merits of the enforcement action, and is not likely to appear on the face of the subpoenas or the complaint. So under the First Circuit’s reasoning in Edwards, AXIS should be entitled to prove it by extrinsic evidence. See also Whelpley, 767 N.E.2d at 1104 (allowing the insurer to prove by extrinsic evidence that the underlying accident occurred off the insured’s premises and so was not covered by the policy). Though the question is close, AXIS has the better of the argument. An insurer may not use extrinsic evidence to avoid its duty to defend by challenging the allegations in the complaint; instead, the insurer must defend if the allegations in the complaint are reasonably susceptible to an interpretation that states a claim within the scope of the policy. See Sterilite Corp. v. Cont’l Cas. Co., 17 Mass.App.Ct. 316, 458 N.E.2d 338, 340 (1983). But an insurer may use extrinsic evidence to deny a duty to defend based on facts irrelevant to the merits of the underlying litigation, such as whether the claim was first made during the policy period, whether the insured party reported the claim to the insurer as required by the policy, or whether the underlying wrongful acts were related to prior wrongful acts. See Edwards, 507 F.3d at 40-41; Brown v. Am. Int’l Grp., 339 F.Supp.2d 336, 346-47 (D.Mass.2004) (citing extrinsic evidence in finding, after a full bench trial, that defendant insurer had failed to prove the wrongful acts at issue were related to pri- or wrongful acts). The discovery AXIS requests may therefore affect the outcome of plaintiffs’ summary judgment motion. B. Interrelated Wrongful Acts Next, plaintiffs turn to the fact that the complaint in the SEC enforcement action alleges certain misrepresentations that took place after the 2011 subpoenas issued. Specifically, the SEC complaint alleges that beginning on November 2011, plaintiffs made several misrepresentations about the results of a clinical trial for a topical ibuprofen cream being developed by BioChemics. Plaintiffs argue that because these alleged misrepresentations occurred after the earlier SEC subpoenas, they cannot be interrelated with the wrongful acts underlying the earlier subpoenas. That argument fails. As noted above, the policy defines “Interrelated Wrongful Acts” to mean “any and all Wrongful Acts that have as a common nexus any fact, circumstance, situation, event, transaction, cause, or series of causally or logically connected facts, circumstances, situations, events, transactions, or causes.” Policy § III.A.6. Therefore, the question is not whether the earlier subpoenas sought information about the later ibuprofen-related misrepresentations; they obviously did not. Instead, the question is whether the earlier subpoenas sought information about wrongful acts that shared a “common nexus” with the later ibuprofen-related misrepresentations. That question cannot be resolved until the parties have taken sufficient discovery. Cf. Brown, 339 F.Supp.2d at 346-47; Allmerica Fin. Corp. v. Certain Underwriters at Lloyd’s, London, 449 Mass. 621, 871 N.E.2d 418, 430 (2007) (“While we cannot say that the underwriters will be unable to show that the claims were ‘interrelated’ in any circumstances, they have not done so on the record before us.”). C. Limits of Liability Next, plaintiffs argue that because section V.A of the policy is titled “Limits of Liability,” it should be interpreted to limit the total amount of coverage but not to act as a complete bar to coverage. They rest on the well-estab lished principle that when construing language in an insurance policy, a court must look to what an objectively reasonable insured party would expect to be covered based on the policy language. See W. Alliance Ins. Co. v. Gill, 426 Mass. 115, 686 N.E.2d 997, 998 (1997). Here, however, the language at issue is unambiguous. It states clearly that all claims based on interrelated wrongful acts shall be deemed one claim, and that the resulting single claim shall be deemed first made when the first underlying claim was made (or when an insured party first provided notice of the underlying facts). The final sentence of section V.A then unambiguously states its intent to exclude certain claims from coverage: “Coverage under this Policy shall apply only with respect to Claims deemed to have been first made during the Policy Period and reported in writing to the Insurer in accordance with the terms herein.” Policy § Y.A; see also id. at 1 (stating, in bold print and in all capitals, that the policy covers only claims first made during the policy period). Given that language, a reasonable insured could not have ignored that section V.A of the policy bars coverage for a claim deemed to be first made before the policy period — including any later claims based on the same interrelated wrongful acts. D. Masiz Finally, plaintiffs argue that the 2011 subpoenas cannot be considered prior claims against Masiz, because they were only directed to BioChemics. AXIS responds that it cannot assess whether any relevant prior claims were filed against Masiz until it discovers the full extent of the prior communication between plaintiffs and the SEC. That response has merit. Any written demands on Masiz made before the policy period began would potentially be relevant to the scope of AXIS’s duty to defend. AXIS is therefore entitled to discover the relevant prior communications between plaintiffs and the SEC, and the scope of the SEC’s prior investigation. E. Ongoing Defense Costs

3985240-29547

POSNER, Circuit Judge. We have consolidated for decision four appeals, heard on the same day, that present issues relating to supervised release. In a recent opinion, United States v. Siegel, 753 F.3d 705 (7th Cir.2014), the court expressed concern with how the district courts of our circuit are administering supervised release. To recapitulate briefly the fuller discussion in the Siegel opinion, the Sentencing Reform Act of 1984 replaced parole for federal crimes with supervised release (to take effect in 1987). 18 U.S.C. § 3583. Parole of federal convicts is granted (though nowadays only in a very limited class of cases, see United States Parole Commission, Wikipedia, http://en.wikipedia.org/wiWUnited_States_ Parole_Commission (visited Jan. 11, 2015, as was the other website cited in this opinion)) by an administrative agency after a convicted defendant begins serving his sentence. An inmate granted parole is thus released from prison before the expiration of his term, but becomes subject to restrictions imposed by the agency on his conduct between his release and when, had he not been paroled, he would have been released upon the expiration of -his prison sentence. The restrictions are intended to reduce the likelihood of his committing crimes in the future. Supervised release, in contrast to parole, consists of restrictions, imposed by the judge at sentencing, called conditions or terms of supervised release, that are to take effect when the defendant is released from prison and continue for a specified term of years (which can be life). Parole shortens prison time, substituting restrictions on the freed prisoner. Supervised release does not shorten prison time; instead it imposes restrictions on the prisoner to take effect upon his release from prison. Parole mitigates punishment; supervised release augments it — most dramatically when the defendant, having been determined to have violated a condition or conditions of supervised release, is given, as punishment, a fresh term of imprisonment. 18 U.S.C. § 3583(e)(3). Supervised release is required by statute in fewer than half of cases subject to the sentencing guidelines. United States Sentencing Commission, Federal Offenders Sentenced to Supervised Release 3 (July 2010), www. ussc.gov/sites/defaulVflles/pdfrtraining/ annual-national-training-seminar/2012/2_ Federal_Offenders_Senteneed_to_ Supervised_Release.pdf. In the other cases the sentencing judge has discretion to order or not order it, see 18 U.S.C. § 3583(a), but almost always the judge orders it in those cases too, United States Sentencing Commission, supra, at 69-70, often without explaining why. Although the defendants in our four cases object to particular conditions of supervised release imposed on them, they do not challenge the propriety of the inclusion of some conditions of supervised release in their sentences. Supervised release as it is designed and administered has turned out to be problematic in a number of respects. See, e.g., Christine S. Scott-Hayward, “Shadow Sentencing: The Imposition of Federal Supervised Release,” 18 Berkeley J.Crim. L. 180 (2013); Fiona Doherty, “Indeterminate Sentencing Returns: The Invention of Supervised Release,” 88 N.Y.U. L.Rev. 958 (2013). One is that the list of conditions required or suggested is very long. The supervised-release statute, 18 U.S.C. § 3563(b), imposes 9 “mandatory” conditions and 23 “discre tionary conditions,” for a total of 32. The sentencing guidelines get into the act as well, see U.S.S.G. § 5B1.3, imposing 10 “mandatory” conditions, 14 “standard” conditions, and 13 “special” or “additional conditions” — a total of 37. The statutory and guideline conditions, where they overlap, are generally the same substantively, but their wording often differs. Sentencing judges usually use the guideline wording rather than the statutory wording. All but the mandatory conditions are optional. And the judge is free to add or substitute (except with regard to the mandatory conditions) conditions of his own devising. Understandably, given the number of conditions, many district judges simply list the conditions that they impose, devoting little or no time at sentencing to explaining them or justifying their imposition. Because conditions of supervised release do not take effect until the defendant completes his prison term and is released, defendants given long prison sentences— and long prison sentences are common in federal sentencing — often have little interest in contesting conditions of supervised release at sentencing. Criminals who court long prison sentences tend to have what economists call a high discount rate. That is, they give little weight to future costs and benefits. Defendants or their lawyers may also worry that a successful challenge to a condition or conditions of supervised release may induce the judge to impose a longer prison sentence, thinking that resistance to supervised release implies recidivist tendencies or intentions. And often a defendant is given no notice in advance of the sentencing hearing of the conditions of supervised release that the judge is thinking of imposing, which can make it difficult for his lawyer to prepare arguments in opposition. Many district judges appear to have overlooked the fact that because the imposition of conditions of supervised release is part of the sentence, a sentencing judge is required by the Supreme Court’s decision in United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005), to evaluate the propriety of any conditions of supervised release that the judge is thinking of imposing, by applying to the proposed conditions the sentencing considerations listed in 18 U.S.C. § 3553(a). The considerations include (in subsections (1), (2), and (3) respectively) “the nature and circumstances of the offense and the history and characteristics of the defendant,” “the need for the sentence imposed,” and “the kinds of sentences available.” Any doubt that conditions of supervised release are a part of the sentence and subject therefore to the requirement that the judge before imposing sentence apply the sentencing factors in section 3553(a) is dispelled by 18 U.S.C. § 3583(c). It provides that “the court, in determining whether to include a term of supervised release, and, if a term of supervised release is to be included, in determining the length of the term and the conditions of supervised release, shall consider the factors set forth in [eight enumerated subsections of] section 3553(a).” And being part of the sentence, the imposition of conditions of supervised release is subject to the further requirements that “the court, at the time of sentencing, shall state in open court the reasons for its imposition of the particular sentence,” 18 U.S.C. § 3553(c), and “in determining the length of the term and the conditions of supervised release, shall consider the factors set forth in” eight enumerated subsections of section 3553(a). 18 U.S.C. § 3583(c). Subsection (a) of section 3553 lists the sentencing factors that the judges are to consider in determining the sentence. From the omission of subsection 3553(a)(2)(A), the court in United States v. Murray, 692 F.3d 273, 280 (3d Cir.2012), inferred “that the primary purpose of supervised release is to facilitate the reentry of offenders into their communities, rather than to inflict punishment.” The omitted subsection (a)(2)(A) is “the need for the sentence imposed ... to reflect the seriousness of the offense, to promote respect for the law, and to provide just punishment for the órense.” The sheer number of conditions may induce haste in a sentencing judge’s evaluation of the recommendations of the probation officer assigned to the case as to what conditions of supervised release to impose (if there are such recommendations — often there are not; there are not in any of the four cases before us) and is doubtless a factor in judges’ frequent omission to mention any of the sentencing factors in section 3553(a) or even any of the conditions recommended by the parties or the probation officer that the judge decides to include in the sentence. And because conditions of supervised release, though imposed at sentencing, do not become operational until the defendant is released, the judge has to guess at the time of sentencing what conditions are likely to make sense in what may be the distant future. Conditions» that may seem sensible at sentencing may not be sensible many years later, when the defendant is finally released from prison. Although nonmandatory conditions of supervised release can be modified at any time, 18 U.S.C. § 3583(e)(2), modification is a bother for a judge, especially when, as is common in cases involving very long sentences, it becomes the responsibility of the sentencing judge’s successor because in the meantime the sentencing judge has retired or died, resigned, or been promoted. Furthermore, although reducing recidivism is the purpose of supervised release, it is difficult, often impossible, to predict whether a defendant is likely upon release to resume criminal activity. Often rehabilitation is named as an additional purpose of supervised release, but being rehabilitated and going straight are as a practical matter synonymous. Another wrinkle is that because conditions of supervised release are imposed at sentencing, the conditions recommended to the judge at the sentencing hearing may be a product of negotiation between prosecution and defense. The defendant’s lawyer may offer the prosecution a trade — more supervised release for a reduced prison term — and the prosecutor may agree. And when adversaries agree on the outcome of a legal proceeding the sentencing judge, habituated as American judges are to adversary procedure, may be reluctant to subject the agreement to critical scrutiny, even though the law is clear that the fact that the prosecution and defense agree on a sentence does not excuse the judge from having to determine the sentence’s conformity to the statutory sentencing factors. Freeman v. United States, — U.S.-, 131 S.Ct. 2685, 2692, 180 L.Ed.2d 519 (2011). Still another problem is that probation officers, upon whom district judges rely heavily for recommendations concerning what conditions of supervised release to impose, spend disproportionate time on enforcement (that is, investigating violations of conditions of supervised release and recommending punishments for the violators) and have little time left over for suggesting appropriate conditions and helping the probationer to comply with them. This is a serious problem given the severe under-staffing of the probation service that we discussed in the Siegel opinion, 753 F.3d at 710, and the reliance that most district judges repose in the recommendations of the probation officer assigned to the case when the officer makes recommendations. A revocation of supervised release and recommital to prison relieves the probation service of monitoring the person during his term of imprisonment. According to Scott-Hayward, supra, at 182 (footnotes omitted), “on average, one third of those individuals [on supervised release] will have their supervised release revoked, most as a result of technical violations, and receive, on average, a new prison sentence of 11 months.” And finally a number of the listed conditions, along -with a number of conditions that judges invent, are, as we’re about to explain, hopelessly vague. See also our Siegel opinion, 753 F.3d at 712-16, for a fuller discussion of vagueness and ambiguity in conditions of supervised release. Given the problems we’ve enumerated, it is no surprise that the administration of supervised release by the district courts has not run smoothly. The types of oversights that we’ll be discussing — well illustrated by our four cases — are understandable, perhaps indeed inevitable, given the confusion that the applicable statutory and guidelines provisions have created. We begin with United States v. Thompson. Thompson was 23 years old when he began an online relationship with a girl of 14. They exchanged nude pictures of themselves. When she was 16 and he 25 she decided to run away from home. Thompson picked her up and drove her across state lines, and they had sex in a state in which the age of consent was 16 and their sexual activity therefore legal. Convicted in federal district court of possession of child pornography, and of traveling in interstate commerce for the purpose of engaging in sexual conduct, in violation of federal laws that fix the age of consent as 18 rather than, as in many states, 16, see, e.g., 18 U.S.C. § 2423(a), Thompson was sentenced to 210 months in prison. He does not challenge the prison sentence, but only conditions of supervised release. Even with full credit for behaving himself in prison, Thompson will be just days short of 41 years old when released, and it seems odd to be devising so far in advance restrictions to impose on him then; but that is how supervised release operates. What is beyond odd — what is unauthorized — -is that the judge imposed a lifetime of supervised release without any articulated justification. The need for an express justification was acute because, as the judge remarked, as a convicted sex offender Thompson will be subject after he is released from prison to a lifetime of mandatory state and local sex-offender reporting quite apart from supervised release. And sensible or not, the lifetime term is vitiated by the fact that in imposing it the judge was laboring under the misapprehension that, in his words, “a term of supervised release can be reduced but can’t be extended.” That’s wrong; it can be extended. 18 U.S.C. §§ 3583(e)(1)-(2); Fed.R.Crim.P. 32.1(c). It’s not that the judge thought that Thompson after being released from prison will be a menace to young girls until he dies perhaps as an octogenarian or even a nonagenarian. It is rather, as the judge explained, that because the future cannot be predicted, any term of supervised release shorter than life would create a risk that Thompson would commit further crimes at an advanced age. But should that risk seem acute many years from now when Thompson completes his prison term, a finite term of supervised release could be extended, as the judge failed to understand. We are surprised that neither the government nor the defense pointed out the judge’s error at the sentencing hearing. The judge committed other errors. One was his failure to include in the oral sentence a condition of supervised release requiring that the defendant receive treatment for drug addiction. Not because it’s a mandatory condition or one that the judge would have been remiss in failing to impose, but because, though he intended to impose it, it appears only in the written judgment, and the oral sentencing, which omits it, takes precedence over the written. United States v. Johnson, 765 F.3d 702, 710-11 (7th Cir.2014); United States v. Alburay, 415 F.3d 782, 788 (7th Cir.2005). A more serious error was a condition of supervised release that Thompson not have “any contact with persons under the age of 18 unless in the presence of a responsible adult who is aware of the nature of the defendant’s background and instant offense and who had been approved by the probation officer.” This can’t have been meant literally, since understood literally it would include males under 18 as well as females, though there is no suggestion that Thompson is bisexual. Furthermore, even if males are excluded from the no-contact rule, “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 directions, or being shown a friend’s baby girl — or his own baby, for that matter. We have warned against imposing a restrictive condition that is not ’reasonably related to the defendant’s “offense, history and characteristics.... Moreover, given the potentially severe restrictions on [the defendant’s] day-to-day life that this condition imposes, the district court’s lack of explanation of why it thinks this condition involves no greater deprivation of liberty than necessary to achieve the penological goals stated in 18 U.S.C. § 3553(a) is troubling.... Because the district court has not provided any explanation of how this condition is reasonably related to [the defendant’s] offense and background or to the goals of punishment, involving no greater deprivation of liberty than is reasonably necessary to achieve these goals, we vacate the condition.” United States v. Goodwin, 717 F.3d 511, 523-24 (7th Cir.2013). The judge in Thompson’s case imposed a total of 24 non-mandatory conditions of supervised release. Because all those conditions were part of the sentence, the judge was, as we noted earlier in this opinion (as well as in Goodwin and Siegel) not permitted to impose them without determining their conformity to the sentencing factors in 18 U.S.C. § 3553(a). There is no indication that he did so. He just checked boxes in a list of conditions. Some of the conditions seem appropriate or innocuous, but others are either inappropriate or vague. Among the inappropriate ones is that the “defendant shall support his or her dependents and meet other family responsibilities.” Of course “or her” should not be in there; its inclusion suggests the rote nature of the judge’s imposition of conditions of supervised release. More important, the condition assumes arbitrarily and maybe inaccurately that should Thompson ever acquire dependents he will have, despite being an ex-con subject to conditions of supervised release and state and local sex-offender restrictions and reporting requirements, the resources necessary to support his dependents. Among the vague conditions is that “defendant shall refrain from excessive use of alcohol,” where “excessive use” is not defined, though it could readily be defined, as we explained in United States v. Siegel, supra, 753 F.3d at 715-16. Fatally vague is a condition forbidding the defendant to “associate with any person convicted of a felony, unless granted permission to do so by the probation officer.” How would the defendant know whether someone he was associating with had ever been convicted of a felony? There is no stated requirement that he know; the condition appears to impose strict liability. If so, to protect himself he would have to submit the name of any person he met to his probation officer to determine whether the name appeared in any database of felons. Maybe liability for violating the condition isn’t strict; so might it be enough that a reasonable person would know that a person whom the defendant was associating with was a felon, even if the defendant didn’t know? And what exactly is “association”? Is a single meeting enough, or is the word intended to denote friendship, acquaintanceship, or frequent meetings? What if a dependent whom Thompson will be required to support when he is released from prison is convicted of a felony? Must he stop associating with that person as well? Would it not be more sensible to scrap the quoted condition and instead forbid the defendant “to meet, communicate, or otherwise interact with a person whom he knows to be engaged, or planning to be engaged, in criminal activity”? The government offers the blanket defense that Thompson waived any objection to the conditions of supervised release that the judge imposed. The judge had sent a list of the conditions, with checkmarks next to the ones he was considering imposing, to the parties in advance of the sentencing hearing and the government argues that this was the defendant’s (more realistically, his lawyer’s) last chance to oppose them. But the judge didn’t indicate why he was thinking of imposing these conditions. A judge cannot properly decide what sentence to impose without consideration of the sentencing factors in 18 U.S.C. § 3553(a). If upon consideration of these factors he decides that he’s leaning toward imposing particular conditions, he should inform the parties of the conditions and the possible reasons for imposing them, so that they can develop arguments pro or con to present at the sentencing hearing. (It would likewise be a better practice for the presentence report to give reasons for any conditions of supervised release that it suggests, but as we said the presentence reports in these four cases did not suggest any conditions of supervised release.) An alternative would be for the judge to explain at the sentencing hearing what conditions he was inclined to impose and why, and ask the defendant’s lawyer whether he objects to any of them; if the lawyer had a reasonable need for more time to decide whether he has grounds for objection, the judge could adjourn the hearing. Either of our suggested approaches would be a “best practice,” which is different from a required practice; for except with regard to conditions of supervised release not listed in the statute or the guidelines, United States v. Bryant, 754 F.3d 443, 446 (7th Cir.2014), no advance notice is required. Id. at 446-47; United States v. McKissic, 428 F.3d 719, 725-26 (7th Cir.2005); United States v. Lopez, 258 F.3d 1053, 1055-56 (9th Cir.2001); United States v. Barajas, 331 F.3d 1141, 1143-45 (10th Cir.2003). This con clusion follows from the Supreme Court’s decision in Irizarry v. United States, 553 U.S. 708, 128 S.Ct. 2198, 171 L.Ed.2d 28 (2008). The district judge in that case had imposed a sentence in excess of the sentence recommended in the presentence report without prior notification to the parties. The Supreme Court held that this lack of notice didn’t require reversal. But that holding is consistent with Barajas, where we read that “there may be occasions when a defendant has a good reason for not being prepared to address at sentencing the imposition of a condition of supervised release listed in the Sentencing Guidelines. In such a circumstance the district court can exercise its sound discretion to grant a continuance,” id. at 1145 — though we would be inclined to substitute “should” for “can” in the last clause of the quoted passage. For in Irizarry itself we read that Rule 32(i)(l)(C) [of the Federal Rules of Criminal Procedure] requires the district court to allow the parties to comment on “matters relating to an appropriate sentence,” and given the scope of the issues that may be considered at a sentencing hearing, a judge will normally be well advised to withhold her final judgment until after the parties have had a full opportunity to present their evidence and their arguments. Sentencing is “a fluid and dynamic process and the court itself may not know until the end whether a variance will be adopted, let alone on what grounds.” ... Sound practice dictates that judges in all cases should make sure that the information provided to the parties in advance of the hearing, and in the hearing itself, has given them an adequate opportunity to confront and debate the relevant issues. We recognize that there will be some cases in which the factual basis for a particular sentence will come as a surprise to a defendant or the Government. The more appropriate response to such a problem is not to extend the reach of Rule 32(h)’s notice requirement categorically, but rather for a district judge to consider granting a continuance when a party has- a legitimate basis for claiming that the surprise was prejudicial.” 553 U.S. at 715-16, 128 S.Ct. 2198. Because we’re remanding in Thompson’s case, the defendant’s lawyer should be permitted to wait until the sentencing hearing to present his objections to whatever conditions of supervised release the judge is minded to impose. We need to note an exception to our “best practice” suggestion, however. Some conditions of supervised release are administrative requirements applicable whenever a term of supervised release is imposed, regardless of the substantive conditions that are also imposed. Examples, are requiring the defendant to report to his probation officer, answer the officer’s questions, follow his instructions, and not leave the judicial district without permission. Once the judge has explained why supervised release is necessary, he should be permitted to impose the necessary incidents of supervision without explanation. It is not correct, however, as has been suggested, that all the standard conditions are “ ‘basic administrative requirements] essential to the functioning of the supervised release system.’ ” United States v. Truscello, 168 F.3d 61, 63-64 (2d Cir.1999). To similar effect see United States v. Tulloch, 380 F.3d 8, 13-14 (1st Cir.2004). Most of them are substantive rather than administrative. So much for Thompson’s sentence; on to United States v. Ortiz. This defendant pleaded guilty to three bank robberies and was sentenced to prison for 135 months. Twenty-one conditions of supervised release were imposed, all but one to remain in force for three years after his release from prison. As in Thompson’s case, the appeal does not challenge the prison sentence but only conditions of supervised release. The presentence report, prepared (as is normal) by the probation officer assigned to the case, contained no suggested conditions of supervised release at all. Nor had the prosecution suggested any. They were sprung on the defendant at the sentencing hearing, and with such brevity that we don’t think his lawyer can be faulted for having failed to object. The judge’s entire discussion of supervised release consisted of the following sentence: “The conditions of supervised release will include the normal conditions, plus drug testing up to the maximum that’s permitted, drug counseling and treatment at the direction of the probation office, and mental health counseling and treatment at the direction of the probation office, which may include taking necessary prescription medications.” It’s not clear what the judge meant by “normal conditions,” but the written judgment fists 3 mandatory conditions (DNA collection, drug testing, and a prohibition against committing further crimes), 13 standard conditions (judges usually exclude from the guidelines fist of 14 standard conditions the last one, which relates to the payment of the financial obligations imposed by the sentence; for some reason not known to us this requirement is incorporated into another part of the standard form that is issued to defendants when they receive their sentences), and 5 additional conditions (a firearm prohibition, a drug treatment program, mental health counseling, a requirement that the defendant report to the probation office within 72 homes of his release from prison, and that he pay restitution). Far from applying the sentencing factors in 18 U.S.C. § 3553(a) to the conditions of supervised release that he was imposing, the judge gave no reasons at all for any of the conditions. The conditions imposed are riddled with ambiguities. Example: “as directed by the probation officer, the defendant shall notify third parties of risks that may be occasioned by the defendant’s criminal record or personal history or characteristics.” There is no indication of what is meant by “personal history” and “characteristics” or what “risks” must be disclosed to which “third parties.” The defendant is to notify his probation officer of any “change in ... employment,” but there is no indication whether change in employment just means changing employers or also includes changing from one position to another for the same employer at the same workplace. The defendant is forbidden to “frequent places where controlled substances are illegally sold, used, distributed, or administered,” but there is no requirement that he know or have reason to know or even just suspect that such activities are taking place. Nor is there any indication of how many trips constitute “frequent[ing]” such places. Instead of being forbidden to use a controlled substance he “shall have no use of controlled substance,” a puzzling expression. And he is required to pay substantial restitution (more than $13,000) “at a rate of at least 10% of new monthly income,” but there is no explanation of what “new” is meant to signify. Nor did the district court specify a penalty should the defendant fail to pay the restitution ordered. Ortiz’s counsel takes particular issue with two standard conditions of supervised release that might be thought to impinge on constitutional rights: that “the defendant shall answer truthfully all inquiries by the probation officer” and that he “shall permit a probation officer to visit him or her [there is of course no “her” in the case] at any time at home or elsewhere and shall permit confiscation of any contraband obsexved in plain view of the probation officer.” The first of these conditions essentially asks for a waiver of the right not to be forced to incriminate oneself, because the condition would require the defendant to answer “yes” if he were asked whether he had committed another crime and he had. The second condition would allow the probation officer to “visit” the defendant at 3:00 a.m. every morning and look around for contraband, and also allow him to follow the defendant everywhere, looking for contraband. Regardless of any possible constitutional concern, both conditions are too broad in the absence of any effort by the district court to explain why they are needed.

7804978-16108

FINDINGS OF FACT; CONCLUSIONS OF LAW AND ORDER HAND, Senior District Judge. This action is before the court on defendant’s motion for summary judgment (Tab 15). In her complaint, plaintiff alleges violations of Title VII of the Civil Rights Act of 1964, as amended by the Equal Employment Opportunity Act of 1972, 42 U.S.C. § 2000e et seq., and 42 U.S.C. §§ 1981 and 1983 for discriminating against her on the basis of her race, sex and/or retaliating against her for filing an EEOC complaint. For the reasons set forth below, the court concludes that no issues of material fact exist and that the defendant is entitled to judgment as a matter of law. FINDINGS OF FACT Upon consideration of defendant’s motion and plaintiffs response in opposition thereto and based upon the pleadings, exhibits, affidavits and other evidence of record, the court makes the following findings of fact: 1. In 1987, plaintiff Patricia L. Lee (Lee) became employed with the Mobile County Commission, through the Mobile County Personnel Board, as a security guard. As a security guard, Lee served as a bailiff for the County Commission meetings and generally patrolled the courthouse grounds. 2. On or about August 9, 1990, Lee resigned her merit system security guard position to accept a court security position as a “confidential employee” of the Presiding Judge of the Thirteenth Judicial Circuit, the Honorable Braxton L. Kittrell, Jr. This was a newly created position and Lee’s annual salary was to be $16,332.00. 3. At the time of Lee’s hiring as a “confidential employee” of Judge Kittrell, two other individuals were already employed as “confidential employees” in court security, Joel Singleton and AL. Whitfield. Singleton and Whitfield were hired by Judge Kittrell in such positions on April 9 and April 24, 1990, respectively. Singleton, Whitfield and Lee each started work at the same salary, namely $16,332.00. 4. In April, 1991, two other individuals, James L. Huey and Derek Norwood, were hired by Judge Kittrell as “confidential employees” in court security with starting salaries of $16,332,00. Approximately six months later, in October 1991, Huey was promoted to the position of head of court security with a corresponding raise in pay to $22,992.00. In October and November of 1991, Singleton, Whitfield and Lee each received raises to salaries of $17,965.00 and thus received the highest salaries of any “confidential Employee” other than Huey who was head of security. 5. In April, 1992, Huey and Norwood received a 5% merit increase which increased their salaries to $24,141.60 and $18,006.00, respectively. Neither Lee nor either Singleton or Whitfield, both black males, received any salary increase at this time. In October, 1992, all five of these “confidential employees” received a 5% cost of living raise. This raise resulted in Norwood receiving a $42.84 a year higher salary than Singleton, Whitfield and Lee. This salary discrepancy was brought to the attention of Judge Kittrell during the summer of 1993, whereupon it was equalized by letter dated September 13, 1993, For the entire period of time in which security officer Norwood received a higher salary than Singleton, Whitfield and Lee, the total salary discrepancy amounted to roughly $66.84. 6. During 1992, the court security positions were merged into the Community Corrections Center, an office created pursuant to Acts of Alabama, Act No. 91-647. This Act provided that the Presiding Circuit Judge of the Thirteenth Judicial Circuit was charged with the authority of employing and dismissing personnel necessary to carry out the provisions of the Act. Thus Judge Kittrell has the power to direct, supervise and fix salaries for all personnel under the Community Corrections Center, including court security officers. 7. At no time did the Mobile County Commission have or exercise any authority to hire, fire, demote, transfer or set any terms and conditions of employment for any “confidential employees” of the Community Corrections Center. At all times the authority granted by Act No. 91-647 was exercised solely by Judge Kittrell. 8. Upon the merger of court security into the Community Corrections Center, the job duties of all court security officers changed in that all court security officers were required at one time or another to man duty stations at both the courthouse and the Community Corrections Center. Shortly after the merger, at or about the time Robert J. Moore was appointed director of the Community Corrections Center, the job description for all court security officers was basically the same. 9. On or about March 15, 1993, shortly after Moore became director of the Community Corrections Center, the decision was made that all court security officers were to rotate through the separate duty stations. At no time did the Mobile County Commission make the decision to rotate court security officers or how such officers were to be rotated. Moreover, at no time did any member of the Mobile County Commission receive a copy of the court security officers rotation schedule. Between April, 1993, when rotation officially began, and July 1, 1994, all court security officers employed by Judge Kittrell rotated duty stations at least once. 10. At the time of the merger and the appointment of Moore as director of the Community Corrections Center by Judge Kittrell, court security had access to four vehicles plus a van for its use. The director and chief of security, because of their supervisory positions, had access to two of these vehicles to travel to and from work. The security officer assigned the duty of opening and closing the Community Corrections Center also had access to a vehicle to travel to and from work. During most relevant times, Norwood was the officer who opened and closed the center and thus had access to a vehicle. However, during the months of May and June, 1993, when Norwood was in training with the Prichard Police Academy, both Lee and Margaret Spencer were assigned to open and close the Center with accompanying access to either an automobile or the van for transportation to and from work. Finally, court security officer Warb Matthews had access to a County vehicle to travel to and from work because he served warrants and writs after hours. Lee has presented no evidence that she was treated differently than any other similarly situated employee with respect to the vehicles assigned to the Community Corrections Center. 11. On or about July 30, 1993, Lee was involved in a meeting with director Moore and chief of security Huey in Moore’s office at the Community Corrections Center. The discussions at this meeting concerned many, if not all, the items listed in Lee’s complaints to the EEOC. At no time before or after this meeting was Lee fired, demoted, transferred, suspended either with or without pay or did she receive any type of written reprimand. 12. On or about February 28, 1992, Lee completed the Alabama Peace Officers Standards and Ti'aining Course. Later in 1992, Judge Kittrell requested a special 5% merit increase for Lee based on her successful completion of this course. However, pursuant to long standing policy, no such special merit increase was approved for the Circuit Court budget. This policy of not paying special merit increases for receipt of specialized training was applied evenly across the board to all agencies and employees in Mobile County. Lee has presented no evidence that any other employee was treated any differently. 13. On at least one occasion during her employment as a court security officer, Lee failed to receive any compensatory time or credit for working overtime. On the occasion in question, both Lee and a black male security officer, Katonio Tricksey, failed to receive such overtime credit for work in Judge Johnstone’s courtroom because they neglected to follow the court security officer procedures regarding overtime. Specifically, they failed to comply with the requirement that they notify someone at the Community Corrections Center by phone or radio if it appeared they were going to have to work overtime. 14. To the extent Lee alleges that she and no other employee was ordered to remove personal items from the workplace, Lee has presented no evidence that any other employee maintained such personal items at the workplace and was thus treated any differently. CONCLUSIONS OF LAW 1. This court has jurisdiction over the parties and the subject matter pursuant to 28 U.S.C. §§ 1331 and 1343. 2. In order to succeed on her equal protection claim under § 1983, Lee must prove by a preponderance of the evidence that she was discriminated against because of her race or sex. See e.g., Grigsby v. Reynolds Metals Co., 821 F.2d 590, 595 (11th Cir.1987), citing, Nix v. WLCY Radio/Rahall Communications, 738 F.2d 1181, 1184 (11th Cir.1984). See also, Pilditch v. Board of Education of the City of Chicago, 3 F.3d 1113, 1116 (7th Cir.1993). In order to succeed against a governmental entity such as the Mobile County Commission, Lee must allege and prove that an agent of that entity violated her constitutional rights while acting under color of state law and was responsible for establishing final govermnental policy with respect to the particular activity in question. See e.g., Kubany v. School Board of Pinellas County, 818 F.Supp. 1504, 1507 (M.D.Fla.1993), citing, Arnold v. Board of Education of Escambia County, Alabama, 880 F.2d 305, 315-16 (11th Cir.1989). Lee must also allege and prove that the acts complained of were in furtherance of or amounted to an official policy or custom of the Mobile County Commission. Id. 3. Where there is no direct evidence of discrimination, as in the present case, Lee must make out a prima facie case by utilizing the McDonnellr-Douglas formula in connection with not only her Title VII claim but her § 1981 and § 1983 claims as well. See, Turnes v. AmSouth Bank, N.A., 36 F.3d 1057, 1060 (11th Cir.1994); Pilditch, 3 F.3d at 1116. Specifically, Lee must proffer sufficient evidence to prove: a. She is a member of a protected class; b. She suffered or received an adverse employment action or decision; e. A person outside the protected class did not receive the adverse employment action at issue; and d. The adverse employment action was causally related to Lee’s status as a member of the protected class. See e.g., Jones v. Firestone Tire and Rubber Co., Inc., 977 F.2d 527, 537-38 (11th Cir.1992); Pace v. Southern Railway System, 701 F.2d 1383, 1386 (11th Cir.1983); Prince v. United Parcel Service, 845 F.Supp. 835, 840 (M.D.Ala.1993); Peden v. Suwannee County School Board, 837 F.Supp. 1188 (M.D.Fla.1993). Only if Lee meets her burden, will the defendant be required to articulate a genuine, non-discriminatory reason for the action taken. See, St. Mary’s Honor Center v. Hicks, 509 U.S. 502, 113 S.Ct. 2742, 125 L.Ed.2d 416 (1993). This “exceedingly light” burden on the defendant, however, is one of production and not persuasion. See e.g., Smith v. Horner, 839 F.2d 1530, 1537 (11th Cir.1988). The ultimate burden remains on the plaintiff to prove the existence of purposeful discrimination by a preponderance of the evidence. St. Mary’s, 509 U.S. at 506-513, 113 S.Ct. at 2747-2750. See also, Earley v. Champion International Corp., 907 F.2d 1077, 1081 (11th Cir.1990); Jones v. Gerwens, 874 F.2d 1534, 1538-39 (11th Cir.1989). 4. If the defendant has articulated a legitimate, non-discriminatory reason for the action taken, the plaintiff must either establish that the articulated reason was merely a pretext for discrimination or that the alleged discriminatory reasons nonetheless motivated the defendant to take the action. Id. See also, Elrod v. Sears, Roebuck and Co., 939 F.2d 1466, 1470 (11th Cir.1991); Goldstein v. Manhattan Industries, Inc., 758 F.2d 1435, 1445 (11th Cir.1985). The Supreme Court has recently held that, even if the plaintiff shows that the defendant’s legitimate, nondiscriminatory reason is proven to be a pretext, this is not sufficient for plaintiff to prevail but may support an inference that the real reason for the employment action is discriminatory. St. Mary’s, 509 U.S. at 510-511, 113 S.Ct. at 2749. See also, Pilditch, 3 F.3d at 1116. 5. Assuming Lee may state a claim for retaliation under § 1983, the same McDonnell-Douglas formula is applicable to such claim as well as to Lee’s Title VII claim. Turnes, 36 F.3d at 1060; Pilditch, 3 F.3d at 1116. In order to establish a prima facie ease of retaliation, whether under Title VII or § 1983, Lee must establish: 1) that she engaged in a statutorily protected activity; 2) that she suffered an adverse employment action; and 3) that there is some causal connection between the two events. See e.g., Goldsmith v. City of Atmore, 996 F.2d 1155, 1163 (11th Cir.1993); Clemons v. Hardee County School Board, 848 F.Supp. 1535, 1538 (N.D.Fla.1994). 6. Under Title VII, Lee may only prevail against an “employer” who intentionally engaged in or is intentionally engaging in an unlawful employment practice. Goldsmith, 996 F.2d at 1162. For Title VII purposes, such an employer must be an individual or entity who extends a certain degree of control over the plaintiff. See e.g., Magnuson v. Peak Technical Services, Inc., 808 F.Supp. 500, 507 (E.D.Va.1992). A determination of whether a defendant is an “employer” subject to liability under Title VII requires an examination of defendant’s role with respect to the right to hire, fire, transfer, promote, discipline, set the terms, conditions and privileges of employment, train and pay the plaintiff. See e.g., Ryals v. Mobile County Sheriff’s Department, 839 F.Supp. 25, 26 (S.D.Ala.1993) (“Factors in determining whether separate entities exercise indicia of control and are thus joint employers includes whether the separate entities share or control certain aspects of the employee’s employment such as (1) the authority to hire, transfer, promote, discipline or discharge; (2) the authority to establish work schedules or direct work assignments; or (3) the obligation to pay or the duty to train the employee.”); Magnuson, 808 F.Supp. at 507 (“In order to be subject to liability under Title VII, a defendant must (1) fall within Title VU’s statutory definition of “employer,” and (2) have exercised substantial control over significant aspects of the compensation, terms, conditions, or privileges of plaintiff’s employment.”); Foster v. Township of Hillside, 780 F.Supp 1026, 1038, n. 4 (D.N.J. 1992). Of these factors, the extent of the defendant’s right to control the means and manner of the workers’ performance is the most important. Magnuson, 808 F.Supp. at 509. Simply because an entity such as the Mobile County Commission is required under state law to pay the salaries of employees does not mean that such entity is the employer of those employees for purposes of liability under Title VII. Ryals, 889 F.Supp. at 26 (Mere fact that the County Commission cut the deputies’ paychecks from funds annually budgeted for the Sheriff’s Department did not mean that the Commission was the deputies’ employer for Title VII purposes.); Hall v. Delaware Council on Crime & Justice, 780 F.Supp. 241, 245 (D.Del.1992) (“[T]he funding of [any] non-profit organizations by the United Way does not justify the conclusion that the organizations are a single employer for the purposes of Title VII.”); Warren v. Stone, 751 F.Supp. 1302, 1304 (M.D.Ill.1990) (‘While Cook County is required to pay the salaries of employees of the Public Defender, ... the County serves no other role in their employment.”). 7. Lee has presented no evidence to establish that the Mobile County Commission is her “employer” as that term is defined under Title VII. The Mobile County Commission had no authority to hire, fire, transfer, promote, discipline, set terms, conditions and privileges of employment, or train Lee. The mere duty to pay Lee’s salary through the budgeting of funds for the Circuit Court does not mean that Lee is deemed an employee of the Mobile County Commission for liability purposes under Title VII.

9190079-10495

MEMORANDUM LEGG, Chief Judge. On August 2, 2004, the Court issued a brief Order denying Defendant Tysheem Pore’s (“Pore”) Motion to Suppress Evidence. The Court now writes to further explain its ruling. I. BACKGROUND This case involves a thirteen-minute traffic stop on Route 95 in Cecil County, Maryland. On August 25, 2003, Trooper Howard Kennard (“Kennard”) of the Maryland State Police observed Pore make an unsafe lane change, among other traffic violations. When Kennard activated his siren, the video camera mounted to his patrol car automatically began recording. Pore’s minivan stopped on the right hand shoulder of the highway and Ken-nard parked behind it. Kennard walked up to the passenger’s side of the van and informed Pore that he had been driving unsafely. In a courteous tone, Kennard asked Pore for his driver’s license and vehicle registration. As Pore, who was highly nervous, struggled to retrieve his Virginia driver’s license from his wallet, Kennard noticed a New York license. He asked Pore for that document as well. As he spoke with Pore, Kennard smelled a strong odor of air freshener coming from inside Pore’s van. Kennard returned to his patrol car and began “calling in” Pore’s information. His suspicions raised, Kennard requested a K-9 unit to perform a drug scan. Sergeant Michael Lewis (“Lewis”) of the Maryland State Police, who was Kennard’s supervisor, overheard the call. Because he was nearby, Lewis decided to provide assistance. The videotape shows Lewis briefly speaking with Pore. While Kennard was completing his check on Pore’s documents, Trooper George Butler of the Maryland State Police arrived with Lobo, a certified drug-detection dog. Without speaking to Butler, Kennard gestured with his hand, signaling Butler to conduct a scan. Lobo alerted twice, at the rear end and at the front passenger side of the van. The Maryland State Police officers found cocaine, crack cocaine, heroin, and a handgun in a secret compartment in Pore’s car. Pore moved to suppress the evidence. On July 9, 2004, the Court held an eviden-tiary hearing. Because of the unavailability of witnesses, the hearing was continued to July 27th and 29th, with oral argument on the 30th During the hearing, the Government called the following witnesses: (i) Kennard, who was also the arresting officer; (ii) Lewis, who has considerable knowledge and training in drug transportation, traffic stops, and secret compartments; and (iii)Butler, who, at the time of the stop, had trained and worked with Lobo for approximately one year. Pore did not testify, but he called a Maryland State Police K-9 officer, Trooper Colleen McCurdy. Pore also introduced into evidence several factual stipulations and a number of other exhibits. II. ANALYSIS There are two issues: (i) whether Trooper Kennard had reasonable articula-ble suspicion to stop Pore; and (ii) whether there was probable cause to search Pore’s van. The Court finds that Kennard validly stopped Pore for traffic violations, including speeding, following too closely, and an unsafe lane change. Once Pore had pulled to the side of the road, Kennard had a reasonable length of time in which to conduct a routine traffic stop. See United States v. Rusher, 966 F.2d 868, 876 (4th Cir.1992) (finding that requesting a driver’s license and vehicle registration, running a computer check, and issuing a citation falls within the proper investigative scope of a routine traffic stop). Kennard was in the process of calling in Pore’s Virginia driver’s license and New York license (which was, in fact, a suspended learner’s permit), when his observations established probable cause to conduct a search of Pobe’s van for drugs. Pore was highly nervous. He was breathing heavily and his muscles were tense. Because Pore’s hands were shaking badly, Pore used his teeth to extract his license from a plastic sleeve in his wallet. Ken-nard’s observations were corroborated by Lewis, who testified that Pore’s chest was palpitating and his right carotid artery was visibly pulsating. Kennard testimony that he smelled the strong odor of air freshener is corroborated by pictures showing pine tree shaped air fresheners hanging from the rear view mirror of Pore’s van. Lewis also testified that he smelled a strong air freshener odor when he spoke with Pore. After Kennard called for a K-9 scan, Trooper Butler and Lobo promptly arrived. Butler testified that the dog alerted, and the tape shows Butler rewarding Lobo by throwing Lobo his toy, rubbing Lobo’s ears and head, and praising the dog. The defense mounted a spirited attack on the probative value of Lobo’s alert. Pore challenged the reliability of drug sniffing dogs in general and Lobo in particular, and sought to discredit Butler’s testimony that Lobo had, in fact, alerted. While resourceful, this attack is unavailing. Lobo is a certified and well-trained K-9 capable of detecting even a faint odor of drugs. An alert ■ does not necessarily mean that drugs are present in a car, the dog will alert to the residual odor that remains for a time after drugs have been removed. An alert is, nonetheless, a significant factor in the probable cause equation. Lobo’s scan of the car and his alert are not plain to see from the video tape. The camera’s view of Lobo was partially obscured by the front of the patrol car. The defense interprets the tape as showing that Butler either mistook Lobo’s equivocal behavior as an alert, or that Butler fabricated an alert as a pretext for searching Pore’s car. The Court rejects these contentions. At the time of the instant scan, Butler and Lobo were an established team, and they had trained and worked together for a year. Butler sent Lobo around the car twice to give Lobo an opportunity to make a careful observation. It is improbable that Butler would misinterpret Lobo’s behavior. Butler also lavishly praised and rewarded Lobo for alerting. It is unlikely that Butler would have been willing to subvert Lobo’s training and performance by rewarding him when no reward was due. It is also unlikely that Butler would have been willing to confuse Lobo in order to search a car that, the dog, despite his powerful sense of smell, had given a clean bill of health. In deciding suppression motions, a Court must look at the facts as they existed before the drugs were discovered. The subsequent discovery of drugs does not validate a law enforcement officer’s mere hunch. In this case, however, the quantity of drugs found in the car corroborates Butler’s testimony that Lobo did, in fact, alert. In the same vein, a witness’s testimony that he smelled smoke is corroborated by evidence of fire. Law enforcement authorities know that Route 95 is a major artery for smuggling drugs up and down the east coast. State Troopers responsible for attempting to stem this flow are not permitted under our Constitution to stop and search cars randomly or on the basis of a hunch. The courts have, however, recognized that certain indicators may, when interpreted together, establish probable cause to justify a search or an arrest. In this case, Pore’s extreme nervousness, the strong odor of air freshener, and Lobo’s alert more than meet the constitutional threshold to justify a search. Accordingly, the Court DENIED Pore’s motion. . There is a videotape record of the encounter, with audio provided by a microphone attached to Kennard's belt. The audio recording, however, ceased after Kennard's initial conversation with Pore. At the hearing, Kennard explained that when he returned to his vehicle and sat down, he must have accidentally turned off the microphone. . There is no audio recording of Lewis’s conversation with Pore because the microphone attached to Lewis's belt did not transmit to Kennard's patrol car video system. . Pore argues that Kennard caused an unnecessary delay in checking Pore's information, resulting in an impermissible second stop. The Court disagrees. Kennard testified that regulations required him to document all traffic stops by either issuing a warning or a citation. At the time he decided to search Pore’s car, Kennard was in the process of writing and issuing a warning to Pore for unsafe driving. The search and arrest occurred within the time frame of a routine traffic stop, so this case does not involve a "second stop” problem. . As the videotape demonstrates, Kennard was friendly and non-confrontational when he spoke to Pore. Kennard is also heard commenting on Pore’s difficulty in extracting his license from his wallet. . Drug couriers use air freshener and other chemical odors in an effort to throw off the drug dogs. The defense disputes the strength of the odor' but does not deny the presence of the air freshener. . Pore does not, nor could he, argue that the canine scan amounts a search. United States v. Jeffus, 22 F.3d 554, 557 (4th Cir.1994) ("Having the trained dog sniff the perimeter of [defendant’s] vehicle, which had been lawfully stopped in a public place, [does] not of itself constitute a search.”). . During oral argument, defense counsel suggested that evidence shows narcotics were found only half the number of times Lobo alerted during a one year period. Over the government’s objection, defense counsel introduced a binder containing field reports on Lobo’s scans. (Def.Exs.6-8.) There was no testimony concerning these reports, and no explanation as to how they should be read or interpreted. The reports, therefore, have scant evidentiary value, particularly when a trained dog’s sense of smell is powerful enough to detect a lingering odor of narcotics, even when the drugs are gone or there is no visible residue. .During this period, Butler and Lobo worked together on roughly a hundred drug scans. The Court credits Butler’s testimony regarding their close relationship and Lobo’s reliability. In its Order dated August 2, 2004, the Court stated that Butler and Lobo had worked together for four years, which is incorrect. Rather, Butler had been on the police force for over four years at the time of the search. This error, however, has no bearing on the Court’s finding that Butler is sufficiently familiar with Lobo to recognize when his dog detects drugs. . There was no communication between the two troopers beyond Kennard’s hand gesture requesting Butler to conduct a drug scan. Butler's lack of information about Kennard’s suspicions undercuts the defense's theory that Butler would have been motivated to fabricate a reason to search Pore's car.

12404635-14182

OPINION ROTH, Circuit Judge I. Introduction Robert Russell Spence, Jr., was a key figure in a large cocaine distribution network. He received shipments of cocaine from California, and he passed them on to distributors in Pennsylvania. In 2014, he was tried and convicted of conspiracy to distribute five kilograms or more of cocaine and conspiracy to engage in money laundering. He now appeals on four grounds. Because we find no merit in any of Spence’s arguments, we will affirm the judgment of the District Court. II. Background The essential facts are not in dispute. From about 2000 to 2010, interrupted only by a relatively short term in prison, Spence was a central player in a cocaine distribution scheme. In this scheme, various individuals transported cocaine from California to Spence in western Pennsylvania; in exchange, Spence arranged for money to be sent back to California. Spence, in turn, sold the cocaine to a middleman who resold it. At the same time, Spence attempted to run several legitimate businesses, including a high-end car rental agency. In May 2009, Spence rented a warehouse at 621 Plum Street in Oakmont, Pennsylvania. Inside, he stored many items related to the cocaine operation, including a van registered to Cortorra Brownfield, with whom Spence ran a real estate business. On February 9, 2010, pursuant to a search warrant, federal agents raided the warehouse. The search warrant originally included authorization to search “any abandoned or parked vehicles within the property, or "within its curtilage,” but that phrase had been crossed out and initialed by a federal agent at the direction of a ’ magistrate judge. Nonetheless, the agents conducted a protective sweep of the van. When they entered it, they saw drug paraphernalia in plain view. After this raid, Spence became aware that he was being investigated. Around this time, he recorded several phone calls between himself and other individuals involved in the drug trade. On March 31, 2010, Spence was charged by way of complaint, and then on April 28, 2010, charged in a one-count indictment with possession with intent to distribute five kilograms or more of cocaine in violation of 21 U.S.C. §§ 841(a)(1) and 841(b)(1)(A)(ii). On March 29, 2012, he was charged in a second superseding indictment with (1) conspiracy to distribute and possession with intent to distribute five kilograms or more of cocaine, in violation of 21 U.S.C. .§ 846; (2) conspiracy to engage in money laundering involving proceeds of the drug conspiracy, in violation of 18 U.S.C. § 1956(h); and (3) possession with intent to distribute five kilograms or more of cocaine, in violation of 21 U.S.C. §§ 841(a)(1) and 841(b)(1)(A)(ii). Spence filed over one hundred motions, one of which was a motion to suppress the evidence obtained in the search of the van within the warehouse at 621 Plum Street. After a suppression hearing, the District Court ruled that he had no standing to challenge the search of the van, because he did not own it. As the case proceeded, Spence was appointed counsel. He then decided to proceed pro se at trial, and his appointed counsel remained as standby counsel. At the trial, during Spence’s cross-examination of the prosecution’s first witness, the District Court expressed concern about Spence’s questioning. The District Court described the questions as “marginally relevant,” “repetitive,” “confusing,” and “problematic.” The District Court then decided to limit the length of Spence’s cross-examination to “equal the time given for direct examination.” Spence contends that the District Court’s decision was not fair. During trial, the government played a recording that Spence had made of one of his phone calls. The government had obtained the recording at the time of Spence’s arrest. When Spence later sought to play another such recording, the prosecutor opined that the recordings were made in violation of Pennsylvania’s Wiretap Act — because only one side of the conversation, Spence, consented to the recording — but that they were not made in violation of federal law and, thus, were admissible. Spence, upon hearing that making and playing the recordings violated state law, moved for a mistrial because the prosecution had already played one such recording. The motion was denied. [App. 2273-2277, 2282.] After a two-week trial, the jury returned a verdict of guilty on the first two counts, namely conspiracy to distribute five kilograms or more of cocaine and conspiracy to engage in money laundering. The jury deadlocked on the third count, possession with intent to distribute five kilograms or more of cocaine. For sentencing, the United States Probation Office conducted a presentence investigation and prepared a presentence report. The report calculated Spence’s total offense level as 48, higher than the maximum level on the sentencing table. Thus, his total offense level was reduced to the maximum of 43, for which the Sentencing Guidelines recommend a sentence of life imprisonment. Spence filed several objections to the presentence report, none of which are relevant here, and the District Court rejected them. On June 11, 2015, the District Court held a sentencing hearing, at which Spence asked for leniency. The District Court sentenced him to twenty years’ imprisonment, varying downward from the range recommended by the Sentencing Guidelines for several reasons. One reason was to avoid unwarranted sentencing disparities between Spence and other defendants who were part of the same cocaine distribution network. Spence did not object to the sentence when it was announced. Spence appealed. He raises four issues on appeal: (1) his motion to suppress the evidence from the search of the van should have been granted because the search was in violation of the Fourth Amendment, (2) the time limits placed on- his cross-examination violated his Sixth Amendment Confrontation Clause rights, (3) his motion for a mistrial should have been granted, and (4) his sentence was unreasonable. III. Discussion A. Standard of Review As to the first issue, “we review a district court’s denial of the motion to suppress for clear error as to the underlying facts, but exercise plenary review as to its legality in light of the court’s properly found facts.” As to the third issue, we review for plain error. As to the second and fourth issues, Spence argues that the appropriate standard of review is abuse of discretion, while the government argues that the standard of review is plain error because the Spence did not properly raise objections in the District Court. We need not resolve this dispute, because none of the District Court’s decisions was an abuse of discretion, much less plain error. B. Search of the Van Spence argues that the District Court erred in not granting his suppression motion regarding the evidence obtained from the search of the van because he claims that the evidence was obtained in violation of the Fourth Amendment. The government responds that the District Court did not err, but even if it did, any error was harmless. In general, “[a]ny error, defect, irregularity, or variance that does not affect substantial rights must be disregarded.” If we determine, beyond a reasonable doubt, that “the error complained of did not contribute to the verdict obtained[,]” then the error was harmless and the conviction should be affirmed. Here, no evidence from the search of the van was introduced at trial. Hence, we can determine beyond a reasonable doubt that the trial would have been identical if the suppression motion had been granted. Consequently, even assuming arguendo that the District Court had erred in denying the suppression motion, the error did not contribute to the verdict obtained and was harmless. C. Time Restriction on Cross-Examination Spence argues that the District Court’s time restriction on his cross-examination — limiting him to the same time as that used by the government on direct examination — was improper under the Confrontation Clause of the Sixth Amendment. That Clause provides that “in all criminal prosecutions, the accused shall enjoy the right to ... be confronted with the witnesses against him ....” The right to confrontation includes a right to cross-examine witnesses. However, “the right to confront and to cross-examine is not absolute and may, in appropriate cases, bow to accommodate other legitimate interests in the criminal trial process.” Specifically, “[t]he right of cross-examination is tempered by policy considerations relating to unfair prejudice, confusion of triable issues, undue delay, presentation of cumula tive evidence, and concern that the jury-may be misled.” These policy considerations were the very concerns that drove the District Court to impose its time restriction on Spence. The District Judge said to Spence, before imposing the time restriction, “[Y]our cross-examination[ ] is taking an excessive amount of time. I find that ... many of [your questions] are marginally relevant, ... some ... are repetitive, I think they are confusing, and they are just problematic.” The judge then said, “My main concern is the time factor, I’m going to manage my docket by limiting the length of your cross-examination to equal the time given for direct examination.” Based on these statements, we conclude that the District Court was considering the proper factors in making this decision. Furthermore, the District Court’s decision was amply supported by the record. Up to that point, Spence had taken up a large amount of time asking confusing, repetitive, or only marginally relevant questions. For these reasons, the District Court’s decision was not an abuse of discretion. Spence argues that, as a pro se litigant, he should have been given more time than was the government because his expertise is less than that of a prosecutor. He argues that the District Court should have made an individualized determination for each witness whether Spence had been given enough time for a reasonable cross-examination, and it should have cut off questioning only when it decided that Spence’s questions had reached the point of diminishing returns. However, even assuming arguendo that Spence is correct that the ■District Court so erred, we conclude that the error was harmless. Spence has not suggested any potentially fruitful line of questioning that he was unable to pursue due to the time limits, and we cannot imagine any. D. Motion for a Mistrial Spence argues that his motion for a mistrial based on the government’s playing his recording of a phone call should have been granted. He claims that the government failed to lay a proper foundation for the admissibility of the recording because if the recording was made for the purpose of committing a crime, it would be inadmissible and the government never introduced evidence regarding the purpose of the recording. He further argues that permitting the government to play, an inadmissible recording is so prejudicial that it deprived him of his fundamental right to a fair trial and therefore warranted a mistrial. An objection to the admission of evidence for lack of foundation ordinarily must be made when the evidence is initially offered because a defendant who fails to object at the time the evidence is offered “deprive[s] the Government of any opportunity to lay a proper foundation.” Here, Spence objected to the lack of foundation only on appeal. At this point, “the objection is waived and we will review the admission of evidence only for plain error.” There is no plain error here. Even assuming arguendo that the government should have laid a foundation for the admission of the recording, any error was harmless because Spence told the jury that he made the recording for a lawful purpose. E. Reasonableness of Sentence Spence argues that his sentence is unreasonable because other members of the drug trafficking conspiracy who may have been more culpable were given equal sentences, and those who may have been equally culpable were given lesser sentences, We review sentences for reasonableness. Procedurally, a sentencing court must, among other things, consider the relevant statutory factors, which include “the need to avoid unwarranted sentence disparities among defendants with similar records who have been found guilty of similar conduct ....” The District Court specifically cited this factor as one it considered in formulating its sentence. Although the other defendants who took part in the conspiracy were sentenced to equal or lesser terms of imprisonment, the other defendants pleaded guilty. A court may “ex-tendi ] leniency in exchange for a plea of guilty and ... not extendi ] leniency to those who have not demonstrated those attributes on which leniency is based.” Even if the other conspirators were identically situated to Spence, their guilty pleas could justify a difference in sentences. Thus, we conclude that the District Court adequately considered the disparity factor. IV. Conclusion For the foregoing reasons, we will affirm the judgment of the District Court. This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not constitute binding precedent. . United States v. Wilson, 413 F.3d 382, 385 (3d Cir. 2005) (quoting United States v. Givan, 320 F.3d 452, 458 (3d Cir. 2003)) (internal quotation marks and brackets omitted). . See Herring v. United States, 555 U.S. 135, 144, 129 S.Ct. 695, 172 L.Ed.2d 496 (2009) (holding that evidence obtained in flagrant or deliberate violation of the Fourth Amendment must be suppressed). . Fed. R. Crim. P. 52(a). . United States v. Stevenson, 832 F.3d 412, 427 (3d Cir. 2016) (quoting Chapman v. California, 386 U.S. 18, 24, 87 S.Ct. 824, 17 L.Ed.2d 705 (1967)) (internal quotation marks omitted). . U.S. Const. amend. VI. . Bruton v. United States, 391 U.S. 123, 126, 88 S.Ct. 1620, 20 L.Ed.2d 476 (1968) (" ‘[T]he right of cross-examination is included in the right of an accused in a criminal case to confront the witnesses against him' secured by the Sixth Amendment ....”) (quoting Pointer v. State of Texas, 380 U.S. 400, 404, 85 S.Ct. 1065, 13 L.Ed.2d 923 (1965)).

11221061-18846

MARCUS, Circuit Judge: This is an appeal of a district court order granting judgment as a matter of law in favor of defendants, Officers Clif ford D. Jackson, Roger T. Fulmer, and Thomas H. Kendricks, of the Summerville, Georgia Police Department, at the close of plaintiff Howard V. Slicker, Jr.’s civil rights case prosecuted under 42 U.S.C. § 198S. In essence, Slicker alleged that the officers violated his rights under the Fourth, Fifth, and Fourteenth Amendments of the United States Constitution by subjecting him to an unlawful seizure when they placed him under arrest and by using excessive force in the process of arresting him. The central issue on appeal is whether the district court erred in entering judgment as a matter of law on the grounds that Slicker failed to produce evidence that he suffered a monetary loss as a result of the officers’ conduct. Because a § 1988 plaintiff alleging excessive force may receive compensatory damages for such things as physical pain and suffering and mental and emotional anguish, and because a § 1988 plaintiff whose constitutional rights are violated is entitled to receive nominal damages even if he fails to produce any evidence of compensatory damages, we hold that the district court erred in granting judgment as a matter of law, we vacate the judgment, and remand for further proceedings consistent with this opinion. I. The procedural history and relevant facts are straightforward. Slicker brought suit against the officers based on an incident that occurred on August 2, 1995. On this date, Slicker accompanied his friend, Patricia Snead Montgomery, to the Sum-merville Police Department to inquire as to why Ray Teague, against whom Montgomery had filed a criminal complaint, alleging he had illegally entered her home, had been released on bond. At trial, Slicker testified that Officer Jackson refused to tell him why Teague had been released. He also testified that as he was leaving the police station building, Officer Kendricks arrested him for disorderly conduct, at which time the officers slammed his head against the pavement and knocked him unconscious. Specifically, he testified in these words: A: I was leaving the city building, the police station and Kendricks said I was under arrest for disorderly conduct. Q: Then what happened? A: He put the handcuffs on my arm and tried to put my arm over my head which I can’t do. I was like let me put them behind my back. And he grabbed ahold of my head and Fulmer had the cuffs on my hands and he put it behind my back and Kendricks grabbed ahold of the top of my head up here and slammed my head in the pavement. Q: What happened next? A: They hit my head on the pavement and I was out. Then I came to, felt like I was in la-la land and I felt two blows to the top of my head. I was worrying about please don’t hurt my neck and Kendricks said this is tough shit. Q: After you were down on the ground, what happened next? A: My hands were cuffed and they picked me up, laid me on the hood of the car and I was having problems I couldn’t feel my arms. So I slid off to the side of the car so it would relax the back of my neck and that’s where I laid handcuffed facing up. Q: Were you kicked? A: I was kicked in the leg and kicked in the back and I ended up — kicked in the back of the head too because I had too [sic] big large knots. Q: Were you still in handcuffs? A: Yes, sir. Q: When were you first placed in handcuffs? A: When he said I was arrested for disorderly conduct. Q: Did the handcuffs ever come off you during the time they were beating you? A: No, sir. Slicker said that after the officers dragged him inside the police station and took off his handcuffs, he was treated at a hospital emergency room, although he did not offer into evidence any medical bills. He also testified that he sought medical treatment after he left the emergency room. Slicker did not claim that he missed work or that he incurred any other direct monetary loss as a result of the officers’ conduct. Ms. Patricia Snead Montgomery’s trial testimony amplified the plaintiffs account. She said that Officer Jackson asked Slicker to leave the police station because the matter did not involve him. She added that as Slicker left the building, Officer Jackson went out after him and that Officers Fulmer and Kendricks were also out- ' side. Ms. Montgomery testified about the critical encounter in these terms: Q: Then what happened? A: That’s when Howard was placed on the hood of the patrol car and handcuffed. Q: Who placed him on the hood of the car? A: Officer Jackson. Q: How did he place him? A: Grabbed him from behind and pushed on the hood of the car and handcuffed him. Q: Did Howard struggle? A: Not that I recall. Q: Could you see? A: Yes Q: Didn’t see him struggle? A: No. Q: Then what happened? A: Howard went limp. He kind of slithered off the hood of the patrol car onto the ground. That’s when I saw Officer Jackson grab Howard from behind, back here and what appeared to [sic] he was beating his head- on the ground and the other two officers looked as though they were kicking at Howard’s ribs or in that general area. Q: Did it appear as if his right hand had a clump of Howard’s hair in his hand? A: I couldn’t say. I just know he had him like this. I won’t say clump. He had his hand in Howard’s hair holding it. Q: And was he using it to strike Howard’s head on the pavement? A: It appeared to me that way, yes. Q: How many times, did Officer Jackson strike Howard’s head to the ground that you could see? A: I saw his head hit the ground approximately two to three times. Q: What were the other officers — what were the other two officers doing at that time? A: They were to the front of Howard. Wfiiat appeared to me they were kicking at his rib cage. I was more to the back of Mr. Jackson and to Howard, and I was seeing it from not a clear, as clear a view, but it appeared they were kicking his rib cage. Q:- Both of the officers looked to be kicking? A: Yes. Q: They looked to be kicking in the direction of Howard? A: Yes. Q: Was Howard handcuffed the whole time? A: Yes, he was. Although she said that she never saw the officers beat him on the head, she testified that she knew that they had because she saw the knots on his head that resulted from the beating. Several minutes later, the officers brought Slicker inside and an ambulance was called. According to Montgomery, Slicker’s eyes were open but he had a starry-eyed look and was unresponsive. Slicker was taken off on a stretcher to the hospital. At the close of Slicker’s case, the officers moved for judgment as a matter of law on the grounds that they were entitled to qualified immunity and, in the alternative, because Slicker failed to present any evidence of damages. The district court found that the officers were not entitled to qualified immunity because Slicker presented enough evidence to raise a question of fact as to whether the officers used excessive force in arresting Slicker. However, the court entered judgment as a matter of law in favor of the officers because it found that Slicker had failed to present any evidence in support of his claim for damages. Specifically, the district court held that under Carey v. Piphus, 435 U.S. 247, 98 S.Ct. 1042, 55 L.Ed.2d 252 (1978), Slicker was required to prove actual injury in order to be entitled to compensatory damages. Moreover, the court observed that under Memphis Community School District v. Stachura, 477 U.S. 299, 106 S.Ct. 2537, 91 L.Ed.2d 249 (1986), compensatory damages may not be awarded based on the “abstract value” or “importance” of constitutional rights. Finally, the court noted that punitive damages may be awarded only where a plaintiff shows that there are aggravating circumstances such as reckless indifference, ill will, or malice. The district court concluded that because Slicker did not present any evidence that he suffered a monetary loss in the form of “medical bills,” “missed work,” or “lost wages,” and because he did not present any evidence of aggravating circumstances permitting the award of punitive damages, the officers were entitled to judgment as a matter of law. II. We review de novo a district court’s grant of judgment as a matter of law under Fed.R.Civ.P. 50, applying the same standards as the district court. Morris v. Crow, 117 F.3d 449, 455 (11th Cir.1997). In evaluating a defendant’s Rule 50 motion, made at the close of the plaintiffs case, we consider all of the evidence in a light most favorable to the plaintiff and grant the plaintiff the benefit of all reasonable inferences. We may affirm a judgment as a matter of law only if the facts and inferences “ ‘point so overwhelmingly in favor of the movant ... that reasonable people could not arrive at a contrary verdict.’ ” Bogle v. Orange County Board of County Commissioners, 162 F.3d 653, 656 (11th Cir.1998)(quoting Richardson v. Leeds Police Dep’t, 71 F.3d 801, 805 (11th Cir.1995)). In finding that Slicker was required to present evidence of monetary loss in the form of medical bills, missed work, or lost income, we think the district court misapprehended the “actual injury” requirement set forth in Carey v. Piphus and Memphis Community School District v. Stachura. In both of these cases the Supreme Court held that compensatory damages under § 1983 may be awarded only based on actual injuries caused by the defendant and cannot be presumed or based on the abstract value of the constitutional rights that the defendant violated. Carey, 435 U.S. at 264, 98 S.Ct. at 1052, Stachura, 477 U.S. at 309-10, 106 S.Ct. at 2544. The Court did not hold, however, that a § 1983 plaintiff can only satisfy the “actual injury” requirement through evidence of direct monetary loss. In fact, the Court specifically found that compensatory damages may include more than out-of-pocket loss and other monetary harms. Carey, 435 U.S. at 264, 98 S.Ct. at 1052; Stachura, 477 U.S. at 307, 106 S.Ct. at 2543. Moreover, the Supreme Court has held that in the absence of actual injury entitling the plaintiff to compensatory damages, a § 1983 plaintiff whose constitutional rights are violated by the defendant is entitled to nominal damages. Carey, 435 U.S. at 266-67, 98 S.Ct. at 1054, Stachura, 477 U.S. at 308, n. 11, 106 S.Ct. at 2543, n. 11. We explicate the facts and holdings surrounding Carey and Stachura to illustrate the point. Carey involved two consolidated suits by students seeking damages and other relief against school board members who allegedly violated their procedural due process rights. One of the students had been suspended for smoking marijuana on school property and the other was suspended for violating a school rule prohibiting male students from wearing earrings. The district court held that the students were not entitled to damages because the students failed to offer any evidence “to quantify their damages, and the record is completely devoid of any evidence which could even form the basis of a speculative inference measuring the extent of their injuries.” Carey, 435 U.S. at 251-52, 98 S.Ct. at 1046. On appeal, the Seventh Circuit reversed, holding that even if the suspensions were ultimately justified, the plaintiffs would be entitled to recover substantial nonpunitive damages for the denial of procedural due process, even though they failed to present proof of actual injury. The Supreme Court reversed the Circuit Court, holding that a plaintiff alleging that his procedural due process rights were violated is only entitled to compensatory damages based on actual injury caused by the defendant and that damages cannot be presumed based on the inherent value of the right that was violated. The Court explained that the basic purpose of § 1983 damages is “to compensate persons for injuries that are caused by the deprivation of constitutional rights” and that our conception of damages drawn from tort law is often helpful in awarding damages in § 1983 cases. Carey, 435 U.S. at 253-54, 98 S.Ct. at 1047. It rejected the plaintiffs’ argument that because the denial of a “feeling of just treatment” inherently gives rise to mental and emotional distress, they should not have to show actual damages. Id. at 260-61, 98 S.Ct. at 1051. The Court noted, however, that damages may be based on demonstrable mental and emotional distress resulting from the deprivation of due process. Id. at 264, 98 S.Ct. at 1052. Finally, the Supreme Court found that in the absence of evidence of actual injury, the plaintiffs were entitled to nominal damages. 435 U.S. at 266-67, 98 S.Ct. at 1053-54. In Stachura, a tenured seventh-grade school teacher brought suit under § 1983 against the school district alleging that his First and Fourteenth Amendment rights were violated when he was suspended for teaching a unit on human reproduction. At the close of trial, the district court instructed the jury that if it found the defendants liable, it should award sufficient damages to compensate Stachura for his injuries, and that it could also award punitive damages. In addition, the court charged that damages could be awarded based on the value or importance of the constitutional rights that were violated. The Supreme Court held that the district court’s instruction was erroneous under the rule it had set forth in Carey that § 1983 damages should be based on actual injuries suffered and that the abstract value of a constitutional right may not form the basis for § 1983 damages. Stachura, 477 U.S. at 310, 106 S.Ct. at 2544-45. The Court explained that if juries were allowed to award damages based on the “value” of constitutional rights, “[sjuch damages would be too uncertain to be of any great value to plaintiffs, and would inject caprice into determinations of damages in § 1983 cases.” Stachura, 477 U.S. at 310, 106 S.Ct. at 2544-45. Carey and Stachura plainly require that compensatory damages in a § 1983 suit be based on actual injury caused by the defendant rather than on the “abstract value” of the constitutional rights that may have been violated. Simply put, this means that if Slicker prevails on his claim that the officers violated his constitutional rights, he may receive compensatory damages only for actual injuries that were caused by the defendants’ illegal conduct and not based on the abstract value of Ms right under the Fourth and Fourteenth Amendments to be free from the use of excessive force. Contrary to the district court’s order, however, neither Carey nor Stachura limits proof of actual injury, and compensatory damages based on actual injury, to such things as medical expenses, missed work, and lost income. Instead, the Supreme Court expressly recognized that compensatory damages may be awarded once actual injury is shown despite the fact that the monetary value of the injury is difficult to calculate. Stachura, 477 U.S. at 307, 106 S.Ct. at 2543. Indeed, it is by now well settled that compensatory damages may be awarded based on physical pain and suffering caused by a defendant’s use of excessive force, apart from any damages based on monetary loss. See Atkins v. New York City, 143 F.3d 100, 104 (2d Cir.1998)(hold-ing that “[a] beating severe enough to leave marks is sufficient proof of a com-pensable injury.”); Haywood v. Koehler, 78 F.3d 101, 105 n. 2 (2d Cir.1996)(holding that if prisoner was assaulted in his cell in an excessive use of force, such an assault could warrant some compensatory damages, at least for pain and suffering, even if no laceration or other observable injuries resulted). Slicker presented evidence, if credited, that he was kicked in the ribs and beaten on his head' by the officers, that he received two knots on his head, was knocked unconscious, and sought medical attention as a result of excessive force. From this evidence, a jury could have awarded Slicker compensatory damages for pain and suffering without proof of medical bills, missed work, or lost income. In addition to damages based on monetary loss or physical pain and suffering, under the law a § 1983 plaintiff also may be awarded compensatory damages based on demonstrated mental and emotional distress, impairment of reputation, and personal humiliation. See Carey, 435 U.S. at 264, 98 S.Ct. at 1052; Stachura, 477 U.S. at 307, 106 S.Ct. at 2543. See also, Wright v. Sheppard, 919 F.2d 665, 669 (11th Cir.1990)(holding that non-physical injuries such as humiliation, emotional distress, and mental anguish and suffering are all within the ambit of § 1983 compensatory damages); O’Neill v. Krzeminski, 839 F.2d 9, 13 (2d Cir.1988)(holding that § 1983 plaintiff alleging excessive force by a police officer was entitled to full compensation for his physical and emotional pain, in addition to any lost wages, suffered as a result of the defendant’s conduct). We think Slicker was entitled to present evidence and seek damages based on any monetary loss, as well as any physical pain and suffering or mental and emotional anguish that he may have incurred as a result of the officers’ alleged misconduct. The district court therefore erred in entering judgment in favor of the officers simply on the grounds that Slicker faded to present evidence of medical expenses, missed work, or lost income. We add, however, that even if Slicker were unable to demonstrate that he suffered any actual injury, under controlling case law the district court erred in not allowing Slicker to seek nominal damages. We have held unambiguously that a plaintiff whose constitutional rights are violated is entitled to nominal damages even if he suffered no compensable injury. See Kelly v. Curtis, 21 F.3d 1544, 1557 (11th Cir.1994)(holding that a § 1983 plaintiff alleging false arrest, malicious prosecution, and illegal detention is entitled to receive nominal damages if he demonstrates that the defendants violated his constitutional rights even if he is unable to prove that he suffered a specific, actual injury as a result of the defendants’ conduct); see also Carey, 435 U.S. at 266, 98 S.Ct. at 1054. Although we have never addressed the appropriateness of nominal damages in the context of an excessive force claim, we agree with the reasoning of our sister circuits which have held that a § 1983 plaintiff alleging excessive use of force is enti- tied to nominal damages even if he fails to present evidence of compensable injury. See e.g., Gibeau v. Nellis, 18 F.3d 107, 110 (2d Cir.1994); Butler v. Dowd, 979 F.2d 661, 669 (8th Cir.1992)(en banc); Briggs v. Marshall, 93 F.3d 355, 360 (7th Cir.1996). These cases acknowledge that the typical § 1983 plaintiff alleging excessive force may be entitled to compensatory damages. They identify, however, several circumstances under which a § 1983 plaintiff alleging excessive use of force may be entitled to receive only nominal damages.

3751968-18598

WALLACE S. GOURLEY, District Judge. These proceedings were filed by Frank C. Snyder et al. in Civil Action 4600, and James C. Pentland et al. in Civil Action 3391, against Dravo Corporation. The two suits are in all respects the same except as to the names of the plaintiffs. As a result of which, on motion of counsel for the plaintiffs, it was' ordered that said actions be consolidated in accordance with the provisions of Rule 42(a) of the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c. The suits seek to recover varying amounts of overtime compensation, liquidated damages, attorneys’ fees and costs under the Fair Labor Standards Act of 1938, 29 U.S. C.A. § 201 et seq. In connection with Civil Action 4600 the plaintiffs, under the provisions of Rule 56 of the Federal Rules of Civil Procedure, have filed a motion for summary judgment. Said motion is made with reference to a portion of the moneys which is claimed, and without prejudice to proceed to trial as to the balance of said claims. The defendant has filed a motion under the provisions of Rule 15(a) of the Federal Rules of Civil Procedure, in which leave of Court is requested to amend the answer previously filed in each action. Said motion requests leave to amend Paragraphs 3 and 5 of the First Defense, and to add thereto a Fifth and Sixth Defense. Subsequent to the presentment of said motion to the Court, the defendant withdrew its request in connection with the Sixth Defense. In connection with the motion for summary judgment, it is first necessary to pass upon the question as to whether or not leave should be granted the defendant to amend its answer. This is obligatory for the reason that in passing on said motion, the Court must consider the pleadings, depositions, admissions on file, affidavits or any other matter now a part of the record. It must be found 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. It is no part of the Court’s function to decide issues of fact, but solely to determine whether there is an issue of fact to be tried. All doubts as to the existence of a genuine or substantial issue as to a material fact must be resolved against the party moving for summary judgment, and the existence of a genuine or substantial dispute as to a material fact forecloses or bars summary judgment. Toebelman et al. (Hahn, Intervener) v. Missouri-Kansas Pipe Line Co. et al., 3 Cir., 130 F.2d 1016; Bowles v. Ward, 65 F.Supp. 880 at page 889; Walling v. Fairmont Creamery Co., 8 Cir., 139 F.2d 318; McElwain v. Wickwire Spencer Steel Co., 2 Cir., 126 F.2d 210; Whitaker v. Coleman, 5 Cir., 115 F.2d 305; Wittlin v. Giacalone, App.D.C., 154 F.2d 20; Campana Corp. v. Harrison, 7 Cir., 135 F.2d 334; Sartor v. Arkansas Natural Gas Corp., 321 U.S. 620, 627, 64 S.Ct. 724, 88 L.Ed. 967. In view of the situation one conclusion might be reached on the record as it now exists, and an entirely different decision if leave is granted to file the amended answer. I will, therefore, consider the record, and the relevant parts of the complaint and answer in passing upon the motion for leave to file the amended answer. In each of said actions the complaints set forth in Paragraph III: “III. The defendant corporation, organized and existing under the Laws of the State of Pennsylvania, at all times herein mentioned had its principal office in the City of Pittsburgh, County of Allegheny and State of Pennsylvania, and its plant and principal place of business (at which the plaintiffs were employed) at Neville Island, in the County of Allegheny, in the Western District of Pennsylvania; defendant at said place of business has been engaged at all times mentioned in the manufacturing and selling of machinery, barges, tow boats, dredges, destroyer escorts, and other naval boats and similar and related articles. The goods so produced by the defendant corporation are made of raw materials, a substantial part of which are shipped to the defendant’s plants and factories from points outside of the State of Pennsylvania. Substantially all of the goods so produced by the said defendant corporation are manufactured and produced for interstate commerce, and have been sold, offered for transportation, transported, shipped and delivered in interstate commerce from the defendant’s said place of business or plant in the Western District of Pennsylvania, to various points outside the State of Pennsylvania.” In the answer originally filed the defendant set forth as follows: “3. The averments of Paragraph III of the Complaint are admitted.” The motion for leave to amend, in connection with Paragraph 3, sets forth the following allegations of fact: “3. The defendant admits the averments of Paragraph III of the Complaint, except that defendant denies that the manufacture, production, sale, transportation or offers thereof, shipment or delivery of any of the products mentioned in said Paragraph III to or for the United States Government, and particularly the Navy Department, constituted commerce or the production of goods for commerce within the meaning of the Fair Labor Standards Act of 1938, or interstate commerce.” The complaint sets forth in Paragraph V: “V. During the period beginning October 24, 1938, and to the date of this Complaint, defendant had employed several thousand employees in the manufacture and production of such machinery, barges, tow boats, dredges, destroyer escorts and other naval boats and similar and related articles for interstate commerce and such goods and products so produced by such employees during such period have been sold, offered for transportation, transported, shipped and delivered in interstate commerce from defendant’s plant on Neville Island in said District to points outside the State of Pennsylvania.” In the answer originally filed the defendant set forth as follows: “5. The averments of Paragraph V of the Complaint are admitted.” The motion for leave to amend carries the following allegations of fact: “5. The defendant admits the aver-ments of Paragraph V of the Complaint, except that defendant denies that the manufacture, production, sale, transportation or offers thereof, shipment or delivery of any of the products mentioned in said Paragraph V to or for the United States Government, and particularly the Navy Department, constituted commerce or the production of goods for commerce within the meaning of the Fair Labor Standards Act of 1938, or interstate commerce.” In addition thereto the defendant requests leave to present a Fifth Defense in its answer (four defenses having been set forth in the original answer), said additional defense being: “Fifth Defense. During all the times mentioned in the Complaint, plaintiffs and interveners were employed by defendant solely in the production of material for the Government of the United States for use in the prosecution of the war between the United States and her enemies; wherefore, none of said plaintiffs and intervenors were engaged in commerce or the production of goods for commerce, as defined by the Fair Labor Standards Act of 1938.” The defendant urges the proposed amendments to the answer were not presented at an earlier date for two reasons: (a) Pre-trial conference is an appropriate time to amend pleading. Rule 16 of the Federal Rules of Civil Procedure. (A pretrial conference was held by the Court in these actions at the time of the argument on the motion for summary judgment as to part of the claim in Civil Action 4600, at which time the motion for leave to amend was presented.) (b) The defendant produced goods for the Navy or Government on a cost plus basis. The Navy Department had issued a mandate in which the defendant was prohibited from interposing as a defense the lack of commerce as defined by the Fair Labor Standards Act. This mandate was not recalled by the Navy Department until August of 1946, and no previous right, therefore, existed to present this affirmative defense. In short, the defendant desires leave to file the amended answer in order to be able to raise this question of- law. Were the plaintiffs engaged in the production of goods for commerce or engaged in commerce where the goods produced were for the Navy Department or Government to be used in the prosecution of World War II? The plaintiffs contend that leave to amend should not be granted for the following reasons: (a) The amendment presents not merely a change in, but a complete reversal of, the position of the defendant. (b) In connection with a previous question which had arisen (as to the type of class action which had been filed and as to the right of intervention), the defendant before the Circuit Court of Appeals had admitted interstate commerce and the other matters which it is now desired to deny. (c) That the application for leave to amend should be addressed to the Circuit Court of Appeals. (d) The application is made too late. (e) The defendant is estopped from presenting an amendment to its answer by its admissions and waiver or stipulation filed in the Circuit Court in which interstate commerce was admitted. (f) That the allowance of the amendment would subject the plaintiffs to great expense that would arise incident to the proof of facts to show interstate commerce. (g) That the allowance of the amendment would delay the proceedings since it would be necessary for the plaintiffs to prepare to meet the new defenses. Rule 15(a) of the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c, provides as follows: “(a) Amendments. A party may amend his pleading once as a matter of course at any time before a responsive pleading is served or, if the pleading is one to which no responsive pleading is permitted and the action has not been placed upon the trial calendar, he may so amend it at any time within 20 days after it is served. Otherwise a party may amend his pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires. A party shall plead in response to an amended pleading within the time remaining for response to the original pleading or within 10 days after service of the amended pleading, whichever period may be the longer, unless the court otherwise orders.” The right to amend a pleading is addressed to the discretion of the Court, and great liberality should be allowed where it is necessary to bring about a furtherance of justice. Young v. Garrett, D.C.Ark., 1946, 5 F.R.D. 117; Moore v. Illinois Central R. Co., D.C., 24 F.Supp. 731, 733, 734, affirmed 312 U.S. 630, 61 S.Ct. 754, 85 L.Ed. 1089; Wilson v. Lamberton, 3 Cir., 1939, 102 F.2d 506, 507; Tahir Erk v. Glenn L. Martin Co., 4 Cir., 1941, 116 F. 2d 865, 871; Gibbs v. Emerson Electric Mfg. Co., D.C.Mo., 1940, 31 F.Supp. 983, 984; Gallahar v. George A. Rheman Co., Inc., D.C.Ga., 1943, 50 F.Supp. 655, 661; Frank Adam Electric Co. v. Westinghouse Electric & Mfg. Co., 8 Cir., 146 F.2d 165, 167. A change in the legal theory of an action is not a test of the propriety of a proposed amendment. International Ladies’ Garment W. U. v. Donnelly G. Co., 8 Cir., 1941, 121 F.2d 561, 562, 563. Even after pre-trial conference a motion for leave to amend should be granted where no prejudice is suffered by the opposing party litigant. McDowall v. Orr Felt & Blanket Co., 6 Cir., 1944, 146 F.2d 136. I do not see how the plaintiffs in this action will be prejudiced as far as the trial is concerned since the amended answer in substance says—The goods made by the plaintiffs were not interstate commerce or produced for interstate commerce since they were used by the Government in the prosecution of the war. This raises a question of law under the Fair Labor Standards Act rather than a question of fact. It will, therefore, not be necessary for the plaintiffs to offer any testimony in connection with this question since the facts are admitted. Furthermore a stipulation of counsel representing a party litigant, originally designed to expedite the disposition of questions which exist, should not be rigidly adhered to when it becomes a manifest injustice upon said litigant. Maryland Casualty Co. v. Rickenbaker et al., 4 Cir., 1944, 146 F.2d 751, 753. The Court should not, in ruling on the motion for leave to amend, pass on the question whether defendant is estopped to raise the defense. 8 F.R.S. 283 (Case 2. 15A21). While it is generally assumed when an answer is filed that the law is settled, it seems proper to permit an amended answer to raise a substantial or genuine question of law which is in dispute and not adjudicated in the Circuit Court where the case is to be tried or by the Supreme Court of the United States. This is true since a party litigant is not bound to anticipate the conclusion which would be reached in the District Court or in the appellate tribunals. American Optical Co. v. New Jersey Optical Co., D.C.Mass., 1943, 50 F.Supp. 806. In the instant cases the defendant states it was barred by the Navy Department from interposing the defense in its original answer—“That the production of goods for the Government was not commerce under the Fair Labor Standards Act.” The question is one that is genuine and substantial since the Supreme Court of the United States or the Third Circuit Court of Appeals has not passed on the problem. However, the matter has been considered in other district courts, circuit courts of appeal and state courts in the United States. The problem resolves itself into the interpretation of the word “commerce” as used in Section 203(b) of the Fair Labor Standards Act of 1938, 29 U.S.C.A. § 201 et seq. Umthun v. Day & Zimmerman, 1944, 235 Iowa 293, 16 N.W.2d 258. One theory expressed is that the Government is not included within the terms of a general statute unless it is clear from the nature of the mischiefs to be redressed, or the language used, that the Government itself was in contemplation of the legislation. United States v. Hoar, C.C.Fed.Cas.No.15373, 2 Mason 311. It has been also stated that where a statute is for the public good or to prevent injury and wrong, the sovereign or government is bound by it although not particularly named' therein. Nardone v. United States, 302 U.S. 379, 58 S.Ct. 275, 82 L.Ed. 314. Another argument presented is that Section 203(d) of the Fair Labor Standards Act specifically excepts from its benefits employees of the United States or any state or political subdivision thereof. That it should, therefore, be assumed that if Congress had intended also to exempt from the statute employees of an independent contractor with the government, such as the defendant in this action, it would have so provided by enlarging the exception. Um-thun v. Day & Zimmerman, 1944, 235 Iowa 293, 16 N.W.2d 258, 261. It is definitely settled that whether an employee is covered by the Fair Labor Standards Act depends on the nature of the employment of the particular employee, and the fact that all of the employer’s business is not shown to have an interstate character is not important. Walling v. Jacksonville Paper Co., 317 U.S. 564, 571, 63 S.Ct. 332, 87 L.Ed. 460. It is apparent that conflict exists as to whether the provisions of the Fair Labor Standards Act apply where goods are manufactured solely for the use of the government in the prosecution of the war. It has been held that if the goods manufactured by the employer and produced by the employee move in interstate commerce, the act regulates the conditions of production, and it is immaterial that some other person or the government is responsible for their interstate movement. Walling v. Kerr, D.C.E.D.Pa., 1942, 47 F.Supp. 852; Walling v. Higgins, D.C.E.D.Pa., 1942, 47 F.Supp. 856; Timberlake v. Day & Zimmerman, D.C.S.D.Iowa, 1943, 49 F.Supp. 28. Also, although manufacture of goods may not be interstate commerce, shipment of said goods does amount to such commerce. Hamlet Ice Co. v. Fleming, 4 Cir., 1942, 127 F.2d 165. It is the obligation of each plaintiff to show, by the preponderance of the evidence, he is entitled to the benefits of the act and that he has not received them, i. e.: (a) That each plaintiff performed work which amounted to interstate commerce; or (b) That each plaintiff performed work which consisted of the production of goods for interstate commerce; and (c) That while engaged in either of the foregoing, each plaintiff has been required to work overtime hours and has not been paid in connection therewith. Timberlake v. Day & Zimmerman, D.C.S.D.Iowa, 1943, 49 F.Supp. 28; Walling v. Jacksonville Paper Co., 317 U.S. 564, 63 S.Ct. 332, 87 L.Ed. 460; Warren-Bradshaw Drilling Co. v. Hall, 317 U.S. 88, 63 S.Ct. 125, 87 L.Ed. 83; McLeod v. Threlkeld et al., 319 U.S. 491, 63 S.Ct. 1248, 87 L.Ed. 1538; Kirsch-baum v. Walling, 316 U.S. 525, 526, 62 S.Ct. 1416, 86 L.Ed. 1638; Burke et al. v. Mesta Machine Co., D.C.W.D.Pa., 1946, 5 F.R.D. 134. I believe the amended answer is not being presented for the purpose of delay, but is in good faith to raise a substantial and genuine question of law. Although the most thorough decisions seem to permit recovery, or that such type of work does constitute the production of goods for commerce, I do not believe the Court should decide said question of law until after a full and complete hearing. Following cases involve this question: Raymond et al. v. Parrish et al., 1944, 71 Ga.App. 293, 30 S.E.2d 669, 672; Scott v. Ford, Bacon & Davis, Inc., D.C.E.D.Pa., 1944, 55 F.Supp. 982; Lynch et al. v. Embry-Riddle Co., D.C.Fla.1945, 63 F.Supp. 992; Brue et al. v. J. Rich Steers, Inc., et al., D.C.N.Y., 1945, 60 F.Supp. 668; Umthun v. Day & Zimmerman, 1944, 235 Iowa 293, 16 N.W.2d 258, 261; Timberlake v. Day & Zimmerman, D.C.S.D., Iowa, 1943, 49 F.Supp. 28; Qyde et al. v. Broderick et al., 10 Cir., 1944, 144 F.2d 348; Walling v. Patton-Tulley Transportation Co., 6 Cir., 1943, 134 F.2d 945; Walling v. Haile Gold Mines, Inc., 4 Cir., 1943, 136 F.2d 102; Anderson et al. v. Federal Cartridge Corp., D.C.Minn., 1945, 62 F.Supp. 775; Simkins v. Elmhurst Contracting Co., Inc., 1944, 181 Mise. 791, 46 N.Y.S.2d 26; Filardo v. Foley Bros., Inc. et al., 1943, 181 Misc. 136, 45 N.Y.S.2d 262. I am aware that cost-plus-fixed-fee contractors with the government, engaged in war production, are not agents of the government and do not share the government’s sovereign immunities. Alabama v. King & Boozer, 314 U.S. 1, 62 S.Ct. 43, 86 L.Ed. 482, 140 A.L.R. 615; Curry v. United States, 314 U.S. 14, 62 S.Ct. 48, 86 L.Ed. 9.

12111485-10866

Nims, Judge: Respondent determined a deficiency of $581 in petitioners’ income tax for the year 1976. Concessions having been made, the issue for decision is whether petitioners are entitled to a deduction for business use of their residence. FINDINGS OF FACT Some of the facts have been stipulated. The stipulation of facts and the attached exhibit are incorporated herein by this reference. At the time of filing their petition, petitioners resided in Downey, Calif. During the taxable year 1976, petitioner Yolanda Baie (hereinafter referred to as petitioner) operated a hotdog stand known as the “Gay Dog.” The stand is located at 9009 Gallatin Road, in Downey, Calif., approximately seven-tenths of a mile from petitioners’ residence. The hotdog stand was originally built as part of a franchise operation and was essentially designed to sell only hotdogs and hamburgers. After petitioner began operating the Gay Dog, she realized that her clientele desired more variety in the food offered since many of them would eat at the stand daily. The interior dimensions of the stand are 10 by 10 feet. Virtually all of that space is required to package and distribute the food. It became evident to petitioner that in order to serve a greater variety of food, additional equipment, particularly sheers, ovens, and freezers, would have to be acquired. However, expanding the size of the stand to provide additional space for this equipment was not considered a viable option since the premises were leased on a franchise basis; evidently, there would have been some difficulty in obtaining approval from the authorized agents of the franchising company. As a consequence, petitioner decided to prepare the additional food at home. A freezer was acquired for more storage space. Much of the Gay Dog’s food, which now includes various meats, stews, and soups, is cooked at home in petitioner’s kitchen where it is then weighed, packaged, and placed in the freezer for storage. With the exception of fresh produce, all of the food preparation is done at petitioner’s home. Her kitchen, however, is still used for personal purposes. The final product is sold only on the premises of the Gay Dog. Most of the food items and ingredients are acquired by petitioner, herself, either at wholesale or at discount retail stores. Whatever deliveries she does receive are made to the hotdog stand. Petitioner also uses a second bedroom in her home exclusively for office space. That room, which contains a desk, an adding machine, and a typewriter, is used for attending to the records or other paperwork of the Gay Dog’s operation. The square footage for petitioners’ residence and the respective rooms is as follows: Kitchen . 84 square feet Home office .... 159 square feet Remaining area 757 square feet Total area ... 1000 square feet On their 1976 tax return, petitioners claimed a home office deduction in the amount of $1,127. This amount was arrived at by determining the percentage area which the kitchen and home office occupied vis-a-vis the total area of the residence, and then multiplying this percentage figure by the rent which petitioners paid for their residence in 1976. OPINION During 1976, Yolanda Baie, one of the petitioners herein, was the proprietress of the “Gay Dog.” Despite the slightly recherche connotations of its nomenclature, the Gay Dog was a prosperous hotdog stand on a busy street in Los Angeles. The premises from which the hotdogs and other food items were dispensed measured 10 by 10 feet and, appropriately, to describe them to the Court, Mrs. Baie produced a shoebox with photographs of the four interior and four exterior sides pasted in their appropriate places in the shoebox. Because of the extremely cramped nature of the premises from which the selling was done, Mrs. Baie found it necessary to prepare food in the kitchen of her home, located seven-tenths of a mile from the Gay Dog, and to transfer the food and other supplies daily from her home to the hotdog stand. Mrs. Baie did all of her bookkeeping in another room in her home used exclusively for that purpose. She used her kitchen, partly for Gay Dog purposes and partly for preparing food for herself and her family. Mrs. Baie, who presented her own case, impressed the Court as being an honest, straightforward, hard-working American taxpayer, and we have no reason to question her testimony as to the uses to which she put the kitchen and the extra room in her dwelling place. On their 1976 return, petitioners claimed $1,127 as a home office expense, which deduction respondent has disallowed under section 280A. Section 280A(a) enunciates a general rule for disallowing expenses which are attributable to the business use of a home: Except as otherwise provided in this section, in the case of a taxpayer who is an individual or an electing small business corporation, no deduction otherwise allowable under this chapter shall be allowed with respect to the use of a dwelling unit which is used by the taxpayer during the taxable year as a residence. The limited exceptions to this general rule are set forth in section 280A(c) which provides in pertinent part as follows: (c) Exceptions for Certain Business or Rental Use; Limitation on Deductions for Such Use.— (1) Certain business use. — Subsection (a) shall not apply to any item to the extent such item is allocable to a portion of the dwelling unit which is exclusively used on a regular basis— (A) as the taxpayer’s principal place of business, (B) as a place of business which is used by patients, clients, or customers in meeting or dealing with the taxpayer in the normal course of his trade or business, or (C) in the case of a separate structure which is not attached to the dwelling unit, in connection with the taxpayer’s trade or business. In the case of an employee, the preceding sentence shall apply only if the exclusive use referred to in the preceding sentence is for the convenience of his employer. (2) Certain storage use. — Subsection (a) shall not apply to any item to the extent such item is allocable to space within the dwelling unit which is used on a regular basis as a storage unit for the inventory of the taxpayer held for use in the taxpayer’s trade or business of selling products at retail or wholesale, but only if the dwelling unit is the sole fixed location of such trade or business. Respondent maintains that since petitioner did not fall within any of the exceptions set forth in section 280A(c), the general rule of nondeductibility contained in section 280A(a) precludes petitioner from deducting the items at issue. Section 280A was added to the Internal Revenue Code by the Tax Reform Act of 1976 to provide “definitive rules relating to deductions for expenses attributable to the business use of homes.” S. Rept. 94-1236 (1976), 1976-8 C.B. (Vol. 3) 807, 839. Prior to the enactment of section 280A, this Court had allowed a deduction for an office in an employee’s residence on the grounds that the maintenance of such office was “appropriate and helpful” under the circumstances. Congress felt that clear-cut rules governing deductibility were needed because of the administrative burdens which resulted from requiring taxpayers to substantiate the business element of what is normally a personal item (i.e., maintenance of a residence). Additionally, there was the concern that, under the standards adopted by some courts (particularly this Court), those which were otherwise personal expenses were being allowed as deductions. In light of the above legislative background, we reluctantly conclude that petitioner is not entitled to deduct any of the expenses claimed here, as she fails to qualify under any of the enumerated exceptions. We cannot agree with her argument that the portions of her home which were used in connection with operating the Gay Dog constituted her principal place of business. This contention is simply not supported by the facts. It is readily apparent that, for purposes of the exception contained in section 280A(c)(l)(A), the hotdog stand, itself, was petitioner’s principal place of business. Nothing in the legislative history of section 280A or the Commissioner’s regulations furnishes any guidance as to the scope of the “principal place of business” concept in the context of section 280A. We therefore take it that what Congress had in mind was the focal point of a taxpayer’s activities, which, in the case before us, would be the Gay Dog itself. The sales of petitioner’s fast food product generated her income. Even though preliminary preparation may have been beneficial to the efficient operation of petitioner’s business, both the final packaging for consumption and sales occurred on the premises of the Gay Dog. Consequently, petitioner does not qualify under the principal place of business exception contained in section 280A(c)(l)(A). Petitioner also argues that section 280A is confined solely to home office situations. Petitioner claims that her residence was utilized for the preparation of food; in other words, a “manufacturing facility” apart from her small retail outlet. Petitioner maintains that since a manufacturing facility is not a home office, section 280A cannot preclude the deductions at issue. We find this argument ingenious and appealing, but, unfortunately, insufficient to overcome the unambiguous mandate of the statute. Section 280A provides a broad general rule requiring disallo-wance of deductions attributable to the business use of a personal residence, irrespective of the type or form of business use. It is true that the potential for abuse in this area was typified by the situation where a taxpayer would make a dubious claim for a home office deduction. S. Rept. 94-938 (1976), 1976-3 C.B. (Vol. 3) 49, 183-185. Unfortunately for the petitioners here, the words of the law which Congress passed are straightforward and much broader in their applicability — sufficiently broad as to catch petitioners in their net. We are not, therefore, at liberty to “bend” the law, much as we may sympathize with petitioner’s position. Congress made some exceptions, as a matter of fact, so that the business use of a home could, in a few situations, extend beyond mere home office situations. Section 280A(c)(2), for example, contains an exception in the case where a portion of the taxpayer’s home is used as storage for inventory which the taxpayer holds for use in the trade or business of selling products at retail or wholesale, but only if the dwelling unit is the sole fixed location of the taxpayer’s place of business. Since her residence is not petitioner’s sole place of business, this exception does not help her. Nor do any of the exceptions contained in section 280A(c)(l), quoted above, fit the situation. Decision will be entered under Rule 155. Pub. L. 94-455, 90 Stat. 1520.

5720942-7565

ORDER Shelley Kaplan lost an employment-discrimination case against the City of Chicago. She appeals from an order denying her relief from the judgment and granting the city’s bill of costs. Because she is improperly trying to revisit the underlying merits of her case, and because the district court properly awarded costs, we affirm the district court’s order. Kaplan worked as a patrol officer in the Chicago Police Department from January 1991 to March 2006. She first sued the city in March 1999 claiming that her employer discriminated against her because of her Jewish faith, retaliated against her for complaining about the discrimination, subjected her to a hostile work environment, and failed to accommodate her religious beliefs. In November 2004 Judge Manning granted summary judgment against her on the first three claims, Kaplan v. City of Chicago, No. 99 C 1758, 2004 WL 2496462 (N.D.Ill. Nov.4, 2004), and in March 2005 a jury returned a verdict against her on the failure-to-accommodate claim. Kaplan did not appeal; instead, a few days after the district court entered judgment, she filed this new lawsuit against the city. The case was assigned to Judge Filip and then reassigned to Judge Lein-enweber in March 2008. In April 2008, Judge Leinenweber granted the city’s motion to dismiss a retaliation claim and a failure-to-accommodate claim under Federal Rule of Civil Procedure 12(b)(6), reasoning that the claims arose out of the same events litigated in the parties’ prior action and thus were barred by res judica-ta. All that remained of Kaplan’s suit was a claim that she was required to participate in Christian prayers during “beat meetings” with community members in violation of the First Amendment and a claim that, after she complained, the city retaliated against her in violation of Title VII of the Civil Rights Act of 1964. In March 2009 the district court granted the city’s motion for summary judgment on these remaining claims and entered judgment against Kaplan. The court explained that Kaplan had not established state action because she presented no evidence that the Christian prayers offered at the public “beat meetings” were initiated by the city rather than by community members. In addition, the court found that the undisputed evidence showed that the city did not coerce Kaplan into participating in the prayers and that the city did not have a policy or custom of encouraging prayer at beat meetings. As for the Title VII claim, the court concluded first that Kaplan did not suffer an adverse employment action and second, that even if she had, she did not prove that the city acted in response to her complaint about the prayers. Once again Kaplan did not file a timely appeal; instead in May 2009 she filed a motion seeking relief from the judgment under Federal Rule of Civil Procedure 60(b). Apparently invoking subsection (b)(3), she argued that she was entitled to relief from the court’s March 2009 order because the decision was “contrary to Illinois State law” and because the city had “knowingly presented false materials to the Plaintiff and to this Court, while withholding crucial discovery materials.” She also requested relief from the April 2008 order, which had dismissed two claims on res judicata grounds; again invoking subsection (b)(3), she asserted that the city had misled the court about whether claim preclusion should apply. For the most part, however, her motion simply revisited the merits of her case. In the same filing, Kaplan submitted objections to the city’s bill of costs. She put forth three arguments why the city should not recover any costs: (1) the judgment should be vacated pursuant to her Rule 60(b) motion, (2) she was indigent, and (3) some of the city’s costs were unnecessary and even “vindictive.” In July 2009 the district court denied Kaplan’s Rule 60(b) motion and granted the city’s bill of costs. The court determined that Kaplan was not entitled to relief from the April 2008 order because she had filed her Rule 60(b) motion in May 2009, more than a year after the order was issued. As for the March 2009 order, the court rejected her assertion that the city had presented false materials as merely an attempt “to rehash arguments that she made, or should have made, when the city’s motion for summary judgment was pending.” Her assertion that the city had withheld crucial discovery materials was also misguided, the court said, because the only materials that she specifically identified — copies of Illinois statutes and her right-to-sue letter from the EEOC — were in fact “readily available to her.” Finally the court determined that the costs sought by the city were both reasonable and authorized by law and that Kaplan’s mere assertion of indigency, absent any supporting evidence, was insufficient to excuse payment. Kaplan argues first that the district court erred by refusing to grant her relief from its April 2008 order, which barred two of her claims on grounds of res judica-ta. For the first time she relies on the third clause of Federal Rule of Civil Procedure 60(b)(5), which allows a court to relieve a party from a final judgment if “applying it prospectively is no longer equitable.” She asserts that the judgment entered against her by Judge Manning in her earlier suit against the city should no longer have “prospective application” because she did not actually have the opportunity in that proceeding to pursue the two barred claims. But Kaplan did not develop this argument before the district court; in fact her Rule 60(b) motion did not even mention subsection (b)(5). In any event, the dismissal of Kaplan’s claims did not have a prospective effect that can be reached under the last clause of subsection (b)(5). The fact “that a party may be precluded from re-litigating a matter because of claim preclusion principles is not sufficient to imbue a prior judgment with prospective force.” Comfort v. Lynn School Committee, 560 F.3d 22, 28 (1st Cir.2009) (affirming denial of relief and describing limited scope of last clause of subsection (b)(5) with regard to prospective application of forward-looking injunctions and consent decrees); accord, DeWeerth v. Baldinger, 38 F.3d 1266, 1276 (2d Cir.1994); Picco v. Global Marine Drilling Co., 900 F.2d 846, 851 (5th Cir.1990); Twelve John Does v. District of Columbia, 841 F.2d 1133, 1139 (D.C.Cir.1988). To top it off, subsection (b)(5) would authorize the court to relieve Kaplan only from the judgment entered in this case that was before Judge Leinenweber, not the judgment entered in her previous case before Judge Manning. Aside from merely arguing the underlying merits of the April 2008 order, which she may not do in a Rule 60(b) motion, see Kiswani v. Phoenix Security Agency, Inc., 584 F.3d 741, 743 (7th Cir.2009), Kaplan offers no further argument why the district court was wrong to deny her relief. Kaplan argues next that the district court erred by refusing to grant her relief from its March 2009 order. Invoking Rule 60(b)(3), which authorizes a court to relieve a party from a judgment obtained by fraud, misrepresentation, or misconduct by an opposing party, she repeats her argument that the order is “contrary to Illinois state law.” But her suggestion—that the city committed fraud by advocating a legal position that she thinks is wrong—is misguided. See Provident Savings Bank v. Popovich, 71 F.3d 696, 699 (7th Cir.1995) (affirming denial of Rule 60(b)(3) relief sought based on position that opponent had argued successfully before district court).

7398579-14695

MEMORANDUM AND ORDER MILLER, District Judge. This is an action for judicial review of a final decision of the Secretary of Health and Human Services denying plaintiff Samuel Kovacevich’s application for Social Security disability benefits as provided by 42 U.S.C. § 423. Mr. Kovacevich suffers from back problems that he believes entitle him to Social Security disability benefits. The Secretary has filed a certified copy of the transcript of the record, including the evidence upon which the findings and decision were based. 42 U.S.C. § 405(g). Those findings are conclusive if supported by substantial evidence. Id.; Davis v. Califano, 603 F.2d 618, 625 (7th Cir.1979). Procedural Background Mr. Kovacevich filed his application for benefits on March 27, 1984, stating that he became disabled on October 31, 1983 when a jack gave way while he was under a trailer fixing a flat tire. The Secretary denied his application. Mr. Kovacevich requested a reconsideration in a timely manner, which was denied. Consequently, Mr. Kovacevich requested an administrative hearing which was held at South Bend, Indiana, on July 22, 1985. Mr. Kovacevich was thirty years old at the time of the hearing. He attended school half way through the ninth grade and stated that the grades he received in grade school were “pure F’s”. He also stated that he has difficulty reading, writing, and spelling. Mr. Kovacevich’s employment history consists of working as a gas station attendant. Mr. Kovacevich described one of his jobs as involving daily book work, banking, pumping gas, washing windows, checking oil, running a cash register, stocking shelves, unloading cases of oil, soda pop, milk and groceries, and working on the car wash when it broke down. The Administrative Law Judge (“ALJ”) made the following findings with respect to Mr. Kovacevich: 1. The claimant met the disability insured status requirements of the Act on October 31, 1983, the date the claimant stated he became unable to work, and continues to meet them through June 30, 1988. 2. The claimant has not engaged in substantial gainful activity since October 31, 1983. 3. The medical evidence establishes that the claimant has severe lumbosacral strain, but that he does not have an impairment or combination of impairments listed in, or medically equal to one listed in Appendix 1, Subpart P, Regulations No. 4. 4. The claimant’s subjective complaints of pain and discomfort are considered grossly exaggerated and not credible in light of the opinions expressed by his treating and examining physicians, the lack of objective medical evidence to account for those complaints, and the claimant’s appearance at the hearing coupled with his lack of any attempts to lose weight or exercise as directed by all of his treating physicians. 5. The claimant has the residual functional capacity to perform the physical exertion requirements of work except for the ability to stand or walk for extended periods of time or to lift weights in excess of 15 pounds. There are no nonex-ertional limitations (20 CFR 404.1545). 6. The claimant is unable to perform his past relevant work as a gas station attendant. 7. The claimant has the residual functional capacity to perform at least the full range of sedentary work (20 CFR 404.1567). 8. The claimant is 29 years old, which is defined as a “younger individual” (20 CFR 404.1563). 9. The claimant has a “limited” education (20 CFR 404.1564). 10. In view of the claimant’s age and residual functional capacity, the issue of transferability of work skills is not material. 11. Section 404.1569 of Regulations No. 4 and Rule 201.24, Table No. 1 of Appendix 2, Subpart P, Regulations No. 4, direct a conclusion that, considering the claimant’s residual functional capacity, age, education, and work experience, he is not disabled. 12. The claimant was not under a “disability,” as defined in the Social Security Act, at any time through the date of this decision (20 CFR 404.1520(f)). Accordingly, the ALJ determined that Mr. Kovacevich was not entitled to a period of disability or disability insurance benefits. The Appeals Council denied Mr. Ko-vacevich’s request for review, and this appeal followed. In reaching its decision, the Appeals Council considered the report of an examination performed by Martin E. Feferman, M.D., dated September 23, 1985. That report was submitted after the AU’s decision in the case. The information in the report indicated that Dr. Feferman successfully operated on Mr. Kovacevich on August 26, 1984 for a herniated disc. The treating physician found that Mr. Kovace-vich could not perform heavy work as in his past relevant work as a service station attendant and that he would have considerable difficulty doing this in the near future. Dr. Feferman believed that it would take a long time for the strength in Mr. Kovace-vich’s leg to improve, perhaps a year or more. The Appeals Council found that the information in the report had no material bearing on the decision and would not change the AU’s findings. Standard of Review The Secretary has delegated his authority to make final decisions to the Appeals Council, see 20 C.F.R. §§ 404.900, 404.981, 416.1400, 416.1481, and the Appeals Council affirmed the AU’s decision without modification. Accordingly, the court must review the decision of the AU. See Arbogast v. Bowen, 860 F.2d 1400, 1402-03 (7th Cir.1988). The United States Court of Appeals for the Seventh Circuit has summarized the five-step test that has been established to determine whether a claimant is disabled: The following steps are addressed in order: (1) Is the claimant presently unemployed? (2) Is the claimant’s impairment “severe”? (3) Does the impairment meet or exceed one of a list of specific impairments? (4) Is the claimant unable to perform his or her former occupation? (5) Is the claimant unable to perform any other work within the economy? An affirmative answer leads either to the next step or, on steps 3 and 5, to a finding that the claimant is disabled. A negative answer at any point, other than step 3, stops the inquiry and leads to a determination that the claimant is not disabled. Zalewski v. Heckler, 760 F.2d 160, 162 n. 2 (7th Cir.1985). Accord, Angevine v. Sullivan, 881 F.2d 519, 521 No. 88-2454, slip op. at 4 (7th Cir.1989); Steward v. Bowen, 858 F.2d 1295 (7th Cir.1988); Lauer v. Bowen, 818 F.2d 636, 638 (7th Cir.1987); Bauzo v. Bowen, 803 F.2d 917, 920 n. 1 (7th Cir.1986). The fifth step governed the denial of Mr. Kovacevich’s claim. The court must determine whether the record as a whole contains substantial evidence to support the Secretary’s finding. Waite v. Bowen, 819 F.2d 1356, 1360 (7th Cir.1987); Garfield v. Schweiker, 732 F.2d 605, 607 (7th Cir.1984); Whitney v. Schweiker, 695 F.2d 784, 786 (7th Cir.1982). The AU’s findings are conclusive if supported by substantial evidence. 42 U.S.C. § 405(g). “Substantial evidence is defined as ‘more than a scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion,’ ” Rhoderick v. Heckler, 737 F.2d 714, 715 (7th Cir.1984), quoting Richardson v. Perales, 402 U.S. 389, 401, 91 S.Ct. 1420, 1427, 28 L.Ed.2d 842 (1971), taking into account anything in the record that fairly detracts from its weight. Sears v. Bowen, 840 F.2d 394, 398 (7th Cir.1988). The Parties’ Arguments Mr. Kovacevich generally contends that the denial of his benefits is not supported by substantial evidence. Specifically, he raises two challenges: first, that the ALJ failed to take into account testimony regarding his inability to have gainful employment, including the testimony of the claimant and his wife regarding his age, education, background, and a normal day in the claimant’s life due to his injuries; and second, that the ALJ failed to take into account the letters from Dr. Curry and Dr. Niles regarding Mr. Kovacevich’s physical impairments. The Secretary contends that the decision of the ALJ and the Appeals Council is supported by substantial evidence. In particular, he submits that the only physicians who specifically assessed Mr. Kovacevich’s ability to perform work-related activities were reviewing physicians Dr. Bloemker and Dr. Sheehan, who concluded that Mr. Kovacevich could lift and carry a maximum of fifty pounds occasionally and ten pounds frequently, that he could sit a total of about six hours in an eight hour day and could stand or walk a similar total, and that he was unlimited in reaching, handling, fingering, feeling, seeing, hearing, and speaking. The Secretary also asserts that although none of the examining physicians assessed Mr. Kovacevich’s ability to perform work-related activity with any specificity, even their generalized pronouncements were not inconsistent with sedentary work. Also, although Mr. Kovacevich asserts that the AU “failed to consider substantial evidence showing that the plaintiff was disabled from his former job”, there is no dispute on that point since the AU found that Mr. Kovacevich was unable to perform his past relevant work as a gas station attendant. With respect to Mr. Kovacevich’s own testimony, the Secretary argues that the AU explicitly took the testimony into account and found it not credible. The Secretary points to certain inconsistencies such as Mr. Kovacevich’s testimony that he had two herniated discs and one cracked vertebrae (A.R. 34), yet numerous X-rays beginning on the day of the accident revealed no fractures and only one disc was ever operated on for herniation. The Secretary also notes that in the application for benefits, Mr. Kovacevich stated that he had three herniated discs. The Secretary also refers to a report by Dr. Keucher that although Mr. Kovacevich stated that he had been unable to work as a mechanic since the injury, he had grease on his hands and around his fingernails. The Secretary also points out that Mr. Kovacevich alleged that he was unable to lift anything, yet when he left the hospital against medical advice on January 25,1985, Dr. Curry observed him walking without assistance and carrying his own suitcase. In light of these factors, the Secretary argues that it was well within the AU’s discretion not to find Mr. Kovacevich’s testimony credible. Discussion As noted earlier, the AU found that Mr. Kovacevich suffered from a “severe lumbosacral strain”, and the Appeals Council considered the report of Dr. Feferman that he had successfully operated on Mr. Kovacevich for a herniated disc. The AU also specifically noted the recommendations of Mr. Kovacevich’s doctors that he needed to lose a significant amount of weight. “If the claimant has inexcusably refused to follow prescribed medical treatment that would eliminate his total disability, then he isn’t totally disabled.” DeFrancesco v. Bowen, 867 F.2d 1040, 1043 (7th Cir.1989), citing 20 C.F.R. § 416.930(b); Dawkins v. Bowen, 848 F.2d 1211, 1213 (11th Cir.1988). As in DeFrancesco, Mr. Kovacevich has not argued that he was denied disability benefits because of his failure to lose weight. Lack of discipline, character, or fortitude is not a defense to a claim for disability benefits. Id. at 1044. There is no serious dispute over Mr. Kovacevich’s inability to resume his work as a service station attendant; the AU specifically found that Mr. Kovacevich cannot perform his past relevant work as a gas station attendant. This finding is in accord with the letters of Drs. Curry, Niles, and Fefer-man. Dr. Curry's May 7, 1985 letter stated that: At this time, I still consider Sam totally disabled for physical labor, although the amount of improvement that he has shown since surgery I feel will continue through the next few weeks and months. He should be able to begin rehabilitation training soon. I do, however, think that Sam will not be able to have a job such as he had before consisting of extensive physical labor or lifting. (A.R. 228). Dr. Niles’ April 30, 1985 letter indicated that he felt Mr. Kovacevich should be ambulating daily, engaging in low back exercises, and going on a strict weight reduction program. Dr. Feferman’s September 23, 1985 letter (which was submitted after the AU’s decision, but was considered by the Appeals Council) stated that Mr. Ko-vacevich “is not able to do his previous heavy work as a service station attendant and I believe he will have considerable difficulty doing this in the near future.” (A.R. 6). These opinions are not inconsistent with the AU’s finding that Mr. Kovacevich is unable to perform his past relevant work, but has the residual functional capacity to perform at least the full range of sedentary work. Although the AU did not specifically mention the letters from Dr. Curry in his opinion, the AU is not required to discuss every piece of evidence. The AU must articulate his rationale sufficiently to allow meaningful review and discuss specific evidence only if it is uncontradicted. Walker v. Bowen, 834 F.2d 635, 643 (7th Cir.1987). Despite conflicting evidence as to the exact nature of Mr. Kovacevich’s back problems, the record supports the Secretary’s finding that Mr. Kovacevich retains the functional capacity to perform at least sedentary work. “When an AU decides a Social Security disability case, he or she necessarily must translate voluminous and often conflicting evidence into a simple finding of ‘disabled’ or ‘not disabled.’ ” Walker v. Bowen, 834 F.2d at 644. It is clear that the opinions of reviewing physicians Bloemker and Sheehan were substantial evidence supporting the finding that Mr. Kovacevich could perform sedentary work. See Steward v. Bowen, 858 F.2d 1295, 1299 (7th Cir.1988). As the Secretary has argued, the only evidence of record contrary to the AU’s findings consisted of the subjective complaints of Mr. Kovacevich himself. The AU did not find Mr. Kovacevich or his wife to be credible witnesses. Because the AU’s finding on pain was a finding based on Mr. Kovacevieh’s credibility, it is entitled to considerable deference, Steward v. Bowen, 858 F.2d at 1302, and may not be overturned unless patently erroneous on the “cold record”. Imani v. Heckler, 797 F.2d 508, 512 (7th Cir.), cert. denied 479 U.S. 988, 107 S.Ct. 580, 93 L.Ed.2d 583 (1986); Szwandrok v. Bowen, 658 F.Supp. 847, 849 (N.D.Ill.1987). The AU had ample opportunity to evaluate Mr. Kovace-vich’s credibility. In addition to Mr. Ko-vacevich’s own testimony, the AU specifically noted that it is very unusual for a doctor to make specific reference to the claimant carrying his own suitcase, as Dr. Niles did in his discharge notes. Simply put, substantial evidence exists to support the AU’s findings regarding Mr. Kovace-vich’s credibility.

6090596-27117

Dawson, Judge: In these consolidated cases respondent determined the following Federal income tax deficiencies: Petitioners Pocket No, Year Peficiency Gordon A. and Olive L. Erickson_ 684-70 1965 $8, 415. 69 W. Wayne and Pauline E. Skinner_ 956-70 1965 16, 631. 88 In docket No. 684-70 certain uncontested adjustments can be given effect in the Rule 50 computation. . The controversy in these proceedings arises out of an agreement dated April 12, 1965, between Gordon A. Erickson and Mid-States Construction Co., a subchaptor S corporation, providing for the re demption of Erickson’s stock for a determined price, with, an upward or downward adjustment of the price depending upon whether the final profits of one construction job then in progress were more or less than the amount estimated at the time of the agreement. The parties to the agreement reported the transaction inconsistently on their respective Federal income tax returns. Erickson reported the gain realized by him in connection with the redemption of his stock as long-term capital gain. The company on its tax return treated $13,040 of the amount as a dividend distribution and $30,992 thereof as a joint venture distribution. Respondent, as a revenue protective measure, made inconsistent deficiency determinations against the Ericksons and the Skinners. He seeks the proper tax treatment of the respective petitioners consistent with the facts and law pertaining to the transaction. Thus the issue presented for decision is whether the amounts of $13,040 and $30,992 paid to Gordon Erickson by Mid-States Construction Co. were paid as parts of the total payment for the redemption of Erickson’s stock or as dividend and joint venture distributions. FINDINGS OF FACT Some of the facts have been stipulated and are so found. Gordon A. Erickson and Olive L. Erickson are husband and wife whose residence was Omaha, Nebr., on the date of filing their petition herein. Their joint Federal income tax return for the taxable year 1965 was 'filed with the district director of internal revenue at Omaha, Nebr. W. Wayne Skinner and Pauline E. Skinner are husband and wife whose residence was Omaha, ISTebr., on the date of filing their petition herein. Their joint Federal income tax return for the tax'able year 1965 was filed with the district director of internal revenue at Omaha, Rebr. Olive L. Erickson and Pauline E. Skinner are parties hereto solely by reason of having filed joint income tax returns with their husbands. The husband-petitioners will sometimes hereinafter be referred to as Erickson and Skinner. Mid-States Construction Co. (herein sometimes referred to as either Mid-States or the company) is a corporation organized under the laws of the State of Nebraska. On or about December 24, 1959, it filed an election to be treated as a small business corporation under the sub-chapter S provisions of the Internal Revenue Code (secs. 1371-1379), which election was in effect at all times material herein. Mid-States filed its U.S. Small Business Corporation Return of Income (Form 1120-S) for the calendar year 1965 with the district director of internal revenue at Omaha. Mid-States was incorporated on April 6, 1959. Upon incorporation the company had 700 shares of stock issued 'and outstanding which were owned as follows: Stoelcholder Number of shares Erickson _ _ 250 Skinner _ 250 Parr _ _ 100 Russell __ _ 50 Oasey-_ 50 Since its incorporation Mid-States’ principal business activity has been the construction of concrete grain-storage elevators and feed mills. During 1961 Parr’s 100 shares were redeemed by Mid-States and thereafter held as treasury stock. Prior to 1965 Skinner was the president of Mid-States and Erickson was secretary-treasurer. Both were directors of the corporation. Late in December 1964, and during the early months of 1965, discussions were held between Erickson and Skinner regarding Erickson’s desire to separate from the company by selling his stock or, in the alternative, buying Skinner’s stock. Various proposals were discussed, including one whereby Erickson would sell his stock to the company for 85 percent of its book value. Such proposal was not consummated because the company was unwilling to pay the full price in cash but instead wanted to make partial payment for the stock by the assignment of certain notes receivable held by the company which had been received in payment for some construction jobs. During the various discussions Erickson was represented by his attorney, Milton R. Abra-hams, and Mid-States w'as represented by its attorney, Harry B. Otis. On April 12,1965, an agreement was reached by and between Erickson and Mid-Staites Construction Co. That agreement provided as follows: This Agreement made and entered into this 12 day of April 1965 by and between GORDON A. ERICKSON, hereinafter called “Erickson”, and MID-STATES CONSTRUCTION CO., a Nebraska corporation, hereinafter called “the company”, Witnesseth: Whereas, the company now has issued and outstanding 600 shares of fully paid and non-assessable common stock, of which 250 shares are owned and held by Erickson and represent his entire stock interest in the company ; Whereas, Erickson desires to sever his relationship with the company as such stockholder and as an officer and director thereof and to sell and transfer all of such stock to the company, and the company is willing to redeem such stock, upon the terms and conditions hereinafter set forth; and Whereas, all of the stockholders of the company have duly consented to such redemption at an adjourned annual meeting of stockholders. Now, Therefore, in consideration of the premises and the mutual covenants contained herein, the parties agree as follows: 1. Subject to and in accordance with the terms and conditions oí this agreement, Erickson agrees to sell to the company and the company agrees to buy from Erickson the aforementioned 250 shares of its common stock now owned by him for a redemption price of $146,479.00 to be paid as hereinafter provided, subject, however, to adjustment in accordance with the provisions of paragraph 4 hereof. Such price represents (a) 41%% of the net book value of the company’s property and assets as reflected by the company’s balance sheet as at the close of business on December 81,1964, prepared and certified by Haskins & Sells, independent certified public accountants, plus (b) 41%% of the net income of the company for the month of January, 1965. A copy of such balance sheet is attached hereto, marked Exhibit A and by this reference made a part hereof. 2. The company shall pay such redemption price to Erickson in the following manner: (a) The sum of $80,500.00 by assigning and transferring to him without recourse certain receivables of the company in the aggregate face amount of $80,500.00 and identified and described by job locations on the company’s records as the Watertown, Wisconsin note and mortgage, $60,000.00; the Goodfield, Illinois note, $11,500.00; and the Storm Lake, Iowa note, $9,000.00; (b) The sum of $7,529.00 by transferring and delivering to Erickson in kind one-half (%) of the furniture, fixtures, machinery and equipment of the company, the items to be transferred and delivered pursuant hereto having a book value of $7,529.00; and (c) The balance of $58,450.00 hy payment thereof in cash. 3. For the purpose of determining the items of furniture, fixtures, machinery and equipment to be transferred and delivered to Erickson as hereinbefore provided, he has prepared and furnished to the company two (2) separate schedules, each purporting to list one-half (%) of such items. By agreement of the parties, the company has selected and is to retain as its own property the items listed in one of such schedules and is to transfer and deliver to Erickson the items listed in the other schedule. 4. Upon the completion of the construction job at Kirksville, Missouri, hereinafter called “the Kirksville job”, the net profit realized therefrom by the company may be more or less than the amount of such profit reflected on the company’s books as at January 31, 1965, namely $52,780.09. Accordingly the redemption price shall be subject to adjustment upon the completion of the Kirksville job either by further payment to Erickson by the company of an amount equal to 41%% of any such additional profit or by reimbursement by Erickson to the company of an amount equal to 41%% of any reduction in such profit, as the ease may be. Erickson shall continue to supervise the Kirksville job until the completion thereof, shall make such trips to Kirksville and perform such services as may he necessary for the supervision of the job, all at his own expense without charge to the company, and shall be furnished by the company with all files, records and papers required in connection with the supervision of the job. 5. Since December, 1964 Erickson has devoted part of his time to another business but has received his regular salary and expense allowance from the company, subject to subsequent adjustment by the parties. Eor the purpose of such adjustment Erickson shall pay the company and the company shall accept a cash refund in the amount of $1,000.00 in full payment, satisfaction and discharge of all claims or demands of the company against Erickson for overpayment of salary or expense allowance to him. 6. The closing under this agreement shall tafee place at 11:00 o’clock A.M. on April 12, 1965 or such earlier or later time or date as may be mutually fixed by the parties. The place of closing shall be the office of the company at 8827 Maple Street, Omaha, Nebraska or such other place as may be mutually agreed upon. At the closing, (a) the company shall execute and deliver to Erickson such bills of sale, assignments, instruments and documents as shall be effective to transfer to Erickson all the receivables, furniture, fixtures, machinery and equipment mentioned in paragraph 2 hereof and shall pay to Erickson by check the sum of $54,450.00 (the balance of $4,000.00 being retained by the company pursuant to the provisions of paragraph 7 hereof) ; and (b) Erickson shall deliver to the company certificates for said 250 shares of stock, duly endorsed for transfer, shall tender to the company his written resignation as a director, officer and employee thereof, shall surrender to the company such company-owned items as may still be in his possession or under his control such as credit cards, keys and other paraphernalia, and shall pay to the company by check said refund of $1,000.00. 7. The company has set apart out of said redemption price and shall retain the sum of $4,000.00 until final payment for the Kirksville job. Upon receipt of such payment, the company shall pay over such sum to Erickson, subject, however, to the adjustment, if any, mentioned in paragraph 4 hereof. 8. After the closing, each party shall from time to time upon the reasonable request of the other party execute and deliver in proper form such further instruments and documents and performing such acts as may be necessary or desirable for perfecting in the other party title to all items intended to be transferred pursuant hereto and putting such party in actual possession thereof. 9. The company has been holding in reserve the sum of $3,000.00 to defray the cost of further painting on the Litchfield, Illinois and Greensburg, Indiana jobs. Such sum is included in the redemption price payable to Erickson hereunder, and he shall arrange for such painting at his own expense. 10. Attached hereto as Exhibit B is a list of all of the company’s construction jobs since the organization of the company. Each job is identified in the gross profit column by an “E” or an “S” according to whether Erickson or W. Wayne Skinner, the president of the company, supervised such job. With respect to each job marked “E” Erickson shall have the following obligations and responsibilities : (a) If at any time prior to January 1, 1967 in the case of each job, except the Kirksville, Litchfield and Greensburg jobs hereinbefore mentioned, and if at any time prior to January 1, 1969 with respect to such jobs, the owner for whom any such job was performed shall claim that there was any defect in materials or workmanship under normal use and service, Erickson shall at his own expense remedy such defect within a reasonable time after he receives written notice of such claim from the company. (b) Erickson shall have the obligation and responsibility for remedying such defect regardless of the amount of time that has elapsed since the completion of the job or the fact that such claim may be barred by the statute of limitations, all to the end that the good will and reputation of the company may be preserved. (c) In the event that Erickson fails or refuses thus to remedy any such defect he shall indemnify the company and hold it harmless from and against any and all loss, liability and expense resulting from or arising out of any such claim of defective materials or workmanship. (d) In the event that Erickson fails or refuses thus to remedy any such defect, the company may itself remedy such defect after first notifying Erickson of the company’s intention to do so, and Erickson shall reimburse the company for the amounts actually expended by it for that purpose. 11. The company shall retain and make available to Erickson at his request such books, records, files, drawings, papers and documents as he may require for the purpose of collecting the receivables mentioned in paragraph 2 hereof or performing his obligations and responsibilities under paragraph 10 hereof. 12. This agreement may not be modified or terminated orally and no modification, termination or attempted waiver shall be valid unless in writing signed by the party against whom the same is sought to be enforced. 13. The provisions of this agreement shall be binding upon, inure to the benefit of and apply to the respective heirs, executors, administrators, successors and assigns of the parties hereto. 'In Witness Whebeop, the parties hereto have executed this agreement on the date first above written. The written agreement was drawn on behalf of the parties through the joint efforts of Erickson’s attorney, Milton 3Ü. Abrahams, and Mid-States’ attorney, Harry B. Otis. Attached to the agreement was a Mid-States balance sheet at January 31, 1965, showing “net common stock and earned surplus” of $294,287.76. At the time of the agreement Erickson owned 250 of Mid-States’ 600 shares, or 41% percent. The “redemption price” of $146,479 set forth in paragraph 1 of the agreement represented the following (figures rounded to nearest dollar) : 41%% of net book value of stock at Jan. 31, 1965 ($294,287.76) _ $122,620 41%% of the Kirksville job profits at Jan. 31, 1965, in the amount of $52,780, as provided in par. 4 of the agreement _ 21,992 Cash adjustment between Erickson and Mid-States Construction Co.: Payable to Erickson: Litchfield, Ill., and Greensburg, Ind., paint jobs- $3, 000 Office equipment allowance_ 367 3,367 Payable to Mid-States Construction Co.: Refund of salary and expense allowance_ 1, 000 Equipment allowance (yokes)_ 100 % of accountant’s fees for audit preceding agreement_ 400 1, 500 Net cash adjustment — payable to Erickson_ 1, 867 146, 479 Pursuant to the agreement, Erickson on April 12, 1965, delivered certificates for the 250 shares of common stock of Mid-States owned by him, duly endorsed, to the company and received the following from the company on the dates indicated: Apr. 12, 1965 Cash_'_ $54, 450. 00 Apr. 12, 1965 Notes receivable: Watertown, Wis., note and mortgage_ $60, 000 Goodfield Ill., note_ 11, 500 Storm Lake, Iowa, note_ 9, 000 80, 500 Apr. 12, 1965 Furniture, fixtures, machinery, and equipment_ 7, 529 Nov. 19, 1965 Cash_ 4, 000 Nov. 19, 1965 Cash_ 9, 000 155, 479 The November 19, 1965, payment to Erickson by Mid-States in the amount of $4,000 represented the part of the “redemption price” retained by the company until final payment for the Kirksville job, as provided in paragraph 7 of the agreement. The November 19, 1965, payment in the amount of $9,000 represented an additional payment to Erickson by the company. The payment was made pursuant to the provisions of paragraph 4 of the agreement. In paragraph 4 it was recognized that the net profit to be realized from the Kirksville, Mo., construction job might be more or less than the estimated profit of $52,780. Accordingly, paragraph 4 provided that the redemption price was subject to adjustment upon the completion of the Kirksville job, either by further payment to Erickson by the company of an amount equal to 41% percent of any additional profit or by reimbursement by Erickson to the company of an amount equal to 41% percent of any reduction in profit, as the case might be. As it turned out, the total profit from the Kirksville job was $77,632, or $24,852 in excess of the estimated profit of $52,780. Because of certain minor items of disagreement, which arose between Erickson and the company, Erickson settled for $9,000 as the additional amount due him for redemption of his stock under paragraph 4 of the agreement. On the reverse side of the company’s check to Erickson in the amount of $9,000 is typed the following: Accepted in full payment of undivided profits in Kirksville, Mo. job per certain agreement dated April 12,1965. G. A. Erickson Erickson endorsed the check in the space provided. Other than supervising the completion of the Kirksville job, as provided in paragraph 4 of the agreement, and fulfilling any repair-of- defect or bonding responsibilities that might arise under paragraph 10 of the agreement with respect to completed jobs that had been previously supervised by him, Erickson separated from Mid-States as of April 12, 1965, when he resigned as a director, officer, and employee of the company. A few months prior to April 12, 1965, Erickson had organized a new company, Mid-States Equipment Co., the operation of which was then and thereafter under his direction. The $54,450 payment made by Mid-States to Erickson on April 12, 1965, was reflected in the cash disbursements journal of the company by an entry crediting a “cash” account and debiting the “Treasury stock” account (account No. 252) in the amount of $54,450. Under date of April 30, 1965, the following general journal entry was made on the books of Mid-States Constrution Co.: Account JNo. Debit Credit G.E. transaction... . 252 Treas. stock_ $93, 550. 00 _ 140 Depr. on car_ 432. 88 _ 141 Mach., Equip.. 12, 899. 96 . 142 Furn., Fixtures. 1, 561. 24 _ 106 Notes rec_ $80, 500. 00 _ 130 Car_ 2, 968. 33 Mach. & equip_ 131 17, 750. 44 Furniture_ 132 2, 225. 31 Ac. payable_ 205 4, 000. 00 Off. salary_ 20 700. 00 Travel exp_ 25 300. 00 The $54,450 and $93,550 entries were reflected as debits in the Treasury stock ledger account of the company, so that the account was thereby increased in the amount of $148,000. On May 31, 1965. the Treasury stock account was credited in the amount of $3,000, to reclassify such amount which pertained to paragraph 9 of the agreement between Erickson and the company regarding certain painting to be done by Erickson in connection with jobs at Litchfield, Ill., and Greeiisburg, Ind. Subsequently, under date of November 30,1965, three entries were made to the Treasury stock ledger account: a debit in the amount of $34,000 and credits in the amounts of $21,992 and $9,000. The debit entry was to reflect, in part, the $25,000 payment to Erickson for the redemption by the company of 50 shares of stock previously owned by Russell. The remaining portion of the entry in the amount of $9,000 is unexplained and may have been in error. The credit entry in the amount of $21,992 was made to reverse, in part, the earlier classification of payments to Erickson as being for Treasury stock. The $9,000 credit entry may 'have been connected with a reclassification^of an entry to reflect the $9,000 cash payment to Erickson on Novem ber 19,1965, or may instead have been to correct the possible error in connection with the $34,000 debit. On December 31, 1965, the outstanding stock of Mid-States was owned as follows: Stockholder Number of shares owned W. Wayne Skinner- 250 John P. Casey- 50 Attached to Mid-States’ Small Business Corporation Return for 1965 (Form 1120-S) were schedules reflecting the following: LINE 10 — Page 1 Construction jobs transferred to joint venture per stockholders’ agreement dated April 12,1965 Income: Profit in process at 1/31/65: Roseland contract (Nebraska)- $1,315.09 Lincoln contract (Nebraska)- 4,893.55 Kirksville contract — Gross billings- 308, 082, 64 314, 291. 28 Less direct costs — Kirksville contract (Missouri)- 230,450.87 Net joint venture profit- 83, 840. 41 Less cash distributed as share of profits to Gordon A. Erickson, Omaha, Nebr. ([ XXX-XX-XXXX ])_ 30,992.00 52, 848. 41 Continuation of Schedule of Distribution of Income Previously Total ' Amount taxed dividends taxable as Dividends undistrib- or distri- ordinary entitled to uted Stock button income exclusion income redemption 4/12/65_Cash distributed to G. A. Erickson $52,450 less joint venture distribution of $30,992. 4/12/65_Other property distributed to G. A. Erickson at fair market value. $21,458 $13,040.00 . $8,418,00. 88,560 .$15,896.67 72,407.61 $245.72 9/26/65_Cash distribution to W. W. Skinner. 7,600 4,622.15-. 2,877.85 . 9/25/65_Cash distribution to John P. Casey. 9/25/65 Cash distribution to W. R. 11/30/65. Russell. 11/19/65- - Cash distribution to G. A. Erickson 1,500 924.45 575.55 . 26,500 924.45 16,124.08 9,451.47 13,000 . 13,000.00 Totals. 158,508 19,511.05 15,896.67 100,403.09 22,697.19 Mid-States deducted the amount of $30,992 in arriving at the amount of taxable income shown on its return. The amount of $13,040 was treated on its return as having been paid to Erickson as a dividend distribution of earnings and profits out of its reported taxable income of $19,511.05. On his individual return for 1965, Skinner reported the amount of $4,622.15 as his share of t)he $19,511.05 reported as taxable income on Mid-States’ return. In his statutory notice of deficiency to Skinner, respondent determined that the $30,992 amount was paid by Mid-States to Erickson for redemption of Erickson’s stock and was not deductible in determining taxable income of the corporation. The amount of $30,992 was added to the reported taxable income of $19,511.05, for a revised taxable income of $50,503.05. As a part of respondent’s determination, the $13,040 amount was found to also have been paid for the redemption of Erickson’s stock, so that such amount did not reduce the amount of taxable income to be distributed to the company’s remaining shareholders on December 31,1965. Of the $50,503.05 revised taxable income, $40,835.88 was determined to be Skinner’s share, which represented the $7,500 in dividends paid to him by the company on September 25, 1965, plus $33,335.88, or 5/6 (250 of 300 shares) of the company’s undistributed taxable income in the amount of $40,003.05 ($50,503.05 less actual dividends on September 25, 1965, in the amounts of $7,500, $1,500, and $1,500 to Skinner, Casey, and Russell, respectively). In 'his income tax return for 1965, Erickson reported on Schedule D the amount of $142,479 as the gross sales price of the 250 shares of stock redeemed by the company on April 12,1965. Such amount represented the $155,479 paid to him by Mid-States pursuant to the 'agreement, less $3,000 for the! paint jobs referred to in paragraph 9 of the agreement and less $10,000 for the 'difference between the $60,000 face amount of the Watertown, Wis., note received under paragraph 2 of the agreement and the $50,000 for which it was sold later in the year by Erickson. In his statutory notice of deficiency mailed to Erickson, respondent determined that the amounts of $13,040 and $30,992 were paid to Erickson by Mid-States as distributions of profits taxable as ordinary income. ULTIMATE FINDINGS The purpose of the April 12,1965, agreement between Erickson and Mid-States was to provide for the redemption of Erickson’s stock. The $13,040 and $30,992 amounts in issue were paid to Erickson as parts of the total purchase price for the redemption of his stock. The provi sions in tlie agreement pertaining to an upward or downward adjustment in the redemption price, depending upon whether the final Kirksville job profits were more or less than the amount estimated at the time of the agreement, were included solely to measure what the ultimate redemption price would be. The «amounts in question were not paid to Erickson «as dividend or joint venture distributions. Since the $13,040 and $30,992 amounts were paid for the redemption of stock, Mid-States is not entitled to treat the $13,040 as a dividend distribution «and deduct the $30,992 from taxable income as a joint venture distribution. Skinner’s share of the company’s taxable income for 1965 should be increased by the amount of $36,213.73. Correspondingly, the gain realized by Erickson in connection with the redemption of his stock qualifies for long-term capital gain treatment. OPINION The narrow issue presented is whether certain amounts received by Erickson from Mid-States in 1965 should be taxed to him as capital gain from the redemption of stock or as ordinary income from dividend or joint venture distributions. If the amounts are taxable as a capital gain to Erickson, then the taxable income of the company and Skinner’s share thereof were properly determined by respondent in the manner prescribed by section 1373,1.E.C. 1954. The resolution of this issue turns upon the true nature and meaning of the agreement of April 12,1965, with the company. The positions of Erickson and Skinner are antithetical. It is Erickson’s position that the agreement provided solely and exclusively for the redemption of his stock. This is also the view taken by respondent in his briefs. It is Skinner’s contention that the agreement actually involved two different transactions: (1) The redemption of Erickson’s stock for «a redemption price of $109,580 representing approximately 41% percent of the net book value of the company’s assets as of the close of business on December 31,1964, and (2) the creation of a joint venture between Erickson and the company with respect to its profits for January 1965 «and the profits from the Kirksville job. Skinner recognizes that «a redemption occurred but seeks to segregate and exclude part of the redemption price specified in the agreement. Skinner argues in his brief: The contract primarily dealt with a redemption; the phrase “redemption price” refers to the actual redemption price, of course. But it covers more, and accordingly should he treated as the eauivalent of “total” or “contract price.” The fact that the parties felt it necessary to define «the elements of the price is evidence of this, «because if it was intended that all payments were to be strictly applied to the stock redemption, no explanation would have been necessary.

12269387-9367

MEMORANDUM OPINION ANDREWS, UNITED STATES DISTRICT JUDGE: Petitioner LeShawn Washington (“Petitioner”) is an inmate in custody at the James T. Vaughn Correctional Center in Smyrna, Delaware. Petitioner filed an Application for a Writ of Habeas Corpus Pursuant to 28 U.S.C. § 2254 (“Petition”). (D.I. 1) The State filed a Motion for Leave to File a Motion to Dismiss (D.I. 10) contemporaneously with a Motion to Dismiss the Petition as Time-Barred (D.I. 10-2). For the reasons discussed, the Court will grant the State’s Motion for Leave to File a Motion to Dismiss and its Motion to Dismiss, and will deny the Petition as barred by the limitations period prescribed in 28 U.S.C. § 2244. I. BACKGROUND As set forth by the Delaware Supreme Court in Petitioner’s direct appeal: On December 11, 2010, Wilmington Police Officer Mary Quinn responded to a call of shots fired near 8th and Washington Street, Wilmington, Delaware. She found William Reeder on the ground with a gunshot wound in his back. Reed-er told Quinn that three or four black males approached him, and that he knew one of them by the nickname “Littles.” While Littles was struggling to get Reeder’s money, Reeder saw that Lit-tles had a silver handgun. Reeder tried to run away, but he was shot in the back. Reeder later identified [Petitioner] as the person he knew as Littles. One month later, Wilmington Police Officer Steven Bender responded to a call of as suspicious vehicle near 10th and Lombard Street, Wilmington, Delaware. At that location, Bender saw three black males in a blue Chevrolet. As Bender approached the car, the men fled. Bender chased and apprehended Usef Allen, who had a silver, 25 caliber gun in his possession. After Bender placed Allen in the back of the patrol car, he returned to the Chevrolet and saw a black, 9 mm handgun on the ground next to the car. Another responding police officer found [Petitioner] hiding a short distance from the car, and arrested him. The police tested the 25 caliber handgun, and determined that the two casings that had been retrieved from the December shooting were ejected from the gun found in Allen’s possession. Experts also tested the 9 mm handgun, and found [Petitioner’s] DNA on the weapon. Washington v. State, 49 A.3d 1194 (Table), 2012 WL 3039725, at *1 (Del. July 25, 2012). Petitioner was indicted on two sets of charges in two separate indictments, which were consolidated for trial. Washington, 2012 WL 3039725, at *1. The jury found Petitioner guilty of first degree robbery, second degree conspiracy, and resisting arrest, but found him not guilty of carrying a concealed deadly weapon. Id. The jury was unable to reach a verdict on the remaining charges of first degree assault and possession of a firearm during commission of a felony (“PFDCDF”). Id. On December 2, 2011, the Superior Court sentenced Petitioner to twenty-five years at Level V for first degree robbery, suspended after fifteen years for decreasing levels of supervision; two years at Level V for second degree conspiracy, suspended after one year; and one year at Level V for resisting arrest, suspended for probation. (D.I. 13-5 at 14-16) Petitioner appealed, and the Delaware Supreme Court affirmed his convictions and sentences on July 25, 2012. See Washington, 2012 WL 3039725, at *2. On July 16, 2013, while represented by counsel, Petitioner filed a motion for post-conviction relief pursuant to Delaware Superior Court Criminal Rule 61 (“Rule 61 Motion”). (D.I. 13-10 at Entry No. 56) The Superior Court denied the Rule 61 Motion on March 21, 2014 (D.I. 13-1 at 24-33), and the Delaware Supreme Court affirmed that decision on November 13, 2014. See Washington v. State, 105 A.3d 990 (Table), 2014 WL 7009718 (Del. Nov. 13, 2014). Petitioner filed the instant Petition in November 2015. (D.I. 1) The Petition asserts the following four grounds for relief: (1) the trial court abused its discretion by permitting the State to admit evidence of prior bad acts; (2) the trial court abused its discretion by reading a coercively worded Allen charge to the jury; (3) the trial court abused its discretion by failing to engage in the required analysis to a Bat-son challenge; and (4) the State engaged in prosecutorial misconduct by using a slide containing Petitioner’s picture declaring him guilty. In response, the State filed a Motion for Leave to File a Motion to Dismiss the Petition (D.I. 10), along with the actual Motion to Dismiss the Petition as Time-Barred (D.I. 10-1). Petitioner filed an Answer to the State’s Motion for Leave to File a Motion to Dismiss (D.I. 18), and the State filed a Reply to Petitioner’s Answer (D.I. 19). Having considered the State’s Motion for Leave to File a Motion to Dismiss (D.I. 10) in conjunction with the record and the parties’ subsequent filings, the Court will grant the Motion for Leave to File a Motion to Dismiss (D.I. 10), and will review the State’s Motion to Dismiss (D.I. 10-1) as set forth below. II. ONE YEAR STATUTE OF LIMITATIONS AEDPA prescribes a one-year period of limitations for the filing of habeas petitions by state prisoners, which begins to run from the latest of: (A) the date on which the judgment became final by the conclusion of direct review or the expiration of the time for seeking such review; (B) the date on which the impediment to filing an application created by State action in violation of the Constitution or laws of the United States is removed, if the applicant was prevented from filing by such State action; (C) the date on which the constitutional right asserted was initially recognized by the Supreme Court, if the right has been newly recognized by the Supreme Court and made retroactively applicable to cases on collateral review; or (D) the date on which the factual predicate of the claim or claims presented could have been discovered through the exercise of due diligence. 28 U.S.C. § 2244(d)(1). AEDPA’s limitations period is subject to statutory and equitable tolling. See Holland v. Florida, 560 U.S. 631, 130 S.Ct. 2549, 177 L.Ed.2d 130 (2010) (equitable tolling); 28 U.S.C. § 2244(d)(2)(statutory tolling). Petitioner does not assert, and the Court cannot discern, any facts triggering the application of § 2244(d)(1)(B), (C), or (D). Consequently, the Court concludes that the one-year period of limitations began to run when Petitioner’s conviction became final under § 2244(d)(1)(A). Pursuant to § 2244(d)(1)(A), if a state prisoner appeals a state court judgment but does not seek certiorari review, the judgment of conviction becomes final, and the statute of limitations begins to run, upon expiration of the ninety-day time period allowed for seeking certiorari review. See Kapral v. United States, 166 F.3d 565, 575, 578 (3d Cir. 1999); Jones v. Morton, 195 F.3d 153, 158 (3d Cir. 1999). In this case, the Delaware Supreme Court affirmed Petitioner’s convictions and sentences on July 25, 2012, and he did not file a petition for a writ of certiorari in the United States Supreme Court. As a result, Petitioner’s convictions became final on October 24, 2012. Applying the one-year limitations period to that date, Petitioner had until October 24, 2013 to timely file a habeas petition. See Wilson v. Beard, 426 F.3d 653, 662-64 (3d Cir. 2005)(Fed. R. Civ. P. 6(a) applies to AEDPA’s limitations period); Phlipot v. Johnson, 2015 WL 1906127, at *3 n. 3 (D. Del. Apr. 27, 2015)(AEDPA’s one-year limitations period is calculated according to the anniversary method, ie., the limitations period expires on the anniversary of the date it began to run). Petitioner, however, did not file the instant Petition until November 12, 2015, more than two years after that deadline. Thus, the Petition is time-barred and should be dismissed, unless the limitations period can be statutorily or equitably tolled. See Jones, 195 F.3d at 158. The Court will discuss each doctrine in turn. A. Statutory Tolling Pursuant to § 2244(d)(2), a properly filed state post-conviction motion tolls AEDPA’s limitations period during the time the motion is pending in the state courts, including any post-conviction appeals, provided that the motion was filed and pending before the expiration of AED-PA’s limitations period. See Swartz v. Meyers, 204 F.3d 417, 420-24 (3d Cir. 2000). The limitations period is also tolled for the time during which an appeal from a post-conviction decision could be filed even if the appeal is not eventually filed. Id. at 424. However, the limitations period is not tolled during the ninety days a petitioner has to file a petition for a writ of certiorari in the United States Supreme Court regarding a judgment denying a state post-conviction motion. See Stokes v. Dist. Attorney of Philadelphia, 247 F.3d 539, 542 (3d Cir. 2001). Here, when Petitioner filed his Rule 61 motion on July 16, 2013, 264 days of AED-PA’s limitations period had already expired. The Rule 61 motion tolled the limitations period through November 13, 2014, the day on which the Delaware Supreme Court affirmed the Superior Court’s denial of the motion. The limitations clock started to run on November 14, 2014, and ran the remaining 101 days without interruption until the limitations period expired on February 23, 2015. Thus, even after the applicable statutory tolling, the Petition is time-barred, unless equitable tolling applies. B. Equitable Tolling

3609601-9129

OPINION OF THE COURT MYERS, Senior Judge: Contrary to his pleas, appellant was convicted by a general court-martial composed of officer and enlisted members of assault consummated by a battery, false swearing, and assault with intent to commit rape in violation of Articles 128 and 134, Uniform Code of Military Justice [hereinafter UCMJ], 10 U.S.C. §§ 928 and 934 (1982). The convening authority approved the adjudged sentence of a dishonorable discharge, confinement for three years, and reduction to Private El. Before us, appellant for the first time challenges the jurisdiction of the court-martial, asserts that the record of trial is not verbatim, and attacks the admissibility of certain character evidence. I Appellant first contends that the case was not tried by the proper court-martial panel, thus the panel that did try him was without jurisdiction to do so. The charges against appellant were referred, to the general court-martial convened by Court-Martial Convening Order [hereinafter CMCO] 28, dated 28 July 1988 (Appendix A). On 27 September 1988, at a pretrial Article 39(a), UCMJ session trial counsel announced that the appellant’s court-martial was convened by CMCO 33 (Appendix B), as amended by CMCO 34 (Appendix C). There was no defense objection. Appellant was thereafter arraigned and requested trial by a panel consisting of enlisted members. When the court-martial was assembled on 3 October 1988, trial counsel announced that CMCO 33 had been further amended by CMCO 35 (Appendix D) to which trial defense counsel posed no objection. In response to this assignment of error, the Government submitted, as a post-trial appellate exhibit, a memorandum dated 24 August 1988. Therein the convening authority selected a new court-martial panel for the period 1-30 September 1988 and directed, inter alia, that all accused not yet arraigned, which included appellant, be tried by that newly-selected panel. The court-martial thus selected was promulgated by CMCO 30, which did not reflect on its face that it replaced CMCO 28. Further, the convening authority's selection memoranda and endorsements were not included in the original record of trial but were added as government appellate exhibits. Manual for Courts-Martial, United States, 1984 [hereinafter MCM, 1984], Rule for Courts-Martial [hereinafter R.C.M.] 905(b)(1), (b)(2), and (e) provide that objections based on jurisdictional defects will not be waived through failure to object at trial. Errors not amounting to jurisdictional error are waived when not objected to at trial. United States v. Murray, 25 M.J. 445 (C.M.A.1988). Such errors include administrative or typographical mistakes. United States v. Hudson, 27 M.J. 734, 735 (A.C.M.R.1988). The charge sheet indicates that appellant’s case was originally referred to the general court-martial convened by CMCO 28. The information contained in Government Appellate Exhibit 1 shows that the convening authority, pursuant to a regularly scheduled rotation of panels, intended to have appellant’s case tried by the panel listed in CMCO 33, as amended. We find, therefore, that appellant's case was properly referred to trial by the convening authority and was tried by a panel which had been properly selected by the convening authority. Further, defense counsel failed to challenge the regularity of the referral process at the trial, and appellant has neither alleged nor shown any actual prejudice as a result of being tried by the court-martial convened by CMCO 33, as amended. United States v. King, 28 M.J. 397, 399-400 (C.M.A.1989). Even assuming that there was an error in the selection process, it was merely administrative in nature, thus was nonjurisdictional, nonprejudicial, and waived by failure to object at the trial. Hudson, 27 M.J. at 734; R.C.M. 801(g). Nevertheless, this issue could have been avoided and a lot of appellate time and resources saved by the mere addition of a few words to the face of CMCO 33 to the effect that it replaced or superseded CMCO 28. R.C.M. 601(e)(1); MCM, 1984, App. 5, page A5-1; App. 6, page A6-1. II With respect to appellant’s second allegation of error, the missing portion of testimony, which consisted of a brief question by trial counsel and answer by a government witness, was supplied by the trial judge in a certificate of correction. With that addition, the record of trial is now fully verbatim and this issue is moot. III Appellant’s final assertion is that the military judge erred by failing to rule, sua sponte, that testimony concerning the truthfulness and veracity of the appellant and the victim was inadmissible or, in the alternative, that the military judge failed to instruct the members to disregard the said testimony in weighing credibility. After the defense had rested, trial counsel recalled First Lieutenant [hereinafter 1LT] A, who had conducted the Article 32, UCMJ, investigation, and attempted to question him about the prior testimony of the victim. Trial counsel sought to introduce evidence of the victim’s prior consistent testimony in order to rebut any inference of prior inconsistent statements which may have been raised by defense counsel during cross-examination. This line of questioning was disallowed by the military judge, who essentially made a factual finding that the victim had not made any inconsistent statements, thus her testimony had not been impeached. Subsequently, trial counsel presented two witnesses who, without objection by defense counsel, testified that the victim was a truthful person. The first witness testified only as to his personal opinion of the victim’s truthfulness based on his associations with her during church activities, and the second witness, a co-worker of the victim, testified as to the latter’s reputation for truthfulness among her co-workers. Trial counsel called a third witness who testified that appellant was not always a truthful person. With regard to the testimony of these three witnesses, the military judge instructed the panel as follows: Now, evidence has been received as to the accused’s bad character for truthfulness, specifically, through the testimony of Specialist Fisher and his opinion concerning the accused’s truthfulness. Now you may consider this evidence in determining his believability. Now, evidence of good character for truthfulness has been introduced as to Miss Popley through the testimony of Reverend Smith and Mr. Brewer as to both their personal opinions and Mr. Brewer as to her reputation in the work place. Now you may consider this evidence in determining her believability. [4] We hold that the opinion evidence concerning the truthfulness and veracity of the victim was inadmissible, but for reasons other than those set forth by appellant. MCM, 1984, Military Rule of Evidence [hereinafter Mil.R.Evid.] 608(a)(2) provides that “the credibility of a witness may be attacked or supported by evidence in the form of opinion or reputation.” However, evidence of truthful character may be introduced “only after the character of the witness for truthfulness has been attacked by opinion or reputation evidence or otherwise.” Id. (emphasis added). A cross-examination during which the truthfulness and credibility of a witness is attacked is, under certain circumstances, sufficient to permit the introduction of evidence of truthful character. United States v. Varela, 25 M.J. 29, 30 (C.M.A.1987); United States v. Everage, 19 M.J. 189, 192-93 (C.M.A.1985). The evidentiary rule permitting a witness to be rehabilitated when his character for truthfulness has been attacked “should not be interpreted in a restrictive manner.” United States v. Woods, 19 M.J. 349 (C.M.A.1985); see also Varela, id., 25 M.J. 29; United States v. Allard, 19 M.J. 346 (C.M.A.1985); Everage, id., 19 M.J. 189. Nonetheless, the mere fact that a witness takes the stand to testify does not automatically trigger the right to offer evidence to bolster his credibility. Varela, id. at 31; Everage, id. at 193. As stated by Chief Judge Everett: [C]ross-examination can be extensive and nevertheless not constitute an attack on a witness’ veracity. The cross-examiner may instead be seeking to establish that, although the witness is well-intentioned and seeks to tell the truth, his observation of events was faulty, his memory is poor, or his testimony on direct examination was ambiguous. Everage, id. at 193. That is precisely what occurred in the case at bar. During cross-examination of the victim, defense counsel elicited testimony that the victim had omitted certain minor matters from her pretrial statement to criminal investigators, such as the location at which appellant first threatened to hit her, whether she heard artillery shells exploding, whether she told appellant “You’re going to be letting yourself in for a big disappointment,” and whether she tried to find "a stick or post” with which to defend herself. As to each item, the victim testified that although they may not have been contained in her prior statements, nevertheless her in-court testimony was an accurate rendition of the events that occurred.

11940222-21228

LITTLE, District Judge: The petitioner, Oxford Management, Inc. (“Oxford”), filed for bankruptcy under Chapter 11 of the Bankruptcy Code. Thereafter, the appellees, Katherine A. Bingler (“Bin-gler”) and J. Louis Matherne & Associates (“Matherne”), each brought suit against Oxford to collect monies owed from the lease of commercial office space. The bankruptcy court found that each appellee was entitled to its fee and ordered the funds harbored in an escrow account. The order was affirmed on appeal by the United States District Court following consolidation of the two separate proceedings. The petitioner now appeals the district court’s ruling, asserting that the order was erroneous as a matter of law because the fees or commissions are the property of the bankruptcy estate and may only be disbursed in accordance with the provisions of the Bankruptcy Code. Because we find that the bankruptcy court abused its discretion under 11 U.S.C. § 105(a) when it required the appellant to pay the appellees their claims, we reverse. I. Oxford Management, Inc. is a broker which provides commercial leasing services. In February 1983, Oxford and appellee Bin-gler entered into a contract whereby Bingler agreed to act as an independent contractor and bring to Oxford commercial leases. On December 6, 1984, Oxford entered into a rental agreement with Fidinam U.S.A., Inc. (“Fidinam”) in which Oxford agreed to furnish commercial leasing services to Fidinam relative to the Place St. Charles office project in New Orleans, which Fidinam owned. Bingler and Oxford agreed that Bingler would be the leasing specialist to the project. In return for her services, Bingler received a commission equal to 4% of the monthly rent owed to Fidinam under leases generated by Bingler. In accordance with the agreement between Oxford and Fidinam, Fidinam would pay 6% of the rental value to Oxford, who placed the money in its general operating account. Oxford would then retain 2% of the commission and forward the remaining 4% to Bingler. The funds received from Fidinam were not segregated in any respect from Oxford’s other funds. Soon after the execution of the rental agreement between Oxford and Fidinam, the law firm of Plauche & Maselli became interested in leasing space in the Place St. Charles. Plauche & Maselli enlisted the brokerage services of appellee Matherne, which negotiated the terms of a lease. Oxford and Matherne agreed that Matherne’s commission would be governed by the Oxford/Fidi-nam rental agreement and would equal 4% of the total net rent of the Plauche & Maselli lease. As with Bingler, Oxford was to pay Matherne its commission upon receipt of the money from Fidinam. This method of payment was in operation until July 1990, at which time Oxford discontinued payments to the appellees despite the fact that Fidinam continued to send the entire 6% commission to Oxford. On November 2, 1990, Oxford filed for bankruptcy under Chapter 11 of the Bankruptcy Code. The appellees then filed separate complaints for injunctive relief, declaratory relief and turnover of funds, and motions for temporary restraining orders and injunctive relief. The bankruptcy court reviewed the contracts between Oxford and Fidinam, Oxford and Bingler, and Oxford and Matherne and denied the appellees’ motions on the grounds that the appellees had a debtor-creditor relationship with the appellant and, as such, ruled that the commissions belonged to Oxford. Nonetheless, the court employed its equitable powers under 11 U.S.C. § 105(a) to order the appellant to comply with the appel-lees’ demands for payment. Oxford appealed the decision to the district court. The district court affirmed the bankruptcy court’s order compelling Oxford to pay the appellees the commissions and agreed with the bankruptcy court’s use of its equity powers under 11 U.S.C. § 105(a) to implement the order. Oxford then filed this appeal, challenging whether the bankruptcy court erred in ordering Oxford to pay to appellees post-petition funds in satisfaction of obligations that arose by pre-petition agreement, and whether the bankruptcy court abused its equity powers under 11 U.S.C. § 105(a) in ordering the payments, II. A bankruptcy court’s findings of fact are subject to the clearly erroneous standard of review. In re Young, 995 F.2d 547, 548 (5th Cir.1993). This court will strictly apply this standard when the district court has affirmed the bankruptcy court’s findings and will reverse only when this court is left with “the definite and firm conviction that a mistake has been made.” Id. Conclusions of law are reviewed de novo. Id.; see also In re Allison, 960 F.2d 481, 483 (5th Cir.1992). A. The appellant objects to the bankruptcy court’s determination that post-petition funds be used to satisfy the appellees claims. The appellant argues that the court, having determined that Oxford and the ap-pellees have a debtor-creditor relationship, erroneously used its equitable powers under 11 U.S.C. § 105(a) to compel payment. We agree with the appellant and hold that the bankruptcy court abused its discretion in the application of this statute. Section 105(a) authorizes a bankruptcy court to fashion such orders as are necessary to further the substantive provisions of the Bankruptcy Code. For instance, the section permits bankruptcy courts to issue injunctions. But, the powers granted by that statute must be exercised in a manner that is consistent with the Bankruptcy Code. See United States v. Sutton, 786 F.2d 1305, 1308 (5th Cir.1986); In re Texas Consumer Finance Corp., 480 F.2d 1261, 1265 (5th Cir.1973). The “statute does not authorize the bankruptcy courts to create substantive rights that are otherwise unavailable under applicable law, or constitute a roving commission to do equity.” United States v. Sutton, 786 F.2d at 1308. The bankruptcy court concluded that the commissions are part of the bankruptcy estate and that the appellees have the status of general unsecured creditors. At the same time, the court decided that Oxford “owed” the appellees their commissions and that equity necessitated payment. We observe, however, that the Bankruptcy Act did not give bankruptcy courts the authority to grant compensation of post-petition funds except as provided by the Bankruptcy Code. Matter of Hammers, 988 F.2d 32, 34 n. 1 (5th Cir.1993). Neither the appellees nor the bankruptcy court cited a specific provision of the Code that would allow the payment of post-petition funds to satisfy pre-petition claims. By commanding payment, the bankruptcy court elevated the status of the appellees above that of the other general unsecured creditors and deviated from the pro rata scheme of distribution envisioned by the Code. See 11 U.S.C. § 726(b) (Law.Co-op. 1987). This order effectuated an impermissible substantive alteration of the Code’s provisions. For this reason, we find that the bankruptcy court was in error when it used its equity powers to command the payment of the appellees’ commissions. B. Having concluded that the bankruptcy court acted beyond the equitable powers granted by section 105(a), we now turn to whether the bankruptcy court was correct in concluding that the commissions were part of the bankruptcy estate. Oxford renews its assertion that the bankruptcy court properly found that the funds are part of the debtor’s estate. Bingler and Matherne, on the other hand, advance numerous arguments in support of the position that the pre-petition agreements rendered the appellees the equitable owners of the funds. In other words, the bankruptcy court’s conclusion was correct, but for the wrong reasons. 11 U.S.C. § 541(d) is the general provision addressing property of the bankruptcy estate. It provides that the estate is comprised of “all legal or equitable interests of the debtor in property as of the commencement of the case.” 11 U.S.C. § 541(d) (Law.Co-op.1986). The section does not, however, create or define property interests. Therefore, in the absence of controlling federal bankruptcy law, the substantive nature of property rights is defined by reference to state law. Butner v. United States, 440 U.S. 48, 55-56, 99 S.Ct. 914, 918, 59 L.Ed.2d 136 (1979). The bankruptcy court properly looked to Louisiana law to determine whether Oxford’s estate owned the commissions under the terms of the contracts between the parties. An interpretation of an unambiguous contract is a question of law and will be reviewed de novo. Calpetco 1981 v. Marshall Exploration, Inc., 989 F.2d 1408, 1413 (5th Cir.1993). The appellant argues that the terms of the contracts between the parties explicitly created a debtor-creditor relationship. The contract between Oxford and Fidi-nam provides that the whole 6% commission is to be paid directly to Oxford, with Oxford then obligated to pay the appellees their shares. Since Bingler and Matherne were not parties to the contract between Oxford and Fidinam, they could not directly receive their payments from Fidinam but were de-pendant upon Oxford for payment pursuant to the terms of their respective agreements with Oxford. The bankruptcy court interpreted these contracts to mean that the commissions paid to Oxford by Fidinam were Oxford’s property, and that while Oxford had an obligation to pay the appellees under separate and distinct contracts, the relationship between the parties was that of debtor and creditor. We agree with these conclusions and concur in the judgment that the appel-lees’ claims arose pre-petition, that the funds are part of the debtor’s estate, and the relationship between the appellant and the appellees is that of debtor-creditor. 1. The appellees advance several arguments in opposition to these conclusions, the first of which is based on a constructive trust theory. The appellees maintain that under Louisiana law governing real estate licenses, a scheme was created that forms the basis of an equitable interest or trust. See La.Rev. StatAnn. §§ 37:1430-1468 (West 1989 & Supp.1993). For instance, § 37:1446(B) requires associate brokers to receive commissions through the sponsoring broker, in this case Oxford. Moreover, § 37:1455(A)(5) permits a broker to be censured or to have his license revoked for “failure to remit money coming into his possession belonging to others.” The appellees maintain that since direct receipt of the commissions is made impossible by this scheme, and since sanctions for failure to remit are permitted by the statute, the commissions received by the sponsoring broker, in this case Oxford, are meant to “pass-through” the sponsoring broker to the associate brokers, Bingler and Matherne. As such, Oxford merely holds the funds in trust for the associate brokers. When the property of an estate is alleged to be held in trust, the burden of establishing the trust’s existence rests with the claimants. “Additionally, where the recipient of the funds can by agreement use them as his own and commingle them with his own monies, a debtor-creditor relationship exists, not a trust.” In our case, the commissions remitted by Fidinam to Oxford were placed in Oxford’s general operating account and commingled with Oxford’s other funds. No agreement existed which prohibited Oxford from using the funds for other purposes. Therefore, the appellees argument in favor of the creation of a trust is insupportable. The appellees also suggest that a constructive trust was created, and they rely on section 541(d) of the Bankruptcy Code and its legislative history for support of that proposition. The appellees assert that section 541(d) recognizes that some property ostensibly owned by the debtor in possession is not the property of the debtor’s estate. Further, they direct our attention to the section’s legislative history, which includes an example of property that is held in constructive trust for the true owner. The appel-lees also note that although Louisiana law does not recognize constructive trusts, the concept is an equitable one and is applicable in situations such as this one, where funds are “earmarked” for a specific creditor. While it is true that the Bankruptcy Code recognizes situations in which some property ostensibly owned by the debt- or is not the property of the debtor’s estate, the examples raised by the appellees are inapplicable here. First, section 541(d) refers to secondary mortgages, not commissions. Second, Louisiana does not recognize constructive trusts. See In re Emerald Oil Co., 807 F.2d 1234, 1238 (5th Cir.1987). Section 541 defines those interests of the debtor that are transferrable to the debtor’s estate, but it leaves to state law the task of defining the extent of the debtor’s interest. Therefore, while the legislative history mentions the possibility of a constructive trust under certain circumstances, the final resolution is made by nonbankruptcy law. In our case, that law is Louisiana law. Additionally, we reject the appellees’ contention that the funds were “earmarked” for them. Rather, the funds were placed in an escrow account by the bankruptcy court pending resolution of the case. This account was later terminated. Finally, the appellees’ reliance on section 541’s legislative history is misplaced. It is well established that where a statute is unambiguous, reference to legislative history is unnecessary. See, e.g., Barnhill v. Johnson, 503 U.S. -, -, 112 S.Ct. 1386, 1391, 118 L.Ed.2d 39 (1992) (“[A]ppeals to statutory history are well-taken only to resolve ‘statutory ambiguity.’ ”); Toibb v. Radloff, 501 U.S. -, -, 111 S.Ct. 2197, 2200, 115 L.Ed.2d 145 (1991). 2. The appellees’ next argument is that the contractual arrangement between the parties created an agency relationship. Specifically, the appellees allege that Oxford, by collecting the commissions on the appel-lees’ behalf, acted as their agent. Under Louisiana law, an agency relationship is created either by express appointment of a man-datary under Civil Code Article 2985 or by implied appointment arising from apparent authority. Civil Code Article 2985 (West 1979); see also Richard A. Cheramie Enterprises, Inc. v. Mt. Airy Refining Co., 708 F.2d 156 (5th Cir.1983). An agency relationship is created by implication “when, from the nature of the principal’s business and the position of the agent within that business, the agent is deemed to have permission from the principal to undertake certain acts____” AAA Tire & Export, Inc. v. Big Chief Truck Lines, Inc., 385 So.2d 426, 429 (La.App.1980). In other words, implied agency involves permission to act, even though permission is not explicitly established orally or in writing. Id. An implied agency is frequently established by the conduct and communication of the parties and the circumstances of the particular case. Busby v. Walker, 84 So.2d 304 (La.App.1955). Under Louisiana law, an agency relationship cannot be presumed, it must be clearly established. Patrick v. Patrick, 230 So.2d 759, 762 (La.App.1970). The appellees fail to establish that an express appointment of Oxford as a mandatary was contemplated by the agreements between the parties. The unambiguous language of the contracts between Oxford and the appellees provides that Oxford agreed to pay the outside broker a commission. Again, this is language of indebtedness that connotes a creditor-debtor relationship. In so far as the record does not support the finding that an implied ap pointment was intended by the parties, we decline to create a relationship between the parties that they themselves did not intend. 3. Third, the appellees maintain that the agreements between the parties created a contract of deposit. Specifically, the appellees assert that Oxford, upon receipt of the commissions from Fidinam, became the depositary of the appellees’ 4% commissions. La.Civ.Code Ann. art. 2926 defines “deposit” as “an act by which a person receives the property of another, binding himself to preserve it and return it in kind.” A deposit is a nominate contract created by mutual consent of the parties, whether express or implied. La.Civ.Code Ann. arts. 2932-2933 (West 1979). The main requisites for the creation of a depositor-depositary relationship are “the mutual consent of the parties and the delivery of the property.” Harper v. Brown & Root, Inc., 391 So.2d 1170, 1172 (La.1980). See also Michael H. Rubin, Bailment & Deposit in Louisiana, 35 La.L.Rev. 825, 828 (1975). With these principles in mind, we conclude that a deposit was not created. In order for a deposit to have occurred, it must be shown that Oxford consented, either expressly or impliedly, to act as a depositary on the appel-lees’ behalf, followed by receipt of the property in question. The situation here does not apply. Certainly there was no explicit agreement between Oxford and Fidinam providing for Oxford’s fulfillment of this role, nor was there any delivery of property to Oxford by the appellees from which an implied deposit can be inferred. As discussed above, Oxford and the appellees had a debtor-creditor relationship. Their arrangement falls short, however, of demonstrating either consent or intent to form a depositor-depositary relationship. 4. Finally, the appellees suggest that they are entitled to their commissions as third party beneficiaries of the brokerage commission agreement between Oxford and Fidinam. La.Civ.Code Ann. arts. 1978-1982 (West 1993) govern third-party beneficiary contracts, or stipulations pour autrui. Article 1978 provides that “[a] contracting party may stipulate a benefit for a third person called a third party beneficiary.” A third party beneficiary contract is created when the party entitled to receive the benefit, the promisee, instructs the promisor to confer the benefit upon a third party, and the prom-isor then agrees to do so. Wagner & Truax Co. v. Barnett Enterprises, Inc., 447 So.2d 1255 (La.App.1984); see also Miller v. Pick, 467 So.2d 74 (La.App.), writ denied, 472 So.2d 36 (La.1985). In this case, there was no agreement between Oxford and Fidinam instructing Fi-dinam to pay the appellees their commissions. Rather, Fidinam agreed to pay Oxford the entire commission, leaving to Oxford the task of forwarding to the appellees their portions. Furthermore, at the time Oxford and Fidinam signed their contract, there was no way Fidinam could have known that Oxford would be affiliated with Bingler and Matherne. Thus, Fidinam’s only obligation was to pay Oxford. Since a stipulation pour autrui must be agreed upon by the promisor, this argument must also fail. III. For the foregoing reasons, we conclude that the bankruptcy court erred in ordering the appellant to pay to the appellees post-petition funds in satisfaction of pre-petition obligations. Accordingly, the bankruptcy court’s order, as affirmed by the district court, is REVERSED. This matter is REMANDED to the bankruptcy court for further administration not inconsistent with this opinion. . Oxford is the successor-in-interest to Latter & Blum’s commercial leasing division as of September 30, 1986. The rental agreements with Katherine A. Bingler and J. Louis Matherne were executed under the name of Latter & Blum, but Oxford is bound by the conditions of these agreements. For clarity, Latter & Blum and/or Oxford will hereinafter be collectively referred to as "Oxford." . Under Louisiana Real Estate License Law, La. Rev.Stat.Ann. §§ 37:1430-1468 (West 1988 & Supp.1993) and the rules and regulations promulgated by the Louisiana Real Estate Commission, where property is leased or sold by someone other than its owner, a lease or sale must take place through a licensed broker. The broker representing the lessor or owner is known as the "listing broker” or "listing agent.” In the case of commercial leases, potential lessees or tenants are often represented by a "tenant’s bro ker” or "tenant’s agent.” In this case, Matherne served as a tenant’s broker, while Oxford served as the listing broker. Bingler, as an independent contractor, had a somewhat different relationship with Oxford. Nonetheless, since the manner in which the appellees were paid their commissions was the same, the bankruptcy court has treated the appellees as similarly situated. We will follow that lead, as did the district court. . This method of payment is the industry practice since, under La.Rev.Stat.Ann. § 37:1446, associate brokers shall not accept a commission except from their sponsoring broker. . The bankruptcy court originally commanded payment of the funds from an escrow account. This account was terminated upon request of the appellant. At the same time, however, as the court terminated the account, the court ordered the appellant to pay the commissions since the funds had been set aside for the appellees. .Section 105(a) provides: "The court may issue any order, process, or judgement that is necessary or appropriate to carry out the provisions of this title. No provision of this title providing for the raising of an issue by a party in interest shall . be construed to preclude the court from, sua sponte, taking any action or making any determination necessary or appropriate to enforce or implement court orders or rules, or to prevent an abuse of process."

1472742-12901

McCARTHY, District Judge. In this matter an involuntary petition in bankruptcy was filed by three creditors who, through their attorney, asked that a receiver be appointed to conserve the assets of the alleged bankrupt, with enlarged powers including the power to continue the business operations of the alleged bankrupt. The receiver, seeking an exercise of the summary jurisdiction of the court, petitioned for an order directing an alleged trust mortgagee to turn over to the receiver assets of the alleged bankrupt held by the alleged trust mortgagee by virtue of the alleged trust mortgage. After extended hearing it is the decision of the court that the petition must be allowed and the alleged trust mortgagee ordered to turn over to the receiver whatever assets are now held by him and to comply, in all respects, with the Order of the Court filed contemporaneously with this memorandum. The answer filed by the alleged trust mortgagee and the subsequent motion to dismiss filed by him rest upon two principal grounds: that the trust mortgage is a true trust mortgage and that there can be no ‘turn over’ order in any event because of the fact that there has been no adjudication of bankruptcy. The alleged trust mortgagee, the respondent to the present petition, has supported his position by memorandum of law. This memorandum has been carefully considered but found lacking in persuasive qualities. 1. FINDINGS OF FACT The alleged bankrupt, hereinafter Mackin, executed, on April 28, 1959, a real estate mortgage, a collateral note, a security agreement and a trust indenture, which documents are attached to the answer of the respondent herein. On April 28, 1959, and for a number of years prior thereto, Mackin was an individual engaged in the home and industrial oil business, the trucking business, the sand and gravel business, the manufacturing of cement blocks, the construction business and the retail appliance business. In addition to motor vehicles, machinery and equipment used in said business, Mackin also owned three gasoline-station sites, all subject to substantial mortgages. Substantially all of his machinery, equipment and motor vehicles were subject to conditional sales, chattel mortgages'and security interests of such amounts that he was unable to raise further monies in April of 1959 on a security basis. On April 28, 1959, his current unsecured trade indebtedness amounted to approximately $175,000, most of which were overdue and which he was unable to pay. He also owed approximately $90,000 to relatives. During April of 1959 the respondent Arthur T. Wasserman, Esq., representing the Standard Oil Company, made demand upon Mackin for payment of monies then owed to that company in the approximate amount of $60,000. Mackin paid $15,000 by check on account thereof, but stated that he was unable to pay the installments on the balance in the amount requested by said Wasserman. At or about that time the said Wasserman hired one Samuel Richard, an appraiser from Boston, who made a liquidation sale appraisal of all of the assets of Mackin. This was done by Richard on or about April 21, 1959. Thereafter, on or about April 28, 1959, Mackin was called to a meeting in the office of Wasserman, at which time there were also present officers and agents of the First National Bank of Boston, counsel for the First National Bank of Boston, an officer or employee of the Esso Standard Oil Company and Wasserman. In the overall picture presented to the court through a study of the facts and circumstances it becomes difficult, if not impossible, to recognize the position of the First National Bank in view of the fact that it is inescapably clear that an official of the bank was secretary to the so-called creditors’ committee, although the bank was a secured creditor herein with a mortgage senior to the instrument involved in these proceedings. Mackin appeared at this meeting without counsel and was for the first time presented with the documents described above. Mackin was asked to sign the said instruments and to obtain his wife’s signature to the real estate mortgage. Mackin at first refused to do so and asked that he be allowed to have an attorney examine the documents and to counsel him on the matter. Wasserman stated before all those present that no further time could be granted and that if he did not sign the papers and obtain his wife’s signature to the mortgage that he (Wasserman) would have a marshal on Mackin’s premises the following day to attach all of his equipment and property. Thereupon Mackin read and signed the documents. At this meeting those present had full knowledge that 500 acres of real estate had been staked out by the Commonwealth of Massachusetts for the purpose of building a highway and that it was held in the name of Peter C. Mackin’s wife and was and still is a very valuable asset. Knowing these facts, they forced Mackin to induce his wife to sign a mortgage of all her right, title, and interest in this land to the mortgage trustee, and at that time it was not an asset of the estate of the alleged bankrupt. Shortly thereafter an attorney associated with Wasserman went to Greenfield and secured the signature of the wife of Mackin to the real estate mortgage. I find that the Respondent Wasserman, the Esso Standard Oil Company, the First National Bank of Boston, and Mackin, the alleged bankrupt, knew that on April 28, 1959, there was no reasonable expectation that the said Mackin could pay in full the amount of the collateral note in the amount of $360,000 upon demand nor could he have paid the amount of his unsecured indebtedness. His cash balance in the Franklin County Trust Company for his businesses at that time amounted to approximately $44. I find that upon the execution of the aforesaid documents the alleged Bankrupt had no real equity of redemption since upon the liquidation of his assets the Creditors Committee, itself, estimated that there would be a deficit of about $32,000. See Receiver’s Ex. 7. I further find that it was the intention of Wasserman and the members of the Creditors Committee after four months to carry out a speedy liquidation of all of the assets of the alleged bankrupt for. the benefit of all creditors who assented to the Trust Indenture in the same fashion and manner as if an assignment for the benefit of creditors in its usual form had been executed. On May 4, 1959, Wasserman and the Creditors Committee, without default upon the alleged “trust mortgage”, at its first meeting designated one Singer as their agent to operate the business of Mackin and Mackin was put on a salary of $150 per week. All of the cash receipts and deposits in the name of Mackin were deposited, on May 26, 1959, and thereafter, to a new account in the name of Arthur T. Wasserman, Trustee. Another account in the names of Singer and Mackin, requiring both signatures for checks, was opened. Checks required in Singer’s discretion to operate the businesses were issued on the last mentioned account and the monies necessary to cover said checks were supplied by Wasserman, after Wasserman’s approval of the expenditures, through a check drawn upon the account of Wasserman, Trustee. The only source of funds for the Singer account was the Wasserman, Trustee, account and all of the receipts of the businesses of Mackin were deposited to the Wasserman, Trustee, account. Singer first took charge of the businesses by actual presence in Greenfield on May 6, 1959. No demand for payment of the collateral note had been made up to that time and I find that no default in the terms of the so-called Trust Indenture had then occurred. Singer was in Greenfield at the Mackin premises about three days a week and was in complete control of the financial aspects of the businesses. In addition to these activities, Singer contacted more creditors and persuaded them to continue to sell merchandise to Mackin on the representation that Wasserman, as Trustee, was in control of the funds of the Mackin businesses and that they would be paid by Wasserman. Some bills were thereafter sent in the name of Wasserman, Trustee, for purchases made during the period after April 28, 1959, and up to August 26, 1959, the date of filing of the Involuntary Petition in Bankruptcy. After the appointment of Singer, Mackin was told by one of the creditors, in the presence of Wasserman, and other members of the Creditors Committee at a regular committee meeting that Mackin was no longer running the businesses, that the creditors were operating his businesses and that nothing should be done without their approval. In May of 1959 Wasserman informed Mackin that his retail appliance business was to be liquidated. Mackin objected to this but over his protests, in June of 1959, Wasserman hired an auctioneer who advertised a liquidation sale, put his red flag outside the store, and sold all of the merchandise in the appliance business at public auction. The merchandise was sold for approximately $10,000 net and it had a retail value of approximately $25,-000. The store on the main street in Greenfield in which the appliance business had been carried on had also played an important part in his overall business operations. Nevertheless after the sale the store was vacated. On April 28, 1959, Mackin, as part of his construction business, was engaged in the performance of construction contracts in the amount of over $300,000, the greater part of which were due to be completed by the end of August, 1959. On or about May 20, 1959, Mackin informed Wasserman and the Creditors Committee that he wished to bid on another construction job and asked for a certified check in the amount of $4,000 to present as a deposit on his bid. Mack-in, told Wasserman that this job would take about three months to complete and was told in return that if he could get assurance of a performance and payment bond, that the deposit check would be forthcoming. When Mackin told Wasserman that he thought he could get the bond, Wasserman refused to give him a deposit check and told Mackin that he would not finance the job under any circumstances. On June 26, 1959, the Creditors Committee actually recorded its decision in the minutes of its meeting to liquidate the businesses of Mackin at the end of the then current construction jobs. See Receiver’s Ex. 6. On or about August 12, 1959, Wasserman hired Aaron Kroek of Worcester, an auctioneer, to advertise and conduct a liquidation sale of Mack-in’s assets on September 10, 1959. On August 24, 1959, demand for payment of the collateral note for which the mortgage was security was first made. I find that no demand on the note was made before this date and that Mackin, up to this date, was not in default of the terms of the mortgages or the Trust Indenture. On or about August 25, 1959, Wasserman, purporting to act under his powers under the Trust Indenture and the real estate mortgages, made an entry upon the real estate and took token possession of the tangible assets. Thereafter, on August 26, 1959, an Involuntary Petition in Bankruptcy was filed by three creditors of Mackin. It is to be noted that none of the facts found herein have been controverted in the slightest degree by Mr. Wasserman, or anyone. I find that the so-called Trust Indenture together with the mortgage and the security agreement and the $350,000 demand promissory note, constituted an effectual assignment for the benefit of all creditors to the said Wasserman as that phrase is used in Section 2, sub. a (21) of the Bankruptcy Act, U.S.C.A. Title 11, § 11, sub. a(21), since the equity of redemption under all of the circumstances was a sham and the Trustee, acting under the instruments and without a demand on the note or a default in the terms of the mortgages of the Trust Indenture, took immediate possession and control of Mackin’s businesses and proceeded to a liquidation of all of the assets of the alleged bankrupt. I find that on the date of filing of the Involuntary Petition in Bankruptcy and on the date that the instant petition was filed the said Wasserman was in possession and control of $11,618.86 which belonged to Maekin and which was deposited to the name of Wasserman in the Franklin County Trust Company, Greenfield, and that he purported to be the mortgagee in possession of the real estate and tangible assets of Peter C. Mack-in. 2. CONCLUSIONS OF LAW Section 2, sub. a(3) of the Bankruptcy Act, U.S.Code, Title 11, § 11, sub. a(3), provides in part that Courts of Bankruptcy may “appoint, upon the application of parties in interest, receivers •x * * take charge of the property of bankrupts and to protect the interests of creditors after the filing of the petition and until it is dismissed or the trustee is qualified * * Adjudication of bankruptcy is not a prerequisite to the appointment of a receiver. 1 Collier on Bankruptcy 196-200.

5746890-17565

ORDER AND JUDGMENT MONROE G. McKAY, Circuit Judge. Georgette Konzak sued her former employer, Wells Fargo Bank, N.A. (“Wells Fargo” or “bank”), for employment discrimination, asserting that her employment was terminated on the basis of her age and gender, in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e to 2000e-17 (“Title VII”), and the Age Discrimination in Employment Act of 1967, 29 U.S.C. §§ 621-684 (“ADEA”). The district court granted Wells Fargo’s motion for summary judgment. Ms. Kon-zak appeals. We exercise jurisdiction under 28 U.S.C. § 1291 and affirm. I. Background Ms. Konzak, who was born in 1962, was employed by Wells Fargo as a personal banker in the Grand Junction, Colorado, district. On July 1, 2008, the assistant manager discovered that Ms. Konzak had entered a “placeholder number” on a new-account application, rather than the applicant’s driver’s license number. She told the district manager, Pam Schaaf, who directed her to report it to the human resources department (“HR”). HR turned the matter over to Richard Johnson, Vice President of Special Investigations, who conducted an investigation. Mr. Johnson discovered that Ms. Konzak had used the placeholder number instead of a correct driver’s license number on numerous account applications. During his investigation, he interviewed Ms. Konzak by telephone, and she also submitted a written statement of her position. Mr. Johnson and others at the Wells Fargo Corporate Security Department, the Corporate Employee Relations Department, and the Regional Compliance Department (“corporate committee”) determined that Ms. Konzak’s use of the fictitious numbers violated Wells Fargo’s Code of Ethics and Business Conduct and its Customer Identification Policy (“CIP”). In addition, they determined that Ms. Konzak had exposed Wells Fargo to liability under the Bank Security Act and the USA PATRIOT Act. Consequently, the corporate committee determined this conduct warranted termination. This decision was communicated to the Grand Junction branch’s Community Bank President, Steve Irion, who questioned whether there was any way to retain Ms. Konzak. When told that Ms. Konzak’s actions violated the CIP and federal law, he realized there was no other choice and he made the decision to terminate her employment. Ms. Konzak did not dispute that she regularly used a fictitious number when opening an account for an established Wells Fargo customer. She testified that a manager had told her that it was acceptable to use a placeholder number instead of the actual driver’s license number if the customer was an existing customer of the bank. After her termination, she discovered that others had also used fictitious numbers, but were not fired. Ms. Konzak also named an employee who had undergone progressive discipline for committing notary infractions, while she herself was fired summarily. Another employee, a younger male, was not disciplined for improperly taking sales credit. She contended that if, in fact, use of the placeholder number was improper, the bank’s “back shop” procedures would have alerted her, as it did when she entered an incorrect social security number, passport number, or alien identification number. She never received notification from the “back shop” about her use of fictitious numbers. She also alleged that the bank never corrected the fictitious numbers. Ms. Konzak testified that she was discharged shortly after she told district manager Pam Schaaf that she was interested in being promoted to a management position. She claimed that Ms. Schaaf preferred younger employees and males to older females. Ms. Konzak did not allege that bank president Mr. Irion or the local branch manager, Frances Baer, discriminated against her. She stated that two days after she was fired, Mr. Irion suggested that she retain an attorney to challenge her termination. Ms. Konzak twice appealed her termination internally. After obtaining a right-to-sue letter from the Colorado Civil Rights Division (“CCRD”), she filed the underlying lawsuit. Ultimately, the district court granted Wells Fargo’s motion for summary judgment. Ms. Konzak appeals, arguing that she presented sufficient evidence to show that Wells Fargo’s stated reason for terminating her employment was pretextual, that she was erroneously required to show “pretext-plus,” and that disputed issues of material fact concerning who made the decision to discharge her precluded summary judgment. II. Legal Standards We review the district court’s summary judgment order de novo, applying the same legal standards as the district court. Swackhammer v. Sprint/United Mgmt. Co., 493 F.Sd 1160, 1167 (10th Cir.2007). Summary judgment is appropriate if “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Pursuant to this standard, “we must view the evidence and draw reasonable inferences therefrom in the light most favorable to the nonmov-ing party.” Swackhammer, 493 F.3d at 1167 (internal quotation marks omitted). “The purpose of a summary judgment motion is to assess whether a trial is necessary. In other words, there must be evidence on which the jury could reasonably find for the plaintiff.” Berry v. T-Mobile USA, Inc., 490 F.3d 1211, 1216 (10th Cir.2007) (citation omitted) (internal quotation marks omitted). “Because our review is de novo, we need not separately address [Ms. Konzak’s] argument that the district court erred by viewing evidence in the light most favorable to [Wells Fargo] and by treating disputed issues of fact as undisputed.” Rivera v. City & Cnty. of Denver, 365 F.3d 912, 920 (10th Cir.2004). Title VII makes it “an unlawful employment practice for an employer ... to discharge any individual ... because of such individual’s race, color, religion, sex, or national origin.” 42 U.S.C. § 2000e2(a)(l). “A plaintiff proves a violation of Title VII either by direct evidence of discrimination or by following the burden-shifting framework of McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973).” Khalik v. United Air Lines, 671 F.3d 1188, 1192 (10th Cir. 2012) (parallel citations omitted). The three-step McDonnell Douglas inquiry provides that if the plaintiff proves a prima facie case of discrimination, the burden “shifts to the defendant to produce a legitimate, non-discriminatory reason for the adverse employment action.” Id. If such a reason is produced, “the burden then shifts back to the plaintiff to show that the plaintiffs protected status was a determinative factor in the employment decision or that the employer’s explanation is pretext.” Id. The ADEA makes it “unlawful for an employer ... to ... discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s age.” 29 U.S.C. § 623(a)(1). The ADEA requires “but-for” causation; therefore, a plaintiff claiming age discrimination must establish by a preponderance of the evidence that his employer would not have taken the challenged employment action but for the plaintiffs age. Gross v. FBL Fin. Servs., Inc., 557 U.S. 167, 177-78, 129 S.Ct. 2343, 174 L.Ed.2d 119 (2009). “Gross does not disturb longstanding Tenth Circuit precedent by placing a heightened evidentiary requirement on ADEA plaintiffs to prove that age was the sole cause of the adverse employment action.” Jones v. Okla. City Pub. Schs., 617 F.3d 1273, 1278 (10th Cir.2010). Nor does Gross “preclude our continued application of McDonnell Douglas to ADEA claims.” Id. III. Analysis The parties do not dispute that the first two McDonnell Douglas steps have been satisfied: Ms. Konzak established a prima facie case of gender and age discrimination; Wells Fargo produced a legitimate, non-discriminatory reason for discharging her. Therefore, we proceed to evaluate whether the proffered reason was a pretext for discrimination. A plaintiff can withstand summary judgment if she presents evidence sufficient to raise a genuine dispute of material fact regarding whether the defendant’s articulated reason for the adverse employment action is pretextual. See Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 147-49, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000). “Pretext exists when an employer does not honestly represent its reasons for terminating an employee.” Miller v. Eby Realty Group LLC, 396 F.3d 1105, 1111 (10th Cir.2005). “Pretext can be shown by such weaknesses, implausibilities, inconsistencies, incoherencies, or contradictions in the employer’s proffered legitimate reasons for its action that a reasonable fact-finder could rationally find them unworthy of credence and hence infer that the employer did not act for the asserted nondiscriminatory reasons.” Rivera, 365 F.3d at 925 (internal quotation marks and brackets omitted). “Pretext may also be shown by providing direct evidence discrediting the proffered rationale, or by showing that the plaintiff was treated differently from others similarly situated.” Jaramillo v. Adams Cnty. Sch. Dist. 14, 680 F.3d 1267, 1269 (10th Cir.2012). Ms. Konzak contends that she produced evidence demonstrating that Wells Fargo’s reason for discharging her was unworthy of belief. She first asserts that there existed a disputed issue of material fact concerning whether the use of fictitious numbers violated any bank policy or federal law. She relies on her testimony and the testimony of other bank employees that they had been instructed- to do so. She also relies on the affidavit of a former Wells Fargo employee stating that Ms. Baer “first told [her] that this type of practice [using placeholder numbers] was acceptable.” ApltApp. Vol. II at 320. But Ms. Konzak’s evidence does not show that the corporate committee or Mr. Irion knew that other employees were also using fictitious numbers. Therefore, the evidence does not demonstrate a disputed fact material to the termination decision. Ms. Konzak next asserts that the “back shop” check of all account applications would have picked up the use of fictitious numbers if their use had been improper, and she had never been questioned. Contrary to Ms. Konzak’s assertion, however, the record does not support her claim that the “back shop” would have caught this procedure. She relies on (1) an audit report, even though that report does not mention a procedure for checking applications, see id. at 378-82; (2) the testimony of Ms. Baer, who stated that she believed the “back shop” was a computer process, particularly because of the “sheer number” of documents processed, id. at 296; (3) the testimony of Dawn Déla Pena, a personal banker, who stated that the “back shop” would give notice of errors in the customer identification fields, but she did not know whether the “back shop” would detect an incorrect driver’s license number as long as the application contained the correct amount of digits, id. at 316; and (4) an affidavit of Lori Southern who stated that when fictitious numbers were used, either she or someone in the “back shop” would later update the numbers, id. at 321. Ms. Southern did not state that the “back shop” would identify any incorrect drivers’ license numbers. This evidence is insufficient to demonstrate a disputed material fact that the “back shop” would have discovered Ms. Konzak’s use of fictitious numbers. Similarly, Ms. Konzak’s allegation that the bank did not correct the fictitious numbers upon discovery, thus demonstrating that this could not have been the true reason for discharging her, is not supported by the record. Ms. Konzak relies on Ms. Baer’s testimony that she did not correct the numbers and she did not remember either instructing others to do it or being instructed to do it. Id. at 297. This testimony of a single employee, albeit the store manager of the bank location where Ms. Konzak worked, is insufficient to create the inference that no one at Wells Fargo ever corrected the fictitious numbers. Ms. Konzak also claims that the bank’s failure to correct the fictitious numbers demonstrates that it did not deem them important enough to warrant discharging her summarily; rather, the bank should have applied its progressive discipline policy. Ms. Konzak does not dispute the bank’s position that its policies permitted immediate termination of employment under appropriate circumstances. As noted, the record does not support Ms. Konzak’s claim that Wells Fargo failed to correct the fictitious numbers. Therefore, she cannot base her progressive-discipline argument on that premise. Next, Ms. Konzak argues that although Mr. Irion testified that he made the decision to discharge her, that was not his honestly held opinion. She asserts that two days after her discharge, he contacted her to “suggest[ ] that [she] retain an attorney to challenge the validity of [her] termination and help prove that [she] did nothing wrong.” Id. at 290. Mr. Irion testified that he did not remember doing so, but we view the evidence in the light most favorable to Ms. Konzak. Even so, it does not undercut Mr. Irion’s determination that the corporate HR investigation left him no choice but to terminate her employment. Ms. Konzak has not adduced any evidence, nor does she claim, that the corporate investigation was instigated or pursued based on her age or gender. “To raise an inference of pretext in the face of the employer’s legitimate, nondiscriminatory explanation, the plaintiff must undermine the employer’s credibility to the point that a reasonable jury could not find in its favor.” Jaramillo v. Colo. Judicial Dep’t, 427 F.3d 1303, 1310 (10th Cir.2005). Mr. Irion’s nondiscriminatory reason “remained] unrebutted and [his] credibility has not been so damaged as to render [his] explanations suspect.” Swackhammer, 493 F.3d at 1169. In a related argument, Ms. Konzak contends that the termination decision was in fact made by Ms. Schaaf. This contention is based primarily on her claim that Ms. Schaaf had “multiple communications” with the corporate committee, thereby influencing the committee to discharge Ms. Konzak. E.g., Aplt. Opening Br. at 41. Ms. Konzak relies on Ms. Schaaf s testimony. But Ms. Schaaf testified that she was not involved in the investigation conducted by HR. Aplt.App. Vol. I at 142. She stated that she had been contacted by HR, not to give input about Ms. Konzak, but to be told what the investigation had uncovered. Id. The evidence does not support Ms. Konzak’s claim that Ms. Schaaf was the actual decisionmaker or that she influenced the corporate committee. Similarly unsupported is Ms. Konzak’s claim that Ms. Schaaf had such influence over Mr. Irion, under a “cat’s paw” theory of liability, that she convinced him to discharge her. Cf. Staub v. Proctor Hosp., -U.S. -, 131 S.Ct. 1186, 1194, 179 L.Ed.2d 144 (2011) (holding “that if a supervisor performs an act motivated by [discriminatory] animus that is intended by the supervisor to cause an adverse employment action, and if that act is a proximate cause of the ultimate employment action, then the employer is liable under [antidiscrimination statutes].” (footnote omitted)). Ms. Kon-zak relies on an affidavit of a former Wells Fargo employee who offered the following opinion: “I believe Mr. Irion was heavily influenced by Ms. Shaaf s [sic] reports to him. She had the ability to sway his views about the managers and people below her.” Aplt.App. Vol. II at 862. This general, unsubstantiated opinion that does not refer to Ms. Konzak or her situation is insufficient to create an issue of fact on a cat’s paw claim. Although Ms. Konzak has proffered the names of other Wells Fargo employees she claims were similarly situated to her but were not discharged for comparable or even identical actions, the evidence does not show that the alleged transgressions of those employees were reported to the corporate HR office. Therefore, the other employees were not similarly situated to Ms. Konzak. See McGowan v. City of Eufala, 472 F.3d 736, 745 (10th Cir.2006) (“To show disparate treatment, [a plaintiff] must establish [that] she was similarly situated to [the claimed comparators] in all relevant respects.”). And even taking as true the evidence that Ms. Schaaf favored younger and male employees over older female employees, the evidence does not support a claim that Ms. Schaaf was involved in the decision to discharge Ms. Konzak. In short, Ms. Konzak’s evidence is insufficient to demonstrate pretext or a genuine issue of disputed material fact concerning Wells Fargo’s stated reasons for terminating her employment. We do not ask whether the employer’s reasons were wise, fair or correct; the relevant inquiry is whether the employer honestly believed its reasons and acted in good faith upon them. Even a mistaken belief can be a legitimate, non-pretextual reason for an employment decision. Thus, we consider the facts as they appeared to the person making the decision, and we do not second-guess the employer’s decision even if it seems in hindsight that the action taken constituted poor business judgment. The reason for this rule is plain: our role is to prevent intentional discriminatory [employment] practices, not to act as a “super personnel department,” second guessing employers’ honestly held (even if erroneous) business judgments. Riggs v. AirTran Airways, Inc., 497 F.3d 1108, 1118-19 (10th Cir.2007) (citations omitted) (internal quotation marks omitted). IV. Conclusion

9041993-10044

CYR, Circuit Judge. Defendant Scott Allen Hensley challenges the restitutionary sentence imposed upon him by the district court, thus presenting this court with its first occasion to interpret and apply the 1990 amendments to the Victim and Witness Protection Act (“VWPA”), 18 U.S.C. §§ 3663-64 (1994). Finding no error, we affirm the district court judgment. I BACKGROUND After a federal grand jury indicted him for, among other things, devising and executing a scheme to obtain merchandise under false pretenses from various computer-products distributors across the country, Hensley pled guilty to all counts, thereby conceding the following facts as alleged in the indictment. On April 1, 1995, under the alias “Robert Halford,” Hensley rented a box at Mail Boxes, Etc. (“MBE”), 510 Commonwealth Avenue, Boston, Massachusetts. On April 14, he telephoned companies in California, New York, Texas, and New Jersey, and using the name “Halford,” placed orders for computer equipment in behalf of a fictitious company, American Telemark, purportedly a division of AT & T, for delivery to the MBE address in Boston. Hensley remitted five forged checks via Federal Express, in amounts ranging from $20,000 to $31,000 and bearing the AT & T logo. Once the computer equipment arrived, Hensley used the alias “William Noonan” to rent storage space and a U-Haul truck to transport the equipment. On his next visit to the MBE, Hensley was arrested by the FBI. After Hensley pled guilty and before sentencing, the government learned that he had committed additional fraudulent acts during the same time period. According to the un disputed facts set forth in the presentence report (“PSR”), see United States v. Benjamin, 30 F.3d 196, 197 (1st Cir.1994) (failing to object bars appellate challenge to facts stated in PSR), on March 30, 1995, Hensley had used the ‘William Noonan” alias to rent a second box at another MBE location, on Newbury Street in Boston. On April 3, “Noonan” placed an $837.86 telephone order for computer software with Creative Computers, a California company, for delivery to the Newbury Street MBE. He tendered a counterfeit money order drawn on a Boston Check Cashiers (“BCC”) company account, which was dishonored after he absconded with the Creative Computers software. Hensley issued three more counterfeit BCC money orders in payment for another computer order placed with ATS Technologies (“ATS”), a credit card bill, and a car rental. Although the charged conduct resulted in no actual losses because the equipment was recovered, the PSR recommended that Hensley reimburse the car rental company ($500.00), the credit card company ($725.00), Creative Computers ($837.86), and ATS ($1,026.12), each of which had accepted a counterfeit BCC money order. Hensley objected that the four companies were not victims of the offense of conviction as the indictment did not charge him with passing the counterfeit money orders. Following briefing and oral argument, the district court found that ATS had sustained no loss, and that neither the credit card bill nor the car rental came within the scope of the offense of conviction. The court nonetheless ruled that the Creative Computers acquisition was within the alleged scheme to defraud. The court accordingly directed Hensley to make restitution to Creative Computers, and Hensley appealed. II DISCUSSION Federal courts possess no inherent authority to order restitution, and may do so only as explicitly empowered by statute. United States v. Gilberg, 75 F.3d 15, 22 (1st Cir.1996). The VWPA authorizes restitution-ary sentences by the district courts for the benefit of victims of federal offenses. As Hensley’s criminal conduct and conviction occurred after November 29, 1990, the effective date of the Crime Control Act of 1990, the 1990 VWPA amendments govern our decision. The VWPA provides that “[t]he court ... may order ... restitution to any victim of such offense.” 18 U.S.C. § 3663(a)(1) (emphasis added). Prior to the 1990 amendments, the VWPA had been interpreted by the Supreme Court as limiting restitution to the “loss caused by the specific conduct that [was] the basis of the offense of conviction.” Hughey v. United States, 495 U.S. 411, 413, 110 S.Ct. 1979, 1981, 109 L.Ed.2d 408 (1990) (emphasis added). The Hughey Court therefore reversed a restitutionary sentence which had been based on the total loss attributable to all counts in an indictment charging unauthorized use of credit cards and theft by a Postal Service employee, rather than on the loss attributable to the one count to which Hughey had pled guilty. Id. at 422, 110 S.Ct. at 1985-86. After Hughey, this court held that the specific conduct underlying a mail fraud conviction, which requires proof of a broader scheme to defraud, includes only the particular mailing charged and not the entire mail fraud scheme. United States v. Cronin, 990 F.2d 663, 666 (1st Cir.1993); accord United States v. Newman, 49 F.3d 1, 11 (1st Cir. 1995) (wire fraud). Thus, we adopted the more narrow and lenient majority view during the interim preceding the 1990 amendments to the VWPA. Cronin, 990 F.2d at 666. The present controversy requires us to reexamine Cronin in light of the 1990 amendments. Consistent with the minority view we rejected in Cronin, in 1990 Congress amended the VWPA to provide that “a victim of an offense that involves as an element a scheme, a conspiracy, or a pattern of criminal activity means any person directly harmed by the defendant’s criminal conduct in the course of the scheme, conspiracy, or pattern.” 18 U.S.C. § 3663(a)(2) (emphasis added). As Hensley concedes that a scheme to defraud is an element of the mail and wire fraud offenses to which he pled guilty, see United States v. Sawyer, 85 F.3d 713, 723 (1st Cir.1996), the district court correctly applied VWPA § 3663(a)(2) in this case. Compare United States v. Reed, 80 F.3d 1419, 1423 (9th Cir.1996) (“felon in possession” offense does not require proof of scheme). Under current VWPA § 3663(a)(2), the district court may order restitution to every victim directly harmed by the defendant’s conduct “in the course of the scheme, conspiracy, or pattern of criminal activity” that is an element of the offense of conviction, without regard to whether the particular criminal conduct of the defendant which directly harmed the victim was alleged in a count to which the defendant pled guilty, or was even charged in the indictment. United States v. Henoud, 81 F.3d 484, 488 (4th Cir.1996) (unnamed victim); United States v. Kones, 77 F.3d 66, 70 (3d Cir.1996) (providing example); United States v. Pepper, 51 F.3d 469, 473 (5th Cir.1995). Thus, the outer limits of a VWPA § 3663(a)(2) restitution order encompass all direct harm from the criminal conduct of the defendant which was within any scheme, conspiracy, or pattern of activity that was an element of any offense of conviction. See Kones, 77 F.3d at 70 (discussing causation requirement). Although Hensley acknowledges the expansiveness of the 1990 amendments, he contends that the fraudulent order placed with Creative Computers was not within the same scheme embraced by the offense to which he pled guilty. We approach this claim by examining the terms of the indictment and the plea agreement. Henoud, 81 F.3d at 488. For the most part, courts require that the indictment “specifically” define the scheme in order to ensure that the restitutionary amount not exceed the harm directly caused the victim of the scheme embraced by the offense of conviction, id.; see also United States v. Bennett, 943 F.2d 738, 741 (7th Cir.1991) (noting amorphous nature of “scheme” concept), cert. denied, 504 U.S. 987, 112 S.Ct. 2970, 119 L.Ed.2d 590 (1992). Nevertheless, the courts of appeals consistently have upheld restitutionary sentences based simply on evidence sufficient to enable the sentencing court to demarcate the scheme, including its “mechanics ... [,] the location of the operation, the duration of the criminal activity, [and] the methods used” to effect it. Henoud, 81 F.3d at 489-90 n. 11; Pepper, 51 F.3d at 473; United States v. Turino, 978 F.2d 315, 318-19 (7th Cir.1992) (collecting cases), cert. denied, 508 U.S. 975, 113 S.Ct. 2969, 125 L.Ed.2d 668 (1993). Hensley concedes that the indictment adequately defined the scheme, but faults the district court for focusing on the broad “boilerplate” language in the indictment, rather than the specific conduct alleged. We think the 1990 amendments to the VWPA and the relevant caselaw, see, e.g., Turino, 978 F.2d at 318-19 (discussing Seventh Circuit cases), preclude so narrow a definition of the “scheme” element, which amounts to an attempt to revive the Hughey holding discarded by Congress in the 1990 VWPA amendments. See supra pp. 276-277. Hensley pled guilty to an indictment alleging that he devised and executed a scheme in Boston to obtain merchandise by false pretenses from specific computer-produets distributors around the country, which extended roughly from April 1 to April 25, 1995. Thus, the indictment adequately detailed the offense of conviction, as well as the underlying scheme to defraud, so as to enable the district court reliably to fashion a restitution-ary sentence which fairly reimbursed any victim directly harmed by Hensley’s criminal conduct during the course of the scheme involved in the offense of conviction. As a fallback position, Hensley claims that the Creative Computers software purchase was not part of the scheme underlying the offense of conviction, even under the broad definition we now adopt. Restitution orders normally are reviewed only for “abuse of discretion,” Gilberg, 75 F.3d at 20, and their subsidiary factual findings only for “clear error.” United States v. Savoie, 985 F.2d 612, 617 (1st Cir.1993) (victim loss); United States v. Sarno, 73 F.3d 1470, 1503 (9th Cir.1995), cert. denied, — U.S. -, -, 116 S.Ct. 2554, 2555, 135 L.Ed.2d 1073 (1996), and petition for cert. filed, — U.S.L.W.-, (U.S. June 27, 1996) (No. 95-9478).

881479-18947

BUTZNER, District Judge. Joe Louis Miller, who was convicted of bribery, assigns error because the trial judge overruled his motion for severance and refused special charges to the jury which he tendered. We find no error and affirm the conviction. Miller was a candy distributor who did extensive business with army commissaries. Clifford V. Lawrence was an army commissary inspector when he became acquainted with Miller. Later he was an employee and manager of the commissary at Fort George G. Meade, Maryland. Miller for several years regularly paid Lawrence large sums of money in cash, and he enjoyed a favored position in the sale of candy at the commissary where Lawrence was employed. The Government contended that Miller bribed Lawrence to prosper Miller’s candy business. Miller was charged in the odd numbered counts of a twenty-count indictment with paying Lawrence money on ten separate occasions, in violation of 18 U.S.C. § 201. The pertinent language of this section read as follows: “Whoever promises, offers, or gives any money * * * to any officer or employee or person acting for or on behalf of the United States, or any department or agency thereof, in any official function, * * * with intent to influence his decision or action on any question, matter, cause, or proceeding which may at any time be pending, or * * * be brought before him in his official capacity, * * * or with intent to influence him to commit * * * any fraud * * * on the United States, or to induce him to do or omit to do any act in violation of his lawful duty, shall be fined * * *” Lawrence was charged in the even numbered counts of the same indictment with receiving money from Miller on the same ten occasions, in violation of 18 U.S.C. § 202. This section provides for the punishment of a United States official who solicits or accepts a bribe. The defendants were tried jointly before a jury. Both were convicted. Miller moved for severance before trial and at appropriate times during the trial. His principal reason for urging that he should have been granted a separate trial is that Lawrence and he made conflicting statements to investigating officers which were introduced in evidence. Miller gave statements both to a criminal investigator of the United States Army and to an agent of the Federal Bureau of Investigation. Miller’s two statements are substantially similar. Lawrence gave a statement to agents of the Federal Bureau of Investigation. Miller’s statement to the criminal investigator and Lawrence’s statement, with immaterial deletions, are appended to this decision. The determination of whether a severance should be granted or refused is vested under Rule 14 of the Federal Rules of Criminal Procedure in the sound discretion of the trial judge. Opper v. United States, 348 U.S. 84, 95, 75 S.Ct. 158, 99 L.Ed. 101 (1954). His decision will be reversed only when a clear abuse of discretion is shown. Cataneo v. United States, 167 F.2d 820, 823 (4th Cir. 1948). In a joint trial when a declaration of one defendant is offered in evidence and is inadmissible against another defendant, the trial judge must, by appropriate instructions, restrict consideration of the statement to the declarant’s case only. Delli Paoli v. United States, 352 U.S. 232, 243, 77 S.Ct. 294, 1 L.Ed.2d 278 (1957); Ward v. United States, 288 F.2d 820, 823 (4th Cir. 1960), cert. denied Pryor v. United States, 365 U.S. 816, 81 S.Ct. 697, 5 L.Ed.2d 695 (1961). The District Judge carefully instructed the jury that the statement made by Lawrence could be considered only with respect to the case against Lawrence and that it was not evidence against Miller. We are not unmindful that a number of cases hold that it may be error to refuse a severance when a co-defendant’s statement implicates the defendant. Illustrative of this principle are Schaffer v. United States, 221 F.2d 17 (5th Cir. 1955), and Barton v. United States, 263 F.2d 894 (5th Cir. 1959). The principles expressed in those cases are, however, not applicable here. Lawrence’s statement, while it conflicts in some respects with Miller’s statement, did not portray Miller as a briber. Lawrence consistently maintained that what he and Miller did was lawful. Lawrence’s statement contained information which, in material respects, was cumulative of that contained in Miller’s. Under these circumstances a severance is not required, cf. Carter v. United States, 304 F.2d 881 (5th Cir. 1962). Miller’s extrajudicial statement required corroboration. Opper v. United States, 348 U.S. 84, 75 S.Ct. 158 (1954); Smith v. United States, 348 U.S. 147, 75 S.Ct. 194, 99 L.Ed. 192 (1954); United States v. Waller, 326 F.2d 314, 315 (4th Cir. 1963). Lawrence’s statement could not be used to corroborate Miller’s statement. Wong Sun v. United States, 371 U.S. 471, 488, 83 S.Ct. 407, 9 L.Ed.2d 441 (1963). Ample corroboration existed, however, without reference to Lawrence’s statement. The Government introduced substantial evidence independent of both statements, to establish the trustworthiness of Miller’s admissions. Miller suggests, however, that the jurors could not be expected to have disregarded Lawrence’s statement in determining whether Miller’s statement was corroborated. There is nothing in the record to support this suggestion. Opper v. United States, 348 U.S. 84, 75 S.Ct. 158 (1954) dealt with assignments of error concerning corroboration and severance. There the defendant was charged with inducing a federal employee to accept outside compensation for services in regard to purchase requests in which the United States had a direct interest. The defendant and the employee were jointly tried after the defendant’s motion for severance was denied. The observation of Mr. Justice Reed is pertinent: “It was within the sound discretion of the trial judge as to whether the defendants should be tried together or severally and there is nothing in the record to indicate an abuse of such discretion when petitioner’s motion for severance was overruled. The trial judge here made clear and repeated admonitions to the jury at appropriate times that Hollifield’s incriminatory statements were not to be considered in establishing the guilt of the petitioner. To say that the jury might have been confused amounts to nothing more than an unfounded speculation that the jurors disregarded clear instructions of the court in arriving at their verdict. Our theory of trial relies upon the ability of a jury to follow instructions. There is nothing in this record to call for reversal because of any confusion or injustice arising from the joint trial. The record contains substantial competent evidence upon which the jury could find petitioner guilty.” Miller requested the District Judge to charge the jury in substance as follows: “Instruction No. 2: Even if you find that Miller gave monies to Lawrence, you must find Miller not guilty if you find that the money was not given with a corrupt or fraudulent intent. “Instruction No. 3: If you find that Miller gave monies to Lawrence only through fear of being treated by Lawrence with partiality, and not with any other intent on Miller’s part, then you must find Miller not guilty. “Instruction No. 4: If you find that Lawrence obtained monies from Miller by means of threats, expressed or implied, that Miller would not be permitted to sell his products to the commissary unless he paid the monies to Lawrence, and if you further find [he had] no intent to defraud the Government, then you must find Miller not guilty.” Running through these proposed instructions is the theme that Miller could not be convicted unless the payment of money to Lawrence was accompanied by a corrupt or fraudulent intent. Instruction number 2 expressly states this proposition. Instructions 3 and 4 state the same theory in a negative manner by emphasizing that fear of loss of business unaccompanied by intent to defraud is a defense. The District Judge refused the prof-erred instructions. He charged the jury on the issue of intent: “ * * * you must be convinced beyond a reasonable doubt that money or remuneration was offered and paid by Miller to Lawrence with intent to influence Lawrence in his decision or action on any matter before him in his official capacity or to induce him to do or omit any act in violation of his duty. “Thus, either an intention to influence official behavior or intention to induce unlawful action will result in a violation of this statute. “I instruct you that it is not necessary that the United States be, in fact, defrauded for this section to be considered violated. There need only be the requisite intent to influence decisions or to induce unlawful actions by payment of money to a Government official, or employee or person acting fot the Government.” The District Judge committed no error in refusing the tendered charge. Title 18 U.S.C. § 201 explicitly states in alternatives the intent necessary to constitute bribery. Either an intention to influence official behavior or an intention to induce a breach of duty makes the briber culpable. United States v. Labovitz, 251 F.2d 393, 394 (3rd Cir. 1958). It is immaterial whether the official action which the briber seeks to influence is right or wrong, in the sense that it is expected to result in pecuniary injury to the Government or that it calls upon the bribe recipient to do something other that what he is legally obligated to do. Daniels v. United States, 17 F.2d 339, 343 (9th Cir. 1927), cert. denied, 274 U.S. 744, 47 S.Ct. 591, 71 L.Ed. 1325 (1927); cf. Wilson v. United States, 230 F.2d 521 (4th Cir. 1956), cert. denied, 351 U.S. 931, 76 S.Ct. 789, 100 L.Ed. 1460 (1956). Given the clear definition by Congress of the intent requisite for a violation of the statute here involved, we decline to engraft upon it the additional requirement that the briber act with a corrupt or fraudulent state of mind. Miller insists that the requested instructions were necessary to present to the jury a defense of extortion, an issue upon which the district judge refused to charge. The Government suggests that extortion cannot be a defense to a violation of 18 U.S.C.A. § 201. This case, however, does not require that we decide the broad proposition urged upon us by the Government, for we do not think the evidence will support a claim of extortion. Although Miller in his statement did indicate that the reason he paid money to Lawrence was that he “figured that I had to give him something or I would lose my business at Fort Meade”, and although the threat of economic harm may under some circumstances result in extortion, Hornstein v. Paramount Pictures, 292 N.Y. 468, 55 N.E.2d 740 (1944), there was no proof introduced in this case to show that Lawrence had threatened Miller with economic harm unless the periodic payments continued. In any event, Miller by his payments was purchasing influence with and favored treatment from Lawrence. Fear of losing his illegal advantage if the payments were discontinued was not extortion. Affirmed. APPENDIX A Statement Made by Joe Louis Miller to United States Army Investigator “I am the proprietor of the Jay Bee Distributing Company and I have owned this company about eight years. About five or six years ago, I was residing at 8202 New Hampshire Avenue, Silver Springs, Maryland. At this time Mr. Clifford Lawrence was a neighbor. Occasionally I would bring my truck home and one day Lawrence mentioned to me that I should try to sell the commissary at Fort Meade. At this time, I did not know what kind of work that Cliff Lawrence was doing or that he was working at Fort Meade. When Lawrence mentioned this to me, I found that he was working at Fort Meade. “The next day at about 10:00 o’clock, I came to Fort Meade and spoke with the Commissary Officer, * * *. I showed him my line, which consisted of Brach candy. The Commissary Officer told me to start servicing the commissary. Since that time I have served the commissary at Fort Meade. “A couple of weeks after I received permission to service the commissary, Cliff Lawrence approached me and asked to borrow two hundred dollars. I loaned him the money and he never attempted to pay it back and did not say anything to me about the money. Although I can (not) remember for sure, but it seems that about three to six months after Cliff borrowed the first two hun-, dred dollars, he came to me and asked to borrow two hundred dollars more. I gave him the money again. “I could see that payment to Cliff would be a steady thing, as he was apparently going to keep coming to me for money. This is what went through my mind in any event. j “A little later, Cliff and I started talking about the money and as I felt he would continue to come to me for money. I agreed with him to pay him one hundred dollars a month and one thousand dollars at the end of each year. I felt that this was better than to pay him a percentage and I would not have to worry about the bookkeeping. “I told this to Cliff in so many words. He was in agreement with this arrangement. I certainly would not have given this money freely, but by Lawrence’s actions I figured that I had to give him something or I would lose my business at Fort Meade. “Since that time I have not increased my payments to Lawrence and he has not requested any increase. I would not have paid any money to Lawrence if I did not need the Government’s business at Fort Meade. It is indeed a pleasure that I will not have to pay any money like this again. I can honestly state that should any Commissary Officer approach me for money in the future that I will not give him any and I will report him to the proper authorities. “I would also like to state that this is the only time that I have paid out any money to anyone, and I repeat, that I will not do this again, j“I realize that Cliff Lawrence was wrong in what he was doing, but at the time I needed the business in a bad way. I was just getting started and this was like a shot in the arm. The Fort Meade Commissary is or was my first commissary. “At the present time, I definitely would not engage in the type of proposition that I did with Cliff Lawrence. “I do want to say that by paying Cliff Lawrence $2,200.00 a year had nothing to do with the prices of my product. The prices have remained the same as they were before I started to selling to the commissary. Also, I sell to other commissaries at the same price as I sell to Fort Meade. # * vs- «- -Ye # “Question, how did you pay Cliff Lawrence ? “Answer, I always pay him in cash and each month. On the $1,000.00 I would pay it in split payments, usually in May, June or July. “Question, when did you make the last payment to Cliff Lawrence? “Answer, last month. I think it was at his home. “Question, did you realize any favors at the Fort Meade Commissary, because of your relations with Lawrence? “Answer, I did not think so.” APPENDIX B Statement made by Clifford V. Lawrence to an Agent of the Federal Bureau of Investigation “About five years ago, * * * (the) Commissary Officer at Fort George C. Meade, Maryland, came to me and asked me if I knew any candy dealers who could furnish candy to the Fort Meade Commissary of an acceptable brand. At that time, I was living at 8204 New Hampshire, Silver Spring, Maryland, and I had noticed a Brach’s truck parked near 8202 New Hampshire. I went to this individual who operated the truck and asked him if he would like to sell his candy at the Fort Meade Commissary. “He, who identified himself as Joe Miller, owner of the Jay Bee Distributing Company, advised me that he had been trying to deal with this commissary, but couldn’t. “At this time, it appeared to me that Miller’s business was in poor financial condition. I set up a meeting between Miller and (the Commissary Officer) and subsequent to that meeting, Miller started selling his products to the Fort Meade Commissary. “During the next four months, I introduced Miller to other Commissary Officers at social functions.' “During this period I was Commissary Specialist, Second Army Headquarters, at Fort Meade, and had nothing to do with buying or selling for the commissaries. “Miller began doing business with other commissaries. I did not force or ask any Commissary Officers to deal with Miller, nor did I appear at any of the appointments that Miller had with Commissary Officers. “After the above noted four months, I was invited to Miller’s brother-in-law’s home, Morris, last name unknown, a C.P.A., who resides in Baltimore, by Miller. At this home, Morris suggested, in Miller’s presence, that they would like to bring me into the Jay Bee Distributing Company and that my share would be two per cent of gross sales. Miller agreed to this. I told them that I would be happy to join them in this business arrangement and I saw nothing wrong with it. “I made no promises that the business would increase at military establishments, especially since I was not in the position to do so. “The reason why they took me into the business was because they were appreciative of me introducing Miller to Commissary Officers, and thereby Miller was able to put his business on its feet. “Thereafter, Miller paid me one hundred dollars a month until April, 1962. Each year, he would also give me two five hundred dollar payments; one payment around May, and the other around June of each year. He has given me no five hundred dollar payment this year. Each one hundred dollar payment has been between the sixth and thirteenth of each month. I believe that I have between three to four thousand dollars due me from this business, that Miller has not paid me, since in my contacts, I have determined that Miller is doing a lot better than he has told me. I have never checked Miller’s book. He simply paid me in cash. Miller obtained no financial advantage by my connections with the commissary, and it is to be especially noted that Miller’s sales volume has decreased at the Fort Meade Commissary since I have become Commissary Officer due to deletion of certain items. “In regard to the business, there was no written agreement with Miller or Morris concerning my part-ownership. Miller also continually bothered me about him selling new items to the commissary, some of which I accepted and if they didn’t sell at the commissary I would delete. I do not believe that my relationship to the Jay Bee Distributing Company constituted any illegal act by myself. “I obtained about eight thousand dollars to nine thousand dollars from Miller due to this business relationship.” . Title 18 U.S.C. §§ 201 and 202 were amended October 23, 1962. The indictment was based on the statute before it was amended. . This court recently held that it was error to admit into evidence in a conspiracy trial a confession, (which implicated the defendants standing trial) of a co-conspirator who had pled guilty. United States v. Boyce, 4th Cir. Nov. 6, 1964, 340 F.2d 418.

4025757-22822

OPINION RODRIGUEZ, District Judge. I. FACTS AND PROCEDURE Plaintiff Leldon P. Pitt, M.D., seeks relief based on the allegedly unconstitutional effect of a Pine Valley Golf Club rule which restricts homeownership in the Borough of Pine Valley to members of the Pine Valley Golf Club. This matter comes before the court on the motions by defendants Pine Valley Golf Club (hereinafter the “Club”); Ernest L. Ransome, Club president, Edward S. Magee, Jr., Club manager, (hereinafter “Club defendants”); and the Borough of Pine Valley (hereinafter “Borough”); Borough Mayor Warner S. Shelly, and Borough Commissioners John R. Ott Jr. and William K. Chapman, (hereinafter “Borough defendants”) for dismissal pursuant to Federal Rules of Civil Procedure 12(b)(1), (2) and (6). Plaintiff alleges the following facts which must be accepted as true for the purpose of ruling on defendants’ Rule 12(b) motions. See Conley v. Gibson, 355 U.S. 41, 44-45, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1958). In 1929, the New Jersey Legislature created the Borough of Pine Valley. The boundaries of the Borough are coextensive with the boundaries of the Pine Valley Golf Club. All land in the Borough is owned by the Club. Residents of the Borough may own their homes but must lease the land from the Club. There exists a Club rule that “No one may purchase a home within the Borough of Pine Valley without being a member of the Pine Valley Golf Club.” (Complaint at 1f 13). All Borough officials are members, officers, or employees of the Club. (Complaint at 1114). Tax dollars collected by the Borough have been used to benefit the Club. (Complaint at ¶ 15). In 1976, plaintiff initiated efforts to join the Club and acquire a residence in the Borough. Plaintiff “discussed the possibility” of purchasing the Borough home of the late John Arthur Brown with Ms. Sally Perkins, the daughter of Mr. Brown. At that time, plaintiff was informed by defendant Edward Magee, Jr., the manager of the Club, that “only Club members could own houses in Pine Valley.” (Complaint at 1116). Plaintiff then discontinued his efforts to purchase a home and continued efforts to gain admittance to the Club. Id. In 1977, plaintiff was “preliminarily approved” for membership. (Complaint at 1117). In 1982, plaintiff was informed that he should deposit two thousand dollars ($2000.00) pursuant to his application. In 1985, plaintiff was rejected for membership. (Complaint at U 18). The instant complaint, brought pursuant to 42 U.S.C. § 1983, alleges violation of: the equal protection and due process clauses of the Fifth and Fourteenth Amendments to the United States Constitution; the privileges and immunities clause of Article IV, section 2, of the United States Constitution; the New Jersey Constitution, Article 8, § 3; and the New Jersey Constitution, Article 1, it 1. The complaint also alleges common law tortious interference with prospective economic advantage. Plaintiff seeks compensatory and punitive damages in addition to injunctive relief. All defendants seek dismissal pursuant to Federal Rules of Civil Procedure 12(b)(1) (lack of subject matter jurisdiction) and 12(b)(6) (failure to state a claim upon which relief may be granted). In addition, defendant Magee seeks dismissal pursuant to Rule 12(b)(2) (lack of personal jurisdiction). II. FIFTH AND FOURTEENTH AMENDMENT CLAIMS A.Standard of review for motion to dismiss Dismissal of a complaint for failure to state a claim is permissible only when it appears “beyond doubt that 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, 101-02, 2 L.Ed.2d 80 (1957); Bryson v. Brand Insulations, Inc., 621 F.2d 556, 559 (3d Cir.1980); Fed.R.Civ.P. 12(b)(6). The court must view all plaintiffs allegations as true, Bryson, 621 F.2d 559. In addition, “all inferences favorable to plaintiff will be drawn,” Mortensen v. First Federal Savings and Loan Association, 549 F.2d 884, 891 (3d Cir.1977). Despite the liberal pleading requirements, the court need only accept the truth of facts. “[Cjonclusory allegations, unsupported by facts, cannot withstand a motion to dismiss.” County of Cook v. Midcon Corp., 574 F.Supp. 902, 920 (N.D.Ill.1983), aff'd 773 F.2d 892 (7th Cir.1985). The court notes that civil rights complaints require a higher level of factual specificity. District Council 47, AFSCME v. Bradley, 795 F.2d 310, 313 (3d Cir.1986). The court recognizes that discovery is particularly necessary in order to develop evidence to support such claims. Frazier v. Southeastern Pennsylvania Transportation Authority, 785 F.2d 65, 68 (3d Cir. 1986). However, the rule is clear: the complaint will be sustained if “sufficient facts are alleged in the complaint so that the court is satisfied that the complaint is not frivolous and that the defendants have been provided with adequate notice so that they can answer the complaint.”' Bradley, 795 F.2d at 313. B.Fifth Amendment Plaintiff asserts claims under the due process and equal protection clauses of the Fifth Amendment to the United States Constitution. However, plaintiff does not allege any action by the federal government. The Fifth Amendment is a limitation on the federal government and has no reference to state actions. Ex parte Whistler, 65 F.Supp. 40 (E.D.Wis.1945), cert. denied, 327 U.S. 797, 66 S.Ct. 822, 90 L.Ed. 2d 1023 (1946), reh’g denied, 327 U.S. 819, 66 S.Ct. 959, 90 L.Ed. 1041 (1946). Therefore, defendants’ motion to dismiss plaintiff’s due process and equal protection claims under the Fifth Amendment is granted. C.Fourteenth Amendment — state action requirement With regard to plaintiff’s equal protection and due process claims brought under 42 U.S.C. § 1983 and the Fourteenth Amendment, defendants argue that plaintiff fails to state a claim upon which relief can be granted due to an absence of the requisite state action. See Lugar v. Edmondson Oil Co., 457 U.S. 922, 929, 102 S.Ct. 2744, 2749, 73 L.Ed.2d 482 (1982). Defendants claim that the Club rule which excludes non-members from buying homes in the Borough is the act of a private entity and thus not subject to legal scrutiny under either section 1983 or the United States Constitution. Under the state action doctrine, a plaintiff must demonstrate that the alleged violations of the Constitution are “fairly attributable to the State.” Lugar, 457 U.S. at 923, 102 S.Ct. at 2746. The Supreme Court has applied a number of approaches for determining the existence of state action. Community Medical Center v. Emergency Medical Services, 712 F.2d 878, 880 (3d Cir.1983). Among the approaches are: (1) a symbiotic relationship between a private and state actor, see Burton v. Wilmington Parking Authority, 365 U.S. 715, 81 S.Ct. 856, 6 L.Ed.2d 45 (1961); (2) a close nexus relationship between a state actor and the private action in question, see Jackson v. Metropolitan Edison Co., 419 U.S. 345, 95 S.Ct. 449, 42 L.Ed.2d 477 (1974); and (3) the public function approach, Evans v. Newton, 382 U.S. 296, 86 S.Ct. 486, 15 L.Ed.2d 373 (1966); Marsh v. Alabama, 326 U.S. 501, 66 S.Ct. 276, 90 L.Ed. 265 (1946). See Community Medical Center, 712 F.2d at 880. In order to determine the reach of the Fourteenth Amendment in a particular case, a fact specific review of the alleged state action must be made. See Evans, 382 U.S. at 300, 86 S.Ct. at 489. See also Lugar, 457 U.S. at 939, 102 S.Ct. at 2754-55. The relationship between state and private action must be a strong and direct one. See Blum v. Yaretsky, 457 U.S. 991, 1004-5, 102 S.Ct. 2777, 2785-6, 73 L.Ed.2d 534 (1982) (“Mere approval or acquiescence in the initiatives of a private party is not sufficient to justify holding the State responsible for those initiatives under the terms of the Fourteenth Amendment.”) (citations omitted). However, the Court has “found state action present in the exercise by a private entity of powers traditionally exclusively reserved to the State.” Jackson v. Metropolitan Edison Co., 419 U.S. at 352, 95 S.Ct. at 454 (emphasis added) (citing Evans v. Newton, 382 U.S. 296, 86 S.Ct. 486, 15 L.Ed.2d 373 (1966) (municipal park); Terry v. Adams, 345 U.S. 461, 73 S.Ct. 809, 97 L.Ed. 1152 (1953) (election); Marsh v. Alabama, 326 U.S. 501, 66 S.Ct. 276, 90 L.Ed. 265 (1946) (company town); Nixon v. Condon, 286 U.S. 73, 52 S.Ct. 484, 76 L.Ed. 984 (1932) (election)). In this case, review must be directed at the Club rule. The Club rule as stated in the complaint is that “No one may purchase a home within the Borough of Pine Valley without being a member of the Pine Valley Golf Club.” (Complaint at ¶ 13). A simple reading of the words of the rule indicates that it functions as a restriction on residential property use and occupation for the entire Borough. Such a restriction is analogous to an element of a zoning ordinance. The Supreme Court discussed the advent of zoning restrictions in the landmark decision of Village of Euclid v. Ambler Realty Co. Building zone laws are of modern origin. They began in this country about twenty-five years ago. Until recent years, urban life was comparatively simple; but with the great increase and concentration of population, problems have developed, and constantly are developing, which require, and will continue to require, additional restrictions in respect of the use and occupation of private lands in urban communities. 272 U.S. 365, 386-87, 47 S.Ct. 114, 117-18, 71 L.Ed.2d 303 (1926). The power to zone is a police power of the state. Village of Belle Terre v. Boraas, 416 U.S. 1, 4, 94 S.Ct. 1536, 1538-39, 39 L.Ed.2d 797 (1974). See also Euclid, 272 U.S. at 387, 47 S.Ct. at 118. Residential zoning regulations entail the development of a legislative classification of residents and their activities on residential property. See Belle Terre, 416 U.S. at 4, 94 S.Ct. at 1538-39. See also Annotation, Supreme Court Views as to Constitutionality of Residential Zoning Restrictions, 52 L.Ed.2d 863, 864 n. 1 (1976). Residential zoning restrictions are promulgated and enforced pursuant to “Zoning Enabling Acts.” See e.g., Municipal Land Use Law, N.J.Stat.Ann. § 40:55D-1 et seq. (West 1988). See also Southern Burlington County N.A.A.C.P. v. Mount Laurel, 67 N.J. 151, 175, 336 A.2d 713, 725 (1975), cert, denied and appeal dismissed, 423 U.S. 808, 96 S.Ct. 18, 46 L.Ed.2d 28 (1975). Zoning is usually viewed by the courts as an exclusively legislative action. See Annotation, Exclusionary Zoning, 48 A.L.R. 3d 1210, 1215. Persons “aggrieved” by a zoning ordinance have a legal right to challenge the ordinance. Id. at 1216. Because the Club rule in question was not promulgated pursuant to a state enabling act, the procedural opportunity for challenge is entirely absent. However, in order to find state action, the court need not identify a statutory provision where a custom having the force of law is in evidence. Adickes v. S.H. Kress & Co., 398 U.S. 144, 171-72, 90 S.Ct. 1598, 1615-16, 26 L.Ed.2d 142 (1970). The Club rule in fact functions as a zoning ordinance even though the rule was neither promulgated nor enforced under enabling act procedures. The rule conditions residency in the Borough on membership in the Club. Because residential zoning is a power “exclusively reserved to the state,” Jackson v. Metropolitan Edison Co., 419 U.S. at 352, 95 S.Ct. at 454, this court finds that a private entity’s rule, which functions as a residential zoning restriction for an entire Borough, is state action. At this stage of the litigation, the court has before it an extremely limited factual record. However, viewing the facts in the light most favorable to plaintiff and allowing for reasonable inferences to be drawn from those facts, plaintiff has made out a colorable allegation of state action under the Evans and Marsh line of cases. D. Fourteenth Amendment — standard of review Absent a fundamental right or suspect classification, the proper standard of review for both due process and equal protection challenges is the rational relation test. A higher level of scrutiny applies only when a suspect classification is employed or a fundamental right is implicated. See Cleburne v. City of Cleburne Living Center, Inc., 473 U.S. 432, 440, 105 S.Ct. 3249, 3254, 87 L.Ed.2d 313 (1985); Kramer v. Union Free School District No. 15, 395 U.S. 621, 89 S.Ct. 1886, 23 L.Ed.2d 583 (1969). Under this rational relationship test, the legislation must not be arbitrary or capricious and must be reasonably related to a legitimate state interest. See Cleburne, 473 U.S. at 440, 105 S.Ct. at 3254; Massachusetts Board of Retirement v. Murgia, 427 U.S. 307, 96 S.Ct. 2562, 49 L.Ed.2d 520 (1976). In this case, the Club rule classifies prospective homeowners in the Borough on the basis of Club membership. This classification would not appear to require heightened scrutiny under either due process or equal protection analysis. However, even if the lower standard is applied, plaintiff has made allegations which, on further development of the factual record, could support a finding that the classification scheme in question was arbitrary and was not rationally related to a legitimate state interest. Therefore, defendants’ motion to dismiss plaintiff’s due process and equal protection claims under the Fourteenth Amendment for failure to state a claim upon which relief may be granted is denied. III. ARTICLE IV, § 2 CLAIM Plaintiff alleges that the restriction at issue violates the privileges and immunities clause of Article IV, § 2 of the United States Constitution. The purpose of the privileges and immunities clause is “to outlaw classifications based on the fact of non-citizenship unless there is something to indicate that non-citizens constitute a peculiar source of the evil at which the statute is aimed.” Toomer v. Witsell, 334 U.S. 385, 398, 68 S.Ct. 1156, 1163, 92 L.Ed. 1460 (1948). The Club rule at issue does not discriminate between residents and nonresidents. Therefore, defendants’ motion to dismiss plaintiff’s privileges and immunities claim for failure to state a claim under rule 12(b)(6) is granted. IV. STANDING Defendants also argue that plaintiff does not have standing. Standing in an Article III court can only be obtained by a plaintiff who files a complaint which demonstrates compliance with the court’s constitutional and prudential requirements. See, e.g., Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 471, 102 S.Ct. 752, 757-58, 70 L.Ed.2d 700 (1982). The constitutional requirements are a showing of “ ‘actual or threatened injury as a result of the putatively illegal conduct of the defendant,’ and that the injury ‘fairly can be traced to the challenged action’ and ‘is likely to be redressed by a favorable decision.’ ” Id. at 472, 102 S.Ct. at 758 (citations omitted). The prudential requirements are that: (1) the plaintiff must assert his own legal rights, (2) the grievance must be specific to plaintiff and not “generalized,” and (3) the complaint must fall within “the zone of interests to be protected or regulated by the statute or constitutional guarantee in question.” Id. at 474-75, 102 S.Ct. at 760 (citations omitted). In applying the general principles of standing to the challenge of a restrictive zoning ordinance, the Supreme Court has held that: [A] plaintiff who seeks to challenge exclusionary zoning practices must allege specific, concrete facts demonstrating that the challenged practices harm him, and that he personally would benefit in a tangible way from the court’s intervention. Absent the necessary allegations of demonstrable, particularized injury, there can be no confidence of “a real need to exercise the power of judicial review” or that relief can be framed “no broader than required by the precise facts to which the court’s ruling would be applied.” Warth v. Seldin, 422 U.S. 490, 508, 95 S.Ct. 2197, 2210, 45 L.Ed.2d 343 (1975) (citation omitted). In Warth, some of the plaintiffs who claimed to be low income persons and who lived outside the zoned town of Penfield, N.Y., asserted that a Penfield ordinance had the effect of excluding low and moderate income persons. Id. at 502-503, 95 S.Ct. at 2207. Each of those plaintiffs claimed to have made an unsuccessful effort to locate affordable housing in Pen-field. Id. The Court found that the plaintiffs did not have a justiciable claim under the standing doctrine since the plaintiffs lacked a “present interest” in Penfield property. Id. at 504, 95 S.Ct. at 2207-08. Plaintiffs’ claim was dependent on a third-party developer or builder constructing low income housing in Penfield. Id. at 505, 95 S.Ct. at 2208. The Court concluded that the complaint failed to allege facts showing a causal relationship between the ordinance and the plaintiffs’ asserted injury. Id. at 507, 95 S.Ct. at 2209. Underlying this finding was the Court’s assessment of the factual record, which indicated that the plaintiffs’ “inability to reside in Penfield [was a] consequence of the economics of the area housing market, rather than of respondents’ assertedly illegal acts.” Id. at 506, 95 S.Ct. at 2209 (footnote omitted). Expressed in other terms, the ordinance was not the “sole” barrier to the plaintiffs’ access to real estate or the “but for” cause of their injury. See Comment, Standing to Challenge Exclusionary Zoning in Federal Courts, 17 B.C. Indus. and Com.L.Rev. 347, 381, 403 (1976). In Village of Arlington Heights v. Metropolitan Housing Development Corp., 429 U.S. 252, 97 S.Ct. 555, 50 L.Ed.2d 450 (1977), the Court found that standing existed for an individual nonresident challenging a zoning ordinance. Id. at 264, 97 S.Ct. at 562-63. The plaintiff, a resident of Evanston, Illinois, sought low rent housing in neighboring Arlington Heights. Id. The Metropolitan Housing Development Corporation (MHDC) had applied to Arlington Heights for the rezoning of a 15-acre parcel on which to construct low income housing. That application was denied. Id. at 254, 97 S.Ct. at 557-58. The Court found that the plaintiff had standing and noted that, had the Court granted relief, there was a “substantial probability” that low income housing would be built. Moreover, the plaintiff’s complaint was neither a generalized grievance nor was it dependent on speculation about third parties. Id. at 264, 97 S.Ct. at 562-63 (citations omitted). The Court concluded that the plaintiff had “adequately averred an ‘actionable causal relationship’ between Arlington Heights’ zoning practices and his asserted injury.” Id. (citing Warth, 422 U.S. at 507, 95 S.Ct. at 2209). The Arlington Heights Court also found that the MHDC had standing to assert the “right to be free of arbitrary or irrational zoning actions.” Id. 429 U.S. at 263, 97 S.Ct. at 562 (citations omitted). Defendants raise several factual arguments against plaintiffs standing in the case at bar. Among these are that plaintiff had no interest in any Borough property, nor did he have a firm offer to buy a Borough home. Defendants also note that the discussions regarding the home apparently took place in 1976, some ten years before the complaint was filed. Defendants offer these facts to support their argument that plaintiff has suffered no “injury,” the first requirement for standing. However, defendants’ arguments pose a “Catch-22” for plaintiff. It is arguable that it would have been absolutely futile for plaintiff to continue his attempt to buy a home in the Borough in light of the Club rule. Plaintiff’s initial discussion with Ms. Perkins was allegedly discontinued because of the Club rule. Any homeowner (a Club member under the rule) would be forced to violate the Club rule in order to sell a home to a non-Club member. Even if plaintiff could purchase a home, it would be violative of the Club rule for plaintiff to lease the land upon which the home stood, absent his admittance to the Club. This court will not require that plaintiff undertake the futile act of negotiating an offer to purchase a home when he is barred as a non-Club member from owning such a home. The complaint alleges that plaintiff pursued Club membership from 1976 through 1985. (Complaint at ¶¶ 16-18). Therefore, the complaint does not lack an allegation of direct injury merely because 10 years have passed since plaintiff’s failed attempt to purchase a home in the Borough. Plaintiff alleges a personal injury as a result of the effect of the Club rule. He alleges denial of an opportunity to purchase a home in the Borough of Pine Valley because he is not a member of the Pine Valley Golf Club. Withdrawal of the rule in question by defendants would provide part of the redress plaintiff seeks. Plaintiffs allegations indicate that the Club rule is prohibiting the possibility of his pursuing residency in the Borough. It appears on the face of the complaint that the Club rule, and no other cause, has created this barrier for plaintiff. Therefore, under Warth and Arlington Heights, plaintiff has standing to challenge the Club rule. V. STATE LAW CLAIMS Plaintiff has brought pendent state law claims under the New Jersey Constitution, Article 1, ¶ 1 (natural and unalienable rights) and Article 8, § 3 (use of public monies) as well as a claim for the common law tort of interference with prospective economic advantage. Defendants seek dismissal of these claims pursuant to Federal Rule of Civil Procedure 12(b)(6). Defendant Magee seeks dismissal of the claims against him on the basis of a lack of personal jurisdiction. Fed.R.Civ.P. 12(b)(2). A. Article 1 Claim Plaintiff brings a cause of action under Article 1 of the New Jersey Constitution. In light of the court’s earlier analysis of plaintiff’s equal protection claim under the federal Constitution, the court finds that plaintiff states a cause of action under Article 1 of the New Jersey Constitution. See Chamber of Commerce v. State, 89 N.J. 131, 445 A.2d 353 (1982) (New Jersey Constitution at least as protective of civil rights as federal Constitution); Abbott v. Burke, 100 N.J. 269, 294, 495 A.2d 376, 389 (1985) (Article 1 embodies the concept of equal protection under the law). See also McKenney v. Byrne, 82 N.J. 304, 316, 412 A.2d 1041, 1047 (1980). Defendants’ Club rule restricting residence in the Borough on the basis of Club membership must be shown to be “justified by an appropriate state interest” in order to pass muster under the New Jersey State Constitution. Exxon Co. v. Board of Adjustment, 196 N.J.Super. 183, 192-93, 481 A.2d 1172, 1177 (Law Div.1984); (citing Taxpayer’s Assn. of Weymouth Tp. v. Weymouth Tp., 80 N.J. 6, 37, 364 A.2d 1016, 1033 (1976)). Therefore, defendants’ motion to dismiss plaintiff’s Article 1 claim is denied. B.Article 8, Section 3 Claim

7355446-7668

REEVES, District Judge. This is a suit 'for the recovery of an income tax paid for the calendar year 1928. The amount was $5,053.87. The net income returned by the plaintiff for the year was $42,115.58. The closing inventory for the year was $163,129.08. In the suit, plaintiff says that this was an error, as the closing inventory should have been $123,019.50. It asserts that it was entitled to a deduction of $40,109.58. This deduction is claimed because it inventoried certain articles of merchandise at the cost price of $57,156.83-, whereas the actual market value at the time was only $17,046'.2&. It is averred by the plaintiff in its petition that such articles of merchandise were obsolete and unsalable. Defendant denies this, and says, moreover, that the plaintiff is estopped to claim such credit for the reason that the inventory was made up and filed on March 15, 1929, and that plaintiff ought not now to be heard to assert that such merchandise was unsalable and obsolete as of December 31, 1928. The merchandise in question involved equipment and devices for magnetic radios. According to the evidence, the dynamic radio deviees and equipment were recognized as far more efficient by the buying public late in the year 1928, and that thenceforward there were practically no demands for the magnetic radio. Such demands as were made for the magnetic device arose in those remote communities where the public was not yet apprised of the more efficient character of the dynamic radio. The plaintiff, as a manufacturer of the equipment for the magnetic deviees, did not appreciate the transition and the supersession of the dynamic radio until early in the year 1929'. Accordingly, it reported its merchandise on hand at cost, and carried same at that figure in its closing inventory. The testimony was overwhelming that at December 31, 1928, the magnetic device was obsolete, although there were sporadic sales arising from occasional demands. Many of these sales were canceled or rescinded. Counsel for the government do not deny that the merchandise was obsolescent, but the contention is that the obsolescence was not readily predictable at the time the closing inventory was made up. Moreover, counsel assert that under a regulation promulgated by the Commissioner of Internal Revenue, a correct inventory was determinable from a “bona fide selling price,” which “means actual offering of goods during a period ending not later than 30 days after inventory date.” This regulation does not contemplate complete obsolescence, but that there will continue to exist a demand for the goods. In the instant case the testimony showed complete obsolescence, but under circumstances not readily or immediately discovers ble. It was discovered later. To enforce this regulation strictly would be unjust to the taxpayer if its goods were in fact worthless. There would be no demand for an obsolete device. Market value eould not be indicated because there was no “actual offering of goods during a period ending not later than 30 days after inventory date.” It required an unavailing effort to sell and extensive inquiry on the part of the plaintiff to ascertain that its merchandise was in fact obsolete. The government could not fairly accept the tax and retain it, merely because plaintiff eould not comply literally with the regulations prescribed by the Internal Revenue Commissioner. Particularly is this true if it appeared by proof that the merchandise was worthless as a manufactured article. Under the authorities the plaintiff would be entitled to correct its mistake, as its income should not be either increased or diminished by artificial or arbitrary methods. In re Harrington (D. C.) 1 F.(2d) 749; Morrow, Becker & Ewing, Inc. v. Commissioner of Internal Revenue (C. C. A.) 57 F.(2d) 1. In the case of Lucker v. United States, 53 F.(2d) 418, 423, the Court of Claims upheld the right of the taxpayer “to reduce the inventory shown in the return and determined by the Commissioner on account of worthless and unsalable phonograph records included therein at factory, cost.” The court said: “While subsequent events axe not determinative of a fact on a given date prior thereto, that which occurred in this case subsequent to December 31, 19-20, confirms what would have been a reasonable expectation at, that time as to future disposition of abnormal supplies of old records on hand.” In the instant case the testimony showed that the magnetic radio equipment was obsolete in the fall of 1928. Subsequent developments confirm what may have been reasonably expected on December 31,1928. The plaintiff ought not to be penalized because it mistakenly inventories its merchandise at cost. As stated in the Lueker Case, “Taxation is eminently practical, and we think this is particularly true as to inventories which need only conform to the ‘best accounting practice in the trade or business and as most clearly reflect the income.’ Not only do we think good accounting practice would require the exclusion of the entire stoek of worthless records, but also that a closing inventory at December 31,192¶0, which included these records at any value to the plaintiff, would result in income not being clearly reflected.” If the plaintiff were required to pay an income tax upon the closing inventory returned by it, the tax would not be upon a true income, for the reason that the closing inventory did not reflect its true income. The regulation promulgated by the Commissioner must not be contrary to the law (Burnet v. Marston, 61 App. D. C. 91, 57 F.(2d) 611), the object of which is to require the taxpayer to reflect in the return its true income. Paragraph (e), of section 22 of the Revenue Act of 1928', relating to the subject of Inventories, section 2022i (c), title 26, U. S. C. Supp. II (26 USCA § 2022 (c), is as follows : “Whenever in the opinion of the Commissioner the use of inventories is necessary in order clearly to determine the income of any taxpayer, inventories shall be taken by such taxpayer upon such basis as the Commissioner, with the approval of the Secretary, may prescribe as conforming as nearly as may be to the best accounting practice in the trade or business and as most clearly reflecting the income.” This expresses the purpose of the Congress to obtain such an inventory “as most clearly reflecting the income.” It was not the object of the law to tax an income artificially or arbitrarily determined. The Commissioner, therefore, could not promulgate a rule so harsh as to compel the payment of a tax upon an income not clearly or fairly reflected. In the ease at bar, the plaintiff was clearly entitled, to a reduction of its inventory. Its closing inventory as returned for taxation purposes was made up as a result of a misapprehension of the facts. These facts existed and were readily ascertainable at the time, but were not ascertained and confirmed until after the tax had been paid upon the basis of an erroneous inventory. The plaintiff should therefore be reimbursed for the tax thus paid by mistake. It is true that there was evidence on behalf of the collector that the sale and even the manufacture of such equipment continued for some time after the first of the year 1929. Nevertheless, it is now a matter of common knowledge that the dynamic radio has completely superseded 'the magnetic, and that the transition began in the fall of 1928. The fact that others may have been able to palm off on the public an obsolete article would not warrant a penalty upon plaintiff because it failed or was unable or unwilling to impose its device upon an uninformed and unsuspecting portion of the public.

1967840-25680

PRETTYMAN, Chief Judge. Our appellant, William Worthy, Jr., was a newspaperman duly accredited by the Afro-American Newspapers, the New York Post, and the Columbia Broadcasting System. In 1957 he applied for renewal of a passport originally issued to him in 1955. The passport contained a restriction stating it was not valid for travel to five named areas under control of authorities with which the United States does not have diplomatic relations, including the portions of China, Korea and Yiet Nam under Communist control; and also a restriction against travel in Hungary. After various proceedings Worthy was asked whether he would make a commitment to abide the restrictions. He declined to do so, and the renewal was refused. The background for the refusal was that when the passport was originally issued it contained the same restrictions but Worthy nevertheless traveled extensively in both Communist China and Hungary. The refusal of the passport rested in no part upon Worthy’s personal beliefs, writings or character. It was an application of the Secretary of State’s general policy of refusing Government sanction to travel by United States citizens in certain areas of the world, presently under Communist control and deemed by him to be trouble spots. We note immediately that the point here presented in no wise resembles the-matter decided by the Supreme Court in Kent v. Dulles. There the Court held that the Secretary refused passports because of the beliefs and associations of the applicants and that he had no statutory authority to refuse on such grounds. In the case at bar no beliefs, associations, or personal characteristics are involved. Nor is this a case in which the Secretary has proposed a restriction upon a passport for reasons of internal security, i. e., protection against internal subversion. The factors here are political and military conditions in certain areas of the earth. Worthy makes four points. 1. He says the right to travel is a constitutional right and may be abridged only when there are overriding considerations of the public safety. 2. The Secretary lacks statutory authority to deny a passport to prevent travel in these countries. 3. Alternatively, to the extent the refusal rests upon Executive power over foreign relations, it is still subject to applicable constitutional provisions, and the - reasons given by the Secretary do not warrant this abridgment. 4. The refusal is an abridgment of the freedom of the press. Worthy says, correctly, that the denial of a passport, under the statutes of today, must be justified as a denial of a right to travel; and he says, also correctly, that the right to travel is protected by the Constitution, being a part of the right to liberty. But the simple, succinct phrases of the Bill of Rights, indestructible protections to some of {he fundamentals of our way of life, can be, and often are, expanded by rhetorical inflation beyond all semblance to the realities with which they were meant to deal. The right to travel is a part of the right to liberty, and a newspaperman’s right to travel is a part of the freedom of the press. But these valid generalizations do not support unrestrained conclusions. For the maintenance and preservation of liberty, individual rights must be restricted for 'various reasons from time to time. In case of a clear and present danger to the national security, even so generally unrestrietable a right as speech can be restricted. In case of a reasonably anticipated threat to security or to law and order, many acts by individuals can be restricted. An assembling mob bent on disorder can be dispersed. A man with a contagious disease can be locked in his house. Potentially dangerous actions must be restricted in order to prevent harm to others. So we have sanitation, fire, building and speeding regulations. Liberty itself is inherently a restricted thing. Liberty is a product of order. There is no liberty in anarchy or in chaos. Liberty is achieved by rules, which correlate every man’s actions to every other man’s rights and thus, by mutual restrictions one upon the other, achieve a result of relative freedom. The mere day-to-day maintenance of the order which insures liberty requires restrictions upon individual rights. Some actions, neither harmful nor potentially dangerous, must be restricted simply for the sake of good order in the community. So we have parking, traffic and zoning regulations and rules of court. No individual, may take whatever he pleases, and so all others are free to enjoy their possessions. One man may not assault another with whom he disagrees, and this restriction protects the freedom of all to speak and live peacefully. One may not spread vicious lies about another, and so all are free to enjoy their good reputations. Every person is forbidden to join with his competitors to drive another person out of business, and so all are free to pursue their trades and buy products at reasonable prices. Everybody’s liberty is restricted by prohibitions against driving recklessly, spreading disease, and leaving hidden dangers on property, and so the whole community is free to enjoy health. One cannot trample his neighbor’s flower beds, or even trespass on his lawn. Even in a neighborhood community every man’s right to roam is drastically restricted. A man who asserts his own uninhibited freedom to go where he pleases is a menace and is quickly put in his place. He may not park where he pleases, or drink where he pleases, or spit where he pleases. In the community the police take care of these matters, and in so doing the officers act as servants of the rest of the community; they are the government. Freedom to worship as each one chooses is restricted in some ways. Worship by human sacrifice is forbidden. A member of one religion cannot interrupt the services of another religion in order to worship in his own way. Through this restriction all have freedom to worship as they choose. Freedom of the press bears restrictions. It does not include the right to publish what another has registered with the copyright office. Merely because a newsman has a right to travel does not mean he can go anywhere he wishes. He cannot attend conferences of the Supreme Court, or meetings of the President’s Cabinet, or executive sessions of Committees of the Congress. He cannot come into my house without my permission, or enter a ball park without a ticket of admission from the management, or cross a public street downtown between crosswalks. He cannot pass a police cordon thrown about an accident, unless he has a pass from the police. A newsman’s freedom to travel about is a restricted thing, subject to myriad limitations. The peace-loving have rights. Those who recognize the fundamental necessities of liberty as a delicate product of order have power to protect themselves and their liberty. The liberty of everyone, law-abiding citizen and criminal alike, is involved in the maintenance of order and is threatened when disorder brings either the necessity or the opportunity for force to replace correlated rules of conduct. Such a threat may easily arise from conditions in foreign lands. The people have a right to protect their liberty, no matter whence the threat. Indeed it is quite clear that those who cry the loudest for unrestricted individual freedom of action would be the loudest in bemoaning their fate if their plea were granted. The same release from constituted authority would set free persons so powerful, so ruthless, so bent on autocratic control that no newsman would have any liberty whatever. The customary prompt transformation of unrestrained liberty into dictatorship is one of the poignant lessons of history. These pleas for unrestricted individual freedom seem to us to be made upon a firm assumption that not too many people will be granted such liberty and not too much liberty in any event. Worthy himself says he does not plead for an unrestricted liberty for all people. His plea is for his own liberty to do what he happens to choose. So we conclude on the point that the right to travel, like every other form of liberty, is, in our concept of an ordered society, subject to restrictions under some circumstances and for some reasons. The next questions are what restrictions are here sought to be imposed by the Secretary and why he seeks to impose them. Worthy seeks an unrestricted passport, so that he may travel anywhere in the world. He wishes especially to enter certain countries, now under Communist control, which, like most others, require him to possess a valid United States passport. He advised the Board of Passport Appeals he had written Premier Chou En-lai that he sought “full information about any and all news stories, especially stories that involve the risk of war, as is the case with current Chinese-American issues over Taiwan, Quemoy and Matsu.” The Secretary will not issue him a passport unless Worthy says he will not enter these designated countries. Thus Worthy is now free to travel in public places in the United States, Canada and Mexico, and if he agrees to the restrictions he will be free to travel in places open to foreigners in all countries which will grant him visas, except those named by the Secretary. The quantum by which Worthy’s freedom has been reduced is the area of places open to foreigners in those of the six named countries which might grant him visas. No restrictions are proposed upon Worthy’s thinking or writing. The restrictions proposed are on his physical presence in specified zones in foreign countries. They are restrictions upon acts, i. e., travel. The Secretary has given two separate but related reasons for this reduction of Worthy’s freedom: (1) The areas named are potential or actual “trouble spots”, where the presence of American citizens may place them in danger and further irritate our relations with the named countries and their allies. (2) The presence of American citizens in these areas and the official approval of their presence there will impede the execution of American foreign policy in relation both to these countries and to other countries. The facts which caused the Secretary to designate these places and to refuse official sanction of travel therein are shown us by the Secretary. Indeed they are established by many current events; they appear almost daily upon the front pages of the newspapers; they have been declared repeatedly by the President, his predecessors, and the Congress. We need not catalog them. The Korean difficulty with Communist China is still in the armistice stage, not finally settled. All trade with that part of China is prohibited. The situation in respect to Formosa and the small offshore islands, where we have a treaty of mutual defense, fluctuates in tensity. We oppose Communist China’s membership in the United Nations. American citizens are held in hostage in that country. The reasons underlying the restriction on travel in Hungary are less numerous but amply sufficient. Unless almost the whole of our foreign policy and the titanic domestic burdens being presently borne by our people are devoid of factual foundation, there is presently in the world a deadlock of antagonistic forces, susceptible of erupting into a fatal cataclysm. The capacity of incidents arising from the conduct of individuals to ignite that conflagration is well proven. Worthy says the reasons averred by or available to the Secretary are insufficient to support the restriction of his passport. We hold they are ample. Designations of restricted areas are made from time to time by the Secretary and thereafter are frequently withdrawn by him. Such has been a customary practice. For example, travel to Hum gary was restricted on December 21, 1949, and the restriction was lifted upon the release of Robert Vogeler. The same thing happened in Czechoslovakia in 1951 in connection with the Oatis incident. We think the designation of certain areas of the world as forbidden to American travelers falls within the power to conduct foreign affairs. The bare determination that certain areas outside this hemisphere are ti'ouble spots, or danger zones, is a phase of “foreign affairs”. Such a determination involves information gleaned through diplomatic sources and channels, and a judgment premised in large part upon foreign policy. The grounds upon which the President would make such a designation are foreign considerations, foreign affairs and policy. Indeed it would seem that such a restriction is in and of itself a foreign policy. It is at least an instrument of foreign policy. It depends upon this Government’s attitude toward a foreign power and on that power’s attitude toward us. Its locale is foreign territory. The assistance the Congress requires the President to afford an American citizen in trouble abroad is a phase of “foreign affairs”. The instrumentalities he must use to fulfill the congressional mandate are diplomatic, or foreign-service consular. A decision on the part of the President to prevent, if possible, the necessity for calling into play his diplomatic instrumentalities and the use of his powers — persuasive or compulsory — upon a foreign nation is a phase of “foreign affairs”. The selection by him of the means to be used in a given such case rests in large part upon policy, obviously foreign policy. If then, the designation of a foreign area as a potential trouble spot is a “foreign affair” and the extrication of a citizen from trouble in a foreign country is a “foreign affair”, is the refusal of the Executive to accord Government approval for a citizen to travel in such a designated area also a “foreign affair”? We think it is. The essence of the conduct of foreign affairs is the maintenance of peace, the prevention of war. The Constitution places that task of prevention in the hands of the Executive. The two correlative powers, to conduct war and to prevent war, are Executive functions under our Constitution. Of course the prevention of clashes with foreign governments embraces diplomatic negotiations with those govern ments. But, as a matter of hard, practical reality, it also involves restrictions upon acts of our own citizens which may reasonably be foreseen as breeding clashes. History establishes that either the behavior or the predicament of an individual citizen in a foreign country can bring into clash, peaceful or violent, the powers of his own government and those of the foreign power. This is a fact, not a theory. The nub of the problem at bar revolves about a fact, not a sup-positious theorem. The acts of individuals do cause clashes; the prevention of such acts does prevent clashes. Such clashes, whether diplomatic or military, involve “foreign affairs”. The plight of airmen who have crossed borders, and the tense crises thereby created, are recent common knowledge. Surely the Executive can forbid such crossings by our airmen, commercial or private as well as military. We think that, if the Executive foresees that the presence of American citizens in a designated foreign area may, by reason of military or political conditions there, evolve into, or be the occasion of, a clash, diplomatic or military, with a foreign government, his power in respect to foreign affairs includes power to refuse to sanction the travel of American citizens in that area. To hold the contrary would be to hold that the protection of the peace against American-caused incidents in foreign countries is outside the realm of foreign affairs. Such latter holding would be both illogical and unrealistic. In foreign affairs, especially in the intimate posture of today’s world of jets, radio, and atomic power, an individual’s uninhibited yen to go and to inquire may be circumscribed. A blustering inquisitor avowing his own freedom to go and do as he pleases can throw the whole international neighborhood into turmoil. Worthy’s avowed intent is to seek “especially stories that involve the risk of war”. The general principles governing the power of the Executive in foreign affairs are discussed by the Supreme Court in Perez v. Brownell; Chicago & Southern Air Lines v. Waterman S. S. Corp.; and American Communications Ass’n, C.I.O. v. Douds, especially in Mr. Justice Jackson’s concurring opinion. We dealt with them at length in Briehl v. Dulles. We think we need not here venture upon another extensive examination of that phase of our problem. It is settled that in respect to foreign affairs the President has the power of action and the courts will not attempt to review the merits of what he does. The President is the nation’s organ in and for foreign affairs. Worthy says that a denial of the right to travel to certain places cannot be based on consideration of foreign policy, because foreign policy is vague and fluctuating. This contention ignores the President’s undisputed power to abridge various other rights on foreign policy grounds. The President may recognize foreign governments, make executive agreements, and grant, deny or modify licenses for international air transportation. When the President exercises his authority in any of these fields, his decision may seriously affect the freedom of an American, “outside areas of plainly harmful conduct, * * * to shape his own life as he thinks best, do what he pleases, go where he pleases.” The nature of the power of the President in the conduct of foreign affairs is well illustrated by the Waterman case, supra. The President’s order to modify a license for overseas air transportation was in accordance with Section 601, Title 49 U.S.C.A. That section provides that such licenses “shall be subject to the approval of the President.” Congress laid down no standards or guide for him to follow. The President’s justification for the change was that he had reached his decision “because of certain factors relating to our broad national welfare and other matters for which the Chief Executive has special responsibility * * The Supreme Court held that the President’s decision was guided by his foreign policy and was immune from judicial review. The dissenting Justices agreed with, this proposition but thought that procedure before the Civil Aeronautics Board should be reviewable. Worthy argues that the Secretary does not have statutory power to designate restricted geographical areas. We think, as we have indicated, that the President has ample power under the Constitution itself. His delegation to the Secretary is complete. But, if the power to act rests upon statutes, we think the existing ones are clearly sufficient. Section 1185(b), Title 8 U.S.C.A., provides that, while a proclamation of national emergency is in force, “it shall, except as otherwise provided by the President, and subject to such limitations and exceptions as the President may authorize and prescribe, be unlawful for any citizen of the United States to depart from or enter, or attempt to depart from or enter, the United States unless he bears a valid passport.” The President delegated this authority to the Secretary by Proclamation No. 3004. On this point we appeared, in Briehl v. Dulles, supra, to be in agreement. In his dissenting opinion Judge Bazelon said, referring to Proclamation No. 3004: “Thus read, it grants the Secretary discretion of the type already exercised in his existing travel control regulations, namely, to determine which parts of the world can be visited by Americans only if they have passports, but not to determine which Americans are to receive passports.” The 1926 Act contained the unequivocal provision: “The Secretary of State may grant and issue passports * * *.” The Supreme Court said in Kent v. Dulles: “Under the 1926 Act and its predecessors a large body of precedents grew up which repeat over and again that the issuance of passports is ‘a discretionary act’ on the part of the Secretary of State. The scholars, the courts, the Chief Executive, and the Attorneys General, all so said.” If the Secretary has any discretion it seems to us it must include a discretion to prevent trouble when he reasonably foresees trouble. Without a preventive discretion, he has no discretion of any realistic content. Reasonable basis for the Secretary’s anticipation of possible involvement appears in ample measure in this case. So we think the statutes, if they have any meaning at all, include the power to do what the Secretary did in the case before us. The in terrorem argument that to sustain the Secretary’s power in this case is to confer upon him an unrestricted dis cretion to grant or to refuse passports is wholly unimpressive. He has not exercised such a .discretion. He does not claim it, and we are not considering any such power in the remotest degree. The claimed power, so far as this case is concerned, is narrow and clearly delineated. It is said that many of the incidents involved in the reported court cases dealing with foreign affairs were in time of war. But foreign affairs involve more than wars, and the President’s powers over foreign affairs are not only war powers. As a matter of fact these are two separate powers in the Constitution. And, as a further matter of fact, governments have many more dealings with each other and problems concerning each other in peacetime than they do in wartime. Not only so, but, as we have already emphasized, the duty of the President to prevent war is as important as is his power to conduct one. Worthy errs when he assumes that the Secretary has forbidden him to travel at all or that the action “is tantamount to imprisoning him.” Worthy, so far as this record shows, can have a passport to travel all over the world except in certain designated areas. He is in no sense imprisoned, except in the same rhetorical sense, although in less degree, that man is imprisoned because he is earthbound. Worthy says situations which demand curtailment of constitutional rights must be of an exceptional and severe emergency nature — “clear and present danger”, “gravest imminent danger”, etc. Several comments may be made. In the first place the nature of the right and the nature of the restriction are important. As we have already pointed out, the right here involved is not a right to think or speak; it is a right-to be physically present in a certain place. The basis of the restriction is not personal but is the military and political situation in the designated areas. In the second place there is a grave, clear and present danger, as we have indicated. When a gunman points a loaded gun, one need not await the report from a shot to know that danger is clear and present. The contention that there is no grave danger involved in the wanderings of uninhibited American newsmen in China or in Hungary today reflects an unawareness of realities. In the third place the Constitution puts in the President the authority to evaluate the military and political exigencies in foreign countries. The courts are the least able of all organs of government to make such evaluations, and they are wholly without authority to make them. Worthy says the presence of Americans, at least of American newsmen, in the restricted areas would better our foreign relations rather than worsen them. This is an argument he should make to the President or the Congress. The authority to determine what would and what would not better our foreign relations is not vested in individual citizens, even though they be newsmen, any more than authority to declare a damaged wall in a newsman’s home town dangerous or not dangerous is vested in him. The Fire Chief determines that condition and enforces his conclusion. To order the Secretary of State to do something, because we believe it would be better for our foreign relations than his plan, would be a gross usurpation of Executive powers. Judgment on what course of action will best promote our foreign relations has been entrusted to the President, not to the courts, journalists, scholars, or even “public opinion”. He makes his decision with the aid of the Department of State, a large organization with stations throughout the world, as well as on the basis of information received from all other parts of the Executive branch. We, if we had all this information, might reach a different decision. But the Constitution has wisely placed that burden in the hands of one who must justify his decisions before the electorate. The judgment of the District Court is Affirmed. . 1958, 357 U.S. 116, 78 S.Ct. 1113, 2 L.Ed.2d 1204. . 22 U.S.C.A. § 1732: “Whenever it is made known to the President that any citizen of the United States has been unjustly deprived of his liberty by or under the authority of any foreign government, it shall be the duty of the President forthwith to demand of that government the reasons of such imprisonment; and if it appears to be wrongful and in violation of the rights of American citizenship, the President shall forthwith demand the release of such citizen, and if the release so demanded is unreasonably delayed or refused, the President shall use such means, not amounting to acts of war, as he may think necessary and proper to obtain or effectuate the release; and all the facts and proceedings relative thereto shall as soon as practicable be communicated by the President to Congress.” . 1958, 856 U.S. 44, 78 S.Ct. 568, 2 L.Ed.2d 603. . 1948, 333 U.S. 103, 68 S.Ct. 431, 92 L.Ed. 568. . 1950, 339 U.S. 382, 70 S.Ct. 674, 94 L.Ed. 925. . Id. at page 422, 70 S.Ct. at page 705. . 1957, 101 U.S.App.D.C. 239, 248 L.2d 561. . Chicago & Southern Air Lines v. Waterman S.S. Corp., 333 U.S. at pages 109-111, 68 S.Ct. at pages 435-436.

4128133-13539

ORDER AND JUDGMENT STEPHEN H. ANDERSON, Circuit Judge. After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist in the determination of this appeal. See Fed. R.App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore ordered submitted without oral argument. A grand jury returned a twenty-nine-count indictment charging defendant/ appellant William Elmo Gaines and eleven other individuals with various crimes committed during the course of a six-year conspiracy to distribute cocaine in the Musgrave Addition area of Oklahoma City. While seven of the twelve entered into plea agreements, the remaining five, including Mr. Gaines, proceeded to trial, where Gaines was found guilty of two counts: one count of conspiracy to possess with intent to distribute powder cocaine and cocaine base/crack cocaine, in violation of 21 U.S.C. §§ 841(a)(1) and 846, and one count of distribution of one-half ounce of crack cocaine, in violation of 21 U.S.C. § 841(a)(1). The presentence report (“PSR”) prepared by the United States Probation Of fice in preparation for sentencing recommended holding Mr. Gaines accountable for 10.6 kilograms of crack cocaine. Based upon that amount, the PSR calculated a base offense level of 38, which, with a two-level enhancement for obstruction of justice, resulted in a total adjusted offense level of 40. With a criminal history category of I, Mr. Gaines’ sentence under the United States Sentencing Commission, Guidelines Manual (“USSG”), was 292 to 365 months’ imprisonment. The district court sentenced Mr. Gaines to 292 months’ imprisonment, followed by five years of supervised release. This court affirmed Gaines’ conviction and sentence on appeal. United States v. Gaines, Nos. 94-6408, 94-6410, 1995 WL 678504 (10th Cir. Nov. 15, 1995) (unpublished). The district court subsequently denied Mr. Gaines’ motion for post-conviction relief, pursuant to 28 U.S.C. § 2255, and denied his motion for reconsideration. This court dismissed his appeal. United States v. Gaines, No. 99-6003, 2000 WL 223587 (10th Cir. Feb. 28, 2000) (unpublished). This court further denied Mr. Gaines permission to file a second or successive § 2255 motion. On January 9, 2008, Mr. Gaines filed this motion to reduce his sentence pursuant to 18 U.S.C. § 3582(c)(2), seeking to modify his sentence by means of the retroactive application of Amendment 706 to USSG § 2Dl.l(c), which lowered the Drug Quantity Table two levels for offenses involving crack cocaine. See USSG § 2D1.1 (Nov. 1, 2007); USSG Supp. to App’x C, Amend. 706; United States v. Sharkey, 543 F.3d 1236, 1237 (10th Cir.2008) (“The Guidelines, through Amendment 706, generally adjust downward by two levels the base offense level assigned to quantities of crack cocaine.”). The district court denied the motion, finding that Mr. Gaines did not qualify for a reduction in sentence because his base offense level of 38 remained unchanged. That is, his base offense level at sentencing was 38, predicated upon the 10.6 kilograms of crack cocaine attributed to him, and it remains at 38, post-Amendment 706, because now a defendant responsible for 4.5 kilograms or more of crack cocaine still receives a base offense level of 38. Thus, the Amendment would not change his Guidelines sentencing range. See USSG § 2Dl.l(c)(l). This appeal followed. We affirm the district court’s denial of Mr. Gaines’ 18 U.S.C. § 3582(c)(2) motion to modify his sentence. BACKGROUND In late 1993/early 1994, the Oklahoma City police and the FBI began investigating the drug distribution activities of two of Mr. Gaines’ co-defendants, Timothy Johnson and Nick Owens, and determined that the two men were directing a large-scale conspiracy to distribute crack cocaine in the Oklahoma City area. Our prior opinion affirming the convictions of Mr. Owens and Mr. Johnson, sets out the basic facts relating to the development of the conspiracy, and, more particularly, Mr. Gaines’ involvement in the conspiracy, as established at the trial of Mr. Gaines and his co-defendants: At the end of 1987, Nick Owens began supplying his nephew Morris Johnson with one-quarter to one-half ounce of crack cocaine once or twice per week. After Morris Johnson sold the cocaine, he returned half of the money to Nick Owens and kept the other half. Nick Owens also supplied crack cocaine to his brother, Jerome Owens, for resale. In May 1988, Nick Owens began supplying his other nephew, Timothy Johnson, with the same amount of crack cocaine for resale. Later in 1988, Morris and Timothy Johnson hired Floyd Bush, their cousin Ronnie Johnson, Charles Watson, Arthur Westerbrook, and Devin Prince to help them resell the cocaine Nick Owens supplied to them. Morris and Timothy Johnson paid them $10 for every $50 worth of crack cocaine they sold. By late 1989, Nick Owens had begun supplying Morris and Timothy Johnson with as much as an ounce of crack cocaine at a time. Occasionally, Nick Owens supplied Morris and Timothy Johnson with cocaine powder instead of crack cocaine. Morris and Timothy’s customers would only buy crack cocaine, not cocaine powder, and at that time they did not know how to cook powdered cocaine into crack cocaine, so they hired William Gaines. Mr. Gaines received $100 for every half-ounce of cocaine he cooked. Mr. Gaines taught Morris and Timothy Johnson how to cook cocaine some time before the summer of 1992. In the summer of 1992, Timothy Johnson and William Gaines cooked one kilogram of cocaine together. After he taught Moms and Timothy Johnson how to cook cocaine, Mr. Gaines continued to participate in the organization by acting as a lookout and notifying Timothy Johnson by walk-ie-talkie if the police were nearby. ... Mr. Gaines also occasionally sold small amounts of crack cocaine. Edwin Smith made a controlled buy of one-half ounce of crack cocaine from Mr. Gaines on February 25,1994. United States v. Owens, 70 F.3d 1118, 1122-23 (10th Cir.1995). The PSR, which the district court adopted, determined that “[djuring the course of the conspiracy, it is estimated that in excess of 15 kilos of cocaine base were distributed.” PSR at ¶ 15, R. Vol. 2. The PSR found as follows concerning Mr. Gaines’ involvement: According to agents and trial testimony, Gaines assisted Timothy Johnson from May 1992 to February 1994, in the total distribution of 1/2 to 1 kilogram of cocaine per month. This distribution took place primarily at the Waverly apartments, Musgrave apartments, and at 701 N.E. 83rd, Oklahoma City, Oklahoma. It should be noted, however, that during February 1994, Timmy Johnson was only able to obtain 6 ounces of cocaine due to an unpaid debt. A conservative total amount of cocaine base attributed to the [Mr. Gaines] is 376 ounces or 10.6 kilograms. Id. at ¶ 33. In accordance with the PSR, at sentencing the district court attributed 10.6 kilograms of crack cocaine to Mr. Gaines. As indicated above, this quantity led to a base offense level of 38. Mr. Gaines objected to that drug quantity, arguing it was based upon “unproven references made by law enforcement agents, all of which conclude with the defendant having been assessed amounts of crack cocaine that was neither alleged nor proven in trial.” Addendum to PSR at 18, R. Vol. 2. The district court rejected that objection. In his direct appeal, Mr. Gaines again objected to the drug quantity of 10.6 kilograms. We addressed this argument as follows: Mr. Gaines contends the district court erred by attributing 10.6 kilograms of cocaine to him and relying on this finding in assigning him a base offense level of 38. U.S.S.G. § 2D1.1. Just as with [eo-defendant] Kevin Johnson, the government contends any error was harmless provided at least 1.5 kilograms of cocaine base were attributable to Mr. Gaines. We agree for the reasons stated in our opinion in United States v. [ ] Owens [, 70 F.3d at 1130-31] Gaines, 1995 WL 678504, at *2. We then concluded that there “was ample evidence at least 1.5 kilograms of cocaine base were attributable to Mr. Gaines, and we therefore find no reversible error.” Id. We affirmed Mr. Gaines’ conviction and sentence. In this appeal of the denial of his 18 U.S.C. § 3582(c)(2) motion to modify his sentence, Mr. Gaines argues (1) our decision in his direct appeal “reduced the amount of cocaine base for which he should be held accountable to 1.5 kilograms, well within the 4.5 kilogram ‘limit’ set by the Sentencing Commission [in Amendment 706]”; and (2) the principles underlying United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005), require a modification of his sentence. DISCUSSION “We review for an abuse of discretion a district court’s decision to deny a reduction in sentence under 18 U.S.C. § 3582(c)(2).” Sharkey, 543 F.3d at 1238. When a “motion for sentence reduction is not a direct appeal or a collateral attack under 28 U.S.C. § 2255, the viability of [the] motion depends entirely on 18 U.S.C. § 3582(c).” United States v. Smartt, 129 F.3d 539, 540 (10th Cir.1997) (internal quotation, citation, and alteration omitted). Section 3582(c)(2) allows a sentence reduction “in the case of a defendant who has been sentenced to a term of imprisonment based on a sentencing range that has subsequently been lowered by the Sentencing Commission....” 18 U.S.C. § 3582(c)(2). In such a case, “the court may reduce the term of imprisonment, after considering the factors set forth in section 3553(a) to the extent that they are applicable, if such a reduction is consistent with applicable policy statements issued by the Sentencing Commission.” Id. (emphasis added). The applicable policy statement, USSG § 1B1.10, provides that where “the guideline range applicable to [a] defendant has subsequently been lowered as a result of an amendment to the Guidelines Manual listed in subsection (c) below, the court may reduce the defendant’s term of imprisonment as provided by 18 U.S.C. § 3582(c)(2).” USSG § lB1.10(a) (2008). Subsection (c) includes Amendment 706 among the enumerated amendments. In determining the extent of any reduction under § 3582(c)(2), “the court shall determine the amended guideline range that would have been applicable to the defendant if the amendment(s) to the guidelines listed in subsection (c) had been in effect at the time the defendant was sentenced.” USSG § lB1.10(b)(l). The policy statement further provides that: “A reduction in the defendant’s term of imprisonment is not consistent with [the] policy statement and therefore is not authorized under 18 U.S.C. § 3582(c)(2) if ... an amendment listed in subsection (c) does not have the effect of lowering the defendant’s applicable guideline range.” USSG § lB1.10(a)(2)(B). As a result of Amendment 706, the current highest offense level of 38 would require a quantity of 4.5 kilograms or more of crack cocaine, rather than the 1.5 kilograms previously required for level 38. See USSG Supp. to App’x C, Amend. 706 (Reason for Amend.). On December 11, 2007, the Sentencing Commission voted to make Amendment 706 retroactive, through Amendments 712 and 713. See USSG § lB1.10(a) and (c); USSG Supp. to App’x C, Amends. 712 and 713. Mr. Gaines argues that he was not actually found responsible for 10.6 kilograms of crack cocaine. He attempts to derive support for this argument by noting that, in our affirmance of his sentence on direct appeal, we stated that “[t]here was ample evidence at least 1.5 kilograms of cocaine base were attributable to Mr. Gaines.” Gaines, 1995 WL 678504, at *2. He thus suggests that we only affirmed a 1.5 kilogram quantity of crack cocaine. We disagree. As our decision makes clear, the government suggested that our court only needed to find Mr. Gaines accountable for 1.5 kilograms of crack cocaine, in order to uphold his sentence. As the district court observed in denying Mr. Gaines’ 18 U.S.C. § 3582(c)(2) motion to modify his sentence: [i]mportantly for purposes of the present issue, the [Tenth] Circuit did not find any error in the [district] Court’s determination of 10.6 kilograms nor did it hold that [Mr. Gaines] was responsible for only 1.5 kilograms.... The Tenth Circuit did not find the Court erred in finding 10.6 kilograms were attributable to Defendant. Rather, it found it unnecessary to determine what amount was attributable to Defendant as long as it was at least 1.5 kilograms. Order at 1-2, R. Vol. 1 at 81-82. Thus, our decision on direct appeal did nothing to undermine the validity of the sentencing court’s attribution of 10.6 kilograms of crack cocaine to Mr. Gaines for sentencing purposes. Accordingly, Amendment 706 does not have the effect of lowering Mr. Gaines sentencing range. To the extent Mr. Gaines’ argument amounts to an attempt to collaterally attack the drug quantity originally calculated at his sentencing, that argument must also fail. Mr. Gaines may not use § 3582(c)(2) to collaterally attack his original sentence. “An argument that a sentence was incorrectly imposed should be raised on direct appeal or in a motion to vacate, set aside, or correct [a] sentence pursuant to 28 U.S.C. § 2255.” United States v. Torres-Aquino, 334 F.3d 939, 941 (10th Cir.2003); United States v. Williams, 290 Fed.Appx. 133, 136 (10th Cir.2008) (“By challenging the quantity of drugs calculated by the sentencing court, [defendant] is attempting to use his § 3582(c)(2) motion as a vehicle to challenge the substance of, or the proceedings that determined, his original sentence.”).

9014475-23412

Opinion for the court filed by Circuit Judge RADER. Dissenting opinion filed by Senior Circuit Judge ARCHER. RADER, Circuit Judge. The Gillette Company (Gillette) owns U.S. Patent No. 6,212,777 (issued April 10, 2001) (the ’777 patent) for wet-shave safety razors with multiple blades. Gillette sued Energizer Holdings, Inc. (Energizer) in the United States District Court for the District of Massachusetts alleging Energizer’s QUATTRO®, a four-bladed wet-shave safety razor, infringes certain claims of the ’777 patent. The district court denied Gillette’s motion for a preliminary injunction because it found that the claims of the ’777 patent covered only a three-bladed razor, and, consequently, Gillette did not show a reasonable likelihood of success on its claim of literal infringement by Energizer’s four-bladed razor. The Gillette Co. v. Energizer Holdings, Inc., No. 03-11514-PBS, 2004 WL 3366162 (D.Mass. Jan. 15, 2004). Because the district court erred in construing the claims of the ’777 patent to cover only three-bladed safety razors, this court vacates and remands. I. The ’777 patent claims a disposable safety razor with a group of blades, each blade placed in a particular geometric position relative to the other blades of the -group. Prior art razors with multiple blades shaved closer to the skin than two-bladed razors but had “a serious detrimental in fluence on other blade unit characteristics, most notably the drag forces experienced when the blade unit is moved over the skin, with the consequence that the overall performance of the blade unit [was] markedly inferior [compared to two-bladed razors] despite a closer shave being obtained.” ’777 patent, col. 1, II. 24-29. The inventive contributions of the ’777 patent are varying progressively the exposure and spacing parameters of the blades to overcome the undesired drag forces produced by razors with multiple blades, not simply limiting the number of blades to three. “The blade exposure is defined to be the perpendicular distance or height of the blade edge measured with respect to a plane tangential to the skin contacting surfaces of the blade unit elements next in front of and next behind the edge.” Id. at col. 1, II. 50-59. Specifically, the blade closest to the guard (leading blade) is positioned with a negative exposure to (i.e. recessed below) its tangential plane. Id. The blade closest to the cap (trailing blade) is positioned with a positive exposure to (i.e., extending above) its tangential plane. Id. A blade in between the leading and trailing blades is positioned with an exposure with respect to its tangential plane in between the exposures of the leading and trailing blades with respect to their respective tangential planes. Id. at col. 2, II. 28-40. The result is a generally “progressive exposure” of the blades with each of the identified blades shaving closer to the skin than the preceding blade. This blade configuration reduces the drag forces produced by the blades and equalizes the work performed by each successive blade. Id. at col. 1, II. 63-66. Additionally, the span marks the distance between successive blades. A progressive span would involve gradually increasing the spaqing between the guard and the leading blade, each successive blade, and the trailing blade and the cap. See, e.g., id. at col. 2, II. 16-20. The progression of the blade span likewise reduces frictional drag, leading to a close and comfortable shave. Claim 1 of the ’777 patent shows this progressive exposure innovation in shaving technology: 1. A safety razor blade unit comprising a guard, a cap, and a group of first, second, and third blades with parallel sharpened edges located between the guard and cap, the first blade defining a blade edge nearest the guard having a negative exposure not less- than -0.2 mm, and the third blade defining a blade edge nearest the cap having a positive exposure of not greater than +0.2 mm, said second blade defining a blade edge having an exposure not less than the exposure of the first blade and not greater than the exposure of the third blade. 777 patent, col. 4, II. 5-14. The Energizer QUATTRO® razor is the accused infringing device. The QUAT-TRO® employs a cartridge with a guard, a cap, and four blades. The leading blade has a negative exposure of not less than - 0.2 mm; the trailing blade has a positive exposure of not greater than +0.2 mm. The QUATTRO® further has two middle blades with essentially the same exposure, which is greater than that of the leading blade and less than that of the trailing blade. In anticipation of Energizer’s launch of the QUATTRO®, Gillette filed a patent infringement suit asserting that the QUATTRO® infringed the claims of the ’777 patent. Shortly thereafter, Gillette moved for a preliminary injunction to enjoin Energizer from making and selling the QUATTRO®. Following a two-day hearing, the district court denied Gillette’s motion, finding that Gillette had not shown a reasonable likelihood of success on its claim of literal infringement. Gillette, 2004 WL 3366162, at *1. The trial court primarily based its decision on the conclusion that the terms “first,” “second,” and “third” of claim 1 limited the scope of that claim to a razor having solely three blades. Id., slip op. at 11. Gillette now appeals, and this court has jurisdiction under 28 U.S.C. § 1292(c)(1). II The grant of a preliminary injunction under 35 U.S.C. § 283 is within the discretion of the district court. This court reviews a preliminary injunction decision for an abuse of discretion. Novo Nordisk of N. Am., Inc. v. Genentech, Inc., 77 F.3d 1364, 1367 (Fed.Cir.1996). “An abuse of discretion may be established by showing that the court made a clear error of judgment in weighing relevant factors or exercised its discretion based upon an error of law or clearly erroneous factual findings.” Id. As the moving party, Gillette is entitled to a preliminary injunction if it shows: (1) a reasonable likelihood of success on the merits of its claims; (2) irreparable harm if an injunction is not granted; (3) a balance of hardships tipping in its favor; and (4) the injunction’s favorable impact on the public interest. Reebok Int’l Ltd. v. J. Baker, Inc., 32 F.3d 1552, 1555 (Fed.Cir.1994). In order , to demonstrate a likelihood of success on the merits, Gillette has to show that, in light of the presumptions and burdens that will inhere at trial on the merits, (1) Energizer likely infringes the ’777 patent, and (2) the claims of the ’777 patent will likely withstand Energizer’s challenges to validity. Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1350 (Fed.Cir.2001). While Energizer raised issues of validity in opposition to Gillette’s motion for a preliminary injunction, the district court held that Gillette did not demonstrate a reasonable likelihood of success on the threshold issue of literal infringement. Therefore, the trial court did not address the validity issues. Accordingly, the validity of the ’777 patent is not before this court on appeal. To review Gillette’s likelihood of success on its literal infringement claim, this court, as the trial court before it, must first determine the meaning and the scope of the claims on this preliminary record. See Oakley, Inc. v. Sunglass Hut Int’l, 316 F.3d 1331, 1339 (Fed.Cir.2003) (“An assessment of the likelihood of infringement, like a determination of patent infringement at a later stage in litigation, requires a two-step analysis. First, the court determines the scope and meaning of the patent claims . asserted. Second[ ], the properly construed claims are compared to the allegedly infringing device.”) (internal quotations, alterations, and citations omitted). “In construing claims, the analytical focus must begin and remain centered on the language of the claims themselves, for it is that language that the patentee chose to use to particularly point out and distinctly claim the subject matter which the paten-tee regards as his invention.” Interactive Gift Express, Inc. v. Compuserve, Inc., 256 F.3d 1323, 1331 (Fed.Cir.2001) (quoting 35 U.S.C. § 112, ¶ 2); see also SRI Int’l v. Matsushita Elec. Corp., 775 F.2d 1107, 1121 n. 14 (Fed.Cir.1985) (ere banc) (“Specifications teach. Claims claim.”). Claim construction requires this court to place the claim language in its proper technological and temporal context. The best tools for this enterprise are the various forms of intrinsic evidence and, when appropriate, extrinsic evidence. See Vitronics, Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1582 (Fed.Cir.1996). The intrinsic evidence, “i.e., the patent itself, including the claims, the specification and, if in evidence, the prosecution history ... is the most significant source of the legally operative meaning of disputed claim language.” Id. (internal citation .omitted); see also United States v. Adams, 383 U.S. 39, 49, 86 S.Ct. 708, 15 L.Ed.2d 572 (1966) (“[I]t is fundamental that claims are to be construed in the light of the specifications and both are to be read with a view to ascertaining the invention.”); Astrazeneca v. Mutual Pharm. Co., Inc., 384 F.3d 1333, 1336-37 (Fed.Cir.2004) (“[E]vidence intrinsic to the patent — particularly the patent’s specification, including the inventors’ statutorily-required written description of the invention — is the primary source for determining claim meaning.” (citing Bell Atl. Network Servs., Inc. v. Covad Communications Group, Inc., 262 F.3d 1258, 1268 (Fed.Cir.2001); Vitronics, 90 F.3d at 1582)). Applying this case law, this court must determine, on this preliminary record, whether the language “comprising ... a group of first, second, and third blades” in the ’777 patent can encompass four-bladed safety razors (such as the QUATTRO®) or is limited to solely three-bladed safety razors. As explained below, this court discerns that claim 1 uses the “open” claim terms “comprising” and “group of,” in addition to other language, to encompass subject matter beyond a razor with only three blades. Moreover, the specification’s focus on blade exposures and express reference to “blade units with a plurality of blades,” ’777 patent, col. 1, II. 3-6, shows as well that this invention covers razors with more than three blades. The objective of the invention of the ’777 patent is to reduce drag forces in safety razors with more than two blades. See id. at col. 1, II. 24-37. The ’777 patent accomplishes this objective by progressively increasing the blade exposure and the blade span. Id. at col. 1, II. 37-59. Indeed, the specification specifically acknowledges that it is not the three blades themselves which solve the prior art problem of detrimental drag forces, but instead the arrangement of three blades in a particular spatial configuration, stating “the novel aspects of the present invention residing in the provision of three blades set in the blade unit set in particular dispositions with respect to each other and the guard and the cap.” Id. at col. 3, .II. 16-19 (emphasis added). The written description likewise discusses these parameters with respect to the relative positioning of each of the three blades at length at column 1, line 60 through column 2, line 40. These principles of progressive blade exposure and progressive blade span could apply equally to four or five blades. Such a geometric arrangement of three, four, or even more blades will achieve a closer shave and, at the same time, minimize excess drag. It may be that a four-bladed safety razor is a less preferred embodiment. A four-bladed razor costs more to build, requires more parts, and adds more frictional drag compared to the three-bladed version. Nevertheless, a patentee typically claims broadly enough to cover less preferred embodiments as well as more preferred embodiments, precisely to block competitors from marketing less than optimal versions of the claimed invention. ' Indeed, the language of claim 1 of the ’777 patent encompasses more than only three-bladed razors. At the outset, the open language of claim 1 embraces technology that may add features to devices otherwise within the claim definition. Moleculon Research Corp. v. CBS, Inc., 793 F.2d 1261, 1271 (Fed.Cir.1986). The claim uses two terms to show this open-ended meaning. The word “comprising” transitioning from the preamble to the body signals that the entire claim is presumptively open-ended. Crystal Semiconductor Corp. v. TriTech Microelectronics Int’l, Inc., 246 F.3d 1336, 1347 (Fed.Cir.2001); Innovad Inc. v. Microsoft Corp., 260 F.3d 1326, 1333 (Fed.Cir.2001). Because the patentee invoked this open-ended treatment in claim 1 of the ’777 patent, the scope of claim 1 encompasses all safety razors satisfying the elements set forth in claim 1. The addition of elements not recited in the claim cannot defeat infringement. See Crystal Semiconductor, 246 F.3d at 1348 (“[T]he transition ‘comprising’ creates a presumption that the recited elements are. only a'part of the device, that the claim does not exclude additional, unrecited elements. KCJ Corp. v. Kinetic Concepts, Inc., 223 F.3d 1351, 1356 (Fed.Cir.2000).”). The claim element identifying the blades likewise uses another presumptively “open” claim term — “group of.” 777 patent, col. 4,1. 6. At the outset, the language “group of’ does not place any limits or closed implications on the elements following this broad designation. Claim drafters often use the term “group of’ to signal a Markush group. A Markush group lists specified alternatives in a patent claim, typically in the form: a member selected from the group consisting of A, B, and C. See Manual of Patent Examining Procedure § 803.2 (2004). A Markush group by its nature is closed. If an applicant tries to claim a Markush group without the word “consisting,” the PTO will insist upon the addition of this word to ensure a closed meaning. Thus, in order to “close” a Mar-kush group, the PTO insists on the transition phrase “group consisting of.” See Abbott Labs. v. Baxter Pharm. Prods., Inc., 334 F.3d 1274, 1280 (Fed.Cir.2003). Without the word “consisting” the simple phrase “group of’ is presumptively open. If intending to limit the claimed invention to a three-bladed razor, the patent drafter would not have used the words “group of.” Rather, the drafter would have used the words “group consisting of,” or the simple formulation “and first, second, and third blades.” Because the drafter chose to use the open .term “group of,” additional members in the element “group of ... blades” will not defeat, infringement. In other words, a razor with two “second blades,” as in the QUATTRO®, will still fall within the literal language of the claim. The element at issue requires: a group of first, second, and third blades with parallel sharpened edges located between the guard and cap, the first blade defining a blade edge nearest the guard having a negative exposure not less than -0.2 mm, and the third blade defining a blade edge nearest the cap having a positive exposure of not greater than + 0.2 mm, said second blade defining a blade edge having an exposure not less than the exposure of the first blade and not greater than the exposure of the third blade. 777 patent, col. 4, II. 5-14 (emphases added). This element clearly defines a “group of blades” as a subset of the total number qf blades in the razor, and specifically identifies which blades of the razor are the “first, second, and third” blades of the subset. The first blade in the group is the blade “nearest the guard,” or leading blade. The third blade in the group is the blade “nearest the cap,” or trailing blade. The second blade is defined by its exposure, and must “hav[e] an exposure not less than the exposure of the first blade and not greater than the exposure of the third blade.” Given that the first and third blades must be the leading and trailing blades, respectively, and in light of the specification’s discussion of a progressive blade exposure, the second blade must also be located between the first and third blades. See id. col. 1, I. 60 — col. 2, I. 40 (discussing a progressive blade exposure from a first blade to a second and third blades). Thus, any blade in between the first and third blades and with an exposure greater than that of the first blade and less than that of the third blade is a “second” blade in the claimed subset of blades. The accused QUATTRO® device, in fact, has two “second blades” because both of the middle blades in the accused device meet the definition of the “second blade” set forth in the claim. Any subset of three blades in a blade unit meeting these definitions is a “group of blades” as defined by the clear language of the claim. This claim is not ambiguous. In fact, the paten-tee underscored this open-ended claim meaning by using both the open-ended transition phrase “comprising” for all elements of claim 1 as discussed above, and the open-ended claim term “group of’ for each part of this element. The language of the claims depending from claim 1 also support reading “comprising” and “group of’ as open terms. Claim 2, which depends from claim 1, adds the limitation that “the span between the first blade edge and the guard is substantially smaller than a span between the edges of the first and second blades and the span between the edges of the second and third blades.” Id. at col. 4, II. 17-20 (emphases added). The patent drafter’s use of “a span” between the first and second blades recognizes that more than one such span may exist. On the other hand, the drafter’s use of “the span” to identify the span between the guard-and first blade recognizes that only one such span is possible. The terms “first, second, and third” are terms to distinguish different elements of the claim, not terms supplying a numerical limit. Thus, the “first,” “second,” and “third” blades need not necessarily appear in that order or necessarily limit the blade unit to only three blades. Instead, these ordinal terms designate different blades within the “unit” according to their location and elevation. The claim itself makes this distinction. The claim defines both the “first” and “third” blades in terms of their location relative to the guard and cap, respectively, and further specifies their respective elevations. The second blade is defined solely by its elevation and location between the leading and trailing blades. None of the blades in the “group” are defined by their consecutive order relative to the other blades. To make it abundantly clear that the reference to “first,” “second,” and “third” blades was not a serial or numerical limitation, the claim does not follow a consecutive order (ie., it does not discuss the second blade after the first). The claim is thus clearly not using the ordinals — first, second, third — to show a consecutive numerical limit but only to distinguish or identify the various members of the group. The case law of this court supports this reading of the claim language “first, second, and third.” See 3M Innovative Props. Co. v. Avery Dennison Corp., 350 F.3d 1365, 1371 (Fed.Cir.2003) (“use of the terms ‘first’ and ‘second’ is common patent-law convention to distinguish between repeated instances of an element” and should not necessarily be interpreted to impose a serial limitation on a claim). The specification provides further support for interpreting claim 1 to encompass razors with more than three blades. The first sentence of the written description of the invention teaches that “the invention ... relates in particular to safety razors having blade units with a plurality of blades.” ’777 patent, col. 1, II. 3-5 (emphasis added). This reference defines the “invention” to encompass “a plurality of blades,” thus eschewing any numerical limit on the number of blades. The written description buttresses this statement of the invention through its use of the same open-ended “group of’ language used in claim 1. Id. at col. 1, II. 87-40 (“Thus, in accordance with the present invention there is provided a safety razor blade unit comprising a guard, cap and a group of three blades ....”) (emphasis added). The specification makes numerous references to a preferred embodiment of the invention with three blades, see, e.g., id. at col. 2, II. 50-53 and col. 4, II. 2-3, but that narrower embodiment does not impose a limit on the broader claim language as elucidated by the reference to “the invention” as embracing a “plurality of blades.” See Comark Communications v. Harris Corp., 156 F.3d 1182, 1186 (Fed.Cir.1998) (refusing to import limitations from the specification to the claims); Sjolund v. Musland, 847 F.2d 1573, 1581 (Fed.Cir.1988) (same); Texas Instruments, Inc. v. U.S. Int’l Trade Comm’n, 805 F.2d 1558, 1563 (Fed.Cir.1986) (“This court has cautioned against limiting the claimed invention to preferred embodiments or specific examples in the specification.”). The prosecution of patents related to the ’777 patent also supports reading claim 1 as an open claim. The defendant itself endorsed an open interpretation of “comprising” when it argued to the European Patent Office (EPO) that a virtually identical claim in Gillette’s European counterpart to the ’777 patent would not exclude an arrangement with four or more blades. This blatant admission by this same defendant before the EPO clearly supports this court’s holding that those skilled in the art would construe the claims of the ’777 patent to encompass razors with more than three blades. The district court adopted Energizer’s argument that the numerous (approximately thirty) references to “three,” “third” and “tertiary” in the specification limit 'the scope of the claims. Gillette, 2004 WL 3366162, at *5. However, “words or expressions of manifest exclusion” or “explicit” disclaimers in the specification are necessary to disavow claim scope. Housey Pharms., Inc. v. Astrazeneca UK Ltd., 366 F.3d 1348, 1352 (Fed.Cir.2004); Liebel-Flarsheim v. Medrad, Inc., 358 F.3d 898, 906 (Fed.Cir.2004). Despite the numerous cites to three-bladed razors plucked from the written description, no statement in the patent surrenders or excludes a four-bladed razor. Neither the district court nor Energizer refers to the “manifest” or “explicit” exclusion test. This patent and its prosecution record fall far short of any kind of disclaimer or disavowal. Not only did the patentee claim the invention with two open-ended terms (“comprising” and “group of’), but the specification expressly teaches that the invention encompasses a “plurality of blades.” This court declines to import limitations to the claims from the specification absent a “manifest” or “explicit” exclusion. Id. The patentee did not disclaim razors with more than three blades at all, let alone “manifestly,” or “explicitly.” Rather the patentee opened its teachings of the invention in the specification with an express statement that the “invention” covers “blade units with a plurality of blades.” ’777 patent, col. 1, II. 3-6. The applicant did not “manifestly” or “explicitly” disclaim blade units with a plurality of blades by expressly defining the invention in those exact terms. More important, the language of the claim itself, with its open transition phrases and use of ordinals to distinguish but not limit claim elements, shows that the invention embraces “a plurality of blades.” Ill

5409332-15211

Opinion for the Court filed by Circuit Judge SENTELLE. SENTELLE, Circuit Judge. International Transportation Service, Inc. (“ITS”) petitions for review of a National Labor Relations Board (“the Board” or “NLRB”) order finding it in violation of Section 8(a)(3) and (1) of the National Labor Relations Act (“NLRA” or “the Act”), 29 U.S.C. § 158(a)(3) and (1). The Board concluded that ITS committed an unfair labor practice when it fired employee Deanna Tartaglia after she picketed for recognition of a union as her personal bargaining representative. Because we conclude that Tartaglia did not engage in protected activity, and ITS therefore did not unlawfully discharge her, we grant the petition for review. I. ITS operates a container terminal at the port of Long Beach through which imports and exports pass continuously. Through its membership in the Pacific Maritime Association (“PMA”), the company indirectly employs longshoremen represented by local unions affiliated with the International Longshore and Warehouse Union (“ILWU”). ITS directly employs its office clerical workers, a bargaining unit represented by the Office Clerical Unit (“the Union”) of ILWU. The company also employs a single “Payroll and Billing Representative” whose union representation is the subject of this case. During past bargaining with ITS on behalf of the office clerical bargaining unit, the Union also attempted to negotiate on behalf of the Payroll and Billing Representative. Each time, however, the Union ultimately agreed to leave the position out of the unit. Accordingly, when ITS hired Deanna Tartaglia in June 1999 as the Payroll and Billing Representative, the Union was not authorized to bargain on her behalf. Not dissuaded by prior failures, the Union asserted itself once more: On February 4, 2002, it presented ITS with a letter demanding recognition as the bargaining representative of a single-employee unit consisting of Tartaglia. The letter imposed a one-hour deadline, which the Union extended until the next morning. On February 5, ITS rejected the demand and refused to recognize the Union as Tartaglia’s bargaining representative. Two Union representatives and Tartag-lia immediately responded by picketing. No other ITS employees joined the picket line, but many ILWU-affiliated employees ceased working. The work stoppage, having brought the terminal to a halt, prompted ITS to request expedited arbitration with ILWU through the PMA. Within a few hours, the arbitrator concluded that the picket line was not bona fide and ruled in the company’s favor, allowing ITS to refuse to pay employees who honored the picket line. Although not subject to the arbitration, the Union and Tartaglia ended the picket line following the ruling. The short work stoppage cost ITS a significant amount of money and goodwill with its customers. It caused a mile-long truck backup, delayed several shipments, and cost upwards of $90,000. In addition, despite the arbitrator’s award, many workers who honored the picket line did not return until the next day. Because her actions triggered the events, ITS fired Tartaglia on February 8. The Union filed an unfair labor practice charge against ITS for Tartaglia’s termination. The NLRB’s Regional Director issued a complaint based on that charge, alleging that ITS violated Section 8(a)(3) and (1) of the NLRA by discharging Tar-taglia for participating in the picket line. After a hearing, an Administrative Law Judge (“ALJ”) found that ITS had committed an unfair labor practice by discharging Tartaglia for picketing. ITS filed exceptions, arguing that it committed no violation because Tartaglia did not engage in activity protected by the Act. Specifically, ITS argued that the Union’s recognitional picketing violated Section 8(b)(7)(C) because the Board could not certify Tartaglia as a single-employee bargaining unit. By assisting the Union’s unlawful actions, therefore, Tartaglia could not receive the Act’s protection under ITS’s theory. ITS also argued that Tar-taglia was either a managerial or supervi sory employee not subject to the protections of the Act. The NLRB rejected ITS’s exceptions and adopted the ALJ’s ruling, which held on two alternative grounds that Tartaglia had engaged in protected activity. First, relying on Teamsters Local Union No. 115 (Vila-Batt Co.), 157 NLRB 588 (1966), it concluded that a union does not violate Section 8(b)(7)(C) when it pickets for recognition of a single-employee unit. ITS pressed the Board to abandon Vilctr-Barr in light of a Seventh Circuit case that questioned its correctness, see Int’l Bhd. of Teamsters v. NLRB, 568 F.2d 12, 18 (7th Cir.1977) (“Purolator Security ”), but the Board declined. It therefore concluded that neither the Union nor Tartaglia unlawfully picketed for recognition. Second, the Board alternatively held that Tartaglia’s picketing was protected even if the Union’s was prohibited. Concluding that Tartaglia did not act as the Union’s representative or agent, the Board refused to impute any wrongdoing by the Union to Tartaglia. The Board also found that the Act protected Tartaglia’s individual picketing because it was “union activity.” Even though she did not act in concert with other employees, it considered the union activity inherently concerted. ITS timely petitions for review of the Board’s order, and the Board cross-applies for enforcement. The company raises three challenges to the Board’s order. First, it argues that Tartaglia did not engage in protected, concerted activity when she joined the Union’s picket line. It therefore urges this court to reject Vila-Barr and find that Section 8(b)(7)(C) prohibits recognitional picketing for single-employee bargaining units. Second, ITS argues that Tartaglia was either a managerial or supervisory employee not subject to the Act’s protections. Third, ITS argues that the Board improperly refused to hear evidence of Tartaglia’s misconduct prior to fashioning a remedy. Because we agree that Tartaglia did not engage in protected activity, we do not address the other arguments. II. We review the NLRB’s orders under a deferential standard. If supported by substantial evidence, the Board’s findings of fact are conclusive. 29 U.S.C. § 160(e). Unless arbitrary or capricious, we will uphold the agency’s policy judgments. Diamond Walnut Groivers, Inc. v. NLRB, 113 F.3d 1259, 1266 (D.C.Cir.1997) (en banc). This level of deference, though high, has limits, and we will not “rubber-stamp NLRB decisions.” Cleveland Constr., Inc. v. NLRB, 44 F.3d 1010, 1014 (D.C.Cir.1995). The Board must provide “a reasoned explanation” for its decisions. Petroleum Comm. v. FCC, 22 F.3d 1164, 1172 (D.C.Cir.1994). In this case, the Board held that ITS violated Section 8(a)(3) and (1) of the Act by firing Tartaglia after she picketed for recognition of herself as a single-employee bargaining unit. Under Section 8(a)(1), an employer may not “interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in” Section 7 of the Act. 29 U.S.C. § 158(a)(1). Section 8(a)(3) makes it an unfair labor practice for an employer to terminate an employee to “discourage membership in any labor organization.” Id. § 158(a)(3). ITS argues that it could not have violated either of these provisions because Tartaglia’s recog-nitional picketing was not protected by Section 7, which grants employees “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collec tive bargaining or other mutual aid or protection.” Id. § 157. The Section 7 right to collective bargaining has never extended to single-employee bargaining units. As the Board has recognized since 1936, “the principle of collective bargaining presupposes that there is more than one eligible person who desires to bargain.” Luckenbach Steamship Co., 2 NLRB 181, 193 (1936). A single-employee bargaining unit by definition excludes all other eligible persons from the bargaining process. Accordingly, the Board will not certify single-employee bargaining units because the Act does not empower it to do so. The Board’s inability to certify a bargaining unit has ripples in other areas of labor law, including Section 8(b)(7)(C) of the Act, which forbids unions from picketing “where such picketing has been conducted without a petition [for election] being filed within a reasonable period of time not to exceed thirty days from the commencement of such picketing.” 29 U.S.C. § 158(b)(7)(C). In other words, Section 8(b)(7)(C) prohibits picketing for recognition of a bargaining unit where the Board will not certify the unit. This principle holds true for mixed-guard units, which the Act outlaws. Id. § 159(b)(3). Because the Board may not certify mixed-guard units, longstanding law holds that Section 8(b)(7)(C) prohibits recognitional picketing on them behalf. See Drivers, Chauffeurs, Warehousemen v. NLRB, 553 F.2d 1368, 1376-77 (D.C.Cir.1977); Purolator Security, 568 F.2d at 18. In Vila-Barr, the Board exempted single-employee units from this general rule, thus creating conflict with the mixed-guard cases. Although the Board will not certify single-employee units, it held in Vilar-Barr that Section 8(b)(7)(C) does not prohibit unions from picketing for recognition of such a unit. 157 NLRB 588. The Board reasoned that it would be “inequitable” to deny the right to picket for recognition of such units because “[t]here is no statutory or other policy against representation of an individual employee in a stable one-man unit by an authorized representative.” Id. at 589-91. The Seventh Circuit has called Vila-Barr into question. Upholding the Board’s rule on mixed-guard units, it broadly stated that Section 8(b)(7)(C) “bars recognitional picketing after it is determined that no Board-conducted election will be held.” Purolator Security, 568 F.2d at 18. In dictum, the court further stated that Vilar-Barr “was incorrect.” Id. at 18 n. 12. The court disagreed with the Board’s distinguishing of Vilar-Barr from the mixed-guard cases and concluded the same policy — '“to stop unions from imposing their will on employers and employees” — applies to preclude recognitional picketing for single-employee units. Id. We too have held that Section 8(b)(7)(C) “appears to contemplate picketing by way of prelude to an election.” Drivers, Chauffeurs, Warehousemen, 553 F.2d at 1377. In other words, a union violates Section 8(b)(7)(C) by picketing for recognition when there is no “reasonable prospect of a Board-conducted election.” Id. at 1376-77. We agreed with the Board that picketing for recognition of a mixed-guard unit did not satisfy that condition. Although we noted the tension between our reasoning and Vilar-Barr, the issue was not before us, and we did not reject the case at the time. Id. at 1377 n. 31. We do so now. The Board understandably followed Vila-Barr as precedent, but we are not so bound. See Alabama Mun. Distribs. Group v. FERC, 312 F.3d 470, 473-74 (D.C.Cir.2002). No rational distinction supports the Board’s different treatment of single-employee units and mixed-guard units for purposes of recognitional picketing. The fact that the Act prohibits the certification of mixed-guard units, see 29 U.S.C. § 159(b)(3), does not help the Board because the Act does not permit it to certify one-person units either. As the Board held in 1936, the very nature of collective bargaining is incompatible with single-employee bargaining units. Luckenbach, 2 NLRB at 193. It is a distinction without a difference that the Act expressly prohibits the Board from certifying mixed-guard units and implicitly prohibits the certification of single-employee units. The Act does not empower the Board to certify either type of unit. Therefore, picketing for recognition of either type of unit in no way serves as a “prelude to an election.” We therefore reject Vila-Barr and hold that Section 8(b)(7)(C) prohibits a union from petitioning for recognition of a one-person unit, as the Union did here. Yet the Board held that Tartaglia did not need Vildr-Bair to receive Section 7’s protections because Section 8(b)(7)(C) only prohibits union activity. The Board did not impute the Union’s wrongdoing to Tar-taglia because it found she was neither an agent nor representative of the Union. This conclusion makes little sense. Tar-taglia authorized, joined, and was the subject matter of the picket line. The Union had no other agenda than to seek recognition as her personal bargaining representative. Were it not for her, the Union would not have picketed in violation of Section 8(b)(7)(C). Accordingly, Tartaglia made possible and participated in all of the Union’s wrongdoing. Thus, the unlawful endeavor was hers as much as the Union’s. The Board’s error runs deeper. Even if Tartaglia did not personally engage in prohibited activity by joining the picket line, the Board did not explain why her assistance of prohibited activity would otherwise be protected. The Act does not protect all nonprohibited activities: Rather, it protects some activities, prohibits some, and leaves others in a suspended state, neither authorized nor punishable. The Board’s decision not to impute wrongdoing to Tartaglia means only that she did not violate the Act. It does not thereby usher her into the safety of Section 7. Furthermore, the Board’s ruling creates perverse protections for employees. It immunizes from employer discipline those employees who aid a union’s unlawful activities. Presumably, the ruling would also protect an employee who helps a union vandalize his employer’s property simply because he assisted a union. We decline to adopt this “Union made me do it” defense for employee misconduct. The Act does not protect an employee for assisting a union’s unlawful acts. We also reject the Board’s alternative holding that Tartaglia’s so-called “union activity” was the kind of concerted activity protected by Section 7. To be sure, the Supreme Court has accepted that in some circumstances employees who act alone may also be engaged in concerted activity. NLRB v. City Disposal Sys., Inc., 465 U.S. 822, 104 S.Ct. 1505, 79 L.Ed.2d 839 (1984). Specifically, the Court approved of the NLRB’s so-called “Interboro doctrine,” which held that an employee who individually asserted a collective bargaining right had engaged in concerted activity. Id. at 829-30, 104 S.Ct. 1505 (citing Interboro Contractors, Inc., 157 NLRB 1295 (1966)). The Court embraced the Board’s justifications for the Interboro doctrine as well: (1) that assertion of a collective-bargaining right was an extension of the concerted action that resulted in the agreement; and (2) that the individual, by asserting the right, had affected the rights of all other employees under the agreement. Id. at 829, 104 S.Ct. 1505. The Court also recognized the Board’s counterpart to Interboro, which held that a nonunionized employee asserting a noncollective-bargaining right had not engaged in concerted activity. Id. at 829 n. 6, 104 S.Ct. 1505 (citing Meyers Indus., Inc., 268 NLRB 493 (1984)).

10540865-9933

JOHNSON, Circuit Judge: This case arises from the district court’s denial of plaintiffs’ motion to amend final judgment. I. BACKGROUND The Northeast Florida State Hospital (“NEFSH”) is a state owned and operated institution for the mentally ill. Plaintiffs, appellants in this present appeal, are mentally retarded persons who reside at NEFSH or who did so at the time this suit commenced. At the time plaintiffs originally filed this suit, NEFSH was not staffed or equipped to offer appropriate care and habilitation for the mentally retarded. Defendants, appellees in this present appeal, are the Secretary of the Department of Health and Rehabilitative Services (“HRS”) of the state of Florida and other HRS officials. HRS has overall responsibility for institutions and services provided to mentally retarded and mentally ill citizens of Florida. The ten named plaintiffs originally filed suit on behalf of themselves and others similarly situated on February 28, 1984. Plaintiffs alleged violations of their rights under the Fourteenth Amendment, 42 U.S. C.A. § 1983, and section 504 of the Rehabilitation Act of 1973, 29 U.S.C.A. § 794. The plaintiffs alleged that the defendants had confined them at NEFSH without providing them with appropriate care or habilitation and had denied them post-commitment review and access to judicial tribunals to challenge the legality of their confinement. The district court originally certified the class on June 27, 1984, as all persons who are mentally retarded, not mentally ill, residing at NEFSH as of February 28, 1984, and all future mentally retarded, not mentally ill, residents of NEFSH. Upon plaintiffs’ motion, the district court later amended the class definition to cover two subclasses: (1) the solely mentally retarded, and (2) those diagnosed as both mentally retarded and mentally ill. Armstead v. Pingree, 629 F.Supp. 273, 280 (M.D.Fla.1986). On October 29, 1987, HRS filed a motion to grant judgment for plaintiffs. On January 21, 1988, the plaintiffs filed a response along with their own motion for summary judgment. On February 8, 1989, the court granted judgment for the plaintiffs and set forth extensive findings of fact and conclusions of law. In its summary judgment order, the court denied “remedial” relief to retarded persons who had been discharged or transferred out of NEFSH during the pendency of the litigation, citing the Eleventh Amendment as a bar to such relief. The court also ordered HRS to submit a compliance plan within ninety days. While awaiting the compliance plan, the plaintiffs filed a motion to amend the judgment so that it would, among other things, include the discharged patients in the relief granted. The court, however, denied that portion of the motion. The court eventually approved a modified version of the compliance plan, but again refused to include the discharged patients in the plan, declaring that such relief would exceed the scope of the action as it was filed and would violate the Eleventh Amendment bar on retroactive relief. II. DISCUSSION The standard of review for the district court’s denial of a motion to amend final judgment is abuse of discretion. Barnes v. Southwest Forest Indus., Inc., 814 F.2d 607, 611 (11th Cir.1987); Evans v. Bexley, 750 F.2d 1498, 1500 (11th Cir.1985); Thomas v. Farmville Mfg. Co., 705 F.2d 1307, 1307 (11th Cir.1983). A. Limitation of the Class Due Relief (1) The Complaint On Its Face In its order granting summary judgment, the court set out as a finding of fact a description of the class: “Plaintiffs and class members are persons who are either solely mentally retarded or both mentally retarded and mentally ill, and who reside or were confined in NEFSH on or after February 20,1984, or will reside or be confined therein in the future.” The original class certification order used similar language, defining the class as “[tjhose persons who ... were residing at [NEFSH] on February 28, 1984, and all future residents.... ” Armstead, 629 F.Supp. at 278. The words “were confined in NEFSH on or after February 20, 1984” and “were residing at NEFSH” contemplate the possibility that some of the plaintiffs would be discharged prior to final judgment. On a literal reading, then, the court’s factual finding includes in the class those members discharged between February 28, 1984, and the date of final judgment. In its order approving the compliance plan, however, the district court clarified its understanding of the class entitled to relief. The court stated that patients who had been transferred out of NEFSH before final judgment were not members of the class entitled to relief. The court’s primary justification for this refinement in class definition was that the plaintiffs’ requested relief concerned conditions at the facility itself and not the specific conditions of individual class members. The plaintiffs disagree with the district court’s characterization of the relief requested in the amended complaint. The plaintiffs view the core allegations of the complaint as concerning the denial of services and post-commitment reviews to the individual class members. They point to paragraph 73 of the complaint, which requests that the court order appropriate placement of plaintiffs in facilities designed to provide habilitation, treatment, training, care, and services for the retarded. Paragraph 75 further requests that the court enjoin HRS from confining the retarded in any inappropriate facility. A plain reading of these two paragraphs of the complaint supports the plaintiffs’ position, especially in view of the class definition. HRS argues that Fed.R.Civ.P. 8 requires that the plaintiffs’ complaint give the defendants fair notice of the claim and the grounds on which it rests. See Mann v. Adams Realty Co., 556 F.2d 288, 293 (5th Cir.1977); Feldman v. Jackson Memorial Hosp., 509 F.Supp. 815, 819 (S.D.Fla.1981), aff'd, 752 F.2d 647 (11th Cir.), cert. denied, 472 U.S. 1029, 105 S.Ct. 3504, 87 L.Ed.2d 635 (1985). As HRS reads the complaint, there is no notice that the class or relief includes patients discharged or transferred during the pendency of the litigation. But in view of the fact that a plain reading of the complaint allows an interpretation which includes the discharged patients in the class receiving relief, HRS’s argument is without merit. (2) The Four Walls of NEFSH The heart of the disagreement between the parties concerns whether the relief requested, and that ultimately granted, focuses upon the institution of NEFSH or the individuals affected by the institution. HRS assumes that the relief is directed toward a place rather than a group of persons. HRS therefore asserts that individuals now not within the four walls of NEFSH are not entitled to relief because the complaint does not allege constitutional violations at a place other than NEFSH and does not link the defendants to any such violations outside the walls. HRS supports this assertion by pointing out that in order to sustain a section 1983 action a plaintiff must allege a constitutional wrong committed by the named defendant. See, e.g., Williams v. Bennett, 689 F.2d 1370, 1380 (11th Cir.1982), cert. denied, 464 U.S. 932, 104 S.Ct. 335, 78 L.Ed.2d 305 (1983). HRS concludes that any claim for relief outside the four walls of NEFSH should have been dismissed because the plaintiffs never linked any constitutional wrongs committed outside NEFSH to the defendants. Plaintiffs, on the other hand, characterize the claim as an allegation of wrongs against a group of persons (i.e., the class) rather than NEFSH itself. As support for this position, the plaintiffs note that the relief actually granted to those residing at NEFSH on or after the date of final judgment was not limited to reform of conditions within the institution. That relief included: (1) detailed provisions as to appropriate placement of class members upon discharge from NEFSH, (2) the right to a hearing to contest the proposed placement, (3) an automatic hearing six months after discharge to any residential facility in order to evaluate the appropriateness of placement, and (4) a requirement that class members be deemed “involuntary” patients as long as they are in any state residential facility. The plaintiffs assert that the district court itself noted that the hearings ordered as part of the relief were necessary to prevent HRS from erroneously discharging from NEFSH those class members who were actually granted relief in the final judgment. The plaintiffs conclude that because relief attached to those individuals, and not the institution, there was no legitimate reason to exclude from relief persons who had been transferred out of the four walls of NEFSH during the pend-ency of the litigation. We find persuasive on this' point the Fourth Circuit’s reasoning in Thomas S. by Brooks v. Flaherty, 902 F.2d 250 (4th Cir.1990). That case was a class action challenging the deficient care of mentally retarded persons in North Carolina’s psychiatric hospitals. In granting relief, the district court included among those entitled to relief all retarded persons transferred out of the hospitals after the date of class certification. The Fourth Circuit upheld the district court’s decision, stating that if it were to hold otherwise “the state could unilaterally avoid the obligations imposed ... and defeat the claims of class members by terminating their institutional care while the case was pending.” Id. at 255. This is essentially the same justification for continued class membership which the district court in the instant case recognized and implemented in its provisions for continued oversight of the appropriateness of placement after discharge from NEFSH for those to whom it granted relief. The district court erred, however, in failing to include the discharged and transferred patients within the ambit of that relief. B. The Eleventh Amendment Bar

6110438-27262

ORDER AND MEMORANDUM OF DECISION NOTTINGHAM, District Judge. This is an appeal from an order and judgment entered by the United States Bankruptcy Court for the District of Colorado. The parties dispute the bankruptcy court’s calculation of the amount of penalty which was assessed pursuant to I.R.C. § 6672 (West Supp.1993), and have filed cross-appeals. Jurisdiction is based on 28 U.S.C.A. § 158(a) (West 1993). FACTS Debtor-Appellee John Hathaway Evans, Jr. (“Evans”) was president of a corporation called Passage Home Communications (“Passage Home”). Prior to May 1989, Passage Home neglected to file its tax returns or make any payment on its federal withholding taxes, pursuant to the Federal Insurance Contributions Act, I.R.C. §§ 3101-3128 (West 1989) [hereinafter “FICA taxes”], and its income taxes, pursuant to I.R.C. §§ 3401-3406 (West 1989) [hereinafter “form 941 taxes”], for the second, third, and fourth quarters of 1988 and the first quarter of 1989. (Br. of Appellant United States at 6-7 [filed Nov. 9, 1992] [hereinafter “Appellant’s Br.”]; Joint Stipulation of Facts ¶ 1 [filed June 1, 1992].) Passage Home’s form 941 tax returns revealed the following tax liabilities: Period Total Tax Non-Trust Fund Trust Fund 2nd Quarter 1988 $6,964.97 $ 2,201.49 $ 3,763.48 3rd Quarter 1988 $28,388.76 $ 8,675.87 $19,712.89 4th Quarter 1988 $34,272.29 $10,111.16 $24,161.13 1st Quarter 1989 $44,901.31 $13,456.02 $31,445.29 Total: $114,527.33 $34,444.54 $80,082.79 (Appellant’s Br. at 7 [Joint Stipulation of Facts ¶ 2].) On May 18, 1989, Evans met with Sharon Rye, a revenue officer for the Internal Revenue Service (“IRS”). Rye demanded full payment of the taxes owed. (Appellant’s Br. at 7 [Pl.’s Ex.L ¶¶2 & 6]; Memorandum Opinion and Order, Relevant Facts ¶ 4 [filed July 17, 1992] [hereinafter “Order”].) Evans gave Rye a check for $15,000 drawn on Passage Home’s account. (Appellant’s Br. at 7 [Joint Stipulation of Facts ¶ 4].) Rye directed that the check be applied to the non-trust fund portion of the form 941 tax liabilities for the second quarter ($2,201.01) and third quarter ($12,798.99) of 1988. (Joint Stipulation of Facts ¶¶ 4-5.) This check completely paid the principal amount of the non-trust fund taxes for these quarters; therefore, the remainder of the check was applied to penalties and interest on the form 941 taxes. (Appellant’s Br. at 8 [Def.’s Ex. 11 ¶ 23].) On May 25,1989, the IRS received a check for $25,000 drawn on Passage Home’s account. Rye directed that $23,093.88 be applied to the non-trust fund taxes, and that $1,906.12 be applied to the corporation’s Federal Unemployment Tax Act, I.R.C. §§ 3301-3311 (West 1989), taxes [hereinafter “form 940 taxes”] for 1988, penalties, and interest. (Joint Stipulation of Facts ¶¶ 6-7; Order ¶5.) On June 22,1989, the IRS received a check for $25,000 drawn on Passage Home’s account. Rye directed that the funds be applied to the non-trust fund taxes. (Joint Stipulation of Facts ¶ 9.) Again, because this check completely paid the principal amount of the non-trust fund taxes, the remainder was applied to the associated interest and penalties on the form 941 taxes. (Appellant’s Br. at 9 [Def.’s Ex. 11 ¶¶ 19, 25, 31 & 37].) On July 25, 1989, the IRS received a check for $10,000 drawn on Passage Home’s account. Rye directed that the funds be applied to the non-trust fund taxes, associated penalties, and interest. (Joint Stipulation of Facts ¶¶ 10-11.) Since the principal amount of the non-trust fund taxes had been completely paid, the entire amount was applied to penalties and interest on the form 941 taxes. On July 26, 1989, the IRS assessed the form 941 taxes along with all related penalties and interest. (Joint Stipulation of Facts ¶ 15.) On August 30, 1989, the IRS received a check for $5,000 drawn on Passage Home’s account. Rye directed that $1,354.11 be paid to interest, $1,092.27 be paid to penalties, and $2,553.44 be applied to the trust fund portion of Passage Home’s tax liability. (Br. of Ap-pellee/Cross Appellant, John Hathaway Evans, Jr., Statement of the Facts ¶ 2 [Def.’s Ex. 11 ¶ 41] [filed Nov. 23, 1992] [hereinafter “Appellee’s Br.”]; contra Joint Stipulation of Facts ¶¶ 12-13; Order, Relevant Facts ¶ 10.) On November 17, 1989, Passage Home filed a voluntary petition for bankruptcy pursuant to chapter 11 of the Bankruptcy Code, 11 U.S.C.A. §§ 1101-1174 (West 1993). (Order, Relevant Facts ¶ 11.) On March 12, 1990, the IRS made an assessment of liability pursuant to I.R.C. § 6672 (West Supp.1993), for the willful failure of the debtor to collect, truthfully account for,- and pay over the federal withholding taxes of Passage Home for the four quarters in question. The assess ment was in the amount of $80,082.76. (Joint Stipulation of Facts ¶ 16.) On November 14, 1990, Evans filed a petition for bankruptcy under chapter 7 of the Bankruptcy Code, 11 U.S.C.A. §§ 701-766 (West 1993). On January 16, 1991, the IRS filed its “Proof of Claim” in the Passage Home bankruptcy proceeding. (Appellee’s Br., Statement of the Facts ¶ 3 [PL’s Ex. E].) In this document, the IRS credited the entire amount of payments, approximately $80,000, to tax obligations, rather than to penalties and interest. The IRS claimed that only $36,449.45 in form 941 taxes remained due. Nevertheless, Evans was assessed $80,082.79 in section 6672 penalties. (Appellee’s Br., Statement of the Facts ¶ 3 [PL’s Ex. E; Def.’s Ex. 11 ¶ 9].) On February 13, 1991, Evans received his discharge. (Appellant’s Br. at 11.) On December 19, 1991, Evans filed an adversary “Complaint to Determine Dischargeability of Debt, Objecting to Claim and for Injunctive Relief’ against the government in order to determine the amount of the section 6672 penalty. (Id. at 6.) As of January 8, 1992, the IRS had seized or received voluntary payments in the amount of $16,-512.45 for the section 6672 penalties. (Order, Relevant Facts ¶ 14.) On June 3,1992, the bankruptcy court held a trial on Evans’ adversary complaint. On July 17,1992, the bankruptcy court issued its Order. (Appellant’s Br. at 11.) The bankruptcy court held that Passage Home’s liability for penalties and interest on the form 941 taxes was payable only after the IRS had given proper notice and demand. (Id. at 11-12.) Since notice and demand had not occurred until July 26, 1989, the IRS had inappropriately applied payments made prior to this date to penalties and interest which had accrued but had not yet been assessed. Thus, of the approximately $75,000 paid before July 26, only $34,444.52 (the principal amount of the non-trust fund portion of the form 941 taxes) could be applied to non-trust fund liabilities; the remainder ($40,555.48) should have been applied to the trust fund principal, leaving a balance due for penalties and interest on the non-trust fund taxes of $89,527.31. Since the August 30, 1989, payment of $5,000 was made after assessment, the bankruptcy court found that the full amount should have been applied to the $39,-527.31. (Id. at 12.) On August 5,1992, Evans filed a motion to amend judgment in order to include a payment of $3,080 which had been paid by another taxpayer, but had been excluded by the bankruptcy court. On August 12, 1992, amended judgment was entered, leaving the IRS with a total claim of $23,014.86, plus interest from March 12, 1990, to January 28, 1992, to be calculated in accordance with applicable IRS procedures. (Id. at 13.) Each of the parties appeals the bankruptcy court’s decision. The questions raised on appeal are as follows: (1) whether the bankruptcy court erred when it concluded that the IRS could not apply payments to accrued but unassessed interest and penalties; (2) whether the bankruptcy court erred when it reduced the section 6672 penalty by the total amount of payment without allowing for interest which accrued between payments; and (3) whether the bankruptcy court erred when it concluded that the IRS could re-allocate to payment of penalties and interest a voluntary payment that the IRS had applied, for purposes of its “Proof of Claim” in the related corporate bankruptcy, toward payment of tax liabilities. I conclude as follows: (1) the bankruptcy court erred when it did not permit the IRS to apply Evans’ payments to both the principal tax and the interest on this tax; (2) the bankruptcy court erred when it reduced the section 6672 penalty by the total amount of payment without allowing for interest which accrued between payments; and (3) the bankruptcy court properly permitted the IRS to re-allocate the payment made after assessment to penalties and interest on the non-trust fund taxes. ANALYSIS Legal determinations by the bankruptcy court are reviewed de novo. In re Branding Iron Motel, Inc., 798 F.2d 396, 399-400 (10th Cir.1986). In contrast, factual determinations are reviewed under a clearly erroneous standard. Fed.R.Bankr.P. 8013; Anderson v. City of Bessemer City, N.C., 470 U.S. 564, 573-75, 105 S.Ct. 1504, 1511-12, 84 L.Ed.2d 518 (1985); In re Mullet, 817 F.2d 677, 678 (10th Cir.1987). Since the issues raised by the parties concern legal determinations only, I review them de novo. 1. Pre-Assessment Payments The Internal Revenue Code [hereinafter “the Code”] requires employers to withhold from their employees’ paychecks money representing employees’ personal income taxes and social security taxes. I.R.C. §§ 3102(a), 3402(a) (West 1989). Because federal law requires employers to hold these funds in “trust for the United States,” I.R.C. § 7501(a) (West 1989), these taxes are commonly referred to as “trust fund” taxes. Slodov v. United States, 436 U.S. 238, 242-43, 98 S.Ct. 1778, 1782-83, 56 L.Ed.2d 251 (1978). “Non-trust fund” taxes generally refer to other corporate tax liabilities, such as corporate income taxes (form 941 taxes) and the employer’s share of FICA taxes. In re Avildsen Tools & Machine, Inc., 794 F.2d 1248, 1249 n. 1 (7th Cir.1986). Should employers fail to pay trust fund taxes, the government may collect an equivalent sum directly from the officers or employees of the employer who are responsible for collecting the tax. See I.R.C. § 6672. These individuals are usually referred to as the “responsible” individuals. Slodov, 436 U.S. at 244-45, 98 S.Ct. at 1783-84. See also United States v. Energy Resources Co., 495 U.S. 545, 546, 110 S.Ct. 2139, 2140-41, 109 L.Ed.2d 580 (1990). In this case, there is no dispute that Evans was the responsible party for the corporation and that the corporation neglected to pay its form 941 taxes and its FICA taxes, pursuant to sections 3102(a) and 3402(a) of the Code. I.R.C. §§ 3102(a), 3402(a). (See Appellee’s Br. at 3.) What the parties dispute is the amount of trust fund taxes owed at the time Passage Home petitioned for bankruptcy. When a corporation declares bankruptcy, the responsible person is subject to section 6672 liability only for the trust fund taxes not paid over — not for any non-trust fund taxes or the penalties and interest associated with the non-trust fund taxes. Williams v. United States, 939 F.2d 915, 916 (11th Cir.1991). Because the bankruptcy laws limit the government’s recovery to trust fund taxes, the IRS has developed a policy which governs the application of payments made by the corporation prior to bankruptcy. In order to minimize the loss to the government for the unpaid non-trust fund taxes, the IRS first applies involuntary payments to the principal on non-trust fund taxes, then to penalties and interest assessed on these taxes, before applying any payments to the trust fund taxes. Avildsen Tools, 794 F.2d at 1251. In this case, the revenue officer followed this policy. Passage Home, by way of Evans, remitted approximately $75,000 in payments before filing for bankruptcy under chapter 11. The revenue officer applied the payments to the principal on the non-trust fund taxes which was owing at the time the payments were made. Once this principal was completely paid, the revenue officer applied the remainder of the payments to interest and penalties on the non-trust fund taxes. However, the IRS did not officially assess the penalties and interest on the non-trust fund taxes until July 26,1989, after Passage Home had remitted the $75,000 in payments. According to Evans, since the IRS had not given notice and demand for the penalties and interest on the non-trust fund taxes, neither had been properly assessed and, as a consequence, were not yet due and owing. Thus, instead of applying the excess payments to as yet unassessed penalties and interest on the non-trust fund taxes, the revenue officer should have applied the excess payments to the principal on the trust fund taxes. In order for me to determine whether the excess payment was properly applied to the interest and penalties, I must determine if notice and demand was required before the interest and penalties were considered due and owing. Penalties were assessed in this case pursuant to sections 6651 and 6656. I.R.C. §§ 6651, 6656 (West 1989). The government acknowledges that these penalties are not self-assessing. (Appellant’s Br. at 15 n. 8.) Hence, there must be a formal administrative determination by the IRS before these penalties may be imposed. See Motor Fuel Carriers, Inc. v. United States, 420 F.2d 702, 707, 190 Ct.Cl. 385 (1970). Although the government suggests that the revenue officer’s notes reflected such an administrative determination, (see Appellant’s Br. at 15 n. 8), I do not believe these notes constitute the type of formal notice and demand contemplated by both the Code and Motor Fuel Carriers. Since notice and demand were required with regard to the penalties, it was not appropriate for the revenue officer to apply the excess payments, once the principal had been paid, to payment of the penalties until after notice and demand was given. The bankruptcy court’s determination with respect to this issue is therefore correct. However, I do not adopt the bankruptcy court’s analysis regarding the interest assessed on the underlying section 3102(a) and section 3402(a) taxes. In 1989, provisions for interest in the Code were contained in chapter 67. The parties agree that either section 6601(a) or section 6601(e)(1), both of which fall within chapter 67, governs the instant case. Section 6601(a) provides: (a) General rule. — If any amount of tax imposed by this title (whether required to be shown on a return, or to be paid by stamp or by some other method) is not paid on or before the last date prescribed for payment, interest on such amount at the underpayment rate established under section 6621 shall be paid for the period from such date to the date paid. I.R.C. § 6601(a) (West 1989). Section 6601(e)(1) provides: (e) Applicable rules. — Except as otherwise provided in this title— (1) Interest treated as tax. — Interest prescribed under this section on any tax shall be paid upon notice and demand, and shall be assessed, collected, and paid in the same manner as taxes. Any reference in this title (except subchapter B of chapter 63, relating to deficiency procedures) to any tax imposed by this title shall be deemed also to refer to interest imposed by this section on such tax. I.R.C. § 6601(e)(1) (West 1989). The distinction between interest assessed under section 6601(a), as opposed to section 6601(e)(1), has been explained as follows: The question of when interest ought to begin accruing on an amount depends on when the amount was first owed by the taxpayer. Where an amount is assessed at the time of notice and demand, which is the universal situation in chapter 68, the amount is first owed at that time, and the IRS gets paid in real dollars if interest then begins to accrue. Until notice and demand, the taxpayer does not owe the amount assessed, even though that amount may have some relation to a prior amount owed and unpaid. See, e.g., § 6672(a) (assessment equal to amount owed but not paid of tax “willfully” evaded). In contrast, when an amount is self-assessable, the taxpayer owes the amount in question at the time he should have reported it. (Citations omitted.) If the government is to collect an assessment in real dollars, interest must begin to accrue when the tax should have been reported. Thus in self-assessing situations, § 6601(a) governs, while in non-self-assessing situations, § 6601(e)(2) governs. Latterman v. United States, 872 F.2d 564, 567 (3d Cir.1989); see also Motor Fuel Carriers, 420 F.2d at 707; Ray E. Loper Lumber, Co. v. United States, 444 F.2d 301, 304 (6th Cir.1971); Bardahl Mfg. Corp. v. United States, 452 F.2d 604, 605 (9th Cir.1971). The mechanism the courts have used in determining whether a tax, and the interest on the tax, is self-assessing turns primarily on whether or not an administrative determination is required in order for the tax or interest to be imposed. Typically, taxes which are reportable on the tax return, and are required to be reported on the return, are considered self-assessable. Motor Fuel Carriers, 420 F.2d at 708. An assessment of a tax is made “by recording the liability of the taxpayer in the office of the Secretary in accordance with rules or regulations prescribed by the Secretary.” I.R.C. § 6203 (West 1989). Assessment, under the Code, is essentially a bookkeeping notation made when the Secretary or his delegate establishes an account against the taxpayer on the tax rolls. Laing v. United States, 423 U.S. 161, 170 n. 13, 96 S.Ct. 473, 479 n. 13, 46 L.Ed.2d 416 (1976); United States v. Krasnow, 548 F.Supp. 686, 688 (S.D.N.Y.1982). In this case, there is no dispute that the section 3102(a) and section 3402(a) taxes were self-assessing. (See Appellee’s Br. at 7.) Section 31.6011(a)^l(a)(l) of the Treasury Regulations requires all employers to report the amount of withheld taxes on their payroll tax returns (form 941), which must be filed every calendar quarter and are due on the last day of the first month following the quarter. See Treas.Reg. § 31.6071(a)-l(a) (1989); Baasch v. United States, 742 F.Supp. 65, 68 (E.D.N.Y.1990), aff'd, 930 F.2d 911 (2d Cir.1991). These amounts were due, at the latest, on the thirtieth day following the end of the quarter. See Treas.Reg. § 31.6302(c)-l(a)(l)(iv) (1989). Afterwards, the unpaid taxes self-assessed — no notice and demand was required. There is no question that section 3102(a) and section 3402(a) taxes are payable without notice and demand. See, e.g., Marvel v. United States, 719 F.2d 1507 (10th Cir.1983) (there is no requirement that before liability for employment taxes accrues, notice of deficiency or assessment be given); Enochs v. Green, 270 F.2d 558 (5th Cir.1959) (no deficiency notice is required for social security and withholding taxes); cf. Macatee, Inc. v. United States, 214 F.2d 717 (5th Cir.1954) (taxpayer became liable for employment and social security taxes prior to assessment and prior to time demands for payment were made); Kodak v. United States, 600 F.Supp. 1302 (N.D.N.Y.1985) (tax liability of employer for failure to pay withholding and FICA taxes arises when wages are paid, rather than on due date of tax return). The only question which remains is whether the interest was likewise self-assessing. The bankruptcy court found that interest was not due and owing until notice and demand had been given. In reaching its decision, the bankruptcy court relied on First National Bank in Palm Beach v. United States, 591 F.2d 1143 (5th Cir.1979). In First National Bank in Palm Beach, the Fifth Circuit reasoned as follows: The liability of a corporation for federal withholding taxes is payable on the due date of the return, which is, at the latest, on the thirtieth day following the end of the quarter; it becomes payable without the necessity of assessment or of notice and demand. 26 U.S.C. § 6151(a). In contrast, although the liability of a corporation for interest and penalties for late payment of withholding taxes arises immediately upon the failure of the corporation to pay withholding taxes on time, that debt is payable only “upon notice and demand.” 26 U.S.C. § 6659(a)(1). The statute does not compel the IRS to exact the penalties, and it appears that in some instances they may not be imposed. See 26 U.S.C. §§ 6653, 6656. Id. at 1147 (citations omitted). The court goes on to cite a string of eases which deal with various penalties which may be imposed for non-payment of taxes. The Fifth Circuit cites to “26 U.S.C. § 6659(a)(1)” as support for its conclusion. In 1979 (when the opinion was delivered), section 6659(a)(1) provided: (a) Additions treated as tax. — Except as otherwise provided in this title— (1) The additions to the tax, additional amounts, and penalties provided by this chapter shall be paid upon notice and demand and shall be assessed, collected and paid in the same manner as taxes. I.R.C. § 6662(a)(1) (West 1989). Section 6659 falls within chapter 68, subchapter A of the Code which governs “Additions and Penalties.” The Fifth Circuit’s citation to section 6659 reveals the court’s confusion between penalties and interest under the Code. Both penalties and interest on penalties require notice and demand. Interest on the penalties does not begin to accrue until after notice and demand is given. In contrast, interest on the tax begins to accrue once the due date for underlying tax has passed; no notice and demand is required. See United States v. Toyota of Visalia, 772 F.Supp. 481, 488 (E.D.Cal.1991) (“There is no authority ... that requires the Internal Revenue Service to make a separate assessment of interest on an assessed tax liability in order to collect that interest.”), aff'd, 988 F.2d 126 (9th Cir.1993). In this case, the underlying section 3102 and section 3402 taxes were self-assessing. It is logical to assume that the interest on these taxes was likewise self-assessing. If this were not the case — i.e., if interest, on self-assessing taxes required notice and demand — then the distinction between self-assessing interest (section 6601[a]) and non-self-assessing interest (section 6601[e][l]), drawn by both the Code and the Latterman court, would be meaningless. Moreover, interpreting the Code provisions such that interest begins to accrue before notice and demand is given, but is not payable until after notice and demand, creates an artificial distinction which the Code does not address. Once interest or penalties begin accruing, they are considered to be due and owing under the Code. See e.g., I.R.C. § 6601(e)(2). Since the bankruptcy court incorrectly concluded that interest on the underlying taxes was not payable until after notice and demand was given, the bankruptcy court was in error. The revenue officer appropriately applied Evans’ various payments, once the principal was satisfied, to the interest which had accrued on this principal as of the date the payment was made. Once the principal and interest were covered, the revenue officer should have applied any remaining funds to the principal on the trust fund taxes. Unfortunately, the bankruptcy court did not make any findings which distinguish between the amount of principal, interest, penalties, and interest on the penalties for each of the four quarters. Although the government supplies a partial breakdown, (see Appellant’s Br. at 10), it is unclear at what point in time the interest figures were determined and whether these interest figures included interest both on the principal tax and on the penalties. Accordingly, this case must be remanded to the bankruptcy court for further findings consistent with this order. 2. Adjustment to Section 6672 Penalty In the government’s second point of error, it argues that the bankruptcy court erred in reducing the section 6672 penalty by the total amount of payments. In its decision, the bankruptcy court totalled all eight payments and deducted that figure from the total amount of the section 6672 penalty which was assessed on March 12, 1990. Since notice and demand on the section 6672 penalty was given on March 12, 1990, interest continued to run from that date until the payments were made in full. The payments made after the penalty was assessed merely stopped the accrual of interest on that portion of the penalty to which the payments were applied; the payments did not negate the interest which had already accrued. Accordingly, I find that the bankruptcy court’s failure to provide for interest on the penalty which had accrued between the payments was error. (See Appellee’s Br. at 1.) The bankruptcy court should recalculate the total amount of liability consistent with this finding. 3. Re-Allocation of Payment On January 16, 1991, the IRS filed its “Proof of Claim” in the Passage Home bankruptcy proceeding. In its “Proof of Claim,” the IRS applied $38,649.38, along with the additional $5,000 paid by Passage Home on August 30, 1989, as payment toward trust fund taxes rather than payment of penalty and interest on the non-trust fund taxes. The bankruptcy court held that the IRS could properly apply the $5,000 payment to the non-trust fund penalties and interest since the payment was made after the penalties and interest were assessed. Evans objects to the IRS’s re-allocation of this amount from the trust fund taxes to the non-trust fund penalties and interest. (Appellee’s Br. at 10 n. 3.) According to Evans, the government is estopped from applying the payments differently when calculating the section 6672 assessment than it did when calculating the form 941 tax liabilities in its “Proof of Claim.” Evans argues that the “Proof of Claim” is an evidentiary admission of the amount of tax due. Dugan v. EMS Helicopters, Inc., 915 F.2d 1428, 1432 (10th Cir.1990) (allegations contained in prior complaint are considered admissions against interest). As such, Evans maintains, the doctrine of judicial es-toppel precludes the government from adopting a position which contradicts the position taken in the “Proof of Claim.” In re Kessel, 108 B.R. 281, 283 (Bankr.D.Colo.1989). It was a disputed fact whether the $5,000 payment was initially allocated to the non-trust fund penalties and interest as opposed to the trust fund principal. Rye testified that she directed the payment to be applied to the non-trust fund portion of the tax for the first quarter of 1989. (Appellant’s Reply at 7 n. 5 [Def.’s Ex. 12 ¶ 25].) Doug Edson testified that, based on his recalculations, only $2,466.56 would be applied to the non-trust fund portion of the tax, with the remainder to be applied to the trust fund portion. (Id [Def.’s Ex. 11 ¶41].) The bankruptcy court found that the revenue officer had properly credited the $5,000 to the non-trust fund penalties and interest. (Order at 8.) According to this finding, the bankruptcy court must have concluded that Rye had, in fact, directed the $5,000 toward payment of the non-trust fund taxes. Since the parties have not provided the court with a copy of the IRS “Proof of Claim,” I cannot determine if this finding by the bankruptcy court constitutes clear error. Nor can I evaluate the validity of the government’s claim that the IRS is not attempting to collect more than the amount of the tax assessment, including penalties and interest. (Appellant’s Reply at 9.)

4171608-10618

MEMORANDUM OPINION ON TRUSTEE’S EMERGENCY APPLICATION TO RETAIN SPECIAL COUNSEL MICHAEL G. WILLIAMSON, Bankruptcy Judge. Creditors Melissa West and The Tradesman Group, Inc. (collectively, “Creditors”) object to the Chapter 13 Trustee’s application to employee special counsel to pursue an avoidance action. The primary argument in support of the Objection is that a chapter 13 trustee does not have statutory authority under § 1302(b)(1) of the Bankruptcy Code to pursue avoidance actions. However, because § 103(a) of the Bankruptcy Code extends a trustee’s chapter 5 avoidance powers to chapter 13 cases, the Court concludes that the Chapter 13 Trustee does have authority to bring avoidance actions. The Court also rejects Creditors’ argument that the failure of the Debtor to list the avoidance action in her schedules or to assert it in a previously pending adversary proceeding between the Debtor and Melissa West somehow precludes the Chapter 13 Trustee from now bringing an avoidance action as a representative of the estate. Aecord- ingly, the Court will overrule the Objection and approve the Application. Procedural Background On January 29, 2013, the Court ruled that Melissa West (“West”) held an unsecured non-priority claim against her sister, Heidi Cecil (“Debtor”), in the amount of $100,000. Around the same time, the Chapter 13 Trustee filed the Application seeking approval for the retention of special counsel to bring an action against West to avoid an alleged fraudulent transfer of approximately $400,000 that took place within two years of the filing of this case. In addition to avoidance of the transfer, in the adversary proceeding the Trustee seeks a determination of the liability of West under § 550 and disallowance of West’s claim under § 502(d). The net effect of a ruling in the adversary proceeding in favor of the Trustee would be either disallowance or payment in full of all allowed unsecured claims in the case, including the $75,144.30 in unsecured claims not owned by West. Because the statute of limitations period under § 546 had nearly elapsed on any potential avoidance claims, the Court granted the Application on an. interim basis, subject to objection by any creditors. Shortly thereafter, Creditors objected to the interim order principally on the grounds that the Chapter 13 Trustee lacks authority to bring the actions for which he seeks to hire special counsel. Conclusions of Law The primary argument advanced by Creditors in support of the proposition that a chapter 13 trustee does not have the right to bring avoidance actions under Chapter 5 of the Bankruptcy Code is based on § 1302(b)(1). That section provides that a chapter 13 trustee shall “perform the duties specified in §§ 704(a)(2), 704(a)(3), 704(a)(4), 704(a)(5), 704(a)(6), 704(a)(7), and 704(a)(9)-” In this respect, Creditors point to the omission of any reference to § 704(a)(1) in § 1302(b)(2). Section 704(a)(1) provides that, “The trustee shall ... collect and reduce to money the property of the estate for which such trustee serves, and close such estate as expeditiously as is compatible with the best interests of parties in interest....” The underlying premise upon which Creditors base their argument is that the language contained in § 704(a)(1) is the source of a trustee’s power to bring avoidance actions. But a review of the Bankruptcy Code, case law, and bankruptcy treatises makes clear that there is no authority to support this premise. In fact, if Creditors were correct, then neither trustees nor debtors in possession in Chapter 11 cases would have the authority to bring avoidance actions under Chapter 5 — something which, of course, occurs routinely in Chapter 11 cases. This is because § 1106 — which specifies the duties of a trustee in a Chapter 11— also omits any reference to § 704(a)(1). Thus, a chapter 13 trustee is not required to collect or reduce to money all property of the estate. This is because in a chapter 13 case, the debtor normally • remains in possession of estate property. This is consistent with the statutory scheme embodied in a chapter 13 case that does not typically contemplate the liquidation of property of the estate. The same is true of the other operating chapters. Accordingly, there is no such reference to § 704(a)(1) in either chapters 9, 11, 12, or 13. Instead, the power to bring an avoidance action under Chapter 5 of the Bankruptcy Code is found in other Bankruptcy Code sections. First, it is specifically found in § 103, which provides that chapters 1, 3, and 5 apply in a case under Chapter 7, 11, 12 or 13 of the Bankruptcy Code. Second, § 323 — also applicable in chapters 7, 11, 12, and 13 — provides that the trustee in a bankruptcy ease is a representative of the estate and has the capacity to sue. Third, § 548 — again, applicable to all operating chapters under § 103 — specifically provides that “the trustee may avoid any transfer” that otherwise qualifies as a fraudulent transfer under that section. Notably, there is nothing in § 548 that limits its applicability to trustees in chapter 7 cases. In fact, the only limitations on a trustee’s avoiding powers are set forth in the particular avoidance provisions and in § 546. Relevant to this case is § 546(a)(1)(B) that requires that avoidance actions be brought within “the later of 2 years after the entry of the order for relief or 1 year after the appointment or election of the first trustee under section 702, 1104, 1163, 1202, or 1302.” If chapter 13 trustees lacked standing to bring avoidance actions in the first place, there would be no need to limit their time for bringing them. Accordingly, if the Court were to sustain the Objection, it would render the last portion of § 546(a)(1)(B) superfluous. Not only does the language of the Bankruptcy Code plainly support a trustee’s right to bring avoidance actions in chapter 13 cases, but there is also no case law support for Creditors’ argument. At most, there is a split of authority as to whether, in addition to a chapter 13 trustee, a chapter 13 debtor may also bring an avoidance action with some cases holding that only chapter 13 trustees have standing to bring such actions and other cases holding that a chapter 13 debtor may also utilize the trustee’s avoiding powers. Finally, all of the treatises that deal with the issue support the proposition that a chapter 13 trustee may bring avoidance actions. These treatises reject the proposition that the omission of § 704(a)(1) from the Chapter 13 trustee’s duties, as enumerated in § 1302(b)(1), can be read so far as to preclude the use of the avoidance powers by the trustee. Rather, it is left to the Chapter 13 trustee’s judgment to determine when it is feasible and efficient to exercise the avoidance powers. The other arguments advanced by Creditors are also unavailing. Specifically, they argue that the Debtor’s failure to assert the chapter 13 trustee’s avoidance claim in prior litigation between the Debt- or and West precludes the Chapter 13 Trustee from now pursuing the claim. To the contrary, the Chapter 13 Trustee was not a party to that litigation, and the Debt- or would have had no standing to assert such claims in her own name in such litigation. Creditors also argue that the failure of the Debtor to list the potential fraudulent conveyance action against West in the schedules filed in this case somehow precludes the Chapter 13 Trustee from bringing such an action. As to this argument-first, the schedules do not call for any such listing by a debtor. Once a case is filed, it is up to a trustee to analyze a debtor’s past financial transactions to determine whether such claims exist. In any event, the debtor’s failure to list such transfers would not provide a defense to the transferee in avoidance litigation. Otherwise, a debtor would be free to transfer all of the debtor’s assets to third parties including to non-debtor spouses and other relatives prior to bankruptcy, fail to list those potential avoidable transfers, and thereby preclude an action by a trustee to set aside the transfers. This is simply not the law. Creditors further argue that the fact that the Debtor is advancing funds to cover the retainer for the Chapter 13 Trustee’s counsel to bring the action somehow precludes the Chapter 13 Trustee from utilizing the services provided by counsel. Compensation of counsel has nothing to do with a trustee’s right to bring avoidance actions. This is something that is dealt with separately in the process of the court’s approval of retention and ultimate payment of any fees. Second, this argument overlooks the fact that a chapter 13 trustee must necessarily look to the debtor for funds to pay creditors and attorney’s fees incurred in the administration of the case. Of course, to the extent that any damages are collected in connection with an avoidance action, those funds would also be available to pay administrative expenses. And none of this provides any defense by a transferee in an avoidance action brought by a chapter 13 trustee. Conclusion The Court has found significant primary and secondary support for its holding that chapter 13 trustees have a right to pursue avoidance actions. In contrast, the Court has not located any support for the proposition that a chapter 13 trastee lacks standing to pursue such claims. Accordingly, the Court will overrule the Creditors’ Objection. A separate final order approving the Application will be entered consistent with this Memorandum Opinion, and the adversary proceeding against West that was abated pending resolution of the Application (8:13-ap-00025) will be scheduled for pre-trial conference. . Doc. No. 163 ("Application”). . Doc. No. 169 (“Objection”). . Id. . See 11 U.S.C. § 103(a). . Doc. No. 174, at 18-19. . See Adv. Pro. No. 8:13-ap-0025. . Doc. No. 18. . Doc. No. 166. . The Court has jurisdiction over this contested matter pursuant to 28 U.S.C. § 1334(b). This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2). . 11 U.S.C. § 704(a)(1). . 11 U.S.C. § 1306(b). . Collier on Bankruptcy ¶ 1302.03 at 1302-8 (citing In re Kinsler, 24 B.R. 962 (Bankr. N.D.Ga.1982)). . 11 U.S.C. § 323. . 11 U.S.C. § 548(a)(1). . 11 U.S.C. § 546 (“Limitations on avoiding powers”). . See 11 U.S.C. § 546(a)(1)(B) (emphasis added). . See Conn. Nat’l Bank v. Germain, 503 U.S. 249, 253, 112 S.Ct. 1146, 117 L.Ed.2d 391 (1992) ("courts should generally disfavor interpretations of statutes that render language superfluous”). . See, e.g., Lucero v. Green Tree Fin. Servicing Corp. (In re Lucero), 199 B.R. 742, 744 (Bankr.D.N.M.1996).

9177951-24541

MEMORANDUM OF DECISION WITH RESPECT TO FURTHER ORDER REGARDING REPORT OF CHAPTER 11 EXAMINER JOEL B. ROSENTHAL, Bankruptcy Judge. Following this Court’s Order of December 9, 2004 [Docket #344] granting the Amended Motion to Seal Examiner’s Preliminary Report [Docket # 332], the issue of sealing all or redacting portions of the Examiner’s Report again came before the Court on various pleadings filed by several parties in interest seeking access to the Examiner’s Report and by some parties urging that publication of the Report be limited. The Examiner opposed providing access to his “preliminary” Report; other parties opposed the request by members of the press for access to the Report. After the hearing on these sundry pleadings, the Court issued its Order Regarding the Report of the Examiner [Docket # 416] (“Order of January 5, 2005”) whereby the Examiner’s Report would be filed under seal with the Court. In addition the Examiner was ordered “to provide each person named in the report, or referenced in such a fashion that the Examiner reasonably believes such person could be identified, with a copy of only that portion or portions of the report that relate to the individual.” Order of January 5, 2005 at ¶ 2. The same order also established a procedure whereby those parties seeking to seal all or redact portions of the Report would file motions requesting such relief in compliance with applicable law. In accordance with the Order of January 5, 2005, the Examiner filed his Report under seal with the Court on January 7, 2005 [Docket # 506] and timely served copies of the relevant part or parts of the Report relating to individuals or entities upon those respective recipients. In all the Examiner served approximately 120 individuals or entities. In response the Court received numerous pleadings that fall into two categories: motions to seal or redact portions of the Report and motions for access to the Report. The former number approximately 26 but some seek to shield the same individuals and entities named in the Report. The latter include motions, some of which were combined with oppositions to the motions to seal, by the Official Committee of Unsecured Creditors (“Creditors’ Committee”), the United States Trustee, the Debtor, LaSalle Business Credit LLC, and ORIX Financial Services, Inc., each requesting that it or she be given a complete copy of the Report even if the Report is not to be published generally. The press, in their opposition to the motions to seal, seek unfettered access to the Report on behalf of the public. The Court has reviewed all of the motions to seal, oppositions thereto, motions for access to the Report, all pleadings related to the foregoing, and the Report along with all of its exhibits. The Court also held a hearing on these matters and the parties were given an opportunity to raise new arguments in support of their cause or in opposition to an opposing position. DISCUSSION Whether some or all of the Report should be sealed and whether parties (with the exception of the Creditors’ Committee which has a statutory entitlement to at least a summary of the Report) should be given access, or limited access, to the Examiner’s Report are intertwined. They are two sides of the same coin. The Nature of the Examiner’s Report Many of the parties, relying on Matter of Baldwin United Corp., 46 B.R. 314 (Bankr.S.D.Ohio 1985), urge the sealing of the Report on the grounds that an examiner enjoys a unique status in a bankruptcy; his role is akin to a civil grand jury. These movants correctly note the Baldwin court agreed with the examiner’s charac terization of his investigative responsibilities “to ascertain legitimate areas of recovery and appropriate targets for recovery” as akin to the function of a civil grand jury and concluded that if an examiner’s disinterested and nonadversarial role is to be preserved, all examiners “and the subjects of their investigation must be unhampered by the threat that any information which comes into the Examiner’s hands will be fair game for a plethora of anxious litigants, regardless of the limitations on disclosure which the Bankruptcy Court has imposed.” Id. at 317. Baldwin, however, unlike the instant controversy, involved efforts by plaintiffs in a security class action pending against the debtor to require the examiner “to preserve all documents and other investigative materials” which the examiner acquired during his investigation. The court viewed this request as the plaintiffs attempt to circumvent the usual course of discovery. Moreover the order delineating the Baldwin examiner’s responsibilities contained the following language: ORDERED, that except as otherwise ordered by the Court after notice and a hearing, nothing contained herein shall require the Examiner to disclose to any person the Examiner’s statement of investigation, or any part thereof, prior to filing such statement pursuant to Section 1106(a)(4) of the Bankruptcy Code. Except as otherwise ordered by the Court after notice and a hearing, the Examiner shall not be required to disclose to any person, other than the Debtors, the Securities and Exchange Commission and any official committee of creditors or equity security holders appointed in these eases, the information reviewed in connection with his investigation .... Id. at 315 (emphasis added). To cite Baldwin for the proposition that an examiner’s report must be sealed in all cases, or even to suggest that the examiner’s statement in Balwin was sealed mischaracterizes the Baldwin court’s decision. The distinction between an examiner’s statement and the investigative materials underlying that statement is an important one. The statement is filed with the Court; underlying documents supporting the statement are not required to be filed. 11 U.S.C. § 1106(a)(4)(A). Papers filed become part of the universe of paper that is presumptively available for inspection by the public. 11 U.S.C. § 107; In re Apex Oil Co., 101 B.R. 92, 98 (Bankr.E.D.Mo.1989) (“The plain language of § 107 establishes standards only for those documents which are filed with the court.”) (emphasis in the original). Because there is nothing in the language of sections 107 or 1106(a)(4) that suggests that section 107 is inapplicable to an examiner’s report, once an examiner’s report is “filed” with the Court, it becomes “a paper filed with the court” and thus falls within the scope of Bankruptcy Code section 107 and Fed. R. Bankr.P. 9018. Section 107, Rule 9018, and the Sealing of Papers Section 107: Public access to papers, provides as follows: (a) Except as provided in subsection (b) of this section, a paper filed in a case under this title and the dockets of a bankruptcy court are public records and open to examination by an entity at reasonable times without charge. (b) On request of a party in interest, the bankruptcy court shall, and on the bank ruptcy court’s own motion, the bankruptcy court may— (1) protect an entity with respect to a trade secret or confidential research, development, or commercial information; or (2) protect a person with respect to scandalous or defamatory matter contained in a paper filed in a case under this title. Section 107 of the Bankruptcy Code requires the sealing of “papers” if (1) requested by a party in interest and (2) the information falls within the categories set forth in section 107(b)(1) and (2). Section 107(b)(1) is not relevant to the Court’s present inquiry. Rather it is the allegations that material contained in the Report is scandalous or defamatory that drive the motions to seal. Rule 9018 of the Federal Rules of Bankruptcy Procedure does not expand the Court’s ability to limit access to papers filed. It does not provide the movants a separate basis for relief. Similarly MLBR 9018-l(a), which gives the Court discretion to seal documents “[f]or cause reflecting a genuine risk of substantial harm,” does not create a new and lower standard for parties seeking impoundment. MLRB 9018-1(a) reiterates that the Court has the power to seal part or all of a pleading if permitted to do so by the Bankruptcy Code or the common law. Because all papers filed with the Court are presumptively available for inspection by the public, the party seeking to seal or redact papers filed bears the burden of proof. It is not an easy burden nor should it be. The burden has been described in a variety of ways. The party seeking impoundment must submit “evidence that filing under seal outweighs the presumption of public access to court records.” In re Muma Services Inc., 279 B.R. 478, 485 (Bankr.D.Del.2002) (“In the absence of any such evidence, we cannot conclude that disclosure of the terms of the lease would cause harm.”). It is a determination based upon the totality of the circumstances. Phar-Mor, Inc. v. Defendants Named Under Seal (In re Phar-Mor, Inc.), 191 B.R. 675, 678 (Bankr.N.D.Ohio 1995) (“If the § 107(b) exceptions are applicable, the inquiry must shift to whether Defendants have shown cause to invoke an exception, given the totality of the circumstances here found.”)- Good cause is not an element of section 107. In re Orion Pictures Corp., 21 F.3d 24, 27 (2d Cir.1994) That information might “conceivably” or “possibly” fall within a protected category is not sufficient to seal documents. Material must, at the very least, be “likely” to fall within the protected categories. United States v. Continental Airlines (In re Continental Airlines, Inc.), 150 B.R. 334, 340 (D.Del.1993). Although it is not a case decided under section 107, the First Circuit’s pronouncements in FTC v. Standard Financial Management Corp., 830 F.2d 404, 412 (1st Cir.1987), support the conclusion that a party requesting the impoundment or redaction of information must make a sufficiently particularized showing for the Court to determine that the allegedly offending information falls within the ambit of section 107. (“We decline to accept conclusory assertions as a surrogate for hard facts. In the absence of some compendium of chapter and verse-a demonstration that cognizable harm is lurking in the background-the appellants’ orotund protests avail them naught. We continue to believe that ‘[a] finding of good cause’ to impound documents must be based on a particular factual demonstration of potential harm, not on conclusory statements.” ’). For purposes of section 107(b) and Rule 9018, scandalous or defamatory material has been defined as material that would cause “a reasonable person to alter their [sic] opinion of [a party] based on the statements therein, taking those statements in the context in which they appear.” In re Phar-Mor, Inc., 191 B.R. at 679 (citation omitted). If the information is true, it cannot be scandalous or defamatory. In re Continental Airlines, Inc., 150 B.R. at 339. “The dissemination of truthful matter cannot be enjoined merely because the matter is prejudicial; section 107(b)(2) requires that the matter be scandalous or defamatory.” In re Whitener, 57 B.R. 707, 709 (Bankr.E.D.Va.1986). Moreover information that is prejudicial or embarrassing is not necessarily scandalous or defamatory. Id. See also Clark v. Pearson (In re Hope), 38 B.R. 423, 424-25 (Bankr.M.D.Ga.1984); In re Analytical Systems, Inc., 83 B.R. 833, 836 (Bankr.N.D.Ga.1987). Protection granted pursuant to section 107(b)(2) and Rule 9018 is not coextensive with that which the Court may grant under Rule 26(c) of Fed.R.Civ.P. Rule 26(c) gives courts discretion to issue protective order to protect person “from annoyance, embarrassment, oppression, or undue burden or expense.... ” But discovery documents, or perhaps more accurately documents proposed to be discovered, are not papers filed with a court. Thus the cases in which courts have granted relief under Fed.R.Civ.P. 26(c) are inapplicable. Common Law Right to Access to Judicial Documents “It is clear that the courts of this country recognize a general right to inspect and copy public records and documents, including judicial records and documents.” Nixon v. Warner Communications, Inc., 435 U.S. 589, 597, 98 S.Ct. 1306, 1312, 55 L.Ed.2d 570 (1978). The presumption that the public has a right to access records exists in civil proceedings. FTC v. Standard Financial Management Corp., 830 F.2d at 408 n. 4. The presumption includes “materials on which the court relies in determining the litigants’ substantive rights” but does not include discovery materials. FTC. v. Standard Financial Management Corp., 830 F.2d at 408 (hold ing that personal financial statements upon which the court relied in approving a settlement should be accessible to the public). “It is uncontested, however, that the right to inspect and copy judicial records is not absolute. Every court has supervisory power over its own records and files, and access has been denied where court files might have become a vehicle for improper purposes.” Nixon v. Warner Communications, Inc., 435 U.S. at 598, 98 S.Ct. 1306. Denial of common law right to access documents is left to the sound discretion of the court. Nixon v. Warner Communications, Inc., 435 U.S. at 598, 98 S.Ct. 1306. The First Circuit has described the test for determining whether documents to which the common law right to access attaches as follows: We agree with the Sixth Circuit that only the most compelling reasons can justify the non-disclosure of judicial records. .. .When faced with a claim that cause sufficiently cogent to block access has arisen, it falls to the courts to weigh the presumptively paramount right of the public to know against the competing private interests at stake.... This balance must be struck, of course, in light of the relevant facts and circumstances of a particular case.... The objectors-those seeking to keep the datum hidden from view-must carry the devoir of persuasion. FTC v. Standard Financial Management Corp., 830 F.2d at 410 (internal quotations and citations omitted). As the Massachusetts Local Bankruptcy Rules describe the test, a party seeking impoundment must demonstrate “a genuine risk of substantial harm.” MLBR 9018-l(a). It is important to remember that the cornerstone of the common law upon which many of the parties seeking impoundment rely is that all judicial documents are open to the public. Although the test for im-poundment is expressed in words that do not parallel the languáge of section 107 of the Bankruptcy Code, the sound discretion of a bankruptcy court to seal documents under the common law should mirror its discretion to seal documents under section 107(b). “Because Congress enacted an express statutory scheme, issues concerning public disclosure of documents in bankruptcy cases should be resolved under § 107. In re Continental Airlines, 150 B.R. 334 (D.Del.1993).” In re Phar-Mor, Inc., 191 B.R. at 679. In the final analysis whatever rubric is employed, each party seeking to limit the public’s right to access has a heavy burden. -He must come forward with the particular facts that demonstrate the material at issue is scandalous or defamatory. The Court is well aware of the facts of this case and has read the Report and all exhibits thereto. It has reviewed the material in light of the controlling law, the positions of the various parties, and indeed, scrutinized the materials to determine whether part or all of the Report and its exhibits should be sealed and now turns to the motions to seal. Have the parties seeking impoundment or redaction met their burden of proof? At the outset, some comments about the level of proof proffered to the Court are warranted. In almost all instances there was no proof. Some motions do not even allege that the information that they state “should” be sealed was defamatory or scandalous. Their proponents instead urged redaction of any information relating to them because they did not want to be mentioned in the Report. Others alleged that their mere inclusion within the Report was sufficient to cause them harm; for example some employees or former employees did not want the fact of their employment by the Debtor published. Still others urged that the Court not divulge to the public information about them even though they do not allege that information contained in the Report that is relevant to them is factually inaccurate. Still others seek to shield themselves from public knowledge that they did not or would not speak with the examiner, including those individuals who properly invoked their privilege against self-incrimination. While the Court is mindful that the disclosure that an individual who is a potential criminal defendant may taint the pool of prospective jurors, many of the individuals advancing such argument are already defendants in a civil action pending in the United States District Court for the District of Massachusetts (Civil Action # 04-12227-DPW) where the allegations are substantially similar to information which the Examiner was told and included within the Report. In the final analysis, each of the motions to seal fall short-often far short, of the mark. Discomfort, embarrassment, shame, and remorse do not rise to the level of scandalous or defamatory. The Examiner took great pains to be inclusive yet evenhanded. The Court’s Discretion to Seal or Redact the Report In conducting its own analysis, the Court concludes that there is nothing scandalous or defamatory in the Report. The bank account numbers, however, may properly be considered confidential information and therefore the Examiner is instructed to delete all bank account numbers included in the Report and its exhibits. With this one exception, the Court will not redact portions of the Report sua sponte. The Court, however, is not unmindful or unsympathetic to the concerns that the Report will be mischaracterized, that information in the report will be misconstrued and interpreted as having the imprimatur of this Court. Many expressly fear that the press will leap to unsubstantiated conclusions of guilt and will broadcast the same. To be clear, the Report is not a document that has the blessing of this Court. It is, as the Examiner notes, a report of his investigation into the affairs of the Debtor and his suggestions for further areas of inquiry. It is one-sided in that the very people sometimes painted in an unflattering light did not respond to the Examiner’s inquiries or to the allegations made by others. Some were advised by counsel not to respond; some were not permitted by counsel to respond; some appear to have chosen not to respond out of fear. So that there is no doubt, the Court cautions all parties who will be given access to the Report, in the words of the Examiner, as to what the report is and what it is not. [I]n many instances, the Examiner reports herein statements, often hearsay, which the Examiner has been unable to confirm independently, and with respect to which nobody has told “the other side of the story....” Given the nature of this Report, and the fact that others are likely to continue the Examiner’s investigation, it seemed appropriate to include such statements, not so they would be assumed to be fact, but so they could be farther investigated and not forgotten. In other instances, the Examiner did solicit and receive responses from parties who were the subject of allegations made by others or reviewed documents that supported such statements. The Examiner has attempted to present its findings in the most balanced manner possible under the circumstances. Inevitably, though, the selection of which statements are discussed or relied on herein required the exercise of judgment by the Examiner. Continued investigation may lead to evidence which supports or contradicts those statements. s-c ‡ % # A final note to the reader: other than those of the Gitto Principals themselves, the names most often mentioned in this Report are those of the persons who cooperated with the Examiner, told the Examiner what they remembered, and, in doing so, put themselves at risk of civil or perhaps even criminal sanction. The frequency with which a particular person’s name appears, therefore, should not necessarily lead one to com elude that such person directed or profited from the activities detailed [in the Report]. The Examiner does note a fundamental distinction between the employees discussed herein and the Gitto Principals themselves. In contrast to the significant evidence that the Gitto Principals personally profited from the misconduct described herein, the Examiner has not been provided with any evidence that suggests the employees (with certain possible exceptions noted below) received compensation specifically for their participation. The motivation of most of the employees appears to have been simply to stay in good standing as employees of Gitto Global. Further it is doubtful that all of the employees fully grasped the scale of the fraudulent acts being carried out and the economic stakes of the Gitto Principals’ misconduct. ^ ifc iji # The Examiner’s task was [to] investigate “the existence of any prepetition fraud, dishonesty, incompetence, misconduct, mismanagement or irregularity in the management and business affairs of the Debtor.” Many unanswered questions remain as of the filing of this Report. $ ‡ ‡ ‡ ‡ ‡ Substantial additional investigation is required into the areas identified in this Court’s order appointing the Examiner before definitive determinations can be made as to whether the Debtor’s estate holds claims against certain other parties .... Examiner’s Report at 22-23, 128, and 153. Moreover, to the extent that the press .has sought a determination that some or all of the individuals named in the Report are public figures, limited public figures, or quasi-public figures, the Court denies those requests. The press is aware of its responsibilities and the Court again cautions that it expects all parties will be thoughtful in their use and dissemination of the Report and the information contained therein. Constitutional Right to Access Finally, although members of the press such as the Worcester Telegraph & Gazette argue that they have a constitutional right to see the Report, the cases that hold that there is a First or Fourteenth Amendment right to access are criminal cases. The Court is unaware of civil cases that rest upon a finding that public access to pleadings in a civil cases is constitutionally required and in light of the Court’s decision, there is no need for the Court to explore whether such a constitutional right should be found to exist. CONCLUSION For the reasons set forth herein, the motions to seal are DENIED. The Report shall be made available to all parties and to the public. The motions for access are thus MOOT. Separate orders shall issue. . Many of the motions to impound failed to comply with the Massachusetts Local Bankruptcy Rules. Some motions sought to protect the name of the individual named in the Report but identified the individual in the very motion or caption of the motion to seal which was then filed not under seal and, in some cases, filed electronically by counsel. The Court did endeavor to protect movants from their own actions and treated motions to seal that contained information the movants hoped would be kept from the public as if those motions had been properly filed under seal. Suffice it to say that the motions seeking to seal or redact the Report, taken as a group, show an overwhelming lack of understanding of the procedure for seeking im-poundment to say nothing of the substantive burden which parties requesting such a remedy must bear. Parties, especially counsel, are cautioned to familiarize themselves with the procedure for requesting impoundment. In the future the Court may not be inclined to protect movants who ignore the local rules. Moreover as a result of the orders which the Court will issue in connection with this Memorandum of Decision, improperly filed motions will be imaged. In the end the Court cannot and will not ignore its obligations to make available all documents not filed under seal. . The Creditors' Committee is entitled to access to the Report or a summary of the Report as a matter of law. Section 1106(a)(4) of the United States Bankruptcy Code, 11 U.S.C. § 1106(a)(4), made applicable to examiners by section 1106(b), provides that an examiner "shall ... (A) file a statement of any investigation conducted [by the examiner] ...; and (B) transmit a copy or a summary of any such statement to any creditors’ committee

7651522-8026

SKOPIL, Circuit Judge: We examine in this appeal the certification requirements of the Emergency Medical Treatment and Active Labor Act (“EMTA-LA”), 42 U.S.C. § 1395dd. Specifically, we must decide if a hospital is hable for damages when it permits an unstable patient to be transferred but fails to comply fully with the Act’s requirement that a physician include in the transfer certificate a written summary of the specific risks to the patient of effecting the transfer. The district court permitted evidence demonstrating that the hospital complied with the substantive requirements of the Act and refused to premise EMTALA liability on the hospital’s failure to comply strictly with the certification requirement. We conclude that the district court’s assessment of the evidence and its conclusions of law are sound. Accordingly, we affirm. I. On May 22, 1993, Deniz Vargas, an 18-month old infant, was brought by her mother to Del Puerto Hospital’s emergency room. Del Puerto is a small, rural hospital in Patterson, California. Its emergency room is staffed by one doctor and one registered nurse per shift. Dr. Burton Butler was the physician on duty when Vargas was admitted. Dr. Butler evaluated Vargas and correctly diagnosed that she was having seizures. He unsuccessfully attempted to control the infant’s seizures with various medications. He thereafter contacted the physician on duty at Doctors Medical Center, a larger hospital approximately 25 minutes away, about transferring her. According to Dr. Butler, the transfer was necessary because at the larger hospital Vargas would receive treatment from a pediatric intensive care unit. Before Vargas was transferred, Dr. Butler completed and signed a “Physician Certification.” In the space provided for “Reasons for transfer, including summary of risks and benefits,” Dr. Butler wrote: “Need pediatric intensive care not available here.” In addition, on the “Interfacility Transfer Summary” signed by Dr. Butler, a box was checked noting that “[t]he benefits of treatment at receiving facility outweigh risks of emergency transfer.” The transfer certificate did not include a written summary of the specific risks of transfer. Approximately one hour and fifteen minutes after arriving at Del Puerto, Vargas was taken by ambulance to Doctors. At Doctors, Vargas was stabilized and her seizures controlled. As a result of the seizures, however, Vargas is quadriplegic. She is also blind, unable to speak and is mostly fed through a tube in her stomach. Vargas brought this action through her guardian ad litem, alleging violation of EMTALA and negligence under California law. The negligence claim was settled prior to trial. The EMTALA claim was tried to the court based on stipulated facts and the testimony of two experts. The district court concluded that Dr. Butler genuinely weighed the risks and benefits to the child before deciding to transfer her, and rejected Vargas' argument that the inadequate completion of the certificate itself violated EMTA-LA. We review the district court's findings of fact for clear error and its conclusions of law de novo. See Magnuson v. Video Yesteryear, 85 F.3d 1424, 1427 (9th Cir.1996). II. Congress enacted EMTALA, commonly known as the Patient Anti-Dumping Act, in response to concerns that hospitals were transferring or refusing to treat patients who were unable to pay. James v. Sunrise Hosp., 86 F.3d 885, 887 (9th Cir.1996). To address these concerns, EMTALA requires hospitals to take certain steps whenever an individual requests emergency medical treatment. First, the hospital must provide an appropriate medical screening examination. 42 U.S.C. § 1395dd(a). Thereafter, if the hospital determines that the individual has an emergency medical condition, the hospital must either attempt to stabilize the condition or transfer the individual to another facility. 42 U.S.C. § 1395dd(b)(1). The hospital may not, however, transfer an individual in an unstable condition unless a physician ... has signed a certification that based upon the information available at the time of transfer, the medical benefits reasonably expected from the provision of appropriate medical treatment at another medical facifity outweigh the increased risks to the individual ... from effecting the transfer.. -. A certification ... shall include a summary of the risks and benefits upon which the certification is based. 42 U.S.C. § 1395dd(c)(1) (emphasis added). It is undisputed that Vargas received an appropriate medical screening examination at Del Puerto, that she came to the Del Puerto emergency room with an emergency medical condition, and that Vargas' condition was unstable when she was transferred to Doctors. The only issue before us is whether Dr. Butler's failure to include a written summary of the specific risks of transfer on the transfer certificate makes Del Puerto liable under EMTALA. Given the legislative purpose underlying the Act, the internal structure of EMTALA, and the record in this particular case, we conclude that it does not. The crux of Vargas' argument on appeal is that the district court erred in looking to anything other than what is written on the transfer certificate to determine Del Puerto's EMTALA liabifity. She contends that Dr. Butler's failure to include a written summary of the risks on the certificate makes Del Puerto just as liable as if Dr. Butler, for example, had failed to give her an appropriate medical screening examination when she was first admitted. We decline to give this record-keeping provision of EMTALA the excessively literal interpretation that Vargas invites. See Malat v. Riddell 383 U.S. 569, 571-72, 86 S.Ct. 1030, 1032, 16 L.Ed.2d 102 (1966) ("Departure from a literal reading of statutory language may ... be indicated by relevant internal evidence of the statute itself and necessary in order to effect the legislative purpose."); Wilshire Westwood Assoc. v. Atlantic Richfield Corp., 881 F.2d 801, 804 (9th Cir.1989) (same). Section 1395dd(c)(1) requires a transferring physician to include a summary of both the risks and the benefits of transfer. Thus, there is little doubt that Dr. Butler failed to comply with the specific "technical" requirements of the statute. We must, however, consider the Act's statutory language in light of the objectives that Congress sought to achieve. The certification requirement is part of a statutory scheme with an overarching purpose of ensuring that patients, particularly the indigent and underinsured, receive adequate emergency medical care. Eberhardt v. City of Los Angeles, 62 F.3d 1253, 1255 (9th Cir.1995) (citing H.R.Rep. No. 241, 99th Cong., 1st Sess. (1986), reprinted in 1986 U.S.C.C.A.N. 726-27). The purpose of the certification requirement in particular is to ensure that a signatory physician adequately deliberates and weighs the medical risks and medical benefits of transfer before effecting such a transfer. Congress surely did not intend to limit the inquiry as to whether this deliberation process in fact occurred to an examination of the transfer certificate itself. While such a contemporaneous record may be the best evidence of what a physician was thinking at the time, we cannot accept the proposition that the only logical inference to be drawn from the absence of a written summary of the risks is that the. risks were not considered in the transfer decision. Other factors might account for the absence of such a summary, such as the time-pressure inherent in emergency room decision-making. Although a contemporaneous record is certainly preferable, we believe it would undermine congressional intent to foreclose consideration of other evidence surrounding the transfer decision. See Romo v. Union Memorial Hosp., Inc., 878 F.Supp. 837, 844 (W.D.N.C.1995) (absence of summary of risk and benefits on transfer certificate does not create EMTALA liability as a matter of law, but creates a jury question as to whether risk/benefit analysis was properly made by physician).

1509754-4273

TIMBERS, District Judge. Defendant’s motion to dismiss, pursuant to Rule 12(b) (2), Fed.R.Civ.P., and plaintiff’s motion to substitute a party defendant, pursuant to Rule 25(a) (1), Fed.R.Civ.P., raise the question whether a cause of action under the forfeiture and damage provisions of the False Claims Act is penal in nature, hence not surviving death of defendant, or is civil in nature, hence surviving such death. This Court holds such cause of action is civil in nature and does survive death of defendant. Accordingly, defendant’s motion to dismiss is denied; plaintiff’s motion to substitute defendant’s administratrix as party defendant is granted. Plaintiff commenced this action December 8, 1961 to recover expenses incurred by the Veterans Administration for hospital treatment or domiciliary care of defendant who claimed he was not able financially to pay such expenses. Plaintiff alleges such claim was false in that defendant was able to pay such expenses. Defendant died April 2, 1962. The pleadings were not closed. Interrogatories had been propounded by defendant but not answered by plaintiff. Rosylin P. Gable was appointed administratrix of defendant’s estate April 26, 1962 by the Probate Court for the District of Stamford; she has qualified and is acting in that capacity. This case is controlled, in the opinion of this Court, by United States ex rel. Marcus v. Hess, 317 U.S. 537, 550-552, 63 S.Ct. 379, 87 L.Ed. 443 (1943), where the Supreme Court held the forfeiture and damage provisions of the False Claims Act constituted a civil sanction and were remedial only. The Court of Appeals for the Second Circuit, on the other hand, in United States ex rel. Brensilber v. Bausch & Lomb Optical Co., 131 F.2d 545, 547 (2 Cir. 1942), aff’d by an equally divided Court, 320 U.S. 711, 64 S.Ct. 187, 88 L.Ed. 417 (1943), has held this statute * * * not only penal but drastically penal.” The Brensilber case was decided by the Second Circuit November 5, 1942. The Marcus case was decided by the Supreme Court January 18, 1943. The Brensilber case was affirmed by an equally divided Supreme Court November 8, 1943 in a per curiam decision. Despite the Supreme Court’s affirmance of the Second Circuit’s decision in Brensilber subsequent to the Supreme Court’s decision in Marcus, the latter remains as the controlling law. The Supreme Court’s affirmance of Brensilber by a divided court, while conclusive upon the parties thereto, cannot be invoked as stare decisis ; and certainly cannot be construed as overruling Marcus, absent an express holding to that effect. If free to choose between the Marcus and Brensilber decisions, this Court would follow the Second Circuit decision in Brensilber, believing its construction of the forfeiture provisions of the False Claims Act as penal in nature to be correct. If free to indulge in crystal ball reading, this Court is not so sure that the presently constituted Supreme Court would reach the same result as was reached in Marcus two decades ago. Being free neither to exercise such choice nor to indulge in such specu lation, this Court, reluctantly, follows what it believes to be the controlling authority of the Supreme Court decision in Marcus. Since this case presents a controlling question of law as to which there is substantial ground for difference of opinion and an immediate appeal from this Court’s order may materially advance the ultimate termination of this litigation, a certificate pursuant to 28 U.S.C. § 1292 (b) has been issued. . 31 U.S.C. § 231: “Any person not in the military or naval forces of the United States, * * * who shall make or cause to be made, or present or cause to be presented, for payment or approval, to or by any person or officer in the civil, military, or naval service of the United States, any claim upon or against the Government of the United States, or any department or officer thereof, knowing such claim to b© false, fictitious, or fraudulent, * * * shall forfeit and pay to the United States the sum of $2,000, and, in addition, double the amount of damages which the United States may have sustained by reason of the doing or committing such act, together with the costs of suit; and such forfeiture and damages shall be sued for in the same suit.”

11497930-26438

MEMORANDUM OPINION AND ORDER KENNELLY, District Judge. Rustum Naeemullah is Pakistani and Muslim. In May 1993, after 12 years with Citicorp Services, Inc. and Citibank, N.A., he became a credit officer and vice-president for the company’s Global Cash Management Services (GCMS) unit in Chicago. Naeemullah’s exact title was “Director of Credit” for GCMS (a U-level position), but he made no bones about the fact that he wanted to be a “Senior Credit Officer” or “SCO.” Citicorp bestows the coveted SCO designation on a select group of employees; only about 600 of Citicorp’s 100,000 employees have made the SCO cut. The designation increases a credit officer’s credit approval authority, allowing approval of up to $5 million. The designation is “sacred” within Citicorp. Though not a promotion per se, the SCO designation is the bank’s way of saying “we trust you and think you have the experience and personal characteristics necessary to lead.” To become an SCO, a candidate must have “wide and diverse experience” including 10 years in consumer or commercial lending and “a wide range of capabilities,” and must possess certain delineated personal traits including integrity, honesty, sound judgment and common sense, balanced and independent judgment, decisiveness and leadership. Citibank’s Core Credit Policies, pp. 3-4 to 3-5 (May 1995). To become an SCO, the candidate must be nominated by two “sponsoring” SCOs, the nomination must be endorsed by a “Line Manager [SCO] with at least a Level 2 Credit Limit, the Executive Vice President and a Member of the Credit Policy Committee,” and finally the nomination must be approved by the Chairman of the Credit Policy Committee. Id. at 3-5. Naeemullah never made it past step one. Although Figliozzi nominated him for the SCO designation, in September 1995 Naeemullah’s Division SCO, David Budinger, refused to second Naeemullah’s nomination. From there Naeemullah’s career at Citicorp began a downward spiral. In July or August 1996, Naeemullah was transferred to a temporary position in New York; six months later he was “job discontinued” — Citicorp’s way of saying “fired.” After exhausting his administrative remedies, Naeemullah sued Citicorp, alleging that Budinger refused to second his SCO nomination because of Naeemullah’s race, national origin, color and religion, and that the bank transferred him to New York and then fired him in retaliation for complaining about Budinger’s discrimination. On November 6, 1997, Naeemullah amended his complaint to add defamation and tor-tious interference with business relationship claims against David Budinger personally. He claims Budinger made nine defamatory statements about him and that Budinger intentionally and maliciously destroyed his career at the bank. The case is before the Court on Citicorp’s and Bu-dinger’s motions for summary judgment. For the reasons explained below, the Court denies Citicorp’s motion, but grants Budinger’s motion. FACTUAL BACKGROUND Before turning to the merits, we need to sketch in a more complete factual picture. As we said, Naeemullah was up front with John Figliozzi, Naeemullah’s boss at GCMS and himself an SCO, about wanting to become an SCO, and when he hired Naeemullah, Figliozzi genuinely seemed to •believe that goal was attainable. Naeem-ullah’s annual performance reviews were generally quite good, suggesting that the SCO designation was within Naeemullah’s grasp. In his evaluations for both 1993 and 1994, Figliozzi rated Naeemullah as “outstanding,” the second best performance category. In his 1993 review of Naeemullah, Figliozzi wrote: “[Naeemul-lah] should actively complete any formal requirements and establish his credentials with current management during 1994, such that a Senior Credit Officer nomination should be a reality. Rustum is clearly ready for this next level of his professional development, and this is a reasonable short term goal.” Performance and Development Review for the period from 6/1/93 to 12/31/93, at 7. Similarly, in his 1994 review of Naeem-ullah, Figliozzi wrote: During the year Rustum worked hard to accomplish the goals set forth by the DCO [Division SCO] and his supervisor. He has demonstrated a good level of technical experience, an understanding of credit policies and procedures, and sensitivity to process management such that he is ready for an SCO assignment. To further this objective, he will be asked to play a more direct role in providing the DCO with ongoing assessments and progress reports. Performance and Development Review for the period from 1/1/94 to 12/31/94, at 5. Figliozzi reiterated in the 1994 review that Naeemullah “has clearly demonstrated his expertise and professional judgment such that he is ready to move into a more senior position.” Id. at 6.' But Naeemullah’s 1994 review was not unconditionally glowing. Figliozzi wrote that Naeemullah could “benefit from improving his ‘people’ skills (ie ‘managing upwards’). While he enjoys the professional respect of his peers and senior officers within the Division, he has a tendency to be abrasive on occasion.” Id. at 5. Additionally, while noting that the ’ SCO designation was “reasonable,” Figliozzi stated that Naeemullah’s SCO nomination “will depend not only on credit skills, but also on interpersonal skills at a senior level. This will be emphasized and accomplished through asking Rustum to assume responsibility for directly keeping the DCO advised and involved in his projects going forward.” Id. at 6. Naeemullah read and signed both the 1993 and the 1994 reviews, acknowledging that the contents were fair and accurate. Despite his reservations about Naeemul-lah’s people skills, Figliozzi recommended that the bank send Naeemullah to its Senior Risk Seminar, which is traditionally viewed within the bank as the precursor to getting the SCO designation. On Figlioz-zi’s recommendation, in April 1995, the company sent Naeemullah to Switzerland to attend the seminar. Figliozzi nominated Naeemullah for SCO in late August 1995. In mid-September, Figliozzi’s boss, David Budinger, who had taken over as Division SCO in July 1995, told Figliozzi he would not second Naeemullah’s nomination. Neil Volweider, who had been Division SCO before Budinger took over, agreed that Naeemullah was not SCO material. After learning that Budinger refused to second his nomination, Naeemul-lah initiated a “problem review,” Citicorp’s internal investigation process whereby the bank’s human resources personnel and independent human resources counselors gather the facts to determine whether an employee was wronged. In his problem review, Naeemullah claimed Budinger tanked his SCO nomination because Naeemullah is Pakistani and Muslim. Although Figliozzi initially believed Naeemullah worthy of the SCO designation, by the end of 1995 or early 1996, he was rethinking his nomination. Figliozzi perceived that Naeemullah was extremely bitter about his SCO nomination and testified that Naeemullah became hostile and aggressive after his nomination was canned. Naeemullah’s 1995 performance evaluation, which Figliozzi completed after Naeemullah initiated the problem review, was largely negative: Rustum’s “people skills” was highlighted in his previous performance appraisal as an area needing improvement. My as sessment of his 1995 performance is that he has not demonstrated an improvement in this regard. Although Rustum accomplished his objectives for 1995 as described in the foregoing section of this evaluation, he continued to display abrasive, and at times antagonistic, behavior which in my opinion has overshadowed his performance on his MBO. Several confrontations with his co-workers, peers, and myself required more time than I felt reasonable to be spent investigating incidents, and caused interference with the efficient operation of the department. Rustum had discussions regarding the appropriateness of his behavior with me, with my supervisor [David Budinger] and with representatives from H.R. during the year. In summary, while he is a competent Credit Officer, he has failed to behave as is generally expected of a V.P. who is otherwise qualified as a candidate for a Senior Credit Officer position. Given the appropriate change in attitude, I have no doubt that Rustum could enjoy a the continuation of a successful career with this organization. Performance and Development Review for period from 1/1/95 to 12/31/95, at 6. In a draft version of the review, Figliozzi rated Naeemullah at “did not meet expectations,” the lowest category ranking. But for the final version of the review, Naeem-ullah’s ranking was upgraded to “met expectations,” the second best performance category. ' Naeemullah’s 1995 review addressed another issue: the bank’s recent decision to relocate the GCMS unit from Chicago to Stamford, Connecticut. Figliozzi wrote: Given the reorganization of the Credit team into product-specific roles, and the pending relocation of positions (excluding Travellers Cheques) to Stamford during 1996, Rustum’s existing position in Chicago will be eliminated. Rustum should seek a position which will provide him an opportunity to improve his relational skills. It is anticipated that such a change will occur during the Second or Third Quarter, 1996. Performance and Development Review for the period from 1/1/95 to 12/31/95, at 7. Naeemullah refused to sign his 1995 review. In connection with the relocation of the GCMS unit, the bank required Chicago employees interested in moving to interview for spots in Stamford. Several positions (U-level and lower) were available to Naeemullah, but he elected not to pursue them. The bank contends Naeemullah voluntarily decided to look elsewhere because he wanted a V-level position, and no such spots were available in Stamford. Naeemullah contends the bank discouraged him from accepting a job in Stamford, where Budinger would have been his boss. The bank also offered Naeemullah a V-level position in Pakistan, which he initially accepted and then rejected, ostensibly because the value of the local currency would have made his salary worth less than he was making in Chicago. In the end, Naeemullah accepted a short-term position in New York. Citicorp contends that it told Naeemullah up front that after his New York assignment was over, he would have to find another job within the company or face job discontinuance. Naeemul-lah contends that the human resources people initially told him he could face job discontinuance after the New York position ended, but they later told him that he would not be let go and that they would help him find another position at the bank. In August 1996, while Naeemullah was in New York, the company’s human resources people wrapped up Naeemullah’s problem review; the company concluded that Naeemullah’s SCO nomination had been considered consistently with applica ble criteria and that the rejection was not the result of discrimination. In February 1997, Naeemullah’s New York boss, Gene Sweeney, told Naeemullah it was time for him to go. The company made no effort to find Naeemullah another job (it’s not entirely clear that Naeemullah himself made any efforts in that regard); instead, in June 1997, the company sent him packing. DISCUSSION Citicorp seeks summary judgment on Naeemullah’s Title VII claims. Budinger seeks summary judgment on Naeemullah’s defamation and tortious interference claims. 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 judgment as a matter of law.” Fed.R.Civ.P. 56(c). The party seeking summary judgment must show that there is an absence of evidence to support the non-moving party’s case. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The non-moving party must then set forth specific facts showing that there is a genuine issue of material fact and that judgment as a matter of law would be inappropriate here. Hedberg v. Indiana Bell Co., 47 F.3d 928, 931 (7th Cir.1995). When considering the evidence presented on a summary judgment motion, the Court may not make credibility determinations or choose between competing inferences. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). We draw all reasonable inferences from the record in the light most favorable to the non-moving party. Hedberg, 47 F.3d at 931. Under this standard, we must deny Citicorp’s motion and grant Budinger’s motion. A. Citicorp’s Motion for Summary Judgment Naeemullah alleges that Citicorp discriminated against him based on his race, religion, national origin, and color, and that Citicorp retaliated against him when he complained about the discrimination. To prove his claims, he would have to show among other things that he was subjected to an adverse employment action. See Smart v. Ball State University, 89 F.3d 437, 440 (7th Cir.1996); Spencer v. AT&T Network Systems, No. 94 C 7788, 1998 WL 397843, at *3 (N.D.Ill. July 13, 1998). Citicorp argues that Naeemullah cannot meet this burden, and therefore argues that it is entitled to summary judgment on Naeemullah’s Title VII claims. Specifically, Citicorp argues that the company’s decision not to make Naeemullah an SCO cannot be considered an adverse employment action because the SCO designation is not a promotion and it did not involve any increase in salary or benefits. Similarly, Citicorp argues that Naeemul-lah’s transfer to New York and his ultimate job discontinuance are not actionable adverse employment actions because they both came after Naeemullah chose to reject a V-level promotion in Pakistan. “[N]ot everything that makes an employee unhappy is an actionable adverse action.” Smart, 89 F.3d at 441. “A materially adverse change might be indicated by a termination of employment, a demotion evidence by a decrease in wage or salary, a less distinguished title, a material loss of benefits, significantly diminished material responsibilities, or other indices that might be unique to a particular situation.” Crady v. Liberty National Bank & Trust Co. of Indiana, 993 F.2d 132, 136 (7th Cir.1993). But “adverse actions can come in many shapes and sizes.” Knox v. State of Indiana, 93 F.3d 1327, 1334 (7th Cir.1996). And the question of whether an employee has suffered such an action will normally depend on the facts of each situation. See Bryson v. Chicago State University, 96 F.3d 912, 916 (7th Cir.1996). “The question ... can be resolved on summary judgment only if the question is not fairly contestable.” Williams v. Bristol-Myers Squibb Co., 85 F.3d 270, 273-74 (7th Cir.1996). Citicorp has failed to establish as a matter of law that the rejection of the SCO designation is not an adverse employment action; in other words, the matter is fairly contestable, and summary judgment is inappropriate. The mere fact that the SCO title carried no increase in salary or benefits is not controlling; the Seventh Circuit has recognized that an “adverse job action is not limited solely to [changes in] pay or monetary benefits.” See Smart, 89 F.3d at 441 (quoting Collins v. State of Illinois, 830 F.2d 692, 703 (7th Cir.1987)). In Bryson v. Chicago State University, the defendant university stripped the plaintiff, a tenured full professor, of her title (she went from being “Special Assistant to the Dean” to being “bibliographic instruction librarian”), and banished her from university committee work, though her salary and benefits remained the same. Plaintiff sued under Title VII. The district court found that the committee work was not essential to a tenured academic (expressing skepticism that anyone would want to serve on committees anyway) and found that the loss of a title had speculative value at best. Based on these findings, the district court concluded that plaintiff failed to demonstrate an adverse employment action and granted summary judgment for the defendant. 96 F.3d at 916. The Seventh Circuit reversed, recognizing that “[t]he subtle indicia of job status and reward ... may, in a particular institution, take on an importance that may be far greater in context than would appear on the outside — indicia like honorary or in-house titles (that may have no budgetary effect, unlike their administrative counterparts) and committee assignments.” Id. at 916-17. In this case, the evidence shows that the SCO designation was a big deal within the bank. Neil Volweider, who was Division SCO at GCMS before David Budinger took over in July 1995, characterized the SCO initial as “a personal designation which attests to your abilities and particularly leadership skills, role model as credit officer, and your judgment.” Volweider Deposition, p 5. He stated that “in the credit world, [the SCO] endorsement is meaningful”; the designation is “distinctive” and “sacred” and he “hold[s] it ‘in very high regard.’ ” Id. at 5, 7. Similarly, John Fi-gliozzi testified that the SCO designation is a “recognition of [one’s] capabilities as a credit officer.” Figliozzi Deposition, p. 53. He characterized the SCO initial as follows: There are certain senior level positions in the bank where the title is granted to give you a broader range of authority to facilitate doing your job. But you can do the job without the title, you just don’t have the same level of authority. So that means more people, other people have to be more involved in your doing the job. Id. at 65. Figliozzi also testified that “the authority that goes with a senior credit officer title is a recognition of advanced skills and therefore that’s a good thing.” Id. at 81. Finally, he admitted that although the SCO designation is not a prerequisite of the job, the majority of the senior credit positions are held by SCOs. Id. at 58. Notably, both Volweider and Figliozzi were SCOs. Although the SCO designation was technically not a promotion, those initials showed the world that the bank thought the particular employee to be of proven personal character and that the bank trusted the employee to handle its most important transactions. Left unstated, but clear as day, is the fact that the company’s refusal to process an employee’s SCO nomination would demonstrate that the company was less than wowed by the employee’s professional skills and personal character. A jury could reasonably find that the situation presented here is not unlike a failure to promote scenario, which can unquestionably constitute an adverse employment action. See Burlington Industries v. Ellerth, 524 U.S. 742, 118 S.Ct. 2257, 2268, 141 L.Ed.2d 633 (1998)(adverse employment action is a “significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits”) (emphasis added). The Court therefore denies Citicorp’s motion for summary judgment on Naeemullah’s discrimination claim. Citicorp also argues that it is entitled to summary judgment on Naeemullah’s retaliation claim. Specifically, Citicorp argues neither Naeemullah’s transfer to New York, nor his ultimate job discontinuance, can constitute adverse employment actions because those actions came after Naeemullah voluntarily rejected a promotion to a V-level position in Pakistan. The cases on which Citicorp relies, Greenberg v. Kmetko, 840 F.2d 467, 475 (7th Cir.1988), and Spring v. Sheboygan Area School Dist., 865 F.2d 883 (7th Cir.1989), deal with lateral transfers (i.e., same level, same pay, same benefits) and constructive discharge, neither of which has been alleged here. The New York job Naeemullah accepted was not a lateral transfer; it was a temporary assignment. And Naeemullah wasn’t constructively discharged; he was actually discharged (job discontinued, in Citicorp’s corporate parlance). When Citicorp decided to move its GCMS operation to Stamford it eliminated some positions and relocated others. Citi-corp contends that when it decided to eliminate Naeemullah’s job, it offered him at least two attractive options — namely, a permanent U-level position in Stamford and a permanent V-level position in Pakistan — and he rejected them both out of hand, choosing instead to purse a dead-end, short-term position in New York. If a jury finds that to be the case, Naeemul-lah’s retaliation claim will ring hollow. But Naeemullah presented evidence from which a trier of fact could conclude that Naeemullah went to New York because he had no other choice. Naeemullah testified that the bank discouraged him from accepting a position in Stamford, and Bu-dinger, who was going to run the Stamford operations, admitted that he told Naeemul-lah there was no place for him there. See Naeemullah Deposition, pp. 587-88; Bu-dinger Deposition, p. 301. Naeemullah also testified that the position in Pakistan, though technically a promotion, would have entailed a significant reduction in pay. Citicorp disputes that the Pakistan job’s total compensation package was less than the Chicago package, but the bank does not directly refute that Naeemullah’s base salary could have gone down because of the currency exchange rate. From this evidence, a trier of fact could conclude that the bank was trying to punish Naeemullah for pursuing the problem review against Budinger. The Court therefore denies Ci-ticorp’s motion for summary judgment on Naeemullah’s retaliation claim. None of this is to say that Naeemullah will necessarily win on his Title VII claims. Much of this case will come down to credibility determinations and questions of how much weight to attach to various bits of evidence, both of which we leave for the jury. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Sarsha v. Sears Roebuck & Co., 3 F.3d 1035, 1041 (7th Cir.1993) (on summary judgment, court neither makes credibility determinations nor chooses between competing inferences; rather, these are functions for a jury). B. Budinger's Motion for Summary Judgment On November 6, 1997, Naeemullah sued Budinger in his individual capacity for slander and libel per se and for tortious interference with employment relationship. Budinger moves for summary judgment on both claims. In his defamation claim, Naeemullah ah leges that Budinger made nine defamatory statements against him. The following table summarizes the statements, to whom and when they were allegedly made. STATEMENT PUBLICATION DATE(S) OF PUBLICATION (1)Naeemullah has interpersonal skills problems Budinger to Naeemullah; and Republished to Cathy Sacks and Del Pulido September 1995 during problem review (sometime between July 1995 and Aug. 1996) (2)Naeemullah failed to take a leadership role within the credit department Budinger to Naeemullah; and Republished to Sacks and Pu-lido November 1995 during problem review (sometime between July 1995 and Aug. 1996) (3)Naeemullah sent emails “all over the world” accusing Budinger of racism Budinger to Sacks and Pulido; and Republished by Sacks to Howard Stein and Pulido late 1995 unknown (4) Naeemullah’s professional abilities were run of the mill Budinger to Stein unknown (5) Naeemullah did not perform well at the Senior Risk Seminar Budinger to Figliozzi; and Republished to Sacks and Pu-lido sometime in 1995 unknown (6)Naeemullah “turned up missing” while Figliozzi was away and demonstrated “amazingly bad judgment” Written by Fred Hunt in internal memorandum (based on Budinger’s representations); and Republished to Sacks and Pu-lido December 19,1995 unknown (7) Naeemullah was responsible for a low internal audit in the Chicago GCMS unit Budinger to Naeemullah; and Republished to Sacks and Pulido September 1995 unknown (8) Naeemullah failed to get approval for certain credit models Written by Budinger in an email to Sacks; and Republished to Pulido January 19,1996 unknown (9)Budinger’s lawyer would have fun kicking Naeemullah out of the country Budinger to Sacks sometime in 1995 Budinger argues that he is entitled to summary judgment because the allegedly defamatory statements were all made more than a year before Naeemullah filed his complaint against Budinger on November 6, 1997. Under Illinois law, which the parties agree applies, an action for slander or libel must be commenced within one year after the cause of action accrues. 735 ILCS 5/13-201. The cause of action generally accrues on the date the defamatory material is published to a third party. Bakalis v. Board of Trustees of Community College District No. 504, 948 F.Supp. 729, 736 (N.D.Ill.1996). Applying this rule here, all of the alleged defamatory state ments would be barred by the statute of limitations. In some instances, Naeemul-lah has alleged and argued publication dates that show conclusively that the statements were published or republished before November 6, 1996 and therefore are barred. In others, Naeemullah has given vague timeframes (such as, “during the problem review”); in still others, he offered no dates at all. These responses are not sufficient to defeat Budinger’s statute of limitations argument. See Colucci v. Chicago Crime Commission, 31 Ill.App.3d 802, 808-09, 334 N.E.2d 461, 466 (1975) (where statute of limitations is involved, plaintiff must prove that statements were made on a precise date; alleging publication “on or about” a specific date or “subsequent to” a specific date, without accompanying details or information, is not enough). Publication dates notwithstanding, Naeemullah argues that the statute of limitations was tolled for some of the allegedly defamatory statements under Illinois’ “discovery rule.” Under this rule, the limitations period does not begin to run until the plaintiff discovers the defamation. Tom Olesker’s Exciting World of Fashion, Inc. v. Dun & Bradstreet, Inc., 61 Ill.2d 129, 334 N.E.2d 160 (1975); Swider v. Yeutter, 762 F.Supp. 225, 228 (N.D.Ill.1991). Naeemullah seeks to invoke the discovery rule for statements (1), (4), (5) and (8). He argues that he did not know about statements (4) and (5) until October 1997, when Budinger admitted at his deposition that he had made these statements, and that he did not learn about statements (1) and (8) until April 1997, when Citicorp produced for the first time the documents containing these statements.

5682342-23750

BYBEE, Circuit Judge: This case presents a question of first impression in our court: Does § 504 of the Rehabilitation Act, 29 U.S.C. § 794, extend to a claim of discrimination brought by an independent contractor? In order to answer that question, we must decide whether § 504(d), which refers to “the standards applied under title I of the Americans with Disabilities Act ... as such sections relate to employment,” incorporates Title I literally or selectively. If Title I is incorporated literally, then the Rehabilitation Act is limited by the ADA and only covers employer-employee relationships in the workplace; if selectively, then the Rehabilitation Act covers all individuals “subject to discrimination under any program or activity receiving Federal financial assistance,” who may bring an employment discrimination claim based on the standards found in the ADA. 29 U.S.C. § 794(a). The Sixth and Eighth Circuits have concluded that Title I is incorporated literally, Wojewski v. Rapid City Reg’l Hosp., 450 F.3d 338 (8th Cir.2006); Hiler v. Brown, 177 F.3d 542 (6th Cir.1999), while the Tenth Circuit has concluded that Title I is incorporated selectively. Schrader v. Ray, 296 F.3d 968 (10th Cir.2002). We agree with the Tenth Circuit, and conclude that § 504 incorporates the “standards” of Title I of the ADA for proving when discrimination in the workplace is actionable, but not Title I in toto, and therefore the Rehabilitation Act covers discrimination claims by an independent contractor. Accordingly, we reverse the judgment of the district court. I For purposes of this appeal, the facts of this case are simple and not contested. Dr. Lester Fleming is an anesthesiologist who suffers from sickle cell anemia. In 2005, Fleming applied for a position as an anesthesiologist at the Yuma Regional Medical Center (‘Yuma”). Upon learning of Fleming’s sickle cell anemia, Yuma told him that it would not be able to accommodate his operating room and call schedules. Fleming declined to accept this condition of employment, effectively canceling the contract. Fleming brought suit against Yuma for breach of his employment contract and employment discrimination in violation of § 504 of the Rehabilitation Act. The district court granted summary judgment in Yuma’s favor, ruling that (1) Fleming was an independent contractor, and that (2) independent contractors are not protected by the Rehabilitation Act. Fleming appeals the ruling that the Rehabilitation Act does not apply to independent contractors; he does not, however, appeal the district court’s finding that he is an independent contractor. II The Rehabilitation Act of 1973, 29 U.S.C. § 701 et seq., was the “first major federal statute designed to protect the rights of ... the handicapped people of this country.” Smith v. Barton, 914 F.2d 1330, 1338 (9th Cir.1990); see also Consol. Rail Corp. v. Darrone, 465 U.S. 624, 626, 104 S.Ct. 1248, 79 L.Ed.2d 568 (1984) (describing the Act as “a comprehensive federal program aimed at improving the lot of the handicapped”). Section 504 creates a private right of action for individuals subjected to disability discrimination by any program or activity receiving federal financial assistance, Kling v. Los Angeles County, 633 F.2d 876, 878 (9th Cir.1980), including employment discrimination in such programs, Consol. Rail, 465 U.S. at 632, 104 S.Ct. 1248; Boyd v. U.S. Postal Serv., 752 F.2d 410, 413 (9th Cir.1985). It provides that “[n]o otherwise qualified individual with a disability ... shall, solely by reason of her or his disability, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance.” 29 U.S.C. § 794(a). The Rehabilitation Act broadly defines “program or activity” to include “all of the operations of — ... an entire corporation, partnership, or other private organization, or an entire sole proprietorship” if the entity as a whole receives federal assistance or if the entity “is principally engaged in the business of providing education, health care, housing, social services, or parks and recreation,” and various other services. 29 U.S.C. § 794(b)(3)(A). The Rehabilitation Act, as amended, incorporates various standards and remedies from other civil rights laws. Most important for our case, § 504(d) provides that “[t]he standards used to determine whether this section has been violated in a complaint alleging employment discrimination under this section shall be the standards applied under title I of the Americans with Disabilities Act ... as such sections relate to employment.” 29 U.S.C. § 794(d). See 42 U.S.C. §§ 12111-17, 12201-04, 12210. Title I of the ADA defines key terms in the act, § 12111, defines discrimination in the workplace, § 12112, provides for defenses and limitations for employees using illegal drugs or alcohol, §§ 12113-14, 12210, and commits enforcement to the Equal Opportunity Employment Commission and the Attorney General, § 12117. Although we have not addressed the question, other circuits have held that independent contractors are not covered by Title I. Aberman v. J. Abouchar & Sons, Inc., 160 F.3d 1148, 1150 (7th Cir.1998); Johnson v. City of Saline, 151 F.3d 564, 567-69 (6th Cir.1998); Birchem v. Knights of Columbus, 116 F.3d 310, 312-13 (8th Cir.1997). The issue before us is whether Dr. Fleming, as an independent contractor, may maintain suit against Yuma based on § 504 of the Rehabilitation Act. Fleming urges us to read § 504(d) to mean that “[t]he standards ” of Title I of the ADA— and not Title I itself — should be “used to determine whether this section has been violated in a complaint alleging employment discrimination.” 29 U.S.C. § 794(d) (emphasis added). Relying on the Tenth Circuit’s opinion in Schrader, Dr. Fleming would have us hold that § 504 does not literally incorporate Title I of the ADA and, therefore, “§ 504(d) addresses only the substantive standards for determining what conduct violates the Rehabilitation Act, not the definition of who is covered.” Schrader, 296 F.3d at 972. Yuma, not surprisingly, offers a different view. It would have us hold that § 504(d) incorporates Title I of the ADA in toto, including any limitations found in those provisions. Relying on decisions from the Sixth and Eighth Circuits, Yuma argues that “the focus of the Rehabilitation Act is upon providing remedies for individuals who are employees” and therefore the Rehabilitation Act, like Title I of the ADA, “requires an employee-employer relationship.” Wojewski, 450 F.3d at 345. The district court agreed with Yuma and found that Fleming was not an employee, but an independent contractor. It then held, citing PGA Tour, Inc. v. Martin, 532 U.S. 661, 692, 121 S.Ct. 1879, 149 L.Ed.2d 904 (2001) (Scalia, J., dissenting), that “[e]mployment actions under the Rehabilitation Act may only be brought by employees and cannot be brought by independent contractors.” Thus, Yuma and the district court would have us read Title I of the ADA into § 504(d) as though Title I had been incorporated on a jot-for-jot basis. Ill Although the matter is not entirely free from doubt, we agree with Dr. Fleming that he is covered by the Rehabilitation Act even though he is an independent contractor. We reach this conclusion for several reasons. A First, the scope of the Rehabilitation Act is broader than the ADA. The Rehabilitation Act covers any “otherwise qualified individual” who has been “excluded from the participation in, or denied the benefits of, or ... subjected to discrimination under any program or activity receiving Federal financial assistance.” 29 U.S.C. § 794(a). The Rehabilitation Act covers any program receiving federal funds. The Act carefully defines “program or activity” as “all of the operations of’ state instrumentalities, colleges and universities, local education agencies, and “an entire corporation, partnership, or other private organization, or an entire sole proprietorship.” 29 U.S.C. § 794(b) (emphasis added). This language has led us to interpret “program or activity broadly.” Sharer v. Oregon, 581 F.3d 1176, 1178 (9th Cir.2009) (quoting Haybarger v. Lawrence County Adult Prob. & Parole, 551 F.3d 193, 200 (3d Cir.2008) (internal quotation marks omitted)). Thus, the Rehabilitation Act covers “all of the operations” of covered entities, not only those related to employment. By contrast, Title I of the ADA prohibits “discriminat[ion] against a qualified individual ... because of the disability of such individual in regard to job application procedures, the hiring, advancement, or discharge of employees, employee compensation, job training, and other terms, conditions, and privileges of employment.” 42 U.S.C. § 12112. Title I covers all aspects of the employer-employee relationship, but unlike § 504 of the Rehabilitation Act, it does not cover other relationships, which are addressed elsewhere in the ADA. See Zimmerman v. Or. Dep’t of Justice, 170 F.3d 1169, 1172, 1177-78 (9th Cir.1999). B Second, Congress did not use language of incorporation when it referred to the ADA in § 504. Instead, Congress referred to the “standards used to determine whether [§ 504] has been violated in a complaint alleging employment discrimination.” 29 U.S.C. § 794(d) (emphasis added). We think the choice of words is significant. The Supreme Court’s decision in Consolidated Rail Corp. v. Darrone is instructive in this regard. Section 505 of the Rehabilitation Act provides that “[t]he remedies, procedures, and rights set forth in title VI of the Civil Rights Act of 1964 shall be available to any person aggrieved ... by any recipient of Federal assistance ... under section 794 of this title.” 29 U.S.C. § 794a(a)(2). In Consolidated Rail, Conrail had refused to employ a locomotive engineer who had become disabled, although it did not find him unfit for employment. The engineer brought suit under § 504. Conrail argued that § 604 of Title VI limited employment discrimination actions to those employers who received federal financial assistance so long as the “primary object of the Federal financial assistance is to provide employment.” 42 U.S.C. § 2000d-3; see 465 U.S. at 628, 104 S.Ct. 1248. Conrail argued that, because § 504 incorporated Title VI, employment discrimination actions under the Rehabilitation Act were limited to those programs receiving funds “to provide employment” and, since the primary objective of the federal assistance received by Conrail was not to provide employment, the engineer could not bring suit under § 504. The Court rejected Conrail’s argument: It is clear that § 504 itself contains no such limitation. Section 504 neither re fers explicitly to § 604 nor contains analogous limiting language; rather, that section prohibits discrimination against the handicapped under “any program or activity receiving Federal financial assistance.” And it is unquestionable that the section was intended to reach employment discrimination. 465 U.S. at 632, 104 S.Ct. 1248 (footnote omitted). The Court in Consolidated Rail pointed to two facts: (1) § 504 had a broad definition of covered programs, and (2) although § 504 referred to Title VI, it did not refer “explicitly” to language in § 604 that would have restricted its scope. Similarly, we can find no language in § 504(d) that explicitly adopts those sections of Title I that would restrict the scope of the Rehabilitation Act. When Congress said that the Rehabilitation Act should use the “standards” applicable to employment discrimination claims brought under Title I, we think Congress meant for us to refer to Title I for guidance in determining whether the Rehabilitation Act was violated, but we do not think that Congress meant to restrict the coverage of the Rehabilitation Act. In Zimmerman v. State Department of Justice, 170 F.3d 1169 (9th Cir.1999), we dealt with a similar issue to that presented in Consolidated Rail and here: Whether Title II of the ADA, by referring to the Rehabilitation Act, either expressly or impliedly incorporated that act into the ADA. See 42 U.S.C. § 12133 (adopting the “remedies, procedures, and rights set forth in section 794a of Title 29”). We held that “Congress’ choice to incorporate one section of the Rehabilitation Act, which provides certain procedures, does not demonstrate that Congress also intended to incorporate the rest of the Rehabilitation Act’s substance.” 170 F.3d at 1179. Following Zimmerman's lead, we decline to hold that because § 504(d) refers to Title I of the ADA, the ADA somehow narrows the scope of § 504(a). As we observed there, under the Rehabilitation Act, “[discrimination is prohibited under any program or activity that receives such [Federal financial] assistance. This focus naturally encompasses the entire operation of the program or activity, for its federal funding may well flow into compensation for employees,” and, we would add, for independent contractors as well. Id. at 1181. C Third, jot-for-jot incorporation would substantially narrow the scope of the Rehabilitation Act in other ways as well. For example, the ADA’s definition of employer, which “means a person engaged in an industry affecting commerce who has 15 or more employees,” 42 U.S.C. § 12111(5), would, under Yuma’s theory, now govern employment discrimination claims under the Rehabilitation Act. But incorporating that standard would significantly limit the availability of employment discrimination claims under the Rehabilitation Act, a result that seems at odds with Congress’s broad definition of “programas] and activities]” covered by the Rehabilitation Act. 29 U.S.C. § 794(b). Without additional direction from Congress, we are hesitant to reduce the express scope of the Rehabilitation Act by wholesale adoption of definitions from another act. See Gross v. FBL Fin. Servs., Inc., — U.S. —, 129 S.Ct. 2343, 2349, 174 L.Ed.2d 119 (2009) (“When conducting statutory interpretation, we ‘must be careful not to apply rules applicable under one statute to a different statute without careful and critical examination.’ ” (quoting Fed. Express Corp. v. Holowecki, 552 U.S. 389, 128 S.Ct. 1147, 1153, 170 L.Ed.2d 10 (2008))). Ironically, if we adopted the district court’s and Yuma’s position, we would have to conclude that Congress narrowed the Rehabilitation Act by adopting the ADA. That conclusion contradicts the plain import of those acts, and we decline to go down that road without a clearer indication that Congress wanted us to. We find the reasoning of the Tenth Circuit persuasive. In Schrader v. Ray, the issue was whether § 504(d) of the Rehabilitation Act incorporated the ADA’s “ ‘fifteen or more employees’ definition of employer as a limitation on the definition of entities covered by the Rehabilitation Act.” 296 F.3d at 971. Deciding that it did not, the court adopted the reasoning from Johnson v. N.Y. Hospital, 897 F.Supp. 83 (S.D.N.Y.1995): In enacting the 1992 amendment of the Rehabilitation Act, Congress intended that the standard of “reasonable accommodations” that employers must make under the ADA would serve as the standard in actions alleging Rehabilitation Act violations in the employer-employee context.... What the amendment does not state is that the standards of the ADA are to be used to determine whether an employer is even subject to the Rehabilitation Act in the first instance. Schrader, 296 F.3d at 972 (quoting Johnson, 897 F.Supp. at 86). The Tenth Circuit concluded that § 504(d) “addresses only the substantive standards for determining what conduct violates the Rehabilitation Act, not the definition of who is covered under the Rehabilitation Act.” 296 F.3d at 972. Latching on to the word “substantive,” Yuma argues that we are bound by the Supreme Court’s more recent decision in Arbaugh v. Y & H Corp., 546 U.S. 500, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006), in which the Court held that the fifteen-employee qualification in Title VII’s definition of employer is “substantive.” Yuma contends that: (1) Section 504(d) incorporates Title I’s substantive requirements; (2) Arbaugh holds that the definition of “employer” is substantive; (3) therefore, § 504 incorporates Title I’s definition of “employer.” Yuma’s argument has two problems. First, Yuma places undue weight on the term “substantive,” a term that does not appear in § 504(d). It is true that other circuits have sensibly described the standards referred to in § 504(d) as “substantive,” but that descriptive term tells us little about the scope of the Rehabilitation Act. The other problem with Yuma’s argument is that it equivocates two meanings of “substantive”: substantive as opposed to jurisdictional, and substantive as opposed to procedural. In Arbaugh, the Supreme Court examined whether Title VII’s definition of “employer” as an entity that employs fifteen or more employees is jurisdictional or a “substantive ingredient of a Title VII claim.” 546 U.S. at 503, 126 S.Ct. 1235. The Court concluded that the fifteen-or-more-employees requirement concerns the substantive adequacy of the claim and was not a prerequisite for establishing subject matter jurisdiction. Id. at 504, 126 S.Ct. 1235. However, the Supreme Court’s conclusion that Title VII’s definition of employer is substantive rather than jurisdictional does not force the conclusion that the definition is “substantive” rather than “procedural,” or something else. These are different contrast classes. That the Supreme Court determined that the fifteen-employee requirement is a “substantive ingredient” of a Title VII claim does not tell us whether the ADA’s definition of employer is part of the ADA’s substantive standard for determining when discrimination occurs. Arbaugh, therefore, did not address, let alone answer the question before us. D Fourth, if we adopted Yuma’s reading, there would be substantial duplication between the Rehabilitation Act and the ADA — perhaps inconsistent duplication— in the definitions of key terms. Section 504 refers to 29 U.S.C. § 705(20) for a definition of the term “individual with a disability.” Section 705(20) defines that term generally and then creates certain exclusions. It addresses employment in two specific cases. In § 705(20)(C)(v), the Rehabilitation Act provides that “[f]or purposes of [29 U.S.C. §§ 793 and 794] as such sections relate to employment, the term ‘individual with a disability’ does not include any individual who is an alcoholic” if alcoholism prevents the individual from performing his duties. And § 705(20)(D), for purposes of employment, similarly excludes persons who have a “currently contagious disease or infection” if the disease or infection would “constitute a direct threat to the health or safety” of others. 29 U.S.C. § 705(20)(D). Title I of the ADA has its own provisions relating to “infectious and communicable diseases,” 42 U.S.C. § 12113(d), and illegal use of drugs and alcohol, 42 U.S.C. § 12114. If Yuma is correct that Title I is incorporated into the Rehabilitation Act, then either the ADA’s exclusions for communicable diseases and illegal use of drugs and alcohol displace the Rehabilitation Act’s own exclusions, or we have to harmonize parallel sections. We have not undertaken a side-by-side comparison of the Rehabilitation Act’s provisions with those of the ADA in these areas, but the duplication suggests that Congress has established two parallel schemes, which counsels against finding that Congress created one scheme and then displaced it with a second, duplicative scheme. E We recognize that our decision puts us in conflict with the Sixth and Eighth Circuits. With all due respect, we do not find their analysis of the Rehabilitation Act persuasive. In contrast to the Tenth Circuit’s decision in Schrader, the Eighth Circuit held that § 504(d) does incorporate the ADA’s employee-employer requirement into the Rehabilitation Act. Wojewski v. Rapid City Reg’l Hosp., Inc., 450 F.3d 338, 345 (8th Cir.2006). Its brief discussion noted: “Given the similarity between Title I and the Rehabilitation Act, absent authority to the contrary, we construe both to apply to an employee-employer relationship and decline [the] appellant’s invitation to extend coverage of the Rehabilitation Act to independent contractors.” Id. In our view, however, there is no need here to “extend” the Rehabilitation Act; its language is broad enough to cover employees and independent contractors alike. In this respect, Title I and § 504 are quite different. Section 504 does not even mention employment, while Title I deals exclusively with employment. Zimmerman, 170 F.3d at 1176-77. We thus do not find the Eighth Circuit’s cursory comparison of § 504 and Title I to be persuasive evidence that the Rehabilitation Act excludes independent contractors. The Sixth Circuit also incorporated, albeit indirectly, the ADA’s limitation into the Rehabilitation Act, holding that “individuals who do not otherwise meet the [Title VII] statutory definition of ‘employer’ cannot be held liable under the Rehabilitation Act’s anti-retaliation provision.” Hiler v. Brown, 177 F.3d 542, 547 (6th Cir.1999). As an initial matter, the Sixth Circuit’s decision in Hiler is of dubious relevance to this case because the claim in Hiler was brought under § 501 of the Rehabilitation Act — not § 504. See id. at 545. Additionally, at issue in Hiler was whether the Rehabilitation Act created a private cause of action against supervisors in their individual capacities for retaliation. Id. at 543. In concluding that it did not, the Sixth Circuit noted that the ADA and Rehabilitation Act “borrowed the definition of ‘employer’ from Title VII” and therefore if an individual does not meet the Title VII definition of employer, he cannot be liable under the Rehabilitation Act’s anti-retaliation provision. Id. at 546 n. 5, 547. Though Hiler states that the Rehabilitation Act borrowed the definition of employer from Title VII, § 504 specifically defines the entities to which it applies, and does not address employers. See 29 U.S.C. §§ 705(20), 794(a), (b). In short, Hiler does not speak to the issue in the case before us, and to the extent it does, we are not moved by its analysis. Finally, although we have rejected it, we recognize that there is some force to the position taken by the district court and Yuma and endorsed by the Eighth and Sixth Circuits. Section 504(d) plainly refers us to Title I of the ADA “as such sections relate to employment.” We recognize that such language of referral might be read to suggest that Title I was to be incorporated jot-for-jot into employment discrimination actions brought under the Rehabilitation Act. We also acknowledge that jot-for-jot incorporation is in some respects easier to administer than a selective regime. But our own administrative convenience is not a factor in determining what Congress meant, and for the reasons discussed we have concluded that this is not the best reading of the Rehabilitation Act. IV. CONCLUSION We hold that § 504 of the Rehabilitation Act is not limited to employers and employees as defined in Title I of the ADA, but rather applies to independent contractors and the entities that hire them. Fleming’s disability discrimination claim under § 504 is proper and his action against Yuma may proceed. REVERSED. . Fleming also brought suit against Yuma Anesthesia Medical Services ("YAMS”). The distinction between Yuma and YAMS is not relevant for the purposes of this appeal. We therefore will refer to the defendants collectively as "Yuma.” . We review a district court's grant of summary judgment de novo. United States v. City of Tacoma, 332 F.3d 574, 578 (9th Cir.2003).

4267085-8737

EDWARD P. MURPHY, District Judge. This is an indictment in thirteen counts of James Andrew and Susan Thorne Camp, for concealing assets of a number of bankrupt estates, a viola tion of 18 U.S.C. § 152. The question before the court is a motion for judgment of acquittal pursuant to Fed.Rules Crim. Proc. rule 29, 18 U.S.C.A. The Rule provides that a judgment of acquittal shall be ordered as to one or more of the offenses charged in the indictment after the evidence on either side is closed “if the evidence is insufficient to sustain a conviction of such offense or offenses.” There was some reference by counsel for the government on the argument of this motion to the state of the evidence “at least for the purposes of this motion.” Counsel for the government thus suggests that the evidence ought to be viewed, for the purposes of this motion, according to the test whether the evidence is insufficient to sustain a conviction. This case, however, is a criminal case tried to the court without a jury, jury trial having been waived by both parties. The motion for judgment of acquittal, therefore, logically goes beyond the test of whether the evidence is sufficient to sustain a conviction by the trier of fact. Where the court is the trier of fact, the test to be applied to the evidence produced by the government is not whether it could sustain a conviction, but whether the government has so far substantiated its case, that absent a defense the court would find the defendant guilty as to any of the counts of the indictment. A contrary rule, one adopting the intimation of the government, would put upon the defendant the risk that by his own evidence, as by testimony produced on cross-examination, he might supply the evidence which convinces the trier of fact of his guilt, where absent such evidence the trier of fact would not be so convinced. To subject the defendant in a criminal case to such a risk would be contrary to the principles by which the criminal law has developed in this country. It would in effect require the defendant to assist in providing a vital element of the evidence which convicts him. The question before this court upon this motion, therefore, is not whether the evidence is substantial enough to warrant ' submission of the case to a jury, but whether the government has met its full ' burden of proof, that of showing beyond a reasonable doubt the guilt of the accused. Before discussing the evidence, it may be well to turn briefly to the law governing this case. Counsel for the defendants argued that in order for the crime described in 18 U.S.C. § 152 to be committed, there must be assets of the bankrupt estate. So much is undisputed. Counsel for defendants further argued, however, that “assets” of a bankrupt estate must be construed to mean that property which is ultimately determined to be the property of the bankrupt estate, as against the claims of other persons. According to this argument, where a bankrupt secretes a sum of money from his creditors or from the Trustee, and the money is subsequently recovered, and it is decided that the sum involved belongs as of right to some other claimant rather than to the bankrupt estate, the bankrupt has committed no crime. This proposition does not seem to correspond to the intent of Congress in providing sanctions for the enforcement of the Bankruptcy Act. Defendants’ argument . in this respect is not convincing, and no cases have been cited to the court, or found, in which defendants’ argument was sustained on this point. Defendants’ argument was made also more narrowly, to the effect that at least property held in trust by the defendants for others could not be the property “belonging to the estate of a bankrupt”, 18 U.S.C. § 152, and thus could not be the subject of concealment prohibited by 18 U.S.C. § 152. In this argument, defense counsel seems to have ignored the character of the evidence adduced. The evidence showed that funds received by the corporations and the defendants here involved were not segregated in trust funds, or trust accounts in banks, or otherwise held in such a manner as to amount to a trust, but on the contrary either commingled with other funds in general accounts or cashed and commingled with other cash. De fense counsel argued that the accounting concept of .“assets” was not determinative of the question of whether any property whjch may have been concealed was “property belonging to the estate of a bankrupt.” This argument, though true, goes only to the distinction between what may appear on an accounting analysis of the bankrupt estates as “assets” and the net worth of the bankrupt estates after the liabilities have been offset against the' “assets.” It is a far cry from the proposition that net worth may be less than the accounting concept of “assets” to the conclusion that any assets on an accounting statement which are counterbalanced by liabilities to other parties are ipso facto assets held in trust for such other parties. The government has adequately shown that the assets in question were “property belonging to the estate of a bankrupt.” So far as the government’s legal theory is concerned, it relied to some extent on the proposition that improper expenditures of the funds of the bankrupt estates, such as the payment of personal obligations of the bankrupt by means of funds of the bankrupt estates, were in themselves concealment of property belonging to the estate of the bankrupt. That is not the law. In United States v. Tatcher, 3 Cir., 1942, 131 F.2d 1002, at page 1003, emphasis added, the court made clear that where the evidence justified equally an inference that the property in question was concealed and an inference that the property in question was “sold and the proceeds used to pay the business and personal expenses of the defendant and his partner”, a conviction was not justified. The crime of concealment is concealment. It is not an improper use of funds, it is not the use of corporate funds for personal expenses, it is not ev.en the use of funds in fraud of creditors. These manipulations of funds may be the basis of private civil obligations,, they may be grounds for denial of discharges in bankruptcy, they may be evidence of a scheme or conspiracy to defraud creditors, and they may be evidence of a concealment from the Trustee or the creditors. As such evidence they are entitled to some weight.. But they are not in themselves the crime alleged in the indictment. In a case dealing with a bankrupt accused of concealing his property, in which the evidence showed large gifts of property by the bankrupt immediately preceding the, bankruptcy, Judge Goodrich, for the Third Circuit, said: “It may well be within the power of Congress to declare, that one who, within the shadow of the aproaching specter of bankruptcy, gives away his assets may be guilty of a crime. But it is neither the crime of concealment nor false swearing with regard to assets on hand at the time the bankruptcy occurs.” United States v. Schireson3 Cir., 1940, 116 F.2d 881, 884, 13A.L.R. 1157. Profligate expenditure of money stolen, in either the legal or the moral sense, from the creditors of a bankrupt is not concealment of such money, and it is only concealment that is charged in the indictment. The evidence introduced by the government of the use of funds of the corporate bankrupt estates to satisfy private obligations of the defendants, whether these were garbed in the form of business expenditures or not, is therefore entitled only to that weight which it may have as evidence of a concealment of other funds, which it may be inferred from the evidence were abstracted from the bankrupt estates. The government also seemed to argue that the use of funds belonging to the bankrupt estates in running the businesses after the date of bankruptcy, and while the defendants were continuing, under the supervision of the Trustee, in the operation of the businesses, was in itself unlawful. It may be pointed out that at least some of these expenditures were made in pursuance of the activities of the defendants sanctioned by the Trust. Cf. Hersh v. United States, 9 Cir., 1934, 68 F.2d 799. But beyond that, it is clear that once again, any expenditures of money, proper or not, can be considered only insofar as they may be evidence of concealment of other funds derived from the businesses. This conclusion is not contrary to the principle that once concealment has been practiced, the concealment may not thereafter be purged of its criminality by the use of the previously concealed property for the benefit of others. See Kalin v. United States, 5 Cir., 1924, 2 F.2d 58. The gravamen of the offense in any case is concealment.

3244458-13655

REYNOLDS, Judge: OPINION AND ORDER This is a suit for refund of $185,431.-20 of federal income taxes which the plaintiff paid after the Commissioner of Internal Revenue disallowed a $322,500 deduction on the taxpayer’s federal income tax returns for the fiscal years of 1959 and 1960. The issue is whether the amounts paid by taxpayer in settlement of litigation, which involved the transfer of real estate, and attorneys’ fees were deductible as ordinary and necessary business expenses rather than nondeductible capital expenditures. I hold that the payments involved were nondeductible capital expenditures and therefore find for the Government. FINDINGS OF FACT Plaintiff (hereinafter “Clark”) is a corporation organized and doing business under the laws of the State of Wisconsin and has its principal refinery in Blue Island, Illinois. Clark is on the accrual basis. William C. Richards and Grace J. Richards of Hinsdale, Illinois, owned the real estate involved in the litigation (hereinafter “Richards property”) located at 3108 West Vermont Avenue in Blue Island which was ultimately surrounded on three sides by Clark’s refin ery. The Richards purchased this property in 1946. At that time there was a paint reclaiming business on the property. Richards operated a toy manufacturing proprietorship on the property until 1949 when he took over the paint business. From 1949 to the present, Richards only business was the manufacturing, reclaiming, and reprocessing of paint. Richards formed corporations to own and operate his business and the Richards property; their ownership interests will be referred to as “Richards.” In 1949 Clark began purchasing property in the immediate vicinity to the Richards property, and by various acquisitions of property, Clark in 1953 had the Richards property surrounded on all sides except for the Vermont Avenue side to the south. In 1952, Clark built the Haudry Cat. Cracker for $4,000,000; and in 1957, Clark constructed the fluid cat. cracker at a cost of approximately $6,000,000 on its property. The Clark facilities, i. e., crackers, were adjacent to and surrounded the Richards property on the three sides. The existence of a paint factory in the middle of an oil refinery was highly undesirable and very dangérous because the Haudry Cat. Cracker, during the course of its operation, emitted gas, smoke, acid fumes, and very hot ceramic fines onto the Richards property. These fines were a definite fire ha2iard, and because the paint factory was so close to the cracker there was always a potential threat.of explosion. In order to eliminate this dangerous situation, Clark, beginning in the year 1953, made several attempts to purchase the Richards property. However, no sale was ever consummated because Clark and Richards could not agree on a price. Despite the obvious nuisance caused by Clark’s trespasses onto the Richards property and the threat of a potential explosion, the actual damage done to the Richards property by the nuisance was minimal. In any event, it was no more than the out-of-pocket loss suffered by Richards of approximately $5,000. Richards never claimed any casualty loss deductions during the years 1953 through 1960 by reason of damage inflicted upon their property by Clark. At no time did Mr. Richards ever consider selling his property for less than an amount which he thought would be sufficient to allow him to purchase another piece of property and to relocate his business in another area without any economic loss to himself or his company. In 1957, after having a study made by contractors, plumbers, electricians, etc., Mr. Richards estimated that his cost of finding comparable property and relocating his business would be $275,000. On July 29, 1958, the Richards filed a lawsuit against Clark and certain of its officers in the Superior Court of Cook County, Illinois, in chancery. Richards requested that the court grant an injunction against alleged nuisances and trespasses committed by Clark on the property and requested a recovery of $1,000,000 in damages. At a hearing on a motion to default and a motion for temporary injunction, Judge Sbarbaro, the presiding judge, indicated that despite the hardship to Clark he might very well grant an injunction. The primary cause of all the trouble between Clark and Richards was the nuisance created by Clark’s cracker. At the time of the suit, Clark did not know if the cracker could be fixed to prevent the cause of nuisance and, if so, how much it would cost. There was a real threat to Clark of an injunction sometime in the immediate future and a real threat of future injunctions, since Clark did not know whether the cracker which was causing the nuisance that Richards was seeking to have enjoined could be fixed. An injunction would have cost Clark a minimum of $25,000 a day. Accordingly, the very substance of the Clark corporation was in dire jeopardy if any injunction were granted. Clark was also confronted with the problem that if there was an explosion in the future, its liability for damage to life and property could be in the millions of dollars. Clark decided that if the refinery was to be operated at the Blue Island location, the only way it could be certain that there would be no future injunctions which would stop operations, and that it would not have to pay millions of dollars of damages in the future to Richards and/or other third parties on the Richards premises because of an explosion, was to “remove” Richards from the property. The only way Clark could “remove” Richards from that property was to buy the property. After Judge- Sbarbaro had indicated that he might very well grant the injunction that was being requested, Clark suggested that the case be settled. The case was to be settled by Clark’s purchasing the Richards property from Richards. When the parties could not agree as to a purchase price, they decided they would submit the settlement to arbitration. The arbitration agreement, drafted by Clark’s attorneys, provided that an arbitrator would be selected by Clark, an arbitrator would be selected by Richards, and an arbitrator would be selected by the presiding judge. The three would compute the amount to be paid by Clark to Richards for its property. The arbitration agreement provided that the following four elements were to be considered in computing a fair price for the Richards property: (1) The cost of acquiring like land; (2) the cost of erecting similar buildings; (3) the cost of moving; and (4) the cost of any economic loss which Richards might suffer during the move. Also, the arbitration agreement provided that Judge Sbarbaro would fix a fifth item to be considered in the total price paid by Clark to Richards — attorneys’ fees. The arbitration agreement states nothing with regard to any payment being made by Clark to Richards in lieu of damages that Clark may have committed on Richards prior to the settlement of this lawsuit. Both the reports of the arbitrator selected by Clark and the arbitrator selected by Richards and the majority decision, upon which the sum of $287,500 transferred by Clark to Richards is based, state very clearly that the only factors which were taken into consideration with regard to computing the price that Clark was to pay for the Richards property was the cost of acquiring like land and buildings, the cost that Richards might incur by having to move his operation, and the cost of any loss of profits that Richards might incur during the move. The reports provide nothing with regard to the fact that the arbitrators in any way took into consideration the damages which Clark may have caused Richards prior to the settlement of the suit in computing the price that Clark was to pay Richards. The majority decision of the arbitrators, providing that based on the first four items of the arbitration agreement Clark should pay to Richards $287,500, was filed with Judge Sbarbaro and made a part of the record in the equity action on November 24, 1959. In a sworn memorandum of law presented to the' court in February of 1960, after the arbitration agreement had been entered into and after the arbitrators had computed the amount to be awarded Richards pursuant to the first four items of the arbitration agreement, Clark stated unequivocably that it was its understanding and its intention that no part of the amount to be paid by Clark to Richards was to be paid in lieu of damages which Richards may have suffered because of the trespasses caused by Clark. Rather, the amount paid was only to give Richards a fair price for his property and thereby eliminate the hazards which had caused a potentially disastrous lawsuit to Clark. On March 17, 1960, Judge Sbarbaro entered an order in the equity action ap proving and finding the following: approving the arbitration and settlement agreement of July 24, 1959; approving the determination of the Board of Arbitrators of November 24, 1959; finding that $287,500 should be paid by Clark to Richards for items 1 through 4 of the arbitration agreement; and approving its own awárd on February 18, 1960, of $35,000 to be paid by Clark to Richards for attorneys’ fees under item 5 of the arbitration agreement. A stipulation of the parties dismissing the action was executed on March 24, 1960, and filed with the court on September 8, 1960, and an order of the court dismissing the action with prejudice was entered on September 8, 1960. Clark was not worried about the damage aspect of the suit. Clark knew that it had caused very little damage, and the actual amount that it would have to pay for damages was minimal. Clark’s primary concern and the reason why it decided to settle the lawsuit was the economic damage which any future injunction might cause Clark and the potential damages, which could run into-millions of dollars, that Clark would have to pay Richards and/or third parties if Clark caused an explosion on the Richards property. At trial, Clark provided no testimony with regard to what the actual damage it had caused to the Richards property was, nor did it submit any evidence with regard to how much damage it thought it may be liable for, except for the testimony with regard to some minor flooding and some minor damage done to employees’ automobiles. On its income tax return, Clark treated its gross payments to Richards as a payment in part for the purchase of the Richards property in the amount of $25,000 and treated the balance as a payment for liquidating damages, for which it took a deduction pursuant to Section 162 of the Internal Revenue Code. Also, Clark took a deduction, except for the amount of $35,000 for attorneys’ fees, in the year 1959. CONCLUSIONS OF LAW The court has jurisdiction in this matter pursuant to the provisions of § 1346 of the United States Code. Section 162 of the Internal Revenue Code of 1954 provides, in relevant part, that a deduction may be taken for ordinary and necessary business expenses. No deduction can be taken for a capital expenditure. Welch v. Helvering, 290 U.S. Ill, 54 S.Ct. 8, 78 L.Ed. 212 (1933). An expenditure should be treated as one in the nature of a capital expenditure if the expenditure brings about the acquisition of an asset having a useful life in excess of one year or if the expenditure secures a like advantage to the taxpayer which has a life of more than one year. United States v. Akin, 248 F.2d 742 (10th Cir. 1957), certiorari denied 355 U.S. 956, 78 S.Ct. 542, 2 L.Ed.2d 532 (1958); Sears Oil Co. v. Commissioner, 359 F.2d 191 (2d Cir. 1966); Clark Thread Co. v. Commissioner, 100 F.2d 257 (3d Cir. 1935); American Dispenser Co., Inc. v. Commissioner, 396 F.2d 137 (2d Cir. 1968). Whether or not the money was expended in settlement of a lawsuit is not controlling with regard to the .question of whether part or all of the money so expended is deductible. If, pursuant to the settlement of a lawsuit, Clark makes a capital expenditure, or an expenditure which does not specifically come within the purview of one of the provisions in the Code which permits a deduction, that expenditure is not deductible. Wise v. Commissioner, 311 F.2d 743 (2d Cir. 1963); United States v. Wheeler, 311 F.2d 60 (5th Cir. 1962), certiorari denied 375 U.S. 818, 84 S.Ct. 54, 11 L.Ed.2d 53 (1963); American Dispenser Co., Inc. v. Commissioner, 396 F.2d 137 (2d Cir. 1968). The Seventh Circuit in Anchor Coupling Co. v. United States, 427 F.2d 429 (1970), discussed in considerable detail the various factors to be considered in determining whether or not the transfer of an asset in the settlement of -a specific performance lawsuit should be treated as a capital expenditure. The Anchor court held on page 433 “that the origin and character of the claim with respect to which a settlement is made, rather than its potential consequences on the business operations of a taxpayer is the controlling test of whether a settlement payment constitutes ' a deductible expense or a nondeductible capital outlay.” Applying this test, I have concluded that Clark’s settlement payment constitutes a capital outlay because Richards’ claim against Clark arose out of the inability of the parties to arrive at a price for the Richards property. It is true that the lawsuit took on the form of a nuisance action seeking an injunction, but there was no doubt in the parties’ minds that what they were really arguing about was the price that Clark would have to pay for the Richards property. These cases should not be decided by a “resort to formalisms and artificial distinctions.” Woodward v. Commissioner, 397 U.S. 572, 577, 90 S.Ct. 1302, 1306, 25 L.Ed.2d 577 (1970).

4176933-12647

CHESNUT, District Judge. The plaintiff has moved to remand this case to the Court of Common Pleas of Baltimore City, where it was originally instituted and whence it was removed to this court on the petition of the defendant. The point is made that the jurisdiction of this court does not exist, because, the. case being one of diverse citizenship, there is not the requisite amount of' more than $3,000, exclusive of interest and costs, in controversy in the case. It appears from the declaration that the plaintiff, as assignee, is suing on a combined life and disability policy of insurance issued by the defendant in the face amount of $5,000, on May 19, 1925 to Joseph N. Berlin as the insured. In addition to the contract of life insurance the policy contained a promise to pay the insured a monthly income of $50 in the event of total and permanent disability, upon due proof thereof, during the continuance of such disability, and also to waive premiums falling due during said period. It is alleged that the insured did become totally disabled within the meaning of the policy and thereupon the Company for a period of time waived the premiums and made the monthly payments to the plaintiff as assignee but that the defendant has failed to make payments of the monthly installments for five months accounting from the 15th day of June 1936, to and including the 15th day of October 1936, making a total of $250 due and payable at the time of the institution of the suit on October 30, 1936. And it is this latter sum only, with interest thereon, from October 28, 1936, for which the plaintiff sues. Before the expiration of the time for pleading in the state court the defendant filed its petition for removal to this court showing the existence of diverse citizenship in that the plaintiff is a resident and citizen of the State of Maryland and the defendant is a Connecticut corporation; and further alleging “that the matter and amount in dispute in said suit, exclusive of interest and costs, exceeds the amount or value of $3,000,” because, as it is alleged, the plaintiff’s declaration does not show the real or true amount or value of the matter and amount in dispute in that “said petitioner by operation of law, requirement of the Insurance Department of Connecticut, and in accordance with sound actuarial principles and practice, would be required to set up a reserve in the event the plaintiff should prevail herein, and will be required to keep and maintain such reserve in excess of $3,000, which reserve, together with the more particular matters claimed by said plaintiff in said petition for removal, is the true amount in dispute in said cause.” It appears from statements, of counsel at the hearing on the motion, to. remand that the plaintiff opposed the removal in the state court and after hearing argument the Judge thereof was of the opinion that at least a prima facie case for removal had been made and therefore signed the usual order for removal, commenting at the time that the matter could be more fully heard and ruled on as a federal question in this court. Here the plaintiff has in due course moved to remand but has not traversed the allegation as to the requirement for reserve, resting the motion on the ground that it appears as a matter of law from the papers in the case that the amount in controversy does not exceed $3,000. The right of removal is purely statutory in origin and for this case is dependent upon United States Code, title 28, § 71, 28 U.S.C.A. § 71 (Judicial Code, § 28, as amended), which provides that a case may be removed from the state to the federal court for the proper district provided it is one “of which the district courts of the United States are given jurisdiction.” If such jurisdiction exists for this case it arises only out of United States Code, title 28, § 41 (1), 28 U.S.C. A. § 41 (1), which gives jurisdiction in cases of diverse citizenship “where the matter in controversy exceeds, exclusive of interest and costs, the sum or value of $3,000” As the plaintiff’s declaration sets up a claim for nothing more than $250 and a small amount of interest thereon, it is at once apparent that there is not the requisite amount in controversy unless the latter is shown by the untraversed allegation in the petition for removal with regard to the requirement for a reserve to be set up by the defendant insurance company. In ordering the removal it •further appears that the judge of the state court was influenced largely by the decision in the case of Enzor v. Jefferson Standard Life Ins. Co. (D.C.) 14 F.Supp. 677, 679, where it was held that a similar untraversed allegation with regard to the requisite reserve justified removal to the federal court. In the latter case the court cited and relied upon the following cases: Mutual Life Ins. Co. v. Thompson (D.C.) 27 F.(2d) 753; Jensen v. New York Life Ins. Co. (C.C.A. 8) 50 F.(2d) 512; Penn Mutual Life Ins. Co. v. Joseph (D.C.) 5 F.Supp. 1003, and Thorkelson v. Aetna Life Ins. Co. (D.C.) 9 F. Supp. 570. But it will be found on examination that in each of these cases, except the Joseph Case, the controversy involved the integrity of the whole of the policy, the face amount of which was more than $3,000 in each case. And in the Joseph Case the insurer was suing to cancel for fraud the total and permanent disability endorsements on three life policies where the annual benefits exceeded $1400 a year. It is true that in the last three of the four cases cited above there are expressions of the respective courts which tend to support the proposition that the requirement as to reserve is sufficient to establish jurisdiction as to the required amount in controversy; but it also appears that these expressions were given merely as additional reasons in support of the jurisdiction, the face amounts of the policy under attack as a whole being in each case more than $3,000 (with the exception of the Thorkelson Case — where only the disability clause was involved). It seems to be now thoroughly well established by numerous federal decisions that where a suit challenges the validity in toto of a life insurance policy in face amount more than $3,000, the requisite amount' in controversy exists. The distinction between such a case and one where disability benefits for less than $3,-000 is alone in issue, is clearly pointed out by Judge Parker for the Circuit Court of Appeals for this Circuit, in Bell v. Philadelphia Life Ins. Co., 78 F.(2d) 322, 323, as follows: “It is true, as contended by plaintiff, that the jurisdiction of the court depends upon the amount actually in controversy in the suit and not upon any amount indirectly involved because of the probative effect of the judgment rendered therein (New England Mortgage Co. v. Gay, 145 U.S. 123, 12 S.Ct. 815, 36 L.Ed. 646); but here the policy itself is directly in controversy and its value determines the value in suit. See Pacific Mut. Life Ins. Co. v. Parker (C.C.A. 4th) 71 F.(2d) 872, 874; Ginsburg v. Pacific Mut. Life Ins. Co. (C.C.A. 2d) 69 F.(2d) 97, 98.” In that case the plaintiff was suing .for disability benefits in the amount of $600; and also prayed that the policy be> declared by the court to be in full force and effect despite the insurer’s action in converting the policy into one for extended term insurance only, because of the failure on plaintiff’s part to pay a premium note when due. • Shortly after the decision .in the last named case the Supreme Court in New York Life Ins. Co. v. Viglas, 297 U.S. 672, 56 S.Ct. 615, 80 L.Ed. 971, denied federal jurisdiction in a case where the plaintiff having a life policy for $2,000 with disability benefits provided for, sued for damages claimed in the amount of $15,900 on the theory of anticipatory breach of the contract by the Insurance Company in an entry made on its books of a lapse of the policy upon failure to pay a premium when the insured claimed that he was entitled to disability benefits and a waiver of premium by virtue of a disability which the insurer refused to acknowledge as valid. The court held that in the circumstances the doctrine of anticipatory breach was not applicable, and .that the real controversy was only over the amount of disability benefits due at the institution of the suit, which was less than $100. On principle it seems quite impossible to spell out from the plaintiff’s declaration in this case a controversy between the parties involving more than $3,000. Indeed this is admitted by the defendant which justifies the removal only on the allegation that it will be required to establish a reserve of more than $3,000 if the plaintiff’s suit is successful. As this averment is not traversed it is to be accepted as a possible consequence of the suit. But still there is no controversy between the parties as to this and if it does result from the suit it is merely incidental, consequential and collateral to the plaintiff’s claim for only $250 which is the sole matter in actual controversy between the parties. The requirement for the reserve does not mean that the defendant will necessarily be required to pay out a sum in excess of $3,000 as that obviously depends upon the long continuance of the plaintiff’s total disability which will not be established by the plaintiff’s success in the present suit, which covers only a particular period of alleged total disability. That is to say, a judgment for the plaintiff in the present case will not necessarily be an estoppel against the defendant with respect to payments alleged to be due in the future. But even if this were the necessary result of this case, nevertheless that would not be sufficient to establish the jurisdiction because it is only a collateral or consequential or incidental result. Elgin v. Marshall, 106 U.S. 578, 1 S.Ct. 484, 27 L.Ed. 249; Bruce v. Manchester, etc., R. Co., 117 U.S. 514, 6 S.Ct. 849, 29 L.Ed. 990; New England Mortgage Security Co. v. Gay, 145 U.S. 123, 12 S.Ct. 815, 36 L.Ed. 646; Holt v. Indiana Mfg. Co., 176 U.S. 68, 72, 20 S.Ct. 272, 44 L.Ed. 374, and Wright v. Mutual Life Ins. Co. (C.C.A. 5) 19 F.(2d) 117, affirmed 276 U.S. 602, 48 S.Ct. 323, 72 L.Ed. 726. Moreover, recent decisions of the Supreme Court show a very definite insistence that the limitation on jurisdiction as to the amount in controversy is to be strictly applied by the federal courts. In Healy v. Ratta, 292 U.S. 263, 270, 54 S.Ct. 700, 703, 78 L.Ed. 1248, Mr. Justice Stone, speaking for the Court, said: “The policy of the statute calls for its strict .construction. The power reserved to the states, under the Constitution (Amendment 10), to provide for the determination of controversies in their courts may be restricted only by the action of Congress in conformity to the judiciary sections of the Constitution (article 3): See Kline v. Burke Construction Co., 260 U.S. 226, 233, 234, 43 S.Ct. 79, 67 L.Ed. 226, 24 A.L.R. 1077. Due regard for the rightful independence of state governments, which should actuate federal courts, requires that they scrupulously confine their own jurisdiction to the precise limits which the statute has defined. See Matthews v. Rodgers, supra, 284 U.S. 521, at page 525, 52 S.Ct. 217, 76 L.Ed. 447; compare Elgin v. Marshall, 106 U.S. 578, 1 S.Ct. 484, 27 L.Ed. 249.” See, also, McNutt v. General Motors Acceptance Corporation, 298 U.S. 178, 56 S.Ct. 780, 80 L.Ed. 1135, and McNutt v. McHenry Chevrolet Co., Inc., 298 U.S. 190, 56 S.Ct. 785, 80 L.Ed. 1141, and New York Life Ins. Co. v. Viglas, supra. Some difficulty has been encountered by the courts in the application of the statute to situations where the amount in controversy is unliquidated and quite uncertain by reason of the subject matter, as, for illustration, where the plaintiff is seeking by injunction defensive protection against threatened injury; and it has been said in some of the cases of that nature that “it is the value of the ‘object of-the suit’ which determines the jurisdictional amount in the federal courts, Mississippi & Missouri R. Co. v. Ward, 2 Black, 485, 17 L.Ed. 311; Packard v. Banton, 264 U.S. 140, 142, 44 S.Ct. 257, 68 L.Ed. 596.” But as Mr. Justice Stone continues in Healy v. Ratta, supra, 292 U.S. 263, at page 268, 54 S.Ct. 700, 702, 78 L.Ed. 1248: “But. this does not mean objects which are merely collateral or incidental to the determination of the issue raised by the pleadings. The statute itself does not speak of objects of the suit. It confers jurisdiction only if ‘the matter in controversy exceeds * * * the sum or value of $3,000.’ ” See, also, Rose Federal Jurisdiction and Procedure (4th Ed.) § 218.

531852-11009

OPINION PER CURIAM. United States Cold Storage, Incorporated brought this 42 U.S.C.A. § 1983 (1994) action, alleging violation of First Amendment rights, and a pendent state law breach of contract claim, against the City of Lumberton. The district court granted summary judgment to the City; we affirm. I. Cold Storage, which leases refrigerated space for food storage, opened a new facility just outside the City’s corporate limits in 1987. Cold Storage and the City signed a written contract, dated June 8, 1987, under which the City agreed to extend its water and sewer lines to the facility, and to provide water and sewer services. In return, Cold Storage agreed to pay the City “the applicable rate ... as required by the Code of the City of Lumberton.” The relevant code provision, Lumberton City Ordinance § 23-6, provides that “[t]he monthly charge for city sewer service shall be based upon the water usage of the customer.” Specifically, the volume of water received, measured in gallons, is multiplied by a rate per gallon, also stated in § 23-6, to generate the sewer service charge. The parties refer to this billing method as “water in/sewer out”; it is commonly used by municipalities because water inflow is easy to measure and in most cases provides a good approximation of discharge into a sewer system (water piped into a facility for use normally returns for treatment). Over the next eight years, the City provided water and sewer services but failed to bill Cold Storage for sewer. (It appears that the City’s finance department was in almost complete disarray.) When the City discovered its error, in September 1995, it sent Cold Storage a bill for sewer services based on the water in/sewer out method. Although Cold Storage conceded an obligation to pay for sewer services, it objected to use of the water in/sewer out method. About 85 percent of the water received by Cold Storage’s Lumberton facility is sent into cooling towers, where it evaporates rather than returning to the City for treatment. Cold Storage therefore believed that its facility burdened the City’s treatment plant far less than the volume of water inflow would suggest. Cold Storage presented this argument to the Public Works Director, who proved receptive. The Director conferred with the City Manager, and then instructed Cold Storage to begin measuring the flow of water into its towers. Thereafter, the Director told Cold Storage, it would be charged the per-gallon rate for treatment only on water not sent into the towers. And, in fact, Cold Storage has proffered undisputed evidence that the City’s finance department used this method to calculate Cold Storage’s bills for just over three years. In July 1999, however, the City discontinued this novel billing method and issued Cold Storage a bill based on the water in/sewer out method, resulting in a charge more than ten times higher than Cold Storage’s two previous bills. When Cold Storage protested, the City informed it that water in/sewer out was the proper billing method under the 1987 contract, that the City would use this method to prepare all future bills, and that the City would shortly bill Cold Storage for undercharges over the past three years. The parties differ sharply as to why the billing method changed. The City asserts that in mid-1999 it was beginning to improve financial controls after years of mismanagement. It had hired a new City Manager, who installed new billing soft ware in May 1999 and discovered a large number of billing irregularities. The City insists that its billing policy has been evenhanded, and that Cold Storage is only one of many companies whose bills either have been or soon will be brought into line with written City policy. Cold Storage contends, to the contrary, that many City customers continue to benefit from billing arrangements that deviate from written policies, and that the City has punished it for opposing a recent annexation ordinance. The City announced plans to annex land just outside its limits late in 1998, including the land on which Cold Storage’s Lumberton facility is located. Cold Storage opposed the City’s plans at a public meeting in December 1998, and then, after the City Council adopted an annexation ordinance in March 1999, challenged the ordinance in state court. Cold Storage asserts that the City has retaliated against it for pursuing this suit by the change in billing methods, surprise meter inspections, threats to cut off Cold Storage’s water during a good faith dispute about the billing method, sewer certificate inspections, inquiries into Cold Storage’s use of its industrial well, and critical press releases from the City Manager’s office misstating Cold Storage’s position on the annexation issue. II. On February 4, 2000, Cold Storage filed this action, naming the City as the sole defendant. In its complaint, Cold Storage alleges that the City, by the acts set forth above, retaliated against Cold Storage for its exercise of First Amendment rights, in violation of 42 U.S.C.A. § 1983 and breached the 1987 contract, as modified in 1995, by billing according to the water in/sewer out method. (Cold Storage also brought a third claim, alleging that the City threatened to breach a contract to provide fire protective services. After discovery, however, Cold Storage agreed to dismiss this claim, and it is not before us.) The City filed a counterclaim, in which it asked the court to “require [Cold Storage] to pay all unpaid water and sewage amounts that are past due and owing to the City of Lumber-ton.” At the close of discovery the district court granted summary judgment to the City on all claims. With respect to the retaliation claim, the district court assumed, without deciding, that the City could be held hable for the actions of its City Manager, but held that Cold Storage had not proffered sufficient evidence of retaliatory acts by the City to create a material issue of fact. On the contract claim, the court held that the 1995 modification would be valid only if supported by consideration, and that Cold Storage had offered no evidence of consideration. The district court then declined to exercise jurisdiction over the City’s counterclaim, which it dismissed without prejudice. Only Cold Storage appeals. We consider each of its claims in turn. III. Even assuming that the acts Cold Storage cites were retaliatory in nature, the company’s retaliation claim cannot succeed because these acts cannot be attributed to the City. A municipality is liable only for injuries arising from a municipal “policy or custom.” Monell v. New York City Dept. of Social Servs., 436 U.S. 658, 694, 98 S.Ct. 2018, 56 L.Ed.2d 611 (1978). Municipal policy may be expressed in legislative acts, like an ordinance or regulation; in a single action taken by a municipal official with “final pohcymaking authority” in the relevant area; or even by the actions of a subordinate official that a higher official ratifies. See Jett v. Dallas Indep. Sch. Dist., 491 U.S. 701, 737, 109 S.Ct. 2702, 105 L.Ed.2d 598 (1989); Pembaur v. City of Cincinnati, 475 U.S. 469, 480, 106 S.Ct. 1292, 89 L.Ed.2d 452 (1986). The decisive question in any case is whether the acts that cause injury constitute acts “ ‘of the municipality’ — that is, acts which the municipality has officially sanctioned or ordered.” Pembaur, 475 U.S. at 479, 106 S.Ct. 1292. By extension, practices not authorized by express policy may nonetheless constitute acts “of the municipality” if “persistent and widespread” and “so permanent and well settled as to constitute a ‘custom or usage’ with the force of law.” Carter v. Morris, 164 F.3d 215, 218 (4th Cir.1999) (quoting Monell, 436 U.S. at 691, 98 S.Ct. 2018). See also City of St. Louis v. Praprotnik, 485 U.S. 112, 127, 108 S.Ct. 915, 99 L.Ed.2d 107 (1988) (plurality opinion) (explaining that liability for municipal “custom” is intended to forestall “egregious attempts by local governments to insulate themselves from liability for unconstitutional policies” which they have ratified sub silentio). In this case, Cold Storage does not allege that it suffers from a City “custom” of retaliation against the exercise of First Amendment rights. Nor does it allege that the City’s ordinances or written policies are themselves discriminatory. In fact, City Ordinance § 23-6 sets forth a uniform per-gallon rate for all sewer bills, and a uniform method of calculating the volume on which that rate is charged. What Cold Storage contends is that the City’s written policy was not uniformly enforced, but was enforced against Cold Storage to procure its silence in the annexation dispute. To succeed on this claim, Cold Storage must prove that the assertedly retaliatory acts were authorized by a decisionmaker with final policymaking authority, who intended to punish Cold Storage for its speech or was deliberately indifferent to that possibility. See Board of County Comm’rs v. Brown, 520 U.S. 397, 405, 117 S.Ct. 1382, 137 L.Ed.2d 626 (1997). In deciding which officials have final policy-making authority, two distinctions are of critical importance. First, the decision-maker must be authorized to make “policy,” i.e., to “set and implement general goals and programs of municipal government, as opposed to discretionary authority in purely operational aspects of government.” Spell v. McDaniel, 824 F.2d 1380, 1385 (4th Cir.1987). Second, the decision-maker’s authority in the relevant policy area must be “final,” i.e., not subject to further review within the municipality. See Praprotnik, 485 U.S. at 112, 108 S.Ct. 915. Although the Supreme Court did not produce a majority opinion in Praprotnik, seven Justices did agree on principles with clear application to this case. Justice O’Connor, writing for four members of the Court, explained that “[wjhen an official’s discretionary decisions are constrained by policies not of that official’s making, those policies, rather than the subordinate’s departures from them, are the act of the municipality.” Praprotnik, 485 U.S. at 127, 108 S.Ct. 915 (plurality opinion). Justice Brennan, writing for three Justices, similarly stated that: a municipality is not liable merely because the official who inflicted the constitutional injury had the final authority to act on its behalf; rather ... the official in question must possess final authority to establish municipal policy with respect to the challenged action .... [I]f, in a given county, the Board of County Commissioners established county employment policy and delegated to the County Sheriff alone the discretion to hire and fire employ ees, the county itself would not be hable if the Sheriff exercised this authority in an unconstitutional manner, because the decision to act unlawfully would not be a decision of the board. Praprotnik, 485 U.S. at 139-40, 108 S.Ct. 915 (Brennan, J., concurring). See also Greensboro Prof'l Fire Fighters Ass’n, Local 3157 v. City of Greensboro, 64 F.3d 962, 964-66 (4th Cir.1995).

6122878-6855

SEYMOUR, Circuit Judge. Garth Driggs, a judgment creditor of Gerald Black, brought this adversary proceeding in bankruptcy court seeking a de termination that the debt owed to him by Black is not dischargeable in bankruptcy. The bankruptcy judge found that Driggs had failed to sustain his burden of proof and dismissed the complaint. Driggs sought review in the district court, which affirmed the order of the bankruptcy judge. Driggs appealed and we affirm. Black was the majority stockholder and chief operating officer of British Auto Imports, Inc. (BAI), an auto dealership. Driggs began work with BAI as a salesman in 1976 and acquired increased responsibilities in the following years. Black and Driggs had discussed Driggs’ desire to buy into BAI several times before Black offered him an opportunity to do so in 1979. At that time Driggs knew BAI was in serious financial trouble because it was out of trust with its financing bank and in danger of foreclosure. Nonetheless Driggs borrowed $35,000 from his parents and bought ten percent of BAI. Although the buy-in agreement allowed Driggs to recover his investment upon tendering written notice, when he attempted to do so in 1980 BAI and Black were unable to refund the money. Driggs then brought a breach of contract action in state court and obtained a judgment against Black for $35,-000. Black subsequently filed a bankruptcy petition and Driggs instituted this adversary proceeding, asserting that the state court judgment represents a debt for money obtained by fraud or defalcation and therefore is not dischargeable under 11 U.S.C. §§ 523(a)(2)(A), 523(a)(2)(B), and 523(a)(4) (1982). Exceptions to discharge are construed narrowly, and the burden of proving that a debt falls within a statutory exception is on the party opposing discharge. See Waterbury Community Federal Credit Union v. Magnusson (In re Magnusson), 14 B.R. 662, 667 (Bankr.N.D.N.Y.1981); Kuehne v. Huff (In re Huff), 1 B.R. 354, 357 (Bankr.D.Utah 1979). We may overturn the bankruptcy court’s resolution of Driggs’ claims only if the court’s findings are clearly erroneous. See May v. Eckles (In re White House Decorating Co.), 607 F.2d 907, 910 (10th Cir.1979). Section 523(a)(2)(A) applies to a debt for money obtained by “false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s or an insider’s financial condition....” Id. This section includes only those frauds involving moral turpitude or intentional wrong, and does not extend to fraud implied in law which may arise in the absence of bad faith or immorality. See, e.g., American Bank & Trust Co. v. Lamb (In re Lamb), 28 B.R. 462, 464 (Bankr.W.D.La.1983); 3 L. King, Collier on Bankruptcy ¶ 523.08[5] (15th ed. 1985). A creditor seeking to have a debt declared nondischargeable under this section must prove that it comes within the statute by clear and convincing evidence. See American Bank & Trust, 28 B.R. at 464; Kuehne, 1 B.R. at 357 & n. 2; 3 Collier ¶ 523.08[5]. Driggs alleged that Black induced him to invest in BAI by falsely representing that BAI had closed on a $300,000 loan to keep the corporation afloat, and that if this loan did not go through a loan would be arranged through the Small Business Administration (SBA) to cover the return of Driggs’ investment. The bankruptcy judge found that Driggs had failed to show Black made statements about the SBA loan in bad faith. The court further found that Black had not given Driggs firm assurance that the $300,000 loan had been completed. Upon review of the record, we affirm the bankruptcy court’s disposition of the section 523(a)(2)(A) claim. Driggs failed to present any admissible evidence on the state of mind with which representations about the SBA loan were made. Moreover, the evidence regarding Black’s statements on the status of the $300,000 loan was conflicting and required a credibility determination. Under these circumstances, the court’s finding in favor of Black is not clearly erroneous. Driggs also seeks a finding of nondischargeability under section 523(a)(2)(B), which applies to money obtained by “use of a statement in writing— (i) that is materially false; (ii) respecting the debtor’s or an insider’s financial condition; (iii) on which the creditor to whom the debtor is liable for such money, property, services, or credit reasonably relied; and (iv) that the debtor caused to be made or published with intent to deceive....” 11 U.S.C. § 523(a)(2)(B). As in section 523(a)(2)(A), the elements of this section must also be proven by clear and convincing evidence. Waterbury Community Federal Credit Union, 14 B.R. at 667; Kuehne, 1 B.R. at 357 & n. 2. The creditor must establish that a materially false writing was made knowingly with the intent to deceive. See, e.g., Sun Bank & Trust Co. v. Rickey (In re Rickey), 8 B.R. 860, 863 (Bankr.M.D.Fla.1981); 3 Collier ¶ 523.-09[5][b]. However, the requisite intent may be inferred from a sufficiently reckless disregard of the accuracy of the facts. Id.; see also Waterbury Community Federal Credit Union, 14 B.R. at 669. Driggs contends that before he invested his money in BAI, Black presented him with an inaccurate corporate financial statement, falsely representing that it was a yearly statement when in fact it was a monthly statement. Driggs further asserts that the statement erroneously showed a note payable to shareholders as an asset instead of a liability, thus incorrectly increasing the corporate profits. As the bankruptcy judge noted, the evidence was conflicting as to whether Black had represented the writing as a monthly or yearly statement, and as to whether the shareholder note payable was properly listed. Upon this record the court’s resolution of these conflicts in favor of Black is not clearly erroneous. Next we address Drigg’s contention that the debt is not dischargeable pursuant to section 523(a)(4), which applies to debts “for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larce-ny_” Driggs argues that Black corn-mitted defalcation while acting in a fiduciary capacity, and/or embezzlement, by writing checks on corporate funds which were not properly signed under the buy-in agreement and which were for Black’s personal benefit. In addressing the defalcation claim, the bankruptcy court concluded that Black, as a majority stockholder and officer of BAI, was acting in a fiduciary capacity toward Driggs, who was a minority stockholder. However, the court found that Driggs had failed to establish that the expenditures complained of were not for the benefit of the corporation. The district court concluded that the finding on the expenditures was not clearly erroneous, and in the alternative concluded that Black had not been acting in a fiduciary capacity within the meaning of the statute.

5677343-5162

PER CURIAM: Lamar Johnson appeals his convictions for possession with intent to distribute marijuana in violation of 21 U.S.C. § 841(a)(1); possession of a firearm in furtherance of a drug trafficking crime in violation of 18 U.S.C. § 924(c)(1)(A); and possession of a firearm by a convicted felon in violation of 18 U.S.C. § 922(g)(1). He also appeals his total 108-month sentence. On appeal, Johnson argues that the district court erred in denying his pretrial motion to suppress evidence seized pursuant to an allegedly unlawful search warrant, and that the district court violated his Sixth Amendment and statutory rights by increasing his sentencing guideline calculation based on other criminal conduct for which he was acquitted. After thorough review, we affirm Johnson’s convictions and sentence. I. We review the denial of a motion to suppress as a mixed question of law and fact, reviewing findings of fact, including credibility determinations, for clear error and the application of law to those facts de novo. United States v. White, 598 F.3d 1199, 1202 (11th Cir.2010). Similarly, we review de novo whether probable cause existed to support a search warrant, although we “take care both to review findings of historical fact only for clear error and to give due weight to inferences drawn from those facts by resident judges and local law enforcement officers.” United States v. Gamory, 635 F.3d 480, 491 (11th Cir.2011) (quotation marks omitted). To obtain a warrant to search a defendant’s residence, law enforcement must show the authorizing magistrate probable cause, that is, that “the totality of the circumstances allows the conclusion that there is a fair probability that contraband or evidence of a crime will be found [there].” United States v. Kapordelis, 569 F.3d 1291, 1310 (11th Cir.2009) (quotation marks omitted). An affidavit supporting such a search warrant should generally “establish a connection between the defendant and the residence to be searched and a link between the residence and any criminal activity,” though detailed factual allegations about a residence itself may be sufficient to do so. United States v. Martin, 297 F.3d 1308, 1314-15 (11th Cir.2002). The information in the affidavit must also be fresh, meaning recent enough to be reliable. Id. at 1314. If an informant is mentioned in the affidavit, the affidavit must demonstrate the informant’s “veracity” and “basis of knowledge.” Illinois v. Gates, 462 U.S. 213, 238, 103 S.Ct. 2317, 2332, 76 L.Ed.2d 527 (1983). However, “[w]hen there is sufficient independent corroboration of an in formant’s information, there is no need to establish the veracity of the informant.” Martin, 297 F.Bd at 1314 (quotation marks omitted). Affidavits supporting search warrants are presumptively valid. Gamory, 635 F.3d at 490. A defendant may challenge the affidavit’s validity by making a substantial preliminary showing that the affidavit contained a false statement, included knowingly and intentionally or with reckless disregard for the truth. Id. Upon such a showing, and if the challenged statement might have been necessary to support probable cause, the district court must hold an evidentiary hearing. Id. At the so-called “Franks hearing,” the defendant may have the warrant voided and the fruits of the search excluded if he shows that, but for the misrepresentations or omissions, the government could not have established probable cause. See id.; see also Franks v. Delaware, 438 U.S. 154, 156, 98 S.Ct. 2674, 2676, 57 L.Ed.2d 667 (1978). Johnson argues that the district court erred by denying his motion to suppress physical evidence discovered during the search of his residence, because the warrant relied on a Miami-Dade Police Department detective’s affidavit that contained an allegedly false statement. Johnson argues that, after excising the detective’s allegedly false statement, the affidavit did not contain information sufficient to support a finding of probable cause to search his residence. We conclude that, even absent the statements regarding the officer’s personal observations, the remainder of the warrant is sufficient to provide probable cause. To be sure, the detective’s affidavit loses some force without his direct observation of a person broadly fitting Johnson’s description. But the warrant was issued to search the premises, not Johnson’s person; and the affidavit contains enough fresh and detailed factual allegations about the premises to support a finding of probable cause. See Martin, 297 F.3d at 1314-15. These allegations include the detective’s direct observation at the house of two controlled buys, conducted according to a set of procedures designed to ensure their reliability. The procedures also provide sufficient independent corroboration of the veracity of the Cl. See id. We therefore affirm the district court’s decision to deny the motion to suppress. II. Johnson next argues that the district court improperly increased his sentencing guideline calculation based on acquitted conduct. He claims, for the first time, that this use of acquitted conduct violates his Sixth Amendment right to a jury trial.

12140095-12774

OPINION AND ORDER THOMAS W. THRASH, JR., United States District Judge This is a class action under the Fair Credit Reporting Act. It is before the Court on the Defendants Equifax, Inc. and TransUnion, LLC’s Motion to Dismiss [Doc. 38]. For the reasons set forth below, the Defendants Equifax, Inc. and Tran-sUnion, LLC’s Motion to Dismiss [Doc. 38] is GRANTED. I. Background In 1996, the Plaintiff Kathleen Pedro’s parents applied for and obtained a Capital One credit card. When the Plaintiffs parents became ill, they made her an “authorized user” on their Capital One credit card. The Plaintiff, however, never became an obligor on the account. Then, in 2014, both of the Plaintiffs parents passed away, and the Capital One credit card account went into default. On January 25, 2015, the Plaintiff discovered that her credit score had dropped from 822 to the low 700s on her credit report from the Defendant Equifax, Inc. The Plaintiff learned that the reason for the drop was a negative credit “hit” arising from her parents’ delinquent credit card account. A credit report from the Defendant Tran-sUnion, LLC also revealed a similar negative credit hit. The Plaintiff contacted Capital One about the delinquent account, which resulted in Capital One terminating the Plaintiffs authorized user status. Despite the fact that the account status for the Capital One credit card was changed to “Account Relationship Terminated,” the delinquent account continued to hurt the Plaintiffs credit score. Her credit score did not return to its previous level until Capital One removed its entire tradeline from her credit reports. The Plaintiff alleges that the negative hit on her credit report “resulted in actual damages in the form of a reduction in her ability to obtain credit, an increase in the cost of obtaining such credit that she was able to secure, loss of economic opportunities, and loss of creditworthiness.” The Plaintiff brought suit, individually and on behalf of all others similarly situated, against TransUnion and Equifax. She asserts that the Defendants willfully violated 15 U.S.C. § 1681e(b) of the Fair Credit Reporting Act (“FCRA”). Specifically, she alleges that “the procedures utilized by Defendants in gathering and scoring credit information relating to authorized users of credit card accounts results in systematic inaccuracies on those authorized user’s credit reports and credit scores.” And, as a result of their unreasonable procedures, the Defendants improperly report the credit histories of authorized users of credit cards. According to the Plaintiff, the Defendants knew or should have known about their flawed procedures because they have received thousands of disputes from consumers about negative credit hits stemming from authorized user information. Moreover, she alleges that the Defendants are key members of the Consumer Data Industry Association, which formulates guidelines for “credit furnishers” like Capital One. The guidelines purportedly direct credit furnishers to report the credit histories of authorized users of credit cards. Thus, the-Plaintiff alleges that the Defendants knew that the credit furnish-ers were reporting negative payment history for authorized user information. The Defendants, now.move to dismiss. II. Legal Standard A complaint should be dismissed under Rule 12(b)(6) only where it appears that the facts alleged fail to state a “plausible” claim for reliéf. A complaint may survive a motion to dismiss for failure to state a claim, however, even if it is “iihprobable” that a plaintiff would be able to prove those facts; even if the possibility of recovery is extremely “remote’ and unlikely.” In ruling on a motion to dismiss, the court must accept the facts pleaded in the complaint as true and construe them in the light most 'favorable to the plaintiff. Generally, ■ notice pleading is all that is required for a valid complaint. Under notice pleading, the plaintiff need only give the defendant fair notice of the plaintiffs claim and the grounds upon which it rests. III. Discussion Section 1681e(b) of the FCRA provides that “[wjhenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about- whom the report relates.” While an agency that negligently violates § 1681e(b) is only liable for actual damages, an agency that willfully violates § 1681e(b) may be liable for actual, statutory, or punitive damages. Here, the Plaintiff alleges that the Defendants- willfully violated § 1681e(b) and only seeks statutory and punitive damages. To recover such damages through a purported willful violation of § • 1681e(b), a plaintiff must sufficiently allege that (1) the agency prepared an inaccurate report, and (2) the inaccuracy was a result of the agency’s willful disregard of reasonable procedures to ensure maximum possible accuracy In determining whether a credit report is inaccurate under § 1681e(b), courts have followed one of two approaches: (1)' “technically accurate” or (2) materially misleading. Under the first approach, “a credit reporting agency satisfies its duty under [§ 1681e(b)] if it produces a report that contains factually correct infor mation about a consumer that might nonetheless be misleading or incomplete in some respect.” This approach was adopted by the Northern District of Alabama in Heupel v. Trans Union LLC. There, the court concluded that requiring the consumer reporting agencies to ensure each report be void of material omissions would place too great a burden on the agencies. Moreover, it would leave the agencies potentially liable for omitting information of which they did not know. For the second approach—materially misleading—a credit reporting agency may be liable “if the plaintiff establishes that the agency reported factually correct information that could also be interpreted as being misleading or incomplete.” Though the Eleventh Circuit has yet to adopt either approach, several circuits have adopted the materially misleading approach. For example, the District of Columbia Circuit followed this approach in Koropoulos v. Credit Bureau, Inc. Relying on congressional intent, the court held that “Congress did not limit the Act’s mandate to reasonable procedures to assure only technical accuracy; to the contrary, the Act requires reasonable procedures to assure ’maximum accuracy.’” Moreover, the court noted that the purpose of Act— to ensure “fair and equitable” credit reporting—would not be promoted by reports that are technically accurate but materially misleading. Here, the Defendants contend, inter alia, that the Plaintiff has failed to adequately allege a willful violation of § 1681e(b). To state a claim for willfulness, a plaintiff must demonstrate “that a consumer reporting agency either knowingly or recklessly violated the requirements of the Act.” A consumer reporting agency recklessly violates the FCRA when its actions are “not only a violation under a reasonable reading of the statute’s terms, but shows that the company ran a risk of violating the law substantially greater than the risk associated with a reading that was merely careless.” “Thus, even if a consumer reporting agency engages in an erroneous reading of the statute, it is not reckless unless it was objectively unreasonable.” “A reading will be unreasonable when ‘the business subject to the [FCRA] had the benefit of guidance from the courts of appeals or [a regulatory agency]... that might have warned it away from the view it took.’ ” The Plaintiff argues that the Defendants recklessly violated § 1681e(b). Specifically, the Complaint alleges that the Defendants were on notice that negative, inaccurate authorized user information appeared on their credit reports and was hurting consumers’ credit scores. And that this action amounts to a willful violation of § 1681e(b)’s mandate to “follow reasonable procedures to assure maximum possible accuracy of the information” in consumer reports. . . In response, the Defendants contend that their reading of the FCRA mandate is not objectively unreasonable. They argue that because there are differing interpretations of “inaccuracy” under § 1681e(b), interpreting the section to allow technically accurate information on their consumer credit reports is not objectively unreasonable. Second, they contend that there is no authoritative guidance that states reporting truthful, negative authorized user information on a credit report is inaccurate. In support of this contention, they note that the Consumer Financial Protection Bureau “has expressly authorized creditors to send authorized user tradeline information to consumer reporting agencies for inclusion in authorized. users’ credit reports.” They also cite to Bailey v. Equifax Information Services, LLC, in which the Eastern District of Michigan held that it was not technically inaccurate to list truthful, negative authorized user information on a credit report. The Court agrees with the Defendants. Given the lack of clarity regarding which standard of inaccuracy is appropriate, the Court cannot say that the Defendants’ interpretation is objectively unreasonable. Plainly—under the technically accurate approach—listing accurate authorized user information does not violate § 1681e(b). With regard to relevant court and agency authority, the Defendants point to both a district court decision and guidance from the Consumer Financial Protection Bureau that indicate listing authorized user information on credit reports is not a violation of the FCRA. The Plaintiff, on the other hand, does not cite to any guidance from relevant federal agencies that warns against listing authorized user information on credit reports. Moreover, the two judicial opinions the Plaintiff cites to in support of her argument are distinguishable from this case. In Fahey v. Experian Information Solutions, Inc., the Eastern District of Missouri held that the plaintiff had adequately alleged a willful violation of § 16816(b). But, there, the plaintiff had challenged the factual accuracy of his credit report. Specifically, the plaintiff alleged that the consumer reporting agency had wrongly listed him as a joint obligor on two delinquent accounts, even though his wife was the sole obligor. Here, the Plaintiff does not dispute that she was an authorized user on the delinquent account listed on her credit report. Rather, she challenges the Defendants’ choice to include the delinquent account on her credit report. In Price v. Trans Union, LLC, the issue at hand was whether TransUnion violated § 1681e(b) by mixing the plaintiffs credit information with another consumer’s credit information. The court held that the plaintiff adequately alleged a willful violation because “at least three court of appeals had construed the meaning of § 1681e(b) against [TransUnion] in mixed file cases,” and the FTC had specifically warned credit reporting agencies to review their procedures when a mixed file case occurs. The Plaintiff, here, has failed to cite to any authority advising the Defendants against reporting accurate authorized user information. In sum, the Plaintiff has not adequately alleged a willful violation of § 1681e(b). The Court cannot say that the Defendants’ interpretation of § 1681e(b) is objectively unreasonable, and the authorities cited by the Defendants contradict the Plaintiffs claim that the Defendants willfully violated § 1681e(b) by including the Plaintiffs authorized user information on their credit reports. Consequently, the Plaintiffs FCRA claims are dismissed. IY. Conclusion For these reasons, the Court GRANTS the Defendants Equifax, Inc. and Tran-sUnion, LLC’s Motion to Dismiss [Doc. 38]. SO ORDERED, this 12 day of May, 2016. . Compitió. . Id. V 17. . Id. . Id. ¶ 19. . Id ¶ 20. . Id. . Id. . Id. ¶ 21, . Id. ¶ 22. . Id ¶ 29. . Id ¶ 30. . Id. ¶1. . Id. ¶38. . Id. ¶24. . Id. ¶ 25. . Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009); Fed. R. Civ. P. 12(b)(6). . Bell Atlantic v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). . See Quality Foods de Centro America, S.A. v. Latin American Agribusiness Dev. Corp., S.A., 711 F.2d 989, 994-95 (11th Cir.1983); see also Sanjuan v. American Bd. of Psychiatry and Neurology, Inc., 40 F.3d 247, 251 (7th Cir.1994) (noting that at the pleading stage, the plaintiff “receives the benefit of imagination”). . See Lombard's, Inc. v. Prince Mfg., Inc,, 753 F.2d 974, 975 (11th Cir.1985), cert. denied, 474 U.S. 1082, 106 S.Ct. 851, 88 L.Ed.2d 892 (1986). . See Erickson v. Pardus, 551 U.S. 89, 93, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007). . See 15 U.S.C. §§ 1681o(a), 1681n(a).

9467433-31701

MEMORANDUM ROBERT F. KELLY, District Judge. Before this Court is the Defendants’ Motion for Summary Judgment. For the reasons that follow, the Motion is granted. 1. FACTS. Because the facts of this case have been set forth at length in a prior Memorandum Opinion, a brief factual recitation follows. See McKnight v. Sch. Dist. of Phila., 105 F.Supp.2d 438 (E.D.Pa.2000). The Plaintiff, Michael A. McKnight (“Plaintiff’ or “Mr. McKnight”), was employed as a teacher by the Defendant School District of Philadelphia (“School’ District”) from September, 1976 through December 17, 1997, when he was suspended without pay. Plaintiff was arrested on November 20, 1997, and charged with sexual assault and other crimes allegedly committed in his home against an eighteen year old male who was Plaintiffs former student. The School District held an investigatory conference on December 15, 1997, which the Plaintiff attended with his Philadelphia Federation of Teachers (“PFT”) union representative. A second hearing was held on March 11, 1998, during which the Plaintiff was advised that he might be terminated due to the School District’s policy against employing individuals who had been arrested and criminally charged. Plaintiff was subsequently discharged on March 20, 1998. The criminal charges against the Plaintiff were dismissed on July 21, 1998. Thereafter, the Plaintiff filed EEOC and PHRA complaints, both of which were dismissed as untimely. On January 31, 2000, Plaintiff, acting pro se, filed an in forma pauperis petition in this Court which was denied on February 3, 2000. He then filed this Complaint on February 7, 2000. The Defendants filed a Motion to Dismiss which was partially granted on July 25, 2000. Plaintiff subsequently retained and fired counsel, and is now acting pro se. Defendants filed the instant Motion for Summary Judgment on January 2, 2001. II. STANDARD OF REVIEW. “Summary judgment is appropriate when, after considering the evidence in the light most favorable to the nonmoving par ty, no genuine issue of material fact remains in dispute and ‘the moving party is entitled to judgment as a matter of law.’ ” Hines v. Consol. Rail Corp., 926 F.2d 262, 267 (3d Cir.1991)(citing Fed.R.Civ.P. 56(c) and Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). The inquiry the court must make is “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Anderson, 477 U.S. at 252, 106 S.Ct. 2505. The moving party carries the initial burden of demonstrating the absence of any genuine issues of material fact. Big Apple BMW, Inc. v. BMW of N. Am., Inc., 974 F.2d 1358, 1362 (3d Cir.1992), cert. denied, 501 U.S. 912, 113 S.Ct. 1262, 122 L.Ed.2d 659 (1993). Once the moving party has produced evidence in support of summary judgment, the nonmovant must go beyond the allegations set forth in its pleading and “counter with evidence that demonstrates there is a genuine issue of fact for trial.” Id. at 1362-63 (citing Fed. R.Civ.P. 56(e)). Summary judgment must be granted “against a party who 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, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). “Unsubstantiated and subjective beliefs and opinions are not competent summary judgment evidence.” Forsyth v. Barr, 19 F.3d 1527, 1533 (5th Cir.), cert. denied, 513 U.S. 871, 115 S.Ct. 195, 130 L.Ed.2d 127 (1994). III. DISCUSSION. The Plaintiffs claims for which the Defendants now move for summary judgment are: (1) breach of contract; (2) notification of COBRA benefits; (3) common law conspiracy; and (4) Fifth and Fourteenth Amendment claims. Each claim is discussed below. A. Breach of Contract. This Court previously denied the Defendants’ Motion to Dismiss the Plaintiffs breach of contract claim because the specific language of the Collective Bargaining Agreement (“CBA”) in place between the PFT, Plaintiffs former union, and the Defendant School District was unknown to the Court. After that ruling and during his deposition, the Plaintiff described his breach of contract claim in terms of the Defendant School District violating the parties’ CBA. Thus, the Defendants contend that any claim for breach of contract is, in reality, a claim for breach of the Public Employees Relations Act, 43 P.S. section 1101.101, et seq. (“PERA”) which, according to the Defendants, is the sole and exclusive statute governing claims implicating the CBA. Claims under the PERA are resolved in an arbitration setting and not in federal court. According to the Defendants, therefore, “the plaintiff attempts to do indirectly that which he may not do directly, namely, personally seek federal judicial review over the terms and conditions of the collective bargaining agreement in effect between the plaintiffs Union and the School District of Philadelphia.” (Defs.’ Mem. Law in Supp. Mot. Summ. J. at 11.) The Defendants further state that the PERA, a statute imposing obligations on the School District and the PFT, defines the Plaintiffs rights as a School District employee and also defines the required procedures for enforcement of the rights and obligations of the School District and the PFT. For example, Section 903 of the PERA requires that a dispute growing out of rights that flow from a collective bargaining agreement in the public sector must be exclusively adjudicated in a grievance and arbitration process. 43 P.S. § 1101.903. Further, Pennsylvania courts have recognized that the Pennsylvania General Assembly expressly commands in section 903 of the PERA that the “[a]rbi-tration of disputes or grievances arising out of the interpretation of the provisions of a collective bargaining agreement is mandatory.” Bd. of Ed. of the Sch. Dist. of Phila. v. Phila. Fed’n of Teachers, Local No. 3, AFT, AFL-CIO, 464 Pa. 92, 346 A.2d 35, 39 (1975) (quoting 43 P.S. § 1101.903 (Supp.1974)). The CBA in effect between the PFT and the School District states in Article T-III, section 8 that: Tenured and/or non-tenured employes shall not be subjected to discipline or discharge except for just cause and in such cases the employe affected shall have the option of electing to proceed under the provisions of the Pennsylvania Public School Code, or, in the alternative, under the grievance and arbitration provisions of this Agreement. (Defs.’ Mem. Law in Supp. Mot. Summ. J., Ex. 8 at 2, ¶ 8.) The CBA also sets forth a grievance procedure for employees to follow. A grievance is defined as: a complaint involving the work situation, that there is a lack of policy; that a policy or practice is improper or unfair; or that there has been a deviation from, or a misinterpretation or misapplication of a practice or policy: or that there has been a violation, misinterpretation, misapplication, inequitable or otherwise improper application of any provision of this Agreement. (Id., Ex. 8 at 3, Art. B-VIII, § 1, ¶ la.) The Plaintiff admits in his Complaint that he “waived any and all rights to a hearing before the Board for failure to request one within ten (10) days of receipt of the recommended termination letter.” (Compl., ¶ 32.) Plaintiffs other avenue of redress was, therefore, a request that the PFT file a demand for arbitration on his behalf. Plaintiff avers that he requested such PFT action on October 23, 1998, but the PFT declined to file a demand for arbitration on his behalf. (Id. at ¶ 51.) According to the Defendants, Plaintiffs next step should have been to file a claim with the Pennsylvania Labor Relations Board (“PLRB”), which would then have jurisdiction over Plaintiffs claim after exhaustion of his administrative remedies under the CBA. (Defs.’ Mem. Law in Supp. Mot. Summ. J. at 14.) The Defendants cite Ziccardi v. Commonwealth, Department of General Services, Bureau of Buildings & Grounds, 50 Pa.Cmwlth. 367, 413 A.2d 9, 11 (1980), overruled in part 500 Pa. 326, 456 A.2d 979 (1982), a Pennsylvania Commonwealth Court case, wherein the court stated: [w]e are mindful that the required arbitration process has been interrupted in this case by the union’s alleged wrongful withdrawal of the request for arbitration. However, that action, if unjustified, would not release the Commonwealth from its obligation to arbitrate the dispute, nor would that action legitimate the underlying alleged wrongful discharge. If the union here has interposed an impediment to arbitration by a wrongful withdrawal, the PLRB has jurisdiction to insure that the employer’s duty to arbitrate is not discharged by that wrong. Ziccardi, 413 A.2d at 11 (citing Pa. Labor Relations Bd. v. Phoenixville Area Sch. Dist., 8 Pa. 351 (1977)). Because Mr. McKnight did not follow this next step and file a PLRB claim, the Defendants argue that he has failed to exhaust his administrative remedies and his breach of contract claim should be dismissed. Mr. McKnight does not specifically respond to the Defendants’ arguments, but rather divides his response into three sub-parts: (1) the Professional Employe’s Contract; (2) the CBA; and (3) violations of the CBA. First, the Plaintiff alleges that the Defendants breached his Professional Employe’s Contract when they terminated him without cause. He provides the Court with the entire provision of 24 Pa.S.A. section 11-1122. (Pl.’s Resp. Mot. Summ. J. at 2.) Next, the Plaintiff, under the heading “Collective Bargaining Agreement,” states: Plaintiff filed PHRC charge number E91504D and EEOC charge number 17F992444 against the Philadelphia Federation of Teachers as a remedy to address allegations that the union breached its duty of fair representation and that he was denied arbitration (unfair representation) because of his race (Black). Plaintiff has been advised off [sic] his right to file a lawsuit against the PFT. The investigation is on going [sic] in respect to this charge. Identifying the PFT as a party to this civil action would end the investigation by PHRC. Therefore the PFT is not joined as an indispensable party. (Pl.’s Resp. Mot. Summ. J. at 3.) In the final portion of Plaintiffs Response, entitled “Violated Terms of The Collective Bargaining Agreement,” the Plaintiff argues that there was no “just cause” reason for his termination as required by the CBA because the PFT, without citing any grounds, declined his request to file a demand for arbitration and never provided a reason for its failure to respond to his arbitration request. According to the Plaintiff, the Public School Code provision setting forth the reasons for termination, 24 Pa.S.A. 11-1122, does not include “criminal ... accusations as grounds for dismissal and [therefore such accusations] cannot be considered a valid cause for termination under this Code.” (Pl.’s Resp. Mot. Summ. J. at 4.) For support, the Plaintiff cites Shearer v. Commonwealth of Pennsylvania, Secretary of Education, 57 Pa.Cmwlth. 266, 424 A.2d 633 (1981), and interprets the holding in that case as a criminal arrest is not grounds for suspension under section 11-1122 of the Code. In Shearer, a Pennsylvania public school teacher sought judicial review of the back pay allowance provisions of a reinstatement order issued by the Secretary of Education. Shearer, 424 A.2d at 634. The teacher had been arrested and charged with possession of marijuana and contributing to the delinquency of a minor. Id. After two hearings, the school board discharged the teacher for immorality and intemperance, but on appeal, the Secretary of Education reversed the discharge for lack of 'substantial evidence to support the charges. Id. Mr. McKnight interprets the Shearer court’s holding as “unless the School District can establish that despite a finding of innocence, the teacher is guilty of some other misconduct specially prohibited by the Code, termination is improper.” (Pl.’s Resp. Mot. Summ. J. at 4.) Here, however, unlike Shearer, Mr. McKnight never appealed his discharge to the Secretary of Education. Thus, there is no reversal of his dismissal by the Secretary of Education, and Shearer is inapplicable. The Plaintiff further contends that, pursuant to the required election of remedies, he chose the remedy that allowed him to request that the propriety of his dismissal be determined in accordance with the grievance and arbitration provisions of the CBA between the Board of Education and the PFT. (Pl.’s Resp. Mot. Summ. J. at 6.) He contends that the PFT did not provide him with any findings of their investigation in his case and the PFT’s position is that he must provide demonstrative evidence that he was exonerated of the criminal charges against him. (Id. at 6-7). Plaintiff states, without support, that he “has reason to believe that the doctrine of election of remedies is operated [sic] as [a] bar to arbitration of grievance contesting teacher’s suspension and termination which violates this statute.” (Id. at 7.) Despite this alleged lack of opportunity to choose his election of remedies, Mr. McKnight states that “[djuring Plaintiffs meeting with attorney Gregg L. Zeff he was presented with an offer via his union to change his option to appeal from arbitration to a hearing before the School Board. Plaintiff rejected this offer.” (Id.) Thus, by his own admission, Mr. McKnight was given an opportunity to elect his remedies and admittedly rejected an offer to have a School Board hearing. On March 20, 1998, the School District sent the Plaintiff a notice that it would be recommending that the Board of Education terminate his employment with the School District, effective immediately. The letter specifically states: [t]he charges against you are: immorality, persistent and willful violation of or failure to comply with the school laws of this Commonwealth, intemperance, cruelty and other improper conduct such as to constitute cause pursuant to 24 P.S. Section 11-1122 of the Public School Code of 1949, and pursuant to the just cause provision of the collective bargaining agreement. (Defs.’ Mem. Law in Supp. Mot. Summ. J., Ex. 7 at 1.) The School District then listed conduct on which it based its charges. (Id.) The correspondence also advised Plaintiff of his right to either: (1) request a hearing with the Board of Education within ten (10) days of his receipt of the letter; or (2) utilize the grievance procedure by informing the union of his intent to follow the CBA grievance procedures applicable to him. (Id., Ex. 7 at 2.) The language in the School District’s March 20 correspondence tracks the valid causes for termination listed in the Public School Code. This language was sufficient to place the Plaintiff on notice of his rights in this case. Thus, the Plaintiffs argument that the Defendants breached that agreement by improperly terminating his employment without cause lacks merit and will be dismissed. The second and third sections of the Plaintiffs Response pertain to the CBA and the Defendants’ alleged violations of the CBA. Plaintiff claims that the PFT, without citing any grounds for its actions, declined his request to file a demand for arbitration. The Plaintiff steadfastly argues that because the Public School Code does not specifically use the word “arrest,” an arrest cannot be considered a valid cause for termination under the Public School Code. Further, the Plaintiff claims that termination is improper unless the School District can establish that, despite a finding of innocence, a teacher is guilty of some other misconduct specifically prohibited by the Public School Code. The Plaintiffs final arguments are that (1) the “defendant(s) failed to destroy records deemed unfavorable upon application after eighteen (18) months” in violation of the CBA and in contrast to confirmation by the PFT that all unfavorable records were expunged from his personnel file (Pl.’s Resp. Mot. Summ. J. at 7); and (2) “the defendant(s) with respect to collective bargaining matters failed to follow proper procedure [sic] when investigating incidents of employee misconduct.” (Id.) Plaintiff, again, neither cites any case law nor provides evidence to support these claims. He also does not respond to the Defendants’ arguments contained in their Motion for Summary Judgment. The Plaintiff, after receiving notice from the PFT that it would not file a demand for arbitration on his behalf, took no further action prior to filing his Complaint in this Court. It is clear, therefore, that the Plaintiff did not exhaust his administrative remedies. Even if the Plaintiff could bring his action under the Public School Code as he alleges in his Complaint, the Plaintiffs case would still fail for lack of exhaustion of administrative remedies. 24 Pa.S.A. section 11-1101, et seq. Thus, summary judgment is granted to the Defendants for Plaintiffs breach of contract claim. B. Notification of COBRA Benefits. Mr. McKnight avers in paragraph 73 of his Complaint that the Defendants “failed to provide [him] with COBRA election notice and therefore denied [him] his right to temporary continuation of health coverage at a group rate.” (Compl., ¶ 73.) The Defendants contend that the School District was not legally obligated to provide Mr. McKnight with COBRA notification because his March 30, 1998 dismissal was based on his November 20, 1997 arrest. Termination for “gross misconduct” is not a “qualifying event” under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. section 1001, et seq., which would have required the School District to notify the Plaintiff of his COBRA options. 29 U.S.C. § 1163. The term “gross misconduct” is not defined under ERISA, and case law also does not provide a clear definition of this term. According to the Defendants, the charges against the Plaintiff amounted to “gross misconduct.” The Defendants argue that this Court, in determining whether the Plaintiffs actions constituted “gross misconduct” should follow the analysis used by the United States Court of Appeals for the Third Circuit (“Third Circuit”) in Larsen v. Senate of the Commonwealth of Pennsylvania, 154 F.3d 82 (3d Cir.1998). In Larsen, the appellate court examined case law defining gross misconduct and determined that the conduct of the plaintiff, a former Pennsylvania Supreme Court Justice who “unlawfully procur[ed] controlled substances through the use of his subordinates[,]” was sufficient to allow “a reasonable official ... [to] believe that the acts which resulted in [his] termination amounted to gross misconduct, [and] it was not clearly established that ... [his] termination was a ‘qualifying event’ triggering his right to coverage.” Larsen, 154 F.3d at 96. The court specifically examined the following cases for their holdings that the conduct in question constituted gross misconduct. Id. (reviewing Burke v. Am. Stores Employee Benefit Plan, 818 F.Supp. 1131 (N.D.Ill.1993)(“holding that the use of improperly procured promotional discount vouchers to obtain free products from employer’s retail outlets constituted gross misconduct”); Adkins v. United Int’l Investigative Servs., Inc., 1993 WL 345186 (N.D.Cal.1993)(“holding that an employee’s acts of leaving his work post unattended and falsifying records to receive additional paychecks constituted gross misconduct”); and Conery v. Bath Assocs., 803 F.Supp. 1388, 1396 (N.D.Ind.1992)(“holding that misappropriation of funds constituted gross misconduct”)). The Defendants also cite Conery v. Bath Associates, 803 F.Supp. 1388 (N.D.Ind.1992) and Collins v. Aggreko, Inc., 884 F.Supp. 450 (D.Utah 1995) for their holdings regarding gross misconduct. In Con-ery, a district court held that charges for misappropriating company funds, “if true, would constitute gross misconduct and would relieve ... [the employer] of its COBRA obligations had ... [the employee] been terminated due to his alleged wrongdoing.” Id. at 1396. The Conery employee argued that “proof of ‘gross misconduct’ should be required to rise to the level of the criminal standard, beyond a reasonable doubt, before COBRA benefits may be terminated,” and the evidence presented against him did not rise to that level. Id. The Conery employer argued, on the other hand, that “the appropriate inquiry should be whether the employer acted on a good faith belief that the employee engaged in gross misconduct.” Id. Although the Conery court appeared to find the employer’s good faith belief argument convincing, it did not decide that issue on the facts of that case since the employee’s severance agreement revealed that the employer agreed to allow the employee to resign and retain the right to elect continuation coverage. Id. Also cited by the Defendants in this case is Collins, 884 F.Supp. 450, wherein the court stated that: [g]ross misconduct may be intentional, wanton, willful, deliberate, reckless or in deliberate indifference to an employer’s interest. It is misconduct beyond mere minor breaches of employee standards, but conduct that would be considered gross in nature. Courts have, in appropriate circumstances and in other contexts, found alcohol or drug abuse to meet that standard. Collins, 884 F.Supp. at 454 (citations omitted). “Gross misconduct” has also been narrowly interpreted to include intentional or reckless disregard for an employer’s interests. See Paris v. F. Korbel & Bros., Inc., 751 F.Supp. 834, 838-839 (N.D.Cal.1990). Still another court rejected the Paris court’s definition of gross misconduct and found that “gross misconduct for purposes of COBRA includes non-work related outrageous behavior if there is a substantial nexus between the behavior and the working environment such that the effects of the intolerable behavior extend into the employment arena.” Zickafoose v. UB Servs., 23 F.Supp.2d 652, 657 (S.D.W.Va.1998)(stating gross misconduct is conduct that shocks the conscience). Mr. McKnight states, without citing any authority, that [a]n arrest does not constitute gross misconduct when there is a lack of a conviction and/or the charges are dismissed resulting from the outcome of the District Attorney’s Office investigation. The charge of rape was dismissed for lack of evidence yet is [sic] still appears of [sic] plaintiffs recommended termination letter. (Pl.’s Resp. Mot. Summ. J. at 13.) The Defendants note that although the Plaintiff, in his Complaint, alleges that an arrest must result in a conviction in order for the employer to conclude that the employee’s conduct constituted gross misconduct thereby exempting the employer from providing COBRA notification to the employee, the Plaintiff fails to legally support this allegation. (Defs.’ Mem. Law in Supp. Mot.1 Summ. J. at 4.) Instead, as the Defendants recognize, Plaintiffs reliance in his previously filed pleadings upon Fenner v. Favorite Brand International, 25 F.Supp.2d 870 (N.D.Ill.1998), is misplaced because, as they contend, that case was not concerned specifically with a criminal arrest or generally with the concept of gross misconduct, and therefore it is not pertinent to the issue before this Court. (Defs.’ Mem. Law in Supp. Mot. Summ. J. at 4.) The Defendants further note that, after questioning at his deposition, Mr. McKnight revealed that the document that allegedly “proves” a professional employee must be convicted of a crime before he may be terminated for immorality by the School District is his Professional Employe’s Contract. {Id. at 5)(citing M. McKnight Dep. at 95-96.) A review of the Professional Employe’s Contract, however, reveals that the document is silent regarding whether the School District may only terminate an employee for immorality when the employee is convicted of a crime. Thus, the Defendants broadly state that “[t]he plaintiffs contention that the School District may categorize his actions as constituting gross misconduct only by awaiting a criminal conviction is legally erroneous.” (Def.’s Mem. Law in Supp. Mot. Summ. J. at 6.) The Defendants opine that this Court should follow not only the Third Circuit in Larsen, but also the reasoning of the court in Burke v. American Stores Employee Benefit Plan, 818 F.Supp. 1131 (N.D.Ill. 1993), in which the court concluded that: inquiry into the propriety of an employer’s determination should be limited to the evidence which was available to the employer at the time of the employee’s termination. Under this approach, the court avoids serving as a ‘super personnel department’ engaged in second-guessing employment decisions based on information which was not available to the employer. Moreover, this approach allows latitude for reliance by an employer upon information which may not fit into the formalities of admissibility under the Federal Rules of Evidence, that the employer should reasonably and appropriately consider in making a business decision — such as termination of an employee. (Defs.’ Mem. Law in Supp. Mot. Summ. J. at 7)(quoting Burke, 818 F.Supp. at 1137) (citations omitted). Four months after Mr. McKnight was discharged, the Philadelphia District Attorney’s Office nol prossed the criminal charges against him. Because this information was unavailable at the time the decision was made to dismiss Mr. McKnight, the Defendants contend that it should not be considered by this Court in determining whether Mr. McKnight’s discharge was appropriate. Moreover, the Defendants argue that the evidence in this ease belies Plaintiffs argument that he was dismissed solely because he was arrested and charged with various criminal offenses. Rather, they contend that the March 20, 1998 dismissal letter from the School District specifically sets forth the School District’s underlying rationale and supporting evidence upon which it based the decision to dismiss the Plaintiff. The letter states: This is to advise you that we shall recommend that the Board of Education terminate your employment with the School District of Philadelphia immediately ... The charges against you are: immorality ... The above charges are based on your conduct set forth below: On December 15,1997, you attend [sic] a conference with Mr. George Cammarota, Acting Hearing Officer for Human Resources. Mr. William Robinson, School District Investigator, testified that his investigation indicated that on November 20, 1997 you had been arrested by the Sex Crimes Unit of the Philadelphia Police Department and charged with rape, involuntary deviant sexual intercourse, indecent assault, and indecent exposure. Mr. Robinson testified that the complaint was an 18-year-old student of the Boone High School. You declined to answer any of the questions presented to you at this conference with Mr. Cammarota. On March 11, 1998, you attended a second conference with Mr. Cammarota. Mr. William Robinson presented Mr. Cammarota with a copy of the student, James Plummer’s deposition given on January 8, 1998, in front of the Honorable Lewis [sic] J. Presenza, Judge in the First Judicial District of the Municipal Court of Philadelphia. Mr. Robinson testified that he was present during the student’s testimony. Mr. Cammaro-ta asked you several questions following Mr. Robinson’s testimony and the submission of the student’s deposition. You refused to answer the questions. Your representative states, ‘Mr. McKnight denied any allegation of wrongdoing.’ On the basis of the submitted documentation and verbal testimony submitted at this hearing before the Hearing Officer for Human Resources, the administration recommended that you be terminated. (Defs.’ Mem. Law in Supp. Mot. Summ. J., Ex. 7). Based on this correspondence which sets forth reasons for Mr. McKnight’s termination and the information available to the Defendant School Dis trict when he was terminated, the School District argues that it was never obligated to provide any COBRA notification to Mr. McKnight. In Lovett-Glenn v. School District of Philadelphia, No. 99-3019, 2000 WL 190586 (E.D.Pa. Jan.31, 2000), a similar case to the instant case, the plaintiff, a Philadelphia school teacher, was terminated based upon the undisputed fact that he was arrested, convicted and sentenced for solicitation of prostitution. Id. at *1. The court found that “there can be no question that conviction for solicitation of prostitution is sufficiently ‘immoral’ to warrant discharge under the school code and the applicable collective bargaining agreement.” Id. The differences between the discharge in Lovett-Glenn based on a criminal conviction, and the discharge in the instant case based on an arrest are indistinguishable in that the School District acted reasonably in using the information available to it at the time of the discharge to determine whether COBRA notice was required. Accordingly, on the facts of this case, summary judgment is granted in favor of the Defendants for Plaintiffs • COBRA benefits notification claim. C. Common Law Conspiracy. In paragraph 82A of his Complaint, the Plaintiff alleges that the parties conspired with each other to harm him. (Compl., ¶ 82A.) Specifically, the Plaintiff alleges the goals of the conspiracy were: (1) to bring about his arrest; (2) to attempt to bring about his conviction; (3) to bring about his improper suspension and termination; (4) to deny his “civil and criminal liability;” (5) to induce him to change his option of appeal from arbitration to a hearing before the School Board Hearing Officer; and (6) to deny him the right to labor arbitration. (Id.) The Defendants contend that a review of the evidence, including Mr. McKnight’s deposition and all relevant documéntation, reveals a lack of evidence to support this claim. Mr. McKnight, in order to proceed on his conspiracy theory, must show “specific facts showing a ‘combination, agreement or understanding among all or between any of the defendants ... to plot, plan or conspire to carry out the alleged chain of events.’ ” Avery v. Mitchell, No. 98-2487, 1999 WL 240339, at *7-*8 (E.D.Pa. Apr.20, 1999) (citations omitted). In response to the Defendants’ Motion, Mr. McKnight restates his conspiracy claim from paragraph 82A of his Complaint. These allegations lack identification of particular individuals, times and dates of the alleged conspiracy. In addition, Mr. McKnight presents no evidence inferring that any co-conspirators had either a meeting of the minds or reached an understanding to achieve an objective. Id. Thus, the Defendants’ Motion for Summary Judgment is granted with respect to Plaintiffs conspiracy claim. D. Fifth and Fourteenth Amendment Claims. Finally, the Defendants move for dismissal of Plaintiffs Fifth and Fourteenth Amendment claims against them because they contend these claims are not independently supported federal substantive claims, but are derived from Plaintiffs perceived violation of the CBA. For support, the Defendants note Plaintiffs deposition testimony: Q: We know what the nature of the charges are. The remaining charges are COBRA notification, breech [sic] of contract, common law conspiracy, Fifth Amendment and Fourteenth Amendment. That is it. So I’m asking you, your Fifth Amendment claim is based upon what you feel were to be violations of the collective bargaining agreement. A: At the time that I drafted this Complaint, I was under that belief. Mr. Feinberg: ... Is he [Plaintiff] claiming the Fourteenth Amendment is triggered through the collective bargaining agreement? Mr. Pierre [then Plaintiffs counsel]: That is correct. Mr. Feinberg: ... That there is no independent basis for any Fourteenth Amendment violation. Mr. Pierre: Correct.

12520482-18059

Moore, Circuit Judge. Sigmapharm Laboratories, LLC, ("Sigmapharm"), Hikma Pharmaceuticals LLC, Hikma Pharmaceuticals PLC, Hikma Pharmaceuticals USA Inc., (collectively, "Hikma"), Breckenridge Pharmaceuticals Inc. ("Breckenridge"), Alembic Pharmaceuticals Ltd., Alembic Global Holdings S.A., Alembic Pharmaceuticals Inc., (collectively, "Alembic"), Amneal Pharmaceuticals LLC, and Amneal Pharmaceuticals Co. India Pvt. Ltd. (collectively "Amneal") are drug manufacturers who filed Abbreviated New Drug Applications with the Food and Drug Administration seeking to market generic versions of Saphris, a drug product sold by Forest Laboratories, LLC. Saphris is a sublingually administered, atypical antipsychotic containing asenapine maleate. Forest sued for patent infringement, asserting that Appellants' proposed generic products would infringe claims 1-2, 4-6, and 9-10 of U.S. Patent No. 5,763,476. The parties have stipulated that the validity of claims 2, 5, and 6 rises and falls with that of claim 1, and the validity of claims 9 and 10 rises and falls with that of claim 4. Forest, Breckenridge, and Alembic have further stipulated that infringement of claims 9 and 10 rises and falls with that of claim 4. Claims 1 and 4 recite: 1. A pharmaceutical composition comprising as a medicinally active compound: trans-5-chloro-2-methyl-2,3,3a, 12b-tetrahydro-1H-dibenz[2,3:6,7]oxepino[4,5-c]pyrrole or a pharmaceutically acceptable salt thereof; wherein the composition is a solid composition and disintegrates within 30 seconds in water at 37° C. 4. A method for treating tension, excitation, anxiety, and psychotic and schizophrenic disorders, comprising administering sublingually or buccally an effective amount of a pharmaceutical composition comprising trans-5-chloro-2-methyl-2,3,3a, 12b-tetrahydro-1H-dibenz[2,3:6,7]oxepino[4,5-c]pyrrole or a pharmaceutically acceptable salt thereof. Trans-5-chloro-2-methyl-2,3,3a,12b-tetrahydro-1H-dibenz[2,3:6,7]oxepino[4,5-c]pyrrole is also known as asenapine. Forest sells an atypical antipsychotic containing asenapine maleate under the name Saphris, which was developed by non-party Organon, another pharmaceutical company. Asenapine was originally developed as a conventional oral tablet. Conventional oral tablets are swallowed and enter into the digestive system before being metabolized. In contrast, Saphris is administered sublingually, meaning the formulation is placed under the tongue, where it dissolves. Buccal administration is similar, but in the cheek cavity. Following a bench trial, the district court held Appellants had not established claims 1-2, 4-6, and 9-10 to be invalid and held Forest had not established infringement of claims 4, 9, and 10 as to Alembic and Breckenridge. Appellants appeal the district court's construction of claim 1 and its determination that the claims have not been established to be invalid. Forest cross-appeals, arguing the district court's finding that Breckenridge and Alembic do not infringe claim 4 was clearly erroneous. We have jurisdiction under 28 U.S.C. § 1295(a)(1). We vacate and remand the district court's validity determination, and we vacate and remand for it to reconsider infringement under a corrected claim construction. DISCUSSION I. Construction of Claim 1 While claim 4 is expressly limited to sublingual or buccal formulations of asenapine, claim 1 is not and instead states that "the composition is a solid composition and disintegrates within 30 seconds in water at 37° C." The district court nevertheless construed claim 1 to be limited to buccal and sublingual formulations. Appellants argue the district court erred in construing claim 1 this way. We review a district court's ultimate claim construction and its interpretations of intrinsic evidence de novo and any subsidiary fact findings about extrinsic evidence for clear error. CardSoft, (Assignment for the Benefit of Creditors), LLC v. VeriFone, Inc. , 807 F.3d 1346, 1348 (Fed. Cir. 2015). We see no error in the district court's construction. Although claim 1 does not expressly refer to buccal or sublingual administration, the claims "must be read in view of the specification, of which they are a part." Phillips v. AWH Corp. , 415 F.3d 1303, 1315 (Fed. Cir. 2005) (en banc) (quoting Markman v. Westview Instruments, Inc. , 52 F.3d 967, 979 (Fed. Cir. 1995) ). "When a patent ... describes the features of the 'present invention' as a whole, this description limits the scope of the invention." Verizon Servs. Corp. v. Vonage Holdings Corp. , 503 F.3d 1295, 1308 (Fed. Cir. 2007). Here, the '476 patent states "[t]he invention relates to a sublingual or buccal pharmaceutical composition," '476 patent at 1:6-7, strongly supporting the district court's construction. See also id. at 1:33-36. That construction is further supported by additional language in the specification, which explains the benefits of sublingual and buccal treatment over the prior art. Id. at 1:33-34 ("The invention therefore relates to a sublingual or buccal pharmaceutical composition ...."). The patent is also expressly titled "Sublingual or Buccal Pharmaceutical Composition." See, e.g. , UltimatePointer, L.L.C. v. Nintendo Co. , 816 F.3d 816, 823 (Fed. Cir. 2016) (using patent title to inform claim construction). Additionally, the claim language "disintegrates within 30 seconds in water at 37° C" appears in the '476 patent as the definition of "[r]apid disintegration." '476 patent at 1:59-61. The specification states that "[p]referred pharmaceutical compositions are solid pharmaceutical compositions which rapidly disintegrate in the mouth of a subject, upon insertion into the buccal pouch or upon placement under the tongue." Id. at 1:56-59. This strongly suggests that the language "the composition is a solid composition and disintegrates within 30 seconds in water at 37° C" was meant to limit the claim to buccal and sublingual formulations. Appellants suggest that this improperly reads a method step into the claim by requiring a particular method of administration, namely sublingual or buccal. The specification, however, repeatedly uses "sublingual or buccal" to modify "composition," indicating that these are properties of the composition itself. See, e.g. , Id. at 1:6-7. We have considered Appellants' remaining arguments as to claim construction and find them unpersuasive. Given the claim language and the language in the specification, we hold the district court properly construed claim 1 to be limited to buccal and sublingual formulations. We do not, therefore, reach Appellants' validity challenges based on its proposed alternative construction. II. Obviousness Following a bench trial, the district court concluded claims 1 and 4 would not have been obvious. While it is undisputed that both oral formulations of asenapine and sublingual formulations of other drugs were known in the prior art, the district court found that there was no motivation in the art to develop sublingual or buccal formulations of asenapine. It found the resolution of the cardiotoxic effects by sublingual administration was an unexpected result. It found sublingual administration met a long-felt need for a safe, effective, and tolerable atypical antipsychotic useful to treat schizophrenia and mania. Obviousness is a question of law with underlying facts. Par Pharm. Inc. v. TWI Pharm., Inc. , 773 F.3d 1186, 1193 (Fed. Cir. 2014). After a bench trial, we review the district court's conclusion of obviousness de novo and the underlying factual findings for clear error. Id. at 1194. A. Motivation to Combine The district court found Appellants had not established that there was a motivation to combine asenapine maleate into a sublingual or buccal form, and even if there were a motivation to combine, a skilled artisan would not have had a reasonable expectation that it would work. Whether there was a motivation to combine prior art references is a question of fact. Arctic Cat Inc. v. Bombardier Recreational Prods. Inc. , 876 F.3d 1350, 1359 (Fed. Cir. 2017). We review for clear error. An invention is not obvious simply because all of the claimed limitations were known in the prior art at the time of the invention. Instead, we ask "whether there is a reason, suggestion, or motivation in the prior art that would lead one of ordinary skill in the art to combine the references, and that would also suggest a reasonable likelihood of success." Smiths Indus. Med. Sys., Inc. v. Vital Signs, Inc. , 183 F.3d 1347, 1356 (Fed. Cir. 1999). The motivation "can be found explicitly or implicitly in the prior art references themselves, in market forces, in design incentives, or in 'any need or problem known in the field of endeavor at the time of invention and addressed by the patent.' " Arctic Cat , 876 F.3d at 1359 (quoting KSR Int'l Co. v. Teleflex Inc. , 550 U.S. 398, 420-21, 127 S.Ct. 1727, 167 L.Ed.2d 705 (2007) ). At trial, Appellants' primary and dominant argument as to motivation to combine was an alleged bioavailability concern with orally administered asenapine. The district court extensively considered this argument and rejected it. On appeal, Appellants have dispensed with their bioavailability argument and instead focus on two other claimed motivations. First, they argue an ordinarily skilled artisan would have been motivated to administer asenapine maleate sublingually or buccally to address known compliance concerns. Second, they argue an ordinarily skilled artisan would have been motivated to administer asenapine maleate sublingually or buccally to obtain more treatment options. Appellants argue that an ordinarily skilled artisan would have been motivated to administer asenapine maleate sublingually or buccally to address compliance problems and swallowing difficulties in special patient populations. The district court discussed compliance concerns and, citing testimony from Forest's expert witness Dr. McIntyre, explained that "clinicians with experience in treating schizophrenic patients understand that sublingual dosage forms are more burdensome to schizophrenic patients in that they require the patient to hold the dosage form in the mouth under the tongue for a period of time, and also require that the patient refrain from drinking or swallowing for a period of time." J.A. 73 (citing J.A. 592-93). The court further explained that Appellants' "own expert clinician, Dr. Hollander, agreed that sublingual administration would not improve patient compliance." J.A. 73 (citing J.A. 442-43). Summarizing testimony, however, is not a clear finding. Our review would be aided by an express finding regarding whether compliance concerns regarding patients with swallowing difficulties would provide a motivation to combine. Turning to Appellants' second claimed motivation, we hold that the district court did not clearly err in rejecting Appellants' contention that the benefits of having multiple treatment options available would provide a motivation to combine. In assessing whether there was a long-felt need, the district court found that "skilled artisans recognized the benefit of having multiple treatment options." J.A. 76. Appellants further argue that their expert Dr. Hollander testified that there was a need for additional treatment options because no single product is appropriate for all patient populations and that in 1994, many antipsychotics were on the market in multiple forms. The district court did not clearly err, however, in concluding that a generic need for more antipsychotic treatment options did not provide a motivation to combine these particular prior art elements. Appellants argue the district court ignored general suggestions in the prior art indicating a growing interest in sublingual and buccal formulations at the time of filing. The district court was presented with a variety of documentary evidence and testimony as to the state of the prior art. We see no clear error in its weighing of this evidence. Finally, Appellants suggest that the district court erred in treating the claimed invention as providing a solution to an unrecognized problem in the art. We have recognized that where a problem was not known in the art, the solution to that problem may not be obvious, because "ordinary artisans would not have thought to try at all because they would not have recognized the problem." Leo Pharm. Prods., Ltd. v. Rea , 726 F.3d 1346, 1357 (Fed. Cir. 2013). The district court characterized the inventors' discovery as a recognition of an unknown problem in the art in conjunction with the discovery of the solution to that problem. J.A. 69-70. It found that the Organon scientists discovered a "previously unknown" problem and developed the claimed sublingual dosage forms as a solution to that problem. Specifically, it found that during early clinical studies Organon discovered intravenous and oral administration of asenapine resulted in severe cardiotoxic events. As a result, those studies were terminated prior to completion. The district court found, however, that during subsequent testing on beagles, while there was "a clear trend of increased heart effects with an oral tablet," "no such trend was observed with the sublingual forms." J.A. 44-45. The district court found that while Organon became aware of these problems, "[t]here was nothing in the prior art that would have indicated that the oral tablet had problems." J.A. 68. The district court further held that the solution Organon developed to address the cardiotoxic effect was also non-obvious. It found that Organon's data indicated that the cardiotoxic effect was likely caused by asenapine itself. J.A. 69. During conventional oral administration, asenapine undergoes first-pass metabolism, which processes the parent compound asenapine into metabolites. J.A. 69. In contrast, sublingual administration increases the amount of the parent compound by circumventing first-pass metabolism. J.A. 69. The district court held, therefore, that it would not have been predictable or expected that sublingual administration would provide a solution to the problem of cardiotoxic effects. J.A. 69-70. Appellants object to this reasoning, arguing that the only reason the cardiotoxicity issue was not publicly known was because Organon concealed and misrepresented the events suffered by patients in clinical studies when it reported the results of those studies. While the actions alleged may raise a variety of concerns, we do not see how they affect the district court's obviousness analysis. Ultimately, we see no clear error in the district court's consideration of the unknown nature of the problem solved by the inventors and the factors that would teach away from their solution. We have considered Appellants' remaining arguments as to motivation to combine and find them unpersuasive. However, in light of the district court's failure to make an express finding as to whether compliance concerns for patients with trouble swallowing would provide a motivation to combine, we remand for the district court to address this question. B. Long-Felt Need "Evidence of a long felt but unresolved need tends to show non-obviousness because it is reasonable to infer that the need would have not persisted had the solution been obvious." WBIP, LLC v. Kohler Co. , 829 F.3d 1317, 1332 (Fed. Cir. 2016). Whether or not such a long-felt need existed is a question of fact. Bristol-Myers Squibb Co. v. Teva Pharm. USA, Inc. , 752 F.3d 967, 978 (Fed. Cir. 2014). The district court found that at the time of the invention, there was a long-felt, but unmet, need for "a safe, effective, and tolerable atypical antipsychotic useful to treat schizophrenia and mania." J.A. 76. In doing so, it found that prior to 1994, "typical antipsychotics were the primary therapeutic options for treating schizophrenia and mania." J.A. 75. It noted, however, that typical antipsychotics "possessed debilitating side effects" and "a significant number of patients did not respond to treatment." J.A. 75. As of 1994, there were also two atypical antipsychotics available. J.A. 75. One "require[d] constant blood monitoring" and had a "life-threatening side effect." J.A. 75. The other had a variety of side effects that resulted in a discontinuation rate of around 74%. J.A. 75-76. Accordingly, the district court found that ordinarily skilled artisans "recognized the need for additional antipsychotic drugs" with improved side effect profiles. J.A. 76. It further found asenapine met this profile. J.A. 76. Appellants point to evidence that they argue indicates the claimed invention did not satisfy a long-felt but unmet need. Specifically, they argue there were a variety of antipsychotic drugs available at the time of the invention, there is evidence that physicians did not switch treatment preferences for patients with schizophrenia when Saphris entered the market, and there is evidence that Saphris did not have better efficacy or compliance than other antipsychotics available in 1994. They further argue Saphris itself has many side effects and a high discontinuation rate. They argue the district court's comparison of Saphris with the two other atypical antipsychotics, clozapine and risperidone, ignored evidence that clozapine treated the negative symptoms of schizophrenia, which Saphris does not; that both drugs were superior to Saphris in terms of efficacy and side effects; and that both drugs had much lower all-cause discontinuation rates than Saphris. In reviewing the district court's fact findings, we do not ask whether evidence could have supported the opposing view, only whether the district court clearly erred. Here it did not. Although there were a variety of existing antipsychotics, they had debilitating negative side effects, which evidence indicates are reduced in Saphris. See, e.g. , J.A. 599, 603. While this may not be a particularly strong demonstration of long-felt need, the district court did not clearly err in finding it weighs in favor of non-obviousness. C. Unexpected Results

5733801-8329

ORDER DENYING CERTIFICATE OF APPEALABILITY NEIL M. GORSUCH, Circuit Judge. Petitioner-Appellant Ibn Omar-Muhammad seeks a certificate of appealability (“COA”) to appeal the district court’s denial of his Fed.R.Civ.P. Rule 60(b)(6) motion for relief from the district court’s order of December 29, 2000, dismissing his writ of habeas corpus under 28 U.S.C. § 2254 as untimely filed. We discern no error in the district court’s disposition and thus deny the COA and dismiss this appeal. I On October 28,1987, Mr. Omar-Muhammad was convicted in Curry County District Court, New Mexico, for first-degree murder. He appealed his conviction in state court and, ultimately, the New Mexico Supreme Court affirmed his conviction on October 26, 1988. Seven years later, Mr. Omar-Muhammad filed a petition for a writ of habeas corpus in state court. Mr. Omar-Muhammad’s initial petition in federal court, filed under 28 U.S.C. § 2254 in the United States District Court for the District of New Mexico, was dismissed without prejudice on April 8,1996, because the district court found that he had not yet exhausted all of his claims in state court. On April 23, 1997, Mr. Omar-Muhammad returned to state court with a petition for writ of habeas corpus, which was denied on July 11, 1997, and his petition for writ of certiorari to the New Mexico Supreme Court was denied on July 24,1997. Having now exhausted his state court remedies, on August 6, 1997, Mr. Omar-Muhammad refiled his petition in federal district court. Ultimately, on December 29, 2000, the district court dismissed the petition, ruling that the applicable one-year statute of limitations period for habe-as petitioners in state custody under the Antiterrorism and Effective Death Penalty Act of 1996 (“AEDPA”), 28 U.S.C. § 2244(d)(1), expired on July 25, 1997— that is, the day after the New Mexico Supreme Court finalized its disposition of his state habeas claim. As the district court saw it, Mr. Omar-Muhammad’s federal habeas petition, filed on August 6, was twelve days late. The district court also denied Mr. Omar-Muhammad’s request for a COA. (Aplt. App. at 101-03.). Mr. Omar-Muhammad then sought a COA from us, which we denied on August 24, 2001, noting that his petition was not filed within AEDPA’s one-year statute of limitations, that the mailbox rule did not apply to New Mexico cases, and that circumstances in Mr. Omar-Muhammad’s case did not warrant equitable tolling. See Omar-Muhammad v. Williams, 17 Fed.Appx. 898 (10th Cir.2001) (unpub.). Approximately three years later in 2004, we decided Serrano v. Williams, 383 F.3d 1181 (10th Cir.2004). In that case, we held AEDPA’s one-year statute of limitations applicable to federal habeas petitions in state custody, 28 U.S.C. § 2244(d)(1), should be tolled during the 15-day period allowed under state law for filing a petition for rehearing with the New Mexico Supreme Court following its denial of a petition for writ of certiorari. Id. at 1187. Nearly two years after Serrano, on August 29, 2006, Mr. Omar-Muhammad filed a motion pursuant to Fed.R.Civ.P. 60(b)(6) with the United States District Court for the District of New Mexico. (Aplt. App. at 107-124). In his motion, Mr. Omar-Muhammad claimed that, based on our decision in Serrano, the dismissal of his federal habeas petition in 1997 was improper. Specifically, he argued that, had the district court tolled the AEDPA limitations period for the 15-day period allowed under Sermno, his 1997 federal habeas petition would have been 3 days early rather than 12 days late. That is, according to Mr. Omar-Muhammad, the New Mexico Supreme Court denied certiorari on July 24, 1997, and pre-Serrano the AEDPA limitations period expired the next day, July 25. But, post-Serrano, the limitations period would have been tolled for 15 days after July 24, or until August 9. The district court denied Mr. Omar-Muhammad’s Rule 60(b)(6) motion on September 25, 2006. It pointed to Gonzalez v. Crosby, 545 U.S. 524, 535, 125 S.Ct. 2641, 162 L.Ed.2d 480 (2005), in which the Supreme Court held that an appellate court opinion liberalizing the calculation of a limitations period but decided after the final dismissal of a habeas petition as untimely does not constitute “extraordinary circumstances” sufficient to “provide grounds for reconsideration” under Rule 60(b)(6). Dist. Ct. Order of Sept. 25, 2006, at 3 (Aplt. App. at 125-128.). Mr. Omar-Muhammad then sought a COA from the district court, but the district court has not ruled on the request for a COA within 30 days and so we must deem the request denied. See 10th Cir. R. 22.1(c). Having failed to persuade the district court, Mr. Omar-Muhammad now seeks a COA in this court. II We may issue a COA only if the petitioner makes “a substantial showing of the denial of a constitutional right.” See 28 U.S.C. § 2253(c)(2). To do so, a petitioner must “show[ ], at least, that jurists of reason would find it debatable whether the petition states a valid claim of the denial of a constitutional right and that jurists of reasons would find it debatable whether the district court was correct in its procedural ruling.” Slack v. McDaniel, 529 U.S. 473, 484, 120 S.Ct. 1595, 146 L.Ed.2d 542 (2000) (emphasis added). We do not believe that Mr. Omar-Muhammad has met this burden. In order for Mr. Omar-Muhammad to obtain relief under Rule 60(b)(6), he must show, inter alia, “extraordinary circumstances” which, the Supreme Court has indicated “will rarely occur in the habeas context.” Gonzalez, 545 U.S. at 535, 125 S.Ct. 2641 (citations omitted). Even more problematically for Mr. Omar-Muhammad, the Supreme Court in Gonzalez rejected a claim for Rule 60(b)(6) relief involving what petitioner himself concedes is “a fact situation very similar to that in [his] case.” Petitioner’s Br. at 13. Some time after Mr. Gonzalez’s habeas claim was dismissed as untimely, the Supreme Court announced a new tolling rule in Artuz v. Bennett, 531 U.S. 4, 8, 121 S.Ct. 361, 148 L.Ed.2d 213 (2000), that would have, had it been in force earlier, permitted Mr. Gonzalez to pursue his ha-beas petition. On the basis of the Artuz ruling, Mr. Gonzalez filed a Rule 60(b)(6) motion seeking to reopen his habeas petition. Ultimately, the Supreme Court ruled that its new decision in Artuz did not create the sort of “extraordinary circumstances” required by Rule 60(b)(6) to reopen Mr. Gonzalez’s case. In denying relief, the Supreme Court explained that “[i]t is hardly extraordinary that subsequently, after petitioner’s case was no longer pending, this Court arrived at a different interpretation [of a statutory limitations period].... [N]ot every interpretation of the ... statutes setting forth the requirements for habeas provides cause for reopening cases long since final.” Gonzalez, 545 U.S. at 537, 125 S.Ct. 2641. We see no way in which we might arrive at a different result in this case. The Supreme Court held that its new limitations period ruling in Artuz did not supply the sort of “extraordinary circumstance” necessary for retroactively reopening final dispositions of habeas petitions such as Mr. Gonzalez’s, and one need only substitute Serrano for Artuz in that equation to see how we are compelled to deny Mr. Omar-Muhammad’s requested relief. Mr. Omar-Muhammad acknowledges the great similarities between his case and Mr. Gonzalez’s, conceding that Gonzalez “[a]t first blush ... would appear to definitively resolve” his appeal, Petitioner’s Br. at 14, but asks us to distinguish Gonzalez on the basis that Serrano corrected what had been a clearly erroneous interpretation of AEDPA while Artuz decided a harder, closer limitations question. As Mr. Omar-Muhammad puts it, this case presents the requisite “extraordinary circumstance” under Rule 60(b)(6) because of the obvious incorrectness of the district court’s limitations analysis in 2000 corrected by Serrano in 2004. Even if we felt able to disregard the Supreme Court’s guidance in Gonzalez on the basis of such a fine distinction, we are unable to accept the premise on which Mr. Omar-Muhammad’s argument is based. That is, we cannot say, as Mr. Omar-Muhammad would have us, that it was obvious before Serrano to all comers that a 15-day tolling period under AEDPA was required after a final disposition by the New Mexico Supreme Court.

4188210-7059

CAMPBELL, District Judge. This is a motion for an order under Title 18, Section 601, United States Code, 18 U.S.C.A. § 601, vacating the forfeiture of the bail bonds heretofore entered and for an order vacating the judgment entered upon the said forfeiture on June 28th, 1940, in favor of the United States of America and against Raffaele Brancaccio, also known as Alberto Brancaccio. On February 6th, 1934, an indictment was filed against the above named defendants, they having been previously arrested and held to bail, Patsy Agapito in $2,500, Bernard Grossman in $3,500, and Murray Welsh in $3,500. Prior to that time the defendants Gross-man and Welsh gave false addresses to the U. S. Attorney’s office. The person who had been the record owner of the property, which was offered as security and in whose name as surety the bonds purported to be made and signed, had been dead for some years, and no one had power to bind him. Notice was sent by the United States Attorney’s office by mail addressed to the addresses they had given, and to the address which had been given as that of the surety requiring the said three defendants to appear in the United States District Court, Eastern District of New York, and plead to the indictment on the 19th day of February, 1934. The defendants failed to appear on that day, the notice to the defendant Agapito was not returned, their defaults were noted, and on the motion of the Assistant United States Attorney in charge of that case, the bonds were forfeited. The defendant Agapito is dead and no affidavit of his forms part of the moving papers. On April 27th, 1934, the defendants were arraigned and upon their plea of guilty they were each sentenced to be imprisoned for sixty days in the Detention Headquarters. On January 22nd, 1940, the defendants moved to vacate and set aside the forfeiture in the above matter, which on January 22nd, 1940, was denied by Judge Moscowitz, who rendered an opinion, D. C., 31 F.Supp. 878, 879, in which he stated “Defendants have not met the requirements of the statute and satisfied the court that the default was not willful”; and on February 19th, 1940, Judge Moscowitz made an order denying the motion. An investigation was thereafter conducted by the office of the United States Attorney, Eastern District of New York; in an effort to 'enforce the liability on the forfeited bonds, and it was then ascertained that Raffaele Brancaccio, whose name appeared in the bonds as surety had died on December 3rd, 1927, approximately six years prior to the execution of the bonds in question. Morris K. Siegel, the Assistant United States Attorney, in his affidavit in opposition to this motion says, “An examination of the Surrogate’s Court records in the County of Kings, discloses that Alberto Brancaccio was appointed as a Co-executor of the estate of Raffaele Brancaccio. In comparing the signature on the bail bonds with the signature on file with the Surrogate’s records, it is apparent that Alberto Brancaccio’s writing is similar with the one appearing on the bail bonds.” A motion was made on June 10th, 1940, to which date it had been adjourned, for judgment against Raffaele Brancaccio, also known as Alberto Brancaccio, in the sum of $9,500, based on an affidavit by Morris K. Siegel, Assistant United States Attorney, in which he recited the death of Raffaele Brancaccio the owner of 1170 42nd Street, Brooklyn, New York, on December 3rd, 1927, approximately six years prior to the executions of the bonds in this case, the examination of the records of the Surrogate’s Court in the County of Kings which disclosed that Alberto Brancaccio and Antonio Brancaccio the sons of the decedent were appointed executors and in which he said as follows : “In comparing the signature on the bail bonds with the signature on the Surrogate Court’s papers it is apparent that Alberto Brancaccio’s writing is similar with the name appearing on the bail bonds. It may be inferred that Alberto Brancaccio used the name of Raffaele Brancaccio in signing the bail bonds in this case. It is for that reason that judgment is sought to be obtained herein against Raffaele Brancaccio, also known as Alberto Brancaccio.” The notice of motion, said affidavit, and other moving papers were duly served on said Alberto Brancaccio. On June 10th, 1940, the motion was duly called, but there was no answer on the part of Alberto Brancaccio and it was granted on default and on June 26th, 1940, judgment was entered. On December 2nd, 1940, the motion now under consideration came on before Judge Inch, who referred the same to me. Title 18, Section '601, U.S.Code, 18 U.S.C.A. § 601, under which this motion is made, reads as follows: “§ 601. Remission of penalty of recognizance. When any recognizance in a criminal cause, taken for, or in, or returnable to, any court of the United States, is forfeited by a breach of the condition thereof, such court may, in its discretion, remit the whole or a part of the penalty, whenever it appears to the court that there has been no willful default of the party, and that a trial can, notwithstanding, be had in the cause, and that public justice does not otherwise require the same penalty to be enforced.” On behalf of the Government is cited Rule 5 of the General Rules of this Court, so much thereof as is necessary for consideration in the case at bar, reads as follows: “Rule 5. Extension of Terms. Eor the purpose of taking any action which must be taken within the Term of the Court at which final judgment or decree is entered, each Term of Court is extended for ninety days from the date of entry of the final .judgment or decree.” The Government contends that inasmuch as thé surety did not move within ninety days after June 26th, 1940, which would have been on or before September 24th, 1940, but waited until after the ninety days had expired, its notice of motion being dated November 26th, 1940, and brought on for hearing on December 2nd, 1940, this Court is without jurisdiction in the premises. If the motion under consideration was one that must be heard in the term in which final judgment is granted, the objection would be a good one, as jurisdiction once lost is lost forever, but the statute in question, Title 18, Section 601, U. S.Code, 18 U.S.C.A. §’ 601, is a remedial statute, and while there can be no question that ordinarily this Court would not have jurisdiction after the expiration of the term as extended, that Rule does not apply in the case at bar, and the making of the motion, under consideration, is not so limited. United States v. Traynor, D.C., 173 F. 114, 115; United States v. Smart, 8 Cir., 237 F. 978, 982; Griffin v. United States, D.C., 270 F. 263, 265; United States v. O’Leary, D.C., 275 F. 202; Henry v. United States, 7 Cir., 288 F. 843, 32 A.L.R. 257. Rule 5 does not apply, and this Court has jurisdiction. To obtain relief three things must be shown by the moving party: 1. It must be shown that there was no willful default. 2. It must appear that a trial could notwithstanding be had.

11558925-12879

RYAN, Circuit Judge. This is an appeal from an order of the Federal Highway Administration requiring the petitioner, Arctic Express, Inc., to pay a $20,000 civil penalty for regulatory violations involving (1) use of drivers who had falsified their duty status logs and (2) failure to examine each driver’s daily duty status logs for completeness, truthfulness, and accuracy in accordance with a 1993 consent order. Arctic claims that its liability was determined according to regulatory standards that were not promulgated in compliance with the Administrative Procedure Act, see 5 U.S.C. § 553, and which imposed an unlawful and unconstitutional standard of strict liability. Arctic also claims that the Federal Highway Administration’s decision is not in accordance with the law or supported by substantial evidence. We do not decide Arctic’s statutory and constitutional challenges that improper standards were used to test the lawfulness of its conduct because Arctic did not present these challenges to the administrative tribunal, and now offers no satisfactory reasons for not having done so. Likewise, we do not decide Arctic’s challenge to the so-called “notice and comment” issue because Arctic’s challenge is untimely under the Hobbs Act, 28 U.S.C. § 2344. However, we conclude that the decision of the Associate Administrator is not supported by substantial evidence because it was not rendered in accordance with the administrative regulations governing the admissibility of evidence in such proceedings. Thus, for the reasons that follow, we vacate the Associate Administrator’s decision. I. The regulatory violations charged against Arctic arose out of a Notice of Claim and Notice of Investigation filed by the Federal Highway Administrator on February 11, 1994, listing 33 counts and assessing penalties against Arctic in the amount of $23,500. In its reply Arctic admitted certain counts and denied others, contested the civil penalty, and requested an oral hearing. The Regional Director opposed the request for hearing on the ground that no issues of material fact were presented, and sought a final order in its favor. The Associate Administrator denied the request for entry of a final order and granted the request for an oral hearing in an Order Appointing Administrative Law Judge. The Regional Director, by motion dated November 25, 1997, sought clarification and reconsideration of the Associate Administrator’s order. In response, and without an oral hearing, the Associate Administrator issued a final opinion and order on January 21, 1998. Consequently, no hearing was ever held before an administrative law judge. In his January 21 opinion and order, the Associate Administrator assessed a $20,-000 civil penalty against Arctic for 20 violations of 49 C.F.R. § 395.8(e), and 10 violations of 49 C.F.R. § 386.22. Section 395.8(e) provides for “prosecution” of drivers or motor carriers who fail to comply with the drivers’ duty status log requirements or who falsify the logs. Section 386.22 and section 386.82 address consent orders and civil penalties for violations of notices and orders. The penalties associated with § 395.8 were assessed because Arctic used drivers who had falsified records of duty status. The penalties associated with § 386.22 and § 386.82 were assessed because Arctic failed to comply with section 3B of the 1993 consent order, requiring that Arctic examine each driver’s daily record of duty status for completeness, accuracy, truthfulness, and compliance with 49 C.F.R. § 395.3 (Maximum driving time). The three remaining counts were, in due course, voluntarily dismissed by the Highway Administration. The arguments submitted to the Associate Administrator focused on whether the evidence was sufficient to prove that Arctic engaged in unreasonable or negligent conduct when it used drivers who had falsified their logs, or when it failed to properly examine the logs as required by the consent order. Here, in addition to its challenge to the sufficiency of the evidence, Arctic maintains that the Highway Administration has subjected Arctic to a standard of strict liability pursuant to certain Questions and Answers, specifically nos. 7, 8, and 21 of the agency’s “Regulatory Guidance.” II. A. Arctic claims that the civil penalties were imposed unlawfully and unconstitu tionally, and it maintains that it preserved this challenge below by its argument that its conduct was reasonable. The imposition of civil penalties for violations of regulations promulgated' by the Secretary of Transportation is governed by 49 U.S.C. § 521. Section 521(b)(8) governs petitions for review of final orders of the Secretary issued under § 521 and provides that “[n]o objection that has not been urged before the Secretary shall be considered by the court, unless reasonable grounds existed for failure or neglect to do so.” Administrative exhaustion is generally required as a matter of preventing premature interference with agency processes, so that the agency may function efficiently and so that it may have an opportunity to correct its own errors, to afford the parties and the courts the benefit of its experience and expertise, and to compile a record which is adequate for judicial review. Weinberger v. Salfi, 422 U.S. 749, 765, 95 S.Ct. 2457, 45 L.Ed.2d 522 (1975). The administrative exhaustion doctrine exists “to permit an administrative agency to apply its special expertise in interpreting relevant statutes and in developing a factual record without premature judicial intervention.” Southern Ohio Coal Co. v. Donovan, 774 F.2d 693, 702 (6th Cir.1985). While we have also stated that if “the purposes behind the exhaustion of administrative remedies doctrine are not served, exhaustion will not be required,” Central States, Southeast and Southwest Areas Pension Fund v. 888 Corporation, 813 F.2d 760, 764 (6th Cir.1987), the Supreme Court has explained that congressional intent is of “ ‘paramount importance’ to any exhaustion inquiry” such that “[wjhere Congress specifically mandates, exhaustion is required,” McCarthy v. Madigan, 503 U.S. 140, 144, 112 S.Ct. 1081, 117 L.Ed.2d 291 (1992) (citation omitted). Where Congress has not mandated exhaustion, the exercise of jurisdiction is governed by “sound judicial discretion.” Id. The McCarthy Court went on to discuss at length the appropriate inquiries surrounding such an exercise of discretion, and concluded that exhaustion was not required under the circumstances presented there. However, the Court was quite clear in its explanation that it undertook that discussion only after finding “[a]s a preliminary matter ... that Congress ha[d] not meaningfully addressed the appropriateness of requiring exhaustion in [the relevant] context.” Id. at 149, 112 S.Ct. 1081. Indeed, the Tenth Circuit recently observed in Garrett v. Hawk, 127 F.3d 1263, 1264-65 (10th Cir.1997), that Congress overruled McCarthy when it amended the applicable statute to specifically require exhaustion of administrative remedies by prisoners seeking “Bivens relief’ in federal court. Courts have waived the exhaustion requirement where constitutional issues are asserted. See, e.g., Gilbert v. National Transp. Safety Bd., 80 F.3d 364, 367 (9th Cir.1996). However, the Ninth Circuit explained further: A petitioner ... may not obtain judicial review simply by invoking the term “due process.” ... [D]ue process “is not a talismanic term which guarantees review in this court of procedural errors correctable by the administrative tribunal.” If the alleged constitutional violation amounts to a mere procedural error, which the NTSB could have remedied if properly presented to the NTSB, a petitioner may not obtain judicial review by asserting the error amounted to a deprivation of due process. Id. (citation omitted). Because § 521(b)(8) specifically prohibits the court from hearing an objection to a civil penalty imposed under § 521 that was not raised below, this court does not have jurisdiction to hear new claims on appeal unless reasonable grounds existed for the failure or neglect to do so. Arctic offers no explanation for its failure to challenge the Questions and Answers below, instead arguing that the issue was pre served because Arctic argued that it took reasonable steps to ensure compliance and that the evidence did not support a finding of negligence. However, the fact that Arctic did not prevail on its argument below that its conduct was reasonable, i.e., not negligent, does not compel the conclusion that the penalties were imposed according to a standard of strict liability. Arctic did not challenge the Questions and Answers below, and it never mentioned “strict liability” or “absolute liability” in the papers it filed with the Associate Administrator. It simply argued that its conduct was reasonable under the circumstances. Moreover, in the portion of its reply brief in which it responds to the Highway Administrations’s jurisdictional arguments, Arctic fails to identify even a single case supporting the proposition that its references below to the reasonableness of its conduct preserve an argument on appeal that addresses imposition of a strict liability standard. Arctic made no attempt to explain how or if its due process claim is sufficiently colorable to defeat the exhaustion doctrine. Thus, we conclude that we lack jurisdiction to correct any alleged defect in the alleged application of the Questions and Answers during the administrative proceedings. B. Arctic also claims that the challenged Questions and Answers violate the notice and comment rule-making requirements of the Administrative Procedure Act. See 5 U.S.C § 553. This court has jurisdiction over the exercise of the powers and duties of the Secretary of Transportation under 49 U.S.C. § 351. The Hobbs Act, under 28 U.S.C. § 2342, provides that the United States Courts of Appeals have exclusive jurisdiction to set aside rules, regulations, or final orders of the Secretary of Transportation issued pursuant to part B of Subtitle IV of Title 49, which, among other things, enumerates the powers of the Secretary over motor carriers. Section 2344 provides that “[a]ny party aggrieved by [a] final order [reviewable under the Hobbs Act] may, within 60 days after its entry, file a petition to review the order in the court of appeals wherein venue lies.” 28 U.S.C. § 2344. We have not directly addressed the issue whether, under the Hobbs Act, this court has jurisdiction over a notice and comment challenge to an administrative rule after expiration of the 60 days. However, in JEM Broadcasting Co. v. FCC, 22 F.3d 320 (D.C.Cir.1994), the petitioner, JEM, sought judicial review of “hard look” rules promulgated by the FCC after the time under the Hobbs Act had expired, claiming that the rules were invalid because they violated the notice and comment requirement. JEM argued that it could not have challenged the rules before the FCC applied them to JEM’s detriment because JEM was not then an aggrieved party. Id. at 324. The D.C. Circuit rejected this argument, characterizing it as a “back door” attack on the “procedural genesis” of the rule in the context of an enforcement action. Id. Similarly, in Florilli Corp. v. Pena, 118 F.3d 1212 (8th Cir.1997), the court dismissed a notice and comment challenge to the Highway Administration’s carrier rating rules, explaining that “[ajlthough a party may challenge the substantive validity of an agency’s rules outside of the sixty-day period, challenges to the procedural genesis of administrative rules must conform to the time limitation under the Hobbs Act.” Id. at 1214 (citation omitted). The court rejected the argument that the petitioner was not sufficiently aggrieved before detrimental application of the rule because it considered a party “ ‘aggrieved,’ giving the party standing to appeal an agency decision, where ... the agency provided no forum for the party to participate in the proceedings through which the agency created the contested provisions.” Id. The Regulatory Guidance was published in the Federal Register on April 4, 1997. The latest date for a challenge of this type, therefore, was on or about June 4, 1997. The first time Arctic asserted the challenge was August 31,1998. Assuming, without deciding, that the Questions and Answers are final orders, regulations, or rules that Arctic may challenge in court, rather than interpretive rules, policy statements, or rules of practice, see 5 U.S.C. § 553, as in JEM Broadcasting and Floril-li, Arctic’s notice and comment challenge must fail because it was asserted long after the expiration of the 60-day time limitation. III. Arctic argues that the decision below should be set aside because the agency did not comply with 49 C.F.R. § 386.49 by submitting affidavits with its documentary evidence when it moved for a final order.

5861088-13866

B.D. PARKER, JR., Circuit Judge: Eric Butler appeals from a judgment of conviction in the United States District Court for the Eastern District of New York (Weinstein, J.). Butler was convicted of securities fraud and conspiracy to commit securities and wire fraud and was sentenced principally to five years’ incarceration. Butler argues, among other things, that venue was not proper in the Eastern District of New York. For the reasons discussed below, we conclude that venue as to the substantive securities fraud count was improper. Accordingly, we vacate Butler’s conviction as to that count. We affirm as to the remaining counts and remand for resentencing. BACKGROUND This case arises out of the failure of the auction rate securities (“ARS”) market. At the relevant time, e, ARS were securities composed of long-term, typically high-grade, debt obligations, such as student loans, mortgages, municipal bonds, corporate debt and preferred stock issued by closed-end mutual funds. Although ARS are structured as long-term fixed income securities and usually issued with maturities of thirty years, ARS were traded through auctions on short-term cycles, generally every 7, 14, 28 or 35 days. At the end of the cycle, an ARS holder could either sell the security for new paper through an auction or hold the security for another cycle. Thus, under normal market conditions, an investor could exchange his security for cash potentially every week or month. Because ARS auctions provided short-term liquidity to asset-backed securities with long-term maturity dates, they effectively transformed long-term bonds into investment vehicles akin to, but paying more than, money market funds or similar short-term instruments and, consequently, attracted investors interested in additional basis points and liquidity. In the unlikely possibility that an investor decided simply to hold his ARS, he would receive a return of principal when the underlying security matured, often many years later. The federal government guaranteed against default up to 98 percent of the underlying principal of ARS that were backed by student loans. However, the guarantee did not protect investors against failures in the auction market. The other types of ARS had no such government guarantee. All the ARS at issue in this case had AAA credit ratings and were considered “safe” in that prior to 2007 there had not been a failure of a AAA-rated ARS auction. Butler and his co-defendant Julian Tzolov worked in Credit Suisse’s Corporate Investment Management group and worked from its Manhattan offices. The clients they serviced included large, sophisticated corporate clients, such as Glaxo Smith Kline, Roche International and ST Microelectronics, who invested in short-term, fixed-income vehicles. Among other investment vehicles, Butler and Tzolov offered their clients ARS. In doing so, Butler and Tzolov would initially make email and telephone presentations to prospective clients. If a prospective client expressed an interest, Butler and Tzolov would typically follow up with in-person meetings at that client’s office. Because most of the investors were located outside New York, Butler and Tzolov frequently flew out of John F. Kennedy Airport located in the Eastern District of New York to attend these meetings. At trial, the government proved that Butler and Tzolov made false statements to the investors about the types of securities purchased on their behalf. Government witnesses testified that they instructed Butler and Tzolov only to purchase ARS backed by government guaranteed student loans, yet contrary to these instructions, Butler and Tzolov purchased ARS that were backed by debt instruments that did not carry government guarantees. After investors agreed to purchase a security, Butler and Tzolov would send them email confirmations and Credit Suisse would send them monthly account statements listing the ARS purchased. In a number of those email confirmations, the government’s proof showed, Butler and Tzolov falsified the names of the securities to make it appear as though they were student-loan-backed ARS. The names were, however, correctly identified in the Credit Suisse statements. The government also presented evidence that during the time period in question, some of the investors called Butler to ask questions concerning their investments, and Butler falsely stated that he was investing in student-loan-backed ARS. The auctions for the non-student-loan ARS began to fail in August 2007. This meant that investors could no longer resell their non-student-loan-backed securities through the monthly auctions. Instead, investors who purchased ARS as short-term investments were forced to hold them until liquidity returned to the market or until the principal matured. While this failure did not signal a default in the underlying debt instrument, the absence of liquidity was a major blow to purchasers who typically looked to ARS exclusively as short-term, highly liquid investments. As the market failed, many of the investors were informed by Butler and other Credit Suisse employees that the securities they had purchased were not backed by student loans. Consequently, at the time of the market failure, many clients were saddled with hundreds of millions of dollars in ARS that were not backed by student loans and that could not be rolled over at the auctions. From August 2007 through the date of this appeal, no successful auction has occurred for non-student-loan-backed securities. The auctions for the student-loan-backed ARS continued to function until February 2008, when they also failed. In April 2009, the government indicted Butler, charging him with securities fraud, conspiracy to commit securities fraud, and conspiracy to commit wire fraud. In a pretrial motion, Butler moved to dismiss all counts for lack of venue. Tzolov pled guilty and testified for the government at Butler’s trial. Butler proceeded to trial and ultimately was convicted on all counts. Following his conviction, Butler moved for a judgment of acquittal arguing, among other things, that the government failed to prove that venue in the Eastern District was proper. The district court denied Butler’s motion. This appeal followed. DISCUSSION Both the Sixth Amendment and Fed.R.Crim.P. 18 require that a defendant be tried in the district where his crime was “committed.” U.S. Const. amend. IV; Fed.R.Crim.P. 18; see also U.S. Const. art. iii, § 2, cl. 3. When a federal statute defining an offense does not specify how to determine where the crime was committed, “[t]he locus delicti must be determined from the nature of the crime alleged and the location of the act or acts constituting it.” United States v. Cabrales, 524 U.S. 1, 6-7, 118 S.Ct. 1772, 141 L.Ed.2d 1 (1998) (quoting United States v. Anderson, 328 U.S. 699, 703, 66 S.Ct. 1213, 90 L.Ed. 1529 (1946)). Venue is proper only where the acts constituting the offense — the crime’s “essential conduct elements” — took place. See United States v. Rodriguez-Moreno, 526 U.S. 275, 280, 119 S.Ct. 1239, 143 L.Ed.2d 388 (1999). The government bears the burden of proving venue. United States v. Beech-Nut Nutrition Corp., 871 F.2d 1181, 1188 (2d Cir.1989). Because venue is not an element of a crime, the government need establish it only by a preponderance of the evidence. See United States v. Smith, 198 F.3d 377, 384 (2d Cir.1999). We review the sufficiency of the evidence as to venue in the light most favorable to the government, crediting “every inference that could have been drawn in its favor.” United States v. Rosa, 17 F.3d 1531, 1542 (2d Cir.1994). Where, as here, the facts are not in dispute, venue challenges raise questions of law, which we review de novo. See United States v. Svoboda, 347 F.3d 471, 482 (2d Cir.2003). As to each count, the jury found, by a preponderance of the evidence, that venue was proper in the Eastern District of New York. Butler challenges the sufficiency of the evidence supporting these findings. Because “venue must be proper with respect to each count,” we separately review each count. Beech-Nut, 871 F.2d at 1188. A. Securities Fraud (Count Two) Count Two charged Butler with securities fraud under 15 U.S.C. §§ 78j(b) and 78ff, which has its own specific venue provision: “Any criminal proceeding may be brought in the district wherein any act or transaction constituting the violation occurred.” 15 U.S.C. § 78aa. The government’s sole basis for venue in the Eastern District on this substantive count was that Butler and Tzolov traveled through JFK airport on their way to meet with the investors. According to the government, these flights are sufficient to establish venue because, under United States v. Svoboda, 347 F.3d 471 (2d Cir.2003), the flights were “an important part of furthering the [fraudulent] scheme.” We disagree. We have little difficulty concluding that the government failed to offer competent proof that any “act or transaction constituting the [securities fraud] violation occurred” in the Eastern District. See 15 U.S.C. § 78aa (emphasis added). Butler did not transmit any false or misleading information into or out of the Eastern District. All the fraudulent statements that were part of the govern ment’s proof, whether made by Butler or Tzolov, were made in telephone calls or emails from Credit Suisse’s Madison Avenue offices located in the Southern District or in meetings with investors. None of this activity occurred in the Eastern District. Nor did Butler commit securities fraud by boarding a plane in the Eastern District. At most, catching flights from the Eastern District to meetings where Butler made fraudulent statements were preparatory acts. They were not acts “constituting” the violation. We have cautioned that “venue is not proper in a district in which the only acts performed by the defendant were preparatory to the offense and not part of the offense.” Beech-Nut, 871 F.2d at 1190. That is all we have here. In other words, going to Kennedy airport and boarding flights to meetings with investors were not a constitutive part of the substantive securities fraud offense with which Butler was charged. See United States v. Ramirez, 420 F.3d 134, 141-142 (2d Cir. 2005) (vacating Appellant’s conviction for visa fraud because “venue is proper only where a crime is ‘committed,’ and Beech-Nut precludes considering preparatory acts in determining the locus delicti ”); id. (finding that venue did not lay in the Southern District for mail fraud when the scheme to defraud originated in the Southern District but the mailing occurred in another district because that would mean that “a defendant who devised a scheme to defraud while driving across the country could be prosecuted in virtually any venue through which he passed”); United States v. Geibel, 369 F.3d 682, 697 (2d Cir.2004) (finding venue improper where actions in the Southern District of New York were “anterior and remote” to the criminal conduct); United States v. Bozza, 365 F.2d 206, 220-21 (2d Cir.1966) (finding venue improper in a district in which a telephone call was made to arrange for the receipt of stolen goods, but the receipt of property itself occurred in another district). The government’s reliance on Svoboda is misplaced. In Svoboda, we stated that “venue is proper in a district where (1) the defendant intentionally or knowingly causes an act in furtherance of the charged offense to occur in the district of venue or (2) it is foreseeable that such an act would occur in the district of venue [and it does].” 347 F.3d at 483. However, Svoboda does not control here. In Svoboda we were not faced with the question of whether preparatory acts alone could establish venue. Indeed, Svoboda did not involve preparatory acts at all. The act that established venue and that occurred “in furtherance” of the crime charged — the execution of a trade — constituted an essential element of the crime. See id. at 485. The only question before us in Svoboda was whether venue could lie in a district when the defendant did not necessarily intend that the criminal conduct take place in that district. Id. at 482-84. Here, by contrast, no conduct that constituted the offense took place in the Eastern District. Accordingly, nothing in Svoboda calls into question the principle that preparatory acts alone are insufficient to establish venue. For these reasons, we hold that venue in the Eastern District was not proper as to Count Two. B. Conspiracy to Commit Securities Fraud (Count One) and Conspiracy to Commit Wire Fraud (Count Three) The conspiracy charges, however, require a different analysis. For them, “venue is proper in any district in which ‘an overt act in furtherance of the conspiracy was committed.’ ” United States v. Royer, 549 F.3d 886, 896 (2d Cir.2008) (quoting United States v. Naranjo, 14 F.3d 145, 147 (2d Cir.1994)). An overt act is any act performed by any conspirator for the purpose of accomplishing the objectives of the conspiracy. The act need not be unlawful; it can be any act, innocent or illegal, as long as it is done in furtherance of the object or purpose of the conspiracy. See United States v. Rommy, 506 F.3d 108, 119 (2d Cir.2007); see also Iannelli v. United States, 420 U.S. 770, 785 n. 17, 95 S.Ct. 1284, 43 L.Ed.2d 616 (1975). The government argues that because Butler’s use of Kennedy airport to attend meetings with the investors were overt acts in furtherance of the conspiracies, venue in the Eastern District was proper with respect to those counts. We agree. A reasonable jury could have concluded that Butler and Tzolov’s travel through the Eastern District was in furtherance of the conspiracy because, had they not done so, the face-to-face meetings with potential investors, which was a regular part of their fraudulent scheme, would not have occurred.

388428-8971

HEMPHILL, District Judge Wrongful death action involving the diversity jurisdiction of this Court. Plaintiff is a citizen and resident of the State of Georgia, defendant, Forrester Trucking Company, Inc., hereinafter called “Forrester,” a South Carolina corporation with its principal place of business at Sumter South Carolina, defendant, Vance Trucking Lines, Inc., hereinafter called “Vance,” a North Carolina corporation with its principal place of business in North Carolina. Named also as defendant in the Complaint is one tractor-trailer unit consisting of 1-1961 Chevrolet Tractor serial # OC 813 B 118765, and one Evans Trailer serial # 11523. Vance has answered the Complaint. Counsel for Forrester and the tractor-trailer unit gave notice of a special appearance for the purpose of moving to quash the purported service as to the tractor-trailer unit asserting the absence of any attachment or appropriate supplementary proceedings and to dismiss the action as to these defendants on the ground that venue does not lie as to them in the Western District of South Carolina. It appears that the tractor-trailer unit was not attached and that counsel for plaintiff do not contest the motion as to the tractor-trailer. It is, therefore, ordered that the aforesaid tractor-trailer unit be dismissed as a party to this action. The basis claimed for establishing venue in the Western District is that under 28 U.S.C. § 1391(c): A corporation may be sued in any judicial district in which it is incorporated or licensed to do business or is doing business, and such judicial district shall be regarded as the residence of such corporation for venue purposes. Alternatively, it is argued that venue lies in the Western District by virtue of 28 U.S.C. § 1392(a) providing that: Any civil action, not of a local nature, against defendants residing in different districts in the same State, may be brought in any of such districts. At the hearing of this motion copies of Certificates of Public Convenience and Necessity issued by the South Carolina Public Service Commission held by For-rester were submitted. One certificate was for authority to operate between certain designated points within the State and points and places in South Carolina for the purpose of hauling certain specified commodities and between points and places in South Carolina for hauling other commodities for designated companies. By another certificate presented, Forrester was licensed to furnish certain freight service from points and places in South Carolina to points and places outside of South Carolina, in interstate commerce. As to Vance, an affidavit was submitted showing such corporation to be a common carrier licensed to transport commodities in interstate traffic to and between points and places along all states on the Eastern Seaboard from Florida to New York, including the State of South Carolina, and the Western District thereof. It further appeared from such affidavit that Mr. James L. Love, Esquire, of Greenville, South Carolina, was its agent for acceptance of process and that Vance was engaged in the business of hauling commodities in the State of South Carolina, including the Western District thereof, on the date of the accident involved in litigation and at all times since such date. The authenticity of the certificates and the affidavit submitted and the correctness of the information shown therein were conceded by counsel for Forrester. As to the position taken under 28 U.S.C. § 1391(c), it appears that the language of the Section is plain on its face. Counsel for Forrester, however, asks the Court to say in essence that only foreign corporations are intended when reference is made to those that are “licensed to do business” or are “doing business,” and that domestic corporations must be sued in the judicial district where they have their principal place of business, this constituting the district in which they are “incorporated” within the intendment of the statute. The defect of this argument is that Congress might easily have provided language supporting the conclusion urged by Forrester, but it did not do so. Consequently, in the face of language which is unambiguous, a number of District Courts have held that a domestic corporation may be sued in any judicial district of the State of its incorporation under the language of Section 1391(c). Hintz v. Austenal Laboratories, 105 F. Supp. 187 (E.D.N.Y.1952); Garbe v. Humiston-Keeling & Co., 143 F.Supp. 776, 778-779 (E.D.Ill.1956), reversed on other grounds 242 F.2d 923 (7th Cir. 1957); Johnstone v. York County Gas Co., 193 F.Supp. 709, 711 (E.D.Pa.1961); Minter v. Fowler & Williams, Inc., 194 F.Supp. 660, 661 (E.D.Pa.1961); De George v. Mandata Poultry Co., 196 F.Supp. 192, 195 (E.D.Pa.1961). A domestic corporation is authorized under its charter to engage in business generally within the State of its incorporation. In the case of common carriers, their rights to transport goods are subject to further regulation, either by the state authority or the Interstate Commerce Commission, but in the case at hand it appears that Forrester is specifically licensed to engage in the business of transportation throughout South Carolina. Therefore, the Court concludes that inasmuch as Forrester is licensed to do business in the Western District, venue is properly laid in this district under Section 1391(c). This point was argued in Vance Trucking Company, Inc. v. Canal Insurance Company, Forrester Trucking Company, Inc., 338 F.2d 943, decided by the Fourth Circuit on November 20, 1964, in an opinion by Chief Judge Sobeloff, and the Court upheld venue of Forrester in the Western District in an action for Declaratory Judgment seeking a determination of responsibility as between Vance and Forrester and the respective insurance carriers with respect to the accident resulting in this suit. There, as here, Forrester maintained that for venue purposes it is a resident of the Eastern District only because that is its principal place of business. While deciding the venue question under Section 1392(a), which Section shall be considered at a later point in this Order, Judge Sobeloff questioned the position of For- rester on this point noting that “several courts have indicated that, for venue purposes, a corporation is a resident of all districts in a state in which it is incorporated or licensed to do business.” 338 F.2d at 944. The cases cited in the opinion by Judge Sobeloff are those cited above in this Order, and this Court is persuaded that they reach the correct result. See also 1 Barron & Holtzoff, Federal Practice and Procedure, § 80, p. 386. It is true that some District Courts have reached contrary results. See Wes-terman v. Grow, 198 F.Supp. 307, 308 (S. D.N.Y.1961); Sawyer v. Soaring Society of America, Inc., 180 F.Supp. 209 (S.D. N.Y.1960); Jacobson v. Indianapolis Power & Light Co., 163 F.Supp. 218, 220 (N.D.Ind.1958). The position reached by the Courts in cases such as Jacobson apparently conclude that 1391(c) effected no substantial change in the law of venue in existence prior to the adoption of this provision in 1948. It is true that prior to the adoption of' 1391(c) a domestic corporation could be sued only in the district of its principal place of business. In fact, it is not until Neirbo Co. v. Bethlehem Shipbuilding Corporation, 308 U.S. 165, 60 S.Ct. 153, 84 L.Ed. 167, that a foreign corporation could be sued except at its- “residence”; that is, in the judicial district of its principal place of business within the state of its incorporation. Neirbo held that a corporation which had complied with state law by designating an agent for acceptance of process had consented to be sued in Federal Court. 308 U.S. at 175, 60 S. Ct. 153. Obviously, the language of 1391(c) goes far beyond the decision in Neirbo in regarding a corporation, for purposes of venue, as a resident of any district in which it is doing business, whether or not it has designated an agent for acceptance of process in such district. It is equally obvious that Section 1391(c) is not limited in its application to foreign corporations either in respect of the phrase’ “doing business” or the phrase “licensed to do business.” Even if venue did not lie in the Western District on account of the foregoing, the Court concludes- that under the provisions of 28 U.S.C. § 1392(a) venue is proper as to Forrester in either the Western or Eastern District of South Carolina. In the opinion of Judge Sobeloff upholding venue against Forrester in the declaratory judgment action mentioned above, Section 1392(a) was invoked as the basis of the decision inasmuch as Canal Insurance Company was a defendant residing in the Western District and For-rester conceded that it was doing business in and was, therefore, a resident of the Eastern District. That decision is controlling here, of course, if Vance is a resident of the Western District for venue purposes.

9457911-14007

PER CURIAM. Appellant Duane W. Larson (“Larson”) filed this action in the district court to recover interest on funds which the federal government had seized for purposes of civil forfeiture but which were ultimately-returned to him. The district court awarded to Larson the interest actually earned on his money while it was in the government’s hands. This, however, was a fairly minimal amount since for most of the time the government held it, the money was in a non-interest bearing account. Larson argues on appeal that he should have received the “constructively-earned” interest on his money, i.e., that interest which would have accrued if the government had placed the money in an interest-bearing account. For the first time on appeal, the government argues that it is immune from any award of interest at all. It contends not only that Larson is not entitled to “constructively-earned” interest, but that even the district court’s award of the minimal interest actually earned should be set aside and judgment entered for the government. The appeal presents a matter of first impression in this circuit, although subsequent legislation enacted last year by Congress makes the legal issue here largely irrelevant in future proceedings. I. In 1985, Larson was convicted on federal drug and tax evasion charges and ordered to serve a ten-year prison sentence. In 1990, the government began to suspect that Larson was engaged in money laundering from prison (with the assistance of his wife, who was not in prison). In June 1990, the U.S. Customs Service seized a total of $55,584.90 from two bank accounts owned by Larson and began civil forfeiture proceedings. Larson disputed the seizure. Ultimately the government declined to prosecute Larson and in mid-1994 it agreed to return the money it had seized. Larson then sued to recover interest on the funds. The district court agreed that Larson should recover the interest his money actually had earned while it was held by the government. While the government initially represented to the court that the money had earned approximately $10,000 in interest, it later disclosed that for most the four years during which the money was in the government’s possession, it had been held in a non-interest bearing account. The total interest actually earned was $891.09. Larson argued that the government should be liable to him for the amount of interest that would have been earned had the money been deposited in an interest-bearing account during the entire time it was in the government’s possession. The court rejected that contention,, and it entered judgment for Larson in the amount of $891.09. He filed this timely appeal. Larson now argues that the government should be liable to him for “constructive interest,” i.e., the amount of interest the money would have earned had the government kept it in an interest-bearing account. Although it did not cross-appeal, the government in its brief argues for the first time that the district court was without jurisdiction to award any interest at all because the government enjoys sovereign immunity as to interest claims agaihst it. The circuits are split on this issue, and this circuit has never addressed the matter directly. II. In Library of Congress v. Shaw, 478 U.S. 310, 106 S.Ct. 2957, 92 L.Ed.2d 250 (1986), the Supreme Court made it clear that “[i]n the absence of express congressional consent to the award of interest separate from a general waiver of immunity to suit, the United States is immune from an interest award.” Id. at 314, 106 S.Ct. 2957. Moreover, “the force of the no-interest rule cannot be avoided simply by devising a new name for an old institution.” Id. at 321, 106 S.Ct. 2957. At the time the instant suit was commenced, federal law provided the following: Upon the entry of judgment for the claimant in any proceeding to condemn or forfeit property seized under any Act of Congress, such property shall be returned forthwith to the claimant or his agent; but if it appears that there was reasonable cause for the seizure, the court shall cause a proper certificate thereof to be entered and the claimant shall not, in such case, be entitled to costs, nor shall the person who made the seizure, nor the prosecutor, be liable to suit or judgment on account of such suit or prosecution. 28 U.S.C. § 2465 (1999). The statute, as it then stood, made no provision for, or reference to, the recovery of pre-judgment interest. Shaw, 478 U.S. at 319, 106 S.Ct. 2957; United States v. $30,006.25 in U.S. Currency, 236 F.3d 610, 614 (10th Cir.2000), cert. denied, _ U.S. _, 122 S.Ct. 130, 151 L.Ed.2d 84 (2001). At least three circuits have where the government, claiming a right to civil forfeiture, has seized funds, but has ultimately returned the funds to their owner, sovereign immunity bars the recovery any interest the money earned while in the possession of the government. The Second, Eighth and Tenth circuits have reasoned that such interest would constitute the award of pre-judgment interest, and since 28 U.S.C. § 2465 does not provide for the recovery of pre-judgment interest in this situation (and since no other statute expressly waives sovereign immunity), the government enjoys sovereign immunity from interest claims. See $30,006.25 in U.S. Currency, 236 F.3d at 614-15; United States v. $7,990.00 in U.S. Currency, 170 F.3d 843, 845-46 (8th Cir.), cert. dismissed, 528 U.S. 1041, 120 S.Ct. 577, 145 L.Ed.2d 449 (1999); Ikelionwu v. United States, 150 F.3d 233, 238-39 (2d Cir.1998). Two other circuits disagree. States v. $277,000 U.S. Currency, 69 F.3d 1491 (9th Cir.1995), the Ninth Circuit held that the interest actually earned while seized funds were held by the government was not interest at all, but rather, the “profit from wrongly seized property.” Id. at 1493. The court further reasoned that even where the money did not actually earn interest, the government should be liable for the interest the money would have earned, had the government placed it in an interest-bearing account. Where a disputed res is capable put to use for someone, it makes no sense whatsoever that a pile of dollar bills should be left doing no good for anyone. Certainly in any normal commercial dispute over property, the disputed property would, as soon as practical, be placed in an escrow account to earn interest that would go to whoever was the ultimate winner. Id. at 1494. Moreover, the court concluded that in a sense, money held by the government always “constructively” earns interest, since “all financial assets in the hands of the government are a means by which the government does not have to borrow equivalent funds.” Id. at 1495. The Sixth Circuit concurred with this view, in United States v. $515,060.42 in U.S. Currency, 152 F.3d 491 (6th Cir.1998). Noting that the Ninth Circuit’s decision in $277,000 in U.S. Currency had been authored by a Sixth Circuit judge sitting by designation, it adopted the reasoning set out by the Ninth Circuit and allowed for the recovery of “constructively-earned interest” on seized funds which were later returned. $515,060.42 in U.S. Currency, 152 F.3d at 504-06. One other circuit has cited this approach with apparent approval, but ultimately it did not need to decide which view to adopt in order to resolve the case before it. In United States v. 1461 West 42nd St., Hialeah, Fla., 251 F.3d 1329 (11th Cir.2001), the Eleventh Circuit refused to award interest on returnable rents and profits. It cited $515,060.42 in U.S. Currency with approval, but said that no interest (either actual or constructive) had been earned because all rental income had been used by the government to pay management and operating expenses of the real estate while in the government’s possession. It seems the same result could have been reached (i.e., a result in favor of the government) by finding that sovereign immunity barred the claim. Only one First Circuit case has dealt with the issue of interest constructively earned on seized money, but that case is readily distinguishable. In United States v. Kingsley, 851 F.2d 16 (1st Cir.1988), the government requested and received an order from the district court directing that seized cash be transferred to the custody of the U.S. Marshal and then be deposited into an interest-bearing account. A plea agreement Kingsley later signed provided that the government would apply the seized assets to his outstanding tax debt. Despite the court order, the government failed to deposit the money in an interest-bearing account. This court held under a contract theory that in entering into the plea agreement, Kingsley reasonably had relied upon the court’s order to place the funds in an interest-bearing account. Thus, when entering into the plea agreement, he reasonably assumed that interest on the funds would be available to reduce his tax debt. The government’s breach entitled defendant to damages. Id. at 21. No mention was made of the rule in Shaw, not surprisingly because the court’s award was not one for pre-judgment interest per se; rather, the award was in the form of damages directly caused by the breach of contract. In its decision allowing an award of interest, the Ninth Circuit in $277,000 U.S. Currency relied in part on our decision in Kingsley. The Ninth Circuit noted that in both cases, the court had ordered the funds placed in an interest-bearing account (actually, in the Ninth Circuit case, the court order simply stated that the government “may deposit” the funds in an interest-bearing account), and it said that as in Kingsley, the claimant could “reasonably rely” on that order being carried out. The Ninth Circuit said the claimant in its case had reasonably relied by foregoing any efforts to obtain a release of the property on bond. $277,000 U.S. Currency, 69 F.3d at 1497. But, the facts in Kingsley seem clearly distinguishable from those in the Ninth Circuit case. In Kingsley, the claimant entered into a contract (his plea agreement) in reliance on the court’s order mandating deposit of the money in an interest-bearing account, and the government’s breach of that contract resulted in an award of damages. In the latter case, the claimant did not enter into any contract in reliance on the order, so no claim for contract damages could accrue to him. Moreover, it seems far less certain that any reliance by the claimant in $277,000 U.S. Currency would have been reasonable, given the permissive language of the court’s order. The Ninth Circuit’s view thus appears to stand or fall on its alternative rationale: that the award was not interest at all, but rather, the “profit from wrongly seized property,” $277,000 U.S. Currency, 69 F.3d at 1493; that it did not make sense to allow the government to let the money just sit there; and that the same would not be allowed in any commercial dispute between private parties. The problem with this rationale, however, is that neither fairness considerations nor rules applicable to private disputes can alone provide grounds for abrogating sovereign immunity. As the Supreme Court made clear in Shaw, “[cjourts lack the power to award interest against the United States on the basis of what they think is or is not sound policy.” Shaw, 478 U.S. at 321, 106 S.Ct. 2957. The Court went on to caution in Shaw that “the force of the no-interest rule cannot be avoided simply by devising a new name for an old institution.” Id. at 321, 106 S.Ct. 2957. In characterizing such claims not as “pre-judgment interest,” but as “profit from wrongly seized property,” the Ninth Circuit can be said simply to have devised “a new name for an old institution.” $277,000 U.S. Currency, 69 F.3d at 1493. Congress has since changed the forfeiture statute so as specifically to allow the recovery both of interest actually earned and interest that could have been earned. 28 U.S.C. § 2465 now provides for the recovery of “interest actually paid to the United States from the date of seizure or arrest of the property that resulted from the investment of the property in an interest-bearing account or instrument,” 28 U.S.C. § 2465(b)(1)(C)(i) (2000), and “an imputed amount of interest that such currency, instruments, or proceeds would have earned at the rate applicable to the 30-day Treasury Bill, for any period during which no interest was paid.” 28 U.S.C. § 2465(b)(1)(C)(ii) (2000). But, the new rule is expressly limited “to any forfeiture proceeding commenced on or after the date that is 120 days after April 25, 2000.” See Notes to 28 U.S.C. § 2465. Congress did not, as it might have, make the revision retroactive. Hence, the new legislation is inapplicable to the issue of interest in cases, like the instant one, commenced prior to 120 days after April 25, 2000, the effective date of the new law. The House Report from an earlier version of the bill explained that the amendment was justified because “[ujnder current law, even if a property owner prevails in a forfeiture action, he will receive no interest for the time period in which he lost use of his property, [footnote citing Shaw] In cases where money or other negotiable instruments were seized, or money awarded a property owner, this is manifestly unfair.” The House Report thus assumed that, prior to the new legislation, there could be no recovery of interest. H.R.Rep. No. 105-358(1), at 34 (1997). In keeping with Shaw and with the views of the Second, Eight and Tenth Circuits, supra, as well as with the view expressed in the above House Report, we feel constrained to hold that sovereign immunity prevents recovery of interest here. It seems unfortunate to reach this result after Congress has revised the statute to indicate its wish to waive sovereign immunity and allow interest; but Congress did not make the revision retroactive, and indeed, it indicated when enacting the revision that it was doing so to change preexisting law that was believed to bar interest awards in the very circumstances now presented.

1539608-5155

HILL, Circuit Judge: Appellant appeals his convictions of conspiracy to possess and possession of marijuana with the intent to import and distribute, 21 U.S.C. §§ 955a(e) and (d)(1), 955c (1982) and 18 U.S.C. § 2 (1982). He contends the evidence was insufficient to support his convictions. Finding the evidence sufficient under United States v. Cruz-Valdez, 773 F.2d 1541 (11th Cir.1985) (en banc), we affirm. FACTS Appellant was captain of the BIERUM when the Coast Guard responded to his distress signal off the Belize coast. The BIERUM had departed Colombia twenty-four days earlier with a five day repair stop in Belize. The BIERUM was very old and rotted; it sank while in custody. It carried no legitimate cargo but had a twelve-man crew. During inspection, the Coast Guard officers discovered a crack in the engine compartment bulkhead that emitted the odor of marijuana. They subsequently located more than 300 bales of marijuana in a compartment concealed by two access plates, one of which was sealed with putty. In addition, they found charts of southern Florida marked near a known transfer point for marijuana smugglers, United States Immigration and Customs forms signed by appellant and a can of autobody putty similar to that sealing the access plate. Appellant and the crewmembers were indicted and tried. One crewmember testified that he was hired for a one-way trip to Aruba to pick up scrap metal but appellant told them they were detouring for a ship in distress and that appellant handled all radio communications. The jury acquitted all defendants except appellant. DISCUSSION We begin with the principle that a jury’s verdict “must be sustained if there is substantial evidence, taking the view most favorable to the Government, to support it.” Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680 (1942). Under our standard of review, [i]t is not necessary that the evidence exclude every reasonable hypothesis of innocence or be wholly inconsistent with every conclusion except that of guilt, provided that a reasonable trier of fact could find that the evidence establishes guilt beyond a reasonable doubt. A jury is free to choose among reasonable constructions of the evidence. United States v. Bell, 678 F.2d 547, 549 (5th Cir. Unit B 1982) aff’d on other grounds, 462 U.S. 356, 103 S.Ct. 2398, 76 L.Ed.2d 638 (1983). In United States v. Cruz-Valdez, 773 F.2d 1541 (11th Cir.1985) (en banc) this circuit adopted a rule of reason for determining whether evidence in drug conspiracy and possession cases satisfies the sufficiency test. The circumstances required to establish voluntary participation in the criminal acts that are afoot may vary. There is no set formula. A jury may find knowledgeable, voluntary participation from presence when the presence is such that it would be unreasonable for anyone other than a knowledgeable participant to be present. Id. at 1546. Although no longer bound by a rigid formula, we discussed several factors that satisfy the sufficiency test, including the quantity of contraband aboard, a lengthy voyage, and whether the contraband was evident by sight or smell. Most significantly, we “recognized that it is highly improbable that drug smugglers would allow an outsider on board a vessel filled with millions of dollars worth of contraband.” Id. With respect to the conspiracy charges, the government had the burden of proving appellant’s knowing and voluntary participation in an agreement between two or more persons to commit the crime charged. Inferences from circumstantial evidence may be used to establish the existence of a conspiratorial agreement. United States v. Pontoja-Soto, 739 F.2d 1520, 1525 (11th Cir.1984), cert. denied, — U.S. -, 105 S.Ct. 1369, 84 L.Ed.2d 389 (1985). Appellant could be convicted even if he joined the conspiracy after its inception and he played only a minor role in the operation. Id. Moreover, appellant could be convicted of conspiracy despite his co-defendants’ acquittals because the indictment charged that the defendants conspired with each other and other persons unknown to the grand jury. (R. 1, 2). “ ‘[A] defendant may be convicted of conspiring with persons whose names are unknown or who have not been tried and acquitted, if the indictment asserts that such other persons exist, and the evidence supports their existence and the existence of a conspiracy.’ ” United States v. Rodriguez, 765 F.2d 1546, 1552 (11th Cir.1985) quoting United States v. Sheikh, 654 F.2d 1057, 1062 (5th Cir. Unit A 1981) cert.denied, 455 U.S. 991, 102 S.Ct. 1617, 71 L.Ed.2d 852 (1982). The jury could consider appellant’s radio communications and charts of southern Florida as evidence of unknown co-conspirators. Moreover, the jury could reach a common sense conclusion that a drug smuggler would necessarily have contracted with a buyer or distributor in the United States. Because the presence of a large quantity of marijuana on board the BIE-RUM is undisputed, evidence sufficient for the jury to convict Mosquera of conspiracy would also suffice for his conviction on the possession charges. Cruz-Valdez, 773 F.2d at 1544.

12529858-18509

PHILIP P. SIMON, JUDGE In this certified class action, the plaintiff class alleges that a dunning letter sent by defendant Enhanced Recovery Company, LLC was false, misleading or confusing in violation of the Fair Debt Collection Practices Act. The parties have filed cross-motions for summary judgment, putting before me the question whether the claim can be decided as a matter of law based on undisputed facts, without a trial. Neither party has requested a jury trial, so the matter would ultimately be decided by me even if I found that material disputes of fact preclude summary judgment. Summary judgment must be granted when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). A genuine issue of material fact exists when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Not every dispute between the parties makes summary judgment inappropriate: "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Id. Undisputed Facts ERC is an accounts receivable management company that provides debt collection services for its clients, one of which is Sprint, the wireless telephone and internet service provider. [DE 63-1 at 5,6.] ERC received the collection account of plaintiff Erin Johnson with Sprint on March 6 or 7, 2016. [DE 63-1 at 17.] Johnson has never used a cell phone for other than personal use, and therefore the debt on her account with Sprint was not incurred for business purposes. [DE 63-2 at 27.] ERC sent Johnson three collection letters concerning her Sprint account. The initial collection letter was sent by ERC on March 8, 2016. Here's what it said in relevant part: Upon receipt and clearance of $1,094.72 [full balance of debt], your account will be closed and collection efforts will cease. This letter serves as notification that your delinquent account may be reported to the national credit bureaus. [DE 65-1 at 4.] A second letter dated April 21, 2016 is the focus of this lawsuit. Johnson did not receive the April 21 letter until May 5, 2016. [DE 63-2 at 23.] The pertinent portion of the letter reads: Our records indicate that your balance with Sprint remains unpaid; therefore your account has been placed with ERC for collection efforts. We are willing to reduce your outstanding balance by offering discounted options. Option 1: Pay the settlement of $875.78, please remit by May 26, 2016. Option 2: Pay the settlement of $930.51, payable in 2 monthly payments of $465.26. Option 3: Pay the settlement of $985.25, payable in 3 monthly payments of $328.42. We are not obligated to renew this offer. This letter serves as notification that your delinquent account may be reported to the national credit bureaus. Payment of the offered settlement amount will stop collection activity on this matter.... Unless you dispute the validity of the debt, or any portion thereof, within thirty (30) days after your receipt of this notice, the debt will be assumed to be valid by us. [DE 65-1 at 5] (emphasis added). The language I have emphasized in bold is what is at issue in this case. ERC's Senior Vice President of Compliance, Jason Davis, testified in his deposition that "collection activity" as used in the letter meant that phone calls and letters from ERC about the account would stop upon receipt of the full amount of the debt, and if the debt had already been reported, full payment would result in updated credit reporting to reflect that the debt had been paid in full or settled. [DE 63-1 at 3, 20.] Depending on the client, ERC waits between 33 and 45 days after it sends the first collection letter before reporting a debt to credit bureaus. [DE 63-1 at 12.] According to ERC's policies, Johnson's debt to Sprint became eligible for credit reporting on April 21, 45 days after ERC received the account. [DE 63-1 at 22.] ERC first reported Johnson's Sprint account debt to credit reporting agencies on April 24, 2016, more than a month before the earliest due date of the settlement options offered in the April 21 letter. [DE 63-1 at 19.] Johnson testified that the April 21 letter was not clear whether her debt would be reported or had already been reported. [DE 63 at ¶ 36.] Johnson interpreted the April 21 letter to mean that she could prevent the Sprint account from appearing on her credit reports if she made a payment as requested in the letter, or disputed the debt within 30 days as referenced in the letter. [DE 63 at ¶ 38.] Recall that Johnson received the April 21 letter in early May. And the day after reading the April 21 letter, Johnson checked her credit reports and found that the debt had already been reported. [DE 63-2 at 23.] She then disputed the debt to TransUnion and contacted an attorney. [Id. at 23-24.] A third letter was sent to Johnson dated June 6, 2018. [DE 63-6 at 2.] The June 6 letter is largely identical to the April 21 letter, offering three settlement options (but for lower amounts more favorable to the debtor than previously offered). [Id. ] Johnson did not submit any payment on her Sprint account, but on July 24, 2016, ERC sent a "deletion" to the credit bureaus concerning Johnson's account because ERC had received notice of Johnson's "lawsuit or pre-suit" disputing the debt. [DE 63-1 at 19.] Johnson never made any payments to ERC on the Sprint account, but does not dispute the accuracy of the balance due on the account. [DE 63-2 at 25.] Discussion The claim arises under 15 U.S.C. § 1692(e), which prohibits false or misleading representations in connection with debt collection, and offers a non-exhaustive list of more than a dozen examples of impermissible conduct. Lox v. CDA, Ltd. , 689 F.3d 818, 822, 827 (7th Cir. 2012). A plaintiff bringing a § 1692(e) claim is not required to prove that she was misled to her detriment or that she suffered actual damages. Lox , 689 F.3d at 826 ; Muha v. Encore Receivable Mgmt., Inc. , 558 F.3d 623, 629 (7th Cir. 2009). The determination whether a representation is false or misleading is made from the perspective of what the Seventh Circuit calls an "unsophisticated consumer." "[O]ur test for determining whether a debt collector violated § 1692e is objective, turning not on the question of what the debt collector knew but on whether the debt collector's communication would deceive or mislead an unsophisticated, but reasonable, consumer." Turner v. J.V.D.B. & Assoc. , 330 F.3d 991, 995 (7th Cir. 2003). This hypothetical person can be "uninformed, naive [and] trusting" but has basic knowledge about the financial world and the ability to draw logical inferences and conclusions. Lox , 689 F.3d at 822 (quoting Veach v. Sheeks , 316 F.3d 690, 693 (7th Cir. 2003), and Wahl v. Midland Credit Mgmt. , 556 F.3d 643, 645 (7th Cir. 2009) ). Because the "unsophisticated consumer" standard is not so low as a "least sophisticated consumer" standard, a collection letter is not misleading under § 1692e - at least in the Seventh Circuit - unless it is confusing to "a significant fraction of the population." Lox , 689 F.3d at 822, quoting Taylor v. Cavalry Inv. , L.L.C., 365 F.3d 572, 574 (7th Cir. 2004). The Seventh Circuit has grouped FDCPA cases alleging deceptive or misleading statements into three categories. The first category of cases involve statements that on their face are plainly not misleading or deceptive. Ruth v. Triumph Partnerships , 577 F.3d 790, 800 (7th Cir. 2009). In that sort of case, dismissal or summary judgment is granted to the defendant without the need for extrinsic evidence of consumer confusion, because even without such evidence the court can determine that "the statement complied with the law." Id. The second category of cases "involves statements that are not plainly misleading or deceptive but might possibly mislead or deceive the unsophisticated consumer." Id. This is the category of claim where evidence is needed to prove that the collection letter would likely deceive or mislead an unsophisticated, but reasonable, consumer. In a case of this kind, the Court of Appeals has held "that plaintiffs may prevail only by producing extrinsic evidence, such as consumer surveys, to prove that unsophisticated consumers do in fact find the challenged statements misleading or deceptive." Id. See also Lox , 689 F.3d at 822. The third type of case described in Ruth is a lay down win for the plaintiff. These are the cases where the collection letter includes plainly deceptive language. When confronted with such a letter, a court can grant summary judgment to the plaintiff "without requiring them to prove what is already clear." Id. Recall that Johnson's claim is based on letter that she received from ERC dated April 21 and which she received in early May. This was the second of three letters that she received from ERC. Johnson argues that this letter falls into the third category of claims as discussed in Ruth - that the letter is plainly misleading on its face because it falsely suggested that credit reporting could be prevented by timely payment of an offered settlement amount. [DE 62 at 15.] The argument depends on Johnson's interpretation of the phrase "may be" in the notification "that your delinquent account may be reported to the national credit bureaus," and her interpretation of the subsequent sentence advising that "[p]ayment of the offered settlement amount will stop collection activity on this matter." [DE 71-1 at 2.] ERC contends that the notice is not plainly deceptive or misleading. Instead, ERC argues this is a category 2 case as described in Ruth in which Johnson can only prevent summary judgment in ERC's favor by offering extrinsic evidence of consumer confusion or deception, which Johnson admittedly does not have. Even with the understanding that credit bureau reporting is "collection activity" within the meaning of the letter, the letter does not plainly indicate either that credit bureau reporting has not yet taken place or that timely payment will prevent a report of the debt to the national credit bureaus. A consumer might possibly construe the letter to mean those things, but would not necessarily do so. It is also reasonable to construe the letter as intended, namely as a notice that the delinquent account is subject to credit reporting (which could occur or has already occurred), but that payment of an offered settlement will impact any credit reporting (such as by an updated notice that the debt has been resolved) as well as other collection efforts (such as additional dunning letters). The "delinquent account" language may reasonably be read as a statement about eligibility for credit reporting but not a statement as to whether or not the account has yet been reported. That the same notice about reporting to the national credit bureaus appears in all three letters, both before and after the debt was reported, supports this generic interpretation, because the language is then accurate in all three letters both before and after actual reporting took place. In the second sentence of the challenged language, the phrase "stop collection activity" cannot reasonably be read to mean "prevent collection activity" when the language appears in a letter that is itself "collection activity." Like the sentence about credit reporting, this statement about stopping collection activity is accurate in all three letters if understood to mean that resolution of the debt will stop further collection activity, which for a debt already reported means an updated report reflecting that the debt has been resolved. With respect to a debt already reported, because the word "stop" connotes "bring to a halt" rather than "delete" or "reverse," reasonable interpretation includes action taken to reflect the satisfaction of the previously reported debt. Johnson wrongly asserts that ERC ignores the three categories of Ruth to contend that extrinsic evidence is always necessary to support a § 1692(e) claim. [DE 75 at 2-3.] To the contrary, ERC expressly acknowledges that extrinsic evidence of consumer confusion is required only in the one category of cases involving language that is not confusing or misleading on its face but might be so to a significant fraction of the population. [DE 71 at 5, 7.] Johnson's efforts to avoid an adverse summary judgment depend on her misinterpretation of the standard for the second category of cases. The first and third categories involve statements that are, on the one hand, plainly not deceptive, or, on the other, plainly are deceptive, leaving the middle category as the broader one encompassing statements that are only possibly deceptive. But Johnson argues that the 7th Circuit has held that extrinsic evidence is not required of a consumer-debtor where a collection representation is "susceptible to two different constructions, one of which is inaccurate." [DE 75 at 5.] Veach v. Sheeks , one of the cases Johnson relies on for this proposition, is distinguishable because it involves an actual misrepresentation as to the amount of the debt, not a statement that is merely potentially confusing or misleading. Veach , 316 F.3d at 693. Chuway v. National Action Financial Services, Inc. , 362 F.3d 944, 948 (7th Cir. 2004), also cited by Johnson, affirms the requirement of extrinsic evidence where "it is unclear whether the letter would confuse intended recipients of it." There, the Seventh Circuit found that no extrinsic evidence was required to "create a triable issue" because to understand the dunning letter's confusing statement about the amount of the debt "one has to be exceptionally ingenious." Id. Chuway doesn't support summary judgment in Johnson's favor here, where it is only "unclear whether the letter would confuse" debtor-recipients. Id. In addition, both Veach and Chuway involve representations on a matter - the amount of the debt - as to which the FDCPA contains a specific disclosure requirement. Claims of noncompliance with such requirements under § 1692g(a)(2) -- rather than § 1692(e) as here -- do not require extrinsic evidence of confusion. Janetos v. Fulton Friedman & Gullace, LLP , 825 F.3d 317, 323 (7th Cir. 2016). Given the parties' rival analyses, the case turns on whether the second category of cases requiring extrinsic evidence encompasses those in which a collection representation is ambiguous and one interpretation is accurate and the other false. Ruling on the previous motion to dismiss, I noted that the word "may" has two different possible meanings in its context here - either "can" or "might in future." [DE 27 at 9.] The former interpretation is espoused by ERC and, as a statement of the debt's eligibility for credit reporting, was true each time it was used in the three collection letters. Johnson points out that if the word "may" is read as "might in future" then the statement, when interpreted in conjunction with the next sentence about payment stopping collection activity, might suggest that timely payment could prevent credit reporting. Johnson cites Gonzales v. Arrow Fin. Servs., LLC , 660 F.3d 1055, 1062 (9th Cir. 2011), in support of the assertion that language with two reasonable interpretations, only one of which is accurate, constitutes deception in violation of the FDCPA. First, Gonzales involves not merely misleading information, but a violation of the FDCPA by the implied threat of collection action that is actually prohibited by law. Gonzales , 660 F.3d at 1062. There is no such circumstance here. More importantly, Gonzales is a decision of the Ninth Circuit, applying the "least sophisticated debtor" standard in determining whether collections language is deceptive or misleading. Id. at 1061-62. This standard is different from the Seventh Circuit's "unsophisticated consumer," and inconsistent with this circuit's rubric of three categories of challenged language. This inconsistency was noted by the Seventh Circuit in Lox. Lox , 689 F.3d at 822. Gonzales cites decisions of the Third, Sixth and Second Circuits to support its position. Id. at 1062. And like Gonzales , these decisions also identify the principle Johnson relies on as flowing from the lower "least sophisticated debtor" standard that is inapplicable in the Seventh Circuit. Brown v. Card Service Center , 464 F.3d 450, 454 (3rd Cir. 2006) ; Kistner v. Law Offices of Michael P. Margelefsky, LLC , 518 F.3d 433, 441 (6th Cir. 2008) ; Russell v. Equifax A.R.S. , 74 F.3d 30, 34 (2nd Cir. 1996). In short, it appears that the Seventh Circuit is out of step with four other circuits in the standard it uses in § 1692(e) cases. But that is neither here nor there for present purposes. In a hierarchical system of courts, my job is to follow what my superiors tell me, and the Seventh Circuit has made it abundantly clear that "the unsophisticated-debtor standard is an objective one and is not the same as the rejected least-sophisticated-debtor standard." Durkin v. Equifax Check Services, Inc. , 406 F.3d 410, 414 (7th Cir. 2005). In sum, I am persuaded that under the Seventh Circuit's approach, ERC is correct when it argues that the two possible interpretations require extrinsic evidence to establish that a significant fraction of the population would be misled by the letter's language. [DE 71 at 5.] Because the language is not plainly deceptive, "the plaintiff must come forward with evidence beyond the letter and beyond [her] own self-serving assertions that the letter is confusing in order to create a genuine issue of material fact[.]" Durkin , 406 F.3d at 415. This extrinsic evidence can take the form of an appropriately designed and conducted consumer survey or an appropriate expert witness. Sims v. GC Services L.P. , 445 F.3d 959, 963 (7th Cir. 2006) (citing Chuway, 362 F.3d at 948 ). Plaintiff lacks any such objective evidence, banking instead on her assertion that the letter "is deceptive on its face." [DE 62 at 15.] Now with all the parties' evidence and argument before me, I reject that position. Because I conclude that the challenged statements in ERC's letter are not plainly misleading or deceptive, Johnson's failure to offer extrinsic evidence that the language would confuse or mislead a significant fraction of the population is fatal to her FDCPA claim. Sims , 445 F.3d at 963. Conclusion

6491861-16786

MEMORANDUM KEITH M. LUNDIN, Bankruptcy Judge. The question is whether Williamson County’s oversecured claim for real property taxes includes statutory penalties, fees and costs. The claim includes penalties, but does not include fees and costs. I. The debtor filed Chapter 11 in August of 1989. A plan proposed by the Bondholder Committee was confirmed on May 14,1991. The confirmed plan provides for payment in full of the allowed secured claim of Williamson County. Williamson County asserts a secured claim for 1989 real property taxes plus interest, penalties, fees and costs. The value of the property securing the County’s claim exceeds the amount of that claim. The Bondholder Committee concedes the County’s right to post-petition interest, see United States v. Ron Pair Enterprises, 489 U.S. 235, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989), but the Committee contests the County’s claim for statutory penalties, fees and costs. II. TENN.CODE ANN. § 67-5-2101 (1989) provides: The taxes assessed by ... a county ... upon any property of whatever kind, and all penalties, interest, and costs accruing thereon, shall become and remain a first lien upon such property from January 1 of the year for which such taxes are assessed. TENN.CODE ANN. § 67-5-2010 (1989) provides: Penalty and interest. — (a)(1) To the amount of tax due and payable, a penalty of one half of one percent (.5%) and interest of one percent (1%) shall be added on March 1, following the tax due date and on the first day of each succeeding month.... Under TENN.CODE ANN. §§ 67-5-2101 and 2010 (1989), Williamson County’s lien for taxes also secures its right to payment of penalties and costs. At the petition in August of 1989, the County’s claim for penalties with respect to 1989 taxes was unmatured and would mature beginning March 1, 1990. That the County’s right to payment of penalties was unmatured does not defeat its status as a claim in bankruptcy. See 11 U.S.C. § 101(5) (“ ‘claim’ means ... right to payment, whether ... matured, unmatured_”). Section 502 of the Bankruptcy Code governs allowance of claims. Upon objection, § 502(b)(1) disallows any portion of a claim that is unenforceable against the debtor and property of the debtor “under any agreement or applicable law for a reason other than because such claim is contingent or unmatured.” 11 U.S.C. § 502(b)(1). Section 502(b)(2) disallows “unmatured interest.” 11 U.S.C. § 502(b)(2). Lack of maturity is not a bar to allowance of the County’s claim for penalties or costs. “Applicable law” for § 502(b)(1) purposes includes bankruptcy law. The Bondholder Committee cites 11 U.S.C. § 506(b) as “applicable law” that disallows penalties, fees and costs. Section 506(b) of the Bankruptcy Code addresses entitlement to “interest ... fees, costs or charges” with respect to overse-cured claims: (b) To the extent that an allowed secured claim is secured by property the value of which, after any recovery under subsection (c) of this section, is greater than the amount of such claim, there shall be allowed to the holder of such claim, interest on such claim, and any reasonable fees, costs, or charges provided for under the agreement under which such claim arose.- Section 506(b) reverses the effect of § 502(b)(2) with respect to post-petition interest for oversecured claim holders. In Ron Pair, the Supreme Court held that § 506(b) allows post-petition interest to both consensual and nonconsensual overse-cured claim holders. The Supreme Court interpreted § 506(b) by reference to pre-Code case law and with acute attention to the grammatical structure of the section. The Court concluded that the rules for allowance of post-petition interest to overse-cured claim holders are different from the rules for allowance of fees, costs or charges: Recovery of postpetition interest is unqualified. Recovery of fees, costs, and charges, however, is allowed only if they are reasonable and provided for in the agreement under which the claim arose. Therefore, in the absence of an agreement, postpetition interest is the only added recovery available. Ron Pair, 489 U.S. at 241, 109 S.Ct. at 1030. Section 506(b) as interpreted by the Supreme Court in Ron Pair requires disallowance of Williamson County's claim for post-petition fees and costs because Williamson County’s claim arose by operation of law and not by agreement. III. The Bondholders argue that Ron Pair interprets § 506(b) also to preclude allowance of penalties to an oversecured, non-consensual lien holder. At least three courts have interpreted Ron Pair to affect the allowance of penalties to nonconsensual lien holders. See In re Parr Meadows Racing Ass’n, Inc., 880 F.2d 1540, 1549 (2d Cir.1989); In re California Wholesale Elec. Co., 121 B.R. 360, 366-67 (Bankr.C.D.Cal.1990); In re Pointer, 113 B.R. 285, 291 (Bankr.N.D.Tex.1990). In Parr Meadows, the Second Circuit precluded secured status for tax penalties on the following theory: Ron Pair also answers the question whether, under § 506(b), the county is entitled to priority on its penalty claims. Under the bankruptcy code, “[recovery of fees, costs, and charges” is allowed “only if they are reasonable and provided for in the agreement under which the claim arose.” In the absence of such an agreement, fees and costs are not recoverable. Ron Pair, 109 S.Ct. at 1030. Here, the claims for penalties arose, not under an agreement between the parties, but by operation of law under the tax act. Consequently, ... § 506(b) did not apply to penalties.... 880 F.2d at 1549. California Wholesale Elec., Co. cites Parr Meadows verbatim and reaches the same conclusion. 121 B.R. at 366-67. In re Pointer follows Parr Meadows but describes as dicta any inference from Ron Pair with respect to the allowance of penalties to the holder of an oversecured, nonconsensual lien. 113 B.R. at 291. Parr Meadows, California Wholesale Elec. Co. and Pointer neither cite nor discuss a contrary line of cases dealing with the allowance of penalties to oversecured, nonconsensual lien holders. See In re Manchester Lakes Assoc., 117 B.R. 221 (Bankr.E.D.Va.1990); Matter of Specialty Cartage, Inc., 115 B.R. 164 (N.D.Ind.1989); In re Stack Steel & Supply Co., 28 B.R. 151 (Bankr.W.D.Wash.1983); In re Mitchell, 39 B.R. 696 (Bankr.D.Or.1984); In re Russo, 63 B.R. 335 (Bankr.D.Mass.1986); In re Seneca Balance, Inc., 114 B.R. 378 (Bankr.W.D.N.Y.1990). As explained by Judge Bostetter in Manchester Lakes Assocs., Ron Pair “did not definitively decide whether section 506(b) bars recovery of a prepetition, nonconsen-sual claim for tax penalties.” 117 B.R. at 223. In Ron Pair, the Supreme Court interpreted § 506(b) in accordance with pre-Code case law. Under § 57j of the former Bankruptcy Act, debts owing to a state or subdivision “as a penalty or forfeiture shall not be allowed_” 11 U.S.C. § 93(j) (repealed 1979). Manchester Lakes Assocs., 117 B.R. at 223. The Supreme Court had interpreted § 57j broadly to prohibit allowance of tax penalty claims without regard to whether the claim was secured or unsecured. See Simonson v. Granquist, 369 U.S. 38, 39-40, 82 S.Ct. 537, 538-39, 7 L.Ed.2d 557 (1962). The Bankruptcy Reform Act of 1978 contains no provision similar to former § 57j applicable to Chapter 11 cases. Several sections of the Code deal specifically with claims for penalties in Chapter 7 cases. Section 726(a)(4) provides for automatic subordination of noncompensatory penalty claims in Chapter 7 cases. Section 724(a) makes liens securing noncompensatory penalty claims voidable by the trustee in a Chapter 7 case. As Judge Bostetter documents, the legislative history of §§ 724 and 726 demonstrates that Congress contemplated that liens securing penalties would be valid in Chapter 11 cases following enactment of the Code: The Notes of the Committee on the Judiciary Senate Report 95-989 (“Notes”) pertaining to section 724(a) indicate that section 724(a) continues section 57(j)’s policy of protecting unsecured creditors from the debtor’s wrongdoing. The Notes explain: [sjubsection (a) of section 724 permits the trustee to avoid a lien that secures a fine, penalty, forfeiture, or multiple, punitive, or exemplary damages claim to the extent that the claim is not compensation for actual pecuniary loss. The subsection follows the policy found in section 57j of the Bankruptcy Act of protecting unsecured creditors from the debtor’s wrongdoing, but expands the protection afforded. The lien is made voidable rather than void in chapter 7, in order to permit the lien to be revived if the case is converted to chapter 11, under which penalty liens are not voidable. To make the lien void would be to permit the filing of a chapter 7, the voiding of the lien, and the conversion to a chapter 11, simply to avoid a penalty lien, which should be valid in a reorganization case. S.Rep. No. 989, 95th Cong., 2d Sess. 96, reprinted in 1978 U.S.Code Cong. & Admin.News 5787, 5882 (emphasis supplied). Committee Notes applicable to section 726(a)(4) explain: [pjaragraph (4) provides that punitive penalties, including prepetition tax penalties, are subordinated to the payment of all other classes of claims, except claims for interest accruing during the case. In effect, these penalties are payable out of the estate’s assets only if and to the extent that a surplus of assets would otherwise remain at the close of the case for distribution back to the debtor. Id. at 5883. 117 B.R. at 224. See also In re Specialty Cartage, Inc., 115 B.R. at 167-68 (“Consequently, Congress was fully aware of the policies against claims for penalties and the liens which might secure them. Despite this, it consciously decided to respect those liens in Chapter 11 by permitting them to remain undisturbed. Given this congressional decision and the foundational role of non-bankruptcy rights, we should not dismember an otherwise valid secured claim merely because it happens to include a penalty.”); In re Stack Steel & Supply Co., 28 B.R. at 155 (“In any event the legislative history to the Code clearly indicates that lien-secured penalties were not intended to be avoidable in Chapter 11 cases.... Therefore, as long as this case remains in Chapter 11, this Court is constrained to allow the claim for penalties secured by pre-petition tax liens.”); In re Russo, 63 B.R. at 337 (“The Code does not allow penalty claims in Chapter 7 liquidations that would impinge on creditors, 11 U.S.C. § 726(a)(4). However, the taxing authority is allowed to collect penalties in Chapter 11. The rationale for the different treatment is that in liquidation the creditors, not the debtor, would be penalized, while in Chapter 11, the debtor continues in business and therefore, bears the penalty.”); In re Seneca Balance, Inc., 114 B.R. 378 (“The vitality of a valid tax lien, which includes penalties and interest on the same, has been historically respected by the Legislature and the Judiciary.”). The Supreme Court in Ron Pair did not cite or analyze § 57j of the former Act, did not trace the development of §§ 724 or 726 and did not mention the allowance of penalties in Chapter 11 cases. These matters were not before the Court. Although the taxing authority’s claim in Ron Pair included penalties, allowance of penalties was neither at issue nor addressed by the Court in its decision. Parr Meadows did not analyze § 57j of the former Act or consider that tax penalty liens are protected in Chapter 11 cases under the Code. Parr Meadows was (converted to) a Chapter 7 case. Penalties are treated differently by the Code in Chapter 7 than they are in Chapter 11 cases. See 11 U.S.C. §§ 724(a) and 726(a)(4). The Parr Meadows court acknowledged that § 726(a)(4) would determine “in what order the county’s penalty claims should be satisfied in relation to other creditors ... [I]f any money remains after the secured creditors’ and other, higher priority claims are satisfied, the county can recover its penalty claims from the estate.” 880 F.2d at 1549. Section 724(a) works in concert with § 726(a)(4) in Chapter 7 cases to produce the result the Second Circuit seems to have desired. Under § 724(a) the Chapter 7 trustee in Parr Meadows could have avoided the (noncompensatory) penalty lien of the taxing authority. The Second Circuit’s use of § 506(b) to accomplish what Congress intended for § 724(a) is not benign. Section 506(b) applies in all chapters, but Congress intended different treatment for penalty liens outside of Chapter 7. The Parr Meadows holding that nonconsensual penalty liens are not secured because they are not provided for by agreement fails statutory analysis because penalties are not “fees, costs, [or] charges” for purposes of § 506(b). The legislative history to § 506(b) does not reveal that “fees, costs [or] charges” were intended to include “penalties.” The drafters of the Bankruptcy Code elsewhere used the words “penalties,” “fees,” “costs” or “charges” as if their meanings are distinct. See, e.g., 11 U.S.C. § 107(a) (access to court records without “charge”); 11 U.S.C. § 322(c) (trustee not liable personally for “penalty or forfeiture”); 11 U.S.C. § 328(a) (“contingent fee”); 28 U.S.C.S. § 1930 (Law.Co-op.1989) (bankruptcy “fees”); 28 U.S.C.S. § 1930 note on Bankruptcy Court Fee Schedule 819 (Law.Co-op.Supp.1991) (“The clerk shall assess a charge of up to three percent....”) (emphasis added); 11 U.S.C. § 507(a)(7)(G) (“the actual, necessary costs”); 11 U.S.C. § 503(b)(1)(C) (“any fine, penalty”); 11 U.S.C. § 503(b)(6) (“the fees and mileage”); 11 U.S.C. § 505(a) (“the amount ... of any ... penalty”); 11 U.S.C. § 507(a)(1) (“any fees and charges”); 11 U.S.C. § 726(a)(4) (“fine, penalty, or forfeiture”). See also Fed.R.Bankr.P. 7054(b) (“The court may allow costs_”). The dictionary definitions of these words are dissimilar. “Penalties” conventionally include some concept of punishment. BLACK’S LAW DICTIONARY 1290 (4th ed. rev.1968). “Charges” involve ordinary duties, burdens or obligations. BLACK’S at 294-95. A “fee” usually includes compensation for goods or services. BLACK’S at 740-41. “Costs” typically include reimbursement of expenses to an officer or agency. BLACK’S at 415-16. The Tennessee statute that creates the liens here at issue separately identifies the taxing authority’s right to recover costs and penalties. See TENN.CODE ANN. §§ 67-5-2101 and 67-5-2010 (1989), reproduced above. In many other contexts, Congress has recognized that “penalties” are different from “fees”, “costs” or “charges.” See, e.g., 5 U.S.C.S. § 551(10) (Law.Co-op.1989) (“sanction” for purposes of the Administrative Procedure Act includes “imposition of penalty or fine;” assessment of costs, charges, or fees are separately allowed); 16 U.S.C.S. § 810(b) (Law.Co-op.1978) (“charges and penalties ” with respect to licensees under Federal Power Act) (em phasis added); 22 U.S.C.S. § 4209 (Law.Coop.1982) (collection of unlawful charges and penalties by consular officers); 43 U.S.C.S. § 465 (Law.Co-op.1980) (charges and penalties payable to the Secretary of Interior); 43 U.S.C.S. § 478 (Law.Co-op. 1980) (construction charges and “a penalty of [one] per centum thereof” payable by any water right applicant or entryman) (emphasis added); 47 U.S.C.S. § 205 (Law. Co-op.1981) (charges and penalties payable to Federal Communication Commission). The precise use of language and punctuation in § 506(b), on which the Supreme Court relied in Ron Pair, favors the conclusion that the section does not address penalties. Such a reading of § 506(b) makes sense of §§ 724 and 726, makes sense of the legislative history of the Code with respect to former § 57j, accounts for the failure of Congress to reenact § 57j and leaves oversecured claim holders in Chapter 11 cases with the more favorable position that Congress intended for them. If § 506(b) is inapplicable, no “applicable law” disallows claims for tax penalties in a Chapter 11 case. Penalties to Williamson County that mature post-petition are allowed as part of its oversecured claim. This interpretation of § 506(b), Ron Pair and the conflicting lines of authority leads to one odd outcome. The Code allows penalties to the holder of an oversecured, non-consensual tax claim in a Chapter 11 case, but § 506(b) and Ron Pair preclude allowance of post-petition fees, costs and charges. Arguably, fees, costs and charges are more in the nature of “compensation” than are penalties. Elsewhere, the Code demonstrates Congressional intent to treat compensatory claims by taxing authorities more favorably than non-compensatory claims. See, e.g., 11 U.S.C. §§ 724(a), 726(a)(4) and 507(a)(7)(G) (excluding from the seventh priority penalties related to a tax claim if the penalty is not in compensation for actual pecuniary loss).

36003-6418

VAN DUSEN, Justice. In this treble damage suit brought under the Robinson-Patman Act, 15 U.S. C.A. § 13 et seq., by wholesale fruit and produce merchants in their capacity as buyers at defendant’s auction, the legal principles to be followed are different in certain instances than those which would normally be applicable in personal injury actions such as Groenveld v. Reading Co. (Civil Action No. 8324, opinion of May 15, 1950) and Prashker v. Beech Aircraft Corporation, D.C.D.Del.1959, 24 F.R.D. 305. In this case, plaintiffs were business men who were claiming substantial sums. The controlling statute is 28 U.S.C.A. § 1920. The items will be referred to under the headings used in defendant’s Motion (Document No. 83), which, correspond to the headings in Exhibit A to the Bill of Costs filed by defendant (Document No. 78). II. Fees of the Court Reporter 28 U.S.C.A. § 1920(2) provides: “A judge or clerk of any court of the United States may tax as costs the following: * * * “(2) Fees of the court reporter for all or any part of the stenographic transcript necessarily obtained for use in the case.” B. & C. The transcripts of the hearings and arguments on January 11 and 18, 1961, will be allowed, as these were essentially pre-trial proceedings made necessary by the failure of plaintiffs to have made timely preparation for the trial. See Bank of America v. Loew’s International Corp., D.C.S.D.N.Y.1958, 163 F.Supp. 924, 931-932. Cf. Delaware Valley Marine Supply Company v. The American Tobacco Company et al., D.C., 199 F.Supp. 560. D. The transcript of the trial will be allowed at the non-daily rate. See Consolidated Fisheries Co. v. Fairbanks Morse & Co., D.C.E.D.Pa.1952, 106 F.Supp. 714; Delaware Valley Marine Supply Company v. The American Tobacco Company et al., D.C., 199 F.Supp. 560. Under normal circumstances, the trial judge would allow this item at the daily rate in a case such as this since he makes use of the daily copy and did so in this case. See Bank of America v. Loew’s International Corp., D.C.S.D.N.Y.1958, 163 F.Supp. 924, 926-928; Perlman v. Feldmann, D.C.D.Conn.1953, 116 F.Supp. 102, 105-109; and cases cited at page 5 of defendant’s brief, being Document No. 104. However, there were two special factors in this case which have caused the trial judge to disallow the daily rate: A. The trial did not last a full two weeks, even though it was expected to last longer than this time, so that it might have been possible to do without the daily transcript. B. The transcript will not be of controlling weight in the trials of the other plaintiffs in this spurious class action, since defendant refused to agree that the liability verdict as to the plaintiffs whose cases were tried first should control in the cases of the other plaintiffs. VI. Costs of Depositions These depositions were taken in good faith and within the bounds of the discovery rules. Under such circumstances, they were “necessarily obtained for use in the case” under 28 U.S.C.A. § 1920 (2). See Bank of America v. Loew’s International Corp., supra, 163 F.Supp. at pages 930-931, and the many authorities there cited. However, the depositions of Collinson, Zeitz, Gorberg, Hyman, Pontari and Robinson should be taxed against, or in favor of, them in the trial of their claims, since defendant refused to agree that the January 1961 trial should have any effect on the claims of these plaintiffs. For this reason, the deposition costs in VI-B-4, 6, 7, 8 and 10 will be disallowed at this time. IV-C. Fees claimed for “Copies of Papers Necessarily Obtained for Use in Case” 28 U.S.C.A. § 1920 (k) These fees cover charges by a well-qualified firm of certified public accountants for making understandable summaries of (a) financial records and, in the case of C-3, (b) government (Department of Commerce) statistical figures. Charges for the time of well-qualified experts were clearly involved in preparing these exhibits, rather than solely for the time and materials necessary to make the documents physically. For this reason, these costs, without more, do not fall under 28 U.S.C.A. § 1920(4) and they were properly disallow ed for part of the item under sub-paragraph 1. See Prashker v. Beech Aircraft Corporation, D.C.D.Del.1959, 24 F.R.D. 305, 311-313. The cost of preparing PT-9 might well be taxable as a cost if there had not been an agreement between counsel to share equally the cost of its preparation. Since counsel did not put this agreement in writing but announced the equal sharing of costs in open court, the trial judge does not believe he should tax any part of this item as costs. The arrangements under which PT-7A was prepared were made between counsel and no report was made to the court. The accountants for plaintiffs undoubtedly contributed with those for defendant to the formula under which this exhibit was prepared, even though defendant’s accountants did the actual work, of analyzing the financial records and preparing the charts. However, the trial could not have proceeded intelligently without this document, which was primarily for the benefit of plaintiffs, and the trial judge would have ordered its preparation if defendant had not undertaken the task of preparing it on the eve of trial in order to aid the court. Under these circumstances, defendant is entitled to have taxed as costs the fair value of the time taken in its preparation insofar as this time was spent by its accountants. See Appliance Investment Co. v. Western Electric Co., 2 Cir., 1932, 61 F.2d 752, 753, 756-757; Prashker v. Beech Aircraft Corporation, supra, 24 F.R.D. at page 313, and cases there cited. However, plaintiffs challenge the reasonableness of this $833. charge stated in the affidavit of June 30, 1961 (Document No. 103). In view of the generality of this affidavit (for example, the failure to state the hours spent in this work or the charge per hour), this matter will be remanded to the Clerk to determine the proper amount of this charge and to revise his taxation of costs (Document No. 80) in accordance with such determination and with the rulings in this Memorandum. The Clerk may find that the filing of a more detailed affidavit by the accountant, in the absence of a contrary affidavit on plaintiffs’ behalf, will enable him to decide the matter without a hearing. See Swan Carburetor Co. v. Chrysler Corporation, 6 Cir., 1945, 149 F.2d 476, at pages 476-477.