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1678094-22423 | LEVIN H. CAMPBELL, Chief Judge.
Stephen O. Masse was convicted in the United States District Court for the District of Massachusetts for distributing cocaine in violation of 21 U.S.C. § 841 (1982) and 18 U.S.C. § 2 (1982). He assigns a number of errors on appeal, none of which we find has merit. We affirm.
I. FACTS
Masse was indicted following an undercover operation conducted by the United States Drug Enforcement Agency (“DEA”). On November 6, 1984, DEA agent Fencer, posing as a drug buyer, made three telephone calls to Joseph Waterhouse seeking to buy one pound of cocaine. After discussing the price and other related issues, the two men agreed they would consummate the transaction the next day, November 7, 1984, at the Holiday Inn on Blossom Street in downtown Boston.
At about 1:30 p.m. on November 7, Waterhouse, accompanied by two others, arrived in a white Grand Prix at the Holiday Inn. The driver of the car was subsequently identified as appellant Masse. Masse and Waterhouse left the car and began walking toward the hotel’s Blossom Street entrance. As Waterhouse approached Fencer, who was standing near the entrance, Masse continued into the hotel lobby. He stayed there briefly before leaving the hotel through its Cambridge Street exit. Two DEA agents, Boeri and Reilly, who were watching from their car, saw Masse cross Cambridge Street and enter Chuck’s Submarine Sandwich Shop. While Masse remained in the sandwich shop, Waterhouse handed Fencer a bag containing a white powder that appeared to be cocaine (the substance later field tested positive for cocaine). Fencer thereupon gave the arrest signal, and agents Boeri and Reilly got out of the car from which they had been watching Masse and moved to the doorway of the sandwich shop, where they waited.
When Masse came out of the shop, the two agents approached him. According to Boeri’s testimony at the suppression hearing prior to Masse’s trial, the agents immediately identified themselves and said to Masse, “we are conducting a drug investigation. Do you mind talking to us?” Masse agreed, and the agents asked whether he would accompany them to the opposite side of Cambridge Street. Masse acquiesced. Agent Boeri testified that once Reilly, Masse and he crossed the street, events unfolded as follows:
[OJne of us, Reilly or I — I think I may have said it — “How did you get here?” He says, "My car.” I said, “What kind of car do you have?” He tells us a black Le Mans, so I said, “Where did you park it?” and he motions, he says, “Up the street,” and he is motioning up Cambridge Street away from where the car had originally been on Blossom Street.
So I say to him, I said, “A black Le Mans?” I said “I just saw you get out of a white Grand Prix,” at which point in time there was no further conversation, and we advised him, either Reilly or I, we said, “You are under arrest for violation of the federal narcotic laws.” I then verbally advised him per the Miranda warnings of his rights.
After handcuffing Masse and placing him in the back seat of their car, the agents once again gave Masse Miranda warnings.
On the way to the police station, and after the second reading of the Miranda warnings, Masse explained to the agents his connection with Waterhouse and the drug deal. He claimed that he had been at home sleeping when he got a call from “these guys” to give them a ride to the Holiday Inn, a service for which he was to be compensated. When asked whether he knew the purpose of the trip to the hotel, Masse admitted to knowing that a “coke deal” was to occur.
At the end of the bail hearing the next day, November 7, Masse and agents Fencer, Boeri and Reilly were standing in the rear of the courtroom when, according to Fencer’s testimony at the suppression hearing, Masse stated, “I had nothing to do with this. I don’t know what’s going on. You guys know I don’t know anything, what’s going on.” After Fencer responded with “Have you talked on the telephone at all in the last six months,” Masse allegedly exclaimed, “Well, then, I guess you guys do know what’s going on.”
A similar conversation occurred on November 9, after Masse had been released on bail and had returned to DEA headquarters to retrieve his car and $697 seized from him at the time of his arrest. While at the headquarters, Masse indicated to agents Fencer and Boeri that he had provided the cocaine to Waterhouse (although also emphasizing that he was just a middleman). Boeri testified at the suppression hearing that, instead of letting Masse continue to incriminate himself, the agents suggested, “Well, ... why don’t you get in touch with your attorney and come back and talk with us if you’ve got something further to discuss about this.” There is no evidence of any further incriminating conversation between Masse and any DEA agent.
On November 20, 1984, a federal grand jury sitting in the District of Massachusetts returned a one-count indictment against Masse and Waterhouse. A two-count superseding indictment was returned on November 29. Count 1 of the superseding indictment charged the defendants with conspiracy to possess cocaine with intent to distribute, in violation of 21 U.S.C. § 846 (1982). Count 2 alleged that the defendants “did knowingly and intentionally possess with intent to distribute, and did distribute, a quantity of cocaine,” in violation of 21 U.S.C. § 841(a)(1) (1982) and 18 U.S.C. § 2 (1982). Prior to trial, defendant Water-house pleaded guilty.
Masse subsequently moved for the suppression of “any statements” obtained by the DEA on either November 7 or November 9. His motion asserted, without explanation, that any such statement was “the product of improper interrogation in violation of his rights under the Fifth and Sixth Amendments to the United States Constitution. Miranda v. Arizona.” On February 25-26, 1985, the district court conducted a hearing on the motion, which it ultimately rejected in an opinion delivered from the bench on February 26. Trial commenced on March 15, 1985 and concluded on March 19, when the jury was instructed. At the request of defense counsel, Count 2 was bifurcated into two charges: (1) possession with intent to distribute cocaine, and (2) distribution of cocaine. On March 21,1985, the jury returned a verdict of guilty on that part of Count 2 alleging distribution of cocaine, while acquitting Masse of all other charges.
II. SUPPRESSION RULING
Masse contends that the district court erred in refusing to suppress the various incriminating statements he made at different times to DEA agents. His initial statements were to agents Boeri and Reilly concerning the location, make and color of his car. They followed the confrontation outside Chuck’s Submarine Sandwich Shop on Cambridge Street. Masse says a custodial situation then existed, requiring the immediate giving of Miranda warnings, and rendering the agents’ failure to do so here fatal to the later use of those statements. Because of this initial error, Masse also asks for suppression of his later statements — his remarks on the way to the police station following his arrest, at the close of his bail hearing the next day, and at DEA headquarters on November 9. While Miranda warnings preceded all of these, Masse wants them excluded as fruit of the poisonous tree.
In reviewing the court’s refusal to suppress, we look only to the record created at the suppression hearing. We recognize that Masse did not choose to testify until the trial itself and that, when he did so, he told a somewhat different story concerning the events surrounding his arrest than had the agents at the suppression hearing. Masse did not, however, ask the district court to reopen its prior suppression ruling, and we see no occasion for this court to look beyond the record at the suppression hearing in determining whether that ruling, based on evidence from that hearing, was properly founded.
We see no merit in Masse’s argument that the statements he made to agents Boeri and Reilly prior to his arrest should have been suppressed because the agents had not given Miranda warnings. Masse was not then in custody. See, e.g., Berkemer v. McCarty, 468 U.S. 420, 434, 104 S.Ct. 3138, 3147, 82 L.Ed.2d 317 (1984) (defendant in a custodial situation must be afforded Miranda warnings before being questioned). The agents’ request that Masse talk to them did not create a custodial situation. As the Supreme Court stated in Oregon v. Mathiason, 429 U.S. 492, 495, 97 S.Ct. 711, 714, 50 L.Ed.2d 714 (1977),
[a]ny interview of one suspected of a crime by a police officer will have coercive aspects to it, simply by virtue of the fact that the police officer is part of a law enforcement system which may ultimately cause the suspect .to be charged with a crime. But police officers are not required to administer Miranda warnings to everyone whom they question.
Accord Podlaski v. Butterworth, 677 F.2d 8, 9 (1st Cir.1982).
A custodial situation necessitating Miranda warnings arises only where “there is ‘a formal arrest or restraint on freedom of movement’ of the degree associated with a formal arrest.” California v. Beheler, 463 U.S. 1121, 1125, 103 S.Ct. 3517, 3520, 77 L.Ed.2d 1275 (1983) (quoting Oregon v. Mathiason, 429 U.S. at 495, 97 S.Ct. at 714). Accord United States v. Quinn, 815 F.2d 153, 160 (1st Cir.1987); Fisher v. Scafati, 439 F.2d 307, 310 (1st Cir.) (“[c]ustody, in the Miranda sense, must require at least some objective manifestation that the defendant was ‘deprived of his freedom of action in [a] significant way’ ”), cert. denied, 403 U.S. 939, 91 S.Ct. 2256, 29 L.Ed.2d 719 (1971). Whether a restraint of freedom triggers Miranda must be determined by objective standards. See, e.g., Podlaski, 677 F.2d at 9; Borodine v. Douzanis, 592 F.2d 1202, 1206 (1st Cir.1979). Although no mechanical test exists, in United States v. Streifel, 781 F.2d 953, 961 n. 13 (1st Cir.1986), we stated that the factors to be considered include “whether the suspect was questioned in familiar or at least neutral surroundings, the number of law enforcement officers present at the scene, the degree of physical restraint placed upon the suspect, and the duration and character of the interrogation.”
Here, the agents’ prearrest questioning of Masse took place shortly after 1:30 in the afternoon, on the public sidewalks bordering Cambridge Street, a major thoroughfare in downtown Boston. The agents were not in uniform, identified themselves immediately upon approaching Masse, and at no time prior to the arrest engaged in or threatened physical coercion. The agents’ questioning of Masse was brief; its purpose was to dispel or to confirm their suspicions of wrongdoing. To be sure, after Masse, Reilly and Boeri had crossed Cambridge Street from the sandwich shop, the questioning occurred in proximity to other plain-clothes agents. But the court could reasonably have be lieved that these additional agents were busy with other aspects of the investigation and did not actively participate in Masse’s questioning. This record provides adequate support for the district court’s ruling that, prior to his arrest, Masse was not in a custodial situation requiring Miranda warnings. See Quinn, at 161; Streifel, 781 F.2d at 961; Podlaski, 677 F.2d at 9-10; Borodine, 592 F.2d at 1205-08. The court, therefore, committed no reversible error in refusing to suppress Masse’s prearrest statements.
As no reason existed to suppress Masse’s first set of statements, there was no primary illegality to taint his subsequent statements. Accordingly, we reject Masse’s argument that his subsequent statements should have been suppressed as fruit of the poisonous tree.
III. COCONSPIRATOR STATEMENTS
At trial, the government sought to introduce statements Joseph Waterhouse made to DEA agent Fencer, in the latter’s undercover capacity, on two different occasions. The first of these were the November 6 telephone conversations, tape recorded by the DEA, in which Fencer and Waterhouse planned the details and timing of the next day’s drug deal. The second statement, occurring on the day of the deal, was in a face-to-face interchange between Fencer and Waterhouse. After Masse had walked past Fencer into the hotel lobby, Fencer had asked Waterhouse “who the other individual was that got out of the car with him,” referring to Masse. Waterhouse purportedly responded, “the source for the cocaine.”
In opposing admission of the November 6 telephone conversation, Masse insisted that the government had produced no evidence that he was a member of the conspiracy on that date. Accordingly, Masse argued, the coconspirator exception to the hearsay rule, Fed.R.Evid. 801(d)(2)(E), did not apply. By contrast, he argued that Waterhouse’s November 7 remark was inadmissible because not in furtherance of the conspiracy. The district court rejected both assertions, finding that (1) Masse was more likely than not a member of the conspiracy on November 6. and (2) Waterhouse’s November 7 statement was in furtherance of the conspiracy. On appeal, Masse challenges both determinations.
A. November 6 Telephone Conversations
Masse’s argument that coconspirator statements made prior to the time he joined the conspiracy are inadmissible is based on dicta from our Petrozziello opinion which suggests that both the defendant and de clarant must be members of the conspiracy at the time the hearsay statement was made. 548 F.2d 20, 23 (1st Cir.1977).
Here there was more than ample proof that Masse was a member of the conspiracy on November 7, the day of the drug deal. Masse admitted to being a source of the cocaine; he appeared, along with Waterhouse, at the Holiday Inn on November 7; and he lied to agents Boeri and Reilly when asked about the location, color and make of his car. Masse insists, however, that there was insufficient evidence that he was a member of the conspiracy at the time of the November 6 phone conversations between Waterhouse and Fencer.
This argument is without merit. This court recently held that the mentioned dicta from Petrozziello is not to be read as announcing a new rule that a coconspirator’s statement is admissible only if the defendant is shown to have belonged to the conspiracy at the time the statement was made. United States v. Baines, 812 F.2d 41, 42 (1st Cir.1987). See also United States v. United States Gypsum Co., 333 U.S. 364, 393, 68 S.Ct. 525, 541, 92 L.Ed. 746 (1948). Once found to be a member of a conspiracy, a defendant is subject to proof of the prior acts and comments of his coconspirators. A statement made by a coconspirator, if in furtherance of the conspiracy, is therefore admissible against the defendant even if made prior to the defendant’s involvement in the conspiracy. Here, given the evidence demonstrating that, by November 7 at least, Masse was a member of the conspiracy to sell cocaine, the district court properly admitted into evidence the three earlier November 6 telephone conversations between Waterhouse and Fencer.
B. November 7 Statement
Masse advances two arguments why the district court erred by admitting Water-house’s statement to Fencer that Masse was “the source for the cocaine.” First, he says “the evidence does not establish by a preponderance that Appellant was a member of the conspiracy with Waterhouse.” For reasons already stated, we find this contention groundless.
Masse’s second position is that the statement was not made in furtherance of the conspiracy. This claim likewise has no merit. In the case at bar, Waterhouse’s statement was made prior both to the completion of the drug deal and to his arrest. Compare United States v. Palow, 777 F.2d 52, 56-57 (1st Cir.1985) (postarrest statement inadmissible under Fed.R.Evid. 801(d)(2)(E)), cert. denied, — U.S. -, 106 S.Ct. 1277, 89 L.Ed.2d 585 (1986). In United States v. Fahey, 769 F.2d 829, 839 (1st Cir.1985), we stated that a coconspirator's statement satisfies Rule 801(d)(2)(E)’s “in furtherance” requirement if it “tends to advance the objects of the conspiracy as opposed to thwarting its purpose.” When Fencer inquired into Masse’s identity, he made it clear that he was nervous and reluctant to meet any additional people. Waterhouse could have believed that had he given an unsatisfactory answer, Fencer would have become skittish and refused to consummate the transaction. Thus, his identification of Masse as “the source” tended to further the goals of the conspiracy, i.e., selling the cocaine. See Fahey, 769 F.2d at 838-39; United States v. Davis, 623 F.2d 188, 191-92 (1st Cir.1980); United States v. Klein, 522 F.2d 296, 301 (1st Cir.1975). See also United States v. Anderson, 642 F.2d 281, 285 (9th Cir.1981) (identification of defendant as “source” held to be in furtherance of the conspiracy); United States v. Lambros, 564 F.2d 26, 30 (8th Cir.1977) (same), cert. denied, 434 U.S. 1074, 98 S.Ct. 1262, 55 L.Ed.2d 779 (1978).
IV. WILLFUL BLINDNESS INSTRUCTION
Masse objected to the district court’s instruction to the jury on the theory of willful blindness. He contended, and continues to argue on appeal, that the record was devoid of any evidence that he intentionally avoided knowledge of wrongdoing. We disagree.
In United States v. Picciandra, 788 F.2d 39, 41 (1st Cir.), cert. denied, — U.S. -, 107 S.Ct. 166, 93 L.Ed.2d 104 (1986), we said that a willful blindness instruction is proper if a defendant claims a lack of knowledge, the facts suggest a conscious course of deliberate ignorance, and the instruction, taken as a whole, cannot be misunderstood as mandating an inference of knowledge. Accord United States v. Martin, 815 F.2d 818, 823 (1st Cir.1987); United States v. Krowen, 809 F.2d 144, 148 (1st Cir.1987); United States v. Rothrock, 806 F.2d 318, 322 (1st Cir.1986).
The first and third prongs of Picciandra were met here: Masse denied knowledge of the occurrence of a drug deal, and the instruction did not mandate an inference of knowledge. The remaining issue is whether the record contains sufficient evidence of a conscious course of deliberate ignorance, i.e., of purposeful blinding while knowing that a crime was likely in progress which Masse was facilitating.
If, as Masse insisted, he lacked actual knowledge of all the details of the drug dealing, we find ample evidence from which a jury could have found that he knew a narcotics deal was likely in progress. It is relevant that the evidence strongly indicated that Masse was a person who would be particularly capable of detecting the signs of a cocaine deal. See Martin, 815 F.2d at 823. He was an acknowledged cocaine user. Moreover, evidence indicated that he was involved in the trafficking of cocaine, not just its casual use. At the time of Masse’s November 7 arrest, DEA agents discovered in his car an Ohaus triple beam balance scale and baking powder, both of which the district court found to be tools commonly used by drug sellers. (Baking powder is mixed with pure cocaine to dilute the product and increase its yield.)
Masse testified that he had not known Waterhouse prior to November 7, the day of the aborted drug deal. He claimed to be driving Waterhouse to the Holiday Inn as a favor to a friend — not knowing that Water-house intended to engage in a drug transaction or that he (Masse) would be facilitating such a transaction. En route to the hotel, however, the third person in the car, identified at trial as Phil Frontiera, turned to Waterhouse, gave him a package, and remarked “get 10 for it.” Frontiera’s comment was the subject of the following colloquy at trial, during Masse’s cross-examination:
Q. What did you think he meant by that?
A. I didn’t know what he meant by it exactly. I assumed something was going on right then and there. I did assume something was going on.
Q. Did you ask him?
A. No, I didn’t. I was eating a submarine sandwich and I was almost at the spot anyway. No, I just didn’t ask. I didn’t say anything to him. I just continued to eat and drive.
Masse’s testimony, if believed, would suggest a paradigm case of willful blindness. As we stated in United States v. Rothrock, “[t]he purpose of the willful blindness theory is to impose criminal liability on people who, recognizing the likelihood of wrongdoing [in actions they are facilitating], nonetheless consciously refuse to take basic investigatory steps.” 809 F.2d at 323. Accord United States v. Martin, 815 F.2d at 823.
Given this evidence (and more not here recounted), we find no error in the district court’s giving of an instruction on willful blindness.
V. AUTHENTICATION OF EVIDENCE
At trial, the government attempted to put into evidence a plastic bag containing a straw, razor blade, piece of paper that read “13 POW/ROCK 15,” and a “nine of hearts” playing card, each of which agents Boeri and Reilly purportedly found on Masse’s body at the time of his arrest. Masse objected, claiming that the government failed to satisfy Fed.R.Evid. 901(a)’s authentication requirement. In particular, he pointed to the trial testimony of Boeri and Reilly in which the agents could not recall which of them had taken the items or their location on Masse’s body. The district court denied Masse’s objection, a decision we review for abuse of discretion. United States v. Drougas, 748 F.2d 8, 24 (1st Cir.1984); United States v. Sorrentino, 726 F.2d 876, 886 (1st Cir.1984).
Here, given the agents’ testimony that (1) the items were discovered as a result of their search of Masse; (2) the objects were “in substantially the same condition as they were on November 7, 1984,” the day of the arrest; and (3) they followed standard procedure in performing the search and placing the seized goods in a plastic bag, the district court did not abuse its discretion in denying Masse’s objection. See, e.g., United States v. Mendel, 746 F.2d 155, 167 (2d Cir.1984) (“the prosecution need only prove a rational basis from which to conclude that the exhibit did, in fact, belong to the appellants”), cert. denied, 469 U.S. 1213, 105 S.Ct. 1184, 84 L.Ed.2d 331 (1985); United States v. Luna, 585 F.2d 1, 6 (1st Cir.) (“[t]he trial judge [is] entitled to rely on a presumption of official regularity”), cert. denied, 439 U.S. 852, 99 S.Ct. 160, 58 L.Ed.2d 157 (1978). In the words of Fed.R.Evid. 901(a), the court could fairly presume that the “matter in question [was] what its proponent claim[ed]” it to be.
VI. EVIDENCE OF MASSE’S SUBSEQUENT POSSESSION OF COCAINE
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3708395-5309 | PER CURIAM:
Allen Tyrone Ford appeals his sentence imposed following his guilty plea to possessing a firearm after having been convicted of a felony, in violation of 18 U.S.C.A. §§ 922(g) and 924(e) (West 2000 & Supp.2007). Finding no error, we affirm the judgment of the district court.
After receiving information from a confidential informant that Ford was distributing crack cocaine from his home, the Fayetteville Police Department conducted controlled buys from Ford on August 25th and 30th, 2005. Two days later, on September 1, 2005, a search warrant was executed at Ford’s home. During the search, Ford informed the officers that he had a small amount of marijuana and a .25 caliber semi-automatic pistol hidden in a bedroom. No cocaine or paraphernalia associated with drug distribution was discovered during the search. Ford was ultimately indicted for possessing a firearm after having been convicted of a felony.
Prior to Ford’s sentencing, the probation office prepared a presentence report. According to U.S. Sentencing Guidelines Manual § 2K2.1 (a)(2), Ford had a base offense level of twenty-four. Ford’s base offense level was increased four points pursuant to USSG § 2K2.1 (b)(6) because the probation officer determined that Ford possessed the firearm in connection with another felony offense—the sales of cocaine on August 25th and 30th. Ford then received a three level reduction for acceptance of responsibility, resulting in an offense level of twenty-five. Ford’s criminal history category of IV and his offense level resulted in an advisory guidelines range of 84 to 105 months’ imprisonment.
Ford appeared for sentencing on April 25, 2007. At sentencing, Ford objected to the four point enhancement for possessing the firearm in connection with another felony. The district court overruled Ford’s objection and sentenced him to eighty-four months’ imprisonment. Ford timely noted his appeal and now argues that: (1) the district court erred in finding that he sold crack cocaine on August 25th and 30th and (2) the district court erred in enhancing his sentence pursuant to USSG § 2K2.1 (b)(6).
U.S. Sentencing Guidelines Manual § 2K2.1(b)(6) provides for a four level enhancement if a defendant “used or possessed any firearm or ammunition in connection with another felony offense.” USSG § 2K2.1(b)(6). “The purpose of this enhancement is to ensure that a defendant receives more severe punishment if, in addition to committing a firearms offense within the scope of § 2K2.1, he commits a separate felony offense that is rendered more dangerous by the presence of a firearm .... ” United States v. Blount, 337 F.3d 404, 406 (4th Cir.2003) (citing United States v. McDonald, 165 F.3d 1032, 1037 (6th Cir.1999)).
Following United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005), a sentencing court continues to make factual findings concerning sentencing factors by a preponderance of the evidence. United States v. Morris, 429 F.3d 65, 72 (4th Cir.2005), cert denied,-U.S. -, 127 S.Ct. 121, 166 L.Ed.2d 91 (2006). Long-standing authority has permitted a sentencing court to consider any evidence at sentencing that “has sufficient indicia of reliability,” see USSG § 6A1.3(a), including “conduct underlying [an] acquitted charge, so long as that conduct has been proved by a preponderance of the evidence.” United States v. Watts, 519 U.S. 148, 156-57, 117 S.Ct. 633, 136 L.Ed.2d 554 (1997) (per curiam); United States v. Montgomery, 262 F.3d 233, 249 (4th Cir.2001).
To apply an enhancement pursuant to § 2K2.1 (b)(6), a district court must find both that (1) a firearm was used and (2) that such use was “in connection with another felony offense.” United States v. Garnett, 243 F.3d 824, 828 (4th Cir.2001) (quoting USSG § 2K2.1 (b)(5)). The district court’s decision to enhance Ford’s offense level pursuant to § 2K2.1(b)(6) is reviewed for clear error. United States v. Green, 436 F.3d 449, 456 (4th Cir.2006).
On appeal, Ford argues that the district court erred in applying the § 2K2.1(b)(6) enhancement because the Government failed to prove that the predicate “other felonies,” namely cocaine distribution on August 25th and 30th, actually occurred. At sentencing, the Government proffered, without objection, the testimony of the case agent. According to the agent, Ford informed officers that he had purchased the firearm for protection, that he sold crack cocaine to pay for his rent and his marijuana, and that he sold crack cocaine from his home daily. Ford also admitted that he would purchase $50 of crack cocaine, cut it into rocks, and sell it. Finally, Ford admitted that he would repeat this process several times a day and that he tended to sell more on the weekends.
Ford’s counseled brief fails to take into account the testimony of the case agent at sentencing. As described, Ford gave the officer a detailed description of his method for selling cocaine, including how much he would purchase, how he would package the drugs, how often he resupplied, and the times he tended to sell more. Ford’s confession, in conjunction with the information from the confidential source that Ford sold cocaine during the two controlled buys, established by a preponderance of the evidence two prior “other felonies” for purposes of § 2K2.1 (b)(6).
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10515270-27694 | LOGAN, Circuit Judge.
The Colorado State Board of Agriculture (SBA or defendant) appeals the decision of the district court finding that it violated Title IX of the Education Amendments of 1972, 20 U.S.C. §§ 1681-1688, and ordering it to reinstate the women’s fast pitch softball team at Colorado State University (CSU) with all of the incidental benefits of a varsity team.
Plaintiffs, CSU students and former members of the fast pitch softball team, brought suit in their individual capacities against SBA and CSU in June 1992 after CSU announced that it was discontinuing the varsity fast pitch softball program. In February of this year the district court found that SBA and CSU had violated Title IX, and issued a permanent injunction reinstating the softball program. Approximately three weeks later, the district court held a status conference and, in the face of apparent foot-dragging by defendant, amplified its earlier orders to require defendant to hire a coach promptly, recruit new members for the team, and organize a fall season. This court denied a motion for a stay but expedited the appeal.
Plaintiffs first contest our jurisdiction to hear these appeals. On the merits, defendant contends that the district court erred in finding a Title IX violation. Defendant also maintains that even if the verdict was correct, the district court abused its discretion when it ordered reinstatement of the softball team and required defendant to follow specific directions in effecting that reinstatement rather than affording defendant the opportunity to present a plan that would bring it into compliance with Title IX.
We review a district court’s interpretations of law de novo, Eastman Kodak Co. v. Westway Motor Freight, 949 F.2d 317, 319 (10th Cir.1991), and its findings of fact for clear error. Mid-America Pipeline v. Lario Enters., 942 F.2d 1519, 1524 (10th Cir.1991). We review a district court’s choice of equitable remedies for abuse of discretion. Keyes v. School Dist. No. 1, 895 F.2d 659, 665 (10th Cir.1990), cert. denied, 498 U.S. 1082, 111 S.Ct. 951, 112 L.Ed.2d 1040 (1991).
I
We consider first the challenges to our jurisdiction over these appeals. Plaintiffs maintain that because defendant failed to name CSU as a party in its notice of appeal, and because parties seeking appellate review must join all of their co-plaintiffs or co-defendants, we must dismiss this appeal. There is no substance to plaintiffs’ argument that SBA cannot appeal the district court’s decision without joining CSU as its co-appellant. This archaic practice of summons and severance was abolished by original Civil Rule 74 in 1937, see 9 James W. Moore et al., Moore’s Federal Practice ¶ 203.27 (1993), and was “assumed to be sufficiently obsolete as no longer to require pointed abolition” when the Federal Rules of Appellate Procedure were adopted. Fed.R.App.P. 3 advisory committee’s note (1967 adoption).
[4] CSU, not having been named in the notice of appeal, is not a party to the appeal. See Torres v. Oakland Scavenger Co., 487 U.S. 312, 314, 108 S.Ct. 2405, 2407, 101 L.Ed.2d 285 (1988). The real question, how ever, is whether SBA, which is named, is the proper party appellant to require us to reach the merits of the issues raised. Plaintiffs argue that because CSU has not appealed, the district court’s order-is final and enforceable against it, and SBA’s appeal is irrelevant. In light of the statutory scheme creating SBA and CSU, however, CSU is powerless to comply .with the district court’s order on its own, and the relief plaintiffs seek may only be obtained against SBA.' The Colorado legislature established CSU and SBA as separate entities, Colo.Rev.Stat. §§ 28-30-101, 23-31-101. While SBA was constituted as “a body corporate, capable in law of suing and being sued,” id. § 23-30-102, the statutes and constitutional provisions pertaining to CSU contain no similar grant. See id. §§ 23-31-101 to -136; Colo. Const. art. VIII, § 5(1). Furthermore, although CSU maintains control over certain internal institutional policies, see, e.g., Colo.Rev.Stat. §' 23-31-104 (faculty and board together determine curriculum); id. § 23-31-114 (faculty establishes rules of governance and discipline), SBA has general control and supervisory power including “power to adopt ... regulations ... to secure the successful operation of the university,” id. § 23-31-108, hiring authority, id. § 23-31-109, and complete financial' control over CSU, id. § 23-31-120; Colo. Const. art. VIII, § 5(2); see also Lewis v. State Bd. of Agriculture, 138 Colo. 540, 335 P.2d 546, 550 (1959). Under this scheme, even if CSU were capable of being sued, any adverse verdict or remedial order entered against CSU concerning hiring or funding would have to operate against SBA. Thus, CSU was an unnecessary party to the suit to begin with, and we see no legal impediment to reaching the merits with only SBA as appellant.
Plaintiffs also dispute SBA’s'right to appeal separately the measures ordered at the March 1993 status conference. Defendant counters with an argument that because it had appealed the injunctive order the-district court was divested of jurisdiction to make any change in the injunction. We are satisfied that we have jurisdiction to review the measures ordered at the status conference either through defendant’s appeal of the original jurisdiction order or its separate appeal of the specific obligations imposed at the March hearing. The district court refused a stay of the injunction, and this court.also refused a stay pending appeal. The district court’s injunction required it to supervise a continuing course of conduct. Absent a stay “an appeal from the supervisory order does not divest the district court of jurisdiction to continue its supervision.” Hoffman v. Beer Drivers & Salesmen Local Union No. 888, 536 F.2d 1268, 1276 (9th Cir.1976). See also NLRB v. Cincinnati Bronze, Inc., 829 F.2d 585, 588 (6th Cir.1987). Indeed, Fed. R.App.P. 8(a) expressly recognizes this continuing power of a district court as it requires an application for an order “modifying ... an injunction during the pendency of an appeal” to be made in the first instance to the district court. See also Fed.R.Civ.P. 62(c) (district court may modify injunction during pendency of an appeal).
In light of the district court’s continuing authority, if the specific directives imposed at the March status conference amount to “modifying” the injunction, they are subject to appeal under the express terms of 28 U.S.C. § 1292(a)(1). If they merely implement the original injunctive order or “clarify” it, they are not separately appealable. See Motorola, Inc. v. Computer Displays Int'l, 739 F.2d 1149, 1155 (7th Cir.1984) (An order is a clarification if it “does not change the parties’ original [legal] relationship, but merely restates that relationship in new terms.”); Mikel v. Gourley, 951 F.2d 166, 169 (8th Cir.1991); Sierra Club v. Marsh, 907 F.2d 210, 212-13 (1st Cir.1990). In that event, however, since the injunction itself is properly before us, we see no difficulty in reviewing the specific requirements-to hire a coach, recruit players, and schedule a fall season-that the district court imposed on defendant.
II
Defendant maintains that, as a matter of law, it did not violate Title IX. Title IX provides that: “No person in the United States shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any education program or activity receiving Federal financial assistance.” 20 U.S.C. § 1681(a). Since 1988, Title IX has applied to recipients of federal funds in all of their operations. Id. § 1687. The statute delegated to the Secretary of Health, Education and Welfare (now the Secretary of Education) the responsibility to promulgate regulations implementing Title IX, including specifically “intercollegiate athletic activities.” Pub.L. No. 93-380, § 844, 88 Stat. 484, 612 (1974). .Title 34, § 106.41, of the Code of Federal Regulations applies Title IX to college athletics.
A
This controversy concerns one sub-part of the regulations implementing Title IX. 34 C.F.R. § 106.41(c) provides:
A recipient which operates or sponsors interscholastic, intercollegiate, club or intramural athletics shall provide equal athletic opportunity for members of both sexes. In determining whether equal opportunities are available the Director [of the Office for Civil Rights] will consider, among other factors:
(1) Whether the selection of sports and levels of competition effectively accommodate the interests and abilities of members of both sexes[.]
Although § -106.41(c) goes on to list nine other factors that enter into a determination of equal opportunity in athletics, an institution may violate Title IX simply by failing to accommodate effectively the interests and abilities of student athletes of both sexes. See Cohen v. Brown Univ., 991 F.2d 888, 897-98 (1st Cir.1993); Favia v. Indiana Univ. of Penn., 812 F.Supp. 578, 584-85 (W.D.Pa.1993); see also 44 Fed.Reg. 71,413, 71,415-17 (1979) (HEW Title IX Intercollegiate Athletics Policy Interpretation, describing the three major areas of regulatory compliance as “Athletic Financial Assistance (Scholarships),” “Equivalence in Other Athletic Benefits and Opportunities,” and “Effective Accommodation of Student Interests and Abilities”); Office for Civil Rights, Department of Education, Title IX Athletics Investigator’s Manual 7 (1990) [hereinafter Investigator’s Manual] (“[a]n investigation may be limited to less than all three of these major areas”).
In 1979, the Department of Health, Education, and Welfare issued a policy interpretation explaining the ways in which institutions may effectively accommodate the interests and abilities of their student athletes. See Policy Interpretation, 44 Fed.Reg. 71,413 (1979). We defer substantially to an agency’s interpretation of its own regulations. Martin v. Occupational Safety & Health Review Comm’n, 499 U.S. 144, -, 111 S.Ct. 1171, 1175, 113 L.Ed.2d 117 (1991). This is especially so when, as here, they are effectively legislative, pursuant to a statutory delegation. The Policy Interpretation delineates three general areas in which the OCR will assess compliance with the effective accommodation section of the regulation, as follows: '
a. The determination of athletic interests and abilities of students;
b. The selection of sports offered; and
c. The levels of competition available including the opportunity for team competition.
44. Fed.Reg. at 71,417. Despite some similar and overlapping language in the Policy Interpretation’s discussion of these three broad policy areas,'a close reading of the application sections immediately following this initial statement of policy reveals that plaintiffs’ claim concerns their opportunity to participate in team competition. The OCR assesses effective accommodation with respect to opportunities for intercollegiate competition by determining:
(1) Whether intercollegiate level participation opportunities for male and female students are provided in numbers substan tially proportionate to their respective enrollments; or
(2) Where the members of one sex have been and are underrepresented among intercollegiate athletes, whether the institution can show a history and continuing practice of program expansion which is demonstrably responsive to the developing interest and abilities of the members of that sex; or
(3) Where the members of one sex are underrepresented among intercollegiate athletes, and the institution cannot show a continuing practice of program expansion such as that cited above, whether it can be demonstrated that the interests and abilities of the members of that sex have been fully and effectively accommodated by the present program.
Id. at 71,418.'
In effect, “substantial proportionality” between athletic participation and undergraduate enrollment provides a safe harbor for recipients under Title IX. In the absence of such gender balance, the institution must show that it has expanded and is continuing to expand opportunities for athletic participation by the underrepresented gender, or else it must fully and effectively accommodate the interests and abilities among members of the underrepresented gender.
In addition to assessing whether individuals of both sexes have the opportunity to compete in intercollegiate athletics, the OCR also examines whether the quality of competition provided to male and female athletes equally reflects their abilities. This will depend on whether, program wide, the competitive schedules of men’s and women’s teams “afford proportionally similar numbers of male and female athletes equivalently advanced competitive opportunities,” id., or “[w]hether the institution can demonstrate a history and continuing practice of upgrading the competitive opportunities available to the historically disadvantaged sex as warranted by developing abilities among the athletes of that sex.” Id. However, “[i]nstitutions are not required to upgrade teams to intercollegiate status or otherwise develop intercollegiate sports absent a reasonable expectation that intercollegiate competition in that sport will be available within the institution’s normal competitive regions.” Id.
B
The district court found that plaintiffs met their burden of showing that defendant could not take shelter in the safe harbor of substantial proportionality. The district court reviewed a substantial quantity of statistical data, and made the undisputed finding that following the termination of the varsity softball program, the disparity between enrollment and athletic participation for women at CSU is 10.5%. Defendant maintains that, as a matter of law, a 10.5% disparity is substantially proportionate.
The OCR has instructed its Title IX compliance investigators that “[t]here is no set ratio that constitutes ‘substantially proportionate’ or that, when not met, results in a disparity or a violation.” Investigator’s Manual at 24. However, in the example immediately preceding this statement, the Manual suggests that substantial proportionality entails a fairly close relationship between athletic participation and undergraduate enrollment. Furthermore, in a Title IX compliance review completed in 1983, the OCR found that CSU’s athletic participation opportunities for men and women were not substantially proportionate to their respective enrollments. During the three years that were the subject of that review, the differences between women enrolled and women athletes were 7.5%, 12.5%, and 12.7%. The district court relied on these sources, as well as expert testimony that a 10.5% disparity is statistically significant, in concluding that CSU could not meet this first benchmark. See also Cohen v. Brown Univ., 809 F.Supp. 978, 991 (D.R.I.1992) (11.6% disparity not substantially proportionate) aff'd, 991 F.2d 888 (1st Cir.1993). Without demarcating further the line between substantial proportionality and disproportionality, we agree with the district court that a 10.5% disparity between female athletic participation and female undergraduate enrollment is not substantially proportionate. The 'fact that many or even most other educational institutions have a greater imbalance than CSU does not require a different holding.
C
The district court also found that defendant could not prove a history and continuing practice of expansion in women’s athletics at CSU. Defendant argues that the district court should have given greater weight to its dramatic expansion of women’s athletic opportunities during the 1970s. In essence, defendant suggests reading the words “continuing practice” out of this prong of the test. In support of this position, defendant offers anecdotal evidence of enforcement at other institutions, and the OCR’s 1983 finding of compliance for CSU, which was contingent upon CSU’s fulfilling the provisions of a plan that CSU never met.
Although CSU created a women’s sports program out of nothing in the 1970s, adding eleven sports for women during that decade, the district court found that women’s participation opportunities declined steadily during the 1980s. Furthermore, although budget cuts in the last twelve years have affected both men and women athletes at CSU, the district court found that women’s participation opportunities declined by 34%, whereas men’s opportunities declined by only 20%. The facts as found by the district court (and largely undisputed by defendant) can logically support no other conclusion than that, since adding women’s golf in 1977, CSU has not maintained a practice of program expansion in women’s athletics, and indeed has since dropped three women’s sports. See Appellant’s Opening Brief at 7-8 n. 4.
We recognize that in times of economic hardship, few schools will be able to satisfy Title IX’s effective accommodation requirement by continuing to expand their women’s athletics programs. ’ Nonetheless, the ordinary meaning of the word “expansion” may not be twisted to find compliance under this prong when schools have increased the relative percentages of women participating in athletics by making cuts in both men’s and women’s sports programs. Financially strapped institutions may still comply with Title IX by cutting athletic programs such that men’s and women’s athletic participation rates become substantially proportionate to their representation in the undergraduate population.
D
The district court found that defendant could not demonstrate that CSU’s athletic program fully and effectively accommodated the interests and abilities of women athletes. Here we hold that the district court improperly placed the burden of proof on defendant. Because a Title IX violation may not be predicated solely on a disparity between the gender composition of an insth tution’s athletic program and the gender composition of its undergraduate enrollment, see 20 U.S.C. § 1681(b), plaintiff must not only show that the institution fails on the first benchmark of substantial proportionality but also that it does not fully and effectively accommodate the interests and abilities of its women athletes. See Cohen, 991 F.2d at 897. Further, an institution would be hard-pressed to establish the full and effective accommodation of the interests and abilities of its women athletes in the abstract. The ultimate burden must lie with the plaintiffs to show that they have been “excluded from participation in, [or] denied the benefits of’ an athletic program “on the basis of sex.” 20 U.S.C. § 1681(a). However, if plaintiffs establish that their interests and abilities are not being accommodated by the university’s athletic program, the institution may still decline to upgrade or create an intercollegiate team if there is no reasonable expectation of competition for that team within the institution’s normal competitive region.
The district court’s misallocation of the burden of proof is not fatal in this case. Faced with a similar situation, the First Circuit held that it could make the proper legal determination because the record on this point had been fully developed. See Cohen, 991 F.2d at 903. In the case before us the district court made extensive findings concerning the unmet abilities and interests of the plaintiff softball players, and the feasibility of them organizing a competitive season of play. The district court credited the plaintiffs’ testimony regarding their commitment to softball, the recognition they have achieved both as a team and as individuals, and the substantial interest in softball among first year CSU students who are participating in a club team. The district court also credited testimony that softball is increasing in popularity among high school students in Colorado. Although CSU’s traditional rivals do not field softball teams, there is no dispute that before the CSU softball team was terminated it played a competitive schedule within its athletic conference. Because the record is more than adequate in this regard, we are able to consider the question of effective accommodation, placing the burden of proof on the plaintiffs.
The heart of the controversy is the meaning of the phrase “full and effective accommodation of interests and abilities.” Defendant maintains that even if there is interest and. ability on the part of women athletes at CSU, the university is obliged to accommodate them only to the extent it accommodates men. Thus, the argument goes, plaintiffs cannot be heard to complain because both women’s softball and men’s baseball were eliminated in the last round of cuts and there are more disappointed male than female athletes at CSU. The First Circuit rejected this position in Cohen,' and so do we. “[T]his benchmark sets a high standard: it demands not merely some accommodation, but full and effective accommodation. If there is sufficient interest and ability among members of the statistically underrepresented gender, not slaked by existing programs, an institution necessarily fails this prong of the test.” Id. at 898.
Based on the district court’s subsidiary findings of fact, we conclude that plaintiffs met the burden of showing that CSU has not accommodated their interests and abilities fully and effectively. Questions of fact under this third prong will be less vexing when plaintiffs seek the reinstatement of an established team rather than the creation of a new one. Here, plaintiffs were members of a successful varsity softball team that played a competitive schedule as recently as the spring of 1992. Although apparently four .plaintiffs have transferred and one has been dismissed, seven or eight plaintiffs remain at CSU for at least part of the 1993-94 school year and would be eligible to play on a reinstated team. We agree with- the district court that CSU fails the third prong of effective accommodation test.
E
Finally, defendant argues that the district court erred in holding that plaintiffs were not required to show discriminatory intent. Defendant reasons that because Title IX was modeled on Title VI of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000d to -4a, and because discriminatory intent is required to prove a violation of Title VI, see Guardians Ass’n v. Civil Serv. Comm’n, 463 U.S. 582, 608 n. 1, 103 S.Ct. 3221, 3235 n. 1, 77 L.Ed.2d 866 (1983) (Powell, J., concurring), proof of a Title IX violation must therefore also require intentional discrimination.
Defendants neglect to consider the additional holding of Guardians, that “although Title VI itself requires proof of discriminatory intent, the administrative regulations [under Title VI] incorporating a disparate-impact standard are valid.” Id. at 584 n. 2, 103 S.Ct. at 3223 n. 2 (opinion of White, J.). Plaintiffs’ complaint alleges violations both of Title IX and of the implementing regulations. If we accept defendant’s analogy to Title VI, then Guardians would permit us to find a violation of Title IX’s regulations without proof of discriminatory intent. See Haffer v. Temple Univ., 678 F.Supp. 517, 539-40 (E.D.Pa.1987), modified, 1988 WL 3845, 1988 U.S.Dist. LEXIS 761.
Further, despite the fact that Title IX was explicitly modeled on Title VI, this court has held that Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e to -17, is “the most appropriate analogue when defining Title IX’s substantive standards, including the question of whether ‘disparate impact’ is sufficient to establish discrimination under Title IX.” Mabry v. State Bd. of Community Colleges & Occupational Educ., 813 F.2d 311, 316 n. 6 (10th Cir.), cert. denied, 484 U.S. 849, 108 S.Ct. 148, 98 L.Ed.2d 104 (1987). Because it is well settled that Title VII does not require proof of overt discrimination, Griggs v. Duke Power Co., 401 U.S. 424, 91 S.Ct. 849, 28 L.Ed.2d 158 (1971); 42 U.S.C. § 2000e-2(k), the district court did not err here in failing to require proof of discriminatory intent.
Ill
Defendant makes two broad objections to the relief ordered by the district court. First, it maintains that plaintiffs have an adequate remedy at law and therefore in-junctive relief is inappropriate. Second, defendant argues that it should have been afforded the opportunity to present a plan to the court that would have brought it into compliance with Title IX, rather than ordered to reinstate the softball program and required to take other specific actions with respect to its management of the team.
A
Defendánt suggests for the first time on appeal that because plaintiffs have settled their damages suit, they -have been made whole and injunctive relief is unnecessary. We draw no such conclusion. Plaintiffs’ damages action is not before us, and we do not presume to know for what they are being compensated. However, insofar as defendant’s continuing violation of Title IX operates to deprive plaintiffs of the opportunity to play softball, we believe monetary relief alone is inadequate. The district court correctly ordered an equitable remedy.
B
Defendant’s second argument has more substance. Defendant contends that the district court abused its discretion by prescribing the precise manner in which it must comply with Title IX. Defendant objects to the specificity of the district court’s order because it believes the district court has ordered it to maintain a softball team in perpetuity, and because-it believes it is enti-tied to devise a plan for its own compliance. Were this a class action, there might be some power to defendant’s, argument that an order specifically requiring an institution to maintain a softball team goes further than is necessary to correct a violation of Title IX. See Swann v. Charlotte-Mecklenburg Bd. of Educ., 402 U.S. 1, 16, 91 S.Ct. 1267, 1276, 28 L.Ed.2d 554 (1971) (“As with any equity case, the nature of the violation determines the scope of the remedy.”); Cohen, 991 F.2d at 906 (“Title IX does not require institutions to fund any particular number or type of athletic opportunities”). In a class action case a more appropriate remedy for violation might be to enjoin CSU’s conduct of men’s varsity competition until defendant presented a plan that would bring CSU into compliance with Title IX. This is, however, an action for relief to individual plaintiffs, brought in them individual capacities. .
The district court’s order^of relief directly responds to the harms plaintiffs have sustained, and the relief they have requested, as individuals. Plaintiffs are former members of a terminated varsity program, seeking reinstatement of their team because of defendant’s failure to comply with Title IX. The Supreme Court has recognized that in reaching Title IX’s goal of protecting private citizens against discriminatory practices, there are situations in which “it makes little sense to impose on an individual, whose only interest is in obtaining a benefit for herself, ... the burden of demonstrating that an institution’s practices are so pervasively discriminatory that a complete cutoff of federal funding is appropriate.”' Cannon, 441 U.S. at 705, 99 S.Ct. at 1962. This is such a situation. “The award of individual relief to a private litigant who has prosecuted her own suit is not only sensible but is also fully consistent with-and in some eases even necessary to-the orderly enforcement of [Title IX].” Id., at 705-06, 99 S.Ct. at 1962. The district court correctly provided plaintiffs with individual relief. Had the district court allowed defendant to devise its own plan for Title IX compliance, it would, in effect have been forcing plaintiffs to become unwilling representatives in a class action suit they chose not to bring.
|
1178451-19592 | MINTON, Circuit Judge.
The petitioner seeks to review a cease and desist order issued by the respondent ordering it to cease and desist from discriminating in the price of gasoline of the same grade and quality among its customers in violation of Section 2(a) of the Clayton Act, as amended by the Robinson-Patman Price Discrimination Act, 15 U.S. C.A. § 13. The Commission asks the enforcement of its order.
The petitioner contends that the order should not be enforced because, first, the Commission failed to find, and could not have found under the undisputed evidence in this case, that either or any of the purchases involved in such discrimination was in commerce; secondly, that the Commission treated as immaterial the petitioner’s conclusive showing that the discrimination made in price was in good faith to meet an equally low price of a competitor, which showing the petitioner asserts is a complete defense. Third, the petitioner contends that:
“Paragraph 6 of the Modified Order directs Standard at its peril to prevent jobbers to whom it sells gasoline and who are in competition with Standard in the resale thereof from reselling to their retail dealers at prices less than Standard’s price to its own retail dealers; requires Standard to police, maintain and regulate such competitor’s prices on gasoline, title to which passed to the jobbers on delivery by Standard; and subjects Standard retroactively to punishment for contempt should a jobber-competitor fail to maintain such resale prices.”
Substantial evidence in this record shows the following facts as found by the Commission. The petitioner’s principal office and place of business is located in Chicago, Illinois. It is engaged in the business of refining and distributing gasoline and other petroleum products throughout fourteen states, principally in the Middle West. The petitioner has a refinery at Whiting, Indiana, to which it supplies crude oil from fields located in other states. One of the divisions in which it distributes its products is known as the Detroit Field, which embraces some thirteen counties in southern Michigan, including the city of Detroit. The Detroit Area, as distinguished from the Detroit Field, is confined to the city of Detroit and its suburbs. The petitioner has no refinery in Michigan, and almost all the gasoline it sells and distributes in the Detroit Field is transported by tankers from its refinery at Whiting through the Great Lakes to the.petitioner’s marine terminal at River Rouge, outside the city of Detroit. This terminal has a storage tank capacity of sixty-three million gallons. During the summer months, deliveries are made from Whiting weekly and sometimes twice weekly. In the fall, sufficient gasoline is delivered and stored to take care of the estimated requirements during the winter months when navigation on the Great Lakes is closed. The amount of gasoline used in Detroit is fairly constant and can be accurately estimated. During the years from 1936 through 1940, the years here in question, the petitioner supplied 16 to 17% of all the gasoline in the Detroit Area. In addition to the River Rouge tanks, the petitioner operated six bulk plants in the Detroit Area. Practically all of the gasoline sold in the Detroit Area passed through the River Rouge terminal, except that in some instances gas was delivered directly from Whiting by truck and also by the same means to commercial users. Deliveries were made from the River Rouge terminal by tank cars and tank trucks up to February 1, 1940, and thereafter by trucks alone. The delivery trucks were owned and operated or leased and operated by the petitioner through its employees.
The petitioner supplied gasoline to approximately 3S8 retail service stations, approximately two hundred of which the petitioner owned and leased, and eight of which it leased and subleased. The remaining 150 were independent operators who owned or leased their stations from someone else. The latter had .agreements to purchase their ■ entire requirements of Standard Oil gasoline only from the petitioner. While the former had no such agreements, they did not buy gasoline from anyone except the petitioner. The delivery to the retail customers was known as “tank wagon delivery” and was made at a price fixed in Chicago by the .petitioner from time to time, known in the trade as the “posted tank-wagon price.”
In addition, the petitioner supplied gasoline to four dealers in the Detroit Area, Citrin-Kolb Oil Company, Stikeman Oil Company, Inc., Wayne Oil Company, and Ned’s Auto Supply Company, hereinafter sometimes referred to as Citrin, Stikeman, Wayne, and Ned’s. These customers were also known as wholesale customers. They had their own storage.tanks and trucks for delivery and met the credit qualifications of the petitioner.
During the time in question Citrin, Stikeman, and Wayne sold a substantial portion of their gasoline purchased from the petitioner direct to the public through retail service stations owned and operated by them. Ned’s was engaged entirely in the retail sale of gasoline to the public through its own stations. To these last four customers, known, as we have pointed out, as the wholesale customers, the petitioner has discriminated in price by selling its gasoline to them for resale at wholesale and through their own retail stations at a price substantially lower than the prices charged retail purchasers in the Detroit Area for gasoline of the same grade and quality. The petitioner’s Red Crown gasoline, its largest selling brand and comprising about ninety per cent of its sales in ■the Detroit Area, was sold to those four wholesalers at 1%^ a gallon lower than the prices charged by the petitioner for the same gasoline to other retail dealers in the Detroit Area.
Citrin, in addition to supplying its own stations which sold at retail, from January 1, 1938, to December 31, 1940, sold one million gallons of gasoline annually to Langer and Cohn, who run a chain of service stations, at 1 jé a gallon less than the tank wagon price, and in addition sold another retail service operator at %jé a gallon less than the tank wagon price. For a time Citrin also issued ' special service cards which entitled the holder to a 2^ a gallon discount on the purchase of gasoline from one of the retail service stations operated by Citrin.
There is no evidence that Wayne ever sold gasoline to retailers at a price lower than the posted tank-wagon price charged by the petitioner to its dealers or that Wayne ever' allowed any discounts. The same is true of Stikeman.
Ned’s, however, sold at retail exclusively,' and it has been its practice since March 7, 1938, to sell to its customers below the prevailing retail service station price or to give premiums and discounts which result in a price below its posted price.
A lower price at one service station than at another is an important factor in the purchasing public’s mind, especially in the price of the petitioner’s advertised brands. Any difference in price between two stations selling the same brand of gasoline is very important in influencing the business. The margin of profit between the tank wagon price to a service station and the retail price is small, averaging since November 1, 1939, about 3.30 a gallon in the Detroit Area.
In 1937 Ned’s was selling the petitioner’s Red Crown gasoline to the public at approximately 20 a gallon below the prevailing retail service station price, which continued with variations until the latter part of 1939. In 1939 and 1940, when Ned’s posted price was the prevailing retail price, it gave premiums and discounts under cover. It has from time to time given commercial discounts of 1 to 20 a gallon off the posted tank-wagon price. In 1939, Ned’s also issued trading stamps with a value of 20 a gallon, which were redeemable in merchandise or gasoline at Ned’s stores. Price cutting at Ned’s stores has been almost continuous, and this company has been responsible for starting most of the retail price cutting in major brand gasolines in Detroit over a period of several years. This practice of Ned’s has caused substantial damage to other retail service station operators selling the petitioner’s Red Crown gasoline and also to retail service station operators selling other brands of gasoline.
The price discriminations granted to Ned’s, Citrin, Wayne, and Stikeman on gasoline sold by them at retail have given a substantial competitive advantage to these favored dealers in their retail operations over other retailers of gasoline, including retail customers of the petitioner. This competitive advantage is capable of being used and has been used by Ned’s and to some extent by Citrin to divert large amounts of business from other gasoline retailers, including customers of the petitioner, with resultant injury to them and to their ability to continue in business and successfully compete with Ned’s and Citrin in the retailing of gasoline. The effect of these discriminations in price allowed by the petitioner to Ned’s, Citrin, Wayne, and Stikeman has been and may be substantially to lessen competition and to injure, destroy, and prevent competition with each of these four dealers and with their respective customers in the retail sale of gasoline.
There is substantial evidence in this record, and we think it may be assumed to be conclusive, to the effect that the petitioner made its low price to Ned’s, Citrin, Wayne, and Stikeman in good faith to meet the lower price of a competitor. The petitioner failed to show that the discriminatory price which it made these four dealers was justified on the basis of any cost savings.
The findings of the Commission based upon the substantial evidence above indicated are sufficient to support the Commission’s conclusion o'f law that the discriminatory sales were in commerce. It is not disputed that the petitioner is engaged in commerce, but it is vigorously insisted that commerce ended at the River Rouge plant and the bulk plants in the Detroit Area and that the petitioner’s transactions from there on were wholly intrastate. With this we are unable to agree. The break that occurred at River Rouge was a break in transportation but not in the constant stream of commerce that flowed from the Whiting refinery to the petitioner’s customers in Michigan. The stream of commerce flowed continuously from the tanks at the refinery to the tankers on the lake; from the tankers to the tanks at River Rouge and the bulk plants in Detroit; and from there into tank cars and tank trucks to the petitioner’s customers. There may have been several breaks in transportation in getting from one vehicle or receptacle to the other in completing the commercial transaction of getting the petitioner’s gasoline from Whiting into the Detroit territory, but the stream of commerce was never broken, no matter how many receptacles were used on the way. The rest at River Rouge was not like a warehouse where the goods awaited further sale and" distribution. Although the gasoline was not brought to River Rouge pursuant to orders already taken, the de mands of the Michigan territory were fairly constant, and the petitioner’s customers’ demands could be accurately estimated, so the flow of the stream of commerce kept surging from Whiting to Detroit.
We think this case quite analogous to Stafford v. Wallace, 258 U.S. 495, 42 S.Ct. 397, 66 L.Ed. 735, 23 A.L.R. 229. In that case, the livestock came by carrier interstate and intrastate into the receiving pens of the stockyards where the animals were fed, watered, and held until sales were consummated, either to the packers who drove them across the street to the packing house, or to the wholesale dealers or feeders who reshipped them. The transportation was broken at the yards. The animals came to rest, but the stream of commerce moved on to final destination; and the stockyards, with its holding pens, was held to be in commerce, just as here the various changes in the manner of movement may have slowed down the stream of commerce between Whiting and Michigan, but never stopped it. The tanks at River Rouge-were similar to a “packaging house” on the way to market. The tank cars and trucks-were the most convenient “packages” that could be used to complete the distribution of the gasoline. It is unlike Walling v. Goldblatt Bros., 7 Cir., 128 F.2d 778, where the warehouse was only a detached stockroom for retail stores of a .retailer. There the stream of commerce ended at the warehouse for the most part. Here it reached at River Rouge only an intermediate stage preliminary to its final disposition to the petitioner’s customers.
We decline, as the Supreme Court did in Stafford v. Wallace, supra, 258 U. S. at page 519, 42 S.Ct. at page 403, 66 L. Ed. 735, 23 A.L.R. 229, “ * * * to defeat this purpose in respect of such a stream and take it out of complete national regulation by a nice and technical inquiry into the noninterstate character of some of its necessary incidents and facilities, when considered alone and without reference to their association with the movement of which they were an essential but subordinate part.” After all, as Justice Holmes said in Swift & Company v. United States, 196 U.S. 375, 398, 25 S.Ct. 276, 280, 49,L. Ed. 518, “* £ * commerce among the States is not a technical legal conception, but a practical one, drawn from the course of business.” The modern concept of commerce is one which gives full sweep to the commerce clause of the Constitution within the limits of the implementing statute, a liberal view of the Congressional purpose as expressed in the statute, and a realistic view of what business is doing as it moves across state lines to accomplish its purpose. The late cases support the view that the petitioner’s operations are in commerce from the refinery to its customers-. Walling v. Jacksonville Paper Co., 317 U.S. 564, 63 S.Ct. 332, 87 L.Ed. 460; Binderup v. Pathé Exchange, 263 U.S. 291, 309, 44 S. Ct. 96, 68 L.Ed. 308; Mid-Continent Petroleum Corporation v. Keen, 8 Cir., 157 F.2d 310, 314; Republic Pictures Corporation v. Kappler, 8 Cir., 151 F.2d 543, 545, 162 A. L.R. 228; Walling v. American Stores Co., 3 Cir., 133 F.2d 840.
Now as to the contention that the discriminatory prices here complained of were made in good faith to meet a lower price of a competitor. While the Commission made no finding on this point, it assumed its existence but held, contrary to the petitioner’s contention, that this was not a defense.
Prior to June 19, 1936, when the Robinson-Patman Act went into effect, the Clayton Act, Section 2, provided:
“That it shall be unlawful for any person engaged in commerce, * * * either directly or indirectly to discriminate in price between different purchasers of commodities * * * where the effect of such discrimination may be to substantially lessen competition or tend to create a monopoly in any line of commerce: Provided, That nothing herein contained shall prevent discrimination in price between purchasers of commodities on account of differences in the grade, quality, or quantity of the commodity sold, or that makes only due allowance for difference in the cost of selling or transportation, or discrimination in price in the same or different communities made in good faith to meet competition * *
Thus it will be seen that a discrimination in price made in good faith to meet competition was a defense under Section 2 of the Clayton Act, as was a showing that the discrimination was made because of cost savings, or proof of the other defenses given by the Act. But since large buyers could always get such price meeting by suppliers to justify a discrimination in price in their favor, the purpose of the Act to avoid such discrimination was easily evaded. Congress sought to change this bypass by changing the discriminatory price, made in good faith to meet the low price of a competitor, from a defense, as it then was, to a procedural aid to enable a seller to overcome the prima facie case made by showing a difference in price to customers in the same community for goods of the same quality. This was done by amending Section 2 of the Clayton Act by Section 2(a) and (b) of the Robinson-Pat-man Act. The amended Section 2(a) still made it unlawful to make a discriminatory price, as before, and it kept as a defense the cost savings and other defenses of the old Clayton Act, but took out of the defense category the provision for making a lower price to meet competition. As to this, it was provided in Section 2(b) as follows:
“Upon proof being made, at any hearing on a complaint under this section, that there has been discrimination in price or services or facilities furnished, the burden of rebutting the prima-facie case thus made by showing justification shall be upon the person charged with a violation of this section, and unless justification shall be affirmatively shown, the Commission is authorized to issue an order terminating the discrimination: Provided, however, That nothing herein contained shall prevent a seller rebutting the prima-facie case thus made by showing that his lower price or the furnishing of services or facilities to any purchaser or purchasers was made in good faith to meet an equally low price of a competitor, or the services or facilities furnished by a competitor.”
This amendment, it is clear, provided that if a discrimination in price were shown, the burden of justifying it was upon the party making the discriminatory price, and he could meet this prima facie case by showing that he acted in good faith to meet the low price of a competitor. That it was not intended as a defense is apparent from the Conference Report resolving the disagreement of the two Houses. The purpose of Congress is so clearly set out in the Conference Report that we quote it as follows:
“The Senate bill contained a further proviso: ‘That nothing herein contained shall prevent discrimination in price in the same or different communities made in good faith to meet competition.’ This language is found in existing law, and in the opinion of the conferees is one of the obstacles to enforcement of the present Clayton Act. The Senate receded, and the language is stricken. A provision relating to the question of meeting competition, intended to operate only as a rule of evidence in a proceeding before the Federal Trade Commission is included in subsection (b) in the conference text as follows:
“ ‘Provided, however, that nothing herein contained shall prevent a seller rebutting the prima-facie case thus made by showing that his lower price or the furnishing of services or facilities to any purchaser or purchasers was made in good faith to meet an equally low price of a competitor, or the services or facilities furnished by a competitor.’ ” (Congressional Record, June 15, 1936, p. 9414.)
The Chairman of the House Conferees stated on the floor of the House as he presented the Conference Report:
“It is to be noted, however, that this does not set up the meeting of competition as an absolute bar to a charge of discrimination under the bill. It merely permits it to be shown in evidence. This provision is entirely procedural.
“If this proviso were construed to permit the showing of a competing offer as an absolute bar to liability for discrimination, then it would nullify the act entirely at the very inception of its enforcement, for in nearly every case mass buyers receive similar discriminations from competing sellers of the same product.” (Congressional Record, June 15, 1936, p. 9418.)
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5464907-23076 | MEMORANDUM OPINION
SUE L. ROBINSON, Chief Judge.
I.INTRODUCTION
Currently before the court is petitioner Sylvester Shockley’s (“petitioner”) application for a writ of habeas corpus filed pursuant to 28 U.S.C. § 2254. (D.I.l) He is incarcerated in the Delaware Correctional Center in Smyrna, Delaware. For the reasons that follow, the court will dismiss petitioner’s § 2254 application.
II. FACTUAL AND PROCEDURAL BACKGROUND
In September 1981, a Delaware grand jury returned a three-count indictment charging petitioner with first degree rape, first degree kidnaping, and third degree assault. Petitioner pled guilty in December 1981 to first degree rape, and the Superior Court sentenced him in 1982 to life imprisonment with the possibility of parole. (D.I. 2, at A-l); See Del.Code Ann. tit. 11, § 4205(b)(2) (Repl.1979).
In February 2005, petitioner filed in the Superior Court a petition for a writ of mandamus, seeking to compel the Department of Correction to calculate his conditional release date. The Superior Court summarily dismissed the petition, and the Delaware Supreme Court affirmed that judgment. Shockley v. Taylor, 882 A.2d 762, 2005 WL 2473792 (Del.2005).
Petitioner filed the pending habeas application on March 30, 2006. The State asserts that the court should deny the application as meritless. (D.I.13) Petitioner filed a traverse, which requests an evi-dentiary hearing and also provides additional arguments to support the claims raised in his habeas application. (D.I.16)
III. DISCUSSION
Petitioner’s federal habeas application asserts two claims for relief: (1) House Bill No. 31 and the Delaware Supreme Court’s decision in Evans v. State, 872 A.2d 539 (Del.2005) (“Evans II”) violate the ex post facto clause of the United States Constitution; and (2) petitioner’s good time and merit credit has been terminated or forfeited in violation of the due process and equal protection clauses of the United States Constitution. The premise for both claims is petitioner’s belief that, in accordance with the Delaware Supreme Court decisions in Crosby v. State, 824 A.2d 894 (Del.2003) and Evans v. State, 2004 WL 2743546 (Del. Nov. 23, 2004)(“Evans I”) (-withdrawn by Evans v. State, 872 A.2d 539 (Del.2005)(“Evans II”)), his par-olable life sentence is for a fixed term of 45 years rather than for the term of his natural life and, therefore, he is entitled to conditional release pursuant to Del.Code Ann. tit. 11, § 4348. To place petitioner’s claims in context, the court will briefly summarize the relevant Delaware law regarding good time credit, parole, and conditional release.
The Delaware General Assembly enacted §§ 4346 and 4348 in 1964. Section 4346 governs a prisoner’s parole eligibility, and provides that an inmate is eligible to apply for parole after serving one-third of the term imposed by the court, adjusted for merit and good behavior credits. Del. Code Ann. tit. 11, § 4346(a). Release of an inmate on parole under § 4346 is discretionary. Evans, 872 A.2d at 554. Section 4348 governs an inmate’s conditional release upon the earning of merit and good behavior credits. Del.Code Ann. tit. 11, § 4348. Conditional release of an eligible inmate under § 4348 is mandatory, and an inmate who has accumulated sufficient good behavior and merit credits must “be released from incarceration on his or her short-term release date, i.e., the maximum period of incarceration less accumulated good behavior and merit credits.” Id.
The Delaware General Assembly enacted Delaware’s Truth-In-Sentencing Act of 1989 (“TIS”) on June 29, 1990, and it applies to crimes committed after that date. Del. Laws C. 130, § 3; DeLCode Ann. tit. 11, § 4354. TIS completely eliminated parole as a method of obtaining early release, but did not eliminate conditional release as a method for obtaining early release. Crosby, 824 A.2d at 899-900. Thus, to summarize,
[ujnder the system in effect before the enactment of the Truth-in-Sentencing-Act, good time operated in two ways to permit an inmate’s early release from his term of incarceration. First, an inmate, in most cases, would have become eligible for parole under DeLCode Ann. tit. 11, § 4346 after serving one-third of the sentence imposed by the court, after the sentence was reduced by any good time award. Second, even if the inmate failed to obtain a discretionary grant of parole under DeLCode Ann. tit. 11, § 4346, the inmate could still obtain early release from his prison term, called “conditional release,” solely by virtue of his accumulated good time credits. Conditional release is an early release mechanism that operates only if parole is not employed.
Snyder v. Andrews, 708 A.2d 237, 244 (Del.1998). However, under the system in effect after the enactment of TIS, “the reduction of a sentence by earned good time credit [will only] result in conditional release under section 4348 for eligible inmates,” not in release via parole. Evans, 872 A.2d at 554.
Finally, § 4346(c) expressly provides that, in order to determine the parole eligibility of an inmate sentenced to life with the possibility of parole, the life sentence is to be considered a 45 year term. Del. Code Ann. tit. 11, § 4346(c)(Repl.l979). Section 4348, the conditional release statute, does not contain any language regarding life sentences.
The issue here is whether § 4346(c)’s reference to a 45 year term for a life sentence permits a prisoner’s parolable life sentence to be viewed as a 45 year term for the purpose of determining a conditional release date under § 4348. The Delaware Supreme Court has addressed this issue in three cases, all of which occurred after the enactment of TIS in 1990. The first time the Delaware Supreme Court faced this question was in Jackson v. Mul- ti-Purpose Criminal Justice Facility, 700 A.2d 1203, 1207 (Del.1997), overruled in part by Crosby v. State, 824 A.2d 894 (Del.2003), when the state court was asked to determine if a prisoner with a parolable life sentence imposed prior to TIS is entitled to conditional release under § 4348 when denied parole under § 4346. Construing the plain meaning of the statutes, the Jackson court held that a prisoner serving a pre-TIS life sentence with the possibility of parole cannot obtain conditional release under § 4348 because “[b]oth [§ 4346 and § 4348] were enacted by the General Assembly in 1964 ... [and][i]f the General Assembly had intended to permit those inmates serving life sentences with the possibility of parole to be eligible for conditional release under Section 4348, presumably it would have stated so expressly, as it did in Section 4346.” Id. The Delaware Supreme Court explained that “[t]he absence of a corresponding provision in Section 4348 [defining a life sentence as a fixed term of 45 years] evidences a deliberate decision by the General Assembly to exclude those serving life sentences from qualifying for early release under Section 4348. This Court may not engraft upon Section 4348 language which has been clearly excluded therefrom.” Id. (internal citation omitted).
The Delaware Supreme Court faced a slightly different issue in 2003 in Crosby v. State, 824 A.2d 894 (Del.2003), when asked to determine if a non-violent habitual offender’s life sentence imposed after the enactment of TIS pursuant to Del.Code Ann. tit. 11, § 4214(a) violated the Eighth Amendment. The Delaware Supreme Court explained that its “ultimate resolution of Crosby’s Eighth Amendment argument is dependent, in part, upon whether Crosby’s life sentence as a habitual offender under section 4[2]14(a) is considered to be a term of 45 years, with the possibility of earning a substantial sentence diminution through good time credits; or is considered to be a natural life sentence with no possibility of reduction or release prior to death.” Id. at 897. The Delaware Supreme Court proceeded to review the history of the habitual offender statute as well as the effect of TIS on Delaware’s sentencing laws, and opined that § 4346 (parole eligibility) and § 4348 (conditional release) should be read in pari materia such that § 4348 incorporates the definition of a life sentence contained in § 4346(c) as being a fixed term of 45 years. Id. at 898-99. Then, after stating that, “to the extent that Jackson is inconsistent with this opinion, it is overruled,” the Delaware Supreme Court held that “a person sentenced to life as a habitual offender pursuant to section 4214(a) is to be considered as having been sentenced to a fixed term of 45 years [under section 4346(c)] and qualifies for conditional release pursuant to section 4348, based upon good time credits earned pursuant to section 4381.” Id. at 899, 902.
One year later, in Evans I, the Delaware Supreme Court was again confronted with the question first presented in Jackson, namely, whether a prisoner with a pre-TIS parolable life sentence should be viewed as serving a 45 year term, thereby entitling the prisoner to conditional release under § 4348. Initially, the Evans I court decided that Crosby required an inmate’s parolable life sentence imposed prior to TIS to be treated as a 45 year term for purposes of determining the inmate’s qualification for conditional release. In response to the uproar following Evans I, the Delaware General Assembly enacted an amendment to the Delaware State Code, House Bill No. 31, which purported to overrule Evans I. Thereafter, the Delaware Supreme Court agreed to reconsider its decision in Evans I.
On April 11, 2005, the Delaware Supreme Court decided Evans II, in which it: (1) withdrew the Evans I decision; (2) held that House Bill No. 31 was unconstitutional and void; and (3) held that a life sentence with the possibility of parole imposed prior to the enactment of TIS was not defined as a 45 year term. Evans, 872 A.2d at 543-53. The Evans II court explained that Crosby did not control the issue in Evans’ case, because Evans was a violent offender sentenced to life prior to the enactment of TIS, whereas Crosby was a non-violent habitual offender sentenced to life after the enactment of TIS. Id. at 557-58 (emphasis added). As a result, the Delaware Supreme Court opined that Evans’ situation was governed by its 1997 decision in Jackson because the defendant Jackson, “like Evans, was sentenced to life imprisonment, with the possibility of parole, before the enactment of Truth-in-Sentencing [and][t]he issue presented in Jackson was whether an inmate who is serving a life sentence with the possibility of parole is entitled to conditional release by the Department of Correction under DehCode Ann. tit. 11, § 4348.” Evans, 872 A.2d at 554-55. In deciding that Jackson set the applicable rule, the Delaware Supreme Court observed that its statements in Crosby about “the operation of section 4346 and section 4348 upon the pre-Truth-in-Sentencing life sentences with the possibility of parole for violent crimes, were overbroad and unnecessary to the holding. That obiter dicta in Crosby is what caused the initial confusion in [Evans I].” Id. at 558. The Delaware Supreme Court then explained
[w]hen Evans was sentenced to life with the possibility of parole, the statutory sentencing system did not permit Evans to be released prior to his death-unless parole was granted. Similarly, good time credits only applied to Evans’ natural life sentence for purposes of accelerating Evans’ parole eligibility date. Accordingly, we hold that Evans — like Jackson — is not eligible for conditional release and must remain incarcerated until his death, unless he is granted parole.
Id. at 558.
Having described the relevant legal background, the court now turns to the facts of petitioner’s situation. To reiterate, petitioner was sentenced to life with the possibility of parole in 1982, prior to the enactment of TIS. In February 2005, while the Delaware Supreme Court was still re-considering its decision in Evans I, petitioner filed a petition for a writ of mandamus in the Superior Court. Petitioner argued that, pursuant to the holdings of Crosby and Evans I, his life sentence is for a term of 45 years and, therefore, the Department of Correction must calculate his conditional release date by taking his good time credit into account. The Superior Court denied the petition, and petitioner appealed. In his appeal, petitioner argued that the Superior Court erred in denying his petition for a writ of mandamus because: (1) the relief requested should have been granted pursuant to the ruling in Crosby; (2) TIS violates the ex post facto clause; and (3) petitioner’s due process rights were violated by the permanent denial of conditional release. (D.I. 15, Op. Br. of the Defendant-Appellant in Shockley v. Taylor). The Delaware Supreme Court affirmed the Superior Court’s judgment on the basis of Evans II. Shockley, 882 A.2d 762, 2005 WL 2473792.
A. Standard of Review
Respondent explicitly waives petitioner’s failure to exhaust state remedies for his two federal habeas claims, and argues that the court should deny the claims as merit-less. Accepting respondent’s waiver, the court will review petitioner’s application de novo, under the pre-AEDPA standard. See Holloway v. Horn, 355 F.3d 707, 718-19 (3d Cir.2004)(explaining that de novo review is appropriate where the state supreme court did not address the merits of a claim).
B. Claim One: Ex Post Facto Violations
Petitioner contends that the Delaware Supreme Court’s decision affirming the denial of his petition for a writ of mandamus violates the ex post facto clause because it retroactively applies Evans II to his case. The court will deny this claim as meritless. The ex post facto clause of the United States Constitution prohibits the retroactive application of a law enacted after the date of an offense if the law “inflicts a greater punishment, than the law annexed to the crime when committed.” Calder v. Bull, 3 U.S. 386, 390, 3 Dall. 386, 1 L.Ed. 648 (1798). However, by its own terms, the ex post facto clause only applies to acts performed by legislatures, not to the retroactive application of judicial decisions. Collins v. Youngblood, 497 U.S. 37, 52, 110 S.Ct. 2715, 111 L.Ed.2d 30 (1990); Rogers v. Tennessee, 532 U.S. 451, 458-60, 121 S.Ct. 1693, 149 L.Ed.2d 697 (2001).
The court will also deny as moot petitioner’s claim that House Bill No. 31 violates the ex post facto clause. The Delaware Supreme Court declared House Bill No. 31 unconstitutional and void in Evans 11. Therefore, the court lacks jurisdiction to review this claim. See North Carolina v. Rice, 404 U.S. 244, 246, 92 S.Ct. 402, 30 L.Ed.2d 413 (1971)(“mootness is a jurisdictional question”); Chong v. District Director, INS, 264 F.3d 378, 383-84 (3d Cir.2001).
C. Claim Two: Due Process and Equal Protection Violations
In his second claim, petitioner contends that the Delaware Supreme Court violated his right to due process and his right to equal protection by retroactively applying TIS and Evans II to his case. According to petitioner, this retroactive application terminated his good time and merit credit which, in turn, increased his punishment.
It is well-established that “it is not the province of a federal habeas court to reexamine state-court determinations on state-law questions.” Estelle v. McGuire, 502 U.S. 62, 112 S.Ct. 475, 116 L.Ed.2d 385 (1991); Warren v. Kyler, 422 F.3d 132, 136 (3d Cir.2005). The court is therefore bound by the Delaware Supreme Court’s interpretation of Delaware law in Evans II. See Mullaney v. Wilbur, 421 U.S. 684, 691, 95 S.Ct. 1881, 44 L.Ed.2d 508 (1975). Accordingly, the only question before the court is whether the Delaware Supreme Court’s application of Evans II to petitioner’s case violates the due process and equal protection clauses of the United States Constitution.
The test for determining if the retroactive application of a judicial interpretation of state law violates due process is one of foreseeability. Bouie v. Columbia, 378 U.S. 347, 352, 84 S.Ct. 1697, 12 L.Ed.2d 894 (1964). A judicial decision is unforeseeable and may not be given retroactive effect if the decision is “unexpected and indefensible by reference to the law which had been expressed prior to the conduct in issue,” or when the court’s construction is at odds with the plain language of the statute. Rogers v. Tennessee, 532 U.S. 451, 456, 462, 121 S.Ct. 1693, 149 L.Ed.2d 697 (2001); Bouie, 378 U.S. at 356, 84 S.Ct. 1697. In the Third Circuit, the rule against the unforeseeable retroactive application of a judicial decision applies with equal force to “after-the-fact increases in the degree of punishment.” Helton v. Earner, 930 F.2d 1040, 1045 (3d Cir.1991).
The court concludes that the retroactive application of Evans II to petitioner’s case did not violate petitioner’s due process rights. First, at the time of petitioner’s sentencing in 1982, the Delaware Supreme Court had not addressed the issue as to whether the reference to a 45 year term contained in § 4346(c) applied with equal force to determining a conditional release date under § 4348. Therefore, the Delaware Supreme Court’s interpretation of those two statutory provisions in Evans II was neither “unexpected nor indefensible by reference to the law which had been expressed prior to the conduct in issue.” Rogers, 532 U.S. at 456, 462, 121 S.Ct. 1693.
Second, the Delaware Supreme Court’s interpretation of § 4346(c) and § 4348 in Evans II did not constitute an unforeseeable change in parole and conditional release determinations for life sentences imposed prior to TIS based on the plain language of the relevant statutory provisions in effect at the time of petitioner’s conviction and sentence. Given § 4346(c)’s explicit definition of a life sentence as a 45 year term, and the clear absence of similar language in § 4348, the court concludes that the plain language of the two statutory provisions fairly warned petitioner that his life sentence would only be considered a 45 year term for the purpose of determining his parole eligibility date, and not for determining a conditional release date. In turn, because the Delaware Supreme Court’s construction of § 4346(c) and § 4348 in Evans II was based on the plain language of those provisions, the holding in Evans II did not deprive petitioner of his due process right of fair warning.
Equally unavailing is petitioner’s argument that the Evans II court violated the fair warning requirement of the due process clause by departing from its own precedent established in Evans I and Crosby. As an initial matter, the court concludes that Evans I is irrelevant to the instant due process analysis because the Delaware Supreme Court withdrew the Evans I decision in Evans II, and therefore, Evans I does not constitute binding Delaware precedent and has no legal effect. Furthermore, Evans II did not overrule Crosby or establish a new principle of law, but only clarified that the holding in Crosby applies to life sentences imposed on habitual offenders after the enactment of TIS. Because the factual situation presented in Crosby differs from the factual situation presented in Evans II, the Evans II court did not act unforeseeably in issuing a different holding than the one it issued in Crosby. In turn, because the factual situation in petitioner’s case is factually similar to Evans II, Evans II provides the relevant precedent in petitioner’s case.
In conclusion, Evans II was not unexpected and indefensible in light of the plain language of the two statutory provisions at issue here and in light of the Delaware case law in effect at the time petitioner was sentenced. The application of Evans II to petitioner’s case did not result in the unforeseeable reduction or removal of good time credits from petitioner’s record because he never had a right to automatic or conditional release under § 4348. At most, petitioner had a right to be considered for parole under § 4346(c), and Evans II did not eliminate petitioner’s opportunity to obtain such release. Accordingly, the court will deny petitioner’s due process claim as meritless.
Finally, the court concludes that petitioner has failed to assert a viable equal protection challenge because he has not proven the existence of purposeful discrimination or that he was treated differently from others similarly situated. Snowden v. Hughes, 321 U.S. 1, 8, 64 S.Ct. 397, 88 L.Ed. 497 (1944). Accordingly, the court will deny petitioner’s equal protection claim as meritless.
D. Motion for Evidentiary Hearing
Petitioner moves the court to conduct an evidentiary hearing for his habeas claims. (D.I.16) However, rather than demonstrate how a hearing would advance his claims, petitioner merely re-asserts the same arguments contained in his application. As previously explained, the court has determined that petitioner’s arguments are without merit. Therefore, the court will deny petitioner’s request for an evidentia-ry hearing. See Campbell v. Vaughn, 209 F.3d 280, 286-87 (3d Cir.2000).
IY. CERTIFICATE OF APPEALA-BILITY
When a district court issues a final order denying a § 2254 petition, the court must also decide whether to issue a certificate of appealability. See Third Circuit Local Appellate Rule 22.2. A certificate of appeala-bility is appropriate when a petitioner makes a “substantial showing of the denial of a constitutional right” by demonstrating “that reasonable jurists would find the district court’s assessment of the constitutional claims debatable or wrong.” 28 U.S.C. § 2253(c)(2); Slack v. McDaniel, 529 U.S. 473, 484, 120 S.Ct. 1595, 146 L.Ed.2d 542 (2000).
If a federal court denies a habeas petition on procedural grounds without reaching the underlying constitutional claims, the court is not required to issue a certificate of appealability unless the petitioner demonstrates that jurists of reason would find it debatable: (1) whether the petition states a valid claim of the denial of a constitutional right; and (2) whether the court was correct in its procedural ruling. Id. “Where a plain procedural bar is present and the district court is correct to invoke it to dispose of the case, a reasonable jurist could not conclude either that the district court erred in dismissing the petition or that the petitioner should be allowed to proceed further.” Id.
The court finds that petitioner’s application for a writ of habeas corpus pursuant to 28 U.S.C. § 2254 does not warrant federal habeas relief. Reasonable jurists would not find this conclusion to be debatable. Consequently, the court declines to issue a certificate of appealability.
V. CONCLUSION
For the reasons stated, petitioner’s application for habeas relief pursuant to 28 U.S.C. § 2254 is denied. An appropriate order shall issue.
. Evans v. State, 2004 WL 2743546 (Del. Nov. 23, 2004).
. De novo review means that the court “must exercise its independent judgment when deciding both questions of constitutional law and mixed constitutional questions.” Williams v. Taylor, 529 U.S. 362, 400, 120 S.Ct. 1495, 146 L.Ed.2d 389 (2000)(Justice O'Connor concurring).
. See generally Evans, 872 A.2d 539.
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12532089-22272 | ROBERT S. LASNIK, UNITED STATES DISTRICT JUDGE
This matter comes before the Court on "Plaintiffs' Motion for Preliminary Injunction." Dkt. # 3. Plaintiffs are young immigrants who have been determined by the courts of the State of Washington to have been abused, neglected, or abandoned by one or both of their parents. They seek classification as Special Immigrant Juveniles ("SIJ") as a pathway to lawful permanent residency in the United States. They contend that defendants - the United States Department of Homeland Security ("DHS"), the United States Citizenship and Immigration Services ("USCIS"), the individuals in charge of DHS and USCIS, and the director of the National Benefits Center - adopted a new policy in 2018 that unlawfully denies them SIJ status. Plaintiffs seek a preliminary injunction enjoining application of that policy.
I. BACKGROUND
A. Federal Law
Congress created the SIJ status in 1990 as a means of alleviating "hardships experienced by some dependents of United States juvenile courts by providing qualified aliens with the opportunity to apply for special immigrant classification and lawful permanent resident status, with possibility of becoming citizens of the United States in the future." 58 Fed. Reg. 42843, 42844 (Aug. 12, 1993). SIJ status is available if:
(i) [the juvenile immigrant] has been declared dependent on a juvenile court located in the United States or whom such a court has legally committed to, or placed under the custody of, an agency or department of a State, or an individual or entity appointed by a State or juvenile court located in the United States, and whose reunification with 1 or both of the immigrant's parents is not viable due to abuse, neglect, abandonment, or a similar basis found under State law;
(ii) [it] has been determined in administrative or judicial proceedings that it would not be in the alien's best interest to be returned to the alien's or parent's previous country of nationality or country of last habitual residence; and
(iii) ... the Secretary of Homeland Security consents to the grant of special immigrant juvenile status....
8 U.S.C. § 1101(a)(27)(J). If granted, SIJ status provides a pathway to lawful permanent residency and, ultimately, citizenship. See 8 U.S.C. §§ 1255, 1427. When an immigrant applies for SIJ status, USCIS must grant or deny the application within 180 days. 8 U.S.C. § 1232(d)(2).
When SIJ status was first recognized as a form of immigration relief, the applicant had to be "eligible for long-term foster care," which the agency interpreted as requiring a determination "by the juvenile court that family reunification is no longer a viable option." 8 C.F.R. § 204.11(a). Agency regulations clarified that eligible juveniles were aliens "under twenty-one years of age." 8 C.F.R. § 204.11(c)(1).
In 2008, Congress passed the William Wilberforce Trafficking Victims Protection Reauthorization Act ("TVPRA"), amending the SIJ statute in three significant ways. Pub. L. No. 110-457 § 235(d), 122 Stat. 5044 (2008). First, the TVPRA expanded the universe of immigrants would could obtain SIJ status. It removed the requirement that applicants be eligible for long-term foster care, broadening the statute to apply instead to juveniles for whom "reunification with 1 or both of the immigrant's parents is not viable due to abuse, neglect, abandonment, or a similar basis found under state law." Id. § 235(d)(1)(B) (amending 8 U.S.C. § 1101(a)(27)(J) ). It also made SIJ status available to juveniles who had been "legally committed to, or placed under the custody of, an agency or department of a State, or an individual or entity appointed by a State or juvenile court" in addition to those who had been "declared dependent on a juvenile court." Second, the TVPRA clarified that an applicant's eligibility for SIJ status is dependent on the juvenile's age at the time he or she applied for SIJ status rather than at the time the application was processed. Id. § 235(d)(6). Finally, the amendments removed the requirement that the agency "expressly consent" to the state court's dependency order, instead requiring "consent[ ] to the grant of special immigration juvenile status." Id. § 235(d)(1)(B). USCIS exercises its "consent" authority by verifying whether the SIJ petition is bona fide, "meaning that the juvenile court order was not sought primarily to obtain the status of an alien lawfully admitted for permanent residence" but "rather to obtain relief from abuse or neglect." Dkt. #25 at 15.
Following enactment of the TVPRA, a petitioner for SIJ status must be (a) under twenty-one years of age, (b) unmarried, (c) declared dependent on a juvenile court or placed in the custody of a state agency or individual appointed by the court, and (d) the subject of state court findings that (i)
reunification with one or both parents is not viable because of abuse, abandonment, neglect, or similar basis under state law and (ii) it is not in the juvenile's best interests to be returned to his or her country of origin. Despite the amendments, the implementing regulations continue to reference pre-TVPRA statutory text conditioning SIJ status on eligibility for long-term foster care. See 8 C.F.R. § 204.11(a), (c)(4)-(5) (2009) ("SIJ regulation"). Defendants rely heavily on these regulations in support of their rather convoluted argument that a state court is competent to make the factual findings required by the SIJ statute only if it has the power to reunify the juvenile with his or her biological parents.
B. Washington Law
Washington juvenile courts have jurisdiction to determine the care and custody of youth up to the age of twenty-one in certain circumstances. Pursuant to RCW 13.34.267, juvenile courts may, with the consent of the youth, maintain jurisdiction over dependency proceedings after the juvenile turns eighteen "to promote permanency and positive outcomes" and counteract the increased risks facing dependent juveniles when they leave the child welfare system. RCW 13.34.267 (Findings - 2013 Wash. Legis. Serv. Ch. 332 (S.S.S.B. 5405) (West)). In the context of this extended foster care program, Washington courts have jurisdiction to make the findings necessary for an immigrant youth to pursue SIJ status. Juvenile courts in Washington may also extend their jurisdiction over youth if, prior to his or her eighteenth birthday, criminal proceedings are pending or an extension is necessary for disposition or sentence to be imposed or enforced. RCW 13.40.300(3). In this context, the state court has authority to commit a juvenile to Washington's Department of Social and Health Services ("DSHS") for placement in a juvenile facility or release to a "responsible adult" at least up until the age of twenty-one (and in some cases until the age of twenty-five). RCW 13.40.040(5) ; RCW 13.40.300. When committing juveniles to DSHS, courts have the power to make the findings necessary for an immigrant youth to pursue SIJ status.
In 2017, the Washington legislature established the Vulnerable Youth Guardianship ("VYG") program specifically for juveniles aged eighteen to twenty-one years old. RCW 13.90.900. The VYG program allows the juvenile to consent to the appointment of a guardian even if he or she was not previously in the child welfare system. The legislature found that "[o]pening court doors for the provision of a vulnerable youth guardianship serves the state's interests in eliminating human trafficking, preventing further victimization of youth, decreasing reliance on public resources, reducing youth homelessness, and offering protection for youth who may otherwise be targets of traffickers." Id. In creating the VYG program, the legislature intended to fix a disconnect between state and federal law. RCW 13.90.901(1)(d). Under federal immigration law, SIJ status is available to youth until the age of twenty-one. 8 U.S.C. § 1101(b)(1). In Washington, however, youth who were not already under the jurisdiction of the juvenile courts had limited opportunities to request that the state court make the findings necessary to apply for SIJ status. As of 2017, Washington extended juvenile court jurisdiction to cover "judicial determinations regarding the custody and care of youth" between the ages of eighteen and twenty-one and to make findings necessary for a juvenile in that age group to seek SIJ status. RCW 13.90.901(1)(a).
C. Plaintiffs
Plaintiff Leobardo Moreno Galvez came to the United States on his own when he turned 14 and has lived with relatives and friends during the past six years. In 2016, Moreno Galvez was arrested for Minor in Possession at seventeen years of age. The Skagit County Superior Court adjudicating the offense extended its jurisdiction past Moreno Galvez' eighteenth birthday. When he was eighteen years old, the Superior Court placed him in state custody and found that (a) it had jurisdiction under state law to make a judicial determination about his care and custody, (b) Moreno Galvez should be legally committed to or placed in the custody of a state agency as of October 20, 2016, (c) reunification with one or both parents was not viable because they had sent him away years ago and "failed to provide for his basic needs including food, shelter, clothing and education," and (d) it would not be in Moreno Galvez' best interests to return to Mexico. Dkt. #4-4 at 2-3. Six weeks later, Moreno Galvez submitted a Form I-360 Petition for Special Immigrant Juvenile Status to USCIS. On December 20, 2018, USCIS denied the petition, stating that "the evidence you submitted does not establish that the state court had jurisdiction under state law to make a legal conclusion about returning you to your parent(s)' custody." Dkt. #4-7 at 3. The denial notified Moreno Galvez that he was not lawfully present in the United States and that, if he did not depart within thirty-three days of the letter, USCIS may commence removal proceedings against him.
Plaintiff Jose Luis Vicente Ramos entered the United States as an unaccompanied minor in 2016, when he was seventeen years old. He eventually went to live with a cousin in Vancouver, Washington. In February 2018, Vicente Ramos was detained by USCIS. Utilizing the VYG program, Vicente Ramos consented to the appointment of his cousin as his guardian and requested that the Pierce County Superior Court make the necessary SIJ findings. It did so and, ten days later, Vicente Ramos submitted a Form I-360 Petition for Special Immigrant Juvenile Status to USCIS. The petition was denied on February 5, 2019, on the ground that Vicente Ramos had failed to show that the state court had jurisdiction "to make a legal conclusion about returning you to your parent(s)' custody." Dkt. #4-10 at 3. Vicente Ramos was ordered removed in May 2019. He remains detained in Northwest Detention Center while an administrative appeal is pending.
Plaintiff Angel de Jesus Muñoz Olivera and his younger brother presented themselves at the border on August 30, 2017, intending to seek help from a relative living in Kennewick, Washington. The brothers were separated, however, and Muñoz Olivera was detained by USCIS for over three months. Utilizing the VYG program, Muñoz Olivera consented to the appointment of the Kennewick relative as his guardian and obtained the factual findings necessary to support an SIJ petition from the Pierce County Juvenile Court. On November 15, 2017, Muñoz Olivera submitted his Form I-360 Petition for Special Immigrant Juvenile Status to USCIS. The agency has not yet adjudicated the application.
D. USCIS Change in Policy Regarding Petitions for SIJ Status
In the summer of 2017, USCIS began holding SIJ applications for individuals between the ages of 18 and 21. USCIS had centralized adjudication of SIJ applications in November 2016 and was awaiting legal guidance from the USCIS Office of Chief Counsel ("OCC") regarding a new policy that would affect SIJ adjudications for that age group. The new guidance was issued in February 2018 and specifies that, in order for a state court to be one of "competent jurisdiction" to make the necessary SIJ findings, the court must have the power not only to determine whether reunification with a parent is appropriate or viable, but also "to order reunification, if warranted." Dkt. #4-2 at 2. A USCIS spokesperson acknowledged the practical effect of this new policy in April 2018:
Since most courts cannot place a child back in the custody of their parent once the child reaches the age of majority (as determined by state [sic] and in most instances that is age 18), those state courts do not have power and authority to make the reunification finding for purposes of SIJ eligibility.
Dkt. #4-4 at 10.
Defendant National Benefits Center now handles all SIJ petitions. In fiscal year 2018, it received approximately 18,000 SIJ petitions, making up less than .1% of its entire caseload. The number of SIJ petitions tripled between 2014 and 2018. As of September 24, 2018, the National Benefits Center had a backlog of 32,518 SIJ petitions, with 23,589 of them pending for more than 180 days.
II. DISCUSSION
A. Preliminary Injunction Standard
"A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest." Winter v. Nat'l Res. Def. Council, Inc., 555 U.S. 7, 20, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008). If the " 'balance of hardships tips sharply in plaintiff's favor,' and the other two Winter factors are satisfied, a plaintiff only needs to show "serious questions going to the merits" in the Ninth Circuit. Alliance for the Wild Rockies v. Pena, 865 F.3d 1211, 1217 (9th Cir. 2017) (quoting Shell Offshore, Inc. v. Greenpeace, Inc., 709 F.3d 1281, 1291 (9th Cir. 2013) ).
B. Likelihood of Success on the Merits
The Administrative Procedure Act ("APA") mandates that district courts set aside agency action if it is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A). Plaintiffs argue that USCIS's February 2018 change in policy violates the APA because it is inconsistent with the governing statute, was imposed without explanation, and was issued without the required notice and comment period. They also argue that USCIS' delayed consideration of SIJ petitions past 180 days is unlawful. USCIS argues that its interpretation of the governing statute is reasonable given the purposes for which the SIJ program was created and that adequate notice of the policy change was provided because its Policy Manual is available to the public and the new guidance merely interprets existing law and is therefore not subject to the requirements for notice, public comment, or input before implementation. In addition, USCIS argues that any delays in processing SIJ petitions should be excused and that the Court lacks jurisdiction to interfere with its initiation or conduct of removal proceedings.
1. In Accordance with Federal Law
The primary issue in this case is whether the new policy requiring that a state court have the power to order reunification with a parent before it will be deemed competent to make factual findings regarding the viability of reunification and/or the best interests of the juvenile violates the SIJ statute or is a reasonable interpretation thereof. The Court finds that plaintiffs are likely to succeed on the merits of their claim that the new policy is "not in accordance with law." 5 U.S.C. § 706(2)(A). There is no textual authority for the new requirement in the statute. The statute does not require that reunification be possible or otherwise define state court competency by whether the juvenile has reached the "age of majority." Congress expressly made SIJ status available to juveniles up to the age of twenty-one and, as a USCIS spokesperson acknowledged shortly after the new policy went into effect, the change in policy generally excludes from protection any juvenile over the age of eighteen. Dkt. #4-4 at 10. The statute requires only that the youth be declared dependent on a juvenile court or placed in the custody of a state agency or an individual appointed by the juvenile court. 8 U.S.C. § 1101(a)(27)(J). The implementing regulations define "juvenile court" as "a court located in the United States having jurisdiction under State law to make judicial determinations about the custody and care of juveniles." 8 C.F.R. § 204.11(a). As discussed above, Washington law grants the courts of the state jurisdiction to make judicial determinations regarding the custody and care of youth between the ages of eighteen and twenty-one in certain circumstances. See RCW 13.34.267 ; RCW 13.40.040(5) ; RCW 13.40.300 ; RCW 13.90.901(1)(a). The Washington courts that placed Moreno Galvez in state custody and appointed guardians for Vicente Ramos and Muñoz Olivera had jurisdiction under state law to determine their care and custody and, pursuant to the plain language of the governing statute and regulations, had jurisdiction to make the required SIJ findings.
USCIS argues, however, that in order to give effect to Congress' intent when creating the SIJ program, it must be permitted to impose additional requirements or limitations so that the program is not used for the purpose of obtaining immigration benefits, as opposed to protecting a child from abuse or neglect. Using Muñoz Olivera's case as an example, USCIS argues that the "capacity to reunify" criteria is reasonable and necessary because it allows the agency to reject petitions, such as Muñoz Olivera's, that are based on a formulaic state court order issued while Muñoz Olivera was detained at the border and without any sort of proceeding or hearing common in child welfare law. Dkt. #25 at 28. USCIS also suggests, without citation to authority, that Congress intended that state courts act only within the scope of the child welfare laws that existed at some unspecified point in the past when making SIJ determinations, and that the new wave of state laws that allow eighteen to twenty-one year olds to request the appointment of a guardian do not create courts of "competent jurisdiction" for purposes of the SIJ statute because they are not steeped in and based on traditional child welfare law. Dkt. #25 at 25. Both arguments appear to be based on a concern that new laws and/or lax procedures will encourage abuses of the SIJ benefit by recent immigrants seeking lawful permanent residence status as opposed to child protective services.
The Court assumes, for purposes of this motion, that the agency has a legitimate concern regarding potential abuses of the SIJ program. Nevertheless, its choice of remedy - to impose an additional requirement not contemplated by the statute and which excludes from the program an age group that Congress intended to benefit - is not only unreasonable, but unnecessary. The statute and existing USCIS policies address the agency's stated concern in two ways. First, pursuant to the statute, the state court must make an explicit finding that the juvenile should not be returned to one or both parents because of abuse, abandonment, neglect, or a similar ground that is disqualifying under state law. If the state court has reason to believe that an immigrant is attempting to game the system by making false claims of endangerment, the predicate finding should not be made. The fact of endangerment and the best interests of the child are issues within the traditional expertise of the state courts, and the SIJ statute, not surprisingly, assigns this fact-finding task to the state court. 8 U.S.C. § 1101(a)(27)(J)(i)-(ii). Second, the statute gives USCIS oversight power, requiring it to "consent" to the grant of SIJ status. 8 U.S.C. § 1101(a)(27)(J)(iii). Pursuant to agency policies, the purpose of this consent is to verify whether the SIJ petition is bona fide, meaning that the juvenile court order was not sought primarily to obtain the status of an alien lawfully admitted for permanent residence, but rather to obtain relief from abuse or neglect. 6 Pol. Man. part J, ch. 2(D)(5). If USCIS concludes that a petition was improperly motivated, it has discretion to withhold consent and deny SIJ status.
USCIS did not exercise its discretion under the "consent" provision as to any of the named plaintiffs, however. Instead, it ignored state law - which clearly granted to the state courts jurisdiction to make custody and care determinations for named plaintiffs - and the state courts' factual determinations, declaring those courts incompetent solely because they lacked the authority to issue a certain type of custody order, namely reunification with a parent. The requirement is inconsistent with the governing statute and unnecessary to safeguard the program. The Court finds, as have the three other courts that have analyzed the issue, that the imposition of the "reunification" requirement is inconsistent with the SIJ statute's plain language, exceeded the agency's authority, and is unreasonable. W.A.O. v. Cuccinelli, No. C19-11696-MCA-MAH (D.N.J. July 3, 2019); R.F.M. v. Nielsen, 365 F. Supp.3d 350, 377-78 (S.D.N.Y. 2019) ; J.L. v. Cissna, 341 F. Supp.3d 1048, 1059 (N.D. Cal. 2018). Plaintiffs' have established that they are likely to succeed on their claim that the February 2018 policy is not in accordance with federal law.
2. Reasoned Explanation
Plaintiffs argue that USCIS's new policy is arbitrary and capricious because the agency failed to provide an adequate basis or reasoned explanation for its new requirement. Dkt. #3 at 20-22. USCIS has not responded to this argument, and the record reveals no evidence that the agency "examine[d] the relevant data" or "articulate[d] a satisfactory explanation for its action."
Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983). The Court finds that plaintiffs have shown a likelihood of success on the merits with regards to their claim that USCIS's new policy is arbitrary and capricious because the agency failed to provide a reasoned explanation.
3. Notice and Comment
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4313965-12511 | MEMORANDUM OPINION
Gladys Kessler, United States District Judge
On May 4, 2012, Plaintiff Roberta Dover (“Dover” or “Plaintiff”) brought an action in D.C. Superior Court against her former employer Defendant Medstar Washington Hospital Center (‘WHC”) and Defendants Paul Higgins, William Mullins, and Marie Boursiquot, WHC employees and managers (collectively, “Defendants”). On May 9, 2013, Defendants removed the case to this court.
The matter is presently before the Court on Plaintiffs Motion for Leave to Amend the Complaint [Dkt. No. 12] and Defendants’ Motion for Section 1927 Sanctions [Dkt. No. 13]. Upon consideration of the Motions, Oppositions, and Replies, the entire record herein, and for the reasons stated below, Plaintiffs Motion for Leave to Amend the Complaint is granted in part and denied in part, and Defendants’ Motion for Sanctions is denied.
I. BACKGROUND
On May 4, 2012, Plaintiff filed her initial Complaint in D.C. Superior Court. The Complaint alleged intentional interference with prospective advantage and economic expectancy (Counts. I and II), intentional misrepresentation (Count III), and defamation (Count IV). Plaintiff sought an injunction, back pay, compensatory damages, and punitive damages.
On April 22, 2013, after the original date for the close of discovery, Plaintiff filed an Amended Complaint adding several factual allegations and seven new claims. Her new claims alleged wrongful discharge (Count I), breach of contract (Counts II and III), breach of the covenant of good faith and fair dealing (Count IV), negligence (Count V), negligent supervision (Count VI), and intentional interference with business relations (Count IX). Her original intentional interference claims became Count VII and VIII.
On May 9, 2013, Defendants removed the case to this Court, arguing that the new claims required an interpretation of the Collective Bargaining Agreement (“CBA”) between MedStar and the Nurses United of the National Capital Region (“Nurses United”). Defendants argued that the common-law claims were preempted by section 301 of the Labor Management Relations Act (“LMRA”), thus requiring removal to this Court.
On May 16, 2013, Defendants filed a Motion to Dismiss the Complaint [Dkt. No. 3]. They sought to dismiss Claims I-VI, arguing that the claims should be dismissed under the LMRA for failure to file within the statute of limitations, failure to allege a breach of the duty of fair representation by a union, and failure to exhaust remedies under the CBA prior to bringing suit. Plaintiffs Opposition was due June 3, 2013, but no opposition was filed.
Instead, a month and a half after the Opposition was due, Plaintiff filed a Motion for Leave to Amend the Complaint [Dkt. No. 12]. Plaintiffs proposed Second Amended Complaint consists of five claims: negligent supervision (Count I), failure to pay overtime under D.C.Code §§ 32-1301, et seq. (Count II), and intentional interference with prospective advantage, economic expectancy, and business relations (Counts III-V). Defendants filed an Opposition [Dkt. No. 14] and Plaintiff filed a Reply [Dkt. No. 16]. The matter is now ripe for consideration.
II. STANDARD OF REVIEW
Federal Rule of Civil Procedure 15(a) provides that leave to amend a pleading “shall be freely given when justice so requires.” The Supreme Court has noted that a district court should grant leave to amend a complaint “[i]n the absence of any-apparent or declared reason — such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc.” Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962). However, “[w]ithin these bounds, a district court has discretion to grant or deny leave to amend under Rule 15(a).” Atchinson v. Dist. of Columbia, 73 F.3d 418, 426 (D.C.Cir.1996).
III. ANALYSIS
A. Motion for Leave to File Amended Complaint
Defendants object to the two new claims Plaintiff raises in her proposed Second Amended Complaint. First, Defendants argue that Plaintiffs claim for negligent supervision (Count I) was conceded when Plaintiff failed to respond to arguments raised in Defendants’ Motion to Dismiss against a similar claim for negligent supervision in the First Amended Complaint. Second, Defendants argue that Plaintiffs claim for failure to pay overtime (Count II) is time-barred, and, thus, amending the complaint to include this claim would be futile. The Court will address each issue in turn.
1. Negligent: Supervision
Defendants argue that Count I of the proposed Second Amended Complaint for “Negligent Supervision” parallels Count VI of the First Amended Complaint. They argue that Plaintiff conceded that claim lacked merit when she failed to oppose the arguments raised against it in Defendants’ Motion to Dismiss.
Although Defendants recognize that this Court has broad discretion to treat the absence of a response as a concession under Local Rule 7(b), that rule is inapplicable here. Defendants’ argument against Plaintiffs claim for Negligent Supervision in the First Amended Complaint was that it was “based upon and/or related to the CBA and the LMRA.” See Pl.’s Reply to Opposition to Motion for Leave to Amend Complaint at 5 [Dkt. No. 16]; Mem. in Support of Defs.’ Mot. to Dismiss Counts I, II, III, IV, V, and VI for Failure to State Claims Upon Which Relief Can Be Granted at 7 [Dkt. No. 3-1] (noting that “Count[]... VI require[s] interpretation of the provisions of the CBA and [is] also preempted by Section 301 of the LMRA”). Because the proposed Second Amended Complaint no longer bases its claims on the CBA, the Court finds that the arguments raised in Defendants’ Motion to Dismiss are not applicable to the Negligent Supervision claim as raised in the Second Amended Complaint. Thus, Defendants have failed to identify a persuasive reason why Plaintiff should not be allowed to pursue her claim, and the Motion for Leave to Amend Complaint shall be granted as to Count I.
2. Failure to Pay Overtime
Defendants argue that Count II of the proposed Second Amended Complaint, a claim for Failure to Pay Overtime under D.C. law, should be denied as futile because it is time-barred.
Plaintiffs claim arises from D.C.Code §§ 32-1301, et seq., known as the D.C. Wage Payment and Collection Law (“DCWPCL”). See Ventura v. Bebo Foods, Inc., 738 F.Supp.2d 8, 20 (D.D.C.2010). The statute of limitations for such claims is three years. See D.C.Code § 32-1013; Ventura, 738 F.Supp.2d at 30 (“The statute of limitations under ... the DCWPCL ... is only three years.”).
No party disputes that Plaintiffs claim accrued on June 25, 2 009, the date that Plaintiff was terminated. Defendants argue that Plaintiffs Motion for Leave to File her Second Amended Complaint was filed over four years later, and, thus, the claim is time-barred.
An amendment to a complaint that raises an otherwise time-barred claim may yet be timely if the amendment “relates back” to the date of the original complaint under Federal Rule of Civil Procedure 15(c). See Jones v. Bernanke, 557 F.3d 670, 674 (D.C.Cir.2009). That Rule provides, among other things, that an amendment relates back if it “asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out — or attempted to be set out — in the original pleading.” Fed. R. of Civ. P. 15(c)(1)(B).,
Relation back is improper when the amended claim “asserts a new ground for relief supported by facts that differ in both time and type from those the original pleading set forth.” Mayle v. Felix, 545 U.S. 644, 650, 125 S.Ct. 2562, 162 L.Ed.2d 582 (2005); see also Jones, 557 F.3d at 674 (“[A]n amendment that ‘attempts to introduce a new legal theory based on facts different from those underlying the timely claims’, does not relate back.”) (citation omitted). Instead, “[t]he underlying question is whether the original complaint adequately notified the defendants of the basis for liability the plaintiffs would later advance in the amended complaint.” Meijer, Inc. v. Biovail Corp., 533 F.3d 857, 866 (D.C.Cir.2008).
Plaintiff’s original Complaint did not allege any facts related to wages or overtime. The only facts alleged were that Plaintiff had “experienced wrongful treatment” by her supervisors; namely, “gross wrongful disparagement and harassment.” Compl. p. 3 [Dkt. No. 1, Ex. 3]. Consequently, the original Complaint did not give Defendants notice that they might face liability for wage payment violations. For this reason, Plaintiff cannot include her claim at this late date because it is time-barred and therefore futile. Plaintiffs Motion for Leave to Amend Complaint shall be denied as to Count II.
3. Undue Delay, Prejudice, and Bad Faith
A district court may deny leave to amend a complaint if the moving party demonstrates “undue delay, bad faith, or dilatory motive on the part of the movant,” among other things. Atchinson, 73 F.3d at 426. Defendants argue that permitting Plaintiff to amend her Complaint at all at this late date will result in undue delay and prejudice, and that Plaintiffs counsel is acting in bad faith in seeking the amendment. The Court disagrees.
Any undue delay in this case was caused by Plaintiffs original Amended Complaint, which added claims that were clearly insufficient under the LMRA. However, at this point, it appears to the Court that Plaintiffs counsel is attempting to move forward in good faith in the best interests of his client, rather than attempting to delay the case further. As discussed above, four of the five claims raised in the Second Amended Complaint may move forward. Thus, the Court finds that the attempt to amend the complaint is neither motivated by an attempt to further delay the case or bad faith.
Even if there was undue delay, such delay is insufficient to justify denying leave to amend in the absence of a showing that the opposing party will suffer prejudice. See Caribbean Broad. Sys., Ltd. v. Cable & Wireless P.L.C., 148 F.3d 1080, 1084 (D.C.Cir.1998) (discussing cases where district court abused discretion in denying leave to amend based on delay in absence of showing of prejudice). There is no prejudice here because Defendants are free to seek to re-open discovery on the new claim in D.C. Superior Court after the case is remanded, as discussed below.
Thus, Plaintiffs Motion for Leave to File an Amended Complaint is denied as to Count II and granted as to all other claims.
B. Remand to Superior Court
This case was removed to this Court because Plaintiffs claims that the CBA was violated meant that her common-law claims were pre-empted by federal law, namely, the LMRA. At this point, Plaintiff no longer alleges or bases any claims on the CBA. Thus, there is no longer federal jurisdiction over this case.
The Court declines to exercise supplemental jurisdiction over the remaining claims pursuant to 28 U.S.C. § 1367(c)(3) because they all relate to local District of Columbia law. See Shekoyan v. Sibley Int’l, 409 F.3d 414, 423-24 (D.C.Cir.2005) (noting that if “all federal-law claims are dismissed before trial, the balance of factors to be considered under the pendent jurisdiction doctrine—judicial economy, convenience, fairness, and comity — will point toward declining to exercise jurisdiction over the remaining state-law claims”) (quoting Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 n. 7, 108 S.Ct. 614, 98 L.Ed.2d 720 (1988)). When a case removed from state court no longer contains any basis for federal court jurisdiction, remanding the case to state court is the proper course of action. See Blue v. Fremont Inv. & Loan, 584 F.Supp.2d 10, 12 (D.D.C.2008); see also Randolph v. ING Life Ins. & Annuity Co., 486 F.Supp.2d 1, 10 (D.D.C.2007) (remanding case to D.C. Superior Court due to lack of subject matter jurisdiction). Accordingly, the Court will remand the remaining claims to the D.C. Superior Court.
C. Sanctions
Defendants have filed a Motion for Section 1927 Sanctions [Dkt. No. 13]. Plaintiff filed an Opposition [Dkt. No. 15] and Defendants filed a Reply [Dkt. No. 17]. That Motion is also ripe for consideration.
28 U.S.C. § 1927 provides that “[a]ny attorney ... who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.”
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3702912-28391 | RULING ON MOTION FOR A PRELIMINARY INJUNCTION
BLUMENFELD, Senior District Judge.
The plaintiffs seek a preliminary injunction restraining the Postal Service from terminating the employment of Philip N. Danko, pending arbitration of the dispute. The defendant opposes the motion and has moved to dismiss for failure to state a claim. The plaintiffs’ motion was heard on August 8, 1984, but no evidence was taken because the defendant conceded that the facts as stated in the plaintiffs’ complaint were true.
Facts
This dispute began with the decision of the Postal Service to “excess” (i.e., eliminate) fourteen positions at the New London Post Office and transfer a number of those employees to other offices in Connecticut. Danko, who is President of the union local, opposed this action; in particular, he claimed that the loss of these positions caused delayed mail service for customers of the New London Post Office. Danko publicized his opposition by contacting the local newspapers, the Senators from Connecticut, and his local Congressman.
The dispute was brought to a head by a letter that Danko sent to Mystic Color Lab, the largest customer of the New London Post Office. Danko informed Mystic Color Lab that, as a result of the elimination of the fourteen positions, its mail was being delayed. The defendant concluded that this letter constituted conduct prejudicial to the interest of the Postal Service and decided to discharge Danko.
The firing was to have taken effect on July 26, 1984, but Judge Clarie issued a temporary restraining order precluding the firing on July 24, 1984, which I extended for an additional ten days on August 3, 1984. The plaintiffs, Danko and the union representing employees at the New London Post Office, seek a preliminary injunction restraining the discharge until the arbitration of the dispute is completed.
The collective bargaining agreement requires arbitration of this dispute and the parties have commenced the arbitration process. The collective bargaining agreement establishes four steps in the arbitration process, two of which have been completed.
Discussion
The plaintiffs have presented several arguments in support of their contention that Danko should not have been fired by the Postal Service. The defendant disputes the merits of all of the plaintiffs’ arguments and contends that a preliminary injunction should not issue because the plaintiffs have not established any irreparable harm. The defendant also challenges the court’s jurisdiction because primary jurisdiction lies with the NLRB.
To obtain a preliminary injunction, the plaintiff must show:
(a) irreparable harm and (b) either (1) likelihood of success on the merits or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the [plaintiff].
Jackson Dairy, Inc. v. H.P. Hood & Sons, Inc., 596 F.2d 70, 72 (2d Cir.1979). Danko’s financial difficulties resulting from his discharge are not sufficient to establish irreparable injury. See Sampson v. Murray, 415 U.S. 61, 94 S.Ct. 937, 39 L.Ed.2d 166 (1974). But the plaintiffs contend that Danko’s discharge will have a chilling effect on his and the other employees’ exercise of their first amendment rights. The union contends that the chilling effect on its members’ first amendment rights is an irreparable injury. To determine whether there will be a chilling effect one must first inquire whether Danko’s actions were protected by the first amendment.
First Amendment
The Postal Service contends that Danko’s letter did not address a matter of public concern and thus was not protected speech under the first amendment. From the other side, the plaintiffs contend that Danko’s letter did not address a matter of purely private concern; they contend that the public has a vital interest in the efficient operation of the mails.
Whether an employee’s speech addresses a matter of public concern must be determined by the content, form, and context of a given statement, as revealed by the whole record.
Connick, 103 S.Ct. at 1690 (footnote omitted).
In Connick, an assistant district attorney distributed to other employees a questionnaire criticizing the internal workings of the district attorney’s office, which was held not to be a matter of public concern. But see Mount Healthy City Board of Education v. Doyle, 429 U.S. 274, 97 S.Ct. 568, 50 L.Ed.2d 471 (1977) (speech about a dress code for teachers was a matter of public concern because it affected public support for bond issues). However, one of the questions on the questionnaire did address a matter of public concern: whether public employees were pressured into participating in political campaigns. Connick, 103 S.Ct. at 1691. Similarly, in Pickering v. Board of Education, 391 U.S. 563, 88 S.Ct. 1731, 20 L.Ed.2d 811 (1968), the Court held that a schoolteacher’s complaints about the allocation of funds between academic and athletic programs were addressed to a matter of public concern.
In this case, Danko’s letter was about a matter of public concern as well as a purely private dispute. The letter was designed to aid the union in its efforts to convince the Postal Service to reinstate the jobs which had been terminated at the New London Post Office. This dispute over the jobs is a private dispute between the union and the Postal Service, but the effects of this dispute were not a purely private matter. It should be noted that Danko’s letter was but one part of a campaign to inform the public of delays in mail deliveries at the New London Post Office. This campaign had received some attention in the local newspapers, which is some evidence that the matter is of public concern. The public has a legitimate and pressing interest in the prompt delivery of the mails. Thus, to the extent that the lost jobs caused a delay of the mails, the private dispute was a matter of public concern.
Irreparable Harm
The loss of first amendment rights for even a short period of time is an irreparable injury. Elrod v. Burns, 427 U.S. 347, 96 S.Ct. 2673, 49 L.Ed.2d 547 (1976). Furthermore, “a plausible claim of a ‘chilling effect’ on the exercise of [first amendment rights] meets the irreparable harm requirement.” Maceira v. Pagan, 649 F.2d 8, 18 (1st Cir.1981); see also Katz v. McAulay, 438 F.2d 1058, 1060 n. 3 (2d Cir.1971), cert. denied, 405 U.S. 933, 92 S.Ct. 930, 30 L.Ed.2d 809 (1972); Chicago Area Military Project v. City of Chicago, 508 F.2d 921, 926 (7th Cir.), cert. denied, 421 U.S. 992, 95 S.Ct. 1999, 44 L.Ed.2d 483 (1975). I conclude that the plaintiffs have shown that the failure to enjoin Danko’s discharge would result in a chilling of his and the other employees’ exercise of their first amendment rights; thus the plaintiffs have satisfied the irreparable harm requirement.
Success on the Merits
The defendant contends that Danko committed an act of disloyalty and thus his discharge was justified. The plaintiffs argue that the discharge was unlawful because Danko was discharged for exercising his first amendment rights. Although the defendant might argue that it would have discharged Danko even in the absence of the protected conduct, see Mount Healthy, 429 U.S. at 281-87, 97 S.Ct. at 573-76, the only instance of disloyalty which the defendant has presented is the letter to Mystic Color Lab. Thus, this case is distinguishable from Mount Healthy in which the defendant claimed that the plaintiff had engaged in conduct justifying his discharge completely apart from the conduct which was protected by the first amendment. Id. at 281-82, 97 S.Ct. at 573-74. In light of my conclusion, at this stage of the proceedings, that Danko’s letter addressed a matter of public concern, the defendant’s admission that Danko was discharged for writing that letter is a sufficient basis to find that the plaintiffs have shown a likelihood of success on their claim that Danko’s discharge was unlawful.
Jurisdiction
The defendant has moved to dismiss this suit because primary jurisdiction lies with the NLRB and therefore this court does not have jurisdiction to issue an injunction. In Boys Markets, Inc. v. Retail Clerk’s Union, 398 U.S. 235, 90 S.Ct. 1583, 26 L.Ed.2d 199 (1970), the Supreme Court held that a union may be enjoined from striking over a grievance which the collective bargaining agreement consigned to arbitration. Otherwise, the union could frustrate the arbitration process by using a strike to wring concessions from an employer before the arbitrator could decide the issue. The availability of injunctions has been narrowed in Buffalo Forge Co. v. United Steelworkers, 428 U.S. 397, 96 S.Ct. 3141, 49 L.Ed.2d 1022 (1976), but an injunction may be issued in aid of arbitration. See Columbia Local, American Postal Workers Union v. Bolger, 621 F.2d 615 (4th Cir.1980); United Steelworkers v. Fort Pitt Steel Casting, 598 F.2d 1273 (3d Cir.1979). In addition to the traditional requirements for the issuance of a preliminary injunction, the failure to issue an injunction must “deprive the union of an effective remedy in the event the arbitrator decided the grievance in the union’s favor.” Local Lodge No. 1266 v. Panoramic Corp., 668 F.2d 276, 283 (7th Cir.1981); Lever Bros. Co. v. Int’l. Chemical Workers, 554 F.2d 115 (4th Cir.1976).
The inquiry into whether the arbitration would be frustrated by the failure to issue an injunction is closely related to the question of whether the plaintiffs will suffer an irreparable injury. See Panoramic, 668 F.2d at 286. The arbitrator would be able to remedy Danko’s loss of employment by ordering reinstatement and back pay, but the failure to issue an injunction would frustrate the arbitration process because the arbitrator would be unable to remedy the chilling effect on the employees’ exercise of their first amendment rights.
For the foregoing reasons, the defendant’s motion to dismiss is denied, and the plaintiffs’ motion for a preliminary injunction is granted.
SO ORDERED.
ON MOTION FOR RECONSIDERATION OR STAY
Defendant in this action has moved for reconsideration or stay of my previous decision to grant a preliminary injunction restraining the discharge of plaintiff Philip Danko pending arbitration of a labor dispute. American Postal Workers Union v. United States Postal Service, 593 F.Supp. 403 (1984) (Blumenfeld, J.). The facts are set forth adequately in that decision, and I need not restate them here. In a lengthy, repetitive, and somewhat disorganized brief, defendant advances various arguments to the effect that this court was without jurisdiction to issue an injunction in this case. These arguments are addressed below.
I. Statutory Basis for Jurisdiction
As an initial matter, 39 U.S.C. § 1208(b) appears to vest jurisdiction in this court. Defendant argues, however, that the body of case law applicable to section 1208(b) precludes the exercise of jurisdiction. The parties agree that the law developed under section 301 of the Labor Management Relations- Act, 29 U.S.C. § 185, applies by analogy. See National Ass’n of Letter Carriers v. Sombrotto, 449 F.2d 915, 918-19 (2d Cir.1971). It is equally well established that in resolving issues under section 301, a district court may apply the case law developed under the Railway Labor Act, 45 U.S.C. § 151 et seq. Boys Markets v. Retail Clerks Union, 398 U.S. 235, 90 S.Ct. 1583, 26 L.Ed.2d 199 (1970).
II. Exhaustion of Contractual Remedies
Defendant contends that the plaintiffs may not seek relief in federal court until they have complied with contractual arbitration procedures to the final step. In effect, defendant’s position is that while a court may enforce an arbitration award, a court has no power to maintain the status quo pending the results of arbitration. However, neither the case law nor the Congressionally-established policy favoring arbitration as the means of resolving labor disputes requires this result.
Republic Steel Corp. v. Maddox, 379 U.S. 650, 85 S.Ct. 614, 13 L.Ed.2d 580 (1965), cited by defendant in support of its contention, is inapposite. In Republic, a discharged employee who had made no effort to utilize contractual grievance/arbitration procedures brought suit in state court to recover severance pay which he alleged was owed him under the terms of the contract. On appeal from a state court judgment in favor of the employee, the Supreme Court held that federal policy prohibits an individual from electing “to completely sidestep available grievance procedures in favor of a lawsuit.” Id. at 653, 85 S.Ct. at 616.
In contrast to the situation in Republic Steel, the plaintiff in the instant case is actively pursuing contractual remedies. But in a classic plea for equitable relief, he alleges that he will suffer irreparable injury if the status quo is not maintained during the possibly lengthy grievance/arbitration process. Such an action has repeatedly been held to be within the jurisdiction of the district court. E.g., Local 553, Transport Workers Union v. Eastern Air Lines, 695 F.2d 668 (2d Cir.1982); Columbia Local, American Postal Workers Union v. Bolger, 621 F.2d 615 (4th Cir.1980); Lever Brothers Co. v. International Chemical Workers Union Local 217, 554 F.2d 115 (4th Cir.1976); Hoh v. Pepsico, Inc., 491 F.2d 556, 560 (2d Cir.1974); Teamsters Local Union No. 764 v. Branch Motor Exp. Co., 463 F.Supp. 282 (D.Pa.1978).
Buffalo Forge Co. v. United Steelworkers, 428 U.S. 397, 96 S.Ct. 3141, 49 L.Ed.2d 1022 (1976), is not to the contrary. In Buffalo Forge, the Supreme Court held that section 4 of the Norris-LaGuardia Act, 29 U.S.C. § 104, prohibits an injunction against a sympathy strike which both employer and union agreed was itself over a non-arbitrable issue. 428 U.S. at 407-08, 96 S.Ct. at 3147-48. The Court went on to say that although the parties in Buffalo Forge could arbitrate the issue of whether the sympathy strike violated the contract’s express no-strike clause, an injunction against the strike would violate section 4(a) of the Norris-LaGuardia Act’s express prohibition against injunctions prohibiting any person from “[cjeasing or refusing to perform any work or to remain in any relation of employment.” Behind this holding lay the Congressional policy decision that courts should not predetermine factual and contract interpretation issues which the parties have agreed to place in the province of the arbitrator, as well as the Court’s recognition that “[injunctions against strikes, even temporary injunctions, very often permanently settle the issue.” 428 U.S. at 412, 98 S.Ct. at 3149.
Buffalo Forge does not control the instant case. There is no strike here. The dispute is over an arbitrable issue. The preliminary injunction does not settle the dispute, nor does it predetermine either factual issues or the interpretation of the contract. The Norris-LaGuardia Act does not by its policy or its terms forbid an injunction, and an injunction here furthers, rather than derogates, federal policy in favor of arbitration as a means of resolving labor disputes. Cf Boys Markets, supra, 398 U.S. at 249-53, 90 S.Ct. at 1591-94. The injunction merely preserves the present relationship between the parties in recognition of the fact that, should plaintiff Danko prevail in the grievance/arbitration process, the arbitrator’s award of reinstatement and back pay could not remedy the damage done to plaintiffs by chilling the exercise of their first amendment rights. See Elrod v. Burns, 427 U.S. 347, 96 S.Ct. 2673, 49 L.Ed.2d 547 (1976); Sheehan v. Purolator Courier, 676 F.2d 877, 885 (2d Cir.1981).
III. Preemption
Defendant next contends that this court is without jurisdiction to issue an injunction in this case because the question whether the Postal Service violated Danko’s rights under sections 7 and 8 of the NLRA is within the exclusive jurisdiction of the NLRB. The argument is a curious one, since plaintiffs have not sought to litigate Danko’s section 7 and 8 rights in this forum. In addition to this action, plaintiffs have filed an unfair labor practice charge with the NLRB, upon which the Board has indicated no action will be taken until the arbitrator has rendered a decision. Plaintiffs do not ask this court to interfere with the NLRB’s jurisdiction by determining the merits of the unfair labor practice charge, but rather to preserve the status quo pending the arbitrator’s decision. The law does not preclude the court from doing so.
In Carey v. Westinghouse Corp., 375 U.S. 261, 84 S.Ct. 401, 11 L.Ed.2d 320 (1964), the Supreme Court held that the existence of an unfair labor practice remedy before the Board did not bar a union from seeking a court order compelling arbitration. See also Smith v. Evening News Association, 371 U.S. 195, 83 S.Ct. 267, 9 L.Ed.2d 246 (1962) (suit for damages not barred by existence of NLRB remedy). At least since then, it has been beyond dispute that the NLRB and the District Court have concurrent jurisdiction over suits to enforce labor contracts, even where the conduct involved might well be an unfair labor practice. Hines v. Anchor Motor Freight, 424 U.S. 554, 562, 96 S.Ct. 1048, 1055, 47 L.Ed.2d 231 (1976); Pari Mutuel Clerks Union of La. v. Fair Grounds Corp., 703 F.2d 913, 917-18 (5th Cir.1983).
Defendant suggests, citing Eastex, Inc. v. NLRB, 437 U.S. 556, 98 S.Ct. 2505, 57 L.Ed.2d 428 (1978) and NLRB v. International Brotherhood of Electrical Workers, 346 U.S. 464, 74 S.Ct. 172, 98 L.Ed. 195 (1953), that the NLRB would not find an unfair labor practice on the facts of this case. That argument does not go to this court’s jurisdiction to issue an injunction pending arbitration, but rather to the merits of the dispute between the parties. The merits are for the arbitrator, in the first instance, to decide. I have concluded only that plaintiffs’ claims of irreparable injury to their first amendment rights are sufficiently strong to require an injunction pending a merits decision.
It is not, however, the jurisdiction of the court which is premised on the constitutional claim. While in the absence of such a claim a court might properly choose, as a discretionary matter, to refrain from issuing an injunction, jurisdiction here is based on statute. The constitutional claim goes to the existence of irreparable injury, a prerequisite for equitable relief.
In sum, I conclude that I am not required by law to defer to the NLRB in this matter. The court shares jurisdiction with the Board. In light of the Board’s decision to defer to the arbitrator, and in the circumstances of this case, it was no invasion of the Board’s authority to issue the injunction in this case.
IY. The Statutory Remedial Scheme
In a final assault on the jurisdiction of the court, defendant argues that under Carlson v. Green, 446 U.S. 14, 100 S.Ct. 1468, 64 L.Ed.2d 15 (1980), and Bush v. Lucas, 462 U.S. 367, 103 S.Ct. 2404, 76 L.Ed.2d 648 (1983), the existence of a statutory remedial scheme precludes the implication of a remedy under the Constitution. These cases are not on point, because this is not a Bivens action. Plaintiffs here seek the intervention of this court not to award damages for a constitutional violation, nor to bypass the avenues of relief established by Congress and the collective bargaining agreement. Rather, they seek temporary injunctive relief to preserve their constitutional rights while they pursue remedies under the very statutory and contractual scheme invoked by defendant. In these circumstances, the discussion of implied constitutional damage remedies is wide of the mark.
The legal issue in Bush v. Lucas was quite different from the issue in the case at bar. Bush, an employee of the National Aeronautics and Space Administration’s Marshall Space Flight Center, was demoted for making public comments critical of the Center. Through the Civil Service appeals process, he sought and was eventually awarded both reinstatement and back pay. Simultaneously, he filed an action seeking to recover damages for alleged violation of his first amendment rights. The issue presented to the Supreme Court was whether, in light of the elaborate remedial system provided by Congress, the Court should imply a non-statutory damages remedy against the supervisor who demoted Mr. Bush. The Court held in the negative, emphasizing that “Congress is in a far better position than a court to evaluate the impact of a new species of litigation between federal employees on the efficiency of the Civil Service.” 462 U.S. at-, 103 S.Ct. at 2417.
In the instant case, however, plaintiff does not seek an implied damages remedy. Congress has already provided a statutory basis for the jurisdiction of the court and no “new species of litigation” is contemplated. Moreover, plaintiff occupies a position of some importance — i.e., President of his union local — in the system of collective bargaining which Congress has sought through the labor laws to encourage, and protect, and plaintiff alleges not only a violation of his own first amendment rights, but also a chilling effect on the rights of the members of his local. See Sheehan v. Purolator Courier, supra. Nothing in Bush v. Lucas addresses this situation or requires a court to forbear from exercising its traditional power to fashion an equitable remedy.
V. Additional Issues
Defendant raises several additional arguments, going to issues other than the jurisdiction of the court.
First, defendant continues to insist that under Connick v. Myers, 461 U.S. 138, 103 S.Ct. 1684, 75 L.Ed.2d 708 (1983), Danko’s speech was not protected by the first amendment. In my previous decision in this matter, I made plain my view that under these circumstances, the letter which Danko was fired for signing addressed a matter of sufficiently public concern to bring Danko under the amendment’s protection. In Connick, the Court stated that its holding was a limited one:
We hold only that when a public employee speaks not as a citizen upon matters of public concern, but instead as an employee upon matters only of personal interest, absent the most unusual circumstances, a federal court is not the appropriate forum in which to review the wisdom of a personnel decision taken by a public agency allegedly in reaction to the employee’s behavior.
461 U.S. at 147, 103 S.Ct. at 1690. In my view, both the content of Danko’s statements and the circumstances under which they were made take them outside the scope of the holding in Connick.
Second, defendant argues that plaintiffs have failed to demonstrate irreparable injury, since if Danko should prevail in arbitration he will receive reinstatement and back pay. However, it is clear that such an award will not remedy the damage done to the first amendment rights of Danko and the members of his union local. This is the type of case to which the court in Lever Brothers referred when it stated that an injunction could issue “where it is necessary to prevent conduct by the party enjoined from rendering the arbitral process a hollow formality ... [since] ... the arbitral award when rendered could not return the parties substantially to the status quo ante.” 554 F.2d at 123. The Supreme Court has held, moreover, that harm to first amendment rights satisfies the irreparable injury requirement for equitable relief. Elrod v. Burns, 427 U.S. 347, 96 S.Ct. 2673, 49 L.Ed.2d 547 (1976) (opinion of Brennan, J.).
Defendant also contends that the local union has no standing to sue, and impliedly argues that this court abused its discretion when it considered the harm that would be done to members of the local if Danko’s discharge were allowed to stand pending arbitration.
It is clear, however, that the statute does not require a party to be a signatory to the contract in order to bring suit. Santos v. Dist. Council of New York City, 547 F.2d 197, 200 n. 3 (2d Cir.1977). Cf. Columbia Local, supra. Since the main requirement for standing under Article III is “injury in fact,” see Duke Power Co. v. Carolina Environmental Study Group, 438 U.S. 59, 98 S.Ct. 2620, 57 L.Ed.2d 595 (1978), and there is no question that the union may assert its members’ rights, see NAACP v. Alabama, 357 U.S. 449, 78 S.Ct. 1163, 2 L.Ed.2d 1488 (1958), I find the standing contention to be without merit.
Finally, defendant contends that the court has improperly balanced the hardships in this case, since the public interest will suffer if defendant must retain this miscreant on its payroll. But defendant has never alleged that plaintiff Danko performs his work in less than adequate fashion. However, defendant now alleges, by affidavit of Francis Boughan, Director of Employee and Labor Relations for the Connecticut Valley District of the United States Postal Service, that the injunction is harmful to United States Postal Service efficiency, because it undermines management authority to discipline employees for cause.
The existence of “cause” for Danko’s discharge is of course an issue to be adjudicated before the arbitrator. Should he or she determine that cause existed, Danko will be discharged, and management authority will be vindicated. The issue, then, is whether the public interest suffers from the fact that Danko must be maintained in work status until a decision is rendered. This question is complicated by the presence of the first amendment issues in the case. I find that the loss of face which management may incur, not from Danko’s speech itself but simply from the inability to discharge him pending resolution of his grievance, is insufficient to outweigh the damage which would be done to plaintiffs’ first amendment rights if Danko were discharged pending arbitration, even if the discharge were subsequently reversed. Conclusion
I reiterate what I said in my previous decision in this matter: “If the trial on the merits were held in this court, I would not be bound by the conclusion of law or fact reached in this decision.” The purpose of this injunction is not to prejudge the case or to influence the arbitrator. It is merely to preserve the status quo until the arbitrator decides the issues raised by Danko’s grievance. Should the matter come before me once again after that event, different considerations might apply to a determination of the merits. At this stage, however, defendant has not convinced me either that issuance of the injunction was incorrect, or that a stay is warranted.
The decision granting a preliminary injunction having been reconsidered, for the reasons made clear above the decision is adhered to and a stay is denied.
SO ORDERED.
. The plaintiffs have also filed an unfair labor practice charge with the National Labor Relations Board ("NLRB"), which has decided to defer action pending arbitration. See Collyer Insulated Wire, 192 N.L.R.B. 837 (1971).
. Such speech does not fall in the same category as obscenity which is never protected under the first amendment; rather, if the speaker is a public employee, he may be fired for such speech without violating the first amendment. Connick v. Myers, 461 U.S. 138, 103 S.Ct. 1684, 1690, 75 L.Ed.2d 708 (1983).
. In Connick, the Court balanced the extent to which the plaintiffs first amendment rights were infringed against the government’s interest in promoting the efficiency of public services:
The limited First Amendment interest involved here does not require that Connick tolerate action which he reasonably believed would disrupt the office, undermine his authority, and destroy close working relationships.
Id. at 1694. In this case, the Postal Service does not contend that Danko’s continued presence in the New London Post Office will result in the disruption of the office or the destruction of working relationships. Furthermore, the fact that Danko’s speech did not occur at the workplace decreases the likelihood that his continued employment would have an adverse effect on the operation of the Post Office. Cf. Connick, 103 S.Ct. at 1693 n. 13.
. Although the person to whom speech is directed is not dispositive, it is a factor to be considered. Compare Givhan v. Western Line Consolidated School District, 439 U.S. 410, 99 S.Ct. 693, 58 L.Ed.2d 619 (1979) (speech protected by the first amendment although directed only to the employer) with Mount Healthy (fact that communication was broadcast by a radio station was evidence that it was a matter of public concern).
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2240131-8733 | AINSWORTH, Circuit Judge:
Frankie Gunn appeals from her conviction on all six counts of an indictment charging her with mail fraud in violation of 18 U.S.C. § 1341. The indictment specifically charged Gunn with using the mails as part of a scheme to defraud through the employment of gasoline company credit cards issued to others, during the months of June, August, and September 1968. On this appeal Gunn does not question the sufficiency of the evidence to convict her. Instead, as in the pretrial hearing on her motion to suppress, she questions the admissibility of certain evidence at her trial in light of applicable federal standards. We conclude that her trial comported with these standards and affirm the judgment of conviction.
In July 1968, Charles Davis, a federal postal inspector, received a complaint from Alexander Susha involving the unauthorized use by an unknown person of a gasoline company credit card issued to Susha. Until September 25, 1968, Davis corresponded with gasoline companies and obtained certain invoices, but otherwise conducted no investigation of the complaint. On the morning of September 25, Davis checked certain vehicle registration records and, through these records, traced a certain tag number and vehicle to Frankie Gunn. The tag number indicated that the vehicle was an Oldsmobile. From the person who had sold the Oldsmobile to Gunn, Davis obtained a description of Gunn and learned that she was employed at Head’s Car Wash on the Southern Bypass in Montgomery, Alabama. Davis had an invoice indicating that the Susha card had been used to make a purchase at a service station on the Southern Bypass. Davis went there and interviewed the operator, Willie Holladay. Holladay described the customer who had used the Susha card. This description resembled the description Davis had previously received of Gunn. Davis then went to Head’s Car Wash, where Frankie Gunn and her automobile were pointed out to him. The automobile was a Plymouth, and its tag number did not appear on the invoices he was investigating. Davis then left the car wash to check the Plymouth tag number. He determined that the tag had been issued to a Ford automobile, not a Plymouth. Davis then contacted two Montgomery city detectives who investigated automobile thefts and with whom Davis had worked before on investigations. The postal inspector, advising the detectives that he was working on a credit card case, asked if they were interested in checking the Plymouth. The detectives replied that they were interested.
On the afternoon of September 25, Davis returned to Head’s Car Wash with the two detectives. Neither Davis nor the detectives had arrest or search warrants. One detective, telling Gunn that the Plymouth was improperly tagged, then questioned her regarding the ownership of the car. Gunn stated that she owned the car and, in response to the detective’s request for proof went to the car to search for the bill of sale. While she was handling papers she had taken from the glove compartment, a credit card fell to the floor of the car in the view of one detective. He handed the card, which had been issued to R. M. Srygley, to Davis. The postal inspector had not previously been investigating use of a credit card issued to this man. Aware that Gunn was on parole from the State of Alabama, Davis then informed Gunn of her Miranda, rights with the use of a warning-and-waiver form. Gunn stated that she understood, but refused to sign the form. Davis then looked at the tires on the Plymouth. He noted that one of the tires, whose serial number faced outward had a number matching the serial number on one of the Susha credit card invoices. The other tires, whose numbers faced inward, were then checked by a city detective, who had to crawl under the car to obtain them. One of these tires also appeared to have been purchased with the Susha credit card. The detectives then took Gunn into the office of the car wash. There they called her parole officer, a Mr. Shook, and advised him of the circumstances attending the questioning of Gunn and of what they had apparently discovered. Shook replied that he would meet them at the Montgomery city jail with a parole violation warrant for Gunn and requested that they arrest Gunn. The arrest was formally made, and Davis, Gunn, and a city detective proceeded to the jail in a city automobile. On the way, Gunn was taken to Holladay’s service station, where the two tires had been purchased with the Susha card. She was there exhibited to Holladay.
At the jail Gunn was booked for parole violation. Davis asked her for handwriting exemplars, and Gunn gave them. Then, on September 26, a warrant for Gunn’s arrest for mail fraud was sworn out by the postal inspector and Gunn was taken before a United States Commissioner that afternoon. At this time, she first asked for a lawyer to represent her. On September 27, Davis asked Gunn for a second set of handwriting specimens, after first advising her of her constitutional rights. She complied. A lawyer was appointed for Gunn on September 30, and prosecution on the federal charges followed.
Before trial Gunn filed a motion to suppress for use as evidence by the prosecution, among other items, (1) the matter taken from her automobile while she, Davis, and the city detectives were at Head’s Car Wash, (2) the handwriting exemplars, and (3) the eyewitness identification of her by Holladay. A hearing was conducted on this motion under Fed.R.Crim.P. 41(e). At this hearing Davis, the two city detectives, and Gunn testified. Thereafter the District Judge, filing findings and conclusions, denied the motion. The evidence here complained of was then introduced at trial by the Government, and, the jury returned a verdict of guilty on all six counts.
On this appeal Gunn contends principally that she was unlawfully arrested, that the taking of the serial numbers of the tires on her car was an unlawful search and seizure, and that the arresting officer unnecessarily delayed in taking her before a United States Commissioner in violation of Fed.R.Crim.P. 5 (a).
We first consider the validity of Gunn’s arrest on September 25. Gunn argues that the city detectives did not have probable cause to arrest her and that they arrested her in violation of Ala.Code tit. 42, § 10. This section provides:
“If the probation and parole officer having charge of a paroled prisoner * * * shall have reasonable cause to believe that such prisoner has lapsed, or is probably about to lapse, into criminal ways or company, or has violated the conditions of his parole in an important respect, such probation and parole officer * * * shall report such fact to the department of corrections and institutions who thereupon shall issue a warrant for the retaking of such prisoner and his return to the prison designated. Any probation and parole officer, police officer, sheriff or other officer with power of arrest upon the request of the probation and parole officer may arrest a parolee without a warrant. In case of an arrest without a warrant the arresting officer shall have a written statement by said probation and parole officer setting forth that the parolee has, in his judgment, violated the conditions of parole and said statement shall be sufficient warrant for the detention of said pax'olee. * * * ”
Gunn contends that the city detectives violated this section by arresting her before they obtained a written statement from Shook, her parole officer.
In denying the pretrial motion to suppress, the District Court found that the arrest was made on probable cause by the Montgomery city detectives at or immediately before Gunn was taken from Head’s Car Wash. The District Court also found that the arrest on the federal charges was not made until September 26. The findings of a District Court on a pretrial motion to suppx’ess are binding upon this Court unless they are clearly erroneous. United States v. Montos, 5 Cir., 1970, 421 F.2d 215; United States v. Ogle, 5 Cir., 1969, 418 F.2d 238; see 3 Wright, Federal Practice and Procedure § 675, at 130 (1969). The record made at the pretrial hearing, reinforced by the record of the trial itself, indicates clearly that the city detectives had sufficient knowledge of facts “to justify a man of reasonable caution and prudence in believing that the arrested person had committed * * * an offense.” Miller v. United States, 5 Cir., 1966, 356 F.2d 63, 66; see Woodbury v. Beto, 5 Cir., 1970, 426 F.2d 923; United States v. Trabucco, 5 Cir., 1970, 424 F.2d 1311. Under the circumstances of this case, it is also clear that Shook and the detectives complied in substance with Ala.Code tit. 42, § 10. The arrest, therefore, was lawfully effected.
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3931299-8382 | MEMORANDUM OPINION
ROBERT W. PORTER, District Judge.
Defendant Sandra Lande has petitioned this Court to set aside the default judgment rendered against her in the above styled and numbered cause. She additionally moves the Court to stay any proceedings to enforce the judgment pending disposition of the motion to set aside the default judgment. For the reasons set forth below, I deny both motions.
Plaintiff’s complaint was filed on August 27, 1976. On August 27, 1976, service was made on Sandra Lande through her brother, Michael Jacobson. Both Sandra and her brother resided at the address at which service was effected, 5720 Forest Lane, Dallas, Texas. Ms. Lande did not answer, and on November 3, 1976, the Court entered a judgment by default against her in the amount of $25,000.
On December 13, 1978, Ms. Lande filed the motions presently before the Court. She concedes that the relief offered by Rule 60(b) is generally restricted to one year after the offending judgment was entered, in cases in which the motion alleges mistake, inadvertence, excusable neglect, newly discovered evidence, or fraud, misrepresentation or other misconduct of an adverse party. Nevertheless, Ms. Lande contends that the judgment rendered more than two years earlier should be set aside because she was never personally served with process in that action.
By affidavit, her brother agrees that he did not give his sister the summons, “nor did I tell her about it, nor did I have any reason to.” Ms. Lande contends that only on October 13, 1978 did she become aware of the existence of the judgment, on that date, the plaintiff attempted to levy execution on the assets of the bank account of a business run by Ms. Lande and her mother.
The plaintiff subsequently obtained a writ of garnishment through which the business bank account was frozen. Thereafter, no business debts were paid from this account. Ms. Lande consequently sought a stay of the execution to enforce the judgment, alleging that enforcement would cause her irreparable injury by damaging the reputation and credit of her business.
Despite Ms. Lande’s contention that her first knowledge of the judgment occurred on October 13, 1978, it is evident that an earlier event gave her notice of its existence. On March 14,1977, the Deputy United States Marshal called on Ms. Lande personally. At that time he demanded of her the amount of the default judgment. His signed return states that Ms. Lande informed him that she had neither the money to pay the judgment nor assets upon which levy might be had.
1. Rule 60(b)(6).
Had Ms. Lande moved promptly after the March 14, 1977 writ of execution was made upon her and requested that the default judgment be set aside pursuant to Rule 60(b), she could very probably have achieved her aim. Courts are willing to recognize the justice of vacating default judgments in cases wherein the defendant was without actual knowledge of service of process against him. Rooks v. American Brass Co., 263 F.2d 166 (6th Cir. 1959); Ameday v. U. S. Trucking Co., 62 F.R.D. 72 (E.D.Pa.1974); Huntington Cab Co. v. American Fidelity & Casualty Co., 4 F.R.D. 496 (S.D.W.Va.1945). Each of the defendants in these cases, however, came before the court promptly upon learning of the default judgments taken against them and moved that the judgment be set aside. In contrast, only after an additional year had passed did Ms. Lande file her motion under Rule 60(b), after which time the plaintiff had levied upon her business bank account. In response to the fact of the March 3, 1977 writ of execution, her attorney suggested that her failure to respond was due to her mistake in believing that the writ related to a different lawsuit between the parties. Consequently, it was not until the October 1978 levy was made did Ms. Lande admit to knowledge of the instant suit.
Rule 60(b)(6) permits vacation of a judgment for any reason “justifying relief” from a judgment. Ms. Lande has conceded in oral argument that her motion, coming more than two years after entry of default and more than a year after receipt of the writ of execution, may prevail only under equitable considerations. Indeed, I agree that equitable considerations should determine the application of Rule 60(b)(6). Smith v. Jackson Tool & Die, Inc. 426 F.2d 5, 8 (5th Cir. 1970). The equity urged is that her failure to move previously was due to her confusion regarding the existence of the suit against her, a subjective state that allegedly existed until October 8, 1978.
Rule 60(b)(6) is not necessarily limited to the one-year limit applicable to other Rule 60(b) bases; it must nonetheless be made within a “reasonable” time. A party is under a duty to take legal steps to protect his interests. Ackermann v. United States, 340 U.S. 193, 197, 71 S.Ct. 209, 95 L.Ed. 207 (1950). When Ms. Lande was given notice in March 1977, she should have acted to protect her interests. Instead she waited until over a year later. I find her explanation that she believed the notice of the writ to relate to a different suit is such as to constitute neglect. Under these circumstances, her excuse will not invoke Rule 60(b)(6).
Additionally, it should be noted that Rule 60(b)(6) is an extraordinary remedy that must be supported by adequate proof. I have not been convinced that extraordinary circumstances actually occurred in this case to justify Ms. Lande’s inaction. See, Ruddies v. Auburn Spark Plug Co., 261 F.Supp. 648 (D.C.N.Y.1966). Defendants have been permitted relief under Rule 60(b)(6) when their failure to come before the court earlier was due to extraordinary circumstances that prevented or rendered them unable to do so. Ackermann v. United States, supra; Klapprott v. United States, 335 U.S. 601, 69 S.Ct. 384, 93 L.Ed. 266 (1949). Martella v. Marine Cooks & Stewards Union, et aL, 448 F.2d 729 (9th Cir. 1971). As noted above, Ms. Lande was not prevented from coming before the court, at least after March 1977; in contrast she demonstrated neglect in failing to use due care to protect her interests at that time. “Excusable neglect” is not available under Rule 60(b)(1) because of the untimeliness of the motion under that provision.
I have viewed the circumstances surrounding this case in light of an additional dual consideration: any injustice of the complained of judgment must be weighed against the desirability of final judgments. A court may invoke the broad equitable power of Rule 60(b)(6) to prevent extreme hardship. Dickerson v. Continental Oil Co., 476 F.2d 635 (5th Cir. 1973). In this case, Ms. Lande’s business bank account has been seized and she fears irreparable harm will accrue to her by that seizure. In contrast, finality of judgment is especially desirable where a reopening could unfairly prejudice the opposing party, Carver v. Liberty Mutual Insurance Co., 277 F.2d 105 (5th Cir. 1960). Plaintiff merely states her conclusion that she will be prejudiced by reopening this action. Presumably, she refers to the costs of another trial process with the attendant effect of lapse of time and of the possibility that these bank account funds would evaporate by the time a new judgment could be gained.
As a general rule, the desirability of orderliness and predictability in the judicial process speaks for caution in the reopening of judgments. Fackelman v. Bell, 564 F.2d 784, 735 (5th Cir. 1977). This principle does not favor a recalcitrant attitude; rather it demands that the Court consider carefully the circumstances and profits offered to reach its decision. I believe I have done so to find that Ms. Lande’s motion to set aside the default judgment under Rule 60(b)(6) is DENIED.
2. Fraud on the Court.
Ms. Lande argues that the judgment itself was obtained only by fraud. Rule 60(b)(3) provides for relief where the judgment was obtained by “fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party) . . . ” Actions under this provision, however, must be brought within one year after the judgment was taken; thus Ms. Lande may not rely on this subsection. I note that even had she moved within one year pursuant to Rule 60(b)(3), Ms. Lande’s claim of fraud does not appear to be of the sort contemplated by that provision. Cf. United States v. International Telephone & Telegraph Co., 349 F.Supp. 22 (D.C.Conn.1972).
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5771535-6854 | OPINION OF THE COURT
FUENTES, Circuit Judge:
Appellant Bruce Wilcox pled guilty to possessing heroin with an intent to distribute. Wilcox’s counsel, John M. Holliday (“Counsel”), has moved to withdraw his representation pursuant to Anders v. California, 386 U.S. 738, 87 S.Ct. 1396, 18 L.Ed.2d 493 (1967). For the following reasons, we will grant Counsel’s motion and affirm Wilcox’s conviction and sentence.
I.
Because we write primarily for the parties, we set forth only those facts necessary to our analysis.
Wilcox pled guilty to possessing with an intent to distribute a quantity of a mixture containing heroin in violation of 21 U.S.C. §§ 841(a)(1) and 841(b)(l)(B)(i). The guilty plea stemmed from a December 14, 2006 drug transaction, during which Wilcox and his co-defendant purchased approximately 120 bricks of heroin in New York City and transported the narcotics to New Jersey using the New Jersey Transit System. Law enforcement intercepted telephone conversations between Wilcox and other individuals discussing purchasing the heroin and transporting the heroin across state lines. Wilcox thereafter traveled to New York, purchased the heroin and returned to New Jersey with Mercedes, a female companion. When law enforcement approached Mercedes, she consented to a pat down and 110 bricks of heroin were seized. The net weight of the heroin was 296.03 grams.
Wilcox pled guilty to Count Two of the indictment pursuant to a plea agreement in which the Government agreed to dismiss the indictment’s conspiracy count. In his plea, Wilcox stipulated that the weight of the heroin was 296.03 grams. Wilcox was sentenced by the District Court on October 1, 2008. Pursuant to U.S.S.G. § 4Bl.l(b), the District Court adjudicated Wilcox a career offender and placed him in criminal history category VI with a base offense level of 34, which was reduced to 31 for his acceptance of responsibility. As such, Wilcox’s Guideline range was 188 to 235 months imprisonment. Exercising its discretion, the District Court denied Wilcox’s motion for a downward departure based on compelling childhood circumstances, which included growing up in a home where adults regularly engaged in drug trafficking. The District Court sentenced Wilcox to 188 months imprisonment and five years of supervised release.
After reviewing the record, Counsel concluded that there are no non-frivolous issues Wilcox can raise on appeal. Therefore, he filed an Anders motion to withdraw as counsel with a supporting brief. Although afforded an opportunity to do so, Wilcox did not file a brief.
II.
Under L.A.R. 109.2 (2008), a counsel may move to withdraw representation where he or she is “persuaded that the appeal presents no issue of even arguable merit.” This motion must be supported by an Anders brief which: (1) shows that a counsel “thoroughly scoured the record in search of appealable issues;” and (2) “ex plain[s] why the issues are frivolous.” United States v. Marvin, 211 F.3d 778, 780 (3d Cir.2000). We then inquire as to “(1) whether counsel adequately fulfilled the rule’s requirements; and (2) whether an independent review of the record presents any nonfrivolous issues.” United States v. Youla, 241 F.3d 296, 300 (3d Cir.2001). In an Anders brief, a counsel’s inquiry into appealable issues demands a level of thoroughness. This standard, however, does not require a counsel to “raise and reject every possible complaint.” Marvin, 211 F.3d at 780. Rather, a counsel must employ sound judgment to “conclude that no further discussion of other areas of the case is necessary.” Id. (quoting United States v. Tabb, 125 F.3d 583, 585 (7th Cir.1997)). Consequently, failure to uncover the best arguments on behalf of a client is grounds for rejecting a counsel’s Anders brief. Id. at 781. Additionally, a counsel must discuss why the issues raised are frivolous. We may reject an Anders brief “in which counsel argue the purportedly frivolous issues aggressively without explaining the faults in the arguments.” Marvin, 211 F.3d at 781.
After reviewing the record in this appeal, it is apparent that Counsel thoroughly reviewed both the record and the law. In turn we conclude that he has satisfied Rule 109.2(a)’s requirements. We therefore independently reviewed the record appended to Wilcox’s brief. Because Counsel’s Anders brief is facially adequate, however, it guided our review. See Youla, 241 F.3d at 301.
Counsel maintains that there are no non-frivolous issues to raise on appeal because Wilcox’s plea and sentencing hearings satisfied all statutory and constitutional requirements. In his brief he therefore identifies three possible issues for appeal and explains why each is frivolous. They are: (1) whether the plea hearing met Federal Rule of Criminal Procedure ll’s requirements; (2) whether the District Court complied with proper sentencing rules; and (3) whether the judge erred in denying Wilcox’s motion for a downward departure.
First, Counsel explains why Wilcox’s plea hearing comported with Rule ll’s requirements. Rule 11 sets forth a number of elements that must be satisfied in order for a District Court to accept a guilty plea. These requirements include advising a defendant of his constitutional rights, informing a defendant about the consequences of his guilty plea, ensuring that a defendant’s plea is voluntary and determining that a factual basis exists for the plea. Because the District Court engaged in an extensive colloquy with Wilcox regarding his rights, these requirements were satisfied during his plea hearing. (App. 16-27) The District Court also determined that Wilcox was competent, capable, and was voluntarily entering the plea. (App. 36) Wilcox also admitted a number of facts that created a factual basis for the plea, including purchasing heroin in New York and transporting the narcotics to New Jersey. (App. 34-35) Therefore, we agree with Counsel that Wilcox’s plea hearing met Rule ll’s requirements and any appeal predicated upon the adequacy of the hearing would be frivolous.
Next, Counsel questions whether the District Court complied with Rule 32’s requirements, concluding that the sentencing hearing was properly conducted. Spe cifically, Counsel notes that the “Court confirmed with both Wilcox and defense counsel that they had the opportunity to review and discuss the Presentence Investigation Report,” as well as an opportunity to offer any objections to the Report. (App. 40-42) The District Court also afforded Wilcox an opportunity to speak, of which Wilcox took advantage. (App. 53) Finally, the District Court informed Wilcox of his right to appeal. (App. 58) After examining the transcript of the sentencing hearing, we agree that the District Court satisfied Rule 32’s requirements and therefore any appeal predicated upon a challenge to the sentencing hearing would be frivolous.
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6570668-30209 | Newman, Judge:
Defendant has moved for summary judgment and dismissal of this civil action, brought pursuant' to 28 U.S.C. § 2632(a) (1970).
Plaintiff, a wholesaler of domestic and imported wines, spirits and alcoholic ^beverages, imported, from Great Britain 3,660 cases of “Beefeater Dry. Gin”, which were entered for warehousing at .thé New York region subport at Perth Amboy, New Jersey on December 17, 1968-The 3,660 cases were assessed'witfi duty under.the provision for “gin” in item 168,35 of the Tariff .Schedules of the United States, and additionally were'assessed with an internal'revenue tax ás “distilled spirits” under the provisions of 26 U.S.C. § 5001(a) (1964).
Plaintiff claims that .the dúty and tax .were assessed on too great a quantity of merchandise; the rates of duty and.tax are not in dispute. Specifically, plaintiff contends that pursuant to 26 U.S.C. § 5008(a) (1964) it is entitled to a refund of the duty ($2,470.50) and tax ($28,822.50) assessed on 915 cases because they were stolen from its bonded warehouse in Perth Amboy, New Jersey, allegedly “without [the] connivance, collusion, fraud, or negligence” of the importer, its employees or agents. Plaintiff also demands a judgment for interest, attorney’s fees and costs of the suit.
Defendant’s motion for summary judgment and dismissal of the action is grounded on the contention that the court lacks jurisdiction for the reason that plaintiff failed to file a protest within sixty days after liquidation in accordance with 19 U.S.C. § 1514 (1964) , Plaintiff concedes that it failed to file its protest within sixty days after liquidation; but opposes defendant’s motion, contending that defendant is “barred” from raising the statute of limitations under section 1514 “by virtue of the fact that an agent of the government misrepresented material facts and induced plaintiff into not pursuing its statutory right to relief within the time limits specified by law”.
I have concluded that defendant’s motion should be granted.
1.
The record comprises the official papers forwarded to the Court by the Regional Commissioner pursuant to 28 U.S.C. § 2632(f) (1970) and rule 3.2(f); the pleadings; an affidavit executed by Stephen Rine-berg, plaintiff’s vice president, submitted in opposition to defendant’s motion; and an affidavit by Joseph A. Farrell, Port Director for United States Customs at Perth Amboy, New Jersey, submitted by defendant in-response to Rineberg’s affidavit.
The following material facts are not in dispute:
This case concerns entry number PA-199, dated December 17,1968, which covered 3,660 cases of gin. It appears that 915 of the cases were stolen from plaintiff’s premises while under bond on December 23 or 24, 1968. The theft was reported by plaintiff to the appropriate customs officials on December 24,1968. In subsequently liquidating the entry on July 2,1969, the Regional Commissioner made no allowance in duty or tax for the 915 stolen cases. Plaintiff failed to file a protest ■against such liquidation within sixty days'thereafter, as prescribed by 19 U.S.C. §1514.
On April 27, 1970, or 299 days after liquidation, plaintiff filed a claim for a refund of taxes (Internal Revenue Form 843), citing 26 U.S.C. § 5008(a) and asserting: “Claim for refund is made pursuant to 26 U.S.C. Sec. 5008(a). The tax was erroneously paid by the taxpayer because of inadvertence and ignorance of the applicable laws and regulations. The tax should not have been paid because the merchandise was lost by theft without the connivance, collusion, fraud or negligence of the taxpayer or its employees or agents. The loss has not been indemnified against or recompensed by the responsible insurance carriers though claim for same has been made”.
On June 1, 1970, or 334 days after liquidation, plaintiff filed an application for an allowance in duty for theft (Customs Form 4315).
The above-mentioned claim and application were denied by the Regional Commissioner in a letter to plaintiff dated April 12,1971 on the ground that no protest had been filed within sixty days after liquidation pursuant to section 1514. In that letter, the Regional Commissioner further advised plaintiff: “The importer (Flagstaff Liquor Co.), or their authorized agent may protest this decision by filing a protest on Customs Form 19 in quadruplicate within ninetjr (90) days after the date of this letter in accordance with Section 1514(a) (7), Title 19, United States Code”.
Within ninety days of the Regional Commissioner’s letter (June 17, 1971), plaintiff filed a protest against the denial of its claims for refund of duty and tax. The protest was denied on July 16,1971 on the Ibasis that the Regional Commissioner’s original decision was found to be correct. Moreover, the Regional Commissioner commented that plaintiff’s claim was “[n]ot correctible under Section 1520(c)(1) Title 19 USC”.
Thereafter, on December 14,1971 plaintiff filed a summons initiating this action against the denial of its protest of June 17,1971.
2.
Plaintiff concedes it is not entitled to relief pursuant to section 1520(c) for “clerical error, mistake of fact, or other inadvertence not amounting to an error in the construction of a law”. As previously mentioned, plaintiff further admits that it failed to file its protest within sixty days after the liquidation, as required by 19 U.S.C. § 1514. However, plaintiff insists that defendant should be “barred” from asserting such sixty day statute of limitations under section 1514 because the failure to file a timely protest was due to “misrepresentations” by a customs official. Hence, while not articulated as such, it is clear that plaintiff relies upon the familiar doctrine of equitable estoppel.
3.
At this juncture, it should be pointed out that the alleged “misrepresentations” were made during a conversation between Mr. Rine-berg, plaintiff’s vice president, and Mr. Farrell, the Port Director at Perth Amboy, New Jersey. As noted, the affidavits of both Rineberg and Farrell are part of the record-in these proceedings.
The conversation between Rineberg and Farrell occurred at plaintiff’s premises on December 24, 1968 as a consequence of plaintiff’s discovery in the morning that a container holding 915 cases of the imported gin had been stolen. Previously, Rineberg had transacted customs business with Farrell, and the latter impressed Rineberg as “a person who exercised considerable authority with respect to the operations of the Port of Perth Amboy, and a person who was knowledgeable in the area of customs and import regulations” (Rineberg affidavit, paragraph 5).
Rineberg related to Farrell the then known facts concerning the theft of the gin, and “asked Mr. Farrell to explain Flagstaff’s obligations to the United States Government with respect to the missing cases of gin” (Rineberg affidavit, paragraph 7). Continuing, Rineberg averred that the “misrepresentations” of Farrell, which allegedly deterred plaintiff from filing a timely protest, are as follows: (1) “Flagstaff was under an absolute duty to pay both alcohol excise tax and customs duties on the missing cases of gin” (paragraph 8); (2) “the United States Government would proceed against Flagstaff’s warehouse operator and/or carrier’s bond in the event that Flagstaff failed to or refused to make payment” (paragraph 9); (3) “if the United States' proceeded against said bonds, Flagstaff’s position as an approved bonded warehouse operator and carrier would be jeopardized” (paragraph 10); and (4) “Farrell [did not] advise me that I had ¿ statutory right to protest the payment of taxes or duties” (paragraph 13).
Kineberg further .argues: “[I]t appeared that the obligation to pay such taxes and duties was absolute and not subject to any challenge or discretionary action on the part of any government official” (paragraph 12); and. “Mr. Farrell’s statements and those of the Customs House to me led me to believe that not only was Flagstaff obligated to. pay, said taxes and duties but that Flagstaff had no recourse to challenge Mr. Farrell’s assertions” (paragraph 17).
It also appears from Kineberg’s affidavit that it was not until March 197Ó that plaintiff consulted its attorneys, and “was advised that it was conceivable that there existed a statutory right to make claims for refund of the customs duties and alcohol excise taxes paid on the missing 915 cases of gin” (paragraph 15).
In summary, as expressed in its brief: “[Pjlaintiff was misled into believing that it must pay the contested taxes and duties, that to dispute said taxes and duties would result in serious adverse consequences to plaintiff, and that in any event, there existed no procedure by which a contest could be made”.
I have determined, however, that as a matter of law the averments in Mr. Kineberg’s affidavit do not establish any basis for an equitable estoppel predicated upon misrepresentation.
4.
First, plaintiff has failed to show wherein any of the statements attributed to Farrell were either erroneous or misleading. On the contrary, they appear to be substantially accurate.
As of December 24,1968, when the conversation occurred, there had been no administrative or judicial determination to abate the duty and tax on the stolen cases of gin, and thus at that time plaintiff was indeed “under an absolute duty” to pay duty and tax on the 915 cases of gin. And although the subject of protesting the assessment did not arise in the conversation, it is of course fundamental that payment of liquidated duties and taxes was a condition precedent to filing a protest and to confer jurisdiction in this court. The A. W. Fenton Co., Inc. v. United States, 55 CCPA 54, C.A.D. 933 (1968); Marvin Schnitzer Machinery Co. v. United States, 62 Cust. Ct. 71, C.D. 3680 (1969); Korlis, Ltd. v. United States, 56 Cust. Ct. 365, C.D. 2660 (1966); A. Zerkowitz & Co., Inc. v. United States, 48 Cust. Ct. 437, Abs. 66724 (1962); A. Zerkowitz & Co., Inc. v. United States, 48 Cust. Ct. 438, Abs. 66725 (1962); A. Zerkowitz & Co., Inc. v. United States, 48 Cust. Ct. 439, Abs. 66726 (1962); Samoca Distributing Co. v. United States, 48 Cust. Ct. 392, Abs. 66633 (1962). Indeed, had plaintiff withheld payment of duty and tax for the stolen merchandise, upon which no allowance-had been made, there can be little doubt that in due course the Government would have proceeded against plaintiff’s bonds.
Whether plaintiff’s status as a bonded cartman and warehouseman would have been “jeopardized”, while somewhat conjectural, is not a “misrepresentation”. In this connection, it may be noted that licenses, to operate as a bonded warehouseman or cartman are revocable for “reasonable cause”, and particularly for negligence or carelessness-in the handling of goods. See 19 CFE §§ 19.3(c) and 21.8(a) (1967).
Second, there is no averment in Eineberg’s affidavit that Farrell stated that plaintiff had no right to file a protest. Eather, plaintiff relies upon Farrell’s silence concerning plaintiff’s statutory right to* file a protest pursuant to section 1514. The general rule is: “estoppel by silence” does not ordinarily arise where there is no affirmative duty to speak. See 31 C.J.S. Estoppel § 87, p. 485; 53 C.J.S. Limitations of Actions § 25, p. 964. Significantly, it is well settled that customs officials are not required to advise importers as to the nature and extent of their rights.
In Wilmington Skipping Company v. United States, 52 Cust. Ct. 642, A.R.D. 174 (1964), aff'd, 52 CCPA 89, C.A.D. 864 (1965), the-appeals for reappraisement were dismissed for untimeliness in that they were prematurely filed -before appraisement. In opposition to defendant’s motion to dismiss the appeals for untimeliness, plaintiff' relied upon conversations between its customhouse broker and the customs officials, whereby the latter erroneously advised the former that the appraisement had been made on a particular date (October-28, 1960) at the values set forth in the appraiser’s written notice of probable unpaid duties. Such notices advised the plaintiff that the-appraiser contemplated appraisement at certain increased values; but in point of fact and law, appraisements were not completed until a later date (November 10,1960) when notices of appraisement were mailed to plaintiff.
In affirming the decision and judgment of the trial court dismissing the appeals as prematurely filed, the appellate term held (52 Cust. Ct. at 649) :
It is regrettable that customs officials told plaintiff’s agent that the merchandise had been appraised on October 28, I960,, and advised him to- file appeals for reappraisement at that time. However, written- notices of appraisement were sent to plaintiff when the appraisement was completed, and plaintiff could then. have investigated and could then have filed timely appeals. It is well settled that customs officials are not required to advise importers as to the nature and extent of their rights. Jacksonville Paper Co. v. United States, 30 CCPA 159, C.A.D. 228; F. B. Wilcon v. United States, 13 Cust. Ct. 96, C.D. 876; United States v. Kenneth Kittleson and E. W. Rollow, 43 CCPA 31, C.A.D. 605. In the Jacksonville case, the court said:
That the importer was “influenced” by the officials to make the entry seems to be true, and the importer’s agents.evidently obtained the impression that such entry was “required” as a condition precedent to obtaining the merchandise, but it could not have been legally “required,” and had importer tendered proper bond all its statutory rights could have been preserved by its following the defined statutory procedure. [Pp. 164,165.]
There are certain legal precepts that may not be overlooked. It is well settled that there is no inherent right to sue the United States, that such right is permissible, and that a suit against the United States cambe maintained only pursuant to the terms’laid’down in the grant of permission. Congress may attach to its consent to sue such conditions as it deems proper. Reid v. United States, 211 U.S. 529; United States v. Loeb & Schoenfeld Co., 7 Ct. Cust. Appls. 380, T.D. 36961; ex parte Bakelite Corporation, 279 U.S. 438; Munro v. United States, 303 U.S. 36; and others.
Appellant has failed to bring itself within the statutory grant of permission conferred by section 501. [Emphasis added.]
Additionally, it must be observed from Rineberg’s affidavit that the affiant asked Farrell to explain plaintiff’s “obligations” to the Government and not its “rights” (paragraph 7). Hence, for this additional reason I see no justification for holding that Farrell was obliged to advise Rineberg that plaintiff could protest the assessment.
Third, plaintiff was not reasonably misled concerning its right to file a protest. Here, it may be stressed that plaintiff is an experienced importer who retained a customhouse broker to make entries (Dorf International, Ltd.), and plaintiff also is a licensed bonded warehouseman and cartman.
Fundamentally, in the law of estopiiel, one claiming to have been misled through lack of knowledge of certain facts must have been without convenient or ready means of acquiring such knowledge, and must have exercised reasonable diligence to acquire knowledge of the true facts. “If he conducts himself with a careless indifference to means of information reasonably at hand * * * he cannot invoke the doctrine of estoppel”. 31 C.J.S. Estoppel § 71, p. 435. It has also been stated: “[I]n order to serve as the basis of such an estoppel [to plead the statute of limitations], the fraud must be of a character to prevent inquiry, to' elude investigation, or otherwise to mislead the party having the cause of action^ and in this connection it has been held that plaintiff is under a duty to exercise reasonable care and diligence”. 53 C.J.S. Limitations of Actions § 25, p. 965.
Unfortunately plaintiff, who now professes to have been greatly concerned on December 24, 1968 about its right to protest the assessment of duty and tax on the stolen gin, apparently did not consult either its broker (Dorf) or its attorneys respecting the matter until March 1970, nearly fifteen months after the theft. Apropos, therefore, .are the following observations of our appellate court concerning an importer’s duty to protect its rights in Jacksonville Paper Co. v. United States, 30 CCPA 159, 164, C.A.D. 228 (1943), cert. denied, 320 U.S. 737 (1943):
The importer unfortunately did not see fit to confer with counsel and receive advice as to his legal rights before making the entries and it was a mistake on the part of Mr. McGehee to as-swne that it. was the duty of the customs officials fully to advise him. They could not, of course, have bound the Government by advising him nor was the importer bound by their statements. It was the duty of importer to protect its legal rights, which, as the trial court pointed out, it readily might have done by making a test case of the April, 1936, entry. [Emphasis added.]
Finally, even assuming arguendo that Farrell gave Bineberg wrong advice which reasonably misled plaintiff into not filing a timely protest, as a matter of law the doctrine of equitable estoppel may not be invoked against the United Stales under such circumstances.
In 'Wilmington Shipping Company, the Government was not barred from asserting that plaintiff’s appeals for reappraisement were prematurely filed notwithstanding plaintiff’s reliance in filing the untimely appeals upon the erroneous advice of the customs officials.
A long line of authorities in other federal courts have rejected the application of equitable estoppel against the United States, despite the fact that misinformation or erroneous advice of the Government’s agents or employees deterred the plaintiffs from filing timely actions. “[I]t is well established that the government is not estopped by such acts of its agents as the giving of improper advice”. Rock v. United States, 279 F. Supp. 96, 101 (S.D.N.Y. 1968)
In a “rider” attached to its summons, plaintiff contends that the “dictates” of Mr. Farrell were “beyond his authority”. But “[l]ack of authority is fatal to a claim of estoppel based upon the conduct of an agent. All who deal with any agent of the United States are charged with notice of his lawful authority”. United States v. Certain Parcels of Land, 131 F. Supp. 65, 73 (S.D. Calif. 1955). “The law is also well established that the United States, as a sovereign, cannot be estopped -by unauthorized acts' of its agents or employees”. Jackson v. United States, 234 F. Supp. 586, 588 (E.D.S.C. 1964). “And when •statutes of limitations are fixed by Congress'they may not be lengthened by estoppel or waiver by agents of the United States”. Kindrew v. United States, 352 F. Supp. 277, 278 (M.D. Fla. 1972), aff’d, 479 F. 2d 49 (CA 5, 1973).
Applicable here are the following comments of the District Court in Kindrew (352 F. Supp. at 278) :
The Plaintiff’s own lack of diligence in purposefully pursuing the cause within the required statutory period results in a forfeiture of the cause of action. This plightful ending was precisely ' described in Martin v. Grace Line, Inc., supra:
“Such unfortunate results will probably occur so long as-there are statutes of limitations. However, statutes of limitations exist to protect other important interests, which must also be accommodated.”
In Ritter v. United States, 19 F.2d 251 (W.D.Pa. 1927), aff’d, 28 F.2d 265 (CCA 3, 1928), the Government was held not estopped to raise plaintiff’s failure to file a written claim for a refund of an overpayment of income tax within the statutory time limit, notwithstanding the fact that a revenue field agent misled plaintiff into believing that an oral claim made to him at the audit was sufficient compliance with the applicable statutes and regulations. There, the Circuit Court of Appeals stated (28 F.2d at 267) :
* * * It is unfortunate and to be regretted that the plaintiff finds himself in the position in which his negligence, misunderstanding, or the unauthorized statement of the filed agent, Timber-lake, places him, but the sovereign government may not be sued, except upon its consent, and then only upon the conditions under which it has consented to be sued, even though they be purely formal. * * *
In Jaehson, the District Court held, in an action under the Federal Tort Claims Act, that the Government was not estopped from raising the two year statute of limitations where the failure of the incompetent plaintiff’s son to file a timely action on behalf of the plaintiff was the result of certain unauthorized statements of a Government officer.
Further, in Taylor v. Flemming, 186 F. Supp. 280 (W.D.Ark. 1960), plaintiff failed to file proof of support within the time specified by statute, which proof was a condition precedent to recovery of dependent parent’s insurance benefits under the Social Security Act. The District Court held that the Government was not estopped to assert plaintiff’s ineligibility for benefits, although plaintiff had relied upon erroneous information given her on inquiry at a social security office prior to the expiration of the time for filing proof of support. The court commented (186 F. Supp. at 284) :
As noted above, the'plaintiff contends that she made an inquiry at the Social Security Office in Sacramento, California, concerning the proof of support prior to July 31, 1951, and she was informed that she did not have to file such a proof. In plaintiff’s brief her attorney argues as follows:
“Since the United States Government can act only through its agents, it would be shocking to allow the United States Government to misinform an individual as to her rights, and then absolve itself from an obligation to that individual because of her reliance upon the misinformation.”
It is apparent that plaintiff is attempting to assert some type of estoppel against the defendant; however, no cases are cited in support of this position. If Mrs. Taylor did rely to her detriment upon such a statement, it is indeed unfortunate. However, the Government'cannot be estopped from insisting upon performance of statutory conditions precedent by the unauthorized acts of an employee of a local Social Security Office. * * *
Similarly, in Flamm v. Ribicoff, 203 F. Supp. 507 (S.D.N.Y. 1961), the Government was held not to be'estopped from raising the defense of plaintiff’s failure to comply with the statutory requirements for recovery of social security benefits despite the 'circumstances that the social security office gave “misinformation” concerning the time when application for benefits should have been filed. The court stated (203 F. Supp. at 510) :
Secondly, plaintiff claims that “misinformation” was given to Mrs. Berger’s son-in-law over the telephone in July 1956 by an employee, of the midtown Social Security office and that she delayed the filing of her written application until December 1958 in reliance thereon. She urges that defendant is therefore estopped by the acts of the Government employee from raising the defense of failure to comply with the statute and regulations so as to limit her benefits to one year prior to the filing of her 1958 application.
It is by no means clear that Mrs. Berger’s son-in-law was in fact misinformed by the Social Security office and that what he received from that office was not merely sound advice that the claimant should have accurate information available as to her date of birth. But even assuming that he did receive “misinformation” on which Mrs. Berger acted to her detriment, it is plain that estoppel will not lie against the Government under these circumstances. Parties dealing with the Government are charged with knowledge of and are bound by statutes and lawfully promulgated regulations despite reliance to their pecuniary detriment upon incorrect information received from Government agents or employees. Failure to comply with the applicable statute and regulations precludes recovery against the Government “no'matter with what good reason” the claimant believed she had come within the requirements. Estoppel will not lie regardless of the -financial hardship “resulting from innocent ignorance.” Federal Crop Insurance Corp. v. Merrill, 332 U.S. 380. 68 S.Ct. 1. 92 L.Ed. 10; Walker-Hill Co. v. United States, 162 F.2d 259 (7 Cir. 1947), cert. den. 332 U.S. 771, 68 S.Ct. 85, 92 L.Ed. 356; James v. United States, 185 F.2d 115, 22 A.L.R.2d 830 (4 Cir. 1954). [Emphasis, added.]
Again, in Commissioner of Internal Revenue v. Duckwitz, 68 F.2d 629 (CCA 7, 1934), the Circuit Court of Appeals affirmed the holding of the Board of Tax Appeals rejecting the taxpayer’s contention as to estoppel of the Government to claim a deficiency income tax because of the careless and unofficial expression of opinion by the solicitor in the-Bureau of Internal Revenue.
Other cases wherein the courts have held that estoppel is inapplicable against the United States where the statute of limitations has run are: Claremont Aircraft, Inc. v. United States, 420 F.2d 896, 898 (CA 9, 1970); Legerlotz v. Rogers, 266 F.2d 457, 459 (CA D.C. 1959), cert. dismissed, 362 U.S. 938 (1960) ; Bono v. United States, 113 F.2d 724, 725 (CCA 2, 1940). See also Taxation: Reliance on advice of Government officials. 33 Cornell Law Quarterly 607, 612, which concludes: “In short, equitable estoppel is but rarely successfully invoked by a taxpayer against the Government”.
Plaintiff relies heavily upon Scarborough v. Atlantic Coast Line R. Co., 202 F.2d 84 (CA 4, 1953), and Fravel v. Pennsylvania R. Co., 104 F. Supp. 84 (D. Md. 1952), wherein both courts held that fraud barred the defendant railroads from relying upon the statute of limitations under the Federal Employers’ Liability Act. Plaintiff’s reliance on those cases is misplaced, inasmuch as in each case the defendant was a private party and not the United States. No decision is cited by plaintiff wherein a statute of limitations for actions against the United States was tolled, or the principle of equitable estoppel applied, on the ground that the-plaintiff received erroneous advice from a Government official.
Accordingly, it is plain that the doctrine of equitable estoppel is inapplicable in this case, and that defendant is not barred from raising the statute of limitations as a defense.
5.
As previously mentioned, plaintiff seeks a refund of both the duty and internal revenue tax assessed upon the stolen gin. However, 26 U.S.C. § 5008(a), upon which plaintiff predicates its right to relief, mentions only internal revenue tax.
In Chicago Heights Distributing Company v. United States, 55 Cust. Ct. 254, C.D. 2586 (1965), imported Scotch whiskey was stolen while-in the custody of a bonded cartman, who was acting as the importer’s agent in transferring the merchandise from the place of unlading to-the importer’s bonded warehouse. The question before the court was. whether the plaintiff was entitled to a refund of customs duties and. internal revenue taxes assessed upon the merchandise in liquidation.. Plaintiff urged that it was entitled to an abatement of duties and taxes assessed against the stolen merchandise because the theft occurred without negligence, on the part of the cartman, relying upon 19 TJ.S.C. § 1001, paragraph 813 and 26 TJ.S.C. § 5011, in support of its contention.. Defendant argued that there were no provisions of the customs or internal revenue laws authorizing abatement of duties and taxes, as claimed by plaintiff, and that even if there were such laws, the negligence of the cartman precluded abatement as a matter of law.
Respecting abatement of duties, the court commented (55 Cust. Ct. at 257-258):
* * * It appears that no statutory provisions have been made-for the abatement of duties for a theft of imported merchandise-not occurring while the merchandise is in the appraiser’s stores, (see 19 U.S.C.A., section 1563). “Congress has not provided that the Government shall be an insurer of imported goods while in customs custody_,” Mills & Gibb Corporation v. United States, 13 Ct. Cust. Appls. 72, 74, T.D. 40933. A broader provision for such relief does exist, however, with respect to abatement of internal' revenue taxes by reason of the theft of distilled spirits under 26 U.S.C.A., section 5008 (section 5008, Internal Revenue Code of 1954, as amended). * * *
We do not think that section 5008 is applicable, however, to customs duties as claimed by plaintiff perforce of paragraph 813. * * * [Emphasis added.]
Consequently, insofar as the duty aspect of this case is concerned,. 26 TJ.S.C. ,§ 5008(a) does not confer any jurisdiction upon this court to grant relief. Respecting plaintiff’s application for allowance in duty (Customs Form 4315) filed on June 1, 1970 and denied on April 12,1971, the provisions of 19 TJ.S.C. §1563 (a) (1964) were applicable. In Camilo E. Rosello, Inc. v. United States, 63 Cust. Ct. 454, C.D. 3935 (1969), plaintiff filed with the Collector of Customs an application on Customs Form 4315 for a refund of duties paid on an importation of plywood destroyed in a fire. The application was •denied by the Collector, and following the liquidation of the entries, plaintiff, protested the decision. With reference to section. 1563(a), •■the court stated (63 Cust. Ct. at 456) :
And as for relief under subsection (a) of section 1563 the court is powerless to review any determination of the Secretary of the Treasury made thereunder even if plaintiff has brought itself within the ambit of that statute. The decision of the Secretary of the Treasury under that statute with respect to duty refunds is final and conclusive upon all persons and not subject to review by or in this court. Delia Failde v. United States, supra. [51 Cust. Ct. 170, Abs. 67894 (1963).] Under the circumstances, the protest herein is overruled.
See also: Armour and Company v. United States, 29 Cust. Ct. 296, C.D. 1482 (1952) ; Battat Imp-Export Co., Inc. v. United States, 43 Cust. Ct. 397, Abs. 53502 (1959).
Plainly, then, insofar as plaintiff seeks judicial review of the Government’s denial of its application for an allowance in duty, this court would lack jurisdiction, even assuming a timely protest were filed.
6.
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4288341-16513 | COLLOTON, Circuit Judge.
Following a jury trial, Kimberly Johnson and Nkosi Gray were each convicted of one count of making a false claim for a tax refund, in violation of 18 U.S.C. § 287. The district court sentenced Johnson to 48 months’ imprisonment and Gray to 60 months’ imprisonment. Johnson appeals, challenging the sufficiency of the evidence supporting her conviction. Gray appeals his sentence, arguing that the district court erred under the advisory sentencing guidelines in calculating the intended amount of loss and in applying an increase for an offense that involves sophisticated means. We affirm.
I.
Johnson and Gray were convicted in relation to a tax fraud scheme run by Gerald Poynter. Poynter’s scheme was known as an Original Issue Discount scheme. Original Issue Discount forms (“OID” forms, for short) are tax forms designed to report an individual’s interest income derived from investments such as municipal bonds and certificates of deposit. In an OID scheme, filers falsely list large amounts of OID income and corresponding large amounts of withholding. Instead of listing actual OID income, the filers list debt, including credit card debts and mortgages. The filers also falsely represent that a large amount of their OID income was withheld, and they thus claim that they are entitled to large tax refunds.
Poynter promoted the scheme through conference calls and seminars that he held across the country. In December 2008, Johnson attended one of these seminars at a hotel in Atlanta, Georgia, where Poynter gave a presentation outlining the OID process. On February 10, 2009, Johnson signed a contract with Poynter, in which she agreed to serve as one of his “branch managers” or “affiliates.” As a branch manager, Johnson was tasked with recruiting clients who were interested in Poyn-ter’s tax services.
Johnson’s contract with Poynter gave her the right to set her fee with each client, but she was required to pay him fifty percent of that fee. The contract also included several disclaimers, including a statement that the material provided by Poynter was not legal or tax advice, but instead was intended for educational and informational purposes. By signing the contract, Johnson agreed that she was not an agent of any government agency, including the IRS.
One of the clients whom Johnson recruited while working as a branch manager for Poynter was Marian Fine-Kennedy. In March 2009, Fine-Kennedy sent Johnson a $500 money order to start the process. Before providing her services, Johnson required Fine-Kennedy to sign a contract that contained a non-disclosure provision and listed a $20 million penalty for disclosure. The agreement also required Fine-Kennedy to certify that she was not affiliated with any government agency.
Fine-Kennedy sent Johnson her financial information, and Johnson completed Fine-Kennedy’s return for the 2008 tax year. On Fine-Kennedy’s 2008 return, Johnson stated that the taxpayer had earned $89,605 in OID income, that $87,492 was withheld, and that Fine-Kennedy was entitled to a $61,959 refund. In reality, however, Fine-Kennedy was unemployed in 2008 and received only disability income in the amount of $22,500, none of which was withheld in taxes. Johnson sent part of Fine-Kennedy’s prepared tax return to Fine-Kennedy, who mailed it to the IRS. The remaining portion of Fine-Kennedy’s return was submitted to the government either by Johnson or by another one of Poynter’s associates. The IRS issued Fine-Kennedy a refund in the amount of $61,959. Fine-Kennedy paid Johnson $4117 for her services by depositing the payment in a third party’s bank account.
Gray was also one of Poynter’s clients. On October 3, 2008, Poynter submitted Gray’s 2007 personal tax return, listing income of $401,068 and withholding of $401,067, and requesting a refund of $283,888. Two weeks later, the IRS deposited a $278,874 refund in Gray’s bank account, and Gray paid Poynter a fee of $15,000. Gray then proceeded to file additional fraudulent tax returns for other tax years seeking more refunds.
In September 2011, after Poynter’s scheme was uncovered, fourteen defendants, including Johnson and Gray, were indicted by a grand jury for their activities related to Poynter’s scheme. Johnson was charged with one count of conspiracy to commit tax fraud and nine counts of making, and aiding and abetting the making of, a false claim upon the United States. Gray was charged with one count of conspiracy to commit tax fraud, based on the 2007 tax return, and one count of making a false claim to the United States and aiding and abetting the same. Johnson and Gray proceeded to trial.
At trial, Johnson admitted that while working as a branch manager for Poynter, she prepared her clients’ OID returns, including Fine-Kennedy’s 2008 tax return. But Johnson also testified that she believed that Poynter’s method of filing tax returns was a valid process.
Gray did not testify at trial, but in an August 2010 interview with an IRS agent, Gray admitted that he continued filing additional OID tax returns, even after he was “bombarded” with frivolous-filing letters from the IRS. The government also produced evidence that on March 6, 2009, Gray forwarded Poynter an e-mail warning him that the Department of Justice was aware of the OID scheme. Gray continued to file false returns after sending Poynter the warning e-mail.
At the close of the government’s case, the district court dismissed four of the nine substantive counts against Johnson on the government’s motion, but denied Johnson’s motion for judgment of acquittal as to the others. The jury convicted Gray of one count of making a false claim, and found him not guilty of conspiracy to commit tax fraud. The jury convicted Johnson on one count of making a false claim, and acquitted her on four other substantive counts and on conspiracy to commit tax fraud. After sentencing and judgment, both Johnson and Gray appeal.
II.
Johnson argues that the evidence was insufficient to support her conviction. We review Johnson’s challenge de novo, construing the evidence in the light most favorable to the verdict. We will reverse Johnson’s conviction only if no rational jury could find her guilty beyond a reasonable doubt. United States v. Jirak, 728 F.3d 806, 811 (8th Cir.2013).
Johnson first argues that the evidence was insufficient to show that she was the but-for cause of submitting the fraudulent return to the government. Because Fine-Kennedy reviewed the return, signed it, and mailed it to the IRS, knowing that her claim was fraudulent, Johnson contends that Fine-Kennedy — not Johnson — was the but-for cause of the filing of the fraudulent return.
The government prosecuted Johnson on a theory that she caused Fine-Kennedy to take an act that would have been an offense if performed by Johnson herself. See 18 U.S.C. § 2(b). The offense of making a false claim upon the United States required proof that a person made or presented a claim to the Internal Revenue Service, knowing that the claim was false, fictitious, or fraudulent. 18 U.S.C. § 287; see United States v. Miller, 728 F.3d 768, 774 (8th Cir.2013). In this case, the jury was instructed that the government must prove that “Johnson caused to be made to the Internal Revenue Service a claim for a tax refund.” The instructions explained that “[a] person makes a claim against the Internal Revenue Service when she files or submits, or causés to be filed or submitted, a tax return requesting a refund of withheld income tax, either for herself or for other persons.”
That Fine-Kennedy physically mailed the return and also knew about the fraudulent scheme does not preclude a finding that Johnson caused the filing. Johnson admitted that Fine-Kennedy was her client and that she prepared Fine-Kennedy’s fraudulent tax return. Johnson accepted payment from Fine-Kennedy for the completion of her fraudulent tax return. Johnson knew that Fine-Kennedy would submit the return to the'government for a refund. Even though Fine-Kennedy ultimately submitted the false return to the IRS, the jury could still find that Johnson caused the submission of a false statement through an intermediary. United States v. Hebeka, 89 F.3d 279, 283-84 (6th Cir.1996); United States v. Blecker, 657 F.2d 629, 631-34 (4th Cir.1981). Fine-Kennedy’s act of submitting the return to the government “was clearly understood and foreseen” by Johnson when she prepared the false return, and a reasonable jury thus could find that Johnson “caused” the return to be presented within the meaning of § 2(b). See United States v. Murph, 707 F.2d 895, 896 (6th Cir.1983) (per curiam).
Johnson also argues that the government failed to prove .that she knew the tax return she prepared for Fine-Kennedy contained false information. Johnson testified at trial that she did not fully understand Poynter’s tax refund process, but that she trusted Poynter because she believed he had lawyers and accountants advising him and ensuring that the process was legitimate. One of Johnson’s former clients also testified that he thought Johnson was unaware of the illegality of Poyn-ter’s scheme: “I totally think that [John-, son] was, you know, she didn’t realize this was a[n] illegal process in my opinion. I think she was victimized just like we were.... I mean, she believed it with all of her heart, I believe.” Johnson argues that this testimony shows she did not have the requisite knowledge to be convicted.
Knowledge may be proved by circumstantial evidence, and we believe a reasonable jury could have found that Johnson acted knowingly. Johnson admitted knowing, when she prepared tax returns for clients, that the information entered was debt information, rather than income information. Johnson listed the debt information in a space identified as “taxable interest,” and she also falsely stated that substantial portions of the false income had been withheld. Although financial information that Fine-Kennedy gave Johnson for 2008 showed income of only $22,500 from disability payments and no withholding, Johnson prepared a tax return claiming $89,605 in interest income, $87,492 in withholding, and entitlement to a refund of $61,959.
None of the information or documentation that Fine-Kennedy provided to Johnson could have supported the amounts that Johnson claimed on Fine-Kennedy’s tax return. A reasonable jury could have inferred from this fact that Johnson knew that the information she entered into the return was false. See Miller, 728 F.3d at 774-75; United States v. Clark, 577 F.3d 273, 286 (5th Cir.2009). Johnson claimed that she acted out of a genuine belief that her actions were legal; but the jury heard her testimony and apparently did not believe it. A reasonable jury could have disbelieved Johnson or concluded that her belief was so unreasonable that it did not constitute a justifiable excuse for her conduct. See United States v. Rifen, 577 F.2d 1111, 1113 (8th Cir.1978) (per curiam). We therefore conclude that the evidence was sufficient to sustain the verdict.
III.
Gray challenges the sentence imposed by the district court on the ground that the district court erred in calculating the total intended tax loss. We review a district court’s factual findings at sentencing for clear error, and we will affirm the district court’s loss calculation “unless it is not supported by substantial evidence, was based on an erroneous view of the law, or the appellate court has a firm conviction that there was a mistake after reviewing the entire record.” United States v. Theimer, 557 F.3d 576, 578 (8th Cir.2009).
“[L]oss” is defined as “the greater of actual loss or intended loss.” USSG § 2B1.1, comment. (n.3(A)). “ ‘Actual loss’ means the reasonably foreseeable pecuniary harm that resulted from the offense.” Id. § 2B1.1, comment. (n.3(A)(i)). “ ‘Intended loss’ ... means the pecuniary harm that was intended to result from the offense,” including “pecuniary harm that would have been impossible or unlikely to occur.” Id. § 2B1.1, comment. (n.3(A)(ii)). Under USSG § 2T1.1(c)(4), “[i]f the offense involved improperly claiming a refund to which the claimant was not entitled, the tax loss is the amount of the claimed refund to which the claimant was not entitled.” If the offense involved a fraudulent or false return, “the tax loss is the total amount of loss that was the object of the offense (i.e., the loss that would have resulted had the offense been successfully completed).” Id. § 2T1.1(c)(1).
At trial, the government presented evidence that Gray submitted eleven false filings to the IRS claiming refunds for the tax years 2005 through 2008. He filed an original return and an amended return for 2005, an original return and two identical amended returns—sent to different IRS processing centers—for 2006, and an original return and two amended returns filed on different dates for 2008. The probation office calculated the intended loss from Gray’s offenses by adding together the refund amounts that Gray claimed on each of these eleven filings. The report calculated an intended loss of $1,537,897 and an actual loss of $278,874. Because the intended loss was greater than the actual loss, the probation office recommended a loss of $1,537,897, which corresponded to a base offense level of 22. See USSG § 2T4.1(I).
Gray objected to the inclusion of multiple returns for any given year in the loss calculation. According to Gray, an individual who files an amended return is not intending to receive double refunds because the amended return is intended to take the place of the original return. He therefore argued that only the most recent return that he filed for any given year should be included in the intended loss calculation. Gray also objected to the inclusion of two amended returns that he submitted- to different IRS locations for the 2006 tax year. Gray argued that he filed duplicate returns because he was unsure of where to send them, and that only one of these amended returns -should be counted in the district court’s loss calculation. The district court overruled Gray’s objections and adopted the probation office’s recommendation.
On appeal, Gray raises the same objections to the district court’s calculation of intended loss. He acknowledges intended loss of $753,205, which corresponds to base offense level 20, but argues that the district court clearly erred by counting multiple returns for certain tax years and increasing the base offense level to 22.
The district court did not make an express finding that Gray intended to obtain multiple refunds for tax years 2005, 2006, and 2008, but we infer from the record that the court made the requisite subsidiary finding that Gray intended to receive the refunds claimed in all eleven filings. See United States v. Patterson, 946 F.2d 1371, 1372 (8th Cir.1991). We do not believe that the finding is clearly erroneous. Gray intended to obtain fraudulent refunds from the government, and it was reasonable to infer that he intended to maximize the amount procured. That Gray sent different amended returns to different locations for tax year 2006 supports an inference that he hoped the government would mistakenly pay twice. Although the IRS, of course, does not pay more than one refund per year as a matter of policy, Gray’s purpose was to commit fraud, and his intent was not constrained by IRS practice in dealing with an honest taxpayer. Whether or not Gray was likely to succeed in obtaining refunds based on multiple returns filed for a single tax year, he is still responsible for any false return he submitted to the IRS with the intent to obtain the amount requested in that return.
Gray also challenges the district court’s application of a two-level specific offense characteristic under USSG § 2T1.1(b)(2) for an offense that “involved sophisticated means.” In explaining its application of the adjustment, the district court found that Gray “participated in the scheme and the concealment of the offense, and that it was complex and intricate.”
Gray argues the finding is clearly erroneous because he used his real name and address on his tax returns, filed numerous returns with the IRS, regularly corresponded with the IRS via e-mail and letters, and in no way attempted to shield his identity. Gray also argues that his acquittal on the conspiracy charge shows that the jury did not credit him with any sophistication or participation in the larger scheme of which his substantive offense was a part.
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567499-10037 | MEMORANDUM OPINION
SUE L. ROBINSON, Chief Judge.
I. INTRODUCTION
Plaintiff Ernest Brookins, a former inmate of the Howard R. Young Correctional Institution (“HRYCI”), Wilmington, Delaware, files this 42 U.S.C. § 1983 (“ § 1983”) action alleging a violation of his Eighth Amendment rights. Defendant Raphael Williams is the Warden of HRY-CI. Currently before the court is defendant’s motion for summary judgment. (D.I.ll) The court has jurisdiction pursuant to 28 U.S.C. § 1331.
II. BACKGROUND
Plaintiffs claims arise from his initial period of incarceration extending from July 7, 2004 through July 12, 2004. (D.I.2) While plaintiff was first being processed by booking on July 7, 2004, he claims that he was given “used clothing, underwear, T-shirts, socks, pants, shirts, blankets, pillow case (without pillows), and sheets.” (D.I.2) Plaintiff states that when he refused to wear the used garments, an officer told him he would “call a code” on him. (D.I.2) Plaintiff also claims that despite having mental illnesses, diabetes, and high blood pressure, he was not given proper medical care, including medication. (D.I.2)
After his transfer from booking on July 8, 2004, plaintiff avers that he was placed in a cell with two other inmates and forced to sleep on the floor, without a mattress, next to a toilet. (D.I.2) Plaintiff further claims that he was forced to eat next to the toilet. (D.I.2) Additionally, plaintiff claims that during those five days in that cell, he was not allowed to exercise proper ly and there was a lack of hot water. (D.I.17) It was these conditions that plaintiff claims led to his feelings of stress, anxiety and humiliation. (D.I.2) Defendant Raphael Williams is the Warden of HRYCI. Plaintiff contends it was defendant’s responsibility to protect plaintiff from these conditions. (D.I.2)
III. STANDARD OF REVIEW
Because the parties have referred to matters outside the pleadings, defendant’s motion to dismiss shall be treated as a motion for summary judgment. See Fed.R.Civ.P. 12(b)(6). A court shall grant summary judgment only 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 moving party bears the burden of proving that no genuine issue of material fact exists. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 n. 10, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). “Facts that could alter the outcome are ‘material,’ and disputes are ‘genuine’ if evidence exists from which a rational person could conclude that the position of the person with the burden of proof on the disputed issue is correct.” Horowitz v. Fed. Kemper Life Assurance Co., 57 F.3d 300, 302 n. 1 (3d Cir.1995) (internal citations omitted). If the moving party has demonstrated an absence of material fact, the nonmoving party then “must come forward with ‘specific facts showing that there is a genuine issue for trial.’” Matsushita, 475 U.S. at 587, 106 S.Ct. 1348 (quoting Fed.R.Civ.P. 56(e)). The court will “view the underlying facts and all reasonable inferences therefrom in the light most favorable to the party opposing the motion.” Pa. Coal Ass’n v. Babbitt, 63 F.3d 231, 236 (3d Cir.1995). The mere existence of some evidence in support of the nonmoving party, however, will not be sufficient for denial of a motion for summary judgment; there must be enough evidence to enable a jury reasonably to find for the nonmoving party on that issue. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). If the nonmoving party fails to make a sufficient showing on an essential element of his case with respect to which he has the burden of proof, the moving party is entitled to judgment as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
IV. DISCUSSION
A. Respondeat Superior Liability
Defendant Raphael Williams argues that he is being sued in his capacity as Warden of the HRYCI and is not liable through the doctrine of respondeat superi- or. The Third Circuit has held that “[a] defendant in a civil rights action must have personal involvement in the alleged wrongs; liability cannot be predicated solely on the operation of respondeat superior.” Rode v. Dellarciprete, 845 F.2d 1195, 1207 (3d Cir.1988); see also Monell v. Dep’t of Soc. Servs., 436 U.S. 658, 98 S.Ct. 2018, 56 L.Ed.2d 611 (1978). Personal involvement can be established through allegations of either personal direction or actual knowledge and acquiescence; however, such allegations must be made with particularity. See Rode, 845 F.2d at 1207.
Viewing the facts in a light most favorable to the plaintiff, the court finds that plaintiff has not shown any evidence that defendant had either personal knowledge of, or in any way acquiesced to, plaintiffs situation. (D.I.2) Here, much like in Rode, plaintiff has failed to allege anything but the mere supervisory function of defendant, which is not enough to make a claim under, respondeat superior. All plaintiff has shown is that he filed grievances. (D.I.2) Grievances are not enough to impute knowledge to the defendant. Rode, 845 F.2d at 1208. In sum, plaintiff has not alleged claims against defendant with particularity. (D.I.2) He failed to make an allegation that defendant was involved in any aspect of his alleged mistreatment. (D.I.2, 12) Therefore, summary judgment shall be granted in favor of defendant.
B. Plaintiffs Conditions of Confinement Claim
Even if plaintiffs claims were not denied under respondeat superior, his claims would fail as a Fourteenth Amendment argument. Although plaintiff brought this suit under the Eighth Amendment, he.was a pretrial detainee as opposed -to an inmate who was in the custody of the State. Therefore, this suit is properly brought under the Fourteenth Amendment Due Process Clause and not under the Eighth Amendment’s protection against cruel and unusual punishment. See Hubbard v. Taylor, 399 F.3d 150 (3d Cir.2005).
To assess whether the constitutional rights of a pretrial detainee have been violated, it must be determined whether the “disability is imposed for the purpose of punishment or whether it is but an incident of some other legitimate governmental purpose.” Bell v. Wolfish, 441 U.S. 520, 539, 99 S.Ct. 1861, 60 L.Ed.2d 447 (1979); see also Hubbard, 399 F.3d at 165. “Thus, if a particular condition or restriction of pretrial detention is reasonably related to a legitimate governmental objective, it does not, without more, amount to ‘punishment.’ ” Bell, 441 U.S. at 538, 99 S.Ct. 1861. “In assessing whether the conditions are reasonably related to the assigned purposes, we must further inquire as to whether these conditions cause [inmates] to endure [such] genuine privations and hardship over an extended period of time, that the adverse conditions become excessive in relation to the purposes assigned to them.” Hubbard, 399 F.3d at 159-160 (citing Bell, 441 U.S. at 542, 99 S.Ct. 1861) (internal quotation marks omitted).
Plaintiff was not punished by being forced to sleep on the floor of his cell. Although this lodging was less than comfortable, it served a legitimate governmental purpose. Overcrowding has bécome a fact of life in prisons and the need of inmates to be housed somewhere underlies this legitimate governmental purpose. Indeed, the conditions at issue lasted only for a period of five days until another accommodation was available for plaintiff. (D.I.12) Additionally, the Third Circuit in Hubbard indicated that it is peculiarly within the province of correctional officials, based on their expertise, to determine whether conditions are related to a legitimate government interest. . The court should give deference to the correctional officials’ opinions unless it is shown that they have blatantly exaggerated. Hubbard, 399 F.3d at 159. In this case, prison officials have decided that, although uncomfortable, placing a pretrial detainee such as the plaintiff on the floor is the best way to deal with overcrowded prisons.
The court must next ask if the conditions imposed on plaintiff amounted to punishment. The situation at bar is factually akin to that which occurred in Hubbard. In Hubbard, pretrial detainees were confined three to a two-person cell. However, what is significantly different from plaintiffs situation is that the pretrial detainees in Hubbard were confined for at least two months in those conditions and, in most cases, the confinement was between three to seven months. Hubbard, 399 F.3d at 155. The Hubbard court, in analyzing Bell, noted that the Supreme Court did not “elaborate upon the duration of confinement that could constitute an extended period of time, nor did it elaborate upon the kind of privations and hardship that could constitute punishment in violation of the Due Process Clause.” Hubbard, 399 F.3d at 159 (citing Bell, 441 U.S. at 542, 99 S.Ct. 1861). In Bell, because of overcrowding, the prison housed two pretrial detainees in a cell designed for one over a period of less than sixty days. The court ruled that this did not amount to a violation of Due Process rights. Bell, 441 U.S. at 542, 99 S.Ct. 1861. Based on the analysis in Bell, it appears that the conditions those detainees endured did not amount to punishment outside the purview of the Fourteenth Amendment. In the case at hand, plaintiffs confinement period was only five days. (D.I.12) This time period is substantially less than the periods of confinement in both Bell and Hubbard. Based on these facts, plaintiffs brief period of confinement cannot be considered punishment.
Plaintiffs complaints of being forced to eat in close proximity to the toilet are also without constitutional dimension, when plaintiff 'brought food back to his cell in violation of the rules and chose to eat there.
C. Plaintiffs Claim of Improper Medical Care
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3912786-8962 | OPINION
PER CURIAM.
Appellant William Harrison Alston seeks review of an order of the United States District Court for the Western District of Pennsylvania entered on January 6, 2010, 2010 WL 95089, granting summary judgment to Appellees Debra Forsyth, Marty Sapko, Stephen Houseler, and James Per-rotti (collectively, “Appellees”). For the following reasons, we will summarily vacate the District Court’s order and remand the matter for further proceedings consistent with this opinion. See 3d Cir. L.A.R. 27.4; I.O.P. 10.6.
I. Background
Alston, a federal prisoner formerly incarcerated at the Federal Correctional Institution at McKean (“FCI-McKean”), filed a pro se civil rights complaint in May 2005, pursuant to Bivens v. Six Unknown Agents of Fed. Bureau of Narcotics, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971). Alston named as defendants the four Appellees, all federal officials who were employed at FCI-McKean during Alston’s tenure there.
In the complaint, Alston alleged he had been assigned to work at FCI-McKean’s UNICOR factory from March 2001 through March 2002. According to Alston, during that work assignment, he was exposed to high levels of silica dust, a carcinogen. He allegedly inquired about the safety of his exposure to the silica dust and was assured he was receiving adequate protection. In March 2002, Alston was diagnosed with a spot on his lung, and he was transferred to a different facility shortly thereafter.
Alston claims he has since suffered additional adverse health effects and attributes these problems to silica dust exposure. Based upon these allegations, Alston claims Appellees violated his rights under the Fifth and Eighth Amendments of the United States Constitution. He seeks to recover monetary damages.
In September 2007, Appellees moved to dismiss Alston’s complaint pursuant to Fed.R.Civ.P. 12(b)(6) on two grounds: (1) that the applicable two-year statute of limitations bars his claims; and (2) that adverse decisions issued in several similar silica dust cases brought by other FCI-McKean prisoners foreclose his claims. Alston opposed the motion.
On June 5, 2008, the District Court denied the motion to dismiss. ■ The District Court concluded that Alston’s allegations did not “conclusively establish that Plaintiffs cause of action accrued outside of the applicable two-year limitations period.” The District Court also determined that Alston was not precluded from litigating his claims, because he had not been a party to the Ward silica dust cases and had not yet had a “full and fair” opportunity to litigate his claims. Moreover, those cases were decided after extensive discovery, while no discovery had yet taken place in Alston’s case.
Alston’s action proceeded. Among other things, on March 30, 2009, Alston filed a “notice to compel the taking of depositions,” requesting that seven prison officials, including Appellees, be made available for depositions. The “notice” also stated that Alston had served requests for the production of documents and but received a minimal response. The record does not reflect any response to Alston’s submission.
On April 6, 2009, the Magistrate Judge held a status conference and scheduled the filing of dispositive motions “regarding [the] timeliness issue.” On May 13, 2009, Appellees moved for summary judgment solely on statute of limitations grounds. Alston opposed the motion. While the summary judgment motion was pending, we affirmed the District Court’s award of summary judgment to the prison officials in the Ward silica dust cases. Ward v. Lamanna, 334 Fed.Appx. 487 (3d Cir.2009). Appellees then filed a reply brief in support of summary judgment, arguing that Ward should dispose of Alston’s claims. Alston did not file a sur-reply.
The Magistrate Judge issued a Report and Recommendation (“R & R”). The R & R recommended denying summary judgment on statute of limitations grounds, because the record reflected a “wealth of conflicting evidence” concerning when Alston had, or should have had, sufficient awareness of the relevant facts to recognize his cause of action against Ap-pellees. However, the R & R recommended granting summary judgment to Appellees based upon Ward, 334 Fed. Appx. at 491-92. The Magistrate Judge concluded, “[n]ow that Plaintiff has had a full and fair opportunity to gather and present evidence in support of his claims, it is clear that Plaintiff is unable to present anything new for this Court to consider.”
Alston filed objections and Appellees responded to Alston’s objections. On January 6, 2010, 2010 WL 95089, the District Court issued a short order adopting the R & R as its opinion and granting summary judgment to Appellees.
Alston filed a timely pro se notice of appeal. Appellees have filed a motion for summary action. Alston has not filed a response.
II. Analysis
We have jurisdiction pursuant to 28 U.S.C. § 1291. We exercise plenary review over the District Court’s summary judgment order. See Peloro v. United States, 488 F.3d 163, 173 (3d Cir.2007). We view the evidence in the light most favorable to Alston and draw all reasonable inferences in his favor. Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451, 456, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992). We will uphold the decision if Appellees established there is no genuine issue as to any material fact and they are entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c). We may take summary action if the appeal presents no substantial question. See 3d Cir. L.A.R. 27.4; I.O.P. 10.6.
A.
A summary judgment movant must provide the nonmoving party with notice and a reasonable opportunity to respond. See generally, Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 326, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (“[District courts are widely acknowledged to possess the power to enter summary judgments ... so long as the losing party was on notice that she had to come forward with all of her evidence.”). There is cause for concern where a movant presents new arguments or evidence for the first time in a summary judgment reply brief, particularly if the District Court intends to rely upon that new information in granting summary judgment to the movant. See, e.g., Beaird, v. Seagate Tech., Inc., 145 F.3d 1159, 1164 (10th Cir.1998) (“[Wjhen a moving party advances in a reply new reasons and evidence in support of its motion for summary judgment, the nonmov-ing party should be granted an opportunity to respond.”); Provenz v. Miller, 102 F.3d 1478, 1483 (9th Cir.1996) (a District Court should not consider new evidence raised in the reply to a motion for summary judgment without giving the non-moving party an opportunity to respond); Cia. Petrolera Caribe, Inc. v. Arco Caribbean, Inc., 754 F.2d 404, 410 (1st Cir.1985) (“[T]he nonmoving party ... should have had an opportunity to examine and reply to the moving party’s papers before the court considered them in its decision process.”).
Here, the District Court accepted Appel-lees’ argument that Ward, 334 Fed-Appx. at 491-92, is dispositive of Alston’s claims. Appellees raised this argument for the first time in a reply brief. Neither the Federal Rules of Civil Procedure nor the District Court’s local rules permitted Alston to file a sur-reply. See Fed.R.Civ.P. 56(c)(1); W.D. Pa. L. Civ. R. 56. Accordingly, Alston had no meaningful opportunity to present arguments or evidence in opposition to the decisive issue.
According to Appellees, “[i]f Alston had any other ‘new’ evidence to present at summary judgment to distinguish his case from' — and escape the effect of — Ward, it was incumbent upon him to present it.” Appellees overlook that Alston was not afforded the opportunity to do so. Fundamental fairness demands that Alston should have had notice and a meaningful opportunity to respond prior to the award of summary judgment on grounds raised for the first time in Appellees’ reply brief.
To the extent Alston wishes to present arguments and evidence in opposition to the decisive summary judgment issue, the District Court should consider them in the first instance. Accordingly, we will vacate the District Court’s order and remand this matter for further proceedings.
B.
Because we have determined that remand is appropriate, we need not reach the merits of the District Court’s summary judgment decision. However, we note that, while it appears that the District Court implicitly applied the principle of defensive collateral estoppel, the District Court did not discuss preclusion principles or set forth its rationale for applying them. The District Court did not discuss how Alston’s evidence is “substantially similar, if not identical” to the evidence in Ward, and, while the District Court stated that Alston had a “full and fair opportunity to gather and present evidence in support of his claims,” the record does not reflect such an opportunity or whether and to what extent Alston had access to discovery.
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11630600-10491 | FLETCHER, Circuit Judge:
Zavtcho Stoyanov, a citizen and national of Bulgaria, petitions for review of a decision by the Board of Immigration Appeals (BIA) vacating a grant of asylum by an Immigration Judge (IJ) and ordering deportation. In vacating the IJ’s grant of asylum, the BIA rejected the IJ’s finding that Stoyanov was credible. We grant Stoyanov’s petition for review, vacate the BIA’s decision, and remand for further proceedings.
I.
Stoyanov entered the United States on a six-month visitor’s visa on July 29, 1992. He applied for asylum on September 14, 1992. The Immigration and Naturalization Service (INS) denied his application in May 1993 and issued an Order to Show Cause why he should not be deported on June 1, 1993. Stoyanov then applied for asylum a second time on March 25, 1994, three months before his scheduled hearing before an IJ.
In his two applications for asylum and in testimony before the IJ, Stoyanov stated that in March, 1992, he attended a political rally of Turkish and other minorities in Sofia, where he lived. Two radio reporters at the rally asked if they could interview him, and he agreed. The reporters asked his name, why he was there, and how he viewed the situation of minority groups in Bulgaria at the time. In his second application for asylum, Stoyanov stated that he answered the interviewers as follows:
I tried to explain to the interviewers that I felt all Bulgarians needed to cooperate during this time of change, and to work together to bring about changes slowly in the country.... I felt that minority people had been particularly deprived of certain things, such as using their own language or their own names, and that now they wanted these things right away, which would be very difficult to achieve.... I [stated that I] believe[d] that we ha[d] to make changes slowly....
Stoyanov’s interview was subsequently broadcast on the radio.
A short time after the rally, Stoyanov and his wife started receiving threatening telephone calls at their home. In his 1994 asylum application Stoyanov described these calls as coming “from angry people demanding to know what I was doing, saying, thinking and meaning to give such an interview.... All of these callers told me that I talked too much, had a big mouth and was not going to live too long because people like me didn’t deserve a place on the Earth.” Stoyanov received about twenty-five of these calls over a two month period, at all times of the day and night. Stoyanov testified that he was sure they were in reaction to the radio interview he gave at the rally.
During the same period that he received the telephone calls, Stoyanov was attacked three times.in the street by different people he did not know. In the first attack, a man accosted Stoyanov one evening as he was leaving a coffee shop in central Sofia. The man beat Stoyanov while saying things like “you know who you are” and “you know what you did.” Although Stoy-anov was wearing expensive jewelry at the time, his attacker did not rob him. The second time, two men accosted Stoyanov in the street and beat him. The men repeated the kinds of things the first attacker had said, and then left without robbing him. Stoyanov testified before the IJ that he lost a tooth as a result of this attack. The third time, one man attacked Stoya-nov. In his 1994 application and in his testimony before the IJ, Stoyanov stated that the attacker tried unsuccessfully to stab Stoyanov with a knife. The attacker repeated the things that Stoyanov’s earlier attackers had said to him, and then left without attempting to rob him. Stoyanov testified he was quite certain that the attacks, like the threatening telephone calls, were the work of extremists within the Turkish community who objected to the views he expressed during the radio interview.
After listening to Stoyanov’s testimony in a hearing that spanned two days, the IJ found him to be credible:
The Court observed the respondent while he was testifying and noticed that he very quickly answered all of the questions put forward even under exhaustive questioning by the Court, he [answered questions] very quickly and very straightforwardly .... and the Court would find [he] has been straightforward and candid as to his particular claim.
The IJ also credited Stoyanov for not claiming that he feared persecution at the hands of the government as well as the Turkish minority in Bulgaria: “[H]e was being very candid and honest by saying no, that’s not the reason, the reason is ... the Turkish minority who were, he feels, behind these beatings.” Largely on the basis of Stoyanov’s credible testimony, the IJ granted his request for asylum..
The INS appealed to the BIA, and the BIA vacated the IJ’s decision. Although the INS had not contested the IJ’s credibility finding, the BIA raised the issue sua sponte and reversed the IJ’s finding. In so doing, the BIA listed four inconsistencies or inadequacies that it perceived in Stoyanov’s application:
1. In his first asylum application submitted in 1992, Stoyanov stated that he had been' stabbed in the third attack. In his 1994 application and testimony, he stated that he had been threatened with a knife but not stabbed.
2. In his 1992 application, Stoyanov stated that members of both the Turkish and gypsy minority groups had persecuted him. In his later application and testimony he stated that the gypsies were not involved.
3. In his testimony before the IJ, Stoy-anov stated that his tooth was broken during his second beating, but later in his testimony he stated that it happened during his third beating. In his 1992 and 1994 applications he made no mention of a tooth being broken.
4. Stoyanov failed to produce any documentary or other objective evidence to corroborate his allegations.
After finding Stoyanov not credible, the BIA disposed of the merits of the case in one sentence: “Finally, even if the respondent’s testimony at the hearing were fully credited, and we make no such affirmative finding, we are not persuaded that his claimed experiences in Bulgaria rise to the level of persecution or that he would encounter any difficulties upon his return to Bulgaria, years after the radio interview was reportedly broadcast.” Stoyanov timely petitioned this court for review of the BIA’s decision.
II.
The BIA raised the issue of Stoy-anov’s credibility sua sponte. The INS did not raise the issue in its brief appealing from the decision of the IJ. Thus, Stoyanov had no notice of, or opportunity to be heard on, the credibility issue before the BIA issued its decision. We must decide whether this was a violation of Stoyanov’s right to due process.
Our recent decision in Campos-Sanchez v. INS, 164 F.3d 448 (9th Cir.1999), provides the relevant rule. In that case, after an IJ found Campos-Sanchez credible but denied his application for asylum on the merits, “the BIA independently reviewed the record and made an adverse credibility finding, which formed the sole basis for its denial of Campos-Sanchez’s appeal.” Id. at 450. Campos-Sanchez had not been notified that his credibility was at issue, nor had he been given the opportunity to offer evidence on that issue before the BIA made its finding. We held that this violated due process. Specifically, we held that “the BIA must provide a petitioner with a reasonable opportunity to offer an explanation of any perceived inconsistencies that form the basis of a denial of asylum.” Id. See Castillo-Villagra v. INS, 972 F.2d 1017 (9th Cir.1992) (holding that the BIA may not take administrative notice of changed country conditions without giving petitioner adequate warning and an opportunity to be heard).
Here, the BIA made an adverse credibility finding without affording Stoya-nov any opportunity to explain the supposed inconsistencies in his written and oral testimony. Under Campos-Sanchez, if the adverse credibility finding “form[ed] the basis of [the BIA’s] denial of asylum,” 164 F.3d at 450, then we must vacate the denial and remand to allow Stoyanov a reasonable opportunity to explain those inconsistencies. If, however, the BIA established an adequate alternative basis for its holding separate from its adverse credibility finding, then we may affirm its decision on that alternative basis.
III.
We review the BIA’s factual findings under the “substantial evidence” standard. See Garrovillas v. INS, 156 F.3d 1010, 1013 (9th Cir.1998). “In order for this court to conduct a proper substantial evidence review of the BIA’s decision, the Board’s opinion must state with sufficient particularity and clarity the reasons for denial of asylum.” Castillo v. INS, 951 F.2d 1117, 1121 (9th Cir.1991); see Ghaly v. INS, 58 F.3d 1425, 1430 (9th Cir.1995) (BIA’s decision must be “adequate for us to conduct our review”). Thus, “[t]he BIA’s opinion ... cannot be mere ‘boilerplate’.” Shirazi-Parsa v. INS, 14 F.3d 1424, 1427 (9th Cir.1994) (quoting Castillo, 951 F.2d at 1121). By the same token, we cannot affirm the BIA’s decision on an alternative basis if the BIA describes that basis in mere boilerplate language.
We find that the BIA did not adequately develop any alternative basis for its decision in this case. Although the BIA stated it had “reservations both with respect to the respondent’s credibility and with regard to the sufficiency of the evidence,” its opinion focused almost exclusively on credibility. Indeed, the BIA’s treatment of the merits of Stoyanov’s claim was contained in one sentence: “Finally, even if the respondent’s testimony at the hearing were fully credited, and we make no süeh affirmative finding, we are not persuaded that his claimed experiences in Bulgaria rise to the level of persecution or that he would encounter any difficulties upon his return to Bulgaria, years after the radio interview was reportedly broadcast.” This conclusory statement is not a sufficient analysis of the merits of Stoyanov’s claim. See Hartooni v. INS, 21 F.3d 336, 343 (9th Cir.1994) (“We are not permitted to credit ... conclusory, ... boilerplate deeision[s].”). Rather, in order to establish an alternative holding on the merits, the BIA must provide a reasoned analysis of the legal basis for its holding, specifying as well the particular facts on which that holding relies. See Garrovillas, 156 F.3d at 1013; Shirazi-Parsa, 14 F.3d at 1427; Castillo, 951 F.2d at 1121. Since the BIA did not adequately analyze the merits of Stoyanov’s claim, we cannot affirm its decision on that ground.
IV.
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57521-19024 | POSNER, Circuit Judge.
The plaintiff, Max Bittner, appeals from a judgment for the defendant, 98 F.R.D. 310, Sadoff & Rudoy Industries, a Wisconsin firm in the scrap-metal business, and from a separate order awarding attorney’s fees to the defendant in an amount yet to be determined. The appeals bring up to us a variety of issues, of which the most difficult relate to procedural and substantive aspects of attorney-fee awards under ERISA (Employee Retirement Income Security Act), 29 U.S.C. §§ 1001 et seq.
Bittner (a vice-president of Sadoff & Ru-doy, reporting to Edward Rudoy, the firm’s general manager) and his family were entitled to medical benefits under the firm’s employee benefit plan, a plan subject to ERISA. Bittner’s son became mentally disabled. For a time Bittner received benefits under the plan for his son’s condition, but these eventually were terminated, Bittner thought in violation of the terms of the plan. Rudoy invited him to file a friendly lawsuit against the company to resolve their dispute, and he did so. But the suit (brought in state court, and later dismissed) was not friendly. Besides continued benefits it asked for $500,000 in punitive damages from the company and from Rudoy himself on the ground that the termination of benefits had been “calculated and intended to cause the plaintiff emotional distress and mental instability for the ultimate purpose of obtaining monetary advantage for the defendants.” When Rudoy read the complaint he summoned Bittner to his office and fired him. In the words of the district judge, “The confrontation between Mr. Rudoy and Mr. Bittner included no discussion of or reference to that part of the complaint in the state court action which sought a declaration of Mr. Bittner’s rights under the [plan]. The only discussion of the complaint related to those parts of the complaint that sought compensatory and punitive damages for alleged intentional infliction of emotional distress. The discussion also involved allegations by Mr. Bittner that Mr. Rudoy had cheated the IRS and stolen from a client.”
Bittner then brought the present suit, a damage action based on a provision in ERISA that makes it “unlawful for any person to discharge ... a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan .. .. ” 29 U.S.C. § 1140. Sadoff & Rudoy admits that if it fired Bittner because he sued it for benefits under ERISA it violated section 1140; but the district judge, who granted the defendant’s motion to dismiss the complaint under Fed.R.Civ.P. 41(b) at the close of the plaintiff’s case, found that Bittner was not fired for that reason. The judge did not say what the true reasons were, but he implied in the passage quoted earlier — and the record conclusively shows — that one was that Bittner had joined with his ERISA claim a claim for punitive damages for intentional infliction of emotional distress. If Bittner had sued Sadoff & Rudoy solely under Wisconsin tort law, and Rudoy had fired him, obviously Bittner could not complain that he had been fired in retaliation for exercising his rights under ERISA. His remedy, if there was any, would be a suit under the Wisconsin law of wrongful discharge, narrowly construed in Brockmeyer v. Dun & Bradstreet, 113 Wis.2d 561, 572-74, 335 N.W.2d 834, 840-41 (1983). It should make no difference that instead of bringing a separate suit claiming damages for intentional infliction of emotional distress Bittner joined that claim with his ER-ISA claim in a single state court suit.
There is no question that Bittner’s claim of intentional infliction of emotional distress was indeed based on state law and not on ERISA. The only type of civil action under ERISA that may be brought in state court is an action by a participant or beneficiary “to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.” 29 U.S.C. § 1132(a)(1)(B); see 29 U.S.C. § 1132(e)(1). The quoted language confers no right to sue for mental suffering caused by a violation of the terms of a plan. True, if Bittner had reasonably and in good faith, though mistakenly, sought a form of relief to which he was not entitled by ERISA, and Rudoy had fired him in pique at his doing so, the defendant might be liable for retaliation. See Power Systems, Inc. v. NLRB, 601 F.2d 936, 939—40 (7th Cir.1979); Pettway v. American Cast Iron Pipe Co., 411 F.2d 998, 1007 (5th Cir.1969). But all concerned have assumed from the beginning that Bittner’s claim for punitive damages — the spark that ignited Rudoy — was based on state law rather than on a misconception (which could hardly have been reasonable) by Bittner of his rights under ERISA. As we are persuaded that the district court’s findings concerning Rudoy’s motive for firing Bittner were not clearly erroneous, we must therefore conclude that he was not fired for suing Sadoff & Rudoy under ERISA.
Bittner also argues that the district court erred in excluding certain letters that he contends illuminate Rudoy’s motive. Since this was a bench trial, and the letters were not voluminous, it would have been better for the judge to have admitted them and given them such weight as they were worth. But their relevance was slight, and it is inconceivable to us that the district judge would have reached a different conclusion if he had admitted them. If there was error, it was harmless.
The remaining issues relate to attorney’s fees. Fourteen days after the entry of judgment in its favor, Sadoff & Rudoy moved for an award of more than $40,000 in attorney’s fees under 29 U.S.C. § 1132(g)(1), which provides that, “In any action under this subchapter by a participant, beneficiary, or fiduciary, the court in its discretion may allow a reasonable attorney’s fee and costs of action to either party.” The district judge held that Sadoff & Rudoy was entitled to a reasonable attorney’s fee because Bittner’s section 1140 retaliation claim had been frivolous, but he also held that Sadoff & Rudoy had not itemized its legal expenses adequately and told it to resubmit its claim. Sadoff & Rudoy submitted a claim for some $8,000 in attorney’s fees on which the district judge has yet to act. This appeal is from the order declaring that Sadoff & Rudoy was entitled to fees but refusing to award the amount sought.
The first question is whether the order was final, and so appealable, see 28 U.S.C. § 1291, when it did not specify the amount of fees to be awarded. We have found no cases on this point. A superficially compelling analogy is that a judgment declaring the defendant liable to the plaintiff for damages but not fixing the amount of damages is not final. Liberty Mutual Ins. Co. v. Wetzel, 424 U.S. 737, 744, 96 S.Ct. 1202, 1206, 47 L.Ed.2d 435 (1976). The reason is to spare the court of appeals from having to consider liability and damage issues in separate appeals. Freeman United Coal Mining Co. v. Director, Office of Workers’ Compensation Programs, 721 F.2d 629, 630 (7th Cir.1983). And it is true that if we decided in this appeal that Sadoff & Rudoy was entitled to an award of attorney’s fees, we might have to decide in a later appeal whether the amount of the award was proper. But if we wait for that appeal before deciding whether any award should have been made, we shall lose the chance to consider liability and (some) attorney’s fee issues at the same time, which we can do here because the order holding that Sadoff & Rudoy was entitled to attorney’s fees was entered shortly after the final judgment and therefore the appeals from both could be and were consolidated without delaying either appeal.
These circumstances bring into play the principle that “a court of appeals may, in the interest of orderly judicial administration, review matters beyond that which supplies appellate jurisdiction.” Scarlett v. Seaboard Coast Line R.R., 676 F.2d 1043, 1052 (5th Cir.1982); see also Shaffer v. Globe Protection, Inc., 721 F.2d 1121, 1124 (7th Cir.1983). The judgment dismissing the complaint is properly before us, independently of the attorney’s fee award, because a judgment is not deprived of its finality by the fact that the district court has not yet acted on a party’s claim for statutory attorney’s fees. Freeman United Coal Mining Co. v. Director, Office of Workers’ Compensation Programs, supra, 721 F.2d at 631; Abrams v. Interco Inc., 719 F.2d 23, 26-27 (2d Cir.1983). We might as well decide at the same time what are likely to be the dispositive issues relating to the award of attorney’s fees. It is possible but unlikely that we shall have to consider the award again.
And if we waited, we still might have to decide two fee appeals — one from the award for work in the district court, the other from an award for work in this court, since a party who is awarded fees for winning in the district court will usually get fees for defending his victory in the court of appeals. See, e.g., Muscare v. Quinn, 680 F.2d 42, 45 (7th Cir.1982); Bond v. Stanton, 630 F.2d 1231, 1235 (7th Cir.1980). If instead we decide the present appeal from the fee order — and suppose we affirmed that order — the district court, by waiting till the appellate proceedings were concluded, could make a single award covering both the district court and the court of appeals proceedings. Then there would be a single appealable order on the amount of fees.
The sad fact is that there is no sure way of preventing multiple appeals in a case where the prevailing party has rights under an attorney’s fee statute as well as substantive rights. There would be no net judicial economy, but if anything a net diseconomy, if we held that we could not consider the merits of the fee order until the amount of fees to be awarded is fixed. We think we can.
The next question, also one of first impression, is whether the request for fees was filed in the district court on time. It was if fees under section 1132(g)(1) are properly taxable as costs under Rule 54(d) of the Federal Rules of Civil Procedure, which has no deadline except the implied one of reasonableness, not here exceeded. Although local rules of court sometimes require that a motion for costs be filed within a specified period after the judgment is entered, often five days, these rules have been held inapplicable to motions for attorney’s fees. Gautreaux v. Chicago Housing Authority, 690 F.2d 601, 611 (7th Cir.1982). But the defendant’s request was not timely if it had to be made in a motion under Rule 59(e) to alter or amend the judgment. Such a motion must be filed within ten days, and the time cannot be extended. Rule 6(b).
White v. New Hampshire Dept. of Employment Security, 455 U.S. 445, 102 S.Ct. 1162, 71 L.Ed.2d 325 (1982), held that a motion for attorney’s fees under the Civil Rights Attorney’s Fees Awards Act, 42 U.S.C. § 1988, is properly brought under Rule 54(d) rather than Rule 59(e). That Act, however, differs in two relevant respects from section 1132(g)(1). It provides that attorney’s fees when awarded shall be taxed as costs; and it is a separate statute from the statutes under which the suits in which fees may be awarded under the Act are brought. These features show that an award of attorney’s fees under the Act is not a part of the original judgment, as damages would be for example, but is separate, as costs traditionally are, and therefore that the award, if not made in the original judgment, does not have to be requested by way of a motion to alter or amend the judgment. Section 1132(g)(1), in contrast, does not describe attorney’s fees as costs, and is part of a substantive statute. But Spray-Rite Service Co. v. Monsanto Corp., 684 F.2d 1226, 1248 (7th Cir.1982), cert. granted on other grounds, 103 S.Ct. 1249 (1983), suggests that these differences may not matter. That decision extended the teaching of White to requests for attorney’s fees under section 4 of the Clayton Act, 15 U.S.C. § 15, which authorizes private antitrust damage actions and entitles prevailing plaintiffs in them to recover “the cost of suit, including a reasonable attorney’s fee,” and says nothing (more) about taxing such fees as costs. Spray-Rite, however, distinguished Hairline Creations, Inc. v. Kefalas, 664 F.2d 652, 655-56 (7th Cir. 1981), where we had held that a request for fees under 15 U.S.C. § 1117, which authorizes an award of reasonable attorney’s fees for trademark infringement “in exceptional cases,” must be made under Rule 59(e).
Hairline Creations is an outlier. Most cases, under most attorney-fee statutes, follow the Rule 54(d) route. See Gordon v. Heimann, 715 F.2d 531, 537-38 (11th Cir.1983), and cases cited there. There is a practical reason for this: Especially in substantial litigation, where large fees may reasonably be requested, it is unrealistic to expect the prevailing party’s lawyer to be able to get a carefully formulated fee request in within the Rule 59(e) deadline of ten days — a deadline that cannot be extended. The Rule 59(e) route would trap the unwary in some cases and in others cause half-baked fee requests to be submitted that would have to be amended later. If Hairline Creations, decided before White as well as before Monsanto, is still good law (a question we need not decide here), it is so only because to allow attorney’s fees to be awarded in “exceptional” cases may be thought to imply that such fees are a sanction in the nature of punitive damages; and of course a plaintiff disappointed with a judgment that did not include an award of punitive damages would have to get the judgment amended if he wanted them added. The analogy is imperfect, because 15 U.S.C. § 1117 allows a prevailing defendant as well as a prevailing plaintiff to obtain an award of attorney’s fees “in exceptional cases” and a defendant could never get an award of punitive damages. But the primary purpose of the “exceptional cases” criterion was to authorize the award of attorney’s fees to plaintiffs, in cases “in which the infringement was malicious, fraudulent, willful, or deliberate,” Hindu Incense v. Meadows, 692 F.2d 1048, 1051 (6th Cir.1982); see also VIP Foods, Inc. v. Vulcan Pet, Inc., 675 F.2d 1106, 1107 (10th Cir.1982); Hairline Creations, Inc. v. Kefalas, supra, 664 F.2d at 657-58, and these are familiar grounds for awarding punitive damages. However, nothing in the language of section 1132(g)(1) suggests that an award of attorney’s fees under that section serves the same purpose as awarding punitive damages (and there is no pertinent legislative history); and we are about to see that the courts have not interpreted section 1132(g)(1) as if its intent were punitive.
We conclude that an attorney’s fee award under section 1132(g)(1) should be sought as it was here by filing a motion under Rule 54(d). Therefore Sadoff & Rudoy’s motion was timely, and we come at last to the merits of the fee order.
If the district judge had been correct that Bittner’s suit was frivolous he would not have needed a statutory basis for ■ awarding the defendant a reasonable attorney’s fee; the common law powers of the court would have been sufficient. Alyeska Pipeline Service Co. v. Wilderness Soc’y, 421 U.S. 240, 258-59, 95 S.Ct. 1612, 1622, 44 L.Ed.2d 141 (1975). A frivolous suit, however, is not merely a suit that fails, or even a suit that lacks a solid basis — a long shot. See McDonald, v. Schweiker, 726 F.2d 311, 316 (7th Cir.1983). It is a suit so completely without hope of succeeding that the court can infer that the plaintiff brought it to harass the defendant rather than to obtain a favorable judgment. Coyne-Delany Co. v. Capital Development Bd., 717 F.2d 385, 390 (7th Cir.1983). As we shall see, this was not such a suit.
If the defendant in this case is entitled to an award of attorney’s fees, therefore, it is only by virtue of section 1132(g)(1), which commits to the district judge’s discretion the question whether to award fees in a particular case. This discretion is not to be exercised without any criteria; it is not unlimited. Janowski v. International Brotherhood of Teamsters, 673 F.2d 931, 940 (7th Cir.1982), vacated on other grounds, — U.S. —, 103 S.Ct. 3565, 77 L.Ed.2d 1406 (1983), is illustrative of a number of cases that list five factors for a district judge to consider in evaluating a fee request under section 1132(g)(1): “(1) the degree of the offending parties’ culpability or bad faith; (2) the degree of the ability of the offending parties to satisfy personally an award of attorneys’ fees; (3) whether or not an award of attorneys’ fees against the offending parties would deter other persons acting under similar circumstances; (4) the amount of benefit conferred on members of the pension plan as a whole; and (5) the relative merits of the parties’ positions.” Other decisions that state the identically worded or a similarly worded test include Leigh v. Engle, 727 F.2d 113, 139 n. 39 (7th Cir.1984); Marquardt v. North American Car Corp., 652 F.2d 715, 717 (7th Cir.1981); Hummell v. S.E. Rykoff & Co., 634 F.2d 446, 452 (9th Cir.1980); Eaves v. Penn, 587 F.2d 453, 465 (10th Cir.1978). Factor 1 in Janowski’s five-factor test seems in context to refer to the easy case, not before us, where the litigating position of the party opposing the application for attorney’s fees is frivolous, and factor 2 to a case where any award of attorney’s fees to the plaintiff would be paid not out of the pockets of the people responsible for the denial of benefits to the plaintiff — the plan’s trustees, for example — but out of the plan assets themselves, thus hurting the plan beneficiaries. That is not an issue here either, since the defendant rather than the plaintiff is seeking attorney’s fees. Factor 3 seems closely related to 2; the deterrent effect of an award would be blunted if it were not paid by the culpable parties. The remaining factors go to the relative merits of the parties’ litigating positions. The benefit conferred on other plan participants or beneficiaries (factor 4) is an important consideration in evaluating the merit of the plaintiff’s case (5)— though again only in a case where the plaintiff is seeking an award of attorney’s fees.
Without questioning the soundness or utility of this test, we note that, at least as stated in Janowski, it is oriented toward the case where the plaintiff rather than the defendant prevails and seeks an award of attorney’s fees. The term “offending parties,” obviously a reference to defendants, is a further clue. Although virtually the same test has been applied to a defendant’s request for an award of attorney’s fees, notably in the Marquardt case, the court stated there, “We do not hold that these five factors constitute the only test which the district court can use in deciding whether to award attorneys’ fees under ERISA.” 652 F.2d at 717. Some further elaboration may therefore be useful.
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4243176-27654 | McGOHEY, District Judge.
On May 1, 1949, at approximately 5:21 P.M., the S.S. Marine Leader, a T-2 type tanker owned pro hac vice by the Standard Oil Company of New Jersey, while outward bound, in ballast, from New York was in collision in New York Harbor with the anchored and heavily laden 5.5. Jalaketu, Indian registry, owned by Scindia Steam Navigation Co., Ltd.
Scindia’s claim is that during a heavy fog The Jalaketu was anchored in an area appropriate for anchorage, seven-eighths of a mile due east of buoy 2A at the seaward entrance to Ambrose Channel and well north of the northern boundary of the channel extension, and was sounding the required signals; that the outward bound Marine Leader through faulty navigation and seamanship was proceeding down the inbound side of the channel on a wrong course and at a rate of speed which under the existing conditions was at least immoderate; that her course took her out of the channel and north of buoy 2A and into the area where The Jalaketu lay; that by reason of her failure to maintain an alert watch, she did not hear or heed The Jalaketu’s anchor signals and ran into her port side at about number 5 hold which became flooded, with consequent damage to the cargo there stowed.
Scindia Steam Navigation Co., Ltd. (hereafter called Scindia), as owner of The Jalaketu, filed a libel against the 5.5. Marine Leader in rem, and against the Standard Oil Company of New Jersey in personam, as owner pro hac vice. Standard filed a cross libel against The Jalaketu in rem, demanding, in addition to its own damages, any which might be recoverable from The Marine Leader or its owner by the owners of cargo on board The Jalaketu. Federal Insurance Company, et al., as parties interested in this cargo, filed a libel against Standard in personam, and The Marine Leader in rem. Standard thereupon filed an impleading petition against Scindia and The Jalaketu. All suits have been consolidated for trial.
'The numbered paragraphs contain the Court’s findings of fact.
1. The S.S. Jalaketu is a single-screw cargo vessel of 7,180 gross tons, 441% feet in length, 57 feet beam, 37 feet moulded depth; and at all the times herein mentioned was owned and operated by The Scindia Steam Navigation Company, Ltd.
2. The S.S. Marine Leader is a single-screw T-2 tanker, 10,172 gross tons, 504 feet in length, 68 feet 2 inches beam; and at all the times herein mentioned was being operated by the Standard Oil Company (N. J.) as owner pro hac vice.
3. The various libellants in A. 162-304 are the owners and/or parties in interest of The Jalaketu’s cargo which was damaged in part in the collision.
4. The parties have treated the channel extension seaward of buoys 2A and 1A as part of the channel itself for all practical purposes. It is so marked on the charts and it is customary to make the approach to the harbor from Ambrose Light Vessel along a stated course which is that of the center range of the channel itself. It is conceded that on May 1,1949 low water at the Battery was at 3:54 P.M.
5. At 1:26 The Jalaketu inbound from Ambrose Light Vessel embarked Captain Donnelly, a Sandy Hook Pilot, somewhere between Ambrose Light Vessel and Gedney sea buoy. By the time she reached the sea buoy, fog had closed in but she continued up the channel extension on the assigned channel course of 297 degrees True. At 2:00 the pilot observed the channel entrance buoy 2A about 100 feet to port, either abeam or just off the port bow. Since the buoy would normally have been to his starboard, he concluded that he had already crossed the northern boundary of the channel. To continue on this northwesterly course would very shortly have brought him into water too shallow for his vessel which drew 26 feet. He therefore determined to seek a safe anchorage to the N.E. of buoy 2A until the fog cleared enough to enable him safely to proceed up the channel.
6. The vessel was backed off from the buoy and brought around hard right. She then proceeded to anchorage which was effected at 2:21. The tide, then about four hours old and running S.E. at approximately 2.5 knots, tended to set The Jalaketu back into the channel extension. As shown in her bell book, between 2:00 and 2:21, there were 9y2 minutes of stern motion, 8% minutes when the engines were stopped and 3 minutes full ahead. Her speed at full ahead was about 10 knots. At that speed, in three minutes she would travel only one-half mile. As is conceded, stern action in a single-screw vessel such as The Jalaketu has the effect of swinging the stern to port and the bow to starboard. The joint effect of the stern action and the tide was to bring The Jalaketu back into the channel extension and heading N. or perhaps even N.E. The added effect of the hard right rudder and rounding to put The Jalaketu during the three minutes of forward motion on a heading almost parallel to that of the channel.
7. She anchored with four and a half shackles of chain in the water. Immediately after anchorage with The Jalaketu laying out on her chain, her stern was approximately 800 feet from the anchor’s position and, due to the state of the tide, the ship was heading approximately 315 degrees and tailing just slightly toward the fairway. No attempt was made to fix her approximate position by taking radio bearings, although facilities to do so were available.
8. During the next two hours the tide went from ebb to slack, and at the time of collision the flood was just beginning. By that time The Jalaketu had swung on her anchor to a northeasterly heading, roughly perpendicular to the channel course. Therefore unless her anchor had been dropped at a point more than 800 feet north of the northern boundary of the channel extension, The Jalaketu of necessity must have been at least partially in the fairway at collision, although concededly at 2:21 when anchorage was effected she may have been clear of the fairway because of the then state of the tide.
The Jalaketu’s pilot and master “estimated” that her anchored position was a point % of a mile due east of buoy 2A. However, as has been found, no attempt had been made to fix her anchorage position. This mere estimate is rejected. It is inconsistent with the vessel’s action as recorded in the bell book, and testified to by the pilot and master. Moreover, as has been found, the vessel was incapable of traveling more than one-half mile in the three minutes of forward motion with her engines at full ahead.
9. The Coast Guard Cutter Tamaroa fixed The Jalaketu’s position by radar at 10:30 as only 750 yards due east of buoy 2A. However, the operator conceded that radar fixes are subject to some error — in practice an error of a mile is arbitrarily assumed — although he said he thought he could operate within 100 yard accuracy. On this occasion, as he admitted, he did not follow the most precise procedure for fixing a vessel’s position.
10. By 10:30 the tide, approximately one-half hour after high, had swung The Jalaketu to a heading somewhat between S.E. and S. At that time the distance from her stern to the anchor’s position had been shortened to about 600 feet because immediately after the collision she had taken in two and a half shackles of chain.
11. Measuring 600 feet from the stern of The Jalaketu, as fixed by the Coast Guard, along a southeasterly course, would determine where the anchor had been dropped. Then measuring 800 feet from that position along a course reciprocal to her 45 degree heading at the time of collision, would put her stern approximately on the northern boundary extension. However, a slight error in the radar fix or in the assumed heading used for plotting purposes would place her either further south into the channel extension or farther to the north of it.
12. The testimony of the captain of The Moran tug is too vague to be of help except that it corroborates that at 10:30 The Jalaketu was north of the channel extension. The same is true of the visual bearing taken by the cadet third officer of The Jalaketu. It was taken in haste, apparently incorrectly recorded, and then corrected by the master who assumed it was a reverse bearing, but who did not check it.
13. The acceptable testimony of The Jalaketu is too equivocal to support a finding as to the vessel’s true position at the time of collision. The variables are so numerous and minute differences in distances so pertinent that the testimony might as well support a finding that she was at least partly in the channel as a finding that she was clear of it.
The Marine Leader’s testimony as to its position, and consequently that of The Jalaketu, at the time of collision is more definite and, as will appear, the finding as to position based on it is not inconsistent with the foregoing findings based on The Jalaketu’s testimony. From The Marine Leader’s testimony the following further findings are made.
14. The Marine Leader, after leaving Bayonne, N. J. and proceeding down the bay, anchored in the vicinity of Craven Shoal at 2:15 to wait for the fog to clear. She was being navigated by Captain Martin, a licensed Sandy Hook Pilot.
15. At 4:24 she got under way and proceeded down Ambrose Channel, arriving at channel buoy 9 at 4:49. Visibility was then between 900 and 1000 feet. Buoy 9 was visually observed at about 500 to 600 feet off the starboard beam. Her heading was then altered to 113 degrees True to make good the channel true course of 117 degrees, allowing for a four degree southwesterly set of the tide which then existed. Buoy 7A at 4:52 and buoy 7 at 4:55 were both observed at about 600 feet off the starboard beam. After passing buoy 7 the tide went slack but the ship’s heading was not changed.
16. From her last known position 600 feet off buoy 7 at 4:55, The Marine Leader proceeded down channel on an average true heading of 114 degrees until at 5:16 buoy 2A was observed abeam 500 feet to port. Visibility was 500-600 feet.
17. The measured track from the position as found off buoy 7 to the position as found off buoy 2A is 114 degrees. In other words, The Marine Leader, because of the slack tide, had made good a track exactly equal to its own average true heading. Her engines were at half speed ahead and her measured speed over ground was 8.3 knots. Had she continued on this course at that speed she would eventually have left the channel but not for a mile or more further out and not until approximately seven minutes later. However, on sighting buoy 2A to port at 5:16 her heading was changed to 120 degrees True, in order to bring her into the starboard side of the channel extension. About five minutes later while on that heading she was in collision with The Jalaketu.
18. On these facts, which are not only amply shown by the testimony of the witnesses but are supported by The Marine Leader’s official logs and by her gyro course recorder, it was physically impossible for her to have been anywhere but in the channel extension at the time of collision.
The proctor for The Jalaketu conténds that The Marine Leader crossed the northern boundary of the channel with buoy 2A to starboard, or at least that she overran the buoy. To substantiate this theory he adopts an assumed position abeam buoy 9 and an arbitrary course from there on. The hypothetical track he suggests is not in accord with the uncontradicted testimony and the finding that buoy 7 was about 600 feet off the starboard beam at 4:55. This was exactly one hour after low water, at which time a S.W. set was still being experienced between buoys 9 and 7. Furthermore, in view of the number of witnesses whose testimony consistently places buoy 2A on The Marine Leader’s port beam, libellants’ mere hypothesis cannot overcome such positive testimony and is rejected.
The crucial period after all is from 5:16 until 5:21, the time of collision. The 5:16 position as found is a new starting point and evidence of what occurred prior thereto is material only in so far as it shows the existing conditions or tends to corroborate the positive testimony.
19. At 5:16 the tide, as shown by the tide tables, was slack. At that time, or within a minute thereafter, The Marine Leader began her alteration to 120 degrees True. During her turn and after steadying on 120 degrees until the collision at 5:21, she was on a heading which would bring her farther south into the channel rather than across its northern boundary.
20. At no time after passing buoy 7 until after the collision did The Marine Leader leave the channel, and she was in the inbound lane of the channel at the time of collision.
21. The Jalaketu also, therefore, was at least partially in the inbound lane of the channel when she was rammed.
As pointed out above, this finding is consistent with The Jalaketu’s evidence which of itself was inconclusive. Moreover it is supported by the testimony of the disinterested crew members of the outbound S.S. American Judge and the inbound S.S. Bradford Island. Their testimony is accepted and on it the following findings are made.
22. The captain of The American Judge while proceeding down the channel on the afternoon in question, following 3 to 4 miles behind another outbound vessel, saw on his radar-scope the outbound vessel ahead of him closing upon a vessel anchored in the channel. The radar images finally merged into one large and indistinct image. He could not identify the two vessels but since there were no other vessels known to have been in the vicinity and no others appeared on the radar-scope, except a vessel inbound but some distance seaward of the merging vessels, it is reasonable to assume that what appeared on his scope were The Marine Leader and The Jalaketu, and I find that they were. The master of The American Judge had a slight glimpse of one of the vessels at the time he was passing the outbound channel buoy 1A, companion buoy of 2A, but was unable to identify it.
23. Hewett, the mate of The Bradford Island, an inbound tanker which arrived in the vicinity of the collision position at approximately 6:00, placed The Jalaketu at that time on the northern edge of the channel. He had maintained a radar watch from a time prior to his arrival at the Gedney sea buoy until after arrival in the area of the collision and a visual sighting of the two vessels involved. From the time his vessel was abeam Gedney sea buoy he had under radar observation two objects which at first he mistakenly believed to be the channel entrance buoys 2A and 1A. The Bradford Island was on a channel course of 297 degrees which lay directly between the above mentioned ob jects. As she continued inbound these objects enlarged on the radar screen until it became apparent that they represented ships and not the entrance buoys. Stretching out to the N.W. behind these objects, Hewett observed on his radarscope the double row of channel buoys, and the course of The Bradford Island likewise lay directly between these rows of buoys. Hewett’s explanation that buoys 2A and 1A were obscured by the anchored vessels is probably correct since radar impulses which follow the line of sight would not be reflected from a small buoy wholly or partially blocked by a large vessel. I find that The Bradford Island was actually proceedng up the channel on the regular course.
24. When The Bradford Island was in close proximity to the objects observed in the radar-scope, The Jalaketu was observed off her starboard bow on a heading reciprocal to that of The Bradford Island, thus paralleling the channel course but headed outbound, and so close as to cause the latter’s pilot to order a sharp swing to port. This position of The Jalaketu was in accord with the state of the tide two hours after low water. Forty minutes earlier when the tide was changing from slack to flood, The Jalaketu was on a heading of 45 degrees and perpendicular to the channel. Logically therefore, to be on the northern boundary and parallel thereto at 6:00, The Jalaketu must have been in the channel extension at 5:20 when it was on a heading perpendicular to the boundary.
25. Immediately after executing the hard aport order The Bradford Island observed The Marine Leader, also anchored in the channel, off the port bow and the former’s pilot ordered hard astarboard to avoid collision. Then having passed under The Jalaketu’s stern, The Bradford Island was brought to anchorage, N.E. of buoy 2A at 6:24. This anchorage position was fixed at the time by three radar cross-bearings. A plot of these bearings establishes the anchorage position of The Bradford Island to have been about 1000 yards, E.N.E. of buoy 2A on a true bearing of N. 70 E. In effecting this anchorage Captain McDonald, without determining with pinpoint accuracy The Jalaketu’s position, which was south of his, allowed a safe swinging distance of not less than 300 yards between the ships. At 10:30 when the visibility cleared, The Bradford Island’s anchorage position was checked by visual bearings and was found to be substantially in accord with the prior radar fix. At this time The Jalaketu was observed at anchor nearly on a line with the channel buoys and seaward of them. Of course, by this time The Jalaketu’s stern had been swung still further to the north by the tide and she was probably tailing between N.W. and N.
26. From all of the foregoing I find that at the time of collision both The Jalaketu and The Marine Leader were actually in the channel extension on the inbound side.
27. At all times during her progress down the channel and at collision, The Marine Leader was sounding under way fog signals at intervals of less than a minute.
28. Her master, second officer and a helmsman were on duty on the bridge. A seaman was stationed on the forecastlehead on lookout at all times. A ship’s officer was also stationed there. All were alert and vigilant.
29. Prior to 5:16 no fog signals of other vessels at anchor or under way were heard on The Marine Leader while navigating the lower reaches of Ambrose Channel except a vessel proceeding astern of her.
30. Shortly after passing buoy 2A at 5:16 and while on the heading of 120 degrees True, a distant fog whistle of a vessel was heard off the starboard bow. This was identified as the fog signal of the pilot boat. On first hearing that signal, The Marine Leader’s speed was reduced to slow and then, when the identity and location of the pilot boat were established, increased to half ahead.
31. Very shortly thereafter The Jalaketu was sighted about 500 feet ahead of The Marine Leader and lying athwart her course, port side to The Marine Leader. Visibility was then about 500 feet.
32. The Marine Leader’s engines were immediately put full speed astern at 5:20% and her rudder hard right; immediately thereafter the starboard anchor was let go at about 5:21. However, because of her speed she was unable to stop and her bow cut into the port side of The Jalaketu near No. 5 hold at an angle of between 60 and 90 degrees.
33. No fog bell from The Jalaketu was heard aboard The Marine Leader prior to sighting. A fog bell from The Jalaketu was first heard aboard The Marine Leader at about the time the latter dropped her anchor. The Jalaketu was not properly sounding her fog bell prior to the collision.
The Jalaketu contends that The Marine Leader was at fault in negligently allowing for a set which was nonexistent and which her pilot should have known was non-existent, and in proceeding at a speed which was excessive in view of the weather conditions. The Marine Leader in turn contends that The Jalaketu was at fault by being improperly anchored in a frequented channel and not sounding the statutory anchor fog signals; and that since The Marine Leader was not apprised of The Jalaketu’s whereabouts by signals, she was justified in assuming the channel to be clear and therefore her speed was not excessive under these circumstances. The Jalaketu counters that since she herself attained or attempted to attain a safe anchorage under the conditions and maintained an adequate anchor watch she is not [contributorily] at fault.
Considering first the affirmative contentions of The Jalaketu it seems clear that The Marine Leader was violating the “Narrow Channel” Rule by navigating down the port side of the channel, and Inland Rule 16 by proceeding at immoderate speed. Even if Pilot Martin’s estimate that buoy 2A was 800-900 feet off his port bow were accepted, he also nevertheless placed the collision north of the center range. The narrow channel rule applies in fog as well as clear weather. The risk of collision is increased by fog. The difficulty of maintaining a course down the starboard side of a narrow channel is likewise increased in fog, it is true, and there may be unusual situations where although there is-no negligence involved the navigator is-unable to maintain his starboard hand' course. Here, however, The Marine Leader’s pilot continued to allow for a set after he passed buoy 7. As a licensed Sandy Hook Pilot, he should have known it had ceased to exist at about that time. When he discovered his error at buoy 2A he changed the course but this was too' late to avoid the collision.
34. The Marine Leader was in violation of Rule 25 through her pilot’s negligence in failing to correct her course after the westerly set ceased.
35. The Marine Leader’s speed was-too great to permit her to stop within 500 feet, the limit of visibility.
36. Under the circumstances her speed was at least immoderate, in violation of Rule 16.
Violation of the rules constitutes statutory fault and therefore it is incumbent upon The Marine Leader to-show that the violation could not have contributed to the collision. This she has not done, nor does it seem likely that such a showing would be possible under these circumstances. She urges that while her speed may have been excessive had she known of The Jalaketu’s presence, she was unaware of this since the latter was not sounding the proper anchor fog signals and is therefore not at fault. This has no merit in the circumstances found here. The cases cited for this general proposition do not concern a vessel proceeding on the wrong side of a busy channel where at the very least incoming vessels, if not a vessel at anchor, might be anticipated. The Marine Leader, as has been found, was proceeding at such speed that she could not be stopped within the existing limit of visibility. Certainly for a vessel on the port hand side of Ambrose Channel, in fog, such speed was immoderate.
Taking up now The Marine Leader’s contentions, it has been found that The Jalaketu was in the channel at the time of the collision. It is true that the channel extension is 1800 feet wide in this vicinity and that at most The Jalaketu was obstructing only 500 feet of the inbound lane. However, she was in a busy channel. Visibility was only 500 feet and inbound vessels were required to be careful to observe the narrow channel rule. Accordingly, unnecessary obstruction of more than half of the inbound lane cannot be excused. Furthermore, it was negligent seamanship to anchor so close to the channel that the tide would swing the ship broadside to the path of oncoming ships, when there was water of .ample depth for a ship of this draft farther to the north out of the channel. It was also negligent seamanship to omit the simple precaution of checking the estimated anchorage position by means of radio bearings. It is argued that .radio bearings are inaccurate and indeed they are. But surely cross-bearings from stations in close proximity over water are better than no knowledge at all, especially when anchorage was not effected until 21 minutes after a visual fix, during which time there was 9% minutes of stern action and 8% minutes of drift in a strong ebb tide. Accordingly these further findings are made.
37. The Jalaketu’s pilot and officers were negligent in anchoring so close to the channel and in failing to take all available precautions to check her position at the time of anchoring.
38. The Jalaketu was unnecessarily obstructing the channel in violation of law, at the time of collision.
As to The Jalaketu’s signals, testimony by various members of The Jalaketu’s crew shows only that orders were given to ring the anchor bell signal; and that at unspecified times from 2:00 to 5:20 it was heard aboard the ship. But it seems most likely that it was not being rung regularly as required by law. It is conceded that the bell was a “good loud bell” and that conditions of wind and weather were good for hearing sound over water. The Marine Leader had heard and acted on the fog whistle of the pilot boat only a few minutes before the collision. Her watch was alert. It is most unlikely therefore that these men would not have heard the bell if it were being rung. It is inconceivable that if they had heard it they would not have taken timely and effective action to protect their ship and themselves, as they did when they heard the pilot boat’s whistle. From all the testimony about the bell the following further findings are made.
39. At the time the ships sighted each other at about 500 feet, The Jalaketu’s pilot was in and about the pilot house. The chief officer who had the watch was in his cabin reading. The ship’s master was in his cabin. There was no licensed ship’s officer on the bridge or on the forecastlehead.
40. On the forecastlehead, alone, was a 20 year old Indian who spoke no English, whose instructions had been relayed to him by the seaman whom he had relieved. These instructions as reeited by the young Indian, through the acting third mate as interpreter, were practically verbatim the words of the Inland Rule. The young man, however, had no watch and did not know the number of seconds in a minute. He was hesitant about telling time, and admitted that he rang the bell when he thought the proper time had elapsed. He did not speak the language of the officers or of the pilot, and it appears that not all members of the crew were able to make themselves mutually understood.
41. I find that The Jalaketu’s bell was not being rung at the intervals required by law.
Conclusions of Law
1. Both vessels were at fault and should share the damages equally.
2. The owners and parties in interest of Jalaketu’s cargo are entitled to recover from Marine Leader full damages, including general average contributions.
3. The Marine Leader is entitled to recover from The Jalaketu one-half of the damages recovered by cargo from The Marine Leader
An interlocutory decree may be entered in accordance herewith, and providing for reference of the question of damages to a special master.
Submit proposed decree.
. All times hereafter stated are P.M.
. Pilot Martin’s testimony that he observed buoys 5 and 5A at approximately the same distance to starboard is rejeeted. These sightings were not recorded in the log, and neither the master nor others in the crew could remember seeing these buoys.
. The vessel’s distance off this buoy was variously estimated at from 500-900 feet, In view of finding that visibility was between 500-600 feet, the pilot’s estimate that 2A was 900 feet off his port beam is rejected,
. 33 U.S.C.A. § 210.
. 33 U.S.C.A. § 192.
. Southern Pac. Co. v. U. S. (El Sol), 2 Cir., 1934, 72 F.2d 212; The Domira, 2 Cir., 1932, 56 F.2d 585; The S. V. Luckenbach, 2 Cir., 1912, 197 F. 888.
. The Pennsylvania, 1873, 19 Wall. 125, 86 U.S. 125, 22 L.Ed. 148; The Martello, 1894, 153 U.S. 64, 14 S.Ct. 723, 38 L.Ed. 637.
. Erie & Western Transportation Co. v. City of Chicago, 7 Cir., 1910, 178 F. 42, certiorari denied 216 U.S. 620, 30 S.Ct. 574, 54 L.Ed. 641; The Sagamore, 1 Cir., 1917, 247 F. 743, 751.
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11193078-18726 | POOLER, Circuit Judge:
In March 1997, after suffering a stroke, plaintiff Robert H. Robbins went to live in a nursing home. Slightly less than one year later, his wife and attorney-in-fact, Nova H. Robbins, applied to the Monroe County Department of Social Services (“DSS”) for Medicaid coverage for Robert. Nova’s monthly income at that time was far below the amount federal and state law allows the “community spouse” of an institutionalized Medicaid recipient to retain, an amount often referred to as the minimum monthly maintenance needs allowance (“minimum income allowance”), see 42 U.S.C. § 1396r-5(d)(3),(g); N.Y. Soc. Serv. Law § 366-c(2)(h); however, her assets exceeded the resource floor or community spouse resource allowance (“resource allowance”) by approximately $88,000, see 42 U.S.C. § 1396r-5(f)(2),(g); N.Y. Soc. Serv. Law § 366 — c(2)(d). As a result, some months after accepting Robert’s Medicaid application, DSS demanded that Nova contribute to the cost of Robert’s care from these “excess” assets and threatened to sue her to recover the money it had spent for Robert’s care if she refused. A community spouse in Nova’s position can request a “fair hearing” at which a New York State Department of Health (“DOH”) hearing officer may set a resource allowance above the statutory amount to enable the assets to generate enough income to raise the community spouse’s income to the level of the minimum income allowance. See 42 U.S.C. § 1396r-5(e)(2)(C); N.Y. Soc. Serv. Law § 366-c(8)(c). Nova did not request a hearing because DOH uses an “income first” approach in determining whether to raise the resource allowance. That is, New York would have attributed a portion of Robert’s Social Security and pension to Nova rather than increasing her resource allowance.
Nova reasonably fears that DOH’s “income-first” approach will leave her destitute in her old age because the painful actuarial likelihood is that Robert will die before her. Although Robert’s excess income would support Nova during his lifetime, at his death, her income would drop sharply. Nova almost certainly would be better off over the long term if she could retain all her assets to generate income even at the cost of receiving less of Robert’s income in the short term. However, New York’s highest court has upheld DOH’s determination that the taxpayers who fund the Medicaid program, rather than the community spouse, are entitled to the “bird in the hand” of readily accessible assets, see Golf v. New York State Department of Social Services, 91 N.Y.2d 656, 658, 674 N.Y.S.2d 600, 697 N.E.2d 555 (1998), and plaintiffs do not ask us to revisit the conclusion that New York’s use of an “income first” method is generally permissible. Instead, they argue that the allocation of Robert’s pension and Social Security to Nova violates the anti-alienation provisions of the Employee Retirement Income Security Act (“ERISA”) and the Social Security Act. We conclude that DSS’ actions and DOH’s policies violate the Social Security Act but not ERISA.
BACKGROUND
I. The Legal Framework for Medicaid Budgeting Under the Spousal Impoverishment Amendments.
Medicaid is a medical assistance program authorized “to pay for necessary medical care for those eligible individuals whose income and resources do not allow them to meet the costs of their medical needs.” Golf, 91 N.Y.2d at 659, 674 N.Y.S.2d 600, 697 N.E.2d 555. The federal and state governments jointly fund Medicaid, and DOH administers the Medicaid program in New York. See id. at 659 and n. 1, 674 N.Y.S.2d 600, 697 N.E.2d 555. In 1988, Congress enacted the Spousal Impoverishment Amendments to the Medicaid Act, “to end [the] pauperization [of the community spouse] by assuring that [he or she] has a sufficient — but not excessive— amount of income and resources” when the other spouse must go into a nursing home. H.R. Report No. 100-105(11), 100th Cong., 2d Sess. 65 (1988), reprinted in 1988 U.S.C.C.A.N. 803, 888. Congress set both a minimum income allowance, see 42 U.S.C. § 1396r-5(d)(3), and a minimum resource allowance, see 42 U.S.C. § 1396r-5(f)(2), to protect the community spouse. If the community' spouse’s income is less than allowed, the institutionalized spouse may transfer income to her to bring her up to the minimum level. See 42 U.S.C. § 1396r — 5(d)(1)(B). In addition, either the community spouse or the institutionalized spouse can use the fair hearing process to argue that the community spouse’s' resource allowance is inadequate. If either spouse can establish at a fair hearing “that the ... resource allowance (in relation to the amount of income generated by such an allowance) is inadequate to raise the community spouse’s income to the minimum monthly maintenance needs allowance,” DOH and DSS must increase the resource allowance until it can generate the income guaranteed by the minimum income allowance. 42 U.S.C. § 1396r-5(e)(2)(C).
As discussed previously, DOH — unlike agencies in some other states — applies an “income first” policy in determining whether a community spouse is entitled to an increase in her resource allowance. If an institutionalized spouse has enough income to bring the community spouse’s income up to the minimum income allowance, DOH and DSS will not increase the resource allowance. Instead, DSS will allow the institutionalized spouse to contribute enough income to the community spouse to bring her income to the minimum level provided by statute. Whether or not the institutionalized spouse contributes his excess income to his spouse, DSS may sue her to recover the “excess” assets that she would otherwise use to generate income.
II. DSS’ Treatment of Robert and Nova’s Income.
When Robert became eligible for Medicaid, he received $992.80 from Social Security and $1,870.28 from his pension per month. Nova had a monthly -income of $486.80 from Social Security and $395.71 in investment income, far below her minimum income allowance of $2019. Howev er, her savings of $169,280.94 exceeded her resource allowance, which was $80,760. Nova declined to contribute her “excess” resources to Robert’s care. Although DSS accepted Robert’s application, the agency followed up by sending Nova a letter demanding repayment of $19,156.58 expended on Robert’s behalf and payment of future expenses. The letter, which was dated September 15, 1998, threatened that if Nova failed to pay the entire amount demanded by September 30, 1998, DSS would “commence an action in New York State Supreme Court to recover the amount of Medicaid paid on your husband’s behalf.” Underlying DSS’ demand is its position that it can consider “the amount of [income] which the institutionalized spouse could transfer to the community spouse, in determining whether the community spouse should be allowed to keep additional resources for the purpose of generating income.” Affn of Daniel J. Tarantino of April 5, 1999 ¶ 10. Because Robert has more than enough income to bring Nova’s income to the allowable level, DSS will not grant her a higher resource allowance whether or not Robert — or Nova on his behalf — actually elects to spend Robert’s money for Nova’s needs. See id. ¶ 6.
III. Procedural Background
Nova filed this lawsuit, on her own behalf and Robert’s on September 23, 1998. She alleged that defendants Barbara A. DeBuono, as DOH commissioner, and Richard F. Schauseil, as DSS director, violated the anti-alienation provisions of the Social Security Act, 42 U.S.C. § 407, and of ERISA, 29 U.S.C. § 1056(d)(1). On January 22, 1999, plaintiffs moved for summary judgment. Defendants filed a cross-motion for summary judgment on April 7, 1999. In a decision and order dated May 10, 1999, the district court determined that DSS’ attribution of Robert’s income to Nova did not violate either statute because mere attribution — even if it occurs during a fair hearing — does not subject the Social Security benefits to “legal process” or change the ownership of pension benefits.
DISCUSSION
Plaintiffs’ claims on appeal rest on the central contention that defendants’ policy of attributing or deeming income of an institutionalized spouse to a community spouse effectively alienates that income from the institutionalized spouse. Because Robert’s income consists of Social Security and a pension subject to ERISA, plaintiffs argue that defendants violated the anti-alienation provisions of these two statutes. Defendants respond principally that no alienation takes place because — despite the threat of a lawsuit that will deplete the assets of the community spouse and the potential use of a fair hearing — the institutionalized spouse can retain all of his income unless he chooses to contribute it to the support of the community spouse.
I. The Social Security Act
The Social Security Act provides:
(a) The right of any person to any future payment under this subchapter shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this subchapter shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.
(b) No other provision of law, enacted before, on, or after April 20, 1983, may be construed to limit, supersede, or otherwise modify the provisions of this section except to the extent that it does so by express reference to this section.
42 U.S.C. § 407. Defendants clearly did not execute on, levy, attach, or garnish Robert’s Social Security benefits. Howev er, plaintiffs contend that the deeming of Robert’s benefits to Nova that would occur in a fair hearing as well as DSS’ threat of a lawsuit constitutes “other legal process” within the meaning of Section 407(a). We have employed an “expansive definition of ‘legal process,’ ” Kriegbaum v. Katz, 909 F.2d 70, 74 (2d Cir.1990), which “em-bracéis] not only the use of formal legal machinery but also- resort .to express or implied threats and sanctions,” Fetterusso v. State of New York, 898 F.2d 322, 327 (2d Cir.1990).
The seminal case in this circuit on deeming or attributing Social Security benefits is Johnson v. Harder, 383 F.Supp. 174 (D.Conn.1974), aff'd, 512 F.2d 1188 (2d Cir.1975). Because plaintiffs claim that Johnson controls and defendants that it is irrelevant, we will explain in some detail the holdings of the district court and this court. Cleo Johnson sued to invalidate a Connecticut welfare regulation that provided that Social Security benefits received by a parent as a representative payee fop her children could be considered as income to the parent for purposes of calculating an Aid to Families with Dependent Children (“AFDC”) grant to the extent that the Social Security benefits exceeded’ the budgeted needs of the children. Johnson, 383 F.Supp. at .175-76. Even if the parent removed the Social Security recipients from the AFDC unit, their “excess” income would be allocated to the AFDC unit. See id. at 178. The district court found that Connecticut’s policy failed because the Social Security statute and regulations required a representative payee to use her child’s benefits only for the benefit of the child. See id. at 179-82. Although the regulations also allowed the representative payee to spend a portion of the benefit on the needs of a “legally dependent spouse, a legally dependent child, or a legally dependent parent of the [Social Security beneficiary]” if all of the beneficiary’s needs were satisfied, the district court found that Connecticut’s policy impermissibly coerced the representative payee to exercise the discretion offered her by the regulations in favor of herself. Id. at 179-82 (quoting 20 C.F.R. § 404.1607 (1974)).
On appeal, this court initially delivered an oral order as follows:
We agree with Judge Blumenfeld that the Connecticut regulations conflict with the federal scheme for providing OASDI benefits. The federal statutes and regulations, taken in conjunction with Philpott v. Essex County Welfare Board, 409 U.S. 413, 93 S.Ct. 590, 34 L.Ed.2d 608 (1973), evidence a clear intention that OASDI funds be used for the beneficiary’s needs, as he or his representative payee may best determine. It would subvert this scheme to permit a state to automatically treat such benefits as available for the needs of a parent or of other children.... Accordingly, we affirm on Judge Blumenfeld’s opinion below.
Johnson v. Harder, 512 F.2d 1188, 1189 n. 2. (emphasis added). To give its order precedential value, the court then issued h brief per curiam opinion, which said that “[f]or the reasons stated by Chief Judge Kaufman in open court, we affirm on Judge Blumenfeld’s opinion below.” Id. Chief Judge Kaufman’s oral order was incorporated in the opinion as a footnote.
Defendants argue that because Johnson rested on then-existing Social Security regulations rather than on Section 407, it does not support plaintiffs’ position. We disagree. First, though Johnson explicitly dealt with Social Security regulations not at issue here, the district court in Johnson took tbe view,-which this Court at least implicitly endorsed, that the attribution of the children’s benefits to the parent for purposes of AFDC calculation left the parent with “no real choice;” rather she was “coerced by the defendant’s action” into using the benefits in a certain way. 383 F.Supp. at 180. At least one court, rélying in part on Johnson, has labeled such a result “administrative coercion.” Manfredi v. Maher, 435 F.Supp. 1106, 1115 (D.Conn.1977). Nova occupies a posi tion that is, in this important respect, analogous to the position of Cleo Johnson. As the representative payee for two children who received Social Security survivors’ benefits, Johnson had the legal authority to determine how those children’s benefits were spent as long as the Social Security recipients’ needs were met. See Johnson, 383 F.Supp. at 176-78. However, if she chose to spend the Social Security benefits solely on the two children who actually received them, she and her remaining children would suffer because the state would cut the family’s AFDC benefits. Similarly, Nova, who has Robert’s power of attorney, has control over his check. If she pays over Robert’s Social Security benefits for his current care rather than applying them to her own needs, her future will be jeopardized because DSS will sue to obtain the assets she will need for her support in the future. Just as in Johnson, “[t]he effect of the State [policy] in question is to force the [attorney-in-fact] to exercise that discretion in favor of herself.” See id. at 180. Although the effect on Nova and Robert Robbins may not be as immediate as the effect on Cleo Johnson and her family, the policy nevertheless works the same injustice since Nova, the person who controls Robert’s benefits, has been coerced to spend the Social Security benefits on herself rather than Robert. It is precisely that type of administrative coercion that we rejected in Johnson.
Moreover, we accepted the district court’s reasoning “in conjunction with Phil-pott.” Johnson, 512 F.2d at 1189 n. 2. Philpott, in turn, relied exclusively on Section 407 to prevent New Jersey from seeking reimbursement for public assistance funds from Social Security Disability funds that had been deposited into a bank account. See Philpott, 409 U.S. at 415, 93 S.Ct. 590. Because we relied on Philpott to decide Johnson, we find that Johnson is relevant to our interpretation of Section 407 in this case.
Finally, under Fetterusso, the use of express or implied threats falls within the meaning of “legal process” for purposes of Section 407. See Fetterusso, 898 F.2d at 327. Because New York’s income-first policy, which is implemented both during the fair hearing process and through the express threat of a lawsuit, constitutes an explicit threat to use “legal process” against a community spouse who refuses to expend her husband’s Social Security benefits on her own needs, and because threats — implicit or explicit — fall within our definition of “legal process,” we hold that the income-first policy as applied to Social Security benefits violates Section 407.
The decisions on which the defendants rely—Bradley v. Austin, 841 F.2d 1288 (6th Cir.1988); Gorrie v. Bowen, 809 F.2d 508 (8th Cir.1987); Norman v. St. Clair, 610 F.2d 1228 (5th Cir.1980); and Jackson v. Mullany, 708 F.Supp. 483 (N.D.N.Y.1989) do not persuade us to the contrary. In Gorrie, Bradley, and Jackson, courts upheld a federal statutory requirement, see 42 U.S.C. § 602(a)(38), that in determining the eligibility of a family for AFDC, the state consider the needs and income of parents or siblings in the household who receive Social Security benefits notwithstanding the fact that those siblings or parents might not wish to apply for AFDC. See Bradley, 841 F.2d at 1293, 1297; Gorrie, 809 F.2d at 512, 525; Jackson, 708 F.Supp. at 487-89. Each of these courts also held that deeming Social Security income to an AFDC unit was not “legal process” and therefore did not violate Section 407(a). See Bradley, 841 F.2d at 1294, Gorrie, 809 F.2d at 517; Jackson, 708 F.Supp. at 489. The latter conclusion conflicts with our holding in Johnson that — in light of Philpott and implicitly Section 407 — state authorities could not deem the income of children receiving Social Security to other members of an AFDC family. See Johnson, 512 F.2d at 1189 n. 2. In Norman, the Fifth Circuit upheld the State of Mississippi’s practice of deeming one spouse’s Social Security benefits to the other spouse when he applied for Medicaid. The Fifth Circuit, like the Eighth and Sixth Circuits, held that mere deeming was not contemplated by the anti-alienation statute. See id., 610 F.2d at 1248. Therefore, like the decisions of those circuits, Norman conflicts with Johnson and this circuit’s definition of “legal process” under Section 407.
II. ERISA
ERISA’s anti-alienation provision sweeps far less broadly than does the Social Security Act’s cognate section. ERISA requires only that “[e]ach pension plan shall provide that benefits provided under the plan may not be assigned or alienated.” 29 U.S.C. § 1056(d)(1). The Secretary of the Treasury, by implementing regulation, has defined “assignment” and “alienation” as
[a]ny arrangement providing for the payment to the employer of plan benefits which otherwise would be( due the participant under the plan,
and
[a]ny direct or indirect arrangement (whether revocable or irrevocable) whereby a party acquires from a participant or beneficiary a right or interest enforceable against the plan in, or to, all or any part of a plan benefit payment which is, or may become, payable to the participant or beneficiary.
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4054878-23064 | PER CURIAM:
Defendant-Appellant Edmundo Cisne-ros, Jr. was convicted of violating 21 U.S.C. § 841(a)(1) and (b)(1)(A) by conspiring to possess with intent to distribute and possessing with intent to distribute more than 1,000 kilograms of marijuana. Cisneros appeals his conviction, contending (1) the evidence was insufficient to convict him, (2) evidence of a prior conviction should not have been admitted, and (3) a deliberate-ignorance instruction should not have been given to the jury. Cisneros also appeals the district court’s application of a sentencing enhancement for a supervisory role in a criminal activity involving five or more participants.
I. Facts & Proceedings
A. Facts
After receiving reports from a store employee, a Texas Department of Public Safety officer, Ricardo Rivera, who was assigned to a Drug Enforcement Administration (“DEA”) Task force, observed an unidentified man load produce into a tractor-trailer. Officers followed the tractor-trailer to a ranch in Hargill, Texas owned by Bertha Serna, who eventually testified that she had been approached the day before by two men and offered $500 to let them leave a tractor-trailer on her proper ty. One of these men was later identified as Cisneros’s brother.
Officer Rivera and another officer, Roman Rodriguez, set up surveillance of the tractor-trailer, at first from forty yards away and then from eighty yards away. The officers shared a pair of binoculars. The ranch was well-lit, with security lights and a bright light source emanating from the trailer. Although the trailer was a refrigeration unit used to keep produce cool, its doors were frequently opened and shut over the course of the night. The two officers observed that someone inside the trailer would knock on the door, his compatriot outside of the trailer would then open the door, and the men inside the trailer would then throw out plastic wrap and cardboard. Neither officer was close enough to the trailer to hear the conversations among those men. Agent Rodriguez later identified Cisneros as the man who repeatedly opened and closed the door to the trailer. The two officers also observed three of Cisneros’s co-conspirators, Claudio Romero Guevara, Jorge Gomez, and Gerado Llamas, going in and out of the trailer, as well as two other men who were not arrested.
At the ranch, the officers later found a “burn pile” of the plastic wrap and cardboard refuse, as well as four large rolls of commercial plastic wrap of the type used by smugglers to wrap marijuana. The officers did not observe any marijuana, but they did see men make repeated trips to the carport, which was large enough to store all the marijuana discovered later.
Around 6:00 a.m. the next morning, the tractor-trailer left the ranch, followed by a green car and a maroon pickup truck. The two surveillance officers, joined by Sergeant Ruben Morin, followed these vehicles. Shortly after leaving the ranch, the tractor-trailer was pulled over by DPS trooper Donato Vela for driving on the wrong side of the road and speeding through a curve. The driver of the trailer, Jose Gutierrez, later told law enforcement that he had been hired by Ruben Rivera to drive a load of produce to Houston and did not know Cisneros, Gomez, Guevara or Llamas.
As Vela stopped the tractor—trailer, the green car—which had been following immediately behind that rig for about ten miles—turned onto a side road and headed in the opposite direction. DEA Agent Juan Hernandez stopped the green car, which Cisneros was driving and in which Gomez was occupying the passenger seat. Neither of the two officers who had maintained surveillance of the tractor-trailer the previous night had seen the green car during their vigil. The red pick up truck, which was being driven by Guevara, was also stopped. In the tractor-trailer, agents found bundles of marijuana mixed in with boxes of cabbages. They eventually recovered 160 boxes containing a total of 498 bundles of marijuana, which in toto weighed approximately 7,300 pounds, or 3,309 kilograms. The estimated value of the marijuana shipment was between $1 and $3 million. Inside the red pickup truck agents found back-support belts used for lifting heavy loads, a blue tarp that had been on the ground behind the trailer, and rain gear that Llamas had been wearing while loading the trailer on the previous night. The officers found a jacket in the green car, in the pocket of which they found a list of the numbered boxes in the trailer containing marijuana and the approximate location of each box within the pallets. A silver cell phone was found in the green car, and telephone records revealed numerous calls from this phone to telephones owned by Guevara, Gomez, Gutierrez, and Llamas that had been placed during the week leading up to the arrests. The only connection between this phone and Cisneros, however, was its presence in the car he was driving.
B. Proceedings
Cisneros was indicted on two counts; (1) Conspiracy to possess with intent to distribution more than 1,000 kilograms of marijuana and (2) possession with intent to distribute more than 1,000 kilograms of marijuana, in violation of § 841(a)(1) and (b)(1)(A). Over Cisneros’s objection at trial, the government introduced evidence that he had a 1992 state conviction for possession of more than five pounds but less than fifty pounds of marijuana. Cisneros called a physician, who testified that, because of a serious automobile accident in 1999 in which both of Cisneros’s arms were fractured, he would not have been able to close and lock the trailer doors. The physician further testified, however, that it would have been possible for Cisneros to open and close those doors a few times each hour without locking them, although likely not over a continuous period of five or six hours.
After a jury found Cisneros guilty on both counts, he was sentenced to 240 months of confinement on Count One of the indictment, to run concurrently with 240 months of confinement on Count Two, plus concurrent five year terms of supervised release on each count.
Cisneros timely filed a notice of appeal, but we later dismissed that appeal for want of prosecution, pursuant to Fifth Circuit Rule 42.3. A little less than a year later, Cisneros filed a motion under 28 U.S.C. § 2255 in which he alleged that his trial counsel failed to perfect a direct appeal of his conviction and sentence. Later that month, the district court permitted the original judgment to be re-entered, giving Cisneros ten days in which to file a timely notice of appeal. Cisneros did so.
II. Analysis
A. Sufficiency of the evidence
Cisneros challenges the sufficiency of the evidence for both counts. Although his trial counsel moved for judgment of acquittal under Federal Rule of Criminal Procedure 29(a) after the government rested, Cisneros’s counsel did not renew his motion at the close of all the evidence. As a result of counsel’s failure to renew that motion, we review the challenge to the sufficiency of the evidence for manifest miscarriage of justice. This standard is a difficult one to meet, as “the record must be devoid of evidence of guilt or the evidence must be so tenuous that a conviction is shocking.”
The elements of Count One, conspiracy to possess with intent to distribute more than 1,000 kilograms of marijuana, are “(1) the existence of an agreement between two or more persons to violate the narcotics laws, (2) the defendant’s knowledge of the agreement, and (3) the defendant’s voluntary participation in the conspiracy.” These elements can be inferred from circumstantial evidence. The elements of Count Two, possession with intent to distribute more than 1,000 kilograms of marijuana, ai-e “(1) knowledge, (2) possession, and (3) intent to distribute the controlled substances.”
The evidence is sufficient to support convictions on both counts, especially in light of the heightened standard of review. Cisneros does not dispute the ample evidence of an operation involving the possession of marijuana with intent to distribute. The two officers observed several defendants load the trailer in which agents later found 7,300 pounds of marijuana. One officer identified Cisneros as the man who opened and closed the doors of the trailer throughout the night. Although medical testimony indicated that Cisneros would have had difficulty opening and closing the doors repeatedly, his ability to do so was not ruled out completely. And, Cisneros was arrested while driving a car in which a phone used to call the co-conspirators and a list of where the marijuana was located in the trailer were found.
Admittedly, the evidence that Cisneros had knowledge of the conspiracy and knew that his compatriots were loading the trailer with marijuana is somewhat more tenuous. Nevertheless, the high value of the shipment of marijuana, between $1 and $3 million, indicates that Cisneros likely had knowledge of the nature of the work done that night. We have previously noted that the high value of a drug shipment is evidence of knowledge because “in the course of transporting millions of dollars of readily marketable marijuana through channels that should lack the protections of organized society, a prudent smuggler is not likely to suffer the presence of unaffiliated bystanders.” Another item of evidence supporting Cisneros’s knowledge of the illegal nature of the operation is his attempt to evade police after the tractor-trailer was pulled over.
“Weighing the evidence is a job for the jury, not for us.” Additionally, our “focus is not on ‘whether the trier of fact made the comet guilt or innocence determination, but rather whether it made a rational decision to convict or acquit.’ ” The evidence against Cisneros is sufficient for a rational trier of fact to find beyond a reasonable doubt that he knowingly and voluntarily participated in an agreement between two or more persons to possess a large amount of marijuana with the intent to distribute. Certainly, no one would find the evidence so tenuous as to render the verdict shocking.
B. Evidence of a prior conviction
Cisneros challenges the admission of evidence of his 1992 state conviction for possession of marijuana, asserting that it was inadmissible under Federal Rule of Evidence 404(b). That rule governs the admissibility of evidence of prior crimes or bad acts and states, “[ejvidence of other crimes, wrongs, or acts is not admissible to prove the character of a person in order to show action in conformity therewith.” Such evidence may be admissible for other purposes. We review this issue under a heightened abuse of discretion standard.
We apply the two-step Beechum test for admission of extrinsic evidence of prior offenses or other misconduct under Rule 404(b). In the first step, “it must be determined that the extrinsic offense evidence is relevant to an issue other than the defendant’s character.” Thus, when the evidence sought to be introduced is a prior offense, “its relevance is a function of its similarity to the offense charged.” Indeed, “where the prior offense involved the same intent required to prove the charged offense, that prior offense is relevant. ...” In the second step, “the evidence must possess probative value that is not substantially outweighed by its undue prejudice and must meet the other requirements of rule 403.” Limiting instructions from the court can diminish the risk of unfair prejudice posed by the admission of the evidence.
The admission of Cisneros’s 1992 conviction satisfies the first step of the Beechum test. Although the conviction was for a much smaller amount of marijuana, it is obviously similar to the charges in this case, viz., conspiracy to possess and possession of a distribution amount of marijuana. Because the intent required is the same, the prior conviction is relevant.
The admission of the 1992 conviction also satisfies both the second step of the Beechum test and the balancing test of Rule 403. It is true that Cisneros’s primary defense was that there was no proof that he was involved at all, not that he merely lacked intent or knowledge. Because the threshold issue was one of identity, “there was great danger that the jury would decide that [the defendant] was involved in the conspiracy because of his prior criminal conduct.”
Nevertheless, when the prior-conviction evidence was introduced, the district court instructed the jury that it was not admitted to prove Cisneros’s propensity for committing crimes, but for the limited purpose of showing intent or knowledge. We presume that the jury will follow the trial court’s limiting instruction. Therefore, the admission of this evidence satisfies both prongs of the Beechum test and thus was proper.
C. Deliberate-ignorance instruction
Cisneros also challenges the court’s instruction on willful blindness, also known as deliberate ignorance. The challenged instruction read, in part:
Knowingly. The word ‘knowingly’ as that term has been used from time to time in these instructions means that the act was done voluntarily and intentionally not because of mistake or accident. You may find that a defendant had knowledge of a fact if you find that the defendant deliberately closed his eyes to what would otherwise have been obvious to him. While knowledge on the part of the defendant cannot be established merely by demonstrating that the defendant was negligent, careless, or foolish, knowledge can be inferred if the defendant deliberately blinded himself to the existence of a fact.
Cisneros’s counsel objected to the inclusion of the “deliberate blindness instruction” during the charge conference. Cisneros contends that the instruction unjustly lessened the government’s burden of proof by imputing knowledge to Cisneros despite any evidence that he had deliberately “blinded” himself.
We review challenges to jury instructions for an abuse of discretion, provided they have been properly preserved. When reviewing jury instructions “we view the evidence and all reasonable inferences that may be drawn from the evidence in the light most favorable to the Government.” We have consistently upheld deliberate-ignorance instructions so long as they have the required factual basis. Deliberate-ignorance instructions are appropriate when the evidence raises two inferences: (1) that the “defendant was subjectively aware of a high probability of the existence of the illegal conduct” and, (2) that the “defendant purposely contrived to avoid learning of the illegal conduct.” Deliberate-ignorance instructions should be given rarely because they create a risk that a jury might convict on the basis of negligence or stupidity when the actual mens rea required is knowing action.
Cisneros is correct that there was little or no evidence adduced that he purposely avoided learning of the illegal conduct. The evidence shows that Cisneros was present at the trailer throughout the night when the other men concealed the marijuana, loaded it onto the trailer, and attempted to destroy the evidence. Cisneros helped those men by continually opening and closing the doors to the trailer, which suggests an active role in the drug smuggling instead of purposeful avoidance of learning of the illegal conduct. In light of the evidence presented, a deliberate-ignorance instruction was inappropriate.
Nevertheless, any error made in giving the instruction was harmless. We have concluded previously that when there is no evidence of conscious ignorance, the jury will not attribute negligence to the defendant. Additionally, if there is substantial evidence of actual knowledge, then the error in giving the deliberate-igno- ranee instruction is generally harmless. As noted above, there was significant evidence that Cisneros had actual knowledge of the nature of the activities occurring at the ranch that night, rendering the error harmless.
D. Leadership enhancement
Cisneros also contests the district court’s decision to impose a three level enhancement based on the determination that Cisneros was a supervisor of more than five persons. A three-level upward enhancement is authorized by U.S.S.G. § 3B1.1 if the defendant was a manager or supervisor (but not an organizer or leader) of an activity that involved five or more participants. We review the district court’s interpretation and application of the Sentencing Guidelines de novo and its factual findings for clear error. A factual finding is not clearly erroneous if it is plausible in light of the record as a whole. In other words, we will deem factual findings clearly erroneous only when, based on the entire evidentiary record, we are “left with the definite and firm conviction that a mistake has been committed.”
The district court based its determination that Cisneros was a supervisor in the drug trafficking operation on the recommendations of the presentence investigation report (“PSR”), which concluded that Cisneros had supervised the actions of Gutierrez, Llamas, Guevara, Gomez, and two unidentified and unindicted co-conspirators. During the loading of the trailer, Cisneros opened and closed the doors of the trailer, thereby controlling the movements of the co-conspirators. Also, he did not personally participate in the loading of the pallets or the concealing of the marijuana. The trailer was registered in the name of his brother, Fernando, and the telephone found in the green car indicated that he was in communication with the other co-conspirators.
These facts, however, are not sufficient to show that Cisneros was more than a mere co-conspirator and had some sort of supervisory function. Although he was the “doorkeeper” to the trailer, that role does not necessarily prove that he had some sort of supervisory control. It is more likely that Cisneros’s injuries rendered him unfit to load the drugs into the trailer, as a consequence of which he helped in the only manner that he could. The registration of the trailer to Cisneros’s brother does not indicate that Cisneros somehow directed his brother or anyone else. . As the contents of the telephone calls are unknown, the mere fact that Cisneros called the other co-conspirators does not indicate that he was their supervisor. There is no evidence in the record that Cisneros took on a supervisory role, e.g. finding the driver, obtaining use of the ranch, spearheading the drug deal, or having some sort of authority over the other participants. As we conclude that the district court clearly erred in this determination, we must vacate the sentence imposed and remand for resentencing.
III. Conclusion
We affirm Cisneros’s conviction on both counts. The evidence was sufficient for a reasonable trier of fact to find him guilty of conspiring to distribute and of possessing a large quantity of marijuana, in large part because (1) an officer managed to identify Cisneros as present during the loading of the trailer, and (2) he attempted to evade the police after the trailer had been stopped. The district court did not abuse its discretion in admitting evidence of his prior conviction because it was a similar crime, and the district court gave a limiting instruction to the jury. And, although the district court erred when it gave a deliberate-ignorance jury instruction, that error was harmless, given the substantial evidence of Cisneros’s actual knowledge of the nature of the activities on the night and morning in question.
Cisneros’s sentence, however, is problematic because the evidence does not support the determination that he acted in a supervisory role during "the conspiracy. Consequently we AFFIRM Cisneros’s conviction, VACATE his sentence, and REMAND to the district court for resentenc-ing.
Pursuant to 5th Cir. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5th Cir. R. 47.5.4.
. The wide range in estimated value results from the variation in the price of marijuana across Texas. According to the testimony of Agent Rivera, in South Texas marijuana generally sells for $150 per pound whereas elsewhere in Texas marijuana sells for an average of $450 per pound.
. Cisneros’s co-defendants, Llamas, Guevara, and Gomez, pleaded guilty to Count Two of the indictment (possession with intent to distribute more than 1,000 kilograms of marijuana). Gutierrez was tried with Cisneros, but the jury did not reach a verdict regarding Gutierrez on Count One.
. United States v. Miller, 576 F.3d 528, 529-30 (5th Cir.2009) (quoting United States v. Green, 293 F.3d 886, 895 (5th Cir.2002) ("Defendants’ sufficiency of the evidence claims are reviewed under a stricter than usual standard, because none of the defendants renewed their motions for judgment of acquittal at the close of all evidence.”)), cert. denied, - U.S. -, 130 S.Ct. 652, 175 L.Ed.2d 482 (2009).
. United States v. Avants, 367 F.3d 433, 449 (5th Cir.2004) (citing United States v. Burton, 324 F.3d 768, 770 (5th Cir.2003)).
. United States v. Gallardo-Trapero, 185 F.3d 307, 317 (5th Cir.1999).
. United States v. Watkins, 591 F.3d 780, 788 (5th Cir.2009) (citing United States v. Casilla, 20 F.3d 600, 603 (5th Cir.1994)).
. United States v. Delgado, 256 F.3d 264, 274 (5th Cir.2001) (citing United States v. Thomas, 120 F.3d 564, 569 (5th Cir.1997)).
. United States v. Martinez-Moncivais, 14 F.3d 1030, 1035 (5th Cir.1994) (quoting United States v. Cruz-Valdez, 773 F.2d 1541, 1547 (11th Cir.1985)).
. See United States v. Quiroz-Hernandez, 48 F.3d 858, 865 (5th Cir.1995).
. United States v. Bueno, 585 F.3d 847, 851 (5th Cir.2009) (citing West v. Nabors Drilling USA, Inc., 330 F.3d 379, 384 (5th Cir.2003)), cert. denied, - U.S. -, 130 S.Ct. 2359, 176 L.Ed.2d 563 (2010).
. United States v. Pennington, 20 F.3d 593, 599 (5th Cir.1994) (quoting Herrera v. Collins, 506 U.S. 390, 402, 113 S.Ct. 853, 122 L.Ed.2d 203 (1993)).
. United States v. Buchanan, 70 F.3d 818, 831 (5th Cir.1996).
. United States v. Beechum, 582 F.2d 898, 911 (5th Cir.1978) (era banc).
. Id.
. Id.
. United States v. Cockrell, 587 F.3d 674, 679 (5th Cir.2009).
. Beechum, 582 F.2d at 911.
. United States v. Crawley, 533 F.3d 349, 355 (5th Cir.2008) (citing United States v. Nguyen, 504 F.3d 561, 574-75 (5th Cir.2007); United States v. Saucedo-Munoz, 307 F.3d 344, 350 (5th Cir.2002)).
. United States v. Jackson, 339 F.3d 349, 356 (5th Cir.2003) (holding that admission of a prior conviction was an abuse of discretion where a defendant denied any involvement and there was substantial evidence of intent).
. United States v. Cisneros-Gutierrez, 517 F.3d 751, 762-63 (5th Cir.2008) (quoting Richardson v. Marsh, 481 U.S. 200, 211, 107 S.Ct. 1702, 95 L.Ed.2d 176 (1987)).
. United States v. Elashyi, 554 F.3d 480, 504 (5th Cir.2008) (quoting United States v. Freeman, 434 F.3d 369, 377 (5th Cir.2005)).
. United States v. Nguyen, 493 F.3d 613, 619 (5th Cir.2007) (quotation omitted).
. United States v. Wofford, 560 F.3d 341, 353 (5th Cir.2009) (citing United States v. Moreno, 185 F.3d 465, 476 (5th Cir.1999)).
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3695265-6967 | ORDER
I.
Introduction
WALLACH, Judge:
On June 3, 2009, Defendant United States (“Defendant”) made an oral Motion for Judgment as a Matter of Law Dismissing Plaintiff Horizon Lines, LLC’s (“Plaintiff’) Cause of Action Contesting the Partial Dutiability of Tug Charges (“Defendant’sMotion”) pursuant to USCIT Rule 52(c). Based upon the following findings of fact and conclusions of law, Defendant’s Motion is GRANTED.
II
Findings of Fact
1. On July 7, 2006, U.S. Customs and Border Protection (“Customs”) in Headquarters Ruling No. W116467 rejected Plaintiff’s argument made in the underlying protest that the tug expenses associated with the dry docking of the CSX HAWAII, a U.S.-flag C6 Class steam vessel, now named HORIZON HAWAII (“HAWAII”) in Lisnave, Mitrena Yard in Setubal, Portugal (“Lisnave”) in 2002 were a single purpose expense incurred for non-dutiable inspections. Customs instead found that the tug towage costs at issue appeared clearly to be a dual purpose expense, in part undertaken due to dutiable vessel repairs and, as such, were dutiable on a pro-rated basis.
2. Plaintiff paid duty in the amount of $11,374.30 on the pro-rated portion of the tug charges set forth in Invoice No. 220-1495/Barwil, Owner’s Ref. No. 1507 for towage related to the HAWAII at Lisnave.
3. Plaintiff’s dry docking specifications for the HAWAII required in addition to the inspections, repair items be dealt with while the vessel was in dry dock.
4. The testimony of Mark Cianci and the uncontested facts showed that the repair work performed pursuant to owner’s reference number “3.1-1” of Lisnave Invoice No. 00174/2002/LISN, for the charge titled “PAINTING PREPARATION” is the type of work customarily performed only when a vessel is in a dry dock and was required to be done during the dry docking according to Plaintiff’s dry dock specifications.
5. The testimony of Mr. Cianci and the uncontested facts showed that the repair work performed pursuant to owner’s reference number “3.1-4a” of Lisnave Invoice No. 00174/2002/LISN, for the charge titled “FLAT BOTTOM” is the type of work customarily performed only when a vessel is in a dry dock and was required to be done during the dry docking according to Plaintiff’s dry dock specifications.
6. The testimony of Mr. Cianci and the uncontested facts showed that the repair work performed pursuant to owner’s reference number “3.1-4b” of Lisnave Invoice No. 00174/2002/LISN, for the charge titled “VERTICAL SIDES” is the type of work customarily performed only when a vessel is in a dry dock and was required to be done during the dry docking according to Plaintiff’s dry dock specifications.
7. The testimony of Mr. Cianci and the uncontested facts showed that the repair work performed pursuant to owner’s reference number “3.1-7” of Lisnave Invoice No. 00174/2002/LISN, for the charge titled “MISCELLANEOUS DRYDOCK PAINTING” is the type of work customarily performed only when a vessel is in a dry dock and was required to be done during the dry docking according to Plaintiff’s dry dock specifications.
8. The testimony of Mr. Cianci and the uncontested facts showed that the repair work performed pursuant to owner’s reference number “3.1-8” of Lisnave Invoice No. 00174/2002/LISN, for the charge titled “CATHODIC PROTECTION SYSTEM ALTERNATIVE A” is the type of work customarily performed only when a vessel is in a dry dock and was required to be done during the dry docking according to Plaintiff’s dry dock specifications.
9. The testimony of Mr. Cianci and the uncontested facts showed that the repair work performed pursuant to owner’s reference number “3.1-11” of Lisnave Invoice No. 00174/2002/LISN, for the charge titled “RUDDER. RUDDER HORN” is the type of work customarily performed only when a vessel is in a dry dock and was required to be done during the dry docking according to Plaintiff’s dry dock specifications.
10. The testimony of Mr. Cianci and the uncontested facts showed that the repair work performed pursuant to owner’s reference number “3.1-13” of Lisnave Invoice No. 00174/2002/LISN, for the charge titled “MAIN SCOOP TO CONDENSER” is the type of work customarily performed only when a vessel is in a dry dock and was required to be done during the dry docking according to Plaintiff’s dry dock specifications.
11. The testimony of Mr. Cianci and the uncontested facts showed that the repair work performed pursuant to owner’s reference number “3.1-14” of Lisnave Invoice No. 00174/2002/LISN, for the charge titled “ROPE GUARD” is the type of work customarily performed only when a vessel is in a dry dock and was required to be done during the dry docking according to Plaintiff’s dry dock specifications.
12. The testimony of Mr. Cianci and the uncontested facts showed that the repair work performed pursuant to owner’s reference number “3.1-16” of Lisnave Invoice No. 00174/2002/LISN, for the charge titled “RUDDER POST GLAND PACKING” is the type of work customarily performed only when a vessel is in a dry dock and was required to be done during the dry docking according to Plaintiff’s dry dock specifications.
13. The testimony of Mr. Cianci and the uncontested facts showed that the repair work performed pursuant to owner’s reference number “3.2-8” of Lisnave Invoice No. 00174/2002/LISN, for the charge titled “STERN TUBE SHAFT SEAL RENEWAL” is the type of work customarily performed only when a vessel is in a dry dock and was required to be done during the dry docking according to Plaintiff’s dry dock specifications.
14. The testimony of Mr. Cianci and the uncontested facts showed that the repair work performed pursuant to owner’s reference number “3.2-33” of Lisnave Invoice No. 00174/2002/LISN, for the charge titled “S.W. SERVICE OVBD HULL PENETRATION RENEWALS” is the type of work customarily performed only when a vessel is in a dry dock and was required to be done during the dry docking according to Plaintiff’s dry dock specifications.
15. The testimony of Mr. Cianci showed that the work performed pursuant to owner’s reference numbers “3.1-1, 3.1-4a, 3.1-4b, 3.1-7, 3.1-8, 3.1-11, 3.1-13, 3.1-14, 3.1-16, 3.2-8, and 3.2-33” of Lisnave Invoice No. 00174/2002/LISN consisted of repair work.
16. Plaintiff conceded in response to a question from the court during argument on Defendant’s USCIT Rule 52(c) motion, that in fact, certain repair work was performed in dry dock which could only have been done in dry dock, while the HAWAII was at Lisnave in 2002.
17. The testimony of Mr. Cianci showed that the tug expenses used to push the HAWAII both on and off the dry dock at Lisnave in 2002 were necessarily incurred to accomplish dutiable repairs.
18. Should any Finding of Fact designated herein, be more properly deemed a Conclusion of Law, it is so designated.
Ill
Conclusions Of Law
1. Under 28 U.S.C. § 2639(a)(1), Customs’ decision is “presumed to be correct” and the “burden of proving otherwise shall rest upon the party challenging such decision.”
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10519621-9425 | WISDOM, Circuit Judge.
This case presents a recurring question in Jones Act disputes: What is a vessel? The plaintiffs-appellants, Robert and Bessie Ducote, argue that the district court erroneously granted the defendants’ motion for summary judgment. The district court held, as a matter of law, that Mr. Ducote is not a seaman because the spud barge on which he worked is not a vessel. Because we find that a reasonable juror could conclude that the spud barge was a vessel, we reverse and remand.
BACKGROUND
On March 23, 1988, Robert Ducote was operating a dragline/crane from the deck of a spud barge located on the Red River near Natchitoches, Louisiana. He was allegedly injured when the crane began to tip over and he was forced to jump out of the cab. Mr. Ducote was driving pilings as part of a piledriving and revetment project being performed for the United States Army Corps of Engineers. Mr. Ducote was hired by either the general contractor, V. Keeler and Company, Inc., or the joint venture of Greg O’Neal and E & B Construction Company, which was supplying all of the labor and equipment.
In August of 1988, Mr. Ducote and his wife brought suit against Keeler and others claiming compensation as a Jones Act seaman or, alternatively, as a maritime worker entitled to damages for vessel negligence under § 5(b) of the Longshore and Harbor Workers’ Compensation Act. In September 1990, after several defendants had been dismissed, Robert Murray Collins, as Representative of Certain Underwriters at Lloyd’s, London, filed a motion for summary judgment. In October 1990, Employers National Insurance Company joined in the motion for summary judgment and a stipulation was entered into between the plaintiffs and the defendants agreeing that the § 5(b) claim was contingent upon a finding that the spud barge was a vessel.
On November 9, 1990, the district court filed its ruling that, as a matter of law, the spud barge was not a vessel. The district court dismissed the claims against the defendants Certain Underwriters at Lloyd’s, London and Employers National Insurance Company. Mr. Ducote filed a notice of appeal to this Court. In March 1991, this court granted a motion to dismiss the appeal as premature. In April 1991, the district court dismissed Houston General Insurance Company as a party-defendant.
The plaintiffs then filed a motion for new trial or rehearing under Rule 59. The district court initially denied the motion as untimely. In July 1991, the district court vacated that denial for good cause shown, and granted reconsideration of its ruling that the spud barge was not a vessel. On reconsideration, the district court, on July 3, 1991, denied the motion for a new trial for the reasons stated in its November 9, 1990, ruling.
Judgment was entered on July 22, 1991, and this appeal was filed on July 29.
DISCUSSION
The Jones Act, 46 U.S.C.App. § 688, provides a cause of action in negligence for “any seaman who shall suffer personal injury in the course of his employment”. A prerequisite to seaman status, and thus to recovery under the Jones Act, is the existence of a vessel. The Jones Act does not define the term “vessel”, and this Court has repeatedly held that the term is incapable of precise definition. Because of this imprecision the question whether a floating structure is a vessel is fact-specific and is usually left to the jury. Furthermore, because of the policy of providing an expansive remedy for seamen, even marginal claims are properly left for jury determination.
This Court has held, however, that summary judgment may be appropriate when there is no evidence from which reasonable persons might draw conflicting inferences on any of the elements of the seaman test. The district court, relying on this Court’s opinion in Ellender v. Kiva Construction & Engineering, Inc. , held that the spud barge on which Mr. Ducote was working was not a vessel as a matter of law. In Ellender we noted that this Court has upheld summary judgments holding that a single construction barge is not a vessel and several barges strapped together to form a floating work platform do not constitute vessels under the Jones Act.
One of the earliest cases to hold that a work platform was not a vessel is Cook v. Belden Concrete Products, Inc. In that case, the work platform was found to be “legally indistinguishable from a floating dry dock which, at least while it is secured to land, is not a vessel for purposes of the Jones Act or general maritime law.” In Bernard v. Binnings Construction Company, Inc., the Court reviewed the line of cases beginning with Cook and found three factors common to the structures involved in those cases:
(1) the structures involved were constructed and used primarily as work platforms; (2) they were moored or otherwise secured at the time of the accident; and (3) although they were capable of movement and were sometime[s] moved across navigable waters in the course of normal operations, any transportation function they performed was merely incidental to their primary purpose of serving as work platforms.
Turning to an analysis of these three factors we find that there is no dispute that the spud barge in question in this case was moored at the time of the accident. Nor is there any dispute that the spud barge was used as a platform to support the drag-line/crane.
The record is almost entirely silent, however, regarding the purpose for which this barge was constructed. As this Court has noted on previous occasions, “[w]e are rarely presented with direct evidence of the subjective purpose motivating the designer or builder of a floating structure.” Therefore we look to whether the structure has features that objectively suggest that one of its primary purposes may be transportation over water. One such objective factor, which is present in this case, is a raked bow. While the mere presence of a raked bow does not mean that the structure is a vessel, it is a piece of evidence from which conflicting inferences could be drawn. This is especially true when, as is the case here, the record does not reveal any evidence establishing that the barge was not constructed to be used as a vessel.
The factor which most distinguishes this case from the Cook line of cases, however, is the third factor: that any transportation function be merely incidental to the work platform function. In analyzing this factor, we are reminded of the admonition in Leonard v. Exxon Corporation “that Cook and now the instant case deviate from the general practice permitting Jones Act issues to be submitted to the jury, and accordingly should be applied restrictively.”
Thus, in Brunet v. Boh Brothers Construction Co., the Court reversed a summary judgment holding that a pile-driving barge that was also used to transport a crane from one jobsite to another was not.a vessel. Similarly, in Sharp v. Johnson Brothers Corp., the Court reversed a summary judgment holding that two spud barges used as pile-driving barges, and two ordinary flat deck barges, were not vessels. In both Brunet and Sharp the Court found that the jury was entitled to decide whether the transportation function these barges provided was merely incidental to their function as work platforms because the barges were used to transport the cranes from one jobsite to another and because the barges were moved considerable distances during the course of the current job.
The record does not disclose whether the spud barge in this case was intended to be used to transport the dragline/crane from one job to another. Nor had it yet been moved any considerable distance during the course of this project. The scope of the project, however, called for the spud barge to be moved approximately five miles along the bank of the Red River. This planned movement distinguishes this spud barge from the structures in the Cook line of cases. In all of those cases, the most significant movement of the structure was its initial movement to the job site. Once the platforms were brought to the work site, they were either not moved at all or were moved a few feet either to accommodate the tides or to reposition slightly. Such a small amount of movement does not destroy the analogy to dry docks, which are basically stationary.
In this case, however, the planned extensive movement is a factor that would support a jury finding that the transportation function of the spud barge was more than incidental to the use of the barge as a work platform.
The summary judgment of the district court is REVERSED and the case is REMANDED for proceedings consistent with this opinion.
. Through supplemental and amending petitions Mr. Ducote named as additional defendants: Houston General Insurance Company, which provided to Keeler a policy of worker’s compensation and employer’s liability insurance with a maritime coverage endorsement; Certain Underwriters at Lloyd’s, London, which provided to Keeler excess maritime employer's liability coverage; Employers National Insurance Company, which provided to Keeler comprehensive general liability coverage; O’Neal Brothers Company, Inc., Greg O’Neal, and E & B Construction Company, as alleged employers; American General Companies and Commercial Union Insurance Company, as insurers of O’Neal Brothers; Big Oak Towing, which provided the tug that moved the barge; and Mc-Donough Marine Service (Marmac), which allegedly owns the barge.
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4158814-15874 | MEMORANDUM OPINION
OREN HARRIS, Senior District Judge.
This is an action filed by plaintiff, Marion Hickingbottom, against the President and Board of Trustees of Phillips County Community College, individually and in their representative capacities, alleging that his employment as an instructor was wrongfully terminated in violation of his right of freedom of speech guaranteed by the First and Fourteenth Amendments to the Constitution and by 42 U.S.C. § 1983. Jurisdiction of the Court is alleged on the basis of 28 U.S.C. § 1331, 28 U.S.C. § 1343, 28 U.S.C. §§ 2201 and 2202, and 42 U.S.C. § 1983.
Defendants deny that the plaintiff was unlawfully terminated as a professor. The defendants also state that if any act allegedly committed by them, which is expressly denied, was committed, such act was in their official capacities and that they are immune from liability for damages arising from conduct while in their official capacity-
Pursuant to regular setting, the matter was tried to the Court, without the intervention of a jury, with the consent of all parties and waiver of right to trial by jury. The Court heard and received evidence from plaintiff, present in person and represented by Hon. Charles B. Roscopf and Hon. Wooten Epes, Jr., and from defendants, represented by Hon. Jimason Daggett. The parties rested and the matter was taken under advisement pending receipt of briefs of counsel. All briefs have now been received and the matter submitted for determination.
The Court, in consideration of the pleadings, testimony, exhibits, and the entire record, and after careful review of the briefs and authorities presented by counsel, makes the following findings of fact and conclusions of law, which are incorporated herein pursuant to Rule 52, Federal Rules of Civil Procedure:
Plaintiff was a resident citizen of the United States and the State of Arkansas at the time of filing of this suit. Defendants are alleged to have acted as to the allegations of the complaint in their individual and official capacities as President and Board of Trustees of Phillips County Community College, a state institution of higher learning created and existing under the laws of the State of Arkansas. The Court finds that a cause of action has been stated pursuant to the First and Fourteenth Amendments, 42 U.S.C. § 1983, and that jurisdiction exists pursuant to 28 U.S.C. §§ 1331 and 1343. The Complaint states a cause of action for deprivation of rights protected by the Constitution and Laws of the United States to plaintiff by defendants under color of law while in the performance of their duties pursuant to the laws of the State of Arkansas. 42 U.S.C. § 1983.
The basic evidentiary facts are virtually without dispute. Plaintiff was employed as a professor of social sciences in 1966 and since 1968 he had served as chairman of the Social Sciences Department. He received nine one-year renewals of his contract through the academic year 1975-1976. The plaintiff did not have tenure.
For the academic years 1974-1975 and 1975-1976 the College had a faculty evaluation procedure which was conducted by the Dean of the College. Plaintiff received excellent ratings on both of these evaluations.
In the Spring of 1975, Louis Ruman a professor in the Department of Social Sciences, made a complaint to federal authorities that the College was violating the conditions of an L.E.A.A. Grant. The complaint resulted in an investigation by the F.B.I. and, during December 1975, an F.B.I. agent interviewed President Easley and Chairman of the Board, Gene Raff, about the L.E.A.A. Grant violations. As a result of the F.B.I. investigation, the College was required to refund to the Government the sum of $4,880.17.
At the meeting of the Board of Trustees on December 11, 1975, Chairman Raff inquired of President Easley if something could not be done to stop the letter writing by the College Faculty and Staff. President Easley suggested enforcement of an established policy which he designated as the Line Authority Policy. The policy was not reduced to writing and circulated to the Faculty. However, President Easley informed the faculty of the F.B.I. investigation and demanded that they follow the chain of command before writing any letters concerning college problems, at the faculty meeting held on January 7, 1976. Plaintiff was present at this faculty meeting. President Easley stated that the chain of command was Division Chairman, Dean of the College, President and Board of Trustees.
On February 20,1976, plaintiff wrote the following letter to the Arkansas Department of Finance and Administration:
“February 20, 1976
Mr. Ragland
Motor Vehicle Division
Department of Finance of Finance and Administration
Little Rock, Arkansas
Dear Mr. Ragland:
I wish to call to your attention a violation of the use of Dealer Tags. In Helena the Ritchey Buick, Pontiac, GMC, Inc. has leased two cars to Phillips County Community College and both carry dealer tags. This has been the practice for several years. These are commercial leases and are paid by the state. This practice not only evades sales tax and tag fees but local assessment as well.
Your investigation and correction of this matter would be appreciated. I also con sider this to be a confidential communication and will expect my confidentiality to be maintained.
Sincerely yours,
Marion L. Hickingbottom
620 St. Regis
West Helena, Ark. 72390”
These cars had been furnished to President Easley and his wife, who was also a faculty member, by the Board to increase their compensation, as they were receiving the maximum salaries allowed by law.
On February 24,1976, at a meeting of the Division Chairmen, at which plaintiff was present, President Easley again strongly reiterated the policy of going through channels first before reporting to other sources. He also made it abundantly clear that any member of the faculty who failed to comply with this procedure would be subject to dismissal. The Division Chairmen were directed to tell all of the members of their respective departments about the policy, but the policy was not reduced to writing and circulated among the faculty members.
On March 8, 1976, Lt. Charles Logan of the Arkansas State Police came to the College to investigate plaintiff’s complaint. While conversing with the officer about where he could locate plaintiff, President Easley learned of the contents of letter by reading it over the officer’s shoulder. Lt. Logan was directed to plaintiff’s office and inquired if plaintiff had written the letter to the Department of Finance and Administration. Plaintiff acknowledged that he had written the letter. The officer informed him that he wanted to let plaintiff know that the investigation was underway. As a result of the investigation, the cars leased to the College were subsequently properly licensed.
On March 9, 1976, within 24 hours of Lt. Logan’s visit, plaintiff was summoned to President Easley’s office where he was questioned about writing the letter to the Department of Finance and Administration, and plaintiff was also asked if he had written the letter to the federal authorities about the L.E.A.A. grant. Plaintiff admitted writing the letter to the Department of Finance and Administration, but denied writing the other letter. President Easley was visibly disturbed and angry, and the confrontation ended with a demand for plaintiff’s resignation. Plaintiff refused to resign and employed counsel, who called President Easley and requested that plaintiff be afforded his procedural rights if disciplinary action was taken.
On April 2, 1976, President Easley wrote to Plaintiff and informed him that he intended to recommend to the Board that plaintiff’s contract not be renewed for the following school year. Dr. Easley stated that he was doing this because plaintiff had been uncooperative with him and his staff, plaintiff was not maintaining the proper relationship with his students, and he had followed disruptive procedures designed to harm the College.
There was considerable correspondence between counsel for plaintiff and counsel for the Board about the exact nature of the charges against plaintiff over the next month. In a letter dated April 29, 1976, counsel for the defendants stated that plaintiff was being discharged because of violating the Line Authority Policy, which he set out in detail.
The Board of Trustees for the College held a hearing on May 10, 1976, to consider President Easley’s recommendation that plaintiff’s contract not be renewed. President Easley testified that plaintiff’s failure to seek a solution to the problem through internal channels before writing the letter to the Department of Finance and Administration was the basis for his recommendation. After the hearing the Board voted unanimously to accept President Easley’s recommendation not to rehire plaintiff.
As the result of the nonrenewal of his appointment at Phillips County Community College, Hickingbottom was not able to obtain comparable teaching positions at other schools, although he made several applications. He did obtain a job as Headmaster of Jefferson Christian Academy, a private elementary and secondary school. In 1978, after completing the 1977-1978 school year, plaintiff went into the construction business and no longer sought to obtain comparable employment. Since entering the construction business, plaintiff has failed to stay current with the developments in his field.
A non-tenured faculty member has no right to continued employment beyond the duration and terms of his contract. The College is free not to rehire him for good reasons or for poor reasons or even “for no reason whatever.” Cooper v. Ross, 472 F.Supp. 802 (E.D.Ark.1979); Mt Healthy City School District Board of Education v. Doyle, 429 U.S. 274, 283, 97 S.Ct. 568, 574, 50 L.Ed.2d 471 (1971). However, the decision not to rehire may not be predicated on the teacher’s exercise of the constitutionally protected right of the First Amendment guarantee of freedom of speech which was made applicable to the states by the Fourteenth Amendment. Cooper v. Ross, supra; Mt. Healthy City School District Board of Education v. Doyle, supra; Perry v. Sindermann, 408 U.S. 593, 92 S.Ct. 2694, 33 L.Ed.2d 570 (1972); Keyishian v. Board of Regents, 385 U.S. 589, 87 S.Ct. 685, 17 L.Ed.2d 629 (1969); Shelton v. Tucker, 364 U.S. 479, 81 S.Ct. 247, 5 L.Ed.2d 231 (1960).
When a non-tenured teacher alleges that he was not rehired in violation of his First Amendment rights, he bears the initial burden of establishing that his conduct was constitutionally protected and that this protected conduct was a “substantial factor” or a “motivating factor” in the college’s decision not to reappoint him. If this burden is sustained, then the college has the burden of showing by a preponderance of the evidence that it would have reached the same decision even in the absence of the protected conduct. Mt. Healthy City School District Board of Education, supra.
The United States Supreme Court in Pickering v. Board of Education, 391 U.S. 563, 574, 88 S.Ct. 1731, 1737, 20 L.Ed.2d 811 (1968), held that, absent proof of false statements knowingly or recklessly made by him, a teacher’s exercise of his right to speak on issues of public importance may not furnish the basis for his dismissal from public employment.
As in Pickering v. Board of Education, supra, plaintiff’s statements involved matters of public concern. Certainly, the potential violation of the law should always be a matter of public concern. It is the duty of everyone to assist in the detection of crime; and if he knows facts that tend to show that a crime has been committed, it is not only proper, but it is his duty to communicate them to the proper officer. Miller v. Nuckolls, 77 Ark. 64, 72, 91 S.W. 759 (1905); In Re Quarles and Butler, Petitioners, 158 U.S. 532, 535, 15 S.Ct. 959, 960, 39 L.Ed. 1080 (1895); Swaaley v. U. S., 376 F.2d 857, 180 Ct.Cl. 1 (1967); Williams v. Allen, 439 F.2d 1398 (5th Cir. 1971).
The Court is persuaded and concludes that the writing of the letter was a substantial or motivating factor in the decision not to reappoint Hickingbottom. Several factors point to this conclusion, including the timing of the nonrenewal decision; the fact that in 1974 and 1975 he was rated as an outstanding instructor, did a good job as department chairman, and had been recommended for continued employment; that Dr. Easley admitted that he probably would have recommended reemployment of plaintiff but for this incident, even though there had been differences and he had some reservations; that Dr. Easley admitted he became very upset upon reading the letter; and that Dr. Easley admitted that the writing of the letter was a motivating factor in the dismissal of plaintiff.
Plaintiff having established that the protected activity was a substantial or motivating factor in his dismissal, and defendants admitting that plaintiff had established a prima facie case, the burden shifted to the College to show by a preponderance of the evidence that it would have reached the same decision, even in the absence of the protected conduct. Mt. Healthy City School District Board of Education v. Doyle, supra.
The College contends that Hickingbottom was not rehired because he failed to follow the Line Authority Policy which required him to “check his information for accuracy” before submitting his letter to the Depart ment of Finance and Administration. The defendants assert that the policy is reasonable and supported by Pickering v. Board of Education, supra, wherein the Court states:
“We are thus not presented with a situation in which a teacher has carelessly made false statements about matters so closely related to the day-to-day operation of the schools that any harmful impact on the public would be difficult to counter because of the teacher’s presumed greater access to the real facts. Accordingly, we have no occasion to consider at this time whether under such circumstances a school board could reasonably require that a teacher make substantial efforts to verify the accuracy of his charges before publishing them.” 391 U.S. at 572, 88 S.Ct. at 1736.
In footnote 4, which immediately follows this quotation the Court states:
“There is likewise no occasion furnished by this case for consideration of the extent to which teachers can be required by narrowly drawn grievance procedures to submit complaints about the operation of the schools to their superiors for action thereon prior to bringing the complaints before the public.” 391 U.S. at 572, 88 S.Ct. at 1736.
On this particular point, Justice White, in a footnote to his separate opinion states:
“The Court does not elaborate upon its suggestion that there may be situations in which, with reference to certain areas of public comment, a teacher may have special obligations to his superiors. It simply holds that in this case, with respect to the particular public comment made by Pickering, he is more like a member of the general public and, apparently, too remote from the school board to require placing him in any special category. Further, as I read the Court’s opinion, it does not foreclose the possibility that under the First Amendment a school system may have an enforceable rule applicable to teachers, that public statements about school business must first be submitted to the authorities to check for accuracy.” 391 U.S. at 582 and 583, 88 S.Ct. at 1742.
The last sentence quoted above is a separate opinion of Mr. Justice White and is not a part of the opinion reached by the majority of the Court. To the extent that the separate opinion is applicable to this case it is noted there was not a written policy established by the Board, but a pronouncement of a policy by President Easley as a result of a previous incident by another teacher.
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1974837-20828 | BARNES, Circuit Judge.
Appellant was convicted by a jury of violating 18 U.S.C. § 2421, which prohibits knowingly transporting a woman in interstate commerce for prostitution or any other immoral purpose. A new trial was denied appellant, and he was sentenced to three and one-half years imprisonment.
Transportation of the seventeen year old complaining witness in an auto owned by defendant from Texas to California was freely admitted by defendant. The two were accompanied on the trip by the defendant’s wife. The latter was a prostitute, known to be such by defendant before he married her, and to his knowledge, engaged in that profession at the Dixie Hotel in Beaumont, Texas, when defendant first met the complaining witness in Dallas, Texas.
The fact that the complaining witness engaged in prostitution immediately after her arrival jointly with defendant and his wife, in California, is likewise undisputed. Whether or not the complaining witness and the defendant engaged in immoral acts on the trip to, and after arrival within, California is disputed.
Because of this undisputed testimony, much of it given by defendant himself, the sole issue remaining for solution was the intent of defendant — did he have the intent, purpose and motive in bringing the complaining witness to California to have her engage in immoral practices? This, of course, was an essential constituent element of the offense charged. Dunn v. United States, 10 Cir., 1951, 190 F.2d 496. It is not necessary that such intent be the sole and single purpose of the transportation, if such purpose and intent was one of the reasons for the transportation. Masse v. United States, 5 Cir., 1954, 210 F.2d 418, certiorari denied 347 U.S. 962, 74 S.Ct. 711, 98 L.Ed. 1105.
It was defendant’s position that he was the innocent victim of the complaining witness, that he had merely aided her to come to California from Texas to visit friends. According to defendant’s trial counsel, “the girl herself duped the defendant as a professional prostitute and tried to lure him into an entrapment * * * to get out of some troubles of her own.”
Such a defense when urged, caused the trial court to express surprise. “Do you mean to say,” said the trial judge “that this defendant here is an innocent individual that has been duped by this young girl ?” This, and other statements of the trial court, will be considered later.
With respect to the conflicting stories told by the principals as to the defendant’s purpose and intent, it is sufficient to state that they presented a question of fact to be passed upon by the jury at the time of trial, and by the trial judge on the motion for new trial. Such a determination of fact is binding on this Court unless clearly erroneous. Bryson v. United States, 9 Cir., 1956, 238 F.2d 657, 662, certiorari denied 355 U.S. 817, 78 S.Ct. 20, 2 L.Ed.2d 34; Hutson v. United States, 9 Cir., 1956, 238 F.2d 167, 170; Adolfson v. United States, 9 Cir., 1947, 159 F.2d 883, certiorari denied 331 U.S. 818, 67 S.Ct. 1307, 91 L.Ed. 1836. Cf., Fed.R.Civ.P. 52(a), 28 U.S.C.A. We need do no more than to recite some of the more important undisputed facts to conclude that they, together with the logical inferences to be drawn therefrom, clearly justified the verdict of guilty.
This appeal originally presented to this Court two briefs for appellant; one presented by defendant in pro. per. and one by his counsel. We postponed the hearing of this appeal at defendant’s suggestion until we were certain that the defendant was properly represented by counsel of his choice and was satisfied with that representation and satisfied to have such counsel proceed with the appeal.
On this appeal three principal matters are urged:
(1) Misconduct of the trial court in making comments prejudicial to defendant.
(2) Error in the admission of evidence.
(3) Error in denial of defendant’s motion to require the production of certain “make-sheets” by the prosecution.
(4) Defendant points out some twenty-two places in the transcript where the court made some ruling, statement, or comment, indicating that the defendant’s counsel was unduly prolonging his examination of witnesses or that he was harassing witnesses, or impugning the ability or integrity of defense counsel, or expressing “undue solicitude” for the prosecutrix, emphasizing the probability of her testimony, or that defense counsel was obtaining some personal satisfaction from requiring the witness to relate details concerning sexual acts.
Prom the record it appears obvious that the trial court resented defense counsel’s trial tactics. He so expressed himself outside of the presence of the jury, and strongly implied it within the presence of the jury. But he also did two things of extreme importance: (1) He advised the jury on several occasions that his rulings and comments, if they raised any reflections on what was occurring in the courtroom, were reflections cast on defendant’s counsel alone, not on defendant. Shockley v. United States, 9 Cir., 1948, 166 F.2d 704, 711-712. (2) The court refused to restrict defendant’s counsel’s cross-examination, either of the complaining witness, or of any other witness, in the slightest degree. He so ruled favorably to defend ant despite his incredulity expressed as to the theory underlying the defense. He ruled in defendant’s favor, on government’s objections, far more often than he ruled against defendant. He did this despite conduct and statements on the part of defendant’s counsel that verged upon, if they did not reach, impropriety.
The government might well have objected to the wide latitude the trial court permitted the defense counsel. While we cannot approve, as good judicial practice, all statements made by the trial judge, we find under the circumstances no clearly prejudicial error which affected defendant’s right to a fair trial. Cf., D’Aquino v. United States, 9 Cir., 1951, 192 F.2d 338, 367, certiorari denied 343 U.S. 935, 72 S.Ct. 772, 96 L.Ed. 1343.
For a further important reason defendant cannot here complain. No objection was made to twenty of the twenty-two presently alleged errors. One of these alleged errors took place outside of the jury’s presence. On three occasions defense counsel moved for a mistrial, once outside the presence of the jury.
Two of the three motions for a mistrial are quoted in full herein (n. 5, 6, supra). The third motion was made in chambers subsequent to the question hereinbefore quoted expressing surprise, made in open court by the trial judge, as to defense counsel’s theory of the case. It came after defense counsel had said:
“I should be permitted to show that the state of mind of the defendant was totally innocent throughout. This girl herself duped the defendant as a professional prostitute and tried to lure him into an entrapment in this very court on these grounds to get out of some trouble of her own.
“The Court: Do you mean to say that this defendant here is an innocent individual that has been duped by this young girl?
******
“Go ahead if that is your presumption.”
Granted that this question might well have been left unasked in the presence of the jury, it still remained a question as to a legal theory. It was no comment on the evidence, or the credibility of any witness, nor on the credibility of the defendant, nor of his guilt or innocence of the crime with which he was charged. It was followed by a ruling which permitted defense counsel the widest latitude in attempting to establish the validity of his theory of defense.
Merely because a statement is made or question asked by court or counsel in the heat of a spirited trial which subsequently in the cool ivory tower of appellate court chambers seems inappropriate, does not make the stating nor the asking prejudicial error. Brown v. United States, 9 Cir., 1955, 222 F.2d 293, 297-298; D’Aquino v. United States, supra; Pacman v. United States, 9 Cir., 1944, 144 F.2d 562, certiorari denied 323 U.S. 786, 65 S.Ct. 278, 89 L.Ed. 627; Lewis v. United States, 6 Cir., 1926, 11 F.2d 745, 747.
In a careful review of the whole record, we can find no prejudicial error created by any action of the trial court.
We come to appellant’s second charged error — the introduction of testimony that defendant had made an extrajudicial admission he was a pimp.
On direct examination, defendant admitted over two hundred arrests in Texas in four years; eight “charges” and two convictions. On cross examination and without objection, defendant admitted that he “had had something to do with prostitution prior to 1954.” On redirect examination by his own counsel he stated he had been “associated in this business” of prostitution, but “did not continue the business or associate in it” after his marriage in 1954. It was then that the girl later to become his wife was engaged in prostitution.
When defense objections, on the ground of immateriality for impeachment purposes were overruled to the question as to whether defendant had admitted to an F.B.I. agent he had once been a pimp, he stated he might have said so.
There is no question but that there exists a general rule that evidence of appellant’s previous misconduct or other criminal acts is inadmissible. Benton v. United States, 4 Cir., 1956, 233 F.2d 491.
One well recognized exception is that proof of a prior conviction of a felony is admissible to impeach a witness’ credibility. Meeks v. United States, 9 Cir., 1947, 163 F.2d 598; NLRB v. Baldwin Locomotive Works, 3 Cir., 1942, 128 F.2d 39, 46. See, McCormick, Evidence § 43 (1954). But no such question was here asked.
A second exception is to show intent, design, scheme, motive or knowledge. United States v. Iacullo, 7 Cir., 1955, 226 F.2d 788, certiorari denied 350 U.S. 966, 76 S.Ct. 435, 100 L.Ed. 839. See, McCormick, Evidence § 157 (1954).
Here we must keep in mind the transportation from one state to another was an admitted fact; the immoral acts and commercialized vice of the witness after the trip were admitted; and the sole issue, by defendant’s own theory, was whether defendant transported the prosecutrix for an immoral purpose knowingly, i e., what was his intent?
“When an act is equivocal in its nature, and may be criminal or honest according to the intent with which it is done, then other acts of the defendant, and his conduct on other occasions, may be shown in order to disclose the mastering purpose of the alleged criminal act.” 1 Wharton, Criminal Evidence § 237, pp. 523-24 (12th ed., 1955); Lawrence v. United States, 9 Cir., 1947, 162 F.2d 156; Tedesco v. United States, 9 Cir., 1941, 118 F.2d 737.
Defendant also objects to the rebuttal testimony of the witness Stewart that the defendant had stated to him that he (the defendant) had previously been a pimp. If the cross-examination on the subject, and defendant’s own' testimony, were proper, as we have held, the rebuttal likewise was proper as possible impeachment. The defendant had refused to admit categorically or deny the alleged statement, merely saying he “might have said it” to Stewart.
Appellant’s third point is that the court erred in refusing to require the government to produce “make sheets” of the prosecutrix, allegedly in the government’s file. Neither the transcript at the trial nor the argument contained in the brief on appeal gives the matter sufficient substance to require us to do more than to say no error existed with respect thereto.
Affirmed.
. The defendant testified that he saw the complaining witness four times socially before he took her to the hotel in Beaumont whore his wife worked at her profession. Defendant likewise testified ho told the complaining witness Ms wife was a prostitute in his first conversation with the complaining witness. Having previously been convicted of a crime in Texas, and having been arrested in Texas over two hundred times from 1950 to 1953, defendant, at these first meetings, told the complaining witness he would go to California with her, but only if his wife went along. According to defendant, the complaining witness said she wanted to be a prostitute, whereupon he said: “You are not going to involve me.”
However, the complaining witness went to Beaumont, Texas, to enter a house of prostitution. She testified the defendant took her there by plane. He denied this. But he went to Beaumont, to the hotel where his wife and the complaining witness were both working their profession. From Beaumont, the three went to Houston where the three occupied one bedroom. The three did the same in Dallas, Texas, and on the trip west. On these occasions the defendant had sexual relations with the complaining witness. He admitted such relations, but did not recall if it had occurred more than once.
When the trio arrived in California, the defendant’s wife entered a house of prostitution. The complaining witness went to the Alhambra Hotel in San Pedro, the same house of prostitution in which defendant’s wife had formerly been an inmate. The defendant twice took clothes to the complaining witness at this house of prostitution. After the complaining witness left the Alhambra Hotel, the defendant picked up her clothes at the Alhambra Hotel.
Prior to 1954 the defendant testified he had been connected with prostitution, was associated with it, and “might have” told the F.B.I. agent he was a “pimp.”
We have considered principally herein-above the defendant’s testimony. It proves a strong circumstantial case against defendant. But the evidence of other witnesses was corroborative.
(1) A special agent for the F.B.I. testified the defendant told him he had been a pimp, “using that particular word.” This defendant had denied.
(2) A friend and associate of the defendant’s testified defendant had received $50 from defendant’s wife by telegraph; that defendant had arranged for his wife to send $50 through the friend to defendant so defendant wouldn’t get into trouble taking a prostitute’s earnings. Defendant denied this.
(3) The testimony of the complaining witness alone if believed was sufficient to convict defendant. She testified at length and was subjected to a gruelling cross-examination. She told a convincing story of being introduced into the oldest profession. It was: The defendant took her by plane from Dallas to Houston to Beaumont. There he took her in a cab to the Beaumont Hotel. From there she took a cab, and he followed in another cab to the Hotel Dixie. She followed his instructions to enter the hotel by the rear stairway. She stayed there between two and three weeks where she acted as a prostitute. The defendant and the madam, a Mrs. Ainsworth, discussed at the hotel where the complaining witness worked her costume and personal hygiene. She left the hotel with defendant’s wife who had likewise been acting as a prostitute at the same hotel, and they met the defendant at a drive-in. In Texas, and on the trip west, the three strange pilgrims slept in one bed at night, as they did in Long Beach on arrival. The defendant engaged in sexual relations with both his wife and the complaining witness.
After the first night in Long Beach, the defendant took the complaining witness to a San Pedro Hotel where she engaged in acts of prostitution. For this she received fifty per cent of the money earned and gave it to the defendant when he came to the hotel to get it. To that house of prostitution defendant took her clothes.
. Not the same counsel on appeal as he who represented defendant below.
. As contained in a letter to this Court dated February 17, 1959.
. This Court received directly from defendant copy of a letter sent by defendant to his attorney, dated March 16, 1959, which stated in part, “I would be proud for you to argue the appeal on my behalf.”
. As an example, the following:
“The Court: Counsel, every question you ask this girl surprises me that she hasn’t broken down before under the very humiliating situation we have here.
“Mr. Graves: I assign Ms Honor’s comments as misconduct and request withdrawal of the jury.
“The Court: Motion will be denied. But as I heretofore indicated to counsel, I have felt right along that counsel is trying to do his best to bait me into committing an error, and I probably have made some in the interest of justice.
“However, any statements that I made to counsel are not in any way to be considered by the jury as any evidence or in any way as any reflection upon the defendant whatsoever. If there is any reflection it is directed toward counsel.
“Mr. Graves: At this time I assign his Honor’s comment as misconduct and request for a dismissal and withdrawal of the jury.
“The Court: The motion is denied.”
. As an example, the following:
“The Court: Now, counsel, just a moment. I think we have proceeded far enough along this line. This witness is not on trial.
“Mr. Graves: If the court please, this tends to go to the credibility of the witness.
“The Court: You have taken an hour in trying to establish the credibility of the witness. * * * If you can’t establish it in that time you can’t do it all week.
“Mr. Graves: Is the court telling mo that I should conclude the cross examination?
“The Court: No, but I am telling you that you are doing your best to try to embarrass the witness who, according to her own statement, has seen the error of her way and you are doing your best to embarrass lier, and I think it is the duty of the court to protect her somewhat.
“Mr. Graves: I understand your Hon- or’s position, but however, may I call your Honor’s attention to this fact. This girl testified that she was a prostitute and came across a state line with this defendant to be a prostitute. 1 am trying to test her credibility and show in fact she is a liar and that she is in fact — may I finish, your Honor, — that she was not a novice to the game and that she in fact was not the innocent girl that she says she was when she walked into the Beaumont Hotel and I think that is within reasonable grounds of cross examination.
“Mr. Jensen: If the court please — ■
“The Court: Just a moment, I will take care of that. It doesn’t make any difference if she is the lowest person on earth if she was transported across the state lino into California from Texas in violation of this statute and as set forth in the indictment. And the party who transported her knowing that, knowingly, is just as guilty as if she was as innocent as the day she was born.
“Mr. Graves: Correct, and I absolutely agree. If this gentleman knew she was a prostituto and transported her across the state line for the purpose of prostitution he stands convicted in this courtroom.
“My position is that this girl has made up a whole story and part of that story is that ho said to her, T am transporting you across a state line for the purpose of prostitution.’
“The Court: You have been asking her about the most delicate things you can ask a woman.
“Mr. Graves: Yes, your Honor. I want to show the whole story.
“The Court: You may get a certain amount of personal satisfaction out of asking those questions but it doesn’t tend to prove or disprove anything in this case.
“The Witness: Your Honor, how can—
“Mr. Graves: If your Honor please, I am going to assign your last statement as misconduct on the part of the court and move for a withdrawal of the jury at this time.
“The Court: The court will deny the motion and I will repeat it if necessary.
“Mr. Graves: I assign those remarks as misconduct and request the court to withdraw the jury and in the alternative to instruct the jury to disregard those remarks.
“The Court: You are not on trial; the defendant is on trial.
“Mr. Graves: That is what I thought but I am in doubt of that now.
“The Court: You have a delicate situation and you are trying your best to go just as far into the details of some of the most private affairs of people.
“Mr. Graves: I am trying to show this girl’s credibility isn’t worth two cents, your Honor. The whole story is a lie. That is my position.
“The Court: Well, that is a question for the jury to determine but we are not going on three days for you to determine that.
“Mr. Graves: May I be permitted to have a reasonable latitude to go into that?
“The Court: Certainly, but you have been asking questions about so-called tricks and how they perform them and all that. None of us are interested. Most of us are too old to be interested.”
. “Q. By Mr. Jensen: I am asking you whether or not in November of 1955 you went to the local offices of the FBI here in Los Angeles and in substance or effect told this man who is now standing that you had prior to that interview been a pimp. A. In the State of California?
“Q. No, just a pimp. Did you make such a statement? A. Prior to 1954? Pardon me, I have been associated in that business.
“Q. Did you say in substance or effect that you had been a pimp? A. I may have.”
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10514154-16412 | OPINION
SPROUSE, Senior Circuit Judge:
Executive Business Media, Inc. (EBM) brought this action against the Defense Commissary Agency (DeCA), Downey Communications, Inc., and others under 5 U.S.C. § 702 seeking injunctive and declaratory relief based on an allegedly unlawful government contract awarded to Downey in a settlement agreement. The district court granted summary judgment against EBM, concluding that the settlement agreement between DeCA and Downey was not subject to judicial review because it was executed by the Department of Justice (DOJ) under the Attorney General’s litigation authority and discretion. See 28 U.S.C. §§ 516, 519. In our view, the district court erred in holding the settlement agreement was not reviewable. We, therefore, reverse and remand.
I
DeCA, an agency within the Department of Defense (DoD), manages military commissaries throughout the world. One of its functions is to issue publications for its commissaries. In 1983, Congress’ Joint Committee on Printing granted DoD a “limited waiver” from printing regulations requiring the Government Printing Office to do all agency printing. The waiver permitted the DoD to award contracts for printing and publishing of civilian enterprise (CE) publications through a competitive bidding process. The waiver required the DoD to promulgate regulations governing CE publications to ensure that it “receive[d] the best possible arrangement for the production of such publications through competitive procedures.” See 32 C.F.R. § 247 et seq.
In 1991, DeCA decided to accept competitive bids to publish an internal employee newspaper entitled Vision, a bi-monthly with a magazine format containing articles of current interest to be distributed at commissaries worldwide. Both EBM and Downey competed for the Vision contract. The successful bidder would gain profits from advertisements placed in Vision by companies selling to commissaries, military personnel, and civilian employees on military bases.
Downey won the contract. Shortly thereafter, a dispute arose between Downey and DeCA over Downey’s efforts to solicit advertisers for Vision. Downey had advised potential advertisers that DeCA closely monitored advertisers in Vision, arguably implying that they would receive preferential treatment from DeCA’s commissary management by advertising in Vision. Disapproving of these tactics, DeCA refused to approve the final Vision contract.
Downey sued DeCA in the United States Court of Claims. By letter dated September 24, 1991, however, Downey offered to dismiss its suit if DeCA would modify the original Vision contract to provide for publication by Downey of a DeCA Guidebook — an annual telephone and fact directory — from 1992— 1994, with an option for 1995. The DOJ, representing DeCA in its litigation, accepted Downey’s offer, and the parties entered into a settlement agreement effectuating this agreement. EBM then brought this action asking for an injunction and a declaration that the contract was void for, inter alia, failure to comply with competitive bidding procedures.
After a preliminary hearing, the district court declined to order injunctive relief. Subsequently, the court granted summary judgment to the defendants, holding that the Attorney General had plenary discretion to settle the Downey litigation under 28 U.S.C. § 516 and § 519 and that the settlement terms, therefore, were not judicially reviewable. Although EBM presented several issues for determination, this was the sole principle of law decided by the district court.
We reverse on that principle and remand for the district court to resolve remaining issues in the first instance.
II
We agree that the Attorney General has broad discretion and even plenary authority to control litigation under 28 U.S.C. §§ 516 and 519, and that such decisions are not judicially reviewable. We disagree, however, with the government’s assertion that this authority empowers the Attorney General to engage in or authorize unlawful acts. Section 516 provides:
Except as otherwise authorized by law, the conduct of litigation in which the United States, an agency, or officer thereof is a party, or is interested, and securing evidence therefor, is reserved to officers of the Department of Justice, under the direction of the Attorney General.
Section 519 provides:
Except as otherwise authorized by law, the Attorney General shall supervise all litigation to which the United States, an agency, or officer thereof is a party, and shall direct all United States attorneys, assistant United States attorneys, and special attorneys appointed under section 543 of this title in the discharge of their respective duties.
In addition, Section 5 of Executive Order No. 6166 (June 10, 1933), reprinted in 5 U.S.C. § 901 note, provides in part:
As to any case referred to the Department of Justice for prosecution or defense in the courts, the function of decision whether and in what manner to prosecute, or to defend, or to compromise, or to appeal, or to abandon prosecution or defense, now exercised by any agency or officer, is transferred to the Department of Justice.
The government cites a host of cases holding that the Attorney General’s statutory and executive authority is plenary. See, e.g., Confiscation Cases, 74 U.S. (7 Wall.) 454, 458-59, 19 L.Ed. 196 (1868); United States v. Newport News Shipbuilding & Dry Dock Co., 571 F.2d 1283, 1286-87 (4th Cir.), cert. denied, 439 U.S. 875, 99 S.Ct. 212, 58 L.Ed.2d 189 (1978). We have no quarrel with that conclusion from our cases. We are of the view, however, that plenary power means absolute authority to pursue legitimate objectives and does not include license to agree to settlement terms that would violate the civil laws governing the agency. Even the government concedes that the Attorney General’s settlement is not “boundless” and can be diminished by “a clear and unambiguous directive from Congress.” United States v. Hercules, Inc., 961 F.2d 796, 798 (8th Cir.1992). Short of that, it argues that the Attorney General in settling or otherwise conducting litigation is free to violate laws governing agency conduct. In our view, however, the Attorney General in representing a government agency is bound by the same laws that control the agency.
The government cites the DOJ Office of Legal Counsel’s opinion discussing the interplay between Article II, § 3 of the Constitution (executive’s duty to “take Care that the Laws be faithfully executed”) and the Attorney General’s plenary settlement authority, stating that
it is reasonably clear that the Attorney General — in the exercise of his settlement responsibilities — is not bound by each and every statutory limitation and procedural requirement that Congress may have specifically imposed upon some other agency head in the administration of that agency’s programs.
Settlement Authority of the United States in Oil Shale Cases, 4B Op.Off.Legal Counsel 756, 758 (1980). In our view, the Office of Legal Counsel’s opinion, at least as characterized by the DOJ, misconstrues and overstates the Attorney General’s power. We think it alien to our concept of law to allow the chief legal officer of the country to violate its laws under the cover of settling litigation. The Attorney General’s authority to settle litigation for its government clients stops at the walls of illegality.
We have considered, of course, the analogous issue of the scope of an agency’s plenary power in the narrow area where it has unbounded discretion. In Garcia v. Neagle, 660 F.2d 983 (4th Cir.1981), cert. denied, 454 U.S. 1153, 102 S.Ct. 1023, 71 L.Ed.2d 309 (1982), we said:
In general, even where action is committed to absolute agency discretion by law, courts have assumed the power to review allegations that an agency exceeded its legal authority, acted unconstitutionally, or failed to follow its own regulations. As the District of Columbia Circuit has observed, “[w]hen the bounds of discretion give way to the stricter boundaries of law, administrative discretion gives way to judicial review.”
Id. at 988 (quoting Scanwell Lab., Inc. v. Shaffer, 424 F.2d 859, 874 (D.C.Cir.1970)) (citations omitted); see also Electricities of North Carolina, Inc. v. Southeastern Power Admin., 774 F.2d 1262, 1267 (4th Cir.1985); Guadamuz v. Bowen, 859 F.2d 762, 767-68 (9th Cir.1988). We think this same rationale limits the otherwise plenary authority of the Attorney General to control agency litigation.
The DoD regulations governing CE publications were promulgated pursuant to a waiver issued by the Joint Committee on Printing pursuant to 44 U.S.C. §§ 103 and 501. The waiver required the DoD to promulgate regulations providing “for the production of [CE] publications through competitive procedures.” In accordance with this waiver requirement, the DoD’s CE regulations provide:
1. ... The underlying premise of the CE concept is that DoD Components and their subordinate command will save money by transferring certain publishing and distribution burdens to a private sector publisher selected by competitive bid.
3. A written contract with the selected commercial publisher shall be established by the commander for each CE publication.
4. ... If there is only one bidder, [DoD] may decide that the offer [is] not sufficient to warrant producing the publication and make no selection....
5. ... In selecting a publisher, fair and equal opportunity shall be afforded any responsible, qualified bidder who may wish to submit a proposal to publish the CE publication.
32 C.F.R. § 247, App. B, F (emphasis added). We do not believe that the Attorney General is empowered to circumvent these regulations, which have the force and effect of law and implement a congressional directive that government contracts be procured by competitive bidding.
Ill
The government and Downey contend, alternatively, that even if the Attorney General must observe agency regulations to accomplish governmental objectives, the Attorney General did not violate the Joint Committee directive and DoD regulations here. They argue that the government has authority under the “cardinal change doctrine” to modify a competitively-bid contract. Both parties acknowledge that this doctrine permits “deductive” modifications to a contract — i.e., changes within the general scope of the contract. However, if proposed modifications go beyond the scope of the contract, the government cannot effect them unilaterally but must submit the changed contract to competitive bidding.
EBM argues the changes made in the settlement agreement were cardinal changes requiring DeCA to submit the DeCA Guidebook contract to competitive bidding. At the outset, it notes that the DeCA Guidebook and Vision magazine fall into different definitional categories in the CE guidelines. The DeCA Guidebook (a “guide” or “directory”) is a “publication[ ] that provide[s] DoD personnel information about the mission of them command; the availability of command; installation or community services; local geography; historical background; and other information.” 32 C.F.R. § 247.3(a)(1). By contrast, Vision magazine (a “DoD newspaper”) contains “commanders’ comments, letter-to-the-editor columns, news, features, editorials, sports, announcements, entertainment items, photography, and artwork.” 32 C.F.R. § 247.3(b). EBM notes that besides them differences in definition and content, the publications differ in length, frequency of publication, advertising appeal and revenue, costs of production and distribution, and profit margin. It contends that these differences are critical. Vision contains primarily editorial and news events; the DeCA Guidebook is a telephone and fact directory. Vision is only 28 pages, is printed bi-monthly or monthly, is generally not retained by the users, and generates costs throughout the year. The DeCA Guidebook, by contrast, is 240 pages long, is printed only annually, and is used as a reference guide throughout the year. While the Vision contract term is one year, the contract term for the Guidebook is three years. And, while Vision requires support from DoD personnel, including computer support, art direction, color printing, and production, the Guidebook does not.
By contrast, the government and Downey urge that the modification to the contract was merely a deductive change within the general scope of the Vision contract. They maintain that the modification effected by the settlement agreement provided for essentially the same work as bargained for in the original contract. They stress that both versions of the contract provided for the printing and distribution of a CE publication that disseminates information to DeCA employees, that the same general regulatory requirements pertain to both publications, and that the contents of the two publications are similar. They concede that the settlement agreement changed the publication schedule from six bi-monthly issues to three annual issues, but maintain that the modifications did not change the basic features of the original Vision contract. It retained the “magazine” style format, color, and typeface requirements. They also contend that the responsibility of both Downey and DeCA under the contract remain essentially the same.
The issue, in our view, is whether the awarding of the contract that resulted from the settlement agreement violated the DoD’s mandatory competitive bidding procedures. The parties both couch this issue within the framework of the cardinal change doctrine. This may be a helpful approach, and on remand the district court may consider those principles as they relate to whether the government has circumvented the competitive procurement process. See, e.g., Cray Research, Inc. v. Department of Navy, 556 F.Supp. 201, 203 (D.D.C.1983); In re Memorex Corp., 61 Comp.Gen. 42, 81-2 CPD ¶ 334 (1981); In re American Air Filter Co., 57 Comp.Gen. 567, 78-1 CPD ¶ 443 (1978). In any event, the district court should determine if the contract to publish the DeCA Guidebook is sufficiently different from the original Vision contract to require a separate competitive bidding procedure. Our review of the descriptions of the two publications convinces us that the issue of whether one or two contracts are involved should be resolved initially by a fact finder.
EBM has asserted numerous other violations in connection with the DeCA Guidebook contract. It alleges violations of the Armed Services Procurement Act, 10 U.S.C. § 2301 et seq., the Federal Acquisition Regulation, 48 C.F.R., Ch. 1, and the Anti-Deficiency Act, 31 U.S.C. § 1341. We have reviewed the record and considered the parties’ arguments and find these claims without merit.
We, therefore, remand to the district court to determine whether the DoD’s CE regulations have been violated and to resolve any other issues that its initial findings might require.
REVERSED AND REMANDED.
. Both parties cite cases holding that the Attorney General's litigation decisions supersede an agency's decisions. See, e.g., United States v. Newport News Shipbuilding & Dry Dock Co., 571 F.2d 1283 (4th Cir.), cert. denied, 439 U.S. 875, 99 S.Ct. 212, 58 L.Ed.2d 189 (1978). We believe that all Newport News stands for is the proposition that when the Attorney General represents an agency in litigation, it is the Attorney General, rather than the agency, who has the final authority to determine the litigation position of the United States.
. Section 103 provides that
The Joint Committee on Printing may use any measures it considers necessary to remedy neglect, delay, duplication, or waste in the public printing and binding and the distribution of Government publications.
Section 501 states that
All printing, binding, and blank-book work for Congress, the Executive Office, the Judiciary, other than the Supreme Court of the United States, and every executive department, independent office and establishment of the Government, shall be done at the Government Printing Office, except—
(1) classes of work the Joint Committee on Printing considers to be urgent or necessary to have done elsewhere; and
(2) printing in field printing plants operated by an executive department, independent office or establishment, and the procurement of printing by an executive department, independent office or establishment from allotments for contract field printing, if approved by the Joint Committee on Printing.
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4185008-23027 | MILLER, District Judge.
This action was brought by the plaintiff Kentucky-Tennessee Light and Power Company against the defendants, Nashville Coal Company, Justin Potter and Henry D. Fitch to recover $315,202.11 as treble damages claimed to have been suffered by the plaintiff by reason of violation of the provisions of the Robinson-Patman Price Discrimination Act, Title 15 U.S.C.A. § 13 (c). The action is authorized by Section 4 of the Clayton Act, Title 15 U.S.C.A. § 15. The matter is before the court on defendants’ motions to dismiss the complaint, to make the complaint more definite and to strike from the record a bill of particulars filed by the plaintiff. The points raised by the various motions have been thoroughly and extensively briefed by eleven separate briefs to such an extent as to make it impractical for the court to discuss the various questions presented in as much detail as discussed in the briefs.
The complaint states the following facts: The plaintiff, Kentucky-Tennessee Light and Power Company, (hereinafter referred to as K-T Company) is a Kentucky corporation, and owns'and operates plants for the manufacture or supplying of water, light or electric power at Frankfort, Bowling Green, Hopkinsville, Mayfield and Cadiz in the State of Kentucky, and at Jellico, Martin and Clarksville, in the State of Tennessee. The defendant, Henry D. Fitch, was president and chief officer of the K-T Company. The Nashville Coal Company (hereinafter referred to as the Coal Company) is a Tennessee corporation having an agent residing in Louisville, Kentucky. The defendant, Justin Potter, is a resident of Tennessee and the president of the Coal Company. On March 7, 1933, the Coal Company through Potter entered into a written contract with the K-T Company whereby the Coal Company agreed to sell and deliver to the K-T Company the coal which was necessary to meet the entire requirements of the K-T Company for a period of five years beginning April 1, 1933, shipments to be made as and when directed. On April 6, 1937, the Nashville Coal Company executed another contract with the K-T Company containing substantially the same provisions as the contract of March 7, 1933, but this contract was dated back to March 7, 1933, and provided that it was to run for a period of ten years. Subsequent to March 7, 1933, the K-T Company purchased its coal requirements from the Coal Company, and in particular purchased 211,565.89 tons of coal at the price of $244,395.42 between the dates of June 19, 1936 (the effective date of the Robinson-Patman Act) and September 12, 1939, which date marked the end of the acts complained of. It is alleged that the Coal Company through Potter, without knowledge on the part of the K-T Company, paid Fitch a commission of from ten cents to fifteen cents a ton on all of the coal purchased under said contracts between the dates above mentioned, which payments were not for any services rendered by Fitch in connection with the sale of purchase of said coal, but were made solely for the purpose of inducing Fitch to purchase on behalf of the K-T Company from the Coal Company the coal so purchased at prices far in excess of the fair market value of such coal; that between said dates Fitch without the knowledge of the K-T Company received and accepted a commission from ten cents to fifteen cents a ton on all of the coal purchased under said contracts; that Fitch during said times was a full-time employee of the K-T Company at a salary of $25,000 per year, and was not acting" for or on behalf of the Coal Company or as its agent in said transactions. It is charged that the Coal Company maintained an account on its books known as “N. W. Moore Commission Account, No. 45”, and that the payments made by the Coal Company to Fitch were listed in this account and amounted to the sum of $28,500.08. The K-T Company alleges that it could have purchased coal of similar or better kind and quality from others at greatly reduced prices, and that' it was injured in its business and property by reason of such excessive prices in the sum of $105,067.37. The complaint states that the Coal Company, Potter and Fitch in the negotiation and performance of said contracts were engaged in interstate commerce, and that the Coal Company shipped coal under said contract from mines in Tennessee to the K-T plants in Kentucky and from mines in Kentucky to the K-T plants in Tennessee; and that all of the negotia^ tions regarding said contracts and purchases were carried on with the Coal Company through Potter, and the payment of commissions was made by and through Potter to Fitch. The complaint files as exhibits photostatic copies of the two contracts referred to and the Commission Account No. 45 in the name of N. W. Moore, and a detailed statement showing the dates, kind and price of coal shipped for all purchases by the K-T Company from the Coal Company from June 19, 1936, through August 31, 1939, for the plants of the K-T Company at Bowling Green, Hopkinsville, Mayfield and Frankfort, Kentucky, and at Clarksville and Martin, Tennessee. A bill of particulars filed later lists all shipments of coal which moved in interstate commerce, included in said purchases, giving the name of the shipper, origin and destination of the shipment, its date, amount, kind and price.
All three defendants have filed motions to.dismiss the complaint. The Coal Company and Potter filed motions for a bill of particulars setting out in detail additional information requested. Defendant Fitch filed a motion to make the complaint more definite and certain by stating what acts are relied upon as constituting interstate commerce. Defendant Fitch also filed a motion to strike from the complaint the allegations pertaining to the N. W. Moore Commission Account No. 45 and that exhibit. Without waiting for these motions to be acted upon the plaintiff filed a bill of particulars which set out in detail the facts pertaining to its business, the various shipments of coal from the Coal Company to the plaintiff, and copies of correspondence and testimony given in hearings before the Securities and Exchange Commission. Thereafter defendant Fitch moved to strike the bill of particulars from the record.
I think it is unnecessary to devote much time to a discussion of the motions to make the petition more definite, for a bill of particulars and the motions to strike. From the facts above stated it is apparent that the exhibits filed with the complaint and the bill of particulars filed later gave to the defendants all the information which it is necessary for them to have in order to determine what facts and transactions are relied upon by the plaintiff. They are given with considerable detail. There may be additional information which the defendants desire to have, but it can be obtained in other ways,' such as by interrogation and discovery. I see no reason why the pleadings should be loaded down with miscellaneous information in the nature of evidence pertaining to the issues involved, provided that the allegations óf the complaint are sufficiently definite to show what acts and transactions are relied upon as constituting the alleged cause of action. The allegations and exhibits dealing with the N. W. Moore Commission Account No. 45 is in the nature of a bill of particulars in order to enable the defendants to know what facts the plaintiff intends to show in support of its allegation that the payments made to Fitch were made secretly -and are not prejudicial to any of the defendants. I recognize the contention of defendant Fitch that the mere existence of the commission account does not show he had knowledge of it, and if plaint-tiff’s evidence should fail to connect this defendant with the keeping of the account in that way such evidence might be incompetent and should not be submitted to a jury. But that is an entirely different question than the one raised by a motion to strike certain allegations from a complaint. All of these motions (excepting motions to dismiss) are being considered as directed to the complaint after it has been supplemented by the bill of particulars and considering the detailed information furnished by the bill of particulars they are overruled.
Motions to Dismiss.
The motions to dismiss raise the real issues in this case. Inasmuch as all three ■defendants rely in the main upon the same grounds the motions will be discussed jointly. The underlying theory of the motions, advanced by way of six separate contentions, is that the provisions of the Robinson-Patman Act, relied upon by the plaintiff, do not apply to the transactions complained of in the complaint. In discussing these contentions it is accordingly necessary to have before us the exact wording of the statutory provisions under consideration. It is Section 1(c) of the Robinson-Patman Act which amends Section 2 of the Clayton Act, (approved October 15, 1914), which act was in itself an amendment to the Sherman Anti-Trust Act of July 2, 1890, 15 U.S.C.A. §§ 1-7, 15 note. It is set out in Title 15 U.S.C.A. § 13(c), and reads as follows: “It shall be unlawful for any person engaged in commerce, in the course of such commerce, to pay or grant, or to receive or accept, anything of value as a commission, brokerage, or other compensation, or any allowance or discount in lieu thereof, except for services rendered in connection with the sale or purchase of goods, wares, or merchandise, either to the other party to such transaction or to an agent, representative, or other intermediary therein where such intermediary is acting in fact for or in behalf, or is subject to the direct or indirect control, of any party to such transaction other than the person by whom such compensation is so granted or paid.”
Section 1 of the Robinson-Patman Act contains in addition to Subsection (c), quoted above, subsections (a, b, ■ d, e, and f), and since it is an amendment of Section 2 of the Clayton Act the various subsections will be herein referred to as Section 2, Subsections (a) through (f), respectively.
It will be seen that the act applies both to the payment of commissions (under which provision the Coal Company and Potter are made defendants), and to the receipt of commissions (under which provision Fitch is made a defendant). The complaint alleges that the commissions paid and received were not for any services rendered in connection with the sale or purchase of coal, which, being considered as true on a motion to dismiss, takes the case outside of the exemption allowed by the statute. Do the facts as stated bring the transaction within the terms of the statute?
Defendants claim that Section 2(c) does not apply to a case involving payment of a commission by the seller to an agent of the buyer where such agent retains the payment for his own use and benefit, which type of transaction is commonly termed “commercial bribery.” They contend that the act only applies where pay ments are made direct to the other party or to an agent of the other party who turns them over to such party. In the present case it is charged that Fitch received and kept the payments; it is not alleged that the commissions were turned over by him to the buyer. It is argued that the words “acting in fact for or in behalf * * * of any party to such transaction” eliminates a situation where such agent or intermediary is acting and receiving the compensation for his own benefit. Defendants state that this exact point has not been previously passed upon by any court. Both plaintiff and defendants refer to the following cases as throwing light upon the question. Biddle Purchasing Co. v. Federal Trade Commission, 2 Cir., 96 F.2d 687; Oliver Bros. v. Federal Trade Commission, 4 Cir., 102 F.2d 763; Great Atlantic & Pacific Tea Co. v. Federal Trade Commission, 3 Cir., 106 F.2d 667; Webb-Crawford Co. v. Federal Trade Commission, 5 Cir., 109 F.2d 268, 270. The first three of these cases involve the payment of commissions by the seller to an agent of the buyer who in turn pays it over to the buyer. They hold such payments illegal under Section 2(c). However, this does not mean, as contended for by the defendants, that the payments would be legal if the agents kept them. That particular question was not before the court in any of those cases. In the fourth case cited above the seller made payment of a commission to some stockholders of the buyer corporation who acted as agent for the buyer in making the purchases. This was held illegal, and would appear to be in point with the present case. The opinion stated “without reflecting on the faithfulness or honesty of anyone here concerned, it is evident that the tendency and general results are precisely the same as if The Webb-Crawford Company, the buyer, had gotten the commissions. And the law equally condemns both things.” Defendants claim that the decision is not in point because the court treated the payment the same as if it was made to the corporation. I do not place that construction upon the ruling. The facts were that the individuals received and retained the commission, and the buyer in its corporate entity did not receive this money. The court condemned the transaction equally as other transactions are condemned where the buyer receives the payment, because the results in both cases are the same insofar as they violate the purpose of the Robinson-Patman Act. I find nothing in the opinion that indicates that the decision wás based upon a disregard of the corporate fiction as would have to exist in order for the decision not to be applicable. In addition, the opinions in two of the other cases use words which indicate that the courts considered both transactions in the same light. Such expressions are of course dicta, but they do throw some light upon the lack of distinction on the part of the court between the two situations. In the Biddle case [96 F.2d 691], the opinion, speaking generally, said: “It is clear that the statute prohibits payment of brokerage by the seller to the buyer or his agent or representative or controlled intermediary except for services rendered. Congress intended to prohibit such- payments as an unfair trade practice.”
In the Great Atlantic & Pacific Tea Company case [106 F.2d 674], the opinion, again speaking generally said: “At each stage of its enactment, paragraph (c) was declared to be an absolute prohibition of the payment of brokerage to buyers or buyers’ representatives or agents. Such is the- plain intent of the Congress and thus we construe the statute. Any other result would frustrate the intent .of Congress.”
It will be noticed that the statute uses the disjunctive “either/or” in making illegal the payment of a commission except for services rendered “either to the other party to such transaction or to an agent, representative, or other intermediary.” Effect must be given to the use of such words. It will also be noticed that the words relied upon by defendants “acting in fact for or in behalf, or is subject to the direct or indirect control, of any party to such transaction” qualify the word “intermediary,” but do not qualify the word “agent” or the word “representative.” The qualifying words were used for the purpose of excluding from the act legitimate brokerage, which is in no wise condemned by the act. Since a broker would be an “intermediary,” legitimate brokerage would be included and made illegal unless such qualifying words were used. The act catches such intermediaries as are acting for the buyer or under the buyer’s control, without being an agent or representative in the legal sense of the word. Accordingly, the statute makes it illegal to make such a payment either to the other party to the transaction or to an agent or representative of such party. These are plain words and mean what they say. Fitch was certainly an agent or representative of the buyer who was the other party to the transactions under consideration. Unless this construction is given to the statute, Section 2(c) would be largely superfluous, in that it would only apply to rebates which ultimately go to the purchaser, and such a transaction is covered by Section 2(a) which deals with price discrimination between purchasers.
Defendants further contend on this point that the payment of a commission to the agent for his own use does not result in lessening competition nor does it tend to create a monopoly, and accordingly such transactions are not within the general purpose of the anti-trust law. These same contentions were advanced and rejected by the courts in the cases of Oliver Bros. v. Federal Trade Commission, supra, Biddle Purchasing Co. v. Federal Trade Commission, supra, and Great Atlantic & Pacific Tea Co. v. Federal Trade Commission, supra. It is unnecessary to repeat here in detail the reasons, as given in those opinions, why this contention is unsound. Those opinions discuss the history of anti-trust legislation; they show that certain loopholes in the Sherman AntiTrust Law were corrected by passage of the Clayton Act in 1914; and that certain difficulties which were found to still exist after the passage of that act were attempted to be remedied by the passage of the Robinson-Patman Act in 1936. The scope of such legislation has accordingly been greatly enlarged over the period of years. It would be contrary to this evident purpose of Congress to take at the present time a narrow technical .restricted view of the language used. Section 2(a) retained the original wording of previous legislation which required a showing of monopolistic tendencies or a restraint of commerce in order to violate the act. Sections 2(c), 2(d) and 2(e) are entirely new sections and eliminate the necessity of showing any such results when considering the transactions specifically set out in those three sections. As was said in Oliver Bros. v. Federal Trade Commission, supra [102 F.2d 767], “it is perfectly clear that all three of these practices [2(c), 2(d), and 2(e)] were forbidden because of their tendency to lessen competition and create monopoly, without regard to their effect in a particular case; and there is no reason to read into the sections forbidding them the limitations contained in section 2(a) having relation to price discrimination, which is an extremely difficult matter to deal with and is condemned as unfair only in those cases where it has an effect in suppressing competition or in tending to create monopoly. The forbidding of specific practices because of their tendency toward a general result, also forbidden, is familiar legislative practice; and no reason suggests itself why the limitations and provisions relating to one should be read into those relating to the other.” Accordingly, I am of the opinion that acts of commercial bribery, where the agent keeps the payment instead of transmitting it to his principal, the buyer, are covered by Section 2(c) of the Act, just as much as cases where the payment is made directly or indirectly to the buyer.
Defendants next contend that no cause of action exists because the alleged injury to the plaintiff is a private wrong instead of an injury to the public, and that the act requires a showing of an injury to the public before any wrong has been committed. What I have just said immediately preceding is also the answer to this contention, which ignores the change made in the Clayton Act by the passage of the Robinson-Patman Act. The Clayton Act (now Section 2(a) required a showing of injury to the public. The additions made by the Robinson-Patman Act (Sections 2(c), 2(d), and 2(e), do not require any such showing in order to make the act illegal. If the act complained of is illegal the plaintiff is entitled to the civil remedy given by Section 4 of the Clayton Act, Title 15 U.S.C.A. § 15, which provides: “Any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney’s fee.”
This civil remedy of treble damages is not limited to competitors of the buyer, but is specifically granted to “any person who shall be injured.” See Apex Hosiery Co. v. Leader, 310 U.S. 469, 60 S.Ct. 982, 84 L.Ed. 1311, 128 A.L.R. 1044; Coronado Coal Co. v. United Mine Workers, 268 U.S. 295, 45 S.Ct. 551, 69 L.Ed. 963; City of Atlanta v. Chattanooga Foundry & Pipeworks, 6 Cir., 127 F. 23, 64 L.R.A. 721, affirmed 203 U.S. 390, 27 S.Ct. 65, 51 L.Ed. 241.
Defendants contend that the payments of the commissions to Fitch were not made by a “person engaged in commerce, in the course of such commerce,” as is required by the act. They point out that the interstate shipments of coal to the plaintiff were not under the contracts, and that the intrastate shipments which were made under the contracts were not in commerce. The affidavit of the defendant Potter is filed in support of this contention. It appears to the court that this point is largely theoretical and technical and fails to give full effect to the pleaded facts. There can be no question but that the plaintiff in manufacturing and supplying water, light and power to consumers in both Kentucky and Tennessee is engaged in commerce. Consumers Power Company v. National Labor Relations Board, 6 Cir., 113 F.2d 38; Consolidated Edison Co. v. National Labor Relations Board, 305 U.S. 197, 59 S.Ct. 206, 83 L.Ed. 126. The petition alleges that the Coal Company shipped coal under its contract from mines in Tennessee to the plants of the plaintiff in Kentucky and from mines in Kentucky to plants of the plaintiff in Tennessee. These are interstate shipments, and the bill of particulars sets out in detail each shipment which moved in interstate commerce. It is immaterial whether these shipments were made under the contracts in existence or were made independently of such contracts. In either event they are purchases of coal by the plaintiff from the Coal Company and interstate shipments made pursuant to such purchases. This action is not based upon the making of the contracts. It is based upon commissions paid to Fitch upon coal purchased by the plaintiff from the Coal Company. The payment of the commission is the gist of the action. The preexisting contracts may be the basis for the purchase by the plaintiff of coal from the Coal Company as it becomes necessary for such coal to be purchased, but it is the actual purchase of the coal at a definite price and the payment of the commission to the buyer’s agent upon that purchase that creates the liability. When goods are purchased in one state for transportation and use in another state, the sale is interstate commerce as well as the transportation thereafter. Swift & Co. v. United States, 196 U.S. 375, 25 S.Ct. 276, 49 L.Ed. 518;
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9474251-12148 | RAWLINSON, Circuit Judge.
Juan Romero (“Romero”) was tried by jury and convicted of conspiracy to distribute cocaine, in violation of 21 U.S.C. § 841(a)(1), § 841(b)(1)(B) and § 846. Romero asserts that there was insufficient evidence to find that he was involved in a conspiracy. He also argues that the district court erred in admitting impermissible character evidence, failed to give a government agent jury instruction, and that the cumulative errors in this case warrant reversal. Finally, Romero contends that his sentence of ninety-two months is unconstitutional and should be vacated. We affirm.
In 1998, Bonnie Rivero (“Rivero”) gave Detective Frank Cortez (“Cortez”) information about a drug trafficking organization involving Romero. Rivero subsequently became a confidential informant for the government. Detective Cortez instructed Rivero to introduce him to Romero as a drug trafficker looking for a suppli er. In June 1998, Cortez and Romero were introduced and discussed a deal involving approximately five kilograms of cocaine, valued in excess of $100,000.
Romero and Detective Cortez made arrangements for Cortez to travel to the area of Yakima, Washington on June 12 to purchase cocaine from Romero and “the other people involved with him.” The June 12 meeting took place, but no drug transaction occurred. Nevertheless, after June 12, Cortez and Romero continued to have phone conversations, discussed the drug transaction, and arranged a meeting.
On July 9, 1998, Cortez and Romero again met in Yakima for Cortez to purchase the five kilograms of cocaine. Enrique Alcantar (“Alcantar”), a confidential informant, accompanied Cortez on this trip and was introduced to Romero. Alcantar traveled with Romero to a farm to get the drugs while Cortez waited at a department store parking lot. While at the farm, Al-cantar and Romero waited for an individual to meet them and deliver the cocaine, but once again, the drug transaction was not consummated.
Alcantar and Romero remained in contact with each other and had another meeting to effect the sale. During this second meeting between Alcantar and Romero, they traveled to another ranch to meet Roque Zapien (“Zapien”). Romero introduced Alcantar to Zapien as the “guy who is going to purchase the kilos.” Za-pien presented a kilogram of cocaine to Alcantar, but Alcantar was not prepared to pay for the cocaine at that time. Romero and Zapien argued about money that Romero owed Zapien. At that point, Za-pien instructed Alcantar to contact Zapien directly and leave Romero out of the transaction.
Detective Cortez and Alcantar subsequently negotiated directly with Zapien, and purchased cocaine from Zapien on August 13, 1998 and September 14, 1998. Romero was not involved in either of these transactions. Zapien was arrested on September 18, 1998 and Romero was arrested on September 21.
Romero was charged by superseding indictment with one count of conspiracy to distribute cocaine in violation of 21 U.S.C. § 841(a)(1), § 841(b)(1)(B) and § 846. The indictment charged that Romero and Za-pien were both members of the conspiracy.
During trial, Bonnie Rivero, the confidential informant, testified regarding her prior drug dealings with Romero. Rivero testified that she began selling drugs for Romero in 1998 and traveled with him approximately eight times to conduct cocaine deals. However, Romero testified that he had never been involved in any drug deals with Bonnie Rivero. He stated that his dealings with Detective Cortez and Alcantar had been part of a plan set up with Bonnie Rivero to steal money from the drug deal.
The jury returned a verdict of guilty against Juan Romero. A sentencing hearing was held on October 8, 1999 and the district court sentenced Romero to ninety-two months in custody. Romero timely appeals.
I. Conspiracy
Romero asserts that there was insufficient evidence of a conspiracy. “There is sufficient evidence to support a conviction if, in viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.” United States v. Wright, 215 F.3d 1020, 1025 (9th Cir.), cert. denied 531 U.S. 969, 121 S.Ct. 406, 148 L.Ed.2d 313 (2000). Where, as here, a defendant fails to challenge the sufficiency of the evidence before the district court, review is for plain error. See United States v. Yossunthorn, 167 F.3d 1267, 1270 n. 4 (9th Cir.1999).
“To establish a drug conspiracy, the government must prove: 1) an agreement to accomplish an illegal objective and 2) the intent to commit the underlying offense.” United States v. Iriarte-Ortega, 113 F.3d 1022, 1024 (9th Cir.1997). To prove the requisite intent for the underlying offense of cocaine distribution, the government must present “clear” evidence of Romero’s knowledge of the purpose behind the conspiracy. See United States v. Hegwood, 977 F.2d 492, 497-98 (9th Cir.1992).
Based on the evidence, a jury could reasonably have found that the overall conspiracy existed. Sufficient evidence was adduced at trial to establish the existence of the overall agreement to sell drugs to Detective Cortez and Aleantar and Romero’s intent to further that agreement.
There is also sufficient evidence to connect Romero to the overall conspiracy. The government need not show an explicit agreement between Romero and the others. See United States v. Montgomery, 150 F.3d 983, 999 (9th Cir.1998). “It is sufficient to show that [Romero] knew or had reason to know of the scope of the conspiracy and ... had reason to believe that [his] own benefits were dependent on the success of the entire venture.” Id. (emphasis in original).
Romero communicated with Cortez about the cocaine purchase, met with Al-cantar several times, and traveled to the ranch to meet with Zapien about the drugs. It is of no consequence that Romero asserts that his intention was to steal money from the drug deal. Even assuming that this was his goal, he had knowledge of the conspiracy and depended on its success to further his goal of stealing the money. “Once the existence of a conspiracy is shown, the government need only prove a slight connection between the defendant and the conspiracy.” United States v. Matta-Ballesteros, 71 F.3d 754, 765 (9th Cir.1995). Romero’s connection to the overall conspiracy was sufficiently established and no plain error occurred.
Romero cites our decision in United States v. Martin, 4 F.3d 757 (9th Cir.1993), to support his position. Martin was double-crossed when his partner, Jackson, arranged a secret drug deal with the undercover agent named Scott. Although Martin had introduced Jackson to Agent Scott, Martin had intended to supply Scott with the drugs himself. Martin had no idea that Jackson and others were dealing separately with the agent behind his back, and Martin did not benefit from that deal. After Jackson, Martin and the others were arrested, the indictment charged Martin with the conspiracy to possess and distribute methamphetamine that produced the Jackson-Scott purchase. Id. at 758-59. We reversed Martin’s conviction. Because the evidence did not “in any meaningful way connect Martin to the overall conspiracy,” there was insufficient evidence to indicate that he knew of and was dependent on the Jackson Scott conspiracy. Id. at 760.
Romero’s case can be distinguished from Martin. In Martin, although a hub-and-spokes conspiracy was charged, no agreement going beyond any two individuals was proven. Martin had no contact with the other individuals charged, with the exception of Jackson. Although Martin may have conspired with Jackson, there was insufficient evidence to show that he was part of the overall conspiracy, because there was no evidence to establish that the overall conspiracy existed before Martin was double-crossed by Jackson. Id.
Unlike Martin, Romero was an active and willing participant in the charged con spiracy before Zapien circumvented Romero’s further participation. The transaction that eventually took place between Zapien and the government agents was the very one Romero had conspired to develop. In contrast, Martin had neither knowledge of nor connection with the Jackson-Scott transaction; he presumably did not event want that drug transaction to occur. Romero’s attempt to analogize his case to Martin therefore fails.
II. Character Evidence
Romero asserts that his conviction was obtained using impermissible character evidence because the government introduced testimony from Bonnie Rivero concerning Rivero’s previous drug-related activities with Romero. We review a district court’s admission of evidence under Federal Rule of Evidence 404(b) for an abuse of discretion. See United States v. Chea, 231 F.3d 531, 534 (9th Cir.2000). If we conclude that a Rule 404(b) violation occurred, we reverse only if the error was not harmless. See United States v. Derington, 229 F.3d 1243, 1247 (9th Cir.2000).
Evidence of a person’s character or a trait of character is not admissible for the purpose of proving action in conformity therewith on a particular occasion. See Fed. R. Evm 404(a); see also Derington, 229 F.3d at 1247. However, Rule 404(b) permits evidence of prior wrongs or acts to show proof of motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident.
We have articulated a four-part test to determine the admissibility of evidence pursuant to Rule 404(b). Such evidence “may be admitted if: (1) the evidence tends to prove a material point; (2) the other act is not too remote in time; (3) the evidence is sufficient to support a finding that defendant committed the other act; and (4) (in certain cases) the act is similar to the offense charged.” Chea, 231 F.3d at 534; see also United States v. Howell, 231 F.3d 615, 628 (9th Cir.2000), cert. denied — U.S. —, 122 S.Ct. 76, 151 L.Ed.2d 40 (2001); United States v. Melvin, 91 F.3d 1218, 1222 (9th Cir.1996). “If the evidence meets this test under Rule 404(b), the court must then decide whether the probative value is substantially outweighed by the prejudicial impact under Rule 403.” Chea at 534 (quotations omitted).
In this case, Rivero’s prior acts were admitted to show her knowledge of cocaine distribution methods and her earlier involvement with Romero in cocaine distribution. This evidence was relevant to Romero’s defense that he did not intend to distribute cocaine, but rather to steal money. See United States v. Jones, 982 F.2d 380, 382 (9th Cir.1992). Since Rivero testified that her prior involvement with Romero occurred during the pendency of the conspiracy with which Romero is charged, the time period was not “too remote.” This evidence also meets the “low threshold” of the third prong of our Rule 404(b) test: there was sufficient proof of the prior acts at issue because they were admitted through the testimony of Rivero, whose credibility was left to the jury. See United States v. Houser, 929 F.2d 1369, 1373 (9th Cir.1990).
Finally, the prior acts about which Rive-ro testified were clearly similar to the crime with which Romero was charged and convicted — i.e., conspiracy to distribute cocaine. The four-part test was therefore satisfied and the district court properly admitted the evidence under FED. R. EVID. 404(b).
III. Jury Instruction Regarding Government Agent
Romero’s next assertion is that the district court committed reversible error by failing to instruct the jury that it could not convict him if it found that the only person with whom he conspired was a government agent. This assertion is based on Sears v. United States, 343 F.2d 139, 142 (5th Cir.1965), in which the Fifth Circuit established that, “as it takes two to conspire, there can be no indictable conspiracy with a government informer who secretly intends to frustrate the conspiracy.” We have adopted this rule. See United States v. de Bright, 742 F.2d 1196, 1200 (9th Cir.1984); see also United States v. Ritter, 989 F.2d 318, 321 (9th Cir.1993) (holding evidence insufficient to support guilty verdict for conspiracy because the only co-conspirators were government agents).
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65696-13310 | ADAMS, District Judge.
This is an action which was brought by the libellant to recover from the respondent damages arising out of an alleged breach of contract made between the respondent and Schwarzschild & Sulzberger Company and J. Shamberg & Son and assigned to the libellant. The contract was in writing and is as follows:
“Chesapeake & Ohio Steamship Co., Ltd., Agents.
Special Live Stock Contract.
New York, Oct. 19th, 1899.
Messrs. Schwarzschild & Sulzberger Co. and J. Shemberg & Son—Dear Sirs: We offer, as Agents of Chesapeake & Ohio S. S. Co. Ltd. and owners, and not on our own behalf, to let you suitable space as undernoted, for the transportation of live cattle, that is to say: On the • Steamers named in margin intended to be dispatched about Sailing dates as per margin from Newport News, Va., U. S. A. to the Ports named in margin, for 350 head of cattle excepting ‘RAPIDAN’ and 388 head for S. S. ‘RAPIDAN’, at the rate of Twenty-seven shillings and six pence Sterling per head. Freight to be paid as customary at destination.
It being stipulated that no responsibility is to attach to the vessel, her owners or her agents, for loss arising from delay in receiving or shipping, or from the Steamer not being ready to embark the animals, or for loss or damage when caused either directly or indirectly by the act of God, the Queen’s enemies, strike, mobs, quarantine, insufficiency or defect in fittings, lighterage to or from the vessel, trans-shipment, explosion, heat, fire at sea or on shore, perils or accidents of the seas, rivers and navigation, or arising from boilers, steam, machinery, pumps or pipes of any kind (including consequence of defect therein or damage thereto), collision, stranding, heeling over, upsetting, submerging or sinking of ship in harbor, river, or at sea, however these or any of them may be brought about, or from admission of water into the vessel, whether this shall arise from any of the before mentioned causes, or from any act of omission, negligence, default or error in judgment of the pilot, master, mariners, engineers, stevedores, or other persons in service of the shipowner’s occurring previously to the vessel’s sailing, or by unseaworthiness of the ship at or after the commencement of the voyage (provided all the reasonable means have been taken to provide against such unseaworthiness); the other conditions being as customary with us, and as expressed in our form of Live Stock Bill of Lading, a copy of which is hereupon endorsed, and which forms part of the .Special Live Stock Contract. No other cattle to be carried.
You are not to sub-let any part of the space referred to in this Contract, without our previous consent, nor until the party to whom you propose to sub-let has signed and delivered to us an undertaking to be bound to all the terms and conditions herein specified, it being understood that you are responsible for the due observance of such undertaking. It is also provided that we shall not be required to give any notice when to ship, except to you, that you are not, under any circumstances, to be relieved from any part of your obligation under this Contract; and that neither ourselves nor the Owners of the Steamship assume any obligations whatever to the party to whom you may sub-let. Bills of lading to be issued at New York as soon as cattle are loaded.
It is distinctly understood and agreed that under no circumstances will cattle be carried free, through the process of crowding a few extra heads in the spaces required for a less number, the freight being payable per head.
Six days’ notice to be given you of the date when the steamer will leave Newport News, and the cattle are to be in Newport News, ready for shipment by the time called for, otherwise usual demurrage to be paid the Steamer. And if the cattle are detained in Newport News, detention to be paid for at the rate of 50 cents per head per day.
In consideration of the Shippers engaging the spaces on the above named Steamers, Agents give Shippers the option to be declared on or before April 15th, 1900, of taking the cattle spaces, conditions as above, on their Steamers sailing from Newport News to Liverpool and London for the months of May, June and July, 1900, at 30/- Sterling per head. Should Shippers declare as their option that they will take the spaces for the additional period named above then a new contract shall be made containing an option to the Shippers for a further period of three months on the same terms, option to be declared on or before the fifteenth day of the last month covered by the contract. This arrangement to continue for all the months of the year 1900 in periods of three months each unless Shippers should at any time not avail themselves of their option when this agreement is to terminate.
Shippers have option to be declared upon receipt of the six days’ notice of Steamers readiness to receive of declining to ship cattle in which case they shall pay the Steamship Company upon sailing of the Steamer from Newport News one-half of the freight on the cattle in full settlement of dead freight, in which case also no other cattle to be carried.
* * * accept the above offer, and hereby agree and bind * * * to ship the number of animals called for on the terms and conditions there stated. P. Pro Furness, Withy & Co., Ltd.,
Geo L Woolley, Agents.”
(Written across the face)
“Accepted Each firm Shipping one half &
signed severally
not jointly. J. Shamberg & Son.
Schwarzschild & Sulzberger Company.
P. Joseph,
Vice Prest”
(Written on left-hand margin)
“Nothing contained herein shall be construed to relieve any Manager, Agent, Master or owner from any liability which it is made Unlawful to contract against by C. 105 of the Acts of the 52d Congress of the United States, approved February 13, 1893, but they shall have the benefits of all the exemption for liability conferred by the Act.”
(Written on right hand margin)
“S. S. ‘Rapidan.’
S. S. ‘Shenandoah.’
S. S. ‘Rappahannock.’
S. S. ‘Greenbrier.’
S. S. ‘Chickahominy.’
S. S. ‘Appomattox.’
S. S. ‘Kanawha.’ ” .
All sailing during the months of December, 1899, January, February, March, April, 1900, for London and Liverpool.
The libellant became the principal by the assignment and the said original parties became his agents in the fulfilment of the contract.
Numerous shipments of cattle were made under the contract for the benefit of the libellant whose acts tended to show a recognition by the respondent of the libellant as the principal in the transaction.
On or about April 5, 1900, the said agents notified the respondent that the option provided for in the contract to continue the contract during the months of May, June and July, 1900, would be exercised. The option for the months of August, September and October, 1900, was also exercised by notification on or about July io, igoo, and the option for November and December, 1900, was exercised by notification on or about October 5, 1900.
First Cause of Action.
On or about January 27, 1900, the respondent gave notice to the libellant that the steamer Chickahominy had been fixed to sail from Newport News on February 2, 1900, and the libellant procured and had in readiness for shipment on that vessel 351 head of cattle on the day appointed, but the steamer did not sail until February 6, by reason of which detention the libellant claims damages at the rate of 50c. per day per head, amounting to $702.
Second Cause of Action.
On or about February 20, 1900, the respondent gave notice to the libellant that the steamer Greenbrier had been fixed to sail from Newport News on February 26, 1900, and the libellant procured and had in readiness for shipment 351 head of cattle on the day appointed, but the steamer did not sail until February 28, by reason of which detention the libellant claims damages at the rate of 50c. per day per head, amounting to $351.
Third Cause of Action.
On or about February 24, 1900, the respondent gave notice to the libellant that the steamer Rappahannock had been fixed to sail from Newport News on March 3, 1900, and the libellant procured and had in readiness for shipment 359 head of cattle on the day appointed, but the steamer did not sail until March 5, by reason of which detention the libellant claims damages at the rate of 50c. per day, amounting to $359-
Fourth Cause of Action.
The libellant claims that the respondent at all times during December, 1899, and throughout the entire year 1900, failed to furnish cattle space or to carry any cattle upon the steamer Rapidan, although she made seven trips across, on each trip carrying live cattle and freight at rates greatly in excess of those fixed by the contract with the libellant; that during said period the libellant had in readiness for shipment cattle sufficient to fill the space on the steamer reserved under the contract, whereby libellant suffered damages to the extent of $40,000.
The respondent, answering the libel makes some formal denials and avers that the arrival of the Chickahominy was delayed by sea perils until February 1, 1900, and all reasonable diligence was used to dispatch the steamer as soon as practicable thereafter and no liability for demurrage on the cattle accrued.
The answer to the second cause of action, after denying the formal allegations, avers that the arrival of the Greenbrier was delayed by sea perils until February 25, and all reasonable diligence was used to dispatch her as soon as practicable thereafter and no liability for demurrage has accrued.
The answer to the third cause of action denies the allegations of the libel.
The answer to the fourth cause of action makes some formal denials and avers that there were no sailings of the Rapidan during December, 1899, or during 1900, and that it was not in contemplation of the parties that the contract should attach unless the vessel sailed in the respondent’s service, which she did not, and that in October, 1899, Furness, Withy & Co. Rtd., as agents of the respondent, entered into a live stock contract with Schwarzschild & Sulzberger Co. and J. Shamberg & Son, with certain steamers mentioned in the margin, the Rapidan being one of them, but that it was understood and agreed between the parties prior to the execution of the contract that the Rapidan was not a vessel belonging to the respondent or regularly running in its line, but that she was temporarily chartered and would not be one of the vessels “sailing during the months” above stated unless her charter was continued and that if it was not and if the vessel did not run in respondent’s service during the currency of the cattle contract, or any renewal of it, the contract should not be deemed to apply to or include her cattle spaces in any way. It is further averred that the vessel with the knowledge of Schwarzschild & Sulzberger Co. and J. Shamberg & Son was taken on time charter by the British Government prior to the signing of the contract and that her name was included in it only on the faith of the agreement and understandin g that it would attach to her only in the event of her return to the respondent’s service and that in fact the steamer never came back into the respondent’s service during the currency of the cattle contract in question and never was a vessel to which the contract or any renewal of it attached.
The contentions advanced by the respondent are:
1st. That the libellant has not proved any privity with the respondent entitling him to maintain this action in his own name. ■
The evidence shows that the respondent knew with whom- it was. dealing. Certain correspondence took place between the libellant and his assignors of which the respondent was apprised and there was some direct dealing between the libellant and the respondent, in the shape of bills of lading for some of the shipments made. The libellant to the knowledge of the respondent, was operating in the name of the Morris Beef Company, Dtd., and many of the shipments were by that company and the respondent collected demurrage from the libellant upon at least one shipment. The inference that he knew of the relation of the parties to the contract is irresistible.
Moreover, the real principal was entitled to come in and avail himself of- the contract made for his benefit, even though the respondent did not know there was an undisclosed principal. New Jersey Steam Nav. Co. v. Merchants’ Bank, 6 How. 344, 378, 380, 12 L. Ed. 465; Ford v. Williams, 21 How. 287, 16 L. Ed. 36; Baldwin v. Bank, 1 Wall. 234, 17 L. Ed. 534; Prichard v. Budd, 76 Fed. 710, 22 C. C. A. 504.
The situation is not changed by the provision in the contract that none of the space should be sub-let. The contention of the respondent is, that in view of such provision, the libellant could acquire no rights in the contract, but the difference between sub-letting and assigning is material. In the one case, the lessee claims the whole or a part of the premises he is entitled to occupy. In the other, he transfers all his right in a contract and the assignee acquires all the rights and assumes all the liability of the assignor. Lynde v. Hough, 27 Barb. 415; Bedford v. Terhune, 30 N. Y. 453, 86 Am. Dec. 394; Field v. Mills, 33 N. J. Law, 254.
2nd. The respondent is not liable for having offered cattle space on the Rapidan.
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3790200-5695 | PER CURIAM:
Angel Ruben Castilla appeals his conviction for conspiracy to distribute and to possess with intent to distribute five kilo grams or more of cocaine, in violation of 21 U.S.C. § 846. After a thorough review of the record, we affirm.
Castilla was indicted along with Roberto Ramirez and two others for conspiracy to distribute and to possess with intent to distribute five kilograms or more of cocaine.
At trial, Kendall Brown testified for the government in exchange for a lighter sentence in his drug-related conviction. According to Brown, his source for drugs was a man from Texas named Chiky, whom Brown knew through Ramirez. Brown and Castilla had known each other for about three years and were friends. After a while, Brown realized that Castilla also was involved in selling drugs and approached Castilla about his supplier. Chiky did not speak English and Brown used Castilla as his interpreter to negotiate deals. At times, Castilla would call Brown when Chiky was in town. Brown met Chiky at Castilla’s house two or three times and Brown would purchase drugs each time. Brown often saw drugs at Castilla’s house and Brown saw Chiky give Castilla drugs. Brown also observed other people at Castilla’s house during drug buys.
According to Brown, if Chiky was unavailable, Castilla purchased drugs from a man named Coyote. Castilla also arranged for Coyote to sell to Brown, and Brown would meet Coyote at Castilla’s house. Castilla was present at each transaction and helped count the money.
Okaloosa County Sheriffs officer Frederick Lithgow testified that he interviewed Castilla after Castilla was arrested and Castilla made a voluntary statement to police. In his statement, Castilla admitted his involvement with others in a conspiracy to distribute cocaine in north Florida. Castilla specifically identified a man named Chiky as his supplier. Castilla was able to describe Chiky and knew Chiky was from Texas. Castilla also admitted acting as Chiky’s interpreter negotiating drug deals with Brown and others in exchange for $500 per transaction. Castilla further admitted that he received ¿Hz kilograms of cocaine to distribute. Lithgow was present during a search of a house belonging to a man named Garcia, also known as “Flocko.” At the house, police found cell phones and drugs paraphernalia.
Officer Corey Aittama was present during the interview and confirmed that Castilla informed police that Chiky was supplying multi-kilo quantities of cocaine, that Castilla distributed drugs and acted as Chiky’s translator, and he identified Coyote as another supplier.
Jairo Ferrera Quintero, who was cooperating with authorities in exchange for a lighter sentence in his drug case, testified that he saw Chiky deliver drugs to Castilla, that he had received drugs directly from Castilla, and that he saw Chiky and Castilla exchange drugs and money. According to Quintero, he delivered drugs for Castilla on three occasions to repay money that he had borrowed to get an attorney for his brother Mario Quintero.
The government submitted Brown’s cell phone as evidence; the phone contained numbers for Chiky, Coyote, and Castilla. Phone logs showed numerous calls between Brown, Castilla, Chiky, Coyote, Flocko and Quintero.
At the close of the government’s case-in-chief, Castilla moved for judgment of acquittal, which the court denied.
Castilla testified in his own defense, admitting that he knew Coyote, Flocko, Quintero, Brown, and Chiky, and that those five men were involved with drugs. He further admitted that he had translated for Brown and Chiky, but denied it had anything to do with drug deals. Castilla denied that he told police he was involved with drugs or that he was involved in any deals with Brown. Castilla further denied dealing drugs with Coyote and using Quintero to sell or deliver drugs. He stated that Quintero and Brown were lying about his involvement. Castilla explained that he told police Chiky had given him $500 to buy supplies for a bar-b-que. He further admitted that he received drugs from Chiky for his own personal use, but stated that he had received only a few ounces from Chiky over six months, and not two-and-a-half kilograms as the police had testified. According to Castilla, he was concerned about Chiky’s drug dealings and tried to contact narcotics officers, but was unsuccessful. He could not explain, however, why the phone logs did not show any calls to narcotics officers. According to Castilla, the police were out to get him and were trying to put him in jail to make him testify against the main drug distributers.
Castilla renewed his motion for judgment of acquittal, which the court again denied. The jury convicted Castilla, specifically finding that the amount of drugs involved was five kilograms or more. The court sentenced him to 169 months imprisonment. Castilla now appeals.
Castilla argues that the evidence was insufficient to support his conviction because the connection between him and the co-conspirators was tenuous at best and there was no direct evidence linking him to any agreement to sell drugs. He asserts that Brown and Quintero are unbelievable, and he calls into question the testimony of the law officers, challenging their memories of the interview.
We review sufficiency of the evidence claims de novo, viewing the evidence in the light most favorable to the government. United States v. Faust, 456 F.3d 1342, 1345 (11th Cir.2006); see also United States v. Munoz, 430 F.3d 1357, 1367 (11th Cir.2005), cert. denied, — U.S. -, 126 S.Ct. 2305, 164 L.Ed.2d 816 (2006). This court must decide whether a reasonable juror could have found the defendant guilty beyond a reasonable doubt. Id.
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946716-17962 | HEANEY, Circuit Judge.
George Wasson petitions this Court, pursuant to § 25(a)(1) of the Securities Exchange Act of 1934,15 U.S.C. § 78y(a)(l), to review an order of the Securities and Exchange Commission suspending him from associating with any broker or dealer for a period of forty-five days. The order was based upon the Commission’s determination that Wasson willfully violated and willfully aided and abetted violations of §§ 5(a) and (c) of the Securities Act of 1933, 15 U.S.C. § 77e(a) and (e), in connection with the sale of S & M Industries, Inc. (S & M) common stock. We affirm that portion of the order finding violations of § 5(a)(1) and § 5(c) and reverse the remainder.
On September 16, 1970, the Commission issued an order for private proceedings against twenty-eight respondents, including Wasson. In particular, he was charged with participating in the sale of a substantial block of unregistered S & M common stock. That transaction was initiated by Kenneth Roth, a Miami resident and an officer of S & M, who employed Richard Mackay. a Texas attorney, to arrange an exchange of some of Roth’s S & M shares for automobiles from a Minneapolis dealership. Mackay, in turn, contacted Howard Davidson, a Minneapolis resident, and asked him to locate an interested automobile dealer. Samuel Proman, general manager of a Minneapolis automobile dealership, expressed some interest in the exchange and on April 14, 1969, called Wasson to inquire about the price of S & M stock. At Pro-man’s request, Wasson followed the stock’s listings for about a week and reported to Proman periodically.
Soon thereafter, Proman agreed to exchange seven automobiles for 30,000 shares of S & M stock. Title to the automobiles was to be placed in the names of seven outstate residents. Arrangements were made for Wasson to sell the stock because Proman wanted the proceeds immediately. The share certificates were delivered from Miami, on April 22, and the parties decided that Davidson would take the shares in his name as he was the only person known in Minneapolis. The shares were to be transferred directly to the automobile dealership; but when Proman brought the certificates to Wasson for sale, he was told that the dealership had no account. They agreed to sell the shares in Davidson’s name.
On April 24, Wasson opened an account in Davidson’s name and prepared an agreement assigning the proceeds to the automobile dealership. During this meeting, Was-son informed his superiors at Walston and Company of the contemplated transaction; and based on this information, they commenced an investigation of the securities’ transferability. Subsequently, the securities were sold on the open market.
After two days of hearings, the Administrative Law Judge concluded that Wasson violated §§ 5(a) and 5(c) of the Act by participating in the sale of unregistered securities. In particular, Wasson was sanctioned for failing to discover, when a simple inquiry of Davidson would have revealed, that the S & M shares were owned by a control person, and for failing to disclose to his superiors certain critical factors regarding the transaction which would have caused greater caution in their investigation. In detailing the undisclosed facts which suggested the questionable nature of the transaction, the Administrative Law Judge stated:
What none of these persons [Mr. Was-son’s superiors] knew, but Mr. Wasson did know, was that Davidson was not the owner of the shares, the Lincoln automobiles were to be received by several persons other than Davidson, who was acting for Mackey [sic] and Roth, among others, and that the assignment of funds by Davidson to Prestige was in part designed to permit the delivery of the cars prior to settlement date.
Wasson’s failure to investigate and reveal completely his knowledge of the transaction formed the basis for the Administrative Law Judge’s decision that he sold unregistered securities. The Commission sustained the findings of the Administrative Law Judge, but reduced the sanction imposed.
In his appeal of the Commission’s order, Wasson raises the following issues: (1) that he was deprived of due process by the Commission’s misstatement, in its Order of Proceedings, of the transaction out of which the charge arose, (2) that he was effectively' denied the right to cross-examine adverse witnesses, (3) that the Commission’s order lacked findings and reasons sufficient to support its determination that Wasson violated the Securities Act of 1933, (4) that the Commission’s determination that Wasson sold or offered to sell unregistered securities was not supported by substantial evidence, and (5) that Wasson’s conduct was not willful as a matter of law. Our consideration of each issue follows.
I. The Notice Issue.
In its Order of Proceedings, the Commission mistakenly charged Wasson with violating the Securities Act in connection with the sale of 23,000 shares of S & M stock. On the second day of hearings before the Administrative Law Judge, the Order was amended to reflect the actual number of shares (30,000) involved in the Davidson transaction. Wasson was not present at the second day of hearings and no attempt was made to notify him of the amendment. The 23,000 figure refers to a block of shares which were provided to Walston and Company in partial substitution for the Davidson shares once Walston determined that the latter were not freely transferable.
In substance, Wasson argues that he relied on the original Order and was not aware that the Davidson transaction was the subject of the Commission’s investigation and hearing. He claims this misunderstanding prevented him from adequately preparing his defense to the transaction for which he was sanctioned. There are several flaws in this argument. First, if, in fact, Wasson believed that the Commission was only investigating the 23,000-share transaction, he must also have assumed that no possible charge could be brought against him since he was not involved in the receipt or sale of the substitute shares. However, the original Order clearly indicated that Wasson and others were charged with willfully' violating the Securities Act and ordered them to respond to those charges. He never objected to these charges which leads us to believe that he realized which transaction was involved. More importantly, there is considerable evidence, both from his testimony at the hearings and from his previous correspondence with the Commission, that Wasson was not misled and, in fact, fully understood the charges brought against him.
II. The Right to Cross-Examine Adverse Witnesses.
Because Wasson appeared pro se, the Administrative Law Judge informed him of his right to counsel, his right to refuse to incriminate himself, his right to produce evidence, and his right to testify in his own behalf. He was not told that he had the right to cross-examine adverse witnesses. Under Rule 14(a) of the Commission’s Rules of Practice and § 7 of the Administrative Procedures Act, parties are entitled “to conduct such cross-examination as may be required for a full and true disclosure of the facts.” Wasson argues that his right to cross-examine was implicitly denied by the Administrative Law Judge’s failure to include it among the rights explained.
As a general rule, we believe parties appearing pro se in administrative proceedings should be advised of all pertinent rights to which they are entitled. In this case, Wasson should have been informed of his right to cross-examine adverse witnesses. Nevertheless, we do not think Wasson’s suspension should be reversed because of the Administrative Law Judge’s failure in this regard. In presenting this argument, Wasson identifies no ways in which the failure prejudiced him and no instances where the opportunity to cross-examine might have helped his case. Under these circumstances, we believe the error was harmless.
III. Adequacy of the Commission’s Findings.
In its opinion, the Commission sanctioned Wasson for directly violating §§ 5 (a) and (c) of the Securities Act of 1933.and for aiding and abetting those violations. Was-son claims that the Commission’s opinion lacked adequate findings and reasons in support of those determinations.
Section 8 of the Administrative Procedures Act, 5 U.S.C. § 557(c)(3)(A), requires that agency adjudications provide findings, conclusions and the reasons or bases therefor on all material issues of fact and law. The purpose for requiring findings of fact is to furnish parties and the reviewing court with a sufficiently clear basis for understanding the premises used by the tribunal in reaching its conclusions of law. Northeast Broadcasting Inc. v. F. C. C., 130 U.S.App.D.C. 278, 400 F.2d 749 (1968). In many cases, the absence of required findings has been fatal to the validity of agency decisions. Anglo-Canadian Shipping Co. Ltd. v. Federal Maritime Comm’n, 310 F.2d 606 (9th Cir. 1962). See Saginaw Broadcasting Co. v. Federal C. Comm’n, 68 App. D.C. 282, 96 F.2d 554, cert. denied sub nom. Gross v. Saginaw Broadcasting Co., 305 U.S. 613, 59 S.Ct. 72, 83 L.Ed. 391 (1938). However, the standard applied in reviewing agency decisions is not a rigid one. Although findings are required when an agency performs its adjudicatory function, reversing an agency order for failure to abide by this command is inappropriate when the path followed by the agency can be discerned and when its statement is sufficiently precise to permit meaningful judicial review. Colorado Interstate Gas Co. v. Federal Power Comm’n, 324 U.S. 581, 595, 65 S.Ct. 829, 89 L.Ed. 1206 (1945); Chieppo Bus Company v. United States, 383 F.Supp. 1192 (D.Conn.1974). See also Minneapolis & St. Louis Ry. v. United States, 361 U.S. 173, 80 S.Ct. 229, 4 L.Ed.2d 223 (1959); United States v. Pierce Auto Freight Lines, 327 U.S. 515, 66 S.Ct. 687, 90 L.Ed. 821 (1946); Note, Administrative Findings under Section 8(b), 51 Va.L.Rev. 459 (1905). We have no difficulty following the agency’s “path” in support of their conclusion that Wasson violated §§ 5(a)(1) and (c). His involvement in the initial stages of the transaction was extensive. Although he did not sell the shares himself, he completely controlled the transaction until his supervisors relieved him and structured the sale arrangement through Davidson’s account. These factors, coupled with his failure to question Davidson on the source of the stock and his failure to disclose all information to his superiors, led the Commission to find that he willfully sold and willfully aided the sale of unregistered securities.
There are no findings or evidence in the record to substantiate a violation of § 5(a)(2). That section prohibits use of the mails to carry a security for the purpose of sale or for delivery after sale. The Commission made no finding that the 30,000 shares of unregistered stock were carried interstate for delivery after sale and a finding of delivery after sale cannot necessarily be inferred from a finding of sale. Thus, we must reverse the Commission’s determination that Wasson violated § 5(a)(2).
IV. Sufficiency of the Evidence to Support the “Sale” Finding.
Wasson contends that since he did not personally execute the sale of the unregistered securities, the finding under § 2(3) of the Securities Act of 1933, 15 U.S.C. § 77b(3), that he sold or offered to sell those securities is without substantial basis in the evidence. He acknowledges that decisions involving violations of § 5 prosecuted under § 12(1) of the 1933 Act may suggest a definition of “sale” which includes participants in a transaction who do not actually contact the ultimate purchaser, but argues that this definition ought not to be applied to violations of § 5 prosecuted under § 15 of the 1934 Act. He reasons that since § 12 has no aider and abettor provision, courts have given a more expansive definition to its “sale” term. Such a broad definition is unnecessary under § 15, he argues, because that provision includes a sanction for aiders and abettors.
Courts considering the “sale” or “offer to sell” in § 12 proceedings have developed two distinct standards for determining whether an individual’s actions makes him a seller under § 2(3). The Fifth Circuit adopted a proximate cause test in Hill York Corp. v. American Int’l Franchises, Inc., 448 F.2d 680 (5th Cir. 1971). In that case, the Court held
that the proper test is the one previously forged by the court in Lennerth v. Men-denhall, supra. [234 F.Supp. 59 (N.D. Ohio 1964)] “ * * * the line of demarcation must be drawn in terms of cause and effect: To borrow a phrase from the law of negligence, did the injury to the plaintiff flow directly and proximately from the actions of this particular defendant?”
Id. at 693.
In developing the negligence-related standard, the Fifth Circuit explicitly rejected the broader participation theory followed by the Southern District of New York in Wonneman v. Stratford Securities Co., Inc., CCH Fed.Sec.L.Rep. ¶ 90,923 (S.D.N.Y. 1959). The participation concept would hold liable virtually every person who participated in the events leading up to the transaction. In our view, neither theory is wholly satisfactory. The participation theory is too broad in that it extends liability to persons for remote or incidental connection with the transaction. See Hill York Corp. v. American Int’l Franchises, Inc., supra at 692. The “sale” term in § 2(3) was meant to be interpreted liberally, Roe v. United States, 316 F.2d 617, 620 (5th Cir. 1963); Creswell-Keith, Inc. v. Willingham, 264 F.2d 76, 80 (8th Cir. 1959), but not so liberally that all participants in a transaction share liability.
Our difficulty with the Fifth Circuit’s proximate cause test is that it fails to elucidate or focus the trier of fact’s attention on those policies which the Act was designed to implement and which, in our judgment, ought to be the basis for a “sale” or “offer to sell” determination.
The Securities Act of 1933 was designed to provide investors with full disclosure of material information concerning public offerings of securities in commerce. Ernst & Ernst v. Hochfelder, 425 U.S. 185, 195, 96 S.Ct. 1375, 47 L.Ed.2d 668 (1976). See H.R.Rep.No.85, 73rd Cong., 1st Sess., 1-5 (1933). To accomplish this end, registration and disclosure requirements were imposed on those with access to relevant information. The point of sale is a crucial step in the Act’s disclosure scheme in that many of the Act’s regulatory provisions are triggered by the actor’s involvement in a “sale” or “offer to sell.” In our judgment, the sale point assumes this importance because in it is the occasion where, at least in theory, relevant information can be obtained from the seller and disclosed to the buyer. Of course, securities transactions as a rule involve various intermediaries between the issuer and ultimate purchaser; identifying a sales point where seller contacts buyer is often impossible. We are not suggesting that a sales point must be identified for each transaction and liability imposed according to each individual’s proximity to that point. However, we do believe that one factor which ought to be considered in determining the “sale” or “offer to sell” issue is whether the defendant was uniquely positioned to ask relevant questions, acquire material information, or disclose his findings.
With this in mind, we begin with Wasson’s argument that the sale term of § 5, as prosecuted under § 15, requires that the broker actually execute the sale. We cannot accept this interpretation for several reasons. First, it ignores the way in which brokerage houses function. In that system, the registered representative procures an order, but oftentimes backroom personnel complete the transaction by locating a willing buyer. Thus, the absence of direct contact between a broker and the ultimate purchaser is in no sense determinative of his seller status. Hill York Corp. v. American Int’l Franchises, Inc., supra, at 692. More importantly, Wasson’s interpretation would relieve a broker who has initial contact with the seller from liability for failing to investigate or disclose relevant information concerning the stock if he does not actually execute the sale. This interpretation would shield a broker from liability who failed to pass on material information acquired from the issuer or who completely neglected his responsibility to investigate the source and transferability of the stock. We believe such a result is completely inconsistent with the Act’s disclosure aims and ignores the oftentimes crucial positioning of a broker to obtain necessary information from the seller.
Under the circumstances of this case, we have no difficulty finding that Wasson “sold” or “offered to sell” the S & M securities. His involvement with the transaction at the initial stage was extensive. He followed the market quotations of S & M stock at Proman’s request, opened an account for Davidson, arranged with Pro-man and Davidson to have the shares sold through the latter’s account, consulted with Proman concerning the source of the stock and the nature of the transaction, learned from Davidson or Proman that Davidson did not own the shares, that the automobiles were for several persons other than Davidson, and that the assignment of funds was designed to allow delivery of the vehicles before the settlement date. In essence, Wasson completely controlled the transaction until he disclosed some of his findings to his superiors at Walston and Company. We believe Wasson should be treated as a seller because of his extensive role in facilitating the sale because he was made aware of questionable circumstances surrounding the transaction which should have been investigated more fully and revealed in detail to his superiors, and because his position in the flow of information made his failure to fully investigate or disclose all the more serious.
V. Whether Wasson’s Conduct was Willful.
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1498661-29646 | DYER, Senior Circuit Judge:
This is an appeal from a summary judgment, 527 F.Supp. 927, entered in favor of the plaintiffs on two counts which alleged that the defendants, Manatee Board of County Commissioners, Manatee County, and individual County Commissioners, abridged plaintiffs’ rights to due process in violation of 42 U.S.C. § 1983 and the Fourteenth Amendment to the United States Constitution (Count 1), and plaintiffs’ rights to due process under the Florida Constitution (Count 4), in refusing to approve a preliminary subdivision plat. The court granted an injunction and directed the defendants to issue the plat to the plaintiffs. The defendants assign error in the court’s findings that the applicable regulations had been complied with and that they therefore violated an administrative duty to approve the plat; that there were no genuine issues of material fact that precluded the entry of summary judgment; and that the denial of the plaintiffs’ application was arbitrary and capricious. We affirm.
Plaintiffs Southern Cooperative Development Fund, Inc. (SCDF), Small Farm Development Corporation (SFDC), and Manatee County Community Development Corporation are associated with a joint private-public program called the Family Farm Cooperative Program (FFC Program) whose purpose is to foster the creation and development of agricultural cooperative communities as a means of addressing rural poverty by making it possible for low-income and disadvantaged persons interested in agriculture to own and operate small family farms. The program is funded by a combination of government grants and low-interest loans, private sector loans, and internally generated revenues. Plaintiff Rutledge is a resident of Manatee County who applied for and was eligible to participate in the FFC Program.
In 1979 SCDF purchased a 1631 acre tract of land near the Myakka-Wauchula Road, approximately six miles from the unincorporated town of Myakka and twenty five miles from the city of Bradenton, Florida. The property is in the unincorporated area of East Manatee County and is zoned for agricultural use. The SFDC representatives contacted officials of the Manatee County Planning Department, the county agency principally responsible for land planning and development, to discuss the establishment of the agricultural cooperative and to determine what county requirements would apply to the project. The Planning Department advised SFDC that it' would be necessary to prepare a subdivision plat and obtain approval of the Manatee County’s Board of County Commissioners in accordance with Manatee County’s Subdivision Regulations.
Under the Subdivision Regulations a developer must submit pre-application plans for review with the Planning Department, the Health Department, the Highway and Engineering Department, and the Utility System, prior to making an application for subdivision approval. Plaintiffs prepared and submitted a detailed pre-application plan describing the proposed agricultural community. They subsequently received permission from the Planning Department to submit an application for preliminary plat approval. A plat application, titled the Long Creek Subdivision, was submitted on February 1,1980, and showed a subdivision of 49 ten-acre tracts, 4 one-acre tracts, and two tracts larger than 460 acres. As a result of discussions with the county staff and agencies, plaintiffs agreed to modify the design of some streets within the subdivision and to improve a portion of the Myakka-Wauchula County Road abutting plaintiff’s property. They also agreed to change dead-end streets to cul-de-sacs and established setbacks for a power line ease ment. A revised plat reflecting the changes was submitted on February 29, 1980. As required by the Subdivision Regulations, the Highway and Engineering Department, the Health Department, and the Utility System reviewed the application for “conformity with all County regulations” and expressed no objections. The Planning Department, as required, recommended to the Manatee County Planning Commission (a public board appointed to advise the Commission on subdivision and zoning matters) that - preliminary plat approval be granted, noting that the Long Creek Subdivision “meets all requirements of preliminary plat review” and that the other county departments had “no objections to the preliminary plat.” The Planning Commission recommended to the County Commission that the plat be approved. Notwithstanding its compliance with all relevant county ordinances, SFDC’s project was a subject of dissent among residents of Manatee County. At the first meeting of the Commission on the Long Creek Subdivision application on March 29, 1980, many members of the all-white community complained that the participants in the FFC program would be low-income blacks and Spanish-Americans and that the program was a federal “give away”. During the hearing Commissioner Driggers wanted to consider factors other than compliance with the Subdivision Regulations because although the plat complied with the regulations he felt that this was not a “normal” subdivision. Rather than approve the plat, the Commission directed the Planning Department to undertake an additional study of the Long Creek Subdivision. This was accomplished and the Planning Department once again concluded that the SFDC’s plat application complied with the Subdivision Regulations. This report was submitted to each Commissioner before the May 1 hearing and noted that the “Long Creek Subdivision appears to meet all requirements of the Manatee County Zoning Ordinances and Subdivision Regulations ...” On May 1, 1980 the Commission voted unanimously to disapprove the plat. Although Section 23 of the Manatee County Planning Act expressly requires the Commission to publicly state its reasons for disapproval of the plat, neither the Commission nor any of the Commissioners gave any reason for disapproving the plat.
Plaintiffs filed suit on May 30, 1980 and undertook discovery. Depositions of the Commissioners established that the Commission accepted the fact that the plat complied with the County’s Subdivision Regulations. Plaintiffs filed a motion for partial summary judgment. The defendants did not controvert the fact of SFDC’s compliance with the Subdivision Regulations.
On July 2, 1981 the district court entered an order finding that only factors contained in the Subdivision Regulations could constitute grounds for denial of the plat application, and since the Commission had failed to state reasons for its May 1,1980 denial, the district court directed that “the County Commission should be and is afforded the opportunity to again consider Plaintiffs’ plat application within the guidelines set forth above (the Subdivision Regulations ‘enacted pursuant to the Manatee County Planning Act, Chapter 63-1559 ... which is attached ... as Exhibit B’).” These were the Subdivision Regulations in effect at the time that the plat application and the suit were filed.
On August 11,1981 the Commission again considered the plaintiffs’ plat application. At the meeting the commissioners remained silent on the merits of the application. The conclusions of the Planning Department in their new review of the application were similar to those found in the first staff report in regard to the public facilities problem. After comments by the planning staff, plaintiffs’ counsel, and an attorney representing local residents, the Commission proceeded immediately to vote unanimously against the subdivision. The Commission then instructed their legal staff to prepare a written order of their decision. Shortly thereafter, the attorney representing the County in this litigation returned to the meeting with the order denying preliminary plat approval. The order made findings of fact that the road access to the proposed subdivision would be unsafe and inadequate; that public school facilities made necessary by the proposed development were not available and were not planned to be constructed; that necessary public or private facilities and sewers were inadequate; that there was no proximity to recreation and shopping facilities and schools and the extra traffic could not be handled safely; and that the proposed subdivision would constitute urban sprawl.
Based on these findings the Commissioners determined that the application did not meet either the requirements of the Subdivision Regulations in effect at the time of the initial consideration of the application on May 1, 1980, or the requirements of the Development Code. The Commissioners further determined that the proposed plat would be in violation of Section 336.05(2) of the Florida Statutes which, they argue, authorizes a county commission to reject a plat if road access is not adequate or safe, and in violation of Section 235.193, Florida Statutes, which, they argue, authorizes denial of a subdivision application if public school facilities are not available or will not be made available concurrent with development. Finally, the Commissioners decided that the subdivision was not consistent with the Manatee County Local Government Comprehensive Plan. '
On December 3,1981, following the Commission’s second denial of SFDC’s plat, the district court granted plaintiffs’ motion for summary judgment on Counts 1 and 4, entered declaratory judgment for plaintiffs and ordered Manatee County to approve the plat. The defendants’ cross-motion for summary judgment on those counts was denied. The district court granted a stay pending appeal of its injunction.
The issues are sharply drawn. The defendants contend that the board’s denial of the plat application was justified under the Subdivision Regulations in effect at the time the application was filed; was justified under the provisions of the Development Code, enacted after the plaintiffs’ plat application had been filed and after this litigation had been instituted; and was justified under the provisions of Florida Statutes, Section 336.05(2) , relating to the inadequacy of road access, and Section 235.-193 , relating to inadequacy of schools.
The plaintiffs contend that since Manatee County enacted detailed and comprehensive Subdivision Regulations with which plaintiffs complied, the Commission had no discretion to disapprove the plat for reasons not contained in the Subdivision Regulations, nor could their disapproval be based upon the later enacted Development Code.
To put the case in proper perspective, we must, at the outset, reject the defendants’ argument that this case involves a challenge to local land use laws, and therefore the standard enunciated in Euclid v. Ambler Realty Co., 272 U.S. 365, 47 S.Ct. 114, 71 L.Ed. 303 (1926) should apply, i.e., whether the action of the Commission was arbitrary and capricious. The plaintiffs do not challenge the exercise of legislative function by Manatee County, or the validity or legality of the zoning ordinances. On the contrary, the plaintiffs urge that the Subdivision Regulations be applied as written. What we are called upon to decide is whether the Commission’s actions were authorized as a matter of Florida law, and if so whether their actions were in violation of the Due Process clause of the Fourteenth Amendment.
The district court held that “Manatee County must base its approval or disapproval of plat applications upon the regulations and requirements contained in the Subdivision Regulations, and not upon any broad powers of discretion. As such, the County Commission does indeed act in an administrative, and not a discretionary, capacity.” Defendants take issue with this holding. They argue that even assuming that only the Subdivision Regulations in effect at the time of the initial application apply, under Florida law the regulations of subdivisions require the use of reasonable discretion by the Commission in the application of standards and requirements to the specific circumstances of the subdivision application. They point to the preamble to the Subdivision Regulations as authority for the position that prefatory language reserving discretion to provide for the general health, safety and welfare was sufficient to sustain their action. We disagree. The preamble contains no standards with respect to subdivision approval. It merely sets forth the underlying purpose for enacting the Subdivision Regulations. The language in the preamble cannot serve as an independent source of authority for disapproving plats. This would permit the Commission to hold in reserve unpublished requirements capable of general application for occasional use as the Commission deems desirable.
Defendants also rely on an access requirement in the Subdivision Regulation which provides: “No subdivision shall be approved unless its street system is connected to an arterial highway by a public road which is county or state maintained.” It is undisputed that the proposed plat satisfied this requirement since the subdivision connected to a county road, which in turn connected with an arterial highway. But the defendants contend that this is not enough. They base their discretion, they say, to deny this plat application because the Myakka-Wauchula county road was in such poor condition that it did not fulfill the minimum standards of design and maintenance. We think it is clear, however, that the defendants cannot impose ad hoc requirements regarding the condition of county roads adjacent to proposed subdivisions in order to implement the purpose of the Subdivision Regulations.
We agree with the district court that Broward County v. Narco Realty, 359 So.2d 509 (Fla.App.1978) enunciated the principle of Florida law that is controlling here. In that case even though Narco had complied with all of the legal requirements for platting its land, the Commission contended that it still had the discretion to approve or to refuse approval of any plat. The court rejected this argument saying:
All persons similarly situated should be able to obtain plat approval upon meeting uniform standards. Otherwise the official approval of a plat application would depend upon the whim or caprice of the public body involved.
... the property owner has done all the law required of him to entitle his plat to be recorded. At that point any discretion in the County Commission vanished.
Defendants maintain however that Narco must be read narrowly because the only principle that it established was that where a local governmental body stipulates that all legal requirements of the plat approval process are met, there is no discretion in the Commission. But it did not establish the principle that a Commission’s action in reviewing a plat application is ministerial instead of discretionary in nature. We are unimpressed with this argument. Here the Commissioners admitted that the plat complied with the Subdivision Regulations and the case is therefore in the same factual posture as Narco. To argue that there is a difference between compliance with subdivision requirements established by stipulation in Narco vis-a-vis by an uncontroverted showing sub judice, is a bit of hyperbole in which we will not indulge.
Defendants further submit that Narco has been misinterpreted because Garvin v. Baker, 59 So.2d 360 (Fla.1952), State ex rel. Zuckerman-Vernon Corp. v. City of Miramar, 306 So.2d 173 (Fla.App.1973), and Broward County v. Coral Ridge Properties, 408 So.2d 625 (Fla.App.1981) established the principle that the Commission had discretion in reviewing the Long Creek Subdivision plat application. An analysis of these cases fails to support the defendants’ assertion that the plat approval process is discretionary in nature. In Garvin, the Commissioners denied approval of the plat because the streets were not sixty feet in width and the lots were too shallow. The city’s ordinance required the streets to conform as nearly as practicable to existing streets and in no event should they be less than fifty feet4 *** . Plaintiffs’ proposed plat indicated street widths of 50 feet, where existing streets in the area were 60 feet wide. There was no ordinance concerning the depths of lots. The trial court held that it was proper to reject the plat on the basis of the ordinance governing street widths, but that it was improper to reject it on the basis of lot depths since this was not covered by the ordinance. It is pertinent to note that the court said:
Should the city desire to effectuate some sound public policy within its authority, this should be done by duly enacted ordinances setting up standards to guide a citizen in carrying on his affairs. Otherwise, a citizen could act only subject to the unknown and uncertain views of a public official or several public officials, as experienced from time to time.
Id. at 362. The Florida Supreme Court affirmed noting that the lower court passed “upon the authority of the City by ordinance to require streets to be conformable as nearly as practicable to existing streets. The court held that the City had not abused its discretion in requiring the streets shown upon the plat to have a width of sixty feet in conformity with other streets with which it connected. There was no error in this finding...” The defendants argue that this holding means that the board had discretion in reviewing the plat application because it required a sixty-foot street width when the ordinance’s language only required a fifty-foot width, ergo, if the board had no discretion in the plat approval process the court would have issued the writ, since the board denied the plat because the streets did not have sixty-foot widths. This argument misses the mark for two reasons. Plainly the language in the ordinance in question was in the disjunctive — it required a minimum of fifty-foot width or that the proposed streets conform as nearly as practicable to existing streets. Moreover, the “discretion” that the court was talking about was with respect to that exercised in enacting an ordinance for a valid purpose, not a discretion in the application of the ordinance. “It requires no citation of authority to establish the fact that a wide street changing into a narrow street, or a narrow street changing into a wide street, constitutes a hazardous traffic condition .... the changing of the width of streets and roads involves the public welfare and safety to a high degree, and public authorities having jurisdiction of such matters have a duty to perform in order to protect the public from hazardous and dangerous traffic conditions.” Id. at 362.
Defendants’ reliance on Zuckerman gives us little pause. A writ of mandamus filed by a developer to compel issuance of a plat approval was denied because at the time the city had not reviewed the plat or taken action since the developer’s compliance with the applicable subdivision regulations were unresolved through no fault of the city. Moreover, in Narco the same court took pains to distinguish Zuckerman noting that in that case there were unresolved questions whether the plan met the zoning requirements. To make certain that Zuckerman did not impinge on the principles set forth in Narco the court added, “There are some rather broad statements in Zuckerman which might lead one to conclude that mandamus never lies to require approval of a plat. While Zuckerman is clearly correct on its facts, to the extent that it might be interpreted to hold that mandamus will never lie to require approval of a plat, we recede therefrom.” 359 So.2d at 511. The exercise of discretion and judgment about which the court spoke is to determine whether a plan meets the zoning requirements. It is not a discretion to approve or disapprove a plan that does meet the requirements.
Defendants’ reliance on Coral Ridge Properties is also misplaced. Narco was cited with approval, but mandamus was found not to be an appropriate remedy because the county contended that even though there was compliance with the requirements for filing a plat, nevertheless lack of access, in violation of Section 336.-05(2), Florida Statutes, was an additional requirement that had not been met. The property owner disagreed that the statutory requirements were applicable. The court found that whether the county had misapplied or misapprehended the legal requirements for plat approval, i.e., whether in addition to the plat requirements the statute could be invoked, was a question properly dealt with by review because a merely erroneous decision would not support an
application for mandamus. Plainly, Narco is neither overruled nor limited by Coral Ridge Properties.
Defendants next assert that the Development Code, adopted April 30, 1981, after the rejection of plaintiffs’ plat application on May 1, 1980 and after this litigation commenced, applies to the plaintiffs’ plat application because it was the law existing at the time of the Commissioners’ second decision of August 11, 1981. In its order of July 2,1981 the district court made preliminary findings that the plaintiffs had apparently complied with all of the Subdivision Regulations and held that “Manatee County must base its approval or disapproval of plat applications upon the regulations and requirements contained in the Subdivision Regulations...” The court also found that the county had not specifically stated the reasons for disapproval of the plat application as required by the Manatee County Planning Act, and stated, “Because the County Commission did not articulate its reasons for disapproving plaintiffs’ application, and because it does indeed appear from the record that the disapproval may have been based upon criteria not contained in the Subdivision Regulations, the County Commission should be and is afforded the opportunity to again consider plaintiffs’ plat application within the guidelines set forth above.” (Emphasis added.)
In its final order the court found that “the plaintiffs’ rights would be violated if new regulations are used to deny a plat application which complied with the regulations in effect at the time the plat application was filed.”. The court then proceeded to again review the county’s rejection of the plat under the Subdivision Regulations and refused to consider the applicability of the Development Code.
The defendants point out that the Development Code was adopted not to defeat this litigation but was made necessary by the requirements of the Florida Local Government Comprehension Planning Act of 1975, Chapter 163.3161 et seq., Florida Statutes (1981), known as LGCPA, which mandates that all local governments in Florida adopt comprehensive plans not later than July 1, 1981. Subdivision Regulations enacted or amended must be consistent with the adopted comprehensive plan. There is no question that plaintiffs’ plat application does not meet the requirements of the new Development Code. It follows, defendants argue, that the land use ordinance can be amended during the pendency of a controversy, and that the controversy must then be determined on the basis of the amended law. See State Etc. v. Oyster Bay Estates, Inc., 384 So.2d 891 (Fla.App.1980); Lelekis v. Liles, 240 So.2d 478 (Fla.1970); City of Miami Beach v. 8701 Collins Ave., 77 So.2d 428 (Fla.1954). As we see it, however, these cases simply declined to apply the law of equitable estoppel when there was an absence of a factual basis for its application, a principle that is not open to question. But this line of authorities is inapposite here for several reasons.
First, we have a finding by the district court (with which we agree) that the prior denial or delaying action of the defendants was unlawful. It would therefore indeed be inequitable to permit the defendants to take advantage of a new law enacted while an application for plat approval, valid when filed, has been unlawfully delayed. See Smith v. City of Clearwater, 383 So.2d 681 (Fla.App.1980), petition dismissed, 403 So.2d 407 (Fla.1981); Davidson v. City of Coral Gables, 119 So.2d 704 (Fla.App.1960), cert. dismissed, 126 So.2d 739 (Fla.1961).
Second, the district court’s order of July 2, 1981, made “preliminary findings ... that plaintiffs have complied with all of the Subdivision Regulations ... and that the defendants must base their approval or disapproval ... upon the regulations and requirements contained in the Subdivision Regulations.” Since, however, the defendants had given no reason for their rejection of the application, as required by the Subdivision Regulations, the court gave the defendants the opportunity, within 45 days, to again consider plaintiffs’ application “within the guidelines set forth above.” The clear language of the district court’s order leaves no doubt that it did not intend to give the defendants carte blanche authority for a de novo review of plaintiffs’ application. It simply gave the defendants the opportunity to do what they were required to do in the first place, i.e., give the reason, if any, why the plaintiffs’ application did not conform to the Subdivision Regulations. The district court’s final order confirms this.
Finally, under the provisions of the ordinance which enacted the Manatee Plan, the new requirements of the Plan and its implementing regulations were not applicable to land use applications filed with the county prior to April 30,1981, the effective date of the Plan. Pursuant to LGCPA, the Development Code implemented the Manatee Plan and is required to be consistent with it. Since the plaintiffs filed this plat application in February, 1980 they were grandfathered out of the new regulations in the Development Code.
For the foregoing reasons the district court was correct in rejecting the defendants’ application of later enacted ordinances to deny plaintiffs’ plat application.
We now turn to the defendants’ claim of error in the refusal of the district court to find that certain Florida statutory provisions authorized them to reject plaintiffs’ plat application because of inadequate road access to the proposed subdivision, and because adequate school facilities were not available or planned to be constructed.
Defendants argue that Section 336.05(2) Florida Statutes gave them discretion, independently of the Subdivision Regulations, to deny the plat application because of the inferior condition of the Myakka-Wauchula County Road, the only access to the subdivision site. The district court held this to be an enabling statute rather than a source of discretion, and therefore their reliance upon discretion, rather than on uniform standards was improper. Moreover, the district court found unpersuasive the defendants’ argument that because the proposed subdivision was not connected with a completed highway sufficient for the anticipated traffic it failed to comply with both the statutes and the Subdivision Regulations. The court found “access” in both contexts not to require a completed road in advance of development.
The Subdivision Regulations contain specific and detailed requirements pertaining to access to a subdivision. They do not impose any requirements regarding the condition of roads maintained, by the county. In fact, they do not incorporate or in any way refer to any statutory provision. It is undisputed that the plaintiffs’ proposed plat met the requirements of the Subdivision Regulations concerning access. Thus the narrow question is whether the statutes give the defendants discretion to deny a plat application because the connecting county road is, in their opinion, in a deteriorated and unsafe condition, even though the plat complies with the access requirements of the Subdivision Regulations. We agree with the district court that this is an enabling statute which would authorize a local government to establish specific land use standards, but it does not constitute an independent source of discretion. Were we to hold otherwise the statute would confer upon the defendants authority to grant plat approval to one and yet withhold it from another without guides of accountability, a result that would not meet the test of constitutionality. See, e.g., Harrington & Co., Inc. v. Tampa Port Authority, 358 So.2d 168 (Fla.1978); Dickinson v. State, 227 So.2d 36 (Fla.1969); North Bay Village v. Blackwell, 88 So.2d 524 (Fla.1956); Drexel v. City of Miami Beach, 64 So.2d 317 (Fla.1953); City of Naples v. Central Plaza of Naples, Inc., 303 So.2d 423 (Fla.App.1974).
We are not unaware of the defendants’ reliance on Chase Manhattan Mortgage & Realty Trust v. Wacha, 402 So.2d 61 (Fla. App.1981), in which, without discussion, in an alternative holding, the court affirmed the denial of a site plan, without prejudice, “on the basis of inadequate access” under Section 336.05(2) Florida Statutes. There is no discussion of the relationship of this statute to any specific standards the county may have had regarding access, or the applicability of such statutes when specific subdivision regulations exist. There is also no discussion whether the rejected site complied with the specific access requirements. Under these circumstances we are unpersuaded that the statute gives the defendants independent discretion to interpret what is “adequate and safe” and impose ad hoc requirements regarding the condition of the county road adjacent to the proposed subdivision.
Similarly, the defendants, relying on Section 235.193 Florida Statutes, refused plaintiffs’ plat application finding that the public school facilities were not adequate to serve the proposed development.
Without belaboring the point we reject this argument for the same reasons that we explicated concerning the “access” statute.
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9227220-16650 | ORDER ON MOTION TO DISMISS
(Doc. No. 145)
ALEXANDER L. PASKAY, Chief Judge.
It is not unusual, as a matter of fact, it is quite common that debtors who are about to lose their homes seek refuge in the court of last resort, which is the Bankruptcy Court. While it is true that this happens as a general rule in Chapter 13 cases, there is nothing in the Bankruptcy Code, which prohibits an individual debtor who is eligible for relief under Chapter 11, to file a Petition for the same reason, even if that is the paramount and at times, the only reason to do so. It cannot be gainsaid that the threat of the loss of a home due to a pending mortgage foreclosure or actually threat of an immediate foreclosure sale, prompts the debtor to seek relief in the bankruptcy court. However, it is clear that basically there is no difference when a debtor files a Petition to save the home when it is threatened by loss by a judgment creditor who is aggressively pursuing an attempt to obtain satisfaction of a judgment by liquidating all assets of the debtor, including the family home, or when the loss of the home is at a foreclosure sale. The fact that the debtor is able to pay his debts as they mature and that the debtor is solvent is of no consequence, especially when the debtor is rendered hopelessly insolvent by the entry of a money judgment in a very large amount. It is well established that the mere fact that the bankruptcy Petition thwarts a judgment creditor in its attempt to enforce a valid legal right is no basis alone to deny the relief sought by the debtor provided that the debtor has an honest intention and a real need for relief and the ability to obtain relief under the provisions of Chapter 11 of the Code.
The instant matter under consideration is a Motion to Dismiss (Doc. No. 145) this Chapter 11 case of Kevin Adell (Debtor), which is filed by John Richards Homes Building Company, L.L.C. (JRH), a judgment creditor of the Debtor. JRH obtained a judgment in the bankruptcy court, in the Eastern District of Michigan, against the Debtor in the amount of $4,100,000, as compensatory and $2,000,000, as punitive, plus attorney’s fees in the amount of $313,230.68, for a total of approximately $6.4 million. In due course, this Court scheduled a preliminary hearing on the Motion to Dismiss, at the conclusion of which, this Court entered an order (Doc. No. 219), which specified the following is sues to be tried at a final evidentiary hearing:
(1) the alleged bad faith aspect of the filing of this Chapter 11 case, including but not limited to the intent of the Debtor to abuse the judicial process; and
(2) the Debtor’s attempts to frustrate the legitimate efforts of JRH in enforcing its rights against the Debtor by filing this Chapter 11 case.
At the duly scheduled final evidentiary hearing, the following facts have been established by documentary evidence and testimony of witnesses relevant to the two issues outlined above.
The Debtor is a highly successful executive and at the time of filing, he was and still is, the officer of the following corporations: Adell Broadcasting Corp.; STN. com, Inc.; The Word Network; and Cuba-na One Network. In the year 2000, his annual gross income was $935,660; in 2001, $2,277,724; in 2002, $1,705,683; in 2003, $1,700,000; and in the first part of 2004, $380,000.
Upon reviewing an ad promoting the sale of custom-built homes by JRH, the Debtor inquired about the possibility of having a home constructed by JRH. The parties met and discussed the price. JRH wanted $4 million and the Debtor was only willing to pay $3 million. After a few meetings, they agreed on a price and the Debtor signed a contract with JRH for the construction of the home for $3,030,000. The home was to be constructed within one year. The Debtor paid JRH a $600,000 down. When JRH found out that it did not own the lot but only had an option to buy it, JRH asked the Debtor for more money to purchase the lot. The Debtor gave JRH $1,200,000 more or $1,800,000 total. The Debtor assumed that JRH had already started construction, and when he found out that construction had not yet begun; the Debtor demanded the return of the funds he already paid.
JRH refused and litigation ensued, initially commenced by the Debtor, who was attempting to recover the down payment from JRH. The suit was filed in the state court in the State of Michigan, which was removed by JRH to the district court where the suit is still pending. The Debt- or was advised by an attorney, for whatever reason, that he would obtain greater success if he filed an involuntary petition under Section 303 of the Code against JRH. Following that advice, the Debtor did file an involuntary petition in the Eastern District of Michigan. The Petition was immediately attacked by JRH with the filing of a Motion to Dismiss the Involuntary Case and a Motion for Compensation and Punitive Damages. JRH, in its Motion, contended that the involuntary petition was improper because only one petitioning creditor filed it and JRH has more than twelve creditors. The Bankruptcy Court in the Eastern District of Michigan considered the Motion in due course and on July 15, 2002, entered an order (Doc. No. 29, in the involuntary of JRH) and dismissed the involuntary case. The Bankruptcy Court expressly reserved jurisdiction to consider the Motion for Compensation and Punitive Damages against the Debtor pursuant to Section 303(i) of the Code.
That Motion was heard in due course and at the conclusion of the hearing, on April 25, 2003, the Bankruptcy Court entered an order and awarded sanctions against the Debtor for a total of $6,413,230.68 (Sanction Award). The entry of the Sanction Award generated a flurry of motions filed by JRH who immediately took steps to enforce the Sanction Award. For instance, JRH requested issuance in excess of 32 writs of garnishment beginning on May 12, 2003. In the interim, JRH was successful to cause the Debtor’s personal properties to be seized in Michigan, which was ultimately sold by the U.S. Marshall, without notice to the Debtor.
The record reveals that after the entry of the Sanction Award, the Debtor sold approximately eleven to thirteen high-end vintage cars for $536,000, which according to the Debtor, were worth at least $700,000 to $800,000; cashed in Treasury bills in the amount of $1,700,000; and wire transferred these funds to his attorney’s in Florida, including $300,000 he withdrew from his checking account.
The Debtor arrived in Florida on May 5, 2003. On May 6, 2003, he engaged the services of a real estate broker, and immediately took steps to establish his residency in Florida. He registered to vote in Florida, he registered his automobile in Florida, and he obtained a fishing license. After spending the day looking at thirteen houses, he signed a contract to purchase a house for $2.8 million. The record reflects that the funds he had previously transferred to his attorney in Florida were not enough. He was short $400,000. He called his father and asked him to lend him the shortfall of $400,000. His father agreed and wired the sum to his son’s attorney in Florida. The contract was signed on May 7, 2003, and the deal was closed on May 8, 2003, or two days after he found the house.
On May 19, 2003, the Debtor filed a suit for declaratory relief in the Circuit Court in and for Collier County, seeking a determination that the property he just bought qualified for the protection granted to homesteads by Art. X, Sec. 4 of the Florida Constitution. JRH removed the declaratory relief action to the Bankruptcy Court for the Middle District of Florida, even though at that time, there was no bankruptcy case pending in this District. JRH promptly filed a motion to transfer the removed action to the Eastern District of Michigan, which was granted and the suit was transferred to the Eastern District of Michigan on June 9, 2003.
On May 21, 2003, JRH filed a motion for miscellaneous post-judgment relief and sought an order from the Bankruptcy Court to force a sale of the Naples residence of the Debtor. The Debtor, who claimed that the home was homestead and could not be reached by creditors of the homeowner, resisted the motion. JRH also requested an order requiring the Debtor to turn over certain personal property to the U.S. Marshal. Additionally, JRH sought an order requiring the Michigan Secretary of the State to record liens on several of the Debtor’s vehicles.
On September 17, 2003, the Bankruptcy Court in the Eastern District of Michigan entered an Order (Homestead Order) that determined that the home the Debtor purchased in Naples did not qualify as homestead because (1) whatever homesteads are available in Florida are trumped by Section 303(i) of the Code; and (2) the Debtor did not qualify for homestead because he was not a bona fide resident of Florida. The Bankruptcy Court ordered the Debtor to sell the home within 60 days and directed the Debtor to turn over some other properties to the U.S. Marshal. The Debtor did not sell the homestead but turned over a gold Rolex and gold money clip to the U.S. Marshal, which were sold.
The Debtor promptly appealed the Homestead Order and filed a Motion for Stay Pending Appeal. The Bankruptcy Court denied the Motion. On October 14, 2003, approximately one month after the Bankruptcy Court had rendered its decision; the Debtor filed an Emergency Motion for Stay Pending Appeal in the District Court. Counsel for the Debtor neither in the Motion for Stay filed in the Bankruptcy Court nor the same Motion filed in the District Court, contended that the Debtor was unable to post a su-persedeas bond. On November 10, 2003, the District court granted a Motion for Stay Pending Appeal, provided that the Debtor posts a cash bond in the amount of $2.8 million. The District Court later amended the original Order and clarified that the bond could be cash or a surety bond. Rather than post the bond, on November 14, 2003, three days before the expiration of the 60-day period, the Debtor filed his Petition for Relief under Chapter 11 in this Court, immediately triggering the operation of the automatic stay imposed by Section 362 of the Code. These are the relevant facts as established at the final evidentiary hearing to consider the Motion to Dismiss the Chapter 11 case by JRH.
The Motion to Dismiss (Doc. No. 145) is filed pursuant Section 1112(b) of the Code. This Section provides that a Chapter 11 case may be dismissed if the court finds that it is “in the best interest of creditors and the estate for cause.” Thereafter, the Section lists ten specific grounds for dismissal. It is clear that the specifics are only illustrative and the term “cause” clearly includes lack of good faith and conversely the bad faith of the Debtor in filing the Petition for Relief under Chapter 11.
In support of its contention that the Debtor filed his Petition in bad faith JRH contends the following:
(1) The Debtor has few unsecured creditors whose claims are small in relation to the claims [sic] of the secured creditor;
(2) The Debtor’s “feigned” financial problems involve essentially a dispute between the Debtor and JRH, which can be resolved in a non-bankruptcy proceeding;
(3) The timing of the Debtor’s filing evidences an intent to delay or frustrate the legitimate efforts of the Debtor’s secured creditors to enforce their rights;
(4) There could be no clearer example of a two-party dispute;
(5) If the claim of JRH is excluded, the Debtor has more than enough cash with which to pay his non-insider, non-lawyers debts;
(6) The Debtor’s case lacks any realistic possibility of an effective reorganization; and
(7) The Debtor is seeking to use the provisions of the Bankruptcy Code to create and organize a new business, not to reorganize or rehabilitate an existing enterprise, or to preserve going concern values of an existing business.
On February 19, 2004, JRH filed an Amended Motion to Dismiss (Doc. No. 153). In its Amended Motion to Dismiss, JRH alleged in addition to the allegations set forth above that the Debtor sued Judge Rhodes and others in a mandamus action to prohibit Judge Rhodes from conducting hearings on the criminal contempt issue. Judge Paul Gadola set the hearing on the mandamus request for early March 2004.
The Debtor, in his Response (Doc. No. 168), while not denying most of the factual allegations, placed a totally different spin on the facts relied on by JRH; and denied that the Petition was filed in bad faith. Specifically, the Debtor contends that:
(1) he did not file his Petition in bad faith because chapter 11 remedies are available;
(2) he has substantial debts other then the debt owed to JRH that would require him to file chapter 11 due to the constraints the Code places on filing chapter 13;
(3) the case is not a two-party dispute between the Debtor and JRH;
(4) the timing of the Debtor’s filing, after he was required to post a bond as a condition to stay the Homestead Order, is not evidence of intent to delay or frustrate secured creditors, and does not taint the filing;
(5) he desires to use Chapter 11 so that he may reorganize and pay his obligations;
(6) he has a realistic possibility of an effective reorganization; and
(7) he is not seeking to use the bankruptcy provisions to create and organize a new business.
Additionally, the Debtor contends that filing bankruptcy to prevent the foreclosure of a home has never been evidence of bad faith. The Debtor claims that he needed to file Chapter 11 to reorganize his obligations and to keep his home.
The issue raised by the Motions under consideration has been considered under the Bankruptcy Act of 1898, even before the enactment of the Bankruptcy Code in 1978 ordinarily in Chapter X (corporate reorganization) cases. Breeding Motor Freight Lines Inc. v. Reconstruction Finance Corp., 172 F.2d 416 (10th Cir.1949), cert. den., 338 U.S. 814, 70 S.Ct. 54, 94 L.Ed. 493 (1949). In testing the good faith of the debtor to seek relief under Chapter X, courts emphasized that the real test is the presence of an honest intention of the debtor, an actual need, and the ability to effectuate the aim of reorganization. In re Julius Roehrs Co., 115 F.2d 723 (3d Cir.1940). A statement by the Tenth Circuit in Breeding Motor, supra, a pre-Code case, still represents a viable principle. In this case, the Tenth Circuit stated that courts are “not required to retain on [their] docket a proceeding for reorganization which is merely a visionary or impractical scheme of resuscitation.” Breeding Motor, 172 F.2d at 421. In the case of In re Natural Land Corporation, 825 F.2d 296 (11th Cir.1987), Judge Tjoflat speaking for the Eleventh Circuit, held that the taint of a petition filed in bad faith must naturally extend to any subsequent reorganization proposals thus any plan would fail to meet Section 1229(a)(3) of the Code, which requires that the plan submitted has been proposed in good faith. Natural Land, 825 F.2d at 298. The Eleventh Circuit noted that in light of this conclusion, it is doubtful that Congress intended that a creditor’s right be delayed merely to allow the bad faith debtor to present a reorganization plan, which, as a matter of law, could not be approved, by the court.
Unlike Section 1129(a)(3) of the Code, which requires as condition precedent to confirmation of Chapter 11 Plan, a finding by the court that the plan was proposed in good faith, Section 1112(b) of the Code, which seeks dismissal or conversion of a Chapter 11 case, does not specify “bad faith” as a specific ground for the dismissal. Nevertheless, it can no longer be gainsaid that a petition, which is found to have been filed in “bad faith,” could be dismissed for “cause.” The legislative history relating to the adoption of Section 1112(b) of the Code leaves no doubt that in addition to the specific grounds set for the Section, the court may use its equitable power to prevent a misuse or abuse of the rehabilitative provisions of this Chapter. H.R. No. 95-595, 95th Cong., 1st Sess.1977 (1978 U.S.C.C.A.N. 5787). Courts now uniformly agree that “bad faith” justifies a dismissal of the Chapter 11 case for “cause.” In re Singer Furniture Acquisition Corp., 254 B.R. 46 (M.D.Fla.2000); In re Albany Partners, Ltd., 749 F.2d 670 (11th Cir.1984); In re Phoenix Piccadilly, Ltd., 849 F.2d 1393 (11th Cir.1988); Colonial Daytona Ltd. Partnership v. American Sav. of Fla., F.S.B., 152 B.R. 996 (M.D.Fla.1993); In re Double W Enterprises, Inc., 240 B.R. 450 (Bankr.M.D.Fla.1999); In re Wells, 227 B.R. 553 (Bankr.M.D.Fla.1998); In re Boughton, 243 B.R. 830 (Bankr.M.D.Fla.2000).
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4064855-16643 | MEMORANDUM
This is an appeal from a judgment of the United States District Court for the Northern District of California, entered in favor of San Jose Police Officers Anthony Luisi and Ronald Bays and the City of San Jose, after a jury returned a verdict in favor of the defendants on plaintiffs claims for excessive force, unlawful arrest, and interference with plaintiffs right of free speech. These claims, which invoked 42 U.S.C. § 1983 and Cal. Civil Code § 52.1, arose out of a routine traffic stop, late at night on July 28,1998.
David Tuttelman, who was driving his pickup truck in San Jose, California, was pulled over by two San Jose police officers, Luisi and Bays, because the license plate on Tuttelman’s truck was obstructed and unlit. Once Tuttelman was pulled over, he exited his truck and walked back towards the patrol car. One word led to another and ultimately to an attempted pat-down search by Luisi, followed by a scuffle, which led to Tuttelman’s arrest for resisting, delaying, or obstructing a police officer, in violation of Cal.Penal Code § 148. He was later formally charged with that offense and with battery on a police officer, in violation of Cal.Penal Code § 243.
Tuttelman moved successfully to suppress the Officers’ testimony concerning both charges on the ground that the attempted pat-down search, which set the subsequent events in motion, was not justified by a reasonable suspicion that Tuttelman was armed and dangerous. A subsequent appeal to the Appellate Department of the Santa Clara County Superior Court resulted in a holding that: (1) the attempted pat-down search was unlawful; (2) Tuttelman could not be prosecuted for either resisting arrest or battery on an officer because Luisi was not lawfully performing his duties — a prerequisite for both charges; (3) Tuttelman could be prosecuted for the charge of simple battery, which did not depend on proof that Luisi was lawfully performing his duties; and (4) the testimony of the Officers was not subject to suppression in connection with that charge.
After further proceedings on remand, Tuttelman pleaded guilty to having an ob structed license plate on the night of the incident. Thereafter, he filed the civil rights lawsuit at issue in this ease, alleging various causes of action. This appeal followed the entry of a final judgment in favor of the defendants.
In Jones v. Barnes, 463 U.S. 745, 103 S.Ct. 3308, 77 L.Ed.2d 987 (1983), the Supreme Court observed that “[experienced advocates since time beyond memory have emphasized the importance of winnowing out weaker arguments on appeal and focusing on one central issue if possible, or at most on a few issues.” Id. at 751-52, 103 S.Ct. 3308. The brief filed by Tuttelman in this appeal takes the opposite course. Instead of winnowing out weaker arguments on appeal, Tuttelman challenges virtually every pre-trial, trial, and post-trial ruling made by the district judge.
I.
Tuttelman’s appeal principally challenges the district court’s grant of the Officers motion for summary judgment on the cause of action arising out of the attempted pat-down search. We reject this challenge.
First, as a threshold matter, we reject Tuttelman’s contention that the Officers are collaterally estopped from arguing that the attempted pat-down was supported by reasonable suspicion. Under California law, “the party against whom preclusion is sought must be in privity with the party to the former proceeding.” People v. Garcia, 39 Cal.4th 1070, 48 Cal.Rptr.3d 75, 141 P.3d 197, 201 (2006). Indeed, Lynch v. Glass, 44 Cal.App.3d 943, 119 Cal.Rptr. 139 (1975), one of the leading cases, held that “[d]ue process requires that the non-party have had an identity or community of interest with, and adequate representation by, the losing party in the first action.” Id. at 142; see also Clemmer v. Hartford Ins. Co., 22 Cal.3d 865, 151 Cal. Rptr. 285, 587 P.2d 1098, 1102 (1978) (“[Collateral estoppel may be applied only if due process requirements are satisfied.”). The Supreme Court has similarly so held. See Parklane Hosiery Co. v. Shore, 439 U.S. 322, 327 n. 7, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979) (“It is a violation of due process for a judgment to be binding on a litigant who was not a party or a privy and therefore has never had an opportunity to be heard.”).
In Davis v. Eide, 439 F.2d 1077 (9th Cir.1971), we held that two Los Angeles police officers, who were defendants in a subsequent federal civil action, were not in privity with the prosecution in a prior state criminal action; because “[t]he defendants were city police officers not directly employed by the state [of California],” who “had no measure of control whatsoever over the criminal proceeding and no direct individual personal interest in its out-comet,] • ■ • there was no privity sufficient to invoke the doctrine of collateral estoppel.” Id. at 1078. These factors are consistent with the factors that California courts have since recognized as the essence of privity under California law. See, e.g., Clemmer, 151 Cal.Rptr. 285, 587 P.2d at 1102; Lynch, 119 Cal.Rptr. at 141-42.
Neither of the Officers had an identity or community of interest with, or were represented by, the Santa Clara County District Attorney’s Office, which “represents the State of California in the name of the ‘People’ at criminal prosecutions.” People v. Sims, 32 Cal.3d 468, 186 Cal.Rptr. 77, 651 P.2d 321, 333 (1982) (citing Cal.Penal Code § 684). None of the Officers’ personal interests were at stake in the suppression hearing. Obviously, neither of the Officers had a proprietary or financial interest in or was in control of the criminal prosecution of Tuttelman. Not only did the Officers and the City not join in that action, they would not have been able to do so. Indeed, Bays was not even called to testify at the suppression hearing. Under these circumstances, the Officers were not in privity with the Santa Clara County District Attorney.
The only case Tuttelman cites for the proposition that both the Officers and the City of San Jose are in privity with the prosecution in the prior state court case is Miller v. Superior Court, 168 Cal.App.3d 376, 214 Cal.Rptr. 125 (1985). Miller was a civil lawsuit for damages against a Los Angeles Police Department officer who had previously been convicted of having raped the plaintiff-victim. Id. at 126. Because the officer was a party to that proceeding, he was precluded from relitigating the jury’s verdict finding him guilty. Although the City of Los Angeles was not a party to the criminal proceeding, the Miller Court held that it was collaterally estopped from litigating the issue whether the officer had raped the plaintiff-victim. Id. at 130-31.
In so holding, however, Miller conflated the doctrines of judicial and collateral estoppel. The latter doctrine is based on privity “between the party to be estopped and the unsuccessful party in the prior litigation....” Sims, 186 Cal.Rptr. 77, 651 P.2d at 333 (quoting Clemmer, 151 Cal.Rptr. 285, 587 P.2d at 1102) (emphasis added). Miller found that the “City [of Los Angeles] was in privity with the People of the State of California,” 214 Cal.Rptr. at 129, represented by the district attorney, who was the successful party in the criminal prosecution.
We are not aware of any authority supporting the proposition that, even assuming the existence of privity, the doctrine of collateral estoppel bars the successful party in a prior action from relitigating the issue on which he was successful. The estoppel that Miller applied could only be the doctrine oí judicial estoppel. As Professors Wright, Miller, and Cooper observe:
Judicial estoppel has little to do with preclusion by judgment, even when it requires reliance by a court on a prior inconsistent position. Courts do not relish the prospect that an adept litigant may succeed in proving a proposition in one action, and then succeed in proving the opposite in a second.... The theories of judicial estoppel that reduce these risks do not draw directly from the fact of adjudication. Instead, they focus on the fact of inconsistency itself.
18B Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 4477 (2d ed.2002); see also Wagner v. Prof l Eng’rs in Cal. Gov’t, 354 F.3d 1036, 1044 (9th Cir.2004) (“Judicial estoppel is an equitable doctrine that is intended to protect the integrity of the judicial process by preventing a litigant from playing fast and loose with the courts.” (internal quotation marks omitted)).
By treating the City of Los Angeles and the People of the State of California as one, Miller was effectively invoking the doctrine of judicial estoppel to prevent the City from taking a position in the civil case that was inconsistent with the position that the State of California, in the name of the People, took in the criminal case. Whether this was a proper application of the doctrine of judicial estoppel is a matter of California law that we need not resolve here. This case does not call for the application of that doctrine and, even if it did, “[fjederal law governs the application of judicial estoppel in federal courts.” Johnson v. Oregon, 141 F.3d 1361, 1364 (9th Cir.1998).
We do note, however, that the considerations of policy that Miller also invoked to justify its holding are not applicable here. Specifically, Miller was concerned that permitting the relitigation of the issue of rape would expose the plaintiff-victim to vexatious litigation, reopen the question of the officer’s guilt, and destroy the finality of a criminal prosecution concluded against the defendant by a jury beyond a reasonable doubt. See Miller, 214 Cal.Rptr. at 131. But none of those prospects loomed over Tuttelman’s civil lawsuit in the district court. The only criminal prosecution and guilty verdict in this case were against Tuttelman.
Finally, our review of the record satisfies us that the attempted pat-down search was justified by reasonable suspicion and did not violate the Fourth Amendment. “To justify a patdown of the driver or a passenger during a traffic stop[,] ... the police must harbor reasonable suspicion that the person subjected to the frisk is armed and dangerous.” Arizona v. Johnson, 555 U.S. 323, 129 S.Ct. 781, 784, 172 L.Ed.2d 694 (2009). The determination of reasonable suspicion involves consideration of “the totality of the circumstances surrounding the stop,” United States v. Burkett, 612 F.3d 1103, 1107 (9th Cir.2010) (internal quotation marks omitted), and “must be based on commonsense judgments and inferences about human behavior,” Illinois v. Wardlow, 528 U.S. 119, 125, 120 S.Ct. 673, 145 L.Ed.2d 570 (2000).
Considering the totality of the circumstances — instead of analyzing them piecemeal, as the state court did — Luisi’s attempted pat-down search of Tuttelman was reasonable. The Officers stopped Tuttelman at approximately 11:00 p.m. Tuttelman immediately exited his pickup truck and walked towards the rear of his vehicle; was agitated and loud; failed to produce his drivers license; walked past Bays and began to return to his truck; failed to comply with Bays’s instruction to stop walking away; and had a discernible bulge in his left front pants pocket.
Ample precedent supports a finding of reasonable suspicion here. See, e.g., Wardlow, 528 U.S. at 124, 120 S.Ct. 673 (“[N]ervous, evasive behavior is a pertinent factor in determining reasonable suspicion.”); Ramirez v. City of Buena Park, 560 F.3d 1012, 1022 (9th Cir.2009) (stating that “an officer’s observation of a visible bulge in an individual’s clothing” supports reasonable suspicion); United States v. Brown, 273 F.3d 747, 748 (7th Cir.2001) (“A nighttime traffic stop, especially in an area where crime is not a stranger, is more fraught with potential danger to an officer than would be a stop during the light of day.”); United States v. Baker, 78 F.3d 135, 137 (4th Cir.1996) (“Based on the inordinate risk of danger to law enforcement officers during traffic stops, observing a bulge that could be made by a weapon in a suspect’s clothing reasonably warrants a belief that the suspect is potentially dangerous, even if the suspect was stopped only for a minor violation.”); United States v. Holifield, 956 F.2d 665, 667 (7th Cir.1992) (“The officers could have had a reasonable belief that [the suspect] presented a danger to themselves and others. Their belief was not based upon a ‘hunch’ but upon [the suspect’s] boisterous, aggressive approach to the squad car.”).
II.
Tuttelman challenges the district court’s grant of summary judgment to the City of San Jose. But Tuttelman does not have a claim against the City because respondeat superior is not a theory of municipal liability under § 1983. See Monell v. Dep’t of Soc. Serv. of N.Y., 436 U.S. 658, 691, 98 S.Ct. 2018, 56 L.Ed.2d 611 (1978). Instead, “[t]o establish [municipal] liability [under 42 U.S.C. § 1983], [the plaintiff] must show that (l)[he] was deprived of a constitutional right; (2) the [municipality] had a policy; (3) the policy amounted to a deliberate indifference to [his] constitutional right; and (4) the policy was the moving force behind the constitutional violation.” Mabe v. San Bernardino Cnty., Dept. of Public Soc. Servs., 237 F.3d 1101, 1110-11 (9th Cir.2001) (internal quotation marks omitted).
The district court correctly determined that Tuttelman’s Monell claim was without merit. Tuttelman arguments to the contrary are sufficiently meritless as to obviate the need for additional discussion. Moreover, notwithstanding the fact that the City had previously withdrawn its summary judgment motion, the district court did not abuse its discretion by dismissing the Monell claim before trial. The district court warned Tuttelman at two separate pre-trial conferences that his claim against the City would be dismissed unless he articulated a triable Monell theory. Indeed, Tuttelman concedes that the arguments his counsel made at the pretrial conferences on the Monell claim “were exactly those he could have made at a hearing on the City’s prior summary judgment motion.” Under these circumstances, the dismissal of Tuttelman’s Monell claim was proper. See Celotex Corp. v. Catrett, 477 U.S. 317, 326, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
III.
Tuttelman argues that he “is entitled to judgment as a matter of law on his state law section 52.1 claim for unlawful search.” This claim is not specifically asserted under the § 52.1 count in his complaint, and Tuttelman admits that he is “raising] the issue for the first time on appeal.” The failure to specifically articulate the state law claim for unlawful search in the district court proceedings precludes Tuttelman from raising it on appeal. See Ohel Rachel Synagogue v. United States, 482 F.3d 1058, 1060 n. 4 (9th Cir.2007) (declining to remand with leave to amend complaint where plaintiffs “neither relied on this proposed cause of action below nor sought leave of the district court to amend their complaint to add it”). His argument that he should be excused for not having specifically presented his claim to the district court, because he mistakenly believed that it would have been subject to the defense of qualified immunity under California law, is premised upon a simple misreading of the case law he cites. Indeed, the post-judgment case he relies upon for an alleged change in California law on this issue, Venegas v. Cnty. of Los Angeles, 153 Cal.App.4th 1230, 63 Cal.Rptr.3d 741 (2007), expressly followed earlier precedents such as Ogborn v. City of Lancaster, 101 Cal.App.4th 448, 124 Cal.Rptr.2d 238, 246 (2002) (“The doctrine of qualified governmental immunity is a federal doctrine that does not extend to state tort claims against government employees.”). The latter case itself followed earlier cases.
IV.
Tuttelman argues that the district court should have given jury instructions that the attempted pat-down search was unlawful, and that he had “the right to forcibly resist an unlawful search attempt” incident to a lawful arrest. We reject these arguments because, as we have explained, the attempted pat-down search was lawful.
V.
Tuttelman also argues that the district court erred by denying his motion for sum mary judgment on his excessive force claim. Specifically, he argues that the district court should have assumed that any use of force by the officers was unreasonable as a matter law because Tuttelman’s conduct had not created “exigent” circumstances and because the officers failed to consider or avail themselves of “less intrusive alternatives to force.” This claim is without merit.
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1430238-8588 | TIMBERS, District Judge.
Plaintiff sues to enjoin defendant from deporting him to Italy. He seeks a judgment setting aside the deportation order entered against him and granting him a new hearing. Pending the final determination of this suit, plaintiff also seeks, pursuant to the Administrative Procedure Act § 10, 5 U.S.C.A. § 1009, a temporary injunction enjoining defendant from deporting or removing him from the United States and enjoining defendant from removing him from the jurisdiction of this Court.
This Court has jurisdiction over this action pursuant to 28 U.S.C.A. § 2201 and 5 U.S.C.A. § 1009.
Plaintiff, age 63, was born in Italy and is a national of that country. He came to the United States in 1916 and claims that he has resided in this Country for the past 44 years. Defendant challenges the continuity of plaintiff’s residence in this Country.
Grounds of Deportation
Pursuant to Section 241(a) of the Immigration and Naturalization Act (8 U.S.C.A. § 1251(a)), a deportation order was entered against plaintiff ordering that he be deported on three separate statutory grounds: (1) that he was not in possession of a visa at the time of his last entry into the United States; (2) that he willfully failed to furnish periodic address reports to the United States Government; and (3) that after entry into the United States he was convicted of two crimes involving moral turpitude not arising out of a single scheme of criminal misconduct, to wit, two offenses of having willfully failed to pay the occupational tax on the business of a retail liquor dealer, with intent to defraud the United States of such tax. Plaintiff’s Attack Upon Deportation Order
Plaintiff claims that the deportation order entered against him is contrary to law and constitutes a denial of his rights under the Constitution and statutes of the United States. Specifically plaintiff claims:
(a) At the deportation hearing before a special inquiry officer, plaintiff’s counsel left the hearing and plaintiff was not allowed a continuance to secure other counsel.
(b) Plaintiff’s appeal to the Board of Immigration Appeals from the order of the special inquiry officer directing that plaintiff be deported, was conducted from a federal prison without benefit of counsel or personal attendance by plaintiff.
(c) The finding of deportability on the ground that plaintiff was not in possession of a visa at the time of his last entry into the United States is contrary to the evidence in that plaintiff was a returning resident.
(d) The finding of deportability on the ground that plaintiff failed to furnish periodic address reports is contrary to the evidence in that it fails to establish willfullness.
(e) The finding of deportability on the ground that plaintiff was convicted of two crimes involving moral turpitude after entry into the United States is contrary to the evidence in that the two convictions arose out of a single scheme of criminal misconduct.
Plaintiffs Claim That He Was Not Represented By Counsel Throughout Deportation Hearing Before Special Inquiry Officer
Turning first to plaintiff’s claim that he was not represented by counsel throughout the deportation hearing before the special inquiry officer, the Court holds that plaintiff acquiesced in his counsel’s withdrawal from the hearing and effectively waived his right to be represented by counsel during the balance of the hearing.
The transcript of the hearing before the special inquiry officer shows the following colloquy between plaintiff (referred to as respondent), his counsel and the special inquiry officer:
“By Counsel: I made arrangements to be here for this hearing today. I have to be in New York for court tomorrow. It is physically impossible for me to stay any longer.
“Counsel To Respondent: I am telling you I can’t stay.
“By Special Inquiry Officer: Let the record show that counsel turned to the respondent and said he could-n’t stay any longer. Let the record show that the respondent’s attorney is conferring with his client.
“By Counsel: For the record, let it be indicated that Mr. Bárrese said it is all right to go on without me.
“Special Inquiry Officer To Respondent: Q. Mr. Bárrese, is that all right? A. Yes.”
Plaintiff at no time asked for a continuance because of the absence of his counsel nor did he request an opportunity to obtain new counsel.
Plaintiff relies on Handlovits v. Adcock, D.C.E.D.Mich.1948, 80 F.Supp. 425, in support of his claim that the waiver of his right to counsel was ineffective. Handlovits is distinguishable from the instant case on the ground that there, as the court emphasized, the evidence showed that petitioner did not understand what she was doing when she waived her right to counsel. In the instant case, on the contrary, the Court is satisfied that the record establishes that plaintiff did understand what he was doing when he stated, after conferring with his counsel, that it was all right to proceed with the hearing in the absence of his counsel.
Plaintiff’s Claim That He Was Not Represented By Counsel On Appeal Before Board Of Immigration Appeals
Turning next to plaintiff’s claim that he was not represented by counsel on his appeal before the Board of Immigration Appeals, the Court holds that plaintiff was deprived of his privilege of being represented before the Board by counsel of his choosing and that he did not waive that privilege.
The decision of the special inquiry officer ordering plaintiff deported was filed February 8, 1960. A copy of this decision was sent February 4, 1960 to plaintiff at the United States Penitentiary in Lewisburg, Pennsylvania; but was returned to the Immigration and Naturalization Service on February 17, 1960 with the notation stamped on the envelope that addressee (plaintiff) was “Not at this address.” Another copy of the decision was sent at the same time to plaintiff’s attorney who had withdrawn from the hearing before the special in quiry officer; but this attorney did not notify plaintiff that he had received a copy of the decision, nor did he inform plaintiff of the time within which an appeal might be filed. Through no fault of plaintiff, he first received notice of the decision of the special inquiry officer on February 20, 1960, five days after the expiration of the time within which to file an appeal to the Board of Immigration Appeals. Plaintiff nevertheless was permitted to file his appeal, from the Federal Correctional Institution at Dan-bury, Connecticut, to which he had been transferred.
Plaintiff’s request for a continuance of the hearing to enable him to obtain counsel was denied. Word of such denial of his request for a continuance reached plaintiff March 27, 1960, three days before the hearing was scheduled before the Board. The appeal was heard March 30, 1960 without plaintiff being present or being represented by counsel.
Plaintiff clearly stated to the Immigration and Naturalization Service, as well as to the Board of Immigration Appeals, that he wished to be represented by counsel on the appeal before the Board of Immigration Appeals; that he was making arrangements to retain counsel for that purpose; and that, because of difficulties of communication by reason of his confinement in the Federal Correctional Institution at Danbury, he needed an extension of time to enable him to retain counsel. Subsequently, but too late-to represent him before the Board of Immigration Appeals, plaintiff did succeed in retaining competent counsel who did represent him in the instant proceedings before this Court. Under these circumstances, it is clear to the Court that plaintiff was deprived of his privilege of being represented by counsel of his choosing on the appeal before the Board of Immigration Appeals and that plaintiff did not waive his privilege of being represented by counsel before that Board.
Plaintiff’s privilege of being represented by counsel in deportation proceedings before a special inquiry officer and in appeal proceedings before the Attorney General, is conferred by 8 U.S.C.A. § 1362:
“In any exclusion or deportation proceedings before a special inquiry officer and in any appeal proceedings before the Attorney General from any such exclusion or deportation proceedings, the person concerned shall have the privilege of being represented (at no expense to the Government) by such counsel, authorized to practice in such proceedings, as he shall choose.”
The Board of Immigration Appeals is the representative of the Attorney General in appeals from deportation proceedings before a special inquiry officer. 8 C.F.R. 6.1(a).
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11936613-9943 | ORDER
G. KENDALL SHARP, District Judge.
This case is before the court on Defendant International Union of Operating Engineers, Local 673’s (Local’s) motion to dismiss the complaint (Doe. 7), on Defendant International Union of Operating Engineers’ (International’s) motion to dismiss the complaint (Doc. 14) and on Defendant Walt Disney World’s (WDW’s) motion to dismiss the complaint (Doc. 23). Plaintiff Charles Ronnie Roberts (Roberts) brought this action alleging in his complaint that International, WDW, and the local did not adhere to their collective bargaining agreement in failing to award permanent employment to Roberts in 1991. In their motions to dismiss, Defendants all assert that Roberts failed to file his complaint within the time allotted for “hybrid” claims alleging both a violation of the collective bargaining agreement and the duty of fair representation. Defendants also argue that Roberts’ pendent state law claims are preempted by federal labor law. The court concludes that Defendants are entitled to dismissal as to all counts in Roberts’ complaint.
I. Facts
When considering a motion to dismiss, the court must view the allegations made in the complaint in the light most favorable to the plaintiff and assume the allegations made in the complaint are true. See Quality Foods de Centro Am., S.A. v. Latin Am. Agribusiness Dev. Corp., S.A., 711 F.2d 989, 994-95 (11th Cir.1983). Defendant WDW employed Plaintiff Roberts as a heavy equipment operator on a temporary basis three times from 1989 to 1991: from December 13, 1989 to April 13, 1990, from September 27, 1990 to October 29, 1990, and from November 13, 1990 to January 4, 1991. Defendant International Union of Operating Engineers and its Local 673 was the exclusive and recognized collective bargaining representative of WDWs production and maintenance employees throughout this period, and Roberts was- a dues-paying member of this union during his employment at WDW.
WDW and the Local entered into a collective bargaining agreement on October 14, 1987 that controlled WDW’s emplojunent actions during this period. Article XVI of this agreement provides that principles of seniority will be observed in all layoffs and recalls unless there is some deviation required by employee qualifications. Article XVI also declares that any employee who works for a period greater than 120 days shall be considered a permanent employee entitled to company benefits. Roberts worked for a period of more than 120 days in his first term of employment with WDW, and should have qualified for seniority status. However, WDW did not recall Roberts when permanent positions became available and instead hired two others with less seniority than Roberts. WDW informed Roberts that he was not qualified to fill these positions, but Roberts alleges that he was qualified when they became available.
Roberts then protested WDW’s failure to hire him to a Local representative pursuant to Article VII of the collective bargaining agreement. Roberts alleges that the Local arbitrarily and capriciously failed to fully investigate Roberts’ claim and failed to follow their customary practices in handling employee grievances. The Local thus deprived Roberts of his only opportunity to obtain an impartial hearing and be reinstated to his job with back pay. As a result of the Local’s alleged unfair representation, it has been difficult, time-consuming, and expensive for Roberts to recover damages from WDW for their breach of the collective bargaining agreement. Roberts has been forced to retain counsel and pursue relief in the courts.
II. Legal Discussion
Roberts alleges three counts in his amended complaint. In the first count, Roberts alleges a breach of the collective bargaining agreement by WDW and a breach by the unions of their duty of fair representation. In the second count, ’Roberts claims that International and the Local breached the collective bargaining agreement under Florida law. Finally, Roberts alleges that all Defendants engaged in a conspiracy to deprive him of his rights under the collective bargaining agreement, and seeks damages under a state law civil conspiracy theory. Defendants allege that the first count is barred by the applicable statute of limitations, and that the two other claims are preempted by federal labor law. The court will consider these defenses in ton.
A. Statute of Limitations
Roberts filed a complaint in this action on January 3, 1995, nearly four years after he was passed over for a position at WDW. Roberts contends that the statute of limitations applicable to his action is Florida’s statute for breach of contract cases, which provides five years for plaintiffs to bring suit. Fla.Stat. ch. 95.11(2)(b) (1993). Defendants contend that Roberts’ action is a “hybrid section 301/fair representation claim,” and that the proper limitations period is six months from the date of accrual under section 10(b) of the National Labor Relations Act (NLRA), 29 U.S.C. § 160(b) (1994). See DelCostello v. International Brotherhood of Teamsters, 462 U.S. 151, 171, 103 S.Ct. 2281, 2294, 76 L.Ed.2d 476 (1983).
In his complaint Roberts acknowledges he brought this action under section 301 of the Labor-Management Relations Act, 29 U.S.C. § 185 (1994), which provides for federal jurisdiction of disputes under collective bargaining agreements. Plaintiffs typically bring section 301 suits against their putative employers. Union members also may sue their unions alleging violations of their duty of fair representation for acting in a “discriminatory, dishonest, arbitrary, or perfunctory manner.” Hechler v. International Brotherhood of Electrical Workers, AFL-CIO, 834 F.2d 942, 943 (11th Cir.1987) (quoting DelCostello, supra, 462 U.S. at 164, 103 S.Ct. at 2290). “Often, the individual employee will sue both the employer and the union, resulting in what is commonly called a ‘hybrid section 301/fair representation claim.’ ” Id. (quoting DelCostello, supra, 462 U.S. at 165, 103 S.Ct. at 2291). This hybrid claim is precisely what Roberts has alleged in his first count.
In DelCostello, the Supreme Court determined that the six-month limitations period under section 10(b) of the NLRA should apply to these hybrid actions. 462 U.S. at 171. See also Benson v. General Motors Corp., 716 F.2d 862, 863 (11th Cir.1983). Roberts’ effort to evade the Supreme Court’s ruling is unpersuasive. Roberts relies on Hechler, supra, to argue that the court should utilize a “fluid balancing test” to evaluate the federal and state interests involved in the ease. See Hechler, 834 F.2d at 946-47. The court in Hechler, however, was deciding which statute of limitations to apply to a novel action: an employee standing in the shoes of his employer to sue his union under section 301. The Supreme Court has already .conclusively resolved which statute of limitations to apply in hybrid section 301/duty of fair representation actions such as this one, and the Court has determined that courts should apply the six-month statute in section 10(b) of the NLRA. This court is obligated to follow the Supreme Court’s holding in DelCostello.
International and the Local assert that Roberts’ cause of action accrued one year after his last period of employment with WDW ended, at the latest. Under that theory, Roberts’ cause of action would have accrued in January 1992. Roberts does not argue that his cause of action accrued at any later date. Because Roberts did not bring this action until January 1995, his section 301 claim against WDW and his claim against the union for breach of its duty of fair representation are time-barred.
B. Federal Preemption of State Law Claims
Defendants urge that Roberts’ remaining two state law counts be dismissed because they are preempted by federal labor law. In Teamsters v. Lucas Flour Co., 369 U.S. 95, 103-104, 82 S.Ct. 571, 576-77, 7 L.Ed.2d 593 (1962), the Supreme Court held that a claim alleging a breach of a labor contract must be brought under section 301 of the Labor-Management Relations Act, and must be resolved by reference to federal law. “A state rule that purports to define the meaning or scope of a term in a [labor] contract suit therefore is pre-empted by federal labor law.” Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 210, 105 S.Ct. 1904, 1910, 85 L.Ed.2d 206 (1985). See also Eitmann v. New Orleans Pub. Serv., Inc., 730 F.2d 359, 361-62 (5th Cir.1984) (“Thus, federal jurisdiction is properly invoked if the complaint alleges the violation of a collective bargaining agreement.... To the extent that state law would otherwise provide a remedy for the contractual breach, it is preempted.”). Roberts’ second count, a breach of contract claim against International and the Local for violation of the collective bargaining agreement, cannot be brought under Florida contract law and must be brought under section-301. Roberts’ second count is therefore preempted by federal law.
Roberts’ third count for civil conspiracy does not specifically allege a violation of the collective bargaining agreement, and therefore is not necessarily preempted by federal law. However, the Supreme .Court has held,
[ T]he pre-emptive effect of section 301 must extend beyond suits alleging contract violations.... [Questions relating to .what the parties to a labor agreement agreed, and what legal consequences were intended to flow from breaches of that agreement, must be resolved by reference to uniform federal law, whether such questions arise in the context of a suit for breach of contract or in a suit alleging liability in tort. Any other result would elevate form over substance....
Allis-Chalmers, supra, 471 U.S. at 210-211, 105 S.Ct. at 1911. To the extent that Roberts’ civil conspiracy claim requires interpretation of the collective bargaining agreement, then, it must be preempted by section 301. See Parker v. Connors Steel Co., 855 F.2d 1510, 1515-16 (11th Cir.1988).
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11117040-13984 | MEMORANDUM OPINION AND ORDER
KENDALL, District Judge.
Before the Court are Defendant’s Motion to Dismiss, filed January 31, 2001; Plaintiffs Response/“Motion to Return to Constitutional Court,” filed February 12, 2001; and Defendant’s Supplement to the Motion to Dismiss, filed February 14, 2001. Plaintiffs Response contains a request that the Court remand this action to state court; the Court DENIES Plaintiffs Motion for Remand. The Court GRANTS Defendant’s Motion to Dismiss.
I. Plaintiffs Remand Issue
At the outset, Plaintiff labels his February 12, 2001 filing as “Motion to Return to Constitutional Court,” although the first page characterizes it as his response to Defendant’s Motion to Dismiss. Construing the document as a Motion to Remand, that Motion is DENIED. The Complaint asserts causes of action against Defendant, an IRS agent, either in his official or individual capacity. Removal to federal court is proper where an officer of the United States is “sued in an official or individual capacity for any act under color of such office or on account of any right, title or authority claimed under any Act of Congress for ... the collection of the revenue.” 28 U.S.C. §§ 1441(a), 1442(a)(1). This ease is properly in federal court.
II. Defendant’s Motion to Dismiss
This is a tax protestor case. Plaintiff Dwight Connor, pro se, has sued Ron Matthews, a collection agent for the Internal Revenue Service. Plaintiffs Original Complaint alleges: (1) Defendant used “unconstitutional procedures” to levy on Plaintiffs paycheck “without the permission and ... knowledge” of Plaintiff; (2) Plaintiffs actions “show great disregard for contracts between Plaintiff and [his employer]”; and (3) Defendant misled Plaintiff as to the actions Defendant would take, thus constituting a fraud on Plaintiff. The Complaint does not identify any statutory bases for relief, nor does it identify a particular provision of the Constitution. The Complaint does state that the claims are of a common law and “not of a statutory nature.” See Pl.’s Orig. Compl. at 3. Plaintiffs prayer for relief seeks only money damages, stating:
Plaintiff is entitled to the alleged amount of alleged levy of $17,997.71 under the Common Law, reasonable legal fees in all court levels and any additional punitive damages of $250,000.00 for the purpose of making sure that this Defendant will never take such fraudulent action in the future and any and all additional damages as may be set in the discretion of the Judge of the Court.
Pl.’s Orig. Compl., at 3. The Complaint fails to set forth any reason that sovereign immunity should not apply.
Defendant’s Motion to Dismiss involves both 12(b)(1) and 12(b)(6) bases for dismissal, and characterizes Plaintiffs complaint as a suit against Matthews in his official capacity. See Notice of Removal at ¶ 2. Plaintiff never states whether his intent is to sue Matthews in his individual or official capacity, but does not contest Defendant’s characterization. The Court will nevertheless evaluate both possibilities.
A. Suit Against Matthews in his Official Capacity
First, suits brought against IRS employees in their official capacities are treated as suits against the United States. State of Hawaii v. Gordon, 373 U.S. 57, 58, 83 S.Ct. 1052, 10 L.Ed.2d 191 (1963); Atkinson v. O’Neill, 867 F.2d 589, 590 (10th Cir.1989). Sovereign immunity bars suits against the United States unless the Unit ed States has expressly consented to suit. See Federal Deposit Ins. Corp. v. Meyer, 510 U.S. 471, 475, 114 S.Ct. 996, 127 L.Ed.2d 308 (1994); United States v. Dalm, 494 U.S. 596, 608, 110 S.Ct. 1361, 108 L.Ed.2d 548 (1990). Plaintiff has not identified, and this Court’s research has not revealed, any basis for finding that the United States has consented to be sued for the common law causes of action alleged in the Plaintiffs Complaint. Furthermore, to the extent that consent and valid causes of action do exist, the Court of Claims has exclusive jurisdiction.
(1) The United States has expressly withheld consent to be sued under the Federal Tort Claims Act for claims arising from the assessment or collection of taxes. 28 U.S.C. § 2680(c). The section 2680(c) bar is valid despite the fact that Plaintiff attempts to characterize his causes of action as common law tort claims. See Interfirst Bank Dallas v. United States, 769 F.2d 299, 306 (5th Cir.1985)(holding that section 2680(c) barred a common law claim for conversion based on tax collection activities).
(2) The Administrative Procedure Act does not provide consent to be sued for money damages. See APA, 5 U.S.C. § 702; Wilhite v. United States, 2001 WL 124937, *4 (N.D.Tex. Jan.12, 2001)(citing Kanemoto v. Reno, 41 F.3d 641, 644 (Fed.Cir.1994)). To the extent that Plaintiff states a claim by alleging that Defendant used “unconstitutional procedures,” Plaintiffs suit is nevertheless baxred because he seeks only money damages.
(3) The Internal Revenue Code does provide a damages remedy for unauthorized collection activities. 26 U.S.C. § 7433. Section 7433, also known as the Taxpayer’s Bill of Rights, serves as Congress’s statement that the United States consents to suit where IRS employees or agents “recklessly or intentionally disregard” certain procedures or regulations.
However, Plaintiffs complaint does not allege that agent Matthews recklessly or intentionally disregarded any IRS procedures or regulations. The Complaint does not refer to section 7433, and in fact expressly disclaims any statutory basis. Section 7433 is in any case unavailing until Plaintiff has exhausted his administrative remedies under that provision, and there is no allegation that he has done so. Failure to exhaust administrative remedies is a jurisdictional bar to proceeding under section 7433. Venen v. United States, 38 F.3d 100, 103 (3d Cir.1994); Conforte v. United States, 979 F.2d 1375, 1377 (9th Cir.1992).
(4) The Internal Revenue Code also provides a remedy for refund of taxes improperly collected. 26 U.S.C. § 7422. However, section 7422, like section 7433, has administrative exhaustion requirements, including full payment of the amount assessed, that Plaintiff does not allege have been fulfilled. And, as noted above, Plaintiff has disclaimed any intention of proceeding under a statutory cause of action.
(5) To the extent that Plaintiffs Complaint can be construed as a suit under the Tucker Act against the United States founded on the Constitution or any Act of Congress, and is not a suit for refund under 28 U.S.C. § 1346(a)(1), the Court of Claims has exclusive jurisdiction because Plaintiffs claims are for more than $10,000. Wilkerson v. United States, 67 F.3d 112, 118-19 & n. 12 (5th Cir.1995).
The Court therefore GRANTS Defendant’s Rule 12(b)(1) Motion to Dismiss Plaintiffs claims against Defendant Matthews in his official capacity, because of the doctrine of sovereign immunity, and for lack of subject matter jurisdiction.
B. Suit Against Matthews in his Individual Capacity
To the extent that any of Plaintiffs causes of action may be construed as tar geting Matthews in his individual capacity, sovereign immunity does not serve as a bar to suit. The Court therefore considers whether Plaintiff has stated a claim for which relief may be granted. Rule 12(b)(6) motions to dismiss for failure to state a claim are viewed with disfavor and are rarely granted. See Lowrey v. Texas A & M, 117 F.3d 242, 247 (5th Cir.1997). There are two primary considerations for a court’s analysis of the propriety of dismissal under Rule 12(b)(6). First, the court must accept as true all well-pleaded facts in the Complaint, and the Complaint is to be liberally construed in favor of the plaintiff. See Baker v. Putnal, 75 F.3d 190, 196 (5th Cir.1996). The plaintiff must plead specific facts, not mere conclusory allegations. Guidry v. Bank of LaPlace, 954 F.2d 278, 281 (5th Cir.1992). Second, 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 that would entitle him to relief. See Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Kaiser Aluminum Chem. Sales, Inc. v. Avondale, 677 F.2d 1045, 1050 (5th Cir.1982). Dismissal is warranted under Rule 12(b) when the facts alleged, taken as true, fail to state a claim for relief. See Kaiser Aluminum, 677 F.2d at 1050.
Where government employees acting under color of federal law violate individual rights, Courts may recognize an action for damages against that federal employee. Bivens v. Six Unknown Federal Agents, 403 U.S. 388, 395-96, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971). Courts will not imply a Bivens remedy where (1) “special factors counsel hesitation in the absence of affirmative action by Congress”; or (2) there is another remedy, equally effective in the view of Congress. Id. at 397, 91 S.Ct. 1999. In the present case, the Court cannot imply a Bivens remedy both because Plaintiff has not pled a violation of his rights, and there is an effective alternative remedy. The existence of a Congressionally established alternative remedy for Plaintiffs wrongful collection claims makes 12(b)(6) dismissal particularly appropriate; no matter what facts Plaintiff could adduce in support of his three claims, the remedies contained in the tax code render a Bivens remedy unavailing. See Haas v. Schalow, 1998 WL 904727 (7th Cir.1998)(table disposition, 172 F.3d 53, 1998 WL 904727)(motion to dismiss proper when no Bivens remedy available in a wrongful levy case); Lawrence v. United States, 2000 WL 1182452 (6th Cir.2000)(table disposition, 229 F.3d 1152)(dismissal proper when taxpayer sought individual damages via Bivens for collection activities); Barron v. United States, 998 F.Supp. 117, 121 (D.N.H.1998)(motion to dismiss is a proper means of challenging availability of Bivens remedy); Barnard v. Pavlish, 1998 WL 247768, *9 (M.D.Pa. March 30, 1998); Shreiber v. Mastrogiovanni, 1999 WL 99093 (D.N.J. March 1, 1999), aff'd. 214 F.3d 148 (3d Cir.2000); Devore v. Gannett, 1999 WL 1001592 *1 (D.D.C. Sept.21, 1999); see also Zuspann v. Brown, 60 F.3d 1156, 1160 (5th Cir.1995)(Rule 12(b)(6) dismissal proper where special factors counsel hesitation in implying a Bivens remedy).
In this Circuit, if there is a Bivens action to be had in an abusive tax collection case, it would be derived from Rutherford v. United States, 702 F.2d 580, 584-85 (5th Cir.1983). In Rutherford, the Court held that certain collection actions taken by Internal Revenue agents may rise to the level of malice, harassment, or vendetta such that a substantive due process right may be violated. Id. at 584-85. The Fifth Circuit did not conclusively hold that such a right existed, see Morales v. Haynes, 890 F.2d 708, 710 (5th Cir.1989), but directed that the District Court on remand consider both the existence of a “liberty interest in freedom from abusive behavior,” and whether Congress had provided an alternative remedy that could effectively compensate a taxpayer for abusive tax collection. Rutherford, 702 F.2d at 584. With respect to the alternative remedy issue, the Rutherford Court found simply that a refund proceeding was not “the process that [was] due” in an abusive collection case; Id. at 584. This Court concludes that Rutherford does not provide a basis for allowing a Bivens cause of action to proceed in the present case.
First, Plaintiff has failed to state a claim because he has not alleged a cognizable constitutional violation. He has not allege a substantive due process violation of the sort that Rutherford suggested might exist. At least one district court in this circuit has found that absent an allegation that a tax official deliberately and improperly harassed the taxpayer during the tax collection process, a Bivens action against the official is not available. Paulson v. United States, 1998 WL 91229, *2 n. 5 (N.D.Tex. Feb.19, 1998)(citing Baddour, Inc. v. United States, 802 F.2d 801, 807-08 (5th Cir.1986)). While the Fifth Circuit has declined to elaborate on the scope of the substantive due process right suggested in Rutherford, see Wilkerson, 67 F.3d at 118, other Circuits have stated that “[n]ot every interference with peace of mind is a deprivation of liberty within the meaning of the Constitution.” Cameron v. Internal Revenue Service, 773 F.2d 126, 129 (7th Cir.1985); McMillen v. United States Dept. of Treas., 960 F.2d 187, 190 (1st Cir.1991). The vague interference with contract and perpetration of a fraud allegations in Plaintiffs Complaint are more consistent with the “borderline tort” causes of action rejected by the Cameron and McMillen courts as alleging substantive due process violations, than the extensive pattern of harassment and abuse at issue in Rutherford.
Plaintiff has also failed to plead a viable procedural due process violation. Plaintiff claims that the IRS levied on him without notice or permission. The IRS did not need to give notice or receive permission. The Supreme Court has repeatedly held that it is not a due process violation to postpone judicial inquiry until after tax collection has occurred. See Phillips v. Comm’r, 283 U.S. 589, 51 S.Ct. 608, 75 L.Ed. 1289 (1931); United States v. Nat’l Bank of Commerce, 472 U.S. 713, 720, 105 S.Ct. 2919, 86 L.Ed.2d 565 (1985). “It is well-established that the government’s need for revenue justifies the use of summary procedures to collect money, followed by a later hearing on the seizure.” Anderson v. United States, 754 F.2d 1270, 1272 (5th Cir.1985)(quoting Zemial v. United States, 714 F.2d 431, 435 (5th Cir.1983)). Plaintiff has not alleged that he has been deprived of an opportunity to contest the IRS’s actions in a post-deprivation proceeding. A Rule 12(b)(6) dismissal is proper where the plaintiffs purported constitutional violations fail to allege a deprivation of a protected liberty or property interest. Vander Zee v. Reno, 73 F.3d 1365, 1369-71 (5th Cir.1996).
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4275190-17165 | OPINION
CANBY, Senior Circuit Judge:
The Alaska Eskimo Whaling Commission (“AEWC”), representing certain Alaska Native villages that engage in subsistence hunting of bowhead whales, petitions for review of the Beaufort Permit (“the Permit”) issued by the Environmental Protection Agency under the National Pollutant Discharge Elimination System (“NPDES”) provisions of the Clean Water Act. The Permit authorizes the discharge by oil and gas exploration facilities of 13 waste streams into marine waters of the Beaufort Sea in accordance with the effluent limitations, monitoring requirements, and other conditions set forth in the Permit. AEWC does not seek to have the Permit vacated, but asks us to remand it to the EPA for further proceedings leading to additional restrictions on discharges. We have jurisdiction to review the EPA’s issuance of the Permit pursuant to 33 U.S.C. § 1369(b)(1)(F). We deny in great part AEWC’s petition, but we grant on one issue on which the EPA has admitted an error in the record: we remand to the EPA for a determination regarding whether the discharge of non-contact cooling water (alone or in combination with other authorized discharges) into the Beaufort Sea will cause unreasonable degradation of the marine environment, 40 C.F.R. § 125.121(e), because of the effect of such discharge on bowhead whales, including deflection from their migratory paths. We deny the petition in all other respects.
I. Background
Following the 2011 expiration of the 2006 Arctic NPDES general permit for offshore oil and gas exploration, the EPA replaced that permit with two separate general permits for exploration discharges: one for the Beaufort Sea and one for the Chuckchi Sea. Only the Beaufort Permit is the subject of this appeal. The Permit allows discharges only in connection with oil exploration; actual oil development and offshore production are not within the Permit.
In January 2012, the EPA issued for public review and comment a draft of the Beaufort Permit. During the three-month comment period, public meetings were held and testimony was taken in communities, including the Nuiqsut Community, on the North Slope and in Anchorage. AEWC and several other organizations also submitted to the EPA extensive written comments on the draft Permit.
In October 2012, the EPA issued the Permit (Permit No. AKG282100) pursuant to Sections 402 and 403 of the Clean Water Act, 33 U.S.C. §§ 1342, 1343. The Permit authorizes the discharge of 13 waste streams “in accordance with the effluent limitations, monitoring requirements, and other conditions” set forth therein, and it is effective from November 28, 2012 through November 27, 2017. The Permit includes one limitation and one monitoring requirement relevant to the issues on appeal. First, the Permit imposes a seasonal limitation on Discharge 001 (water-based drilling fluids and drill cuttings), prohibiting all such discharge “during fall bowhead whale hunting in the Beaufort Sea by the Nuiqsut and Kaktovik communities.” Second, the Permit requires permittees to monitor “to the maximum extent possible” for possible deflection of marine mammals when discharging Discharge 001 and Discharge 009 (non-contact cooling water). The Permit provides that it may be modified or revoked “if, on the basis of any new data, the Director or DEC determines that continued discharges may cause unreasonable degradation of the marine environment.”
AEWC now appeals, arguing that the EPA failed to consider adequately the extent to which discharges authorized under the Permit will interfere with subsistence uses of the Beaufort Sea, particularly the subsistence communities’ fall hunt for bow-head whales. AEWC contends that the permitted discharges will divert the whales far from their normal seasonal migratory routes, making the hunting of them less productive and far more dangerous. AEWC challenges the EPA’s failure to include in the Permit the following two sets of restrictions: first, a total prohibition (“zero discharge restriction”) on the discharge of six of the thirteen authorized waste streams: drilling fluids and cuttings (No. 001), sanitary and domestic waste (Nos. 008, 004), ballast water (No. 010), bilge water (No. 011), and certain muds, cuttings, cement at the seafloor (No. 013); and second, a prohibition during the fall bowhead hunting season of the discharge of an additional five waste streams: non-contact cooling water (No. 009) and, if not brought within the zero discharge restriction, sanitary and domestic waste (Nos. 003, 004), bilge water (No. 011), and certain muds, cuttings, cement at the seafloor (No. 013).
“Challenges to EPA actions under section 509(b) of the Clean Water Act, 33 U.S.C. § 1369(b), are reviewed under the arbitrary and capricious standard of the Administrative Procedure Act.” Akiak Native Cmty. v. EPA 625 F.3d 1162, 1165 (9th Cir.2010). Under this deferential standard of review, we “ ‘will not vacate an agency’s decision unless it has [1] relied on factors which Congress had not intended it to consider, [2] entirely failed to consider an important aspect of the problem, [3] offered an explanation for its decision that runs counter to the evidence before the agency, or [4] is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.’ ” Id. (quoting Natl Ass’n of Home Builders v. Defenders of Wildlife, 551 U.S. 644, 658, 127 S.Ct. 2518, 168 L.Ed.2d 467 (2007) (internal quotation marks omitted)).
II. The Error in the Record
Along with the Permit, the EPA issued three documents that, taken together, explain the bases for the EPA’s permitting decision: (1) its Response to Comments, which includes the EPA’s responses to all comments it received; (2) its Ocean Discharge Criteria Evaluation, issued “to review the discharges authorized under [the Permit] and evaluate their potential [to] cause unreasonable degradation of the marine environment,]”; and (3) its Environmental Justice Analysis in support of the Permit. In its response to a comment requesting a seasonal restriction on the discharge of non-contact cooling water and related chemicals, sanitary and domestic wastes, and bilge water, “because these waste streams risk deflecting bowhead whales from their migratory paths,” the EPA stated that it “concluded that non-contact cooling water will not result in an unreasonable degradation to the marine environment due to the permit restrictions and monitoring requirements placed on this discharge and because temperature is expected to dissipate and achieve complete mixing within 100 meters of the discharge location.” Similarly, in the Ocean Discharge Criteria Evaluation, the EPA stated that it used a model to evaluate the dilution of all the drilling-related effluents associated with each of the discharges authorized by the Beaufort general permit, and that “[t]he predicted dilution for th[e] worst-case scenario was approximately 600:1 at 100 meters from the discharge point.”
On the eve of oral argument, the. EPA filed with this court a letter in which it candidly acknowledged its discovery of a misstatement in the record and in its brief. In its letter, the EPA reported that the modeling it cited in support of its statements that the temperature of cooling water would dissipate and mix within 100 meters of discharge, and that all discharges would dilute to a ratio of 600:1 within 100 meters of discharge, in fact did not include non-contact cooling water in the model. That model was for drilling-relat ed effluents, not cooling water. EPA’s letter further stated that cooling water was included in other modeling that applied to a wide range of discharges. An attachment to the letter contained a table (“Table 6”) that included a list of numbers and figures for the temperature effects at various cooling water discharges.
Under the controlling rule for the review of administrative agency actions, “a reviewing court, in dealing with a determination or judgment which an administrative agency alone is authorized to make, must judge the propriety of such action solely by the grounds invoked by the agency. If those grounds are inadequate or improper, the court is powerless to affirm the administrative action by substituting what it considers to be a more adequate or proper basis.” SEC v. Chenery Carp. (Chenery II), 332 U.S. 194, 196, 67 S.Ct. 1575, 91 L.Ed. 1995 (1947). We must remand rather than combing the record for evidence on which the agency may have relied. Id.
Here, neither the EPA’s letter and its attachment, nor the EPA’s representations at oral argument, explained the import of the agency’s error. In addition to the table in its attachment, the letter discusses a list of other figures and tables in the Further Excerpts of Record. These figures and tables are no substitute for the agency’s on-the-record explanation of what the evidence showed and how that evidence supports its ultimate conclusions. The EPA’s erroneous statement that cooling water would be mixed and diluted to a ratio of 600:1 suggested that this level of mixing and dilution was unlikely to change the behavior of bowhead whales. We are unable to extract a similar conclusion from the figures supplied or referred to in the EPA’s letter. With the record in this posture, we cannot properly answer the question whether the EPA’s error affected its decision. We conclude, therefore, that the error in the record to which the EPA drew our attention requires remand to address the issue involved.
We remand to the EPA to reconsider, in light of its acknowledged error, its determination that discharge of non-contact cooling water (alone or along with other authorized discharges) will not cause unreasonable degradation of the marine environment, and to identify evidence in the record sufficient to support its reconsidered decision concerning the possible effect, or non-effect, of the discharge of non-contact cooling water on the bowhead whale migration and subsistence hunting season in the Beaufort Sea.
For the reasons and in the manner discussed below, we deny the petition for review in all other respects.
III. Adherence to Statutory Criteria
The Clean Water Act requires the EPA to promulgate guidelines for determining degradation of marine waters, which shall address several considerations listed in the statute. 33 U.S.C. § 1343(c)(1)(A)-(G). AEWC argues that the EPA erred in failing to base its decision on two of these considerations, “the effect of disposal ] of pollutants on esthetic, recreation, and economic values,” id. § 1343(c)(1)(C), and “the effect on alternate uses of the oceans, such as mineral exploitation and scientific study,” id. § 1343(c)(1)(G).
AEWC’s argument misses the mark. The organic statute sets forth the considerations that EPA was to follow when promulgating its own regulations, not the criteria that EPA must apply to each permitting decision it makes. AEWC disclaims any Chevron-style challenge to EPA’s regulations under the statute. Thus, we are tasked only with deciding whether EPA’s application of its regulatory criteria to the permitting decision challenged here was arbitrary or capricious.
IV. Adherence to Regulatory Criteria
The remainder of AEWC’s arguments challenge the EPA’s consideration of the record evidence in light of the regulatory requirements for the issuance of NPDES permits, 40 C.F.R. § 125.123, and the “unreasonable degradation” criteria set out in the implementing regulations, 40 C.F.R. § 125.122.
A
The EPA issued the Permit under paragraph (a) of 40 C.F.R. § 125.123, which provides in pertinent part:
(a) If the director on the basis of available information ... determines prior to permit issuance that the discharge will not cause unreasonable degradation of the marine environment after application of any necessary conditions specified in § 125.123(d), he may issue an NPDES permit containing such conditions.
The EPA did not purport to act under paragraph (c), which provides in pertinent part:
(c) If the director has insufficient information to determine prior to permit issuance that there will be no unreasonable degradation of the marine environment ... there shall be no discharge of pollutants into the marine environment unless the director on the basis of available information ... determines that:
(1) Such discharge will not cause irreparable harm to the marine environment during the period in which monitoring is undertaken, and
(2) There are no reasonable alternatives to the on-site disposal of these materials, and
(3) The discharge will be in compliance with all permit conditions established pursuant to paragraph (d) of this section.
Paragraph (d) then provides certain conditions that are mandatory for permits issued pursuant to paragraph (c), including a monitoring program to assess the impact of the discharge on aquatic life, and a clause providing for revocation of the permit if the director determines at any time that continued discharges may cause unreasonable degradation of the marine environment.
Proceeding under paragraph (a), the director determined on the basis of available information that the discharge would not cause unreasonable degradation of the marine environment after the monitoring condition and cancellation clause of paragraph (d) were added to the Permit. EPA accordingly issued the Permit.
AEWC argues that, because the EPA applied two conditions specified in paragraph (d), the EPA somehow became subject to paragraph (c) and its requirement that the director determine that there were no reasonable alternatives to on-site disposal of materials. This contention, however, simply is not what the regulations provide. The director was free to impose two conditions specified in paragraph (d), as paragraph (a) authorized. Nothing in the regulations provides that proceeding in such a manner somehow converts a paragraph (a) proceeding to a paragraph (c) proceeding.
Accordingly, should the EPA determine on remand that available information still supports its determination that discharges will not cause unreasonable degradation of the marine environment, there is no error in its decision to proceed under subsection (a). If, however, the EPA determines on remand that the record does not contain sufficient “available information” to support its determination that “the discharge[s] will not cause unreasonable degradation of the marine environment after application of any necessary conditions specified in § 125.123(d),” 40 C.F.R. § 125.123(a), its issuance of the Permit pursuant to subsection (a) cannot stand, and it will be obliged to proceed under subsection (c) and conduct the alternatives analysis and meet the other requirements for permit determinations under that subsection.
B
The main thrust of AEWC’s remaining arguments is that the EPA’s decision regarding discharges other than non-contact cooling water was not adequately supported by the evidence. AEWC also argues that the EPA did not provide a rational explanation of how the monitoring program will prevent conflicts with subsistence uses and that the EPA’s reliance on the monitoring program is arbitrary and irrational. These arguments stress the EPA’s acknowledgment of record evidence indicating the discharges may conflict with subsistence uses.
The Clean Water Act’s implementing regulations set out ten criteria the EPA must consider in making its determination of “whether a discharge will cause unreasonable degradation of the marine environment.” 40 C.F.R. § 125.122(a)(1)-(10). AEWC’s challenge to the sufficiency of the EPA’s analysis of the record evidence in light of the regulatory criteria focuses on the sixth and ninth criteria: “[t]he potential impacts on human health through direct and indirect pathways,” and “[s]uch other factors relating to the effects of the discharge as may be appropriate.” 40 C.F.R. § 125.122(a)(6), (9). The record is, however, replete with evidence that the EPA heard and considered the concerns raised by AEWC. The record evidence also reflects the EPA’s consideration of the ocean discharge criteria in making its determination that the authorized discharges would not cause unreasonable degradation of the marine environment, 40 C.F.R. § 125122(a).
To the extent that AEWC takes issue with the EPA’s factual findings other than those specifically related to the effect of the discharge of non-contact cooling water on the bowhead whale migration, those findings are supported by the administrative record and are entitled to our deference. See Arkansas v. Oklahoma, 503 U.S. 91, 113, 112 S.Ct. 1046, 117 L.Ed.2d 239 (1992) (explaining that, when reviewing an agency’s adjudicative action, the reviewing court “should not supplant the agency’s findings merely by identifying alternative findings that could be supported by substantial evidence”). EPA’s issuance of the permit on the basis of those findings was not arbitrary or capricious.
C
AEWC also argues that the EPA did not provide a rational explanation of how the monitoring program will prevent conflicts with subsistence uses and that the EPA’s rebanee on the monitoring program is arbitrary and irrational.
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3666153-17044 | PARKER, Circuit Judge.
This is a petition by the Southgate Brokerage Company to review and set aside an order of the Federal Trade Commission directing that company to cease and desist from accepting brokerage, or any commission, compensation, allowance or discount in lieu thereof, on purchases made for its own account. The company petitions also that it be allowed to adduce evidence, rejected by the Commission, to the effect that it has rendered services to the sellers in connection with such purchases for which it claims to be entitled to compensation. The Commission has filed a cross petition asking that its order be enforced.
There is no dispute as to the facts. The brokerage company, which has its principal office in Norfolk, Va., does a large commission and brokerage business in Virginia and the Carolinas to which the order of the Commission admittedly has no application. In addition, it does a large business as distributor of products which it buys from processors and subsequently sells to its customers. It is with respect to this business that the order of the Commission applies; and the facts bearing thereon are covered by the fourth and fifth paragraphs of the Commission’s findings, which are fully supported by the evidence and are as follows:
“Paragraph four: The purchases made by respondent in its own name and behalf and for its own account constitute approximately sixty per cent of its total volume of business. The merchandise so purchased is stored by respondent in its own warehouses, and is in all respects its own property to deal with as it sees fit. Respondent insures the merchandise in its own name and at its own expense, pays such taxes as may be levied on the merchandise, and resells it to such purchasers and at such prices and upon such terms as its judgment may dictate, reaping a profit or sustaining a loss thereon, as the case may be. If the merchandise is lost or damaged while in transit from the seller to respondent, respondent files claims against the carrier for such loss or damage in its own name and for its own benefit. In short, respondent’s title to the merchandise is absolute. Respondent frequently enters into contracts of purchase with packers and canners of food products calling for the future delivery of large quantities of goods to respondent at fixed prices. In such cases, respondent’s profit or loss on the transaction usually depends, of course, upon whether the market advances or declines after the contract is executed. Some of the canned food products purchased and resold by respondent bear respondent’s own private trade-marks or brands, which are registered in the United States Patent Office. The labels for such goods are supplied by respondent to the packer or canner, who affixes them to the cans or other containers in which the goods are packaged.
“Paragraph five: In connection with the purchase in, interstate commerce of such food products and other merchandise in its own behalf and for its own account, respondent in many instances receives and accepts and for a number of years last past has received and accepted from the sellers of such merchandise, brokerage or allowances and discounts, in lieu of brokerage. The brokerage is usually received by respondent in one of two ways. In some cases, the seller remits the amount of the brokerage to respondent by check. In other cases, respondent in remitting to the seller the purchase price of the merchandise deducts the brokerage, or a discount or allowance in lieu thereof, from the seller’s invoice. The amount of brokerage thus received and accepted by respondent is substantial. For example, the amount received on purchases made by respondent between July 1, 1941, and December 31, 1941, was $25,873.68.”
The evidence which the Commission excluded as irrelevant, and which the company asks that it be allowed to produce, is evidence of various witnesses to the effect that, in connection with the goods purchased and sold as distributor and covered by the foregoing findings of fact, it renders services consisting of “promoting, offering for sale, selling, ordering, receiving, adjusting shortage or damage claims, handling, warehousing, distributing, invoicing, collecting, assumption of credit risks”. We entertain no doubt that the evidence was properly excluded and that on the undisputed facts the cease and desist order was properly entered.
Section 2(c) of the Robinson-Patman Act, 15 U.S.C.A. § 13(c), is as follows: “It shall be unlawful for any person engaged in commerce, in the course of such commerce, to pay or grant, or to receive or accept, anything of value as a commission, brokerage, or other compensation, or any allowance or discount in lieu thereof, except for services rendered in connection with the sale or purchase of goods, wares, or merchandise, either to the other party to such transaction or to an agent, representative, or other intermediary therein where such intermediary is acting in fact for or in behalf, or is subject to the direct or indirect control, of any party to such transaction other than the person by whom such compensation is so granted or paid.”
It is perfectly clear that this- provision forbids the payment of brokerage on a sale or purchase of goods to the other party to the transaction. The seller may not pay the buyer brokerage on the latter’s purchases for his own account. As said in the Report of the House and Senate Conference Committee with reference to this subsection (House Rep. 2951, 74th Cong. 2nd Sess.): “This subsection permits the payment of compensation by a seller to his broker or agent for services actually rendered in his behalf; likewise by a buyer to his broker or agent for services in connection with the purchase of goods actually rendered in his behalf; but it prohibits the direct or indirect payment of brokerage except for such services rendered. It prohibits its allowance by the buyer direct to the seller, or by the seller direct to the buyer; and it prohibits its payment by either to an agent or intermediary acting in fact for or in behalf, or subject to the direct or indirect control, of the other.”
The section has been so construed in all of the cases in which it has been considered. Biddle Purchasing Co. v. Federal Trade Commission, 2 Cir., 96 F.2d 687; Oliver Bros. v. Federal Trade Commission, 4 Cir. 102 F.2d 763; Great Atlantic & Pacific Tea Co. v. Federal Trade Commission, 3 Cir, 106 F.2d 667; Webb Crawford Co. v. Federal Trade Commission, 5 Cir. 109 F.2d 268; Quality Bakers of America v. Federal Trade Commission, 1 Cir. 114 F.2d 393; Jarrett v. Pittsburgh Plate Glass Co, 5 Cir. 131 F.2d 674; Fitch v. Kentucky-Tennessee Light & Power Co. 6 Cir. 136 F.2d 12, 149 A.L.R. 650 and note at page 662 et seq. and cases there cited; Modern Marketing v. Federal Trade Com. 7 Cir., 149 F.2d 970. As said in Quality Bakers of America v. Federal Trade Commission, supra, 114 F.2d 393 at page 398: “It is plain enough that the paragraph, taken as a whole, is framed to prohibit the payment of brokerage in any guise by one party to the other or the other’s agent, at the same time expressly recognizing and saving the right of either party to pay his own agent for services rendered in connection with the sale or purchase.”
It is argued that the section is not applicable here because the receipt by the company of brokerage from the sellers results in no discrimination against buyers, since the company sells only to wholesalers, who pay the prices that they would otherwise pay if the sales were made to them through brokers. It is said that a distributor, such as the company, renders to the wholesale trade the service that a broker ordinarily performs, and that no discrimination is involved in allowing such distributor the ordinary broker’s commissions. The answer is that price discrimination, which is covered by section 2(a) of the Act, 15 U.S.C.A. § 13(a), is not necessary to a violation of section 2(c), quoted above, which specifically forbids the payment of brokerage by the seller to the buyer or the 'buyer’s agent. We went into this matter very carefully in Oliver Bros. v. Federal Trade Commission, 4 Cir. 102 F.2d 763, 767, where we said:
“The Robinson-Patman Act of June 19, 1936, 49 Stat. 1526, was an amendment of the Clayton Anti-Trust Act of October 15, 1914, 38 Stat. 730. Section 2 of the Clayton Act, which was the section amended, merely forbade discrimination in price when the effect of such discrimination was to substantially lessen competition or tend to create monopoly. The Robinson-Patman Act broadened the scope of this provision, conferred upon the Federal Trade Commission power to establish quantity differentials for the purpose of determining dis crimination and cast the burden of proof upon one charged with discrimination to justify any discrimination shown. Receipt of price discrimination was made unlawful for the first time, section 2(f), 15 U.S.C.A. § 13(f); and three specific matters were forbidden as unfair trade practices by subsections (c), (d) and (e), viz.: the granting of commission or brokerage, or any allowance in lieu thereof, to the other party to the transaction or his agent, the making of discriminatory payments by seller to buyer for services rendered by the latter and discrimination by the seller in the rendering of services to the buyer. It is perfectly clear that all three of these practices were forbidden because of their tendency to lessen competition and create monopoly, without regard to their effect in a particular case; and there is no reason to read into the sections forbidding them the limitations contained in section 2(a) having relation to price discrimination, which is an extremely difficult matter to deal with and is condemned as unfair only in those cases where it has an effect in suppressing competition or in tending to create monopoly. The forbidding of specific practices because of their tendency toward a general result, also forbidden, is familiar legislative practice; and no reason suggests itself why the limitations and provisions relating to one should be read into those relating to the other.”
We are not impressed with the argument that the company renders services to those from whom it purchases, within the meaning of the exception to subsection (c) quoted above. The services which the company proposes to show by the evidence that was excluded are services rendered to itself, as purchaser, owner and subsequent seller of the goods purchased, and not to those from whom it has purchased them. It is immaterial that those persons are benefited by the fact that the company purchases from them the goods which it subsequently resells.. The crucial fact is that all of the services upon which it relies are services rendered in connection with its own purchase, ownership or resale of the goods; and these services it renders, not to those from whom the goods are purchased, but to itself. Directly in point are the cases above cited of Biddle Purchasing Co., Oliver Bros., Great Atlantic & Pacific Tea Co., Webb Crawford Co., Quality Bakers of America, and Modern Marketing. The Great Atlantic & Pacific Tea Co. case is practically on all fours, involving an allowance of brokerage made directly to the buyer because of alleged services rendered the seller by the buyer’s purchasing agents. The other cases cited involved situations where agents of buyers were collecting from sellers brokerage which they were passing on to the buyers whom they represented; but if the statute forbids the payment of brokerage to such agents because they represent buyers, a fortiori it forbids the payment to the buyers themselves; and, if the agents cannot be brought within the exception of the section by reason of services rendered, certainly the buyers cannot because of rendering the same sort of services.. In the Oliver case it appeared that the commissions allowed the buyers’ agent were received by the buyers; and we commented on this as showing beyond question that the section had been violated in that the buyers were receiving commissions on their purchases. We said:
“We come then to the final question in the case, viz., whether the brokerage commissions here involved come within the exception contained in section 2(c), i.e., are they paid for services rendered to the sellers? A sufficient answer to the question is found in the fact that the commissions are received by the buyers and not by Oliver, and that there can be no contention that any services are rendered by the buyers to justify the payment of compensation to them. * * * They are receiving brokerage commissions on their purchases; and the fact that they may have paid the purchasing agent for services rendered them and that they receive the commissions because of this does not alter the fact that they are receiving the commissions on their purchases.
“And even if it were true that Oliver rendered services to the sellers, we do not think that this, would change the situation. No one would contend that, without violating this section, a broker representing the seller could give his commissions to the buyer; for in such case the action of the broker would be the action of his principal, the seller, and would amount to the allowance of commissions by the seller to the other party to the transaction in direct violation of the statutory provision. As we have seen, it constitutes a clear violation of the section for the buyer to receive commissions allowed an agent who represents him alone. If, therefore, the buyer may not receive commissions allowed either his own agent or the agent of the seller, it would seem to follow necessarily that he may not receive commissions allowed a broker who is the agent of both. We may assume that under the section it is permissible for a broker to render services to both buyer and seller and to receive from both compensation for the services rendered; but this is a very different thing from the buyer himself receiving the compensation.”
The company argues that the receipt of brokerage on its purchases is authorized by section 2(d) of the Act, 15 U.S.C.A. § 13(d), which provides:
“It shall be unlawful for any person engaged in commerce to pay or contract for the payment of anything of value to or for the benefit of a customer of such person in the course of such commerce as compensation or in consideration for any services or facilities furnished by or throtigh such customer in connection with the processing, handling, sale, or offering for sale of any products or commodities manufactured, sold, or offered for sale by such person, unless such payment or consideration is available on proportionally equal terms to all other customers competing in the distribution of such products or commodities.”
This subsection has no relation to payment ■ of brokerage to buyers or their agents, which is dealt with in the preceding subsection, but is intended -to prevent discriminatory payments by seller to buyer on account of services actually rendered the seller. It is commonly referred to as the “advertising allowance” section of the act; and as explained by Representative Utterback in presenting the conference report to the House the words “services or facilities”, rather than the term “advertising allowance”, were employed for the purpose of making the “prohibitions of the till * * * intentionally broader * * * in order to prevent evasion.” 80 Cong. Rec. 9418. As pointed out above, the services rendered by the company with respect to goods purchased by it are services rendered to itself, and not to the sellers, and consequently can furnish no basis for payment by the sellers. It is little short of absurd to argue that the receipt by a buyer of brokerage on his purchases, forbidden by subsection (c), is validated by subsection (d), the purpose of which is to forbid discriminatory payments for services actually rendered by buyers.
The earnestness of counsel for the company in presenting its cause has led us to discuss its contentions at greater length than their merit seems to warrant. Stripped of verbiage, his position is that in acting as a distributor of the products of the sellers, the company performs for them the service of a broker and is entitled to the compensation of a broker. The fact is, however, that the company is not a broker but a purchaser with respect to the goods that it purchases for its own account. In selling these goods to others it acts, not for those from whom it has purchased them, but for itself. Any profits due to rise in the market belong to it and any losses, whether from decline in the market or other cause, fall upon it. It sells for itself, to whom it pleases and at prices which it determines. The fact that it purchases from the sellers is doubtless beneficial to them and may enable them to dispense with the services of a broker on such transactions; but this does not mean that it has rendered services to them within any fair meaning of that language as used in the statute.
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1795863-7059 | ROBB, Associate Justice.
Appeal from a decree in the Supreme Court of the District denying probate of the will of Harriet P. Gunnell upon the verdict of the jury that it was procured by the undue influence of her daughter, appellant Mary P. Brooke.
The will was dated January 17, 1914. We quote from it as follows:
“Because of large sums of money and assistance given by me to my son, Joseph P. Bames, during my lifetime, and because of the further fact that he is now in receipt of a competent income as an officer in the United States Army, I make no provision for him in this my last will and testament other than the sum of one hundred dollars, which I direct shall be paid to him by my executrix, hereinafter named.
“After the payment of my just debts and funeral expenses and the above legacy to my son, I give, devise, and bequeath to my beloved daughter, Mary P. Brooke, born Bames, in consideration of her love and care, through years- of devotion, for myself and my husband, all the rest and residue of my property and estate, of whatsoever kind or nature and wheresoever1 the same may he situated, and of which I shall die seized and possessed or in any manner entitled to, in fee simple absolutely.”
Testatrix died August 22, 1930, at the age of 83 years. She was therefore 67 years old when her will was executed, and lived sixteen years thereafter. Her sole heirs at law and next of kin were her two children: George F. Barnes, the caveator, a lieutenant colonel in the United States Army; and Mary F. Brooke, caveatee, wife of Lieut. Col. Mark Brooke, of the Engineer Corps of the Army.
The testamentary capacity of the testatrix was not challenged, nor was there ground for such a challenge, sinee the evidence disclosed that Mrs. .Gunnell at the time of making her will was a lady of intelligence and culture. There was no evidence of any change in her mental status during the remainder of her life. On the contrary, the evidence indicated continued mental alertness and independence of thought and action.
At the time of the execution of the will the family consisted of the husband of the testatrix,. Dr. Francis P. Gunnell, Surgeon General of the United States Navy, retired (then 86 years of. age), who lived for eight years thereafter; the caveator, then 36 years of age and unmarried (married in February, 1914); the caveatee, who was then 31 years old; and eaveatee’s daughter, then 7 years of age. The caveator was then stationed at Fort Rilev, Kan. Caveatee’s husband was Assistant Commissioner of the District and with his family lived with the Gunnells in the family home. Mrs. Brooke was not present when the testatrix instructed the draftsman of the will as to what its contents should be, nor was she present when the will was executed. At that time the value of the testatrix’ estate was almost negligible.
The bulk of the property possessed by her at the time of her decease (real estate of the value of $6,500 and personal property of the approximate value of $62,000) was left to her by Dr. Gunnell at his death in 1922.
Both before and after the execution of the will the Brooke family, while Colonel Brooke was stationed in Washington, made their home with Mrs. Gunnell. There were times after the execution of the will when, owing to Colonel Brooke’s assignments away from Washington, his family, did not live here.
As already indicated, the sole issue submitted to the jury was whether undue influence was exercised by Mrs. Brooke over her mother. The burden of proof was on caveator. Leach v. Burr, 188 U. S. 510, 516, 23 S. Ct. 393, 47 L. Ed. 567; Brosnan v. Brosnan, 263 U. S. 345, 44 S. Ct. 117, 68 L. Ed. 332.
As a circumstance indicating undue influence, it is contended by caveator that the recital in the will that the testatrix had given in her lifetime to him “large sums of money” was an exaggeration. The evidence disclosed that although the total of the sums advanced by the testatrix to her son, thecaveator (amounting as it did to less than-$1,000), was not in fact large when compared with the value of her estate at the time of her death, nevertheless it was large! in comparison with the value of her estate at the time she made her will. We think, therefore, that the statement was justified and made by the testatrix in good faith.
It is next insisted that the recital that the residue was given to Mrs. Brooke in consideration “of her love and care, through years of devotion, for myself and my husband,” was inaccurate; that, in fact, Mrs. Brooke’s motive was selfish and not actuated by her sense of duty to her mother. The evidence is directly to the contrary, including letters written by caveator himself in which he recognized and acknowledged his sister’s devotion to her mother.
During the course of caveator’s testimony it developed that he had borrowed money from his stepfather, Dr. Gunnell (which he-was delinquent in repaying), and that he had invested and lost it in ill-advised financial' ventures: The evidence falling from his own lips indicates very clearly his lack of business capacity, and that his mother would have been justified in concluding that any property coming into his hands would) be lost in unwise speculation.
The caveator further testified as to the existence of ill will between his sister and himself, and particularly of a conversation in May, 1915, in the Philippines in which his sister is alleged to have said that he was disinherited; that she had fixed it so that their mother had written him out'of the home as a son; and that “you can expect nothing from mother.” Later the caveator testified that the receipt of a copy of the will after his mother’s death was “the first intimation that he had that a will had been made of this tenor.”
There was some evidence as to the “dom ineering character” of Mrs. Brooke, but no evidence that she exercised undue influence over anyone, including her mother.
In Beyer v. Le Fevre, 186 U. S. 114, 22 S. Ct. 765, 768, 46 L. Ed. 1086, the .issue was whether a will had been procured through undue influence. The court stated that: “It is no ground of criticism that others might have made a different will. * * * It will be remembered that it is not influence, but undue influence, that is charged, .and is necessary to overthrow a will. ® * * One who is familiar with the volume of litigation which is now flooding the courts cannot fail to be attracted by the fact that actions to set aside wills are of frequent occurrence. In such actions the testator cannot be heard, and very trifling matters are ■often pressed upon the attention of the court or jury as evidence of want of mental capacity or of the existence of undue influence. Whatever rule may obtain elsewhere •we wish it distinctly understood to be the rule of the Federal courts that the will of a person found to be possessed of sound mind and memory is not to be set aside on ■evidence tending to show only a possibility or suspicion of undue influence. The expressed intentions of the testator should not be thwarted without clear reason therefor.”
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3836078-17877 | BOUDIN, Circuit Judge.
This appeal arises out of a contract dispute between two companies: American Express Travel Related Services Company, Inc. (“AmEx”) and The Capability Group, Inc. (“Capability”). AmEx is in the business of global payments and travel services, while Capability trains other companies in a method of increasing business efficiency called Six Sigma. The lawsuit, brought by Capability against AmEx, was resolved in the latter’s favor on summary judgment.
Six Sigma, broadly speaking, is a business management approach that aims at improving outputs using certain quality control and statistical techniques. See generally Newcombe, Law Firm Convergence Meets Six Sigma, Of Couns., May 2007, at 7 (2007). It can be adapted to many industries and embodied in training materials directed to a specific company’s business operations. Six Sigma has been used by various consultants and companies for several decades.
In the late 1990s, AmEx was assisted by another Six Sigma consultant who in turn used Capability as a sub-contractor. After this initial exposure to Capability, AmEx contracted directly with Capability to provide Six Sigma training and related materials to AmEx employees. The agreement, entered into on August 14, 2000, and later amended, promised Capability (1) a guaranteed, fixed base compensation of $4 million, and (2) a “gain sharing fee” to be paid only if AmEx surpassed savings in calendar year 2001 of $106 million as a result of Capability’s work.
AmEx’s Global Six Sigma Performance Group (“Performance Group”) was responsible for tracking and for assisting with implementation of Six Sigma projects across the company. Janet Young headed the Performance Group, which comprised about 25-30 employees, and David Hudson, another Performance Group employee, created a database that tracked financial and other project information supplied by each project team for all of the hundreds of Six Sigma projects at AmEx.
In September 2000, Capability hired a consultant — BGM Services, Inc. and its principal Arthur Zentner — to assist with the development of course materials and training, and in the same month Capability and BGM offered the first training course. Capability completed its work under the agreement by December 31, 2001. There was little discussion between Capability and AmEx as to the results of the savings tracking until rather late in the process, but a few clues could have encouraged optimism on Capability’s part starting in mid-2001.
In August 2001 Zentner participated in a monthly conference call with AmEx and Capability personnel and heard an AmEx employee comment in substance that “the savings target was achieved,” which Zentner took to mean that AmEx had reached $106 million in savings. In mid-December 2001, Janet Young sent an e-mail to Kevin Weiss, the CEO of Capability, relating in part to the gain sharing fee calculation; it included the statement: “Current projected Net Savings as of November, 2001: $102mm. Final calculation to be completed Dec. 31, 2001.”
A couple of months later, after AmEx computed the final net savings at around $90 million, Young supplied Capability savings reports showing gross savings of $149 million, and a spreadsheet file titled “Final-TCG Contract Pay-out Final gain share analysis” that explained the $90 million net figure — but a second, never fully explained worksheet contained different numbers and specified a net savings figure of over $107 million.
In the same time frame, Capability raised questions as to whether AmEx was fully complying with confidentiality provisions in the contract designed to protect Capability’s training materials. One alleged breach concerned an IBM contractor who refused to sign a confidentiality agreement before being trained with protected materials, and another involved a third-party vendor to AmEx, The Quality Group, that incorporated protected information into an online demonstration product.
On November 5, 2002, Capability rejected AmEx’s calculations as inconsistent with the agreement, demanded an explanation for the conflicting spreadsheets, and asserted knowledge of new confidentiality violations related to five former AmEx employees taking confidential materials with them to new jobs. AmEx responded in March 2003 that it stood by its calculations and methodology, dismissing the second spreadsheet as a draft.
Following a nearly five-year hiatus, Capability filed suit against AmEx on January 29, 2008. In Count I, the complaint charged breach of contract based both on the failure to pay a gain sharing fee and on alleged breaches of the confidentiality provisions. Count II sought an accounting for disclosures or uses of the Capability materials inconsistent with the copyright license provided by the agreement. After discovery, the district court granted AmEx summary judgment on both counts.
Starting with the gain sharing fee, the district court ruled that the contract was unambiguous, that the gross savings figure generated by the system was not decisive because a net figure was contemplated, and that Capability had failed to show that the $90 million net calculation was erroneous. As to confidentiality breaches, the court found that they were largely minor or technical, and that no damages had been established. It also rejected the copyright claim on limitations grounds, and Capability appealed only from the judgment rejecting the contract claim.
While that appeal was pending, Capability moved for relief from judgment in the district court, Fed.R.Civ.P. 60(b), arguing that its attorney’s poor performance and suspension from practice shortly after summary judgment proceedings justified relief. After a hearing, the district court denied Capability’s motion, and Capability timely appealed from that order. We consolidated the two appeals and now affirm.
The standard of review on summary judgment is de novo, drawing inferences in favor of the non-moving party. Landrau-Romero v. Banco Popular De P.R., 212 F.3d 607, 611 (1st Cir.2000). The contract provides that New York law governs its interpretation. Review of an order denying a post-trial motion under Rule 60(b) is for abuse of discretion, Karak v. Bursaw Oil Corp., 288 F.3d 15, 19 (1st Cir.2002), which in practice means de novo review of strictly legal determinations and deference to the extent that the denial turns on factual or judgmental determinations.
The gain sharing fee. Capability first argues that the agreement unambiguously required AmEx to use the $149 million savings figure reported by its internal savings system' — without subtraction of savings not attributable to Capability’s Six Sigma efforts — as the trigger for additional payment. Capability does not, however, dispute that the $149 million figure included savings from 715 Six Sigma projects, some of which were unrelated to Capability’s own work, and failed to exclude certain costs of implementing the Six Sigma program.
Capability’s most far-reaching argument for rejecting the net $90 million figure is that the agreement implicitly required use of the gross figure because (1) it provided that the calculations derived from AmEx’s system would be determinative, and (2) no further massaging of numbers was permitted. The first proposition is true but not the second. The argument emphasizes the underscored language in the agreement:
The gain sharing shall be determined by [AmEx] using the system it uses itself to internally track and report on such savings for internal business purposes. [AmEx] will provide regular reports off of this system to [Capability], redacting any confidential information as appropriate. The savings calculations from [AmEx’s] system shall be determinative and not subject to challenge by [Capability].
But this language must be read together with the agreement’s gain sharing provision. It explicitly provides that the gain sharing fee is to be “based on the calculated benefit of the net savings to [AmEx] ... resulting from the materials, training, coaching and development of personnel contemplated by [the] Agreement.” See note 1, above (emphasis added). Exhibit E, cross-referenced in this provision, also refers to “realized actual net savings.”
Nor is the language relied on by Capability inconsistent with AmEx’s derivation of the net figure. AmEx’s calculation did “us[e] the system” to generate a number that reflected actual net savings “shown on” and “from” the system. It then permissibly removed other savings “shown on” and “from” the system unrelated to Capability’s work and — consistent with the aim of deriving a final net number — it reduced the relevant savings by the costs of implementing the Six Sigma program.
Capability points to the second sentence of the excerpt quoted above, saying that the requirement of regular reports generated by the AmEx system would be meaningless if the numbers in those reports did not establish the final figure. But Capability had good reasons to monitor the changing gross savings as they were reported, and to insist that the final reported number be a starting point for calculations, even though the final net numbers might be determined only later in the day.
Capability’s fallback position is to argue first that at least the agreement should be taken to be ambiguous, permitting consideration of parol evidence. The parol evidence rule does invite resort to extrinsic evidence, such as negotiations between the parties, where a contract’s terms are unclear. But here there is nothing ambiguous in the agreement’s explicit specification of net savings resulting from Capability’s contribution. E.g., Teitelbaum Holdings, Ltd. v. Gold, 48 N.Y.2d 51, 421 N.Y.S.2d 556, 396 N.E.2d 1029, 1031 (1979).
Capability also argues that it was a shared purpose of the parties to achieve savings of $106 million. That figure was certainly an objective; but it is also evident that AmEx intended to limit its payment to Capability if that goal was not achieved. Nor is it apparent why Capability should expect to receive a performance-based payment for $59 million in savings unrelated to its own work under the contract.
Capability’s final fallback argument is that there was at least a material issue of fact as to the correctness of the subtractions, and this in turn necessarily generated material issues of fact precluding summary judgment. This would indeed be a promising line of attack if Capability had attempted to identify evidence at the summary judgment stage that any one of the individual components of any of the subtracted figures — for example, a subtracted project that reduced the net savings — did result from use of Capability’s training or materials.
Capability points us to no such evidence. Instead, Capability chooses to argue that the overall correctness of the $90 million calculation is globally impeached not by particular errors but by three pieces of evidence already adverted to: an AmEx employee’s statement during a conference call in August 2001, Janet Young’s December 12, 2001, e-mail, and the second spreadsheet that identified $107 million in savings.
As already noted, Zentner testified at his deposition that during a conference call with AmEx, he heard an AmEx employee comment to the effect that “the savings target was achieved.” But the call was among Six Sigma representatives from across AmEx, which had its own internal savings target, and the vague comment left unstated which “target” the employee was referring to — not to mention leaving unclear whether the savings were projected or actual and whether they were gross or net.
As for Young’s e-mail, the sentence to which Capability points — “[cjurrent projected Net Savings as of November, 2001: $102 mm” — expressly cautioned that it was a projection, i.e., estimate, and came immediately after a warning that AmEx was in the process of adjusting savings projec tions as a result of the events of September 11, 2001. Capability was free to explore in discovery how the estimate was altered by events and the revising-down process; if it did so, nothing helpful to Capability has been called to our attention.
As for the mysterious $107 million spreadsheet, AmEx produced admissible evidence identifying the $90 million spreadsheet as the final calculation and explaining how it conducted its analysis in arriving at that figure. Despite discovery, Capability has failed to adduce any meaningful evidence refuting the propriety of Capability’s calculations or showing that the $107 million spreadsheet was the final version rather than some interim or incomplete calculation or projection.
Its closest attempt is a strained reading of a footnote in the $90 million spreadsheet that identified a large deduction as “categorized under a subset of Six Sigma unrelated to [Capability’s] work but tracked via [AmEx’s] system.” Capability wishfully suggests that anything under the banner of Six Sigma had to be credited toward the gain sharing fee, regardless of whether it derived from Capability’s work. This misreads the agreement for reasons already explained.
In its reply brief, Capability for the first time stresses that AmEx’s spreadsheet describes the starting $149 million savings figure as being “net of costs to implement,” arguing that this is inconsistent with an additional subtraction for $8.1 million in program costs; but the uncontradicted evidence from Janet Young’s deposition was that the $149 million figure was net of “project cost[s] for individual projects,” not overarching costs such as operating the Performance Group itself.
The reply brief also contends that an internal AmEx memorandum represents a fourth piece of evidence creating a genuine issue of material fact in stating, “Through the third quarter, we already exceeded our goal of delivering $100 million in benefits for the year with 293 completed Six Sigma projects across the company.” Nothing indicates that this is a net figure reflecting only Capability-assisted projects.
Confidentiality claims. Capability also appeals from summary judgment on its contract claim based on the agreement’s confidentiality provisions. One such provision gave AmEx a license to distribute and use the materials created under the agreement for training AmEx employees as well as “contractors and consultants who [AmEx] determines are integral to [AmEx] business initiatives,” provided that the latter and their employers also sign confidentiality agreements restricting their use of the materials.
The alleged breaches consisted of distributing confidential materials to contractors and consultants who had not signed, or whose employers had not signed, confidentiality agreements; allowing former employees to retain materials after they left AmEx; and permitting an unauthorized third-party company, The Quality Group, to use and distribute the materials. AmEx virtually concedes that it had in some instances not properly policed its materials or obtained the proper signatures.
However, AmEx also asserts that the breaches were minor, that none of the materials are now being distributed outside the company or have been since 2005, and that Capability has not been damaged in any of the episodes. The district judge agreed and, as to The Quality Group’s arguable unauthorized use, found that a May 2005 license by Capability granted The Quality Group use of the material in exchange for a fee paid to Capability.
Capability’s position is that the materials had inherent value evidenced- by AmEx’s payments to Capability under the contract; and so, Capability asserts, a jury could conclude that but for AmEx’s failure to secure confidentiality agreements, the recipient companies would otherwise have paid Capability for the right to use the materials. But the materials were furnished to help these third parties in AmEx’s business and were not otherwise used.
The one exception — The Quality Group’s incorporation of protected materials into an online demonstration product— was ultimately covered by a license and license fee. It appears from the license agreement that it covered The Quality Group’s pre-license uses and, in any event, Capability does not suggest otherwise. Thus, the district judge correctly concluded that it would be double recovery to require any payment from AmEx on account of this episode.
The contract also stipulated that breaching the confidentiality provisions would amount to “irreparable and continuing damage or injury” entitling the non-breaching party to request an injunction, as well as attorneys’ fees incurred for that purpose. Capability claimed in the district court that it is entitled to both an injunction and fees, but the district court found that no further threat of improper disclosure existed, AmEx having long since ceased providing the materials to outsiders.
Although Capability still insists that it is entitled to the injunction even without such a threat, injunctions are almost always discretionary exercises of the court’s equity powers, and are rarely warranted where no threat of future harm exists. The agreement’s language might suffice to avoid proof of irreparable injury in the case of continuing disclosure, but the parties have no power to compel a court to grant equitable relief that the court finds to be unnecessary. E.g., Firemen’s Ins. Co. of Newark, N.J. v. Keating, 753 F.Supp. 1146, 1154 (S.D.N.Y.1990).
Capability’s Rule 60(b) motion. Capability sought by post-judgment motion, Fed.R.Civ.P. 60(b), and the district court denied, relief from the judgment on the grounds that its own trial attorney’s negligence and misconduct (counsel was replaced for the appeal) denied it an opportunity to fully litigate its claims. Capability contended that its trial attorney was suffering through personal and family distractions, undisclosed to Capability, that compromised his ability to conduct the lawsuit.
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7393985-26685 | MEMORANDUM OPINION AND ORDER
ASPEN, District Judge:
The defendant Alfred Elliott has moved to strike and dismiss certain parts of the indictment against him. For the reasons set forth below, that motion is denied.
I. Background
The seventy-count indictment charges that Elliott, a former partner in the law firm of Schiff, Hardin & Waite (“Schiff”), misused “confidential client information” for his personal benefit in nine separate transactions involving Schiff clients. According to the indictment, when Elliott would learn confidential information about the planned acquisition of a large block of stock, he used this “nonpublic information” and purchased stock in the target company, in the expectation that the price would rise when the planned acquisition became public. The stock purchases purportedly were made through the Chicago office of Charles Schwab & Co., which communicated the orders by wire to a central computer in San Francisco. The indictment charges that by purchasing these stocks, Elliott defrauded both Schiff, see Indictment Ct. 1, if 2(a), and its clients, see id. 112(b), of property, namely, the confidential client information. Since the purchases were made by wire, the indictment charges Elliott with thirty-four counts of wire fraud, 18 U.S.C. § 1343 (1982), for each of the separate wire communications. In addition, because the fraud was in connection with the purchase of securities, the indictment charges Elliott with thirty-four counts of securities fraud, 15 U.S.C. §§ 78j(b), 78ff (1982 & Supp. IV 1986), for the same transactions. Count 69 of the indictment charges Elliott with a violation of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1962(c), 1963(a) (1982 & Supp. IV 1986), and Count 70 charges Elliott with filing a false income tax return, 26 U.S.C. § 7206(1) (1982). The tax count is not at issue in this motion.
II. Wire Fraud
A. Was the Confidential Client Information “Property” in the Hands of Schiff?
Paragraph 2(a) of Count 1, adopted by reference in every other count but number 70, alleges that Elliott defrauded Schiff “of property, namely, confidential information which defendant ALFRED ELLIOTT misappropriated and used for his own private benefit.” Elliott contends that paragraph 2(a) is a non sequitur and will not support a charge under the wire fraud statute. His argument goes like this: (1) The wire fraud statute protects only property rights. See Carpenter v. United States, 484 U.S. 19, 108 S.Ct. 316, 98 L.Ed.2d 275 (1987); McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987). (2) An essential ingredient of property is the ability to exploit it. (3) It is the government’s theory that the Illinois Code of Professional Responsibility as well as Schiff’s own policies prohibit a lawyer from using confidential client information for personal gain, without the client's consent. (4) Therefore, Schiff could not exploit the client confidences. (5) Therefore, Schiff had no property interest in the confidential client information. (6) Therefore, even if Elliott defrauded Schiff of confidential client information, he did not defraud them of property. (7) Therefore, paragraph 2(a) does not state a violation of the wire fraud statute.
Elliott relies heavily on certain language from Carpenter v. United States, 484 U.S. 19, 108 S.Ct. 316, 98 L.Ed.2d 275 (1987), in support of his argument. In Carpenter, one of the defendants, a reporter for The Wall Street Journal’s, “Heard on the Street” column, used his knowledge of what would be published in the column to buy or sell stock, in the expectation that the stock’s price would go up or down when the column was published. The Supreme Court held that this prepublication information, even though intangible, was property for purposes of the mail and wire fraud statutes. The Court stated:
The Journal had a property right in keeping confidential and making exclusive use, prior to publication, of the schedule and contents of the “Heard” columns .... The confidential information was generated from the business and the business had a right to decide how to use it prior to disclosing it to the public.... [I]t is sufficient that the Journal has been deprived of its right to exclusive use of the information, for exclusivity is an important aspect of confidential business information and most private property for that matter.
Id. 108 S.Ct. at 320-21. Elliott argues that since Schiff did not have a right to decide how to use the client confidences or a right to exclusive use of these confidences, they were not property interests in the hands of Schiff.
The Second Circuit has already rejected the same argument in United States v. Grossman, 843 F.2d 78 (2d Cir.1988), cert. denied, — U.S. -, 109 S.Ct. 864, 102 L.Ed.2d 988 (1989). In Grossman, the defendant, an associate of a New York City law firm, funneled information about the recapitalization of a firm client to his friends and relatives, who profited handsomely from the information. Grossman argued, as Elliott argues here, that in light of Carpenter, the confidential information was not property in the hands of the law firm, since the firm could not exploit it. The Second Circuit rejected this argument as “specious,” for two reasons:
First, Grossman distorts Carpenter. In context, the language which he cites merely describes the confidential information in that case; it does not require that all confidential information must be of the same nature to be considered “property.” Carpenter actually holds generally that, even though “confidential business information” is intangible, it “has long been recognized as property.” Thus, the information in this case regarding the ... recapitalization clearly falls within the definition of property under Carpenter. Second, the fact that [the law firm] could not commercially exploit the information by trading on it does not mean the confidentiality of the information had no commercial value to the firm. As several partners of the firm testified, maintaining the confidentiality of the information was of commercial value because, by maintaining confidentiality, the firm would protect or enhance the firm’s reputation, with the result that it would not lose its clients and perhaps would gain more clients.
Id. at 86.
Elliott contends that Grossman is wrongly decided; in his view, the Second Circuit, by looking to the firm’s reputation, readopted the intangible rights theory rejected in McNally. However, we believe that the Seventh Circuit implicitly endorsed the Grossman decision in FMC Corp. v. Boesky, 852 F.2d 981 (7th Cir.1988). In that case, FMC alleged that Boesky, the famed arbitrageur gone bad, purchased a large block of FMC stock after learning inside information about FMC’s recapitalization, and thus raised the cost of recapitalization substantially. The narrow issue on appeal was whether FMC had been injured for purposes of standing under Article III of the Constitution. Reversing the district court, the majority held that FMC had suffered an injury to its property. Judge Manion, dissenting, disagreed. Judge Man-ion suggested that an injury to reputation would suffice, but there was no such injury alleged. To illustrate his point, Judge Manion cited to Grossman with a “Cf.” In responding to Judge Manion’s contention, the majority also cited Grossman, but argued that Judge Manion’s citation of the case was anomalous.
On the one hand, he argues that under Carpenter, FMC’s confidential business information was so ethereal to be “property” for purposes of federal mail fraud and could not be the subject of an Article III injury because it was not the company’s stock-in-trade and lacked commercial value. On the other hand, his reading of Grossman suggests that the same confidential information in the hands of FMC’s law firm or Goldman was “property” for purposes of mail fraud and, because it would have commercial value— certainly both FMC’s law firm and Goldman also had a reputational interest in keeping the information confidential — its misappropriation would suffice for purposes of an Article III inquiry. Under this reasoning, Goldman could bring a civil action against Brown and Boesky and friends, but FMC, the actual owner of the information, could not. This seems a strange result.
Id. at 992 n. 21. We read this passage to mean that the majority believes confidential corporate information should be considered property in the hands of the corporation itself — which is essentially what it held — but also in the hands of the corporation’s law firm or investment banker. To be sure, the references to property under the mail fraud statute are only dicta, since the issue before the Court was standing under Article III; the Court conceded that the inquiries were different under the statute and the Constitution. Id. at 991 n. 21. But the import of the quoted passage is that a corporation’s confidential informa tion is still property in the hands of the corporation’s law firm.
But even if we are wrong and the Seventh Circuit has not endorsed Grossman, we still believe that the confidential client information must be \ considered Schiff’s property for purposes of the mail fraud statute. Certainly, the Illinois Code of Professional Responsibility strictly limits how a law firm can use the confidences of its clients, that does not mean, however, that a law firm does not or cannot use client confidences. On the contrary, the law firm uses such confidences all the time, to produce the legal advice and other forms of legal assistance that it sells. Client confidences therefore have economic value to a law firm, just as a word processor or a copying machine or any other tool used by a law firm does. Moreover, the Seventh Circuit has suggested, albeit in passing and without discussion of the issue, that a person still has a property interest in money which is held for the benefit of others and whose use is limited by law. For example, in United States v. Cosentino, 869 F.2d 301 (7th Cir.1989), the defendants were charged with withdrawing funds for their personal use from the account of an insurance company, whose funds were strictly regulated in order to protect policyholders. The Court concluded that the indictment alleged “a scheme to deprive [the insurance company] and its policyholders of money, thus stating an offense under” the mail fraud statute. Id. at 310. Likewise, in United States v. Bailey, 859 F.2d 1265, 1277 (7th Cir.1988), cert. denied sub nom. Ticktin v. United States, — U.S. -, 109 S.Ct. 796, 102 L.Ed.2d 787 (1989), the court stated that a “scheme to injure [a federally insured and regulated savings and loan] financially is necessarily one to injure its shareholders and depositers [sic] financially.” The same logic should apply to client confidences, since they are held for the benefit of the client and since their use is also limited by law. We therefore reject Elliott’s argument on this point and hold that client confidences must be considered property not only in the hands of the client but also in the hands of the law firm.
B. Does the Indictment Sufficiently Allege that Elliott Defrauded Schiff and Its Clients of Confidential Information?
Paragraph 2(b) of Count 1 alleges that Elliott defrauded Schiff’s clients “of property, namely confidential client information which defendant ALFRED ELLIOTT misappropriated and used for his own private benefit." Elliott does not contest — wisely, in light of Carpenter — that confidential client information is the client’s property. Nonetheless, he argues that paragraph 2(b) must be stricken because the rest of the indictment does not support the claim that he took confidential client information.
Elliott notes that the paragraphs describing his purchases of stock do not explicitly state that he purchased stock based on confidential information. Rather, they state that he purchased stock “on the basis of nonpublic information he learned during the course of confidential conversations.” See, e.g., Indictment Ct. 1, HIT 7, 9, 11. Elliott argues that “nonpublic” is not the same as “confidential,” and that even if he learned of information during confidential conversations, that does not mean the information was still confidential when he allegedly misappropriated it by purchasing stock.
Elliott’s argument must be rejected. In evaluating the sufficiency of an indictment, we must look to three factors: “First, it should state all of the elements of the offense charged; second, it should inform the defendant of the nature of the charge so that he may prepare a defense; and third, it must enable the defendant to plead the judgment as a bar to any later prosecution for the same offense.” United States v. Gironda, 758 F.2d 1201, 1209 (7th Cir.), cert. denied sub nom. Spiess v. United States, 474 U.S. 1004, 106 S.Ct. 523, 88 L.Ed.2d 456 (1985); see also United States v. Serola, 767 F.2d 364, 369 (7th Cir.1985); United States v. Sanders, 688 F.Supp. 367, 371-72 (N.D.Ill.1988). Essentially, Elliott is arguing that the indictment fails the first prong of this test, since the indictment does not state that he defrauded Schiff and its client of confidential information, but only of nonpublic information. However, we refrain from reading an indictment in a hy-pertechnical fashion. Gironda, 758 F.2d at 1209. The Seventh Circuit has held that mail fraud indictments in particular should be accorded a broad reading, United States v. Brack, 747 F.2d 1142, 1147 (7th Cir.1984), cert. denied, 469 U.S. 1216, 105 S.Ct. 1193, 84 L.Ed.2d 339 (1985); given the similarities between the mail and wire fraud statutes, see Carpenter, 108 S.Ct. at 320 n. 6; United States v. Gimbel, 830 F.2d 621, 627 (7th Cir.1987), wire fraud indictments like Elliott’s must also be broadly construed. With these principles in mind, we conclude that stock purchased “on the basis of nonpublic information ... learned during the course of confidential conversations” is equivalent to stock purchased on the basis of confidential information.
Moreover, even if we were to accept Elliott’s strained reading of paragraphs describing his purchases, the indictment still must be read as a whole. United States v. Hoag, 823 F.2d 1123, 1126 (7th Cir.1987); United States v. Watkins, 709 F.2d 475, 478 (7th Cir.1983). Any defects in the individual paragraphs are cured by paragraph 3, which describes Elliott’s scheme in general. Paragraph 3 reads in pertinent part as follows:
It was the scheme of defendant ALFRED ELLIOTT to purchase stock based on confidential client information that he learned during the course of his work at Schiff, Hardin & Waite. When confidential information was disclosed to defendant ALFRED ELLIOTT by other attorneys at the firm or by clients of the firm which related to a prospective acquisition of a large block of stock, defendant ALFRED ELLIOTT, acting on the basis of this nonpublic information, would purchase stock in the corporation which was to be the target of this acquisition, expecting that the price of this stock would later rise when the prospective acquisition became public. In this way, defendant ALFRED ELLIOTT schemed to reap large profits by utilizing non-public, confidential information. ...
(Emphasis added.) The underlined passages make it clear that the scheme alleged was one to purchase stock based on confidential client information, and that “nonpublic information” is intended to mean “confidential information.” The allegations sufficiently charge that Elliott defrauded Schiff and its clients of the clients’ confidential information, and we reject Elliott’s arguments to the contrary.
C. Does the Indictment Sufficiently Allege That the Confidential Client Information was Material?
Elliott also argues that the wire fraud allegations are deficient because they fail to allege that the confidential information allegedly misappropriated was material. The government concedes that the indictment does not use the word “material,” and that the “nonpublic information must have been of some importance to both Elliott and the victims of the fraud to constitute property.” Govt’s Response at 9. The government does argue, however, that the indictment clearly alleges the significance of the confidential information.
We agree. “In determining whether an essential element is missing from the indictment, [the Seventh Circuit] has held that no particular words or phrases must be used.” Watkins, 709 F.2d at 478. Thus, an indictment that charged a defendant with knowingly making false statements for the purpose of obtaining HUD-insured mortgages, in violation of 18 U.S.C. § 1010 (1982), was sufficient even though it did not explicitly allege “materiality”; the Seventh Circuit held that materiality is not required under § 1010, but alternatively that materiality was alleged in substance,' since the defendant must have known HUD would rely on his false statements. Hoag, 823 F.2d at 1126-26. The indictment against Elliott similarly alleges materiality in substance. Paragraph 3 states that Elliott bought stock in companies he knew were targeted for acquisition, in the expectation that the price of the stock would rise when the acquisition became public. If the price of the stock was expected to rise when information about the acquisition became public, that information must have had some significance or, to use Elliott’s word, must have been “material.” We reject Elliott’s arguments on this point also and conclude that the wire fraud allegations should stand.
III. Securities Fraud
A. The Misappropriation Theory
Elliott is also charged with thirty-four violations of Section 10(b) of the Securities and Exchange Act of 1934, 15 U.S.C. § 78j(b) (1982). Section 10(b) provides:
It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange—
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(b) To use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.
In 1942, pursuant to section 10(b), the Securities and Exchange Commission promulgated Rule 10b-5, 17 C.P.R. § 240.10b-5 (1987), which provides:
It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,
(a) To employ any device, scheme, or artifice to defraud,
(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 the light of the circumstances under which they were made not misleading, or
(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person,
in connection with the purchase or sale of any security.
The second paragraph of each securities fraud count tracks the language of parts (a) and (c) of Rule 10b-5 and alleges that Elliott, by placing orders for stock, “employed a device, scheme and artifice to defraud and engaged in acts, practices and a course of business that operated as a fraud.”
In most insider trading cases under section 10(b) and Rule 10b-5, the focus has been on whether a corporate insider or his “tippee” breached a duty to disclose material nonpublic information before buying or selling stock. See Dirks v. Securities & Exchange Commission, 463 U.S. 646, 103 S.Ct. 3255, 77 L.Ed.2d 911 (1983), Chiarella v. United States, 445 U.S. 222, 100 S.Ct. 1108, 63 L.Ed.2d 348 (1980); In re Cady, Roberts & Co., 40 S.E.C. 907 (1961). However, the government does not rely on these nondisclosure cases, see Govt’s Response at 11 & n. 2, but on the “misappropriation” theory established by the Second Circuit. See United States v. Carpenter, 791 F.2d 1024, 1027-34 (2d Cir.1986), aff'd in pertinent part by an equally divided court, 484 U.S. 19, 108 S.Ct. 316, 98 L.Ed.2d 275 (1987); Securities & Exchange Commission v. Materia, 745 F.2d 197, 201-03 (2d Cir.1984), cert. denied, 471 U.S. 1053, 105 S.Ct. 2112, 85 L.Ed.2d 477 (1985); United States v. Newman, 664 F.2d 12, 15-19 (2d Cir.1981). Under the misappropriation theory, “one who misappropriates [material] nonpublic information in breach of a fiduciary duty and trades on that information to his own advantage violates Section 10(b) and Rule 10b-5.” Materia, 745 F.2d at 203. Since neither the Supreme Court nor the Seventh Circuit has passed on the validity of the misappropriation theory, we first must determine whether it states a violation under section 10(b) and Rule 10b-5.
We conclude that the theory should be adopted, at least under the facts alleged in the indictment. While section 10(b) does not explicitly reveal whether misappropriation is a violation, the statute’s language broadly prohibits, “in connection with the purchase or sale of any security,” “any person” from using “any manipulative or deceptive device.” (Emphasis added.) Likewise, Rule 10b-5 outlaws “any device, scheme, or artifice to defraud” and “any act, practice, or course of business which operates as a fraud or deceit upon any person.” (Emphasis added.) “These proscriptions, by statute and rule, are broad and, by repeated use of the word ‘any’ are obviously meant to be inclusive.” Affiliated Ute Citizens of Utah v. United States, 406 U.S. 128, 151, 92 S.Ct. 1456, 1471, 31 L.Ed.2d 741 (1982). Moreover, Elliott’s alleged use of information entrusted to him, if proven, clearly operated as a fraud or deceit. If the government’s allegations are true, Elliott’s “theft of information was indeed as fraudulent as if he had converted corporate funds for his personal benefit.” Materia, 745 F.2d at 201-02; see also Chiarella, 445 U.S. at 245, 100 S.Ct. at 1123 (Burger, C.J., dissenting) (defendant “misappropriated — stole to put it bluntly— valuable nonpublic information entrusted to him in the utmost confidence”). Moreover, Elliott’s alleged fraud was “in connection with” his purchase of stock in target companies.
Elliott argues, however, that the Second Circuit’s misappropriation theory runs afoul of the Supreme Court’s decision in Chiarella. In that case, the defendant, who worked for a financial printer, was able to deduce the identities of corporate takeover targets from draft announcements that his company printed, even though the names of the targets were disguised. Before the takeovers became public, he purchased stock in the targets and sold at a higher price after the takeovers were announced. The Supreme Court held that the defendant’s conviction was improper, because he was not a corporate insider and owed no duty to disclose to his sellers. According to the Court, “liability is premised upon a duty to disclose arising from a relationship of trust and confidence between parties to a transaction.” Chiarel-la, 445 U.S. at 230, 100 S.Ct. at 1115. Elliott argues that the misappropriation theory must be rejected because it does not focus on the “relationship ... between parties to a transaction,” but on the duty owed by a defendant to either his employer or the corporation.
As mentioned previously, see note 4 supra, the United States Supreme Court did not consider the misappropriation theory, but, in our view, the Court’s opinion does not preclude the application of the theory. The Court noted that an insider generally has a duty to disclose material nonpublic information or abstain from trading in the corporation’s stock. That duty arises from “(i) the existence of a relationship affording access to inside information intended to be available only for a corporate purpose, and (ii) the unfairness of allowing a corporate insider to take advantage of that information by trading without disclosure.” Chiarella, 445 U.S. at 227, 100 S.Ct. at 1114 (citing In re Cady, Roberts & Co., 40 S.E.C. 907 (1961)). The Chiarella decision focused on the second of these factors, the unfairness to the other party in the transaction; its decision did not focus as much on the first factor, the access to inside corporate information. But the Court did not completely ignore this factor. In dicta discussing the liability of “tippees,” those who receive confidential information from insiders, the Court suggested that the tip-pee’s obligation arises from “his role as a participant after the fact in the insider’s breach of a fiduciary duty.” Id. 445 U.S. at 230 n. 12, 100 S.Ct. at 1116 n. 12. The insider’s duty to the corporation was also stressed in Dirks v. Securities & Exchange Commission, 463 U.S. 646, 655, 103 S.Ct. 3255, 3261, 77 L.Ed.2d 911 (1983), where the Court noted that insiders “have independent fiduciary duties to both the corporation and its shareholders.” The Dirks Court then went on, in dicta, to discuss the duties of so-called “quasi-insiders.”
Under certain circumstances, such as where corporate information is revealed legitimately to an underwriter, accountant, lawyer, or consultant working for the corporation, these outsiders may become fiduciaries of the shareholders. The basis for recognizing this fiduciary duty is not simply that such persons acquired nonpublic corporate information, but rather that they have entered into a special confidential relationship in the conduct of the business of the enterprise and are given access to information solely for corporate purposes. When such a person breaches his fiduciary relationship, he may be treated more properly as a tipper than a tippee. For such a duty to be imposed, however, the corporation must expect the outsider to keep the disclosed nonpublic information confidential, and the relationship at least must imply such a duty.
Id. at 655 n. 14, 103 S.Ct. at 3262 (citations omitted). We think that this footnote strongly suggests that a quasi-insider attorney like Elliott may not misappropriate information which the corporation client has disclosed “solely for corporate purposes.” We recognize that the quoted passage provides less support for imposing misappropriation liability on defendants like the financial printers in Chiarella and Materia, who may not have had a direct fiduciary duty to the corporation. But we may leave that issue to another day, since Elliott falls within the ambit of the Dirks dicta. Accordingly, we adopt the misappropriation theory advanced by the government in this case.
B. Materiality
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6115458-26561 | OPINION
DIANE WEISS SIGMUND, Bankruptcy Judge:
The Debtor initiated this adversary proceeding on December 17, 1992 by fifing a Petition to Determine Tax Liability Pursuant to 11 U.S.C. § 505(a), and Objection to Claim (the “Petition”). The Court must initially decide whether the Debtor was a “responsible person” within the meaning of Internal Revenue Code (“IRC”) § 6672 during the time period in question. If this Court finds that the Debtor was a responsible person, we must then decide whether the Debtor’s failure to remit trust fund taxes during the period in question was willful. If this Court decides either the first or second issue in the negative, the Internal Revenue Services’ (the “IRS”) proof of claim will be disallowed. If this Court decides both issues in the affirmative, then the IRS’ proof of claim will be allowed. In order to render these decisions, the Court must first determine which party bears the burden of proof which is also in dispute.
BACKGROUND.
On May 15, 1992, the Debtor filed a voluntary petition seeking relief under chapter 13 of the United States Bankruptcy Code (the “Code”), 11 U.S.C. §§ 1301 et seq. The Defendant, the United States of America, by and through the IRS, filed a proof of claim in the Debtor’s bankruptcy case claiming that the Debtor, a responsible person under IRC § 6672, owed the IRS payroll withholding taxes in the amount of $113,825.43.
In the Petition, the Debtor requested that the Court enter an Order (1) assessing the Debtor’s liability for the taxes at zero and (2) disallowing the IRS’ proof of claim. A hearing was held on the Petition on November 29, 1993.
FACTS.
The IRS claims that the Debtor owes payroll withholding taxes under IRC § 6672 as a result of his position as a “responsible person” with a Pennsylvania corporation known as Joseph J. Abel & Sons, Inc. (the “Company”). The Company was in the construction business. The parties admit that the Company failed to remit to the IRS payroll withholding taxes accrued during the period ended June 30, 1987 through the period ended September 30,1988. This time period will be referred to as the period in question throughout this opinion.
At the time the Company was incorporated in 1963, it was owned in equal one-third shares by Joseph J. Abel and his two sons, David J. Abel (“David”) and the Debtor. After Joseph J. Abel died in 1983, David and the Debtor became 50% owners of the Company until September, 1988 when the Debtor resigned.
During the period in question, David was the President of the Company and the Debt- or was the Secretary. In addition to his role as an officer of the Company, the Debtor was responsible for supervising construction workers in the field, conducting on-site inspections, drafting estimates, occasionally paying for on-site deliveries, and, with David, hiring and firing employees. The Debtor could and occasionally did sign checks on behalf of the Company; no co-signers were required. Government Exhibit 7. The Company checks signed by the Debtor were usually payments for on-site deliveries of materials and supplies. On one occasion, the Debt- or prepared and signed three payroll checks on-site to replace lost payroll cheeks. The parties agree that the Debtor’s duties never included the payment of salaries, or the payment of any obligations relating to payroll including the payment of payroll taxes. The Debtor did not prepare tax returns.
The Debtor also provided financial assistance to the Company. The Debtor and his wife executed a personal guaranty on June 17, 1988, to provide additional security for an existing loan to the Company. Government Exhibit 6. The guaranty, however, was provided on account of the Company’s existing debt to its lender and not to obtain new or additional credit at that time.
Notwithstanding some initial confusion due to the passage of time, the Debtor credibly testified that he first became aware in September of 1988 that the payroll taxes were not paid. As a result, the Debtor hired an attorney and an accountant to review the Company’s books and records. The Debtor resigned from the Company in September of 1988 on the advice of his attorney and accountant.
DISCUSSION.
Burden of Proof. In order to address the substantive issues under IRC § 6672, this Court must decide which party bears the burden of proof. The Debtor argues that the IRS’ proof of claim constitutes prima, facie evidence of the validity and amount of the debt, but that this presumption is rebuttable. If, according to the Debt- or, he puts on sufficient evidence to rebut the presumption, the burden then shifts to the IRS and is one of a preponderance of the evidence. The IRS argues that the tax assessment and proof of claim are presumed to be correct, and the Debtor has the burden of proof by preponderance of the evidence to show that he is not a responsible person under § 6672 or that he did not willfully fail to pay the payroll taxes. Thus, while the parties agree as to the presumed correctness of the proof of claim, they disagree on the evidence necessary to rebut the presumption.
Our analysis begins with the Third Circuit Court of Appeals’ decision in Resyn Corporation v. United States, 851 F.2d 660 (3d Cir.1988). The case involved an appeal from the United States District Court for the Eastern District of Pennsylvania, affirming an Order of the Bankruptcy Court allowing an IRS proof of claim for corporate income tax deficiencies and interest penalties. The basis for the claim was that the taxpayer had fraudulently understated its corporate income and overstated its cost of goods sold and taken certain deductions which were improper.
In Resyn, the Third Circuit Court of Appeals, relying on non-bankruptcy cases, stated that the government’s deficiency assess ment “ordinarily is afforded a presumption of correctness, thus placing the burden of producing evidence to rebut that presumption squarely on the taxpayer.” Id. at 663 (citing Helvering v. Taylor, 293 U.S. 507, 55 S.Ct. 287, 79 L.Ed. 623 (1935) and Anastasto v. Commissioner, 794 F.2d 884, 886 (3rd Cir.1986)).
“The burden of proving that an assessment is arbitrary and excessive rests on the taxpayer; if the taxpayer cannot prove that the assessment was arbitrary, it retains the burden of overcoming the presumption in favor of the government that the assessment was not erroneous.” Id. (omitting citations). “However, once the taxpayer has sustained its burden of proving that the assessment is arbitrary and excessive, i.e., that it lacks a rational foundation in fact and is based upon unsupported assertions, the ultimate burden of proving that the assessment is correct is placed on the government.” Id. (citing Baird v. Commissioner, 438 F.2d 490, 492 (3d Cir.1971)).
The rule allocating the burden of proof to the taxpayer in tax assessment cases furthers certain well-established public policies. The Third Circuit Court of Appeals, in a non-bankruptcy case, identified those policies as (1) the requirement that the taxpayer meet bookkeeping obligations placed upon him by the IRC, and (2) the requirement that corporate officers explain their failure to perform duties imposed upon them by law, i.e., the duty to collect and pay over the taxes withheld and willfulness in the failure to do so. It also recognizes that the taxpayer has more readily available to him the correct facts and figures. Psaty v. United States of America, 442 F.2d 1154, 1160 (3d Cir.1970).
Applying the foregoing burden of proof, the Court of Appeals in Resyn concluded that the debtor failed to make a showing that the tax assessment was arbitrary and excessive so that the burden never shifted to the government to prove that the assessment was correct and the debtor retained the burden of proving that the assessment was incorrect. Resyn, 851 F.2d at 663.
The Court of Appeal’s analysis diverges from those cases that have recognized the applicability of Bankruptcy Rule of Procedure 3001(f) and its predecessor Rule 301(b) and applied a lesser burden in the context of bankruptcy tax claims litigation than in non-bankruptcy tax assessment cases. See, e.g., California State Board of Equalization v. The Official Unsecured Creditors’ Committee (In re Fidelity Holding Company, Ltd.), 837 F.2d 696, 698 (5th Cir.1988); Watson v. Thompson, 456 F.Supp. 432, 435 (S.D.Ga.1978); In re Avien, 390 F.Supp. 1335, 1341-42 (E.D.N.Y.), aff'd, 532 F.2d 273 (2d Cir.1976); In re Premo, 116 B.R. 515, 523 (Bankr.E.D.Mich.1990); In re Brady, 110 B.R. 16, 18 (Bankr.D.Nev.1990); In re Hudson Oil Co., Inc., 91 B.R. 932, 945 (Bankr.D.Kan.1988); In re L.G.J. Restaurant, 27 B.R. 455, 459 (Bankr.E.D.N.Y.1983). In recognizing an exception under the Bankruptcy Code to the traditional burdens in tax assessment cases, the Fifth Circuit Court of Appeals stated:
Under Bankruptcy Rule 301(b) [now 3001(f) ], a party correctly filing a proof of claim is deemed to have established a pri-ma facie case against the debtor’s assets, (citation omitted). The objecting party must produce the evidence rebutting the claimant or else the claimant will prevail, (citation omitted). If, however, evidence rebutting the claim is brought forth, then the claimant must produce additional evidence to ‘prove the validity of the claim by a preponderance of the evidence.’ The ultimate burden of proof always rests on the claimant, (citation omitted). This burden does not shift even where the claimant is a state or federal taxing authority. (citation omitted). The Bankruptcy Code, under Rule 301(b), does not differentiate between government and private claimants when proofs of claim are filed. Fidelity Holding, 837 F.2d at 698.
In the context of claims litigation, the evidence produced by the debtor must only be “of a probative force equal to that of the allegations of the creditor’s proof of claim.” In re Wells, 51 B.R. 563, 566 (D.Col.1985). This is more properly described as a burden of going forward since the burden of proof is always on the claimant to prove the validity of the claim by a preponderance of the evidence. In re Wall to Wall Sound & Video, Inc., 151 B.R. 700, 701 (Bankr.E.D.Pa.1993).
We believe that the Bankruptcy Code and Rule exception applies in this proceeding because the Resyn burden was intended to apply to a deficiency tax assessment and not a claim against the debtor based on IRC § 6672. Resyn requires the taxpayer to establish that the assessment is “arbitrary and excessive” in order to shift the burden to the government. A showing that a tax is excessive implies that there is a challenge to the amount of the tax which is precisely the ease in a deficiency assessment such as Re-syn. Responsible person liability under § 6672 is not a matter of the amount of the tax which is separately established based on the activity of the taxpayer with the income, not the responsible person. The burden of establishing that the assessment is excessive properly lies with the taxpayer incurring the income and not the debtor challenging his responsibility for that liquidated amount.
Further evidence that the Resyn burden of proof was intended to apply in a deficiency tax assessment and not a § 6672 proceeding is found in an examination of the policy underpinnings for establishing the burden. Fact finding in a deficiency assessment case is furthered by requiring proper recordkeep-ing by the taxpayer. Placing a heightened litigation burden on a potentially responsible person, however, does not advance a similar purpose since as previously noted, the responsible person is not necessarily charged with the bookkeeping obligations relating to the withholding taxes. A responsible person’s duty is to collect, truthfully account for or pay over certain taxes. See page 999 infra. While responsible party liability may be imposed on one with bookkeeping obligations, responsibility has a much broader reach. Given the natural allocation of tasks in any organization, it is difficult to understand how a heightened burden imposed upon a person potentially responsible under § 6672 will promote better recordkeeping.
Nor will the potentially responsible person necessarily have better access to correct facts and figures to justify the imposition of a higher burden. The facts that are at issue in a § 6672 proceeding, unlike a tax deficiency assessment, do not necessarily require access to records but rather are primarily resolved by testimonial evidence. Premo, 116 B.R. at 523 n. 15 (quoting the argument in McCormick On Evidence, § 337 at 950 (3d ed. 1984) that the significance of access to records in fixing the burden of proof is overstated.)
Even assuming the debtor/potentially responsible person had better access to information, establishing the general bankruptcy burden of proof based on this policy consideration gives it too much weight since in bankruptcy an objection to a claim may be made by any party in interest, not just the debtor. 11 U.S.C. § 502(a). As the court in Premo, 116 B.R. at 523, recognized:
There is usually no reason to presume that another creditor, or even a bankruptcy trustee, has greater access to the debtor’s documents than does the IRS. As the court noted in Brady, ‘the estate is a party in interest and not just the taxpayer.’ 110 B.R. at 18. The court’s generalization [that the taxpayer is more likely to have access to relevant information] in Rexach [United States v. Rexach, 482 F.2d 10 (1st Cir.), cert. denied 414 U.S. 1039, 94 S.Ct. 540, 38 L.Ed.2d 330 (1973)] therefore breaks down to some extent in the context of bankruptcy, where many parties are involved in addition to the IRS and the taxpayer.
See also In re Fidelity America Financial Corp., (Kransdorf and Official Creditors’ Committee v. Internal Revenue Service, 91-1 USTC (CCH) ¶ 50,161 (Bankr.E.D.Pa.1990)) (where the objector is the Chapter 11 trustee, not the taxpayer/debtor, Resyn is inapplicable to the extent it was based on the taxpayer’s presumed access to relevant financial information.)
In the Psaty case, the Third Circuit Court of Appeals identified a public policy furthered by placing the ultimate burden on the taxpayer which is implicated in this case, i.e., the requirement that corporate officers explain their failure to perform duties imposed on them by law to collect and pay over taxes. Since Psaty was not a bankruptcy case, the Third Circuit did not have before it the question of whether that policy was served in bankruptcy where the objecting party could be a party in interest and not the debtor and whether there were other, and perhaps more compelling, bankruptcy policies to be considered.
“The practice in bankruptcy of requiring the claimant to prove its claim is in essence an application of the general rule allocating the burden of proof to the moving party.” Premo, 116 B.R. at 523. The courts that have done so even when the claimant is the IRS have recognized that the Bankruptcy Code does not distinguish government claims from claims of private entities. Id.; Fidelity Holding, 837 F.2d at 698. More significantly, the IRS should be treated like any other claimant because the estate is a party in interest, not just the taxpayer. Brady, 110 B.R. at 18. We believe that the policy considerations that have generated the tax litigation rule (placing the burden on the taxpayer) are not undermined by recognition of an exception where the taxpayer has filed for bankruptcy and the litigation occurs in the context of an IRS claim based on IRC § 6672.
In the context of § 6672 tax litigation, we find that the Debtor has correctly stated the burden of proof in this matter. Unfortunately, however, for the Debtor, while the evidence he offered rebutted the presumption of correctness afforded the IRS’ proof of claim, the IRS successfully met its ultimate burden of proving that the Debtor was a responsible person and acted willfully in not paying the trust fund taxes.
Liability under IRC § 6672. IRC § 6672 imposes a penalty upon each responsible person who willfully fails to pay “trust fund” taxes ; it provides:
“Any person required to collect, truthfully account for, and pay over any tax imposed by this title who willfully fails to collect such tax, or truthfully account for and pay over such tax, ... or willfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall ... be liable to a penalty equal to the total amount of tax evaded, or not collected, or not accounted for and paid over....”
The question of the Debtor’s liability under § 6672 presents two issues: first, whether the Debtor is a responsible person; and second, whether the Debtor’s failure to collect or truthfully account and pay over such taxes was willful. Quattrone Accountants, Inc. v. Internal Revenue Service, 895 F.2d 921, 927 (3d Cir.1990). The questions of responsibility and willfulness are factual ones. Godfrey v. United States, 748 F.2d 1568, 1575 (9th Cir.1984).
Responsible Person. A responsible person is a person required to collect, truth fully account for or pay over any tax. Slodov v. United States, 436 U.S. 288, 250, 98 S.Ct. 1778, 1787, 56 L.Ed.2d 251 (1978); Quattrone, 895 F.2d at 927. In Slodov, the petitioner argued that because the obligations in § 6672 are phrased in the conjunctive, a person can be a responsible person only if all three duties, i.e., to collect, truthfully account for and pay over, are attributable to him. Slodov, 436 U.S. at 247, 98 S.Ct. at 1785. The Supreme Court rejected this argument finding that the petitioner’s construction of § 6672, while not inconsistent with the language of the statute, was inconsistent with the statute’s purpose of assuring payment of the withheld taxes. Id. at 247-48, 98 S.Ct. at 1785-86. If given the petitioner’s construction, the penalties under § 6672 could easily be evaded by changes in the person’s duties. Id. at 247, 98 S.Ct. at 1785. The Supreme Court concluded that the language in § 6672 was not meant to limit liability to only those persons responsible to perform all three enumerated duties but includes persons responsible to perform any of the three enumerated duties. Id. at 250, 98 S.Ct. at 1787.
There can be more than one responsible person for an employer. Quattrone, 895 F.2d at 926; United States v. Vespe, 868 F.2d 1328, 1332 (3d Cir.1989). The fact “[tjhat another person also may be liable under Section 6672 does not affect the liability of the person presently subject to suit.” Quattrone, 895 F.2d at 926. Section 6672 imposes “joint and several liability on each responsible person, and each responsible person can be held for the total amount of the withholding not paid.” Id. (citing Sinder v. United States, 655 F.2d 729, 732 (6th Cir.1981)). Even though the IRS will not collect more than 100% of the taxes owed, each responsible person is responsible for 100%. Quattrone, 895 F.2d at 926-27; United States v. Elginton, 90-1 USTC ¶ 50,322 at 84,126 (E.D.Pa.1990).
A significant body of case law has developed interpreting who is a responsible person under § 6672. The case law has fairly consistently held that the “responsible person” status is not determined solely by official title, but rather by the degree of connection to the corporation and the amount of control over certain corporate duties. See, e.g., Nolfi v. United States, 92-2 USTC ¶ 50,-511 at 85,777 (E.D.Pa.1992) (quoting Hartman v. United States, 538 F.2d 1336, 1340 (8th Cir.1976) (“[a] responsible person need not be an officer or director or shareholder or employee. It suffices that the person have significant control (not necessarily sole or final authority) over disbursement of the ... funds”.))
The court in Pacific National Insurance Company v. United States, 422 F.2d 26, 30 (9th Cir.1970), cert. denied, 398 U.S. 937, 90 S.Ct. 1838, 26 L.Ed.2d 269 (1970) stated that the definition of persons in § 6671(b) “does not require that they be formally vested with the office or employed in the position normally charged with [the] function” of paying the taxes. Section 6672 “must be construed to include all those so connected with the corporation as to be responsible for performance of the act in respect of which the violation occurred.” Id. (quoting United States v. Graham, 309 F.2d 210, 212 (9th Cir.1962)).
Responsibility under § 6672 is generally considered to be a “matter of status, duty and authority, not knowledge”. Quattrone, 895 F.2d at 927; Mazo v. United States, 591 F.2d 1151, 1156 (5th Cir.1979); Elginton, 90-1 USTC at 84,126. A person is responsible if he has significant, though not necessarily exclusive control over the employer’s finances. Quattrone, 895 F.2d at 927; Vespe, 868 F.2d at 1332. Courts have determined that a person has significant control over the employer’s finances “if he has the final or significant word over which bills or creditors get paid.” Id.; Commonwealth National Bank of Dallas v. United States, 665 F.2d 743, 757 (5th Cir.1982).
Courts have considered various factors in determining whether a person is a responsible person under § 6672. These factors include authority to write checks on behalf of the employer, Quattrone, 895 F.2d at 927; provision of financial advice to and securing financing for the employer, id; preparation and filing of the employer’s tax returns, id.; holding an office in the employer, Brown v. United States, 591 F.2d 1136, 1140 (5th Cir.1979); owning shares of the employer/corporation, Green, 89 B.R. at 475; involvement in hiring and firing of employees, id.; involvement in the day-to-day operations of the employer, Howard v. United States, 711 F.2d 729, 734 (5th Cir.1983); and possession of an entrepreneurial stake in the employer by reason of loans to business, Green, 89 B.R. at 475. See generally Datlof v. United States, 252 F.Supp. 11, 32-33 (E.D.Pa.1966); Green, 89 B.R. at 475 (citing In re Clate, 69 B.R. 506, 509 (Bankr.W.D.Pa.1987)).
The presence of one of these factors alone or even a combination of several of these factors does not necessarily mean that the debtor is a responsible person under § 6672. For example, the case law is clear that a person is not a responsible person merely because that person is an officer of the employer. See Godfrey, 748 F.2d at 1575-76; McCullough v. United States, 462 F.2d 588, 590 (5th Cir.1972). Similarly, it has been held that the mere mechanical “duties of signing checks and preparing tax returns are not determinative of liability under § 6672.” Godfrey, 748 F.2d at 1575; Nolfi, 92-2 USTC at 85,777. These enumerated factors, therefore, are merely examples of the types of “status, duty and authority”, Quattrone, 895 F.2d at 927, which indicate that a person may be a responsible person under § 6672. The responsible person test is a test of substance not form. Godfrey, 748 F.2d at 1576.
Applying the statute as interpreted by the case law to the facts proven, we conclude that the IRS proved by a preponderance of the evidence that the Debtor was a responsible person of the Company under 26 U.S.C. § 6672 during the period in question. The Debtor was a fifty percent shareholder and secretary of the Company during the period in question. The Debtor had authority to sign checks on behalf of the Company with no co-signature required. The Debtor exercised that authority on several occasions. While the Debtor called his brother before writing checks, the purpose of such calls was to confirm that there were sufficient funds in the Company’s account to cover the checks, not to seek approval. The Debtor with his brother made decisions regarding the hiring and firing of employees. The Debtor spoke with his brother regularly regarding the Company. The Debtor had an entrepreneurial stake in the Company and stood behind the Company’s obligations by providing a guaranty of its obligations to its lender.
The Debtor argues that he did not know that during the period in question the payroll withholding taxes were not paid. Such knowledge is irrelevant to determining responsibility under § 6672. In re Brady, 110 B.R. 16, 19 (Bankr.D.Nev.1990). As stated earlier, “[responsibility is a matter of one’s status, duty, and authority, not knowledge.” Quattrone, 895 F.2d at 927.
The Debtor also cannot avoid responsibility by claiming that although he could write checks on behalf of the Company, he only did so after consultation with his brother. Even assuming that the Debtor needed his brother’s permission to write Company checks , it does not make the Debtor any less responsible under § 6672. The Debtor could sign Company checks without a co-signer and, therefore, had the authority or the “effective power” to pay the taxes, ie., the Debtor could have paid the payroll withholding taxes. The Fifth Circuit Court of Appeals concluded that the debtor in Howard, 711 F.2d at 734, a director, officer and shareholder of the corporation who had been ordered by the president not to pay withholding taxes, demonstrated the “effective power” to pay the taxes by the fact that he issued a small number of cheeks without the president’s approval. Id. The court appreciated the fact that the debtor could have been fired if he paid the taxes in contravention of the president’s orders but stated that it could not “condone the abdication of the responsibility imposed upon [the debtor] by law.” Id,
The Debtor argues that the corporate power to pay taxes was given exclusively to his brother. The Debtor credibly testified that his brother handled the day-to-day business operations of the Company while he spent most of his time on the construction sites. The Debtor relies upon the holding in Brady to support his position that he is not a responsible person.
The facts in Brady are very similar to the facts before this Court. The debtor in Brady was a director, vice president and fifty percent shareholder of a corporation which failed to pay payroll withholding taxes. From the beginning, the financial responsibilities were delegated to another individual and the debtor spent most of his time on the road conducting “road shows”. Id. at 19. The debtor visited the company’s office infrequently but had almost daily telephone contact with the company to check on inventory and report sales receipts. The court concluded that because the corporate duty to pay taxes was given exclusively to another individual at the company, the debtor was not a responsible person under § 6672. Id. When the responsible officer left the company and the debtor assumed control over the company’s finances, the debtor became a responsible person under § 6672. Id. at 20.
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5558345-15092 | MEMORANDUM AND ORDER
ROGERS, District Judge.
This is a diversity action for fraud and breach of contract. Plaintiff is a Kansas resident. Defendants are citizens of the State of Washington. This case is now before the court on defendants’ “renewed” motion for summary judgment. In an order of April 28, 1980, this court denied defendants’ original motion for summary judgment because of the meagre state of the record. The court also at that time denied plaintiff’s motion for summary judgment on defendants’ counterclaim for the same reason. In addition, defendants’ motion for costs was denied since it was dependent upon resolution of the summary judgment motion in their favor. Since that order, the deposition of defendant, Irv Rohrich, has been taken and defendants have renewed their motion for summary judgment.
The defendants move for summary judgment on the ground that this court lacks personal jurisdiction over the defendants. In addition, the defendants contend that punitive damages cannot be awarded in this case. In the earlier order issued in this case, the court treated all the motions before the court as motions for summary judgment. However, at this time the court feels it is proper to consider the defendants’ motion for summary judgment, when based upon an allegation of a lack of personal jurisdiction, as a motion to dismiss. See Meench v. Raymond Corp., 283 F.Supp. 68 (E.D.Penn.1968); 6 Moore’s Federal Practice ¶ 56.03. There would seem to be no advantage to the defendants by transforming this motion to dismiss into a motion for summary judgment. Furthermore, there is no bar to the consideration by the court of matters beyond the pleadings when they are presented with a motion to dismiss for lack of jurisdiction under Rule 12(b)(2) of the Federal Rules of Civil Procedure. Top Form Mills v. Sociedad Nationale Ind., Etc., 428 F.Supp. 1237 (S.D.N.Y.1977); 2A Moore’s Federal Practice ¶ 12.09. Therefore, the court takes defendants’ motion for summary judgment as a motion to dismiss for lack of personal jurisdiction.
The critical jurisdictional facts show that in February, 1979, Fred Gallion, an employee of Kemper Enterprises, telephoned Rick Ryan, manager of Chevrolane, Inc., and asked him if he would be interested in the purchase of a 1979 Chevrolet Corvette. Mr. Gallion had previously been employed by Astro World Imports, another used car dealership in Topeka, and had sold cars to Chevrolane in the past. Mr. Ryan was not interested in the Corvette at the time of the call; however, Mr. Ryan later called Mr. Gallion asking whether the car was still available. After some discussion and negotiations over the telephone, the defendants agreed to pay plaintiff $13,250 for the delivery of the car to Washington. The car was delivered and the defendants paid only $5,750, claiming a $7,500 setoff against plaintiff relative to another vehicle transaction. The other transaction was a 1978 agreement in which the defendants had purchased three cars from Astro World Imports. The defendants paid for the cars involved in that business deal but only received two of them. The setoff claimed by the defendants in this case is for the cost of the car they had not received. The defendants assert that the plaintiff led them to believe that Kemper Enterprises and Astro World Imports were one and the same and they have filed a counterclaim requesting that the court acknowledge the validity of the claimed setoff. The plaintiff has alleged in his complaint that the setoff was “wrongfully and unlawfully” claimed because the 1978 transaction was with Bruce Clemmons d/b/a Astro World Imports, an other and unrelated used car dealership. The court notes that since January of 1978, defendants have done considerable business with car dealerships in the State of Kansas.
Plaintiff alleges that jurisdiction over the defendants exists pursuant to the Kansas long arm statute: K.S.A. § 60-308. The specific statutory provisions relied upon provide as follows:
“(b) Submitting to jurisdiction — process. Any person, whether or not a citizen or resident of this state, who in person or through an agent or instrumentality does any of the acts hereinafter enumerated, thereby submits said person, and, if an individual, his or her personal representative, to the jurisdiction of the courts of this state as to any cause of action arising from the doing of any of said acts:
(1) The transaction of any business within this state;
(2) The commission of a tortious act within this state;
(5) Entering into an express or implied contract, by mail or otherwise, with a resident of this state to be performed in whole or in part by either party in this state; ”
The plaintiff argues that the defendants “transacted business” in Kansas by having done close to a million dollars worth of business in the state. Further, plaintiff argues that the defendants transacted the very business out of which this litigation arises by telephone with the plaintiff. In addition, the plaintiff makes claims of misrepresentation and fraud by the defendants in this case and therefore, assert that the defendants committed “a tortious act within this state.” In the alternative to the tort claim, plaintiff alleges a breach of contract occurred and that the contract was to be performed in part in this state.
Defendants have summarily concluded that this is not a case involving fraud and have argued that jurisdiction does not lie under either K.S.A. § 60-308(b)(l) or (5). Defendants have cited several Kansas cases to support their contention that their activities in Kansas do not amount to the con-. tacts necessary to support in personam jurisdiction. It is undisputed by plaintiff that defendant is not licensed to do business in Kansas; maintains no offices or places of business in Kansas; has no agents or representatives here; and was never physically present in the state with regard to this transaction.
This court has recently had the opportunity to discuss in personam jurisdiction under the Kansas long arm statute in Thermal Insulation Systems, Inc. v. Ark-Seal, Corp., 508 F.Supp. 434 (D.Kan., 1980). This court established that the following analysis is the appropriate one to be followed when considering personal jurisdiction questions:
First, it must be determined whether the defendant’s conduct falls within the scope of any of the enumerated provisions of the Kansas long arm statute. Then, it must be determined whether the defendant’s contacts with the state of Kansas are sufficient to meet the due process requirements set out in International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), and further developed in Shaffer v. Heitner, 433 U.S. 186, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977), Kulko v. Superior Court, 436 U.S. 84, 98 S.Ct. 1690, 56 L.Ed.2d 132 (1978) and most recently in World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). Both the statutory and constitutional requirements must be met for this court to assert personal jurisdiction over the defendant.
This court will first look at plaintiff’s contention that jurisdiction exists under K.S.A. § 60-308(b)(2). If defendants have committed a tortious act within the state, the conduct falls within the scope of subsection (b)(2). Plaintiff relies upon J. E. M. Corp. v. McClellan, 462 F.Supp. 1246 (D.Kan.1978) for their contention that jurisdiction is proper under (b)(2) in the instant case. In McClellan, the plaintiff agreed to sell an apartment complex to the defendant McClellan for $310,000, including a quantity of jade valued at $110,000. Plaintiff placed a telephone call to defendant Vogel in Chicago in order to receive an appraised value for the jade. Vogel was apparently familiar with the jade in question. Plaintiff claimed that Vogel represented over the telephone that the jade was worth as much as McClellan claimed and that the value was increasing. Upon finding the true worth of the jade to be only $15,000, plaintiff brought an action claiming that Vogel intentionally and fraudulently misrepresented the jade’s value to mislead the plaintiff and induce the plaintiff to enter into a contract upon the mistaken belief. The issue before the court was whether a fraudulent misrepresentation made from without the jurisdiction and causing tortious injury within the jurisdiction constitutes a “tortious act within the state” under subsection (bX2). The court in McClellan found that it does.
In the instant case, defendants promised to purchase the car in question for the sum of $13,250. Based upon that promise, plaintiff transported the car to Washington. At that time, defendants sent the plaintiff $5,750 in payment for the car. The defendants assert that the $7,500 withheld was for setoff purposes in another transaction. In Kansas, the plaintiff need not prove the ultimate fact of tort liability as a precondition to filing an action and obtaining service under subsection (b)(2). As the court in McClellan stated: “This would make the existence of personal jurisdiction dependent upon the outcome of a trial on the merits.... The Kansas court has specifically held that for service to issue under the long arm statute, plaintiff need only make out a prima facie case that a defendant has committed those acts which allegedly give rise to liability.” 462 F.Supp. at 1248 (citations omitted).
Defendants have not addressed the issue of whether a fraudulent misrepresentation was made in this case. They have apparently concluded that no fraud is present and that only a breach of contract claim can possibly exist. At this stage of the litigation this court does not share the same certainty that the defendants do. This court feels that the plaintiff has made out a prima facie case of “tortious conduct” and that the defendant has not sufficiently rebutted it. Therefore, the court finds that the plaintiff has made a sufficient showing to establish that defendants’ conduct falls within subsection (b)(2).
However, even assuming that no fraud occurred in the case at hand as the defendants conclude, the facts of this action fall squarely within the terms of subsection (bX5). Subsection (b)(5) permits jurisdiction to be asserted over defendants who enter into an express or implied contract, by mail or otherwise, with a resident of this state to be performed in whole or in part by either party in this state. Plaintiffs have clearly shown the existence of a contract between the parties in this action. Further, it cannot be logically denied that the contract was to be performed in part in Kansas. By necessity, part of the agreement was performed in Kansas, since the formation of the contract occurred over the telephone and the automobile was shipped from Kansas along with its title. Obviously, the literal terms of the statute are met under the facts of this case.
Having concluded that subsections (b)(2) and (b)(5) apply to the given facts, this court will not pursue an examination of the applicability of subsection (b)(1). This court has thoroughly discussed this provision in its recent opinion, Thermal Insulation Systems, Inc. v. Ark-Seal Corp., supra, and simply feels it is not necessary to engage in any discussion concerning this subsection.
Having determined that the defendants’ conduct falls within the enumerated provisions of the Kansas long arm statute, the question remains whether, under the evidence, an exercise of such jurisdiction would violate the constitutional guarantee of due process. The appropriate analysis to determine the due process issue was set out in Thermal Insulation Systems, Inc. v. Ark-Seal Corp., supra:
The due process clause of the Fourteenth Amendment of the United States Constitution operates as a limitation on jurisdiction over nonresidents. Kulko v. Superior Court, supra, 436 U.S. at 91 [98 S.Ct. at 1696]. Thus, our application of K.S.A. § 60-308(b)(l) must comport with the requirements of due process to be valid. In a recent opinion, World-Wide Volkswagen Corp. v. Woodson, supra, the United States Supreme Court reaffirmed the ability of courts to exercise personal jurisdiction over a nonresident defendant only so long as there exist “minimum contacts” between the defendant and the forum state. 444 U.S. at 291 [100 S.Ct. at 564]. Under due process analysis, a court must look to the “quality and nature” of the defendant’s activity to determine whether it is both “reasonable” and “fair” to require the defendant to conduct his defense in the forum state. Kulko, supra, 436 U.S. at 92 [98 S.Ct. at 1696]. In every case there must be “some act by which the defendant purposely avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.” Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228 [1239], 2 L.Ed.2d 1283 (1958). Actual physical contacts by the defendant with the forum state are not required by the due process clause. McGee v. International Life Ins. Co., 355 U.S. 220, 222, 78 S.Ct. 199 [200], 2 L.Ed.2d 223 (1957); Pedi Bares, Inc. v. P & C Food Markets, Inc., 567 F.2d 933 (10th Cir. 1977); Rosedale State Bank and Trust Co., v. Stringer, supra, 2 Kan. App.2d [331] at 333, 579 P.2d [158] at 160.
Like other tests requiring the determination of reasonableness or fairness, the “minimum contacts” test precludes mechanical application. Instead, “the facts of each case must be weighed to determine whether the requisite ‘affiliating circumstances’ are present.” Kulko, supra, 436 U.S. at 92 [98 S.Ct. at 1697], Inconvenience to the parties and the interest of the state in providing a forum for the action are also relevant considerations. Kulko, supra, 436 U.S. at 93 [98 S.Ct. at 1697]; J. E. M. Corp. v. McClellan, supra at 1255; Pedi Bares, supra, at 937. The United States Supreme Court in World-Wide Volkswagen recently discussed these principles and the concept of “foreseeability” as a criterion for establishing in personam jurisdiction. Although finding foreseeability of injury in the forum is not sufficient for personal jurisdiction under the due process clause, the Court acknowledged that it was not wholly irrelevant. As the Court noted: “[T]he foreseeability that is critical to due process analysis is not the mere likelihood that a product will find its way into the forum State. Rather, it is that the defendant’s conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there.” 444 U.S. at 297, 100 S.Ct. at 567.
The court in J. E. M. Corp. v. McClellan, supra, determined that “the intentional tortious act here causing injury to a resident in this forum in and of itself satisfies the criteria of International Shoe on a claim for damages arising from that act.” 462 F.Supp. at 1255. [citing Thorington v. Cash, 494 F.2d 582, 587 (5th Cir. 1974)] Therefore, we conclude that this court has personal jurisdiction over the defendants because the facts in the record demonstrate a sufficient constitutional basis for the exercise of in personam jurisdiction.
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3807473-15130 | OPINION
DITTER, District Judge.
This diversity action was brought by a resident alien to recover for injuries suffered at defendant’s plant where he was employed by an independent contractor. After a verdict for plaintiff, a post trial motion was filed asserting the court had no jurisdiction, it was improper to submit interrogatories to the jury for the itemization of damages, the award of $113,151.85 was excessive, and there were errors in evidentiary rulings and the charge.
Jacob Stern & Sons, Inc., and AcmeHardesty (hereafter “Stern”) process fats and greases at a plant in Philadelphia. Plaintiff, Janos Hagl, was employed as a welder by Industrial Coppersmithing & Metal Works Company, Inc., an independent contractor engaged by Stern to do construction work. Indistrial’s performance was overseen and directed by Thomas G. Brown, a second independent contractor. On December 9, 1969, Hagl was completing a metal catwalk which was designed to give access to the tops of certain storage tanks. Having seen on the ground a section of steel stairway that would help complete the job, Hagl left the catwalk and proceeded toward the point where the material was lying. While approaching it, he fell into an open pit used to collect waste water, fats, and grease. He did not see the pit because its edges were obscured by the dirty colored liquids which overflowed on to the adjacent ground. Usually a steel grating was kept over the pit, but on the day in question it had been moved aside. As a result of his fall, plaintiff suffered personal injuries for which he brought this suit against Stern and Brown. Industrial was then joined as a third-party defendant. At the conclusion of the evidence on liability, I directed a verdict for Industrial. The jury found that Stern was negligent, Hagl was not contributorily negligent, and there was no negligence on the part of Brown. The jury then awarded damages to Hagl in separate amounts for medical expenses, past wage losses, future wage losses, pain, and loss of life’s pleasures. Stern’s post-trial motion followed.
Defendant first alleges that this court has no jurisdiction because there is no diversity of citizenship. Stern claims to be a citizen of Pennsylvania and that Hagl, though a Canadian, lives in Pennsylvania and is therefore a citizen of Pennsylvania for purposes of 28 U.S.C. § 1332(a)(2).
Article III, Section 2 of the Constitution in defining the diversity jurisdiction of federal courts includes cases and controversies between United States citizens “and foreign States, Citizens or Subjects.” This is codified in 28 U.S.C. § 1332(a)(2), which allows an alien the right to sue any United States citizen, whether both are domiciled in the same state or not. Thus an alien enjoys a greater right to bring suit in federal court than that given United States citizens. Among those upholding this construction was Chief Justice John Marshall. In Breedlove v. Nicolet, 32 U.S. (7 Pet.) 413, 428 (1833), he held that there is federal jurisdiction even if an alien resides within the same state as a United States citizen. See also Psinakis v. Psinakis, 221 F.2d 418, 423 (3d Cir. 1955); Robinson v. Anastasiou, 339 F.Supp. 472 (S.D.Tex.1972); Hart and Wechsler, The Federal Courts and The Federal System 1060 (2d ed. 1973); C. Wright, Law of Federal Courts § 24, at 81 (2d ed. 1970). Although giving aliens greater privileges then those enjoyed by United States citizens, this interpretation has consistently been applied to diversity actions. It follows that there is no merit in defendant’s argument.
Stern next contends the court erred in submitting five interrogatories to the jury so that it would make separate awards for each element of plaintiff’s asserted injuries. Prejudice is claimed because these several sums were then added together and judgment entered for their total, an excessive amount according to Stern.
The determination of damages is a factual question to be decided by the jury. Gardner v. National Bulk Carriers, Inc., 333 F.2d 676, 677 (4th Cir. 1964). F.R.C.P. 49 bestows broad discretion upon the court to obtain a general, lump sum verdict, or a special verdict, containing a special written finding of each fact. The form of a special verdict is also within the sound discretion of the court. Elston v. Morgan, 440 F.2d 47, 49 (7th Cir. 1971). See Anderson v. Eagle Motor Lines, Inc., 423 F.2d 81, 85 (5th Cir. 1970). The only limitation is that the questions asked of the jury be adequate to determine the essential factual issues. Kornicki v. Calmar S.S. Corp., 460 F.2d 1134, 1139 (3d Cir. 1972).
In this case plaintiff claimed five types of damages and the jury made the following awards: (1) medical expenses, $2,751.85; (2) wage losses from the date of the accident until plaintiff returned to work, $5,400; (3) wage losses from plaintiff’s return to work to date of trial, $17,000 ; (4) plaintiff’s future wage losses, reduced to present net worth, $60,000; and (5) pain and suffering, loss of life’s pleasure and similar matters, $28,000. There was nothing complicated or extraordinary in these elements. If proved, they clearly flowed out of the accident caused by the negligence of the defendant. Separate questions were posed to simplify the jury’s job in deciding the factual question of how much plaintiff was entitled to recover by focusing its attention on the evidence rather than encouraging it to seize upon some nebulous amount. Cf. Neal v. Saga Shipping Co., S.A., 407 F.2d 481, 489 (5th Cir.), cert, denied, 395 U.S. 986, 89 S.Ct. 2143, 23 L.Ed.2d 775, rehearing denied, 396 U.S. 871, 90 S.Ct. 45, 24 L.Ed.2d 129 (1969). Stem complains because the jury stated a separate sum for each aspect of the claim and because the verdict was computed by adding them together. In essence, defendant argues that the only way a jury can reach a correct verdict on damages — thus expressing its feelings on the nuances of the matter is by a general verdict. Otherwise, the jury can not consider the subtle aspects of a case and the defendant is thereby prejudiced by an inflated verdict. The correct procedure, as outlined by Stern, would have been for me to treat the jury’s findings as guides from which I would mold a general and just total for the plaintiff.
To state this contention is to refute it. Not surprisingly, no authority is cited to support the proposition that special verdicts are always too high and that the court should arbitrarily reduce them. Moreover, in this case, I do not find the total, $113,151.85, to be excessive because each of the constituent findings was supported by competent evidence.
Of the five, defendant raises no objection to three: that for medical expenses, $2,751.85, loss of earnings during complete disability, $5,400, and loss of earnings after return to work to the date of trial, $17,000. However, Stern does argue that the $60,000 award for lost future earnings and the $28,000 for pain and suffering, loss of life’s pleasures, and similar matters were excessive.
The damage portion of the trial took the better part of two days. Besides the plaintiff, the testimony of a doctor, an orthopedic surgeon, the business manager of plaintiff’s former union, an official of Hagl’s present employer, and an actuary were presented to the jury. The defendant presented no evidence on the question of damages.
Defendant primarily complains that I erred in allowing plaintiff to testify that he was qualified to work as an outside construction welder (pipe-fitter), had intended to seek such work as soon as he had satisfied the minimum membership-time requirement of his union, but could not do so because of his injuries. A construction welder is a more rigorous and difficult occupation, paying substantially more than the simple welding job Hagl had when injured. It is uncontested that Hagl was eminently qualified to be a construction welder. He had the training and many years experience in his native Hungary and Canada doing such work. It was not unreasonable for the jury to find that he could have been a construction welder in this country. The fact that Hagl was not so employed at the time of his accident was not conclusive since he then had several months of seniority to go before the union would allow him to undertake that type job. Impairment of earning power and limitation of potential earnings a plaintiff could reasonably expect are questions for the jury: Frankel v. Todd, 393 F.2d 435 (3d Cir.), cert, denied, 393 U.S. 855, 89 S.Ct. 137 (1968); DiChiacchio v. Bockcraft Stone Prods. Co., 424 Pa. 77, 225 A.2d 913 (1967); Bochar v. J. B. Martin Motors, Inc., 374 Pa. 240, 97 A.2d 813 (1953).
Plaintiff presented additional testimony that his loss of future earnings, reduced to present worth, would be between a minumum of $39,973 if he continued to work at his old position and a maximum of $133,425 had he worked steadily as a construction welder. The jury awarded $60,000, a reasonable amount suggesting a decision that Hagl would have worked as a construction welder but not all year long.
Stern further objects to the jury’s award for pain and suffering and loss of life’s pleasures. After reviewing the testimony as to the pain Hagl suffered, the length of time he was disabled, his medical treatment, the loss of his ability to be a professional soccer referee and play soccer with his grandchildren, his difficulty in sleeping, and the impairment of sexual relations with his wife, I conclude that the jury’s award of $28,000 was reasonable.
Defendant next contends that it was error to allow plaintiff to alter his claim for damages toward the end of the trial because doing so constituted an unjust surprise. The court has broad discretionary power under F.R.C. P. 15(a) to allow amendments to pleadings, the key requirement being “when justice so requires.” Plaintiff’s amendment did not introduce any new element of damages — it merely increased the total sought. Had the amendment been refused, the plaintiff would have been deprived of damages he was able to prove to the jury’s satisfaction. See Zatina v. Greyhound Lines, Inc., 442 F.2d 238, 242 (8th Cir. 1971); 6 C. Wright & A. Miller, Federal Practice and Procedure § 1474, at 385 (1971). Stern has not suggested how a higher figure in the original complaint would have lead to a change in defense strategy or trial tactics and none occurs to me. I conclude the amendment did not legally prejudice any of defendant’s rights and therefore, it was properly allowed.
Stern also claims that I erred in refusing to allow it the opportunity to show plaintiff’s standing to sue was clouded because he was in the United States illegally and thus subject to deportation. Stern also contends it should have been allowed to argue to the jury that since Hagl’s continuing presence in this country is not assured, recovery for future earnings loss should be reduced.
Contrary to defendant’s insinuation, every alien, whether in this country legally or not, has a right to sue those who physically injure him. Each person is entitled to the equal protection of the law. Sugarman v. Dougall, 413 U.S. 634, 641-42, 93 S.Ct. 2842, 2847, 37 L.Ed.2d 853 (1973); Graham v. Richardson, 403 U.S. 365, 371, 91 S.Ct. 1848, 1851, 29 L.Ed.2d 534 (1971); Torao Talcahashi v. Fish and Game Commission, 334 U.S. 410, 68 S.Ct. 1138, 92 L. Ed. 1478 (1948); Yick Wo v. Hopkins, 118 U.S. 356, 6 S.Ct. 1064, 30 L.Ed. 220 (1886). The Fifth and Fourteenth Amendments use the word person not citizen in this context. The idea of equal protection for all has been codified in 42 U.S.C. § 1981 which states:
All persons within the jurisdiction of the United States shall have the same right ... to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings . . .
It follows that insofar as liability was concerned, Hagl’s status as an alien was irrelevant. Whether he will be deported, leave of his own accord, or obtain United States citizenship might have been relevant in the damages portion of the trial. However, there was no evidence on this point. There was testimony to show he had come to this coun try in 1967. At side bar it was explained he had hired an attorney to help in achieving permanent residency status but nothing further had occurred in this regard. No proceedings to deport Hagl had been started as of the time of trial, not was there any indication that such proceedings were contemplated. In short, there was nothing which would have justified the jury’s reducing damages because plaintiff is an alien who might conceivably face some unspecified immigation action at an unknown time.
Defendant next argues that I improperly favored defendant, Thomas G. Brown, in reviewing the evidence during the charge. A trial judge has the right to comment upon the evidence, Quercia v. United States, 289 U.S. 466, 469, 53 S.Ct. 698, 699, 77 L.Ed. 1321 (1933), as long as he does not unfairly prejudice a party. United States v. Chibbaro, 361 F.2d 365, 378-79 (3d Cir. 1966). After reviewing my remarks I believe they were balanced and accurate. The jury was repeatedly instructed that it was the sole finder of fact, that its recollection not mine controlled, and that the verdict was for it to decide. Moreover, F.R.C.P. 51 prevents a party from assigning as error any portion of the charge he does not object to before the jury retires. There is no such objection by the defendant in the record.
Finally, Stern contends that I improperly allowed plaintiff to testify that he left Hungary because he was a Freedom Fighter against the Communists during the 1956 uprising. (N.T. 3-59 to 60) Defendant objects to this testimony because it was not relevant, and during this portion of his testimony plaintiff wept, the moment being “highly charged with emotion.”
The record shows that it was Stern who first brought up the subject of plaintiff’s former Hungarian citizenship and the fact that he had renounced it. (N.T. 2-145 to 148) This was done during the liability portion of the trial. The questions asked by plaintiff’s counsel on redirect the next day were simply to explain to the jury plaintiff’s reasons for leaving Hungary and rebut any negative inference raised by his renunciation of citizenship. If this line of questioning created sympathy for Hagl it was Stern’s fault for trying to make plaintiff out to be a Hungarian Philip Nolan and thus create prejudice against him.
Having reviewed the reasons advanced by counsel for a new trial and having found them to be without merit, I conclude that Stern’s motion must be denied.
. Jacob Stern & Sons, Inc., and Acme-Hardesty are jointly controlled. One owns the land on which the plant is situated and the other operates the business. For the purposes of this case, they may be considered a single entity and both were represented by the same attorney,
. Stern contends, for example, that it conducts a socially useful enterprise, is the source of employment for numerous persons, and did not wilfully, or with gross negligence cause plaintiff to be injured. See Defendant’s brief at 6.
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11309492-11541 | Opinion for the Court filed by Circuit Judge SILBERMAN.
SILBERMAN, Circuit Judge:
Petitioner challenges an ICC decision vacating an arbitration board’s awards of protective pay allowances to railway employees who refused to exercise their seniority to take jobs at other locations after their prior jobs were abolished. We deny the petition.
I.
The ICC is required under the Interstate Commerce Act (ICA), 49 U.S.C. § 11347 (1988), to condition its approval of railroad merger agreements on the inclusion of “fair and equitable” arrangements to protect employee interests. This case involves interpretation of the labor protective provisions in a Merger Agreement (the Agreement) and related Memoranda of Understanding (MOUs) negotiated by the Norfolk and Western Railway Company (N & W) and its labor unions at the time of the 1962 “Nickel Plate” merger between N & W and the former New York, Chicago and St. Louis Railway Company.
The Agreement incorporated the provisions of a previous labor protective agreement, the Washington Job Protection Agreement of 1936 (WJPA). Section 6(a) of the WJPA provides that employees will be deemed to be placed in a “worse position” and entitled to benefits from the carrier if, as a result of the merger, or “coordination,” they are unable “in the normal exercise of ... seniority rights” to retain a position in the merged system with compensation at least equivalent to that earned at the time of the Agreement. This protection was extended in § 1(b) of the Agreement to cover the employee’s working lifetime with the carrier, beyond the WJPA’s ordinary five-year limit. Section 1(b) also gave N & W the right to “transfer the work of the employees protected hereunder throughout the merged or consolidated system.” This right was qualified by a MOU dated January 10, 1962, paragraph 5 of which specified that § 1(b) did not permit N & W to “transfer any employee (as distinguished from work) to another job within his craft or class beyond the same general locality as his point of employment ... without the consent of his representative....”
Petitioner brought this action on behalf of two groups of N & W employees whose jobs were abolished by the railroad. The “NKP group” includes two trainmen, one yardman, and one fireman in Indiana who lost their jobs in August 1989 due to a leasing and a crossing automation. The “WLE group” is composed of 40 firemen and trainmen who lost their positions after N & W sold a 166-mile section of Nickel Plate’s Wheeling and Lake Erie District in Ohio in May 1990. The claimants were all Nickel Plate employees at the time of the Agreement, and all had seniority entitling them to take other N & W positions after their jobs were abolished. Rather than exercise their seniority, however, which might have required a geographic relocation, the employees submitted displacement claims under the Agreement, asserting that they did not have to accept other work beyond the general locality of their last place of employment. N & W denied the claims because it viewed the employees’ failure to exercise seniority as a refusal to take available work that disqualified them from any allowances under the Agreement. In accordance with the Agreement, the dispute was presented to an arbitration board.
The arbitration board sustained the claims of all of the WLE group employees and two of the four NKP group employees. It held that requiring the WLE employees to travel up to 160 miles to relocate to jobs within their seniority district, but outside their “historic seniority division,” would place the employees in a “worse position” within the meaning of § 1(b) of the Agreement unless the employer could demonstrate otherwise. And in ruling for two of the NKP employees, the arbitration board said that an individual is placed in a “worse position” as a result of a forced relocation “by having to travel an unreasonably long distance” to take a new job. N & W petitioned for ICC review of the arbitration board’s awards under 49 C.F.R. § 1115.8 (1993).
The ICC vacated both decisions. Norfolk & W. Ry. Co. and New York, Chicago & St. Louis Ry. Co. — Merger, Etc. (Arbitration Review), 9 I.C.C.2d 1021 (1993) (N & W Merger). The Commission reaffirmed its authority “to review arbitral awards arising from the labor protective conditions that the agency imposes upon its approval of mergers and other transactions embraced within 49 U.S.C. § 11343(a).” 9 I.C.C.2d at 1025. In Chicago & North W. Transp. Co.-Abandonment, 3 I.C.C.2d 729 (1987) (Lace Curtain), aff'd sub nom. International Bhd. of Elec. Workers v. ICC, 862 F.2d 330 (D.C.Cir.1988), the Commission had articulated its standard of review of arbitral awards interpreting Commission-imposed agreements. The ICC indicated it was concerned about “recurring or otherwise significant issues of general importance regarding interpretation of our labor protective provisions.” Lace Curtain, 3 I.C.C.2d at 736. Accordingly, the ICC said it will vacate arbitral awards where “there is egregious error, the award fails to draw its essence from [the labor conditions], or the arbitrator exceeds the specific contract limits on his authority.” Id. at 735 (citing Loveless v. Eastern Air Lines, Inc., 681 F.2d 1272, 1275-76 (11th Cir.1982)).
Applying this standard, the ICC held that the arbitration board ignored the “essential bargain” of the Agreement, which requires employees to exercise their seniority to take available work anywhere should they ultimately be displaced. N & W Merger, 9 I.C.C.2d at 1027. Neither the “worse position” language of § 1(b) of the Agreement, nor paragraph 5 of the January 10 MOU, modified this obligation. The ICC concluded that the MOU’s provision that employees need only follow transferred work within the “general locality” of their employment does not affect the employees’ obligations, as in this case, when their jobs are abolished.
II.
Petitioner argues that the Commission exercised too aggressive a scope of review of the arbitration board’s awards. The ICC should instead have limited itself to that review which a district court would apply to an award under the Railway Labor Act (RLA): a district court “may not ... set aside [an award] except for failure of the [Board] to comply with the requirements of [the Act], for failure of the order to conform ... to matters within the scope of the [Board’s] jurisdiction, or for fraud or corruption by a member of the [Board] making the order.” 45 U.S.C. § 153 First (q) (1982). We have previously described this standard as “amongst the narrowest known to the law.” Northwest Airlines, Inc. v. Air Line Pilots Ass’n Int'l, 808 F.2d 76, 80 & n. 19 (D.C.Cir.1987), cert. denied, 486 U.S. 1014, 108 S.Ct. 1751, 100 L.Ed.2d 213 (1988) (citing Diamond v. Terminal Ry. Ala. State Docks, 421 F.2d 228, 233 (5th Cir.1970)). The union was apparently confident that under that latter standard the awards would remain unscathed.
We are thus presented with one of those administrative law cases in which the decisive issue is the appropriate scope of review. But here the key question is the appropriateness of the scope of review the agency afforded the arbitration board. Petitioner argues that the ICC acted unreasonably (arbitrary and capricious) when it applied the Lace Curtain scope of review to the arbitration board’s interpretations of labor protective provisions that had been negotiated by the carriers and the union — as opposed to those formulated by the Commission itself — and then merely adopted by the Commission.
The ICC’s assertion in Lace Curtain of its jurisdiction to review arbitral awards, and the standards of review it applied, have been repeatedly upheld by this court. International Bhd. of Elec. Workers v. ICC, 862 F.2d 330, 335-38 (D.C.Cir.1988) (IBEW); Brotherhood of Maintenance of Way Employees v. ICC, 920 F.2d 40, 44-45 (D.C.Cir.1990); Railway Labor Executives’ Ass’n v. United States, 987 F.2d 806, 811-12 (D.C.Cir.1993) (RLEA). Petitioner does not challenge the validity of Lace Curtain review per se (nor could it under existing caselaw); it argues rather that application of Lace Curtain standards is inappropriate if the Commission is called upon to interpret language that the parties themselves fashioned. An arbitrator is thought under those circumstances to have a comparative institutional advantage and therefore the. Commission should give the arbitrator the broadest possible deference.
The Supreme Court has insisted, however, that the Commission must oversee the appropriateness of labor protective provisions required by the statute even when negotiated by the parties. The Commission must incorporate those provisions into an order approving a merger or a like transaction and thereafter the Commission has the responsibility to ensure that those provisions are implemented. See Norfolk & W. Ry. Co. v. Nemitz, 404 U.S. 37, 42, 92 S.Ct. 185, 188, 30 L.Ed.2d 198 (1971). In other words, labor protective provisions, once incorporated into an ICC order, are more a matter of public than private law, unlike the ordinary collective bargaining agreement.
Still petitioner argues that, notwithstanding Nemitz, the most deferential scope of review of an arbitrator’s interpretation of labor protective provisions must be employed here. The Commission itself, it is asserted, implicitly acknowledged as much in the Lace Curtain opinion by emphasizing that it had formulated the protective provisions at issue and therefore brought “special competence and expertise” to determine “whether our intent has been carried out,” and that the Commission would “know best what we intended [the conditions] to mean.” See Lace Curtain, 3 I.C.C.2d at 733. If the parties negotiate the protective provisions, no such Commission expertise can be brought to bear.
Petitioner has a point as to the language in Lace Curtain. Yet it was certainly open to the Commission to determine — as it did in this case — that its responsibility to ensure that labor protective provisions are applied in accordance with statutory policy overrode any perceived, lack of Commission expertise as to the meaning of the language in the provisions. That, after all, is the fundamental logic of Nemitz. Moreover, if the Commission were to adopt a different scope of review as to labor protective provisions that are bargained-for, as opposed to those fashioned by the Commission, considerable confusion would be created if, as is certainly likely, the provisions were a product of both processes. (In that regard, the Commission permits the parties to modify the provisions of a merger or like agreement through collective bargaining — but always subject to the Commission’s approval.)
In sum, we think the Commission quite reasonably adopted the Lace Curtain scope of review of the arbitration board’s awards. That standard is also deferential but somewhat less so than the RLA standard. The critical difference is that the Lace Curtain standard, like the standards applied by courts under the Steelworkers Trilogy of cases, permits inquiry as to whether the arbi-tral award “draws its essence from the collective bargaining agreement.” United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593, 597, 80 S.Ct. 1358, 1361, 4 L.Ed.2d 1424 (1960); see Lace Curtain, 3 I.C.C.2d at 735. In applying Lace Curtain in this case, the Commission vacated the awards “because they fundamentally misinterpret and fail to draw their essence from” the labor protective conditions. N & W Merger, 9 I.C.C.2d at 1027.
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6103023-12524 | Re, Chief Judge:
Plaintiffs, on behalf of former employees at the Dana Corporation’s Marion, Indiana plant (Marion plant), challenge the Secretary of Labor’s denial of certification of eligibility for worker adjustment assistance benefits under the Trade Act of 1974. 19 U.S.C. §§ 2101-2487 (1976 & Supp. V 1981). The Secretary’s denial is part of a multiple determination on the petition for certification filed by the Marion plant employees. In his determination, the Secretary certified only the workers “engaged in employment related to the production of journal crosses and bearing races,” namely those in Departments 225 and 230. The Secretary did not certify the remaining production workers at the plant and the service workers, who provided ancillary and support services to all of the production departments, because they failed to satisfy the eligibility criteria of section 222(3) of the Trade Act of 1974, 19 U.S.C. § 2272(3) (1976).
The background of this action is detailed in Abbott v. Donovan, 6 CIT 92, 570 F. Supp. 41 (1983) (Abbott I), and need not be repeated here. In Abbott I, this court affirmed the Secretary’s determination denying certification to the production workers, other than those in Departments 225 and 230. After reviewing the administrative record, the court concluded that the workers in Departments 225 and 230 were the only ones who produced articles adversely affected by increased imports of like or directly competitive articles, as contemplated by section 222(3) of the Act.
As to the service workers, in Abbott I, the Secretary found that increased imports of journal crosses and bearing races did not contribute importantly to their separation from employment from the Marion plant. The Secretary noted that his investigation did not establish an “important causal nexus” between increased imports and the separation of the service workers. For an “important causal nexus” the Secretary stated that he must find that at least 25% of the service workers’ activities were expended in support of those departments which produced the import-impacted articles. Based on his investigation, the Secretary concluded that their activities accounted for “significantly less than 25% of direct labor costs” for all products manufactured at the Marion plant.
After careful examination, the court found the record devoid of any data to support the Secretary’s conclusion. Furthermore, the court stated that, even if the supporting data existed, the Secretary’s rationale was flawed because he failed to account for the possibility that the service workers’ efforts were not evenly distributed throughout the plant. Consequently, the court remanded the action to the Secretary to develop the relevant data, and to consider the effect, if any, of an uneven distribution of the service workers’ support activities to all production departments at the Marion plant.
In compliance with the court’s order, the Secretary conducted a further investigation, and on October 20, 1983, submitted his rede-termination. The Secretary also submitted a supplemental administrative record, together with a copy of the Notice of Further Determination, which reaffirmed his initial denial of certification of the Marion plant service workers. 48 Fed. Reg. 48876, 48877 (1983).
This Court is empowered to review a decision by the Secretary which denies certification of eligibility for trade adjustment assistance benefits to assure that the determination is supported by substantial evidence, and is in accordance with law. Trade Act of 1974, § 284(b), 19 U.S.C. § 2395(b) (Supp. V 1981).
After reviewing the original and supplemental administrative records, and the briefs of the parties, the court again remands the action to the Secretary for further proceedings in accordance with this opinion.
For the Secretary to certify a petitioning group of workers as eligible, his investigation must disclose, among other things:
(3) that increases of imports of articles like or directly competitive with articles produced by such workers’ firm or an appropriate subdivision thereof contributed importantly to such total or partial separation, or threat thereof, and to such decline in sales or production.
Trade Act of 1974, § 222(3), 19 U.S.C. § 2272(3)(1976).
In Abbott I, this Court reviewed the Trade Act of 1974 and found that it was silent as to coverage for service workers under the worker adjustment assistance program. Hence, the court stated that it would defer to the Secretary’s interpretation and application of the statute if it had “a rational basis in law,” was not “inconsistent with the legislative purpose of the statute,” and did not frustrate Congressional intent. Abbott I at 100, 570 F. Supp. at 49 (citing John V. Carr & Son, Inc. v. United States, 69 Cust. Ct. 78, 86, 347 F. Supp. 1390, 1396 (1972), aff’d, 61 CCPA 52, 496 F.2d 1225 (1974), and Woodrum v. Donovan, 5 CIT 191, 564 F. Supp. 826, 829 (1983), appeal docketed, No. 84-651 (Fed. Cir. Dec. 1, 1983)).
The Secretary contends that for over five years he has interpreted the “contributed importantly” provision of section 222(3) to require the existence of an “important causal nexus” between increased imports of the impacted article, and the resultant separation of the service workers in question. The Secretary further submits that the nexus is established by a showing that the activities of those workers are substantially integrated with the production of the import-impacted articles, in this case journal crosses and bearing races. By substantial integration, the Secretary means that at least 25% of the service workers’ activities are directly related to the group of workers producing the adversely affected articles.
In reaffirming the correctness of his initial determination, the Secretary found that no service department or individual service worker expended at least 25% of a typical work week directly in support of the certified production departments, Departments 225 and 230. Based on a finding of no substantial integration, the Secretary concluded that an important causal nexus did not exist, i.e., increased imports did not “contribute importantly” to the separation of workers in the service departments at the Marion plant.
Plaintiffs maintain that the administrative record establishes an important causal nexus. They point to the report of the Indiana State Employment Service which indicates that no journal crosses or bearing races could be produced by the certified departments without the support functions of the service workers. See 47 Fed. Reg. 16434 (1982). Indeed, the Secretary acknowledged and agreed with that conclusion in reaching his negative determination subsequent to this Court’s initial remand in its memorandum and order in Abbott v. Donovan, 3 CIT 54, 55 (1982), which preceded the determination in Abbott I. See 47 Fed. Reg. 16434 (1982). Thus, plaintiffs argue that the Secretary’s determination is not supported by sub stantial evidence, and that the service workers are entitled to certification.
The “important casual nexus” test is a reasonable method by which the Secretary may determine whether service workers fall within the scope of the adjustment assistance benefit provisions of the Trade Act of 1974. The parties do not dispute the apropriateness of the test. Rather, they disagree with its interpretation and application to the service workers in this case. Defendant admits that there exists some nexus between the two certified production departments and the service workers. Hence, the questions presented in this case are (1) the degree of that interrelationship; and (2) whether it is substantial enough to rise to the level of an “important causal nexus.” If the Secretary finds an “important causal nexus,” he must conclude that increased imports of the impacted articles “contributed importantly” to the service workers’ separation from employment within the meaning of the Act.
The court must now consider the Secretary’s interpretation of the “important causal nexus” test, and its application to the service workers at the Marion plant. In Abbott I, this Court discussed the Secretary’s use of a 25% standard to measure whether service workers were substantially integrated into the production process, thereby establishing the “important causal nexus” needed for certification. The court noted that the 25% standard may be appropriate where “the efforts of the service departments are evenly distributed throughout the plant.” Abbott I at 102, 570 F. Supp. at 50 (emphasis added). The court also stated that it was possible for the certified departments to be “service intensive,” that is, “require a higher percentage of services than do other departments.” Id. Nevertheless, the court found no supporting data in the original record pertaining to the activities of the service workers in relation to the production departments, whether certified or non-certified. Accordingly, the court remanded the action to the Secretary for a more detailed inquiry, and specifically instructed the Secretary to “account for the possibility that services are not distributed evenly throughout the plant.” Id. (emphasis added).
A review of the supplemental administrative record reveals that:
(1) there are 25 service departments which provide auxiliary and support services to the 33 production departments at the Marion plant;
(2) auxiliary and support services are supplied to the production departments on an “as needed” basis;
(3) the Dana Corporation does not maintain records of the time spent by the service workers in providing support services to the 33 production departments at the Marion plant;
(4) the Dana Corporation provided the Secretary with an estimate of the number of hours per work week expended by the Marion plant service departments directly related to the production of journal crosses and bearing races;
(5) the estimate disclosed an uneven distribution of support activities by the service workers to production Departments 225 and 230;
(6) the estimate revealed that some service workers, e.g., millwrights and machine repairmen, expended a higher percentage of their time in support of Departments 225 and 230 than did other service workers; and
(7) no data was furnished documenting the extent of the service workers’ activities for the remaining 31 production departments.
A study of the record on remand shows that there exists an uneven distribution of support services among the production departments at the Marion plant. Consequently, the court does not pass on the reasonableness of the Secretary’s 25% standard or requirement. Rather, the court focuses on whether the Secretary, on remand, accounted for the possibility of “service intensive” production departments, and whether his redetermination is supported by substantial evidence, and is in accordance with law.
The record on remand does not support the Secretary’s reaffir-mance of the non-existence of an “important causal nexus” between increased imports of journal crosses and bearing races, and the separation of the Marion plant service workers. From the data compiled pursuant to the Abbott I remand, it appears that the time expended by the service workers in support of Departments 225 and 230 varied extensively depending upon the type of work performed. For example, the contribution of some of the service departments, such as the power house department, was de minimis, whereas the support of others, like the millwright department, was much more substantial. Furthermore, while the Secretary submitted data as to the number of hours spent by each service department in relation to the two certified departments, he did not do the same for the remaining 31 production departments. In view of the foregoing, it is the determination of the court that this action be remanded again since the Secretary has not properly accounted for the possibility that some production departments are more “service intensive” than others.
In remanding this action, the court notes that Abbott I implicity requires the Secretary to engage in a comparative analysis to determine which, if any, of the 33 Marion plant production departments are “service intensive.” The Secretary ought also to calculate, on the basis of the best information available, the amount of time spent by the service workers in support of each production department, certified and non-certified. The Secretary may then compare the data, and identify the “service intensive” production departments.
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5244560-6326 | OPINION
RESTANI, Judge.
Plaintiff-Appellant Edward L. Walsh (‘Walsh”) is a former employee of Defendant-Appellee Wal Mart Stores Inc. (Wal-Mart”). Walsh claims that the termination of his employment by Wal-Mart was motivated by retaliation in violation of the Americans with Disabilities Act (“ADA”), 42 U.S.C. § 12101 et seq., and the Age Discrimination in Employment Act (“ADEA”), 29 U.S.C. § 621 et. seq. The District Court granted Wal-Mart’s motion for summary judgment. We will affirm.
I. Procedural and Factual Background
On October 7, 2002, Walsh’s employment at Wal-Mart’s Cranberry, Pennsylvania store was terminated by Wal-Mart on the basis of four complaints from employees alleging acts of sexual harassment by Walsh. Walsh had been employed as a people greeter in the store since June 1999, and was responsible for greeting and thanking customers, providing shopping carts and other customer service, identifying returned items in accordance with company procedures, and visually verifying customers’ receipts.
Walsh’s job performance came into question following verbal and written reprimands in December 2001 and February 2002 for failing to greet customers and properly mark returned merchandise, and for failing to stop a customer who brought a BB gun into the store for exchange. These incidents were also reflected in Walsh’s performance evaluations, which stated that he generally met expectations, but was “below expectations” on some requirements.
Wal-Mart follows a sequenced discipline policy when an employee’s conduct falls below company expectations. This policy is implemented according to the severity of conduct and the recurrence of poor performance. It follows three stages, including verbal “coaching,” written reprimand, and “decision day,” which serves as a final opportunity to evaluate performance and may result in termination of the employment. As a consequence of his failure to stop the customer carrying a BB gun into the store, a “decision day” was scheduled for Walsh, and he was required to submit a plan for improvement.
After receiving these reprimands, Walsh submitted copies of a hand-written letter to Wal-Mart’s corporate headquarters in February 2002, alleging discrimination and harassment by the managers of the Cranberry store. In the letter, Walsh claimed that he was being unfairly targeted for discipline and that the managers were creating a hostile work environment.
In September 2002, Wal-Mart received four complaints from employees in the Cranberry store alleging acts of mild sexual harassment by Walsh. Three of the complaints were made by purported victims of the harassment, and the fourth was made by a coworker who claims to have witnessed Walsh inappropriately touch a female employee. Walsh admits that these complaints were made, but denies their veracity. Walsh was subsequently terminated for failure to adhere to WalMart’s stated policy against sexual harassment. Ben Stover, a new manager at the Cranberry store, declared in an affidavit that his decision to terminate Walsh was made as a result of Walsh’s apparent violations of Wal-Mart’s sexual harassment policy, and that at the time of the termi nation he was unaware of Walsh’s letter to Wal-Mart headquarters.
To the contrary, Walsh asserts that the complaints were solicited by Wal-Mart in order to justify his termination. Walsh claims that his termination was in retaliation for the letter to Wal-Mart headquarters, and offers testimony of an associate at Wal-Mart who was the subject of the fourth complaint. Her testimony alleges that managers of the store had solicited the claims against Walsh, and that she had not been harassed by him as described in the complaint submitted by her coworker.
Walsh filed suit against Wal-Mart in the District Court for the Western District of Pennsylvania, claiming age and disability discrimination and retaliation in violation of the ADA, ADEA, and the Pennsylvania Human Relations Act (“PHRA”), 43 P.S. § 951 et seq. The district court granted summary judgment in favor of Wal-Mart on all claims. Walsh appeals only on the retaliation claims under the ADA and ADEA.
II. Discussion
We have jurisdiction pursuant to 28 U.S.C. § 1291. We review a grant of summary judgment de novo and apply the same standard as the District Court. MBIA Ins. Corp. v. Royal Indem. Co., 426 F.3d 204, 209 (3d Cir.2005). Where the non-moving party would bear the burden of proof at trial, the moving party must indicate a lack of evidence on an element essential to the claim, and the burden then shifts to the nonmoving party to demonstrate a triable issue. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
To establish a claim of unlawful retaliation in violation of the ADA and ADEA, a plaintiff must show: 1) protected activity by the employee; 2) adverse employment action by the employer; and 3) a causal connection between the protected activity and the adverse employment action. See Nelson v. Upsala Coll., 51 F.3d 383, 386 (3d Cir.1995). In this case, only the third element is at issue. To sustain his claim of retaliation, Walsh must be able to produce evidence of a causal connection between his February letter to Wal-Mart headquarters and the termination of his employment almost eight months later.
Proof of causation may depend on three types of evidence: temporal proximity, a pattern of antagonism by the employer in response to the protected activity, and the employer’s knowledge of that activity. While evidence of only one factor is generally insufficient to establish causation, evidence of all three is not necessary, so long as the claim reasonably supports an inference of causation. See Robinson v. City of Pittsburgh, 120 F.3d 1286, 1302 (3d Cir. 1997), abrogated on other grounds by Burlington No. & Santa Fe Ry. Co. v. White, - U.S. -, 126 S.Ct. 2405, 165 L.Ed.2d 345 (2006); see also Krouse v. American Sterilizer Co., 126 F.3d 494, 503 (3d Cir. 1997).
In the present case, Walsh fails to establish causation on the basis of temporal proximity. The fact that his termination occurred after the letter is not sufficient to infer a causal link, and the elapsed period of eight months is not “ ‘unusually suggestive’ of retaliatory motive.” Krouse, 126 F.3d at 503 (quoting Robinson, 120 F.3d at 1302).
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655778-13894 | FAGG, Circuit Judge.
I.
This case arises from a controversy about the sex education unit of a family relations course taught to seniors at an Independence, Missouri, public high school. Linda Deupree, the teacher of the course, sued Christopher C. Iliff for libel, slander, intentional infliction of emotional distress, and false light invasion of privacy. Deu-pree’s suit is based on a statement Iliff made when he was a guest on a call-in radio program dealing with the controversy-
Before trial, the district court granted partial summary judgment against Deu-pree on her libel and slander claims, holding that Iliff s statement was the expression of an opinion protected by the first amendment. The remaining claims for emotional distress and false light invasion of privacy were submitted to the jury, which found in favor of Deupree and awarded her actual and punitive damages on each claim. After trial, the district court entered judgment notwithstanding the verdict on Deupree’s false light invasion of privacy claim. The court reasoned that under a then-recent Missouri Supreme Court decision, Missouri law did not recognize a cause of action for that tort in the circumstances of Deupree’s case. Both parties appeal. We affirm in part, reverse in part, and remand for further proceedings.
II.
In 1981, Deupree began teaching an elective family relations course that included an optional, two-week segment in which students received general information about human reproduction and family planning. In January 1984, a group of parents complained to the Independence School Board about several books Deupree kept in the classroom for her personal reference, but that were not part of the approved curriculum for the course. The parents group took issue with what it deemed to be the inappropriate content of the books and with the possible availability of the books to students in the course. After discussion between Deupree and her supervisor, the board remained supportive of Deupree’s use of the books for her own reference in the course.
Between January and March 1984, the controversy surrounding Deupree’s course escalated. Local and school newspapers reported parents were objecting to the use of materials in Deupree’s course that the “parents [said were] morally offensive.” Some of these articles identified Deupree by name as the teacher of the course. Radio and television stations covered the story, and the issue was hotly debated at school board meetings. On March 1, 1984, a local “Christian Family” radio station for the second time devoted an hour to a call-in program on the topic. Under the format of the program, which was called “Encounter,” listeners were invited to call in and voice their opinions. One of the complaining parents who was a guest on the radio program was highly critical of sex education being taught in the public schools. Deupree and other school officials were also asked to be guests in the studio, but they declined to do so.
On the day of the radio broadcast, the host of the program contacted Iliff, an attorney then practicing in Kansas City, Missouri, to request an on-the-air interview during the program. The host informed Iliff that materials being used in a public school family relations course had been called “filthy” and “pornographic.” Iliff, who did not know Deupree personally and who claimed to be unaware of the specific controversy brewing over her course, consented to be available by phone for the radio interview.
According to Deupree, “[m]uch of the broadcast * * * consisted of comments critical of sex education, the absence of religious and moral values in schools[,] and allegations of censorship by school officials.” Deupree was identified on the air as the teacher of the family relations course being discussed. After Iliff was introduced as an attorney experienced in matters concerning family and education, he and the host talked generally about the propriety of sex education in schools. In response to the host’s question whether Iliff saw any correlation between public high school graduates “hardly able to read and write and get a job” and the “intense need to inform them about homosexuality and perversion, and where they can get a confidential pregnancy test, and everything of that sort,” the following exchange took place:
Mr. Iliff: Well, what’s going on in that classroom in Independence is you have a teacher basically who is much more interested in the titillating sorts of information that the teacher actually derives probably a very secret sort of sexual gratification * * *
The Host [interrupting]: Not * * * you’re not at all saying that it necessarily applies in this case at all?
Mr. Iliff: Well, not necessarily, but what they do, of course, is they skip over the essentials, the basics, and the things that are really critical for making a success out of life with these students, and they go right to the thing that really interests the teacher most, and that is certain kinds of sexuality, and breaking down the traditional moral codes that have been taught to children at home, in order to set them free from the middle-class morality that the teacher, him or herself finds so offensive.
The Host: Now that seems to me to be one of the central issues here * * * what is the moral code that is held in most homes in the community.
Plaintiff’s Ex. 1 (tape recording). Deupree heard these remarks while she and several other teachers listened to the radio program in the vice principal’s office at the high school.
III.
Initially, we must decide whether Iliff’s comment that Deupree was “much more interested in the titillating sorts of information that [she] actually derives probably a very secret sort of sexual gratification” was the expression of an opinion or a statement of fact. We will then consider each of Deupree’s claims in this case.
A.
In the context of the first amendment, whether a statement is one of fact or opinion is a question of law to be decided by the court. Janklow v. Newsweek, Inc., 788 F.2d 1300, 1305 n. 7 (8th Cir.) (en banc), cert. denied, 479 U.S. 883, 107 S.Ct. 272, 93 L.Ed.2d 249 (1986). Drawing from an opinion of the District of Columbia Circuit Court of Appeals, this circuit has adopted a four-factor analysis to guide the fact/opinion determination. See id. at 1302-03; Ollman v. Evans, 750 F.2d 970, 979 (D.C.Cir.1984) (en banc), cert. denied, 471 U.S. 1127, 105 S.Ct. 2662, 86 L.Ed.2d 278 (1985). These factors are: (1) the precision and specificity of the disputed statement; (2) the plausible verifiability of the statement; (3) the literary context in which the statement was made; and (4) the public context in which the statement was made. Janklow, 788 F.2d at 1302-03.
The district court, relying in part on these factors, concluded that even though Iliff’s statement was “silly, hyperbolic[,] and vituperative,” when it was “recognized * * * for what it was — merely the opinion of a radio interviewee who was expounding upon his opinions on sex education in the classrooms of public schools” — the statement was a constitutionally protected expression of opinion. Deupree v. Iliff, No. 85-0233-CV-W-8, slip op. at 2 (W.D.Mo. April 11, 1986) (Order Granting Partial Summary Judgment). We agree.
Iliff’s statement identifying Deupree as a teacher who derives personal sexual gratification from teaching her family relations course arguably has the necessary precision and specificity to satisfy the first Janklow factor. Nevertheless, whether the statement was factual “depends upon [Iliff’s remarks], taken as a whole, of which the statement is a part.” Ollman, 750 F.2d at 982. From this perspective, the statement reflects Iliff’s broader perception that emphasis on sexuality .by educators in general is misplaced and threatens Iliff’s notion of “traditional moral codes” and “middle-class morality.” When Iliff’s challenged statement is considered in this light, the statement loses much of the fact-specific quality it may appear to have when viewed in isolation. With regard to the second factor, Deupree’s intrinsic, personal satisfaction in teaching the course is not verifiable. Thus, Iliff’s comment on the matter is an inherently unverifiable assertion about “a very secret sort” of subjective fulfillment.
Considering the third and fourth factors, we note the presence in the challenged statement of some cautionary language (“basically” and “probably”), see Ollman, 750 F.2d at 982-83, as well as a disclaimer by Iliff that his statement was “not necessarily” applicable to Deupree. Because “the distinction between fact and opinion can * * * be made only in context,” id. at 982, the setting in which the remarks were offered must also be considered. The statement was made during the sort of call-in radio show that is generally designed to encourage listener participation and to foster the airing of divergent viewpoints. As Deupree acknowledges, the show served as a broad-based forum for opinions on the appropriateness of sex education in schools generally as well as a forum for the specific discussion of a controversial sex education course in a local public school.
Against this background, Iliff’s statement as a whole appears to be what the district court described — a statement of his position on the appropriate academic priorities in public education. We believe reasonable listeners following the program, see id. at 983, would recognize the broadcast was geared to attract a wide range of diverse views, and they would “tend[] to ‘discount that which follow[ed].’ ” Id. (quoted citation omitted). When all of the factors are considered “together, * * * [with] no solitary criterion * * * be[ing] dispositive,” Janklow, 788 F.2d at 1302, we are convinced Iliff’s disputed statement was an expression of opinion within the meaning of the first amendment.
B.
Because Iliff s statement was an expression of opinion rather than an assertion of fact, Iliff is “[absolutely protected under the [fjirst [a]mendment” against a defamation action based on that statement. Janklow v. Newsweek, Inc., 788 F.2d 1300, 1302 (8th Cir.) (en banc), cert. denied, 479 U.S. 883, 107 S.Ct. 272, 93 L.Ed.2d 249 (1986). This conclusion follows from the principle that because an opinion cannot be false, see Gertz v. Robert Welch, Inc., 418 U.S. 323, 339, 94 S.Ct. 2997, 3006, 41 L.Ed.2d 789 (1974), it cannot support a defamation action requiring a false statement of fact. Missouri law is in accord with this principle. See Henry v. Halliburton, 690 S.W.2d 775 (Mo.1985) (en banc). Thus, the district court properly granted partial summary judgment for Iliff on Deupree’s defamation claims for libel and slander, and we affirm that decision.
We also conclude Iliff’s statement cannot form the basis of an award of damages for intentional infliction of emotional distress. After submission of this appeal, the United States Supreme Court decided Hustler Magazine, Inc. v. Falwell, — U.S. -, 108 S.Ct. 876, 99 L.Ed.2d 41 (1988) (Falwell). In Falwell, the Court was faced with two competing interests— the value of providing a state tort remedy for damages resulting from the intentional infliction of emotional distress on the one hand, and the value of protecting speech under the first amendment on the other. The Court rejected the court of appeal’s rationale that because the jury found the challenged speech “was intended to inflict emotional distress, was outrageous, and did in fact inflict serious emotional distress, it [was] of no constitutional import whether the statement was a fact or an opinion, or whether it was true or false.” Id. at 880. Instead, the Court held that “in the area of public debate,” id. at 881, first amendment principles must operate to limit “a State’s authority to protect its citizens from the intentional infliction of emotional distress,” id. at 879. The Court took the position that allowing recovery for an outrageous statement of opinion as opposed to one of fact would “run[] afoul of [the Court’s] long-standing refusal to allow damages to be awarded because the speech in question may have an adverse emotional impact on the audience.” Id. at 882.
We recognize Falwell involved a plaintiff who was a public figure. See id. at 882 & n. 5. Deupree argues vigorously that she, in contrast, remained a private individual throughout the controversy. Although Deupree “played a central, albeit involuntary, role,” Dameron v. Washington Magazine, Inc., 779 F.2d 736, 741 (D.C.Cir.1985), cert. denied, 476 U.S. 1141, 106 S.Ct. 2247, 90 L.Ed.2d 693 (1986), in the public debate over her family relations course, we need not decide whether she falls within that class of individuals who “voluntarily inject[ ] [themselves] or [are] drawn into a particular controversy and thereby become[ ] * * * public figure[s] for a limited range of issues,” Gertz, 418 U.S. at 351, 94 S.Ct. at 3012. We believe “expressions of opinion are protected whether the subject of the comment is a private or public figure.” Ollman, 750 F.2d at 975. Thus, we conclude that under Falwell, Iliff’s statement is protected by the first amendment from Deupree’s emotional distress claim.
The district court did not have the benefit of the Falwell opinion when Deupree’s case was tried. Under the principles of that decision, however, we hold Iliff is entitled to judgment notwithstanding the verdict on Deupree’s emotional distress claim, and we reverse the district court’s contrary ruling.
Finally, after the jury returned a verdict for Deupree on her claim for false light invasion of privacy, the district court determined a Missouri Supreme Court case precluded that cause of action. See Sullivan v. Pulitzer Broadcasting Co., 709 S.W.2d 475 (Mo.1986) (en banc). For this reason, the district court granted judgment notwithstanding the verdict in favor of Iliff on the false light invasion of privacy claim.
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1258268-7319 | PHILLIPS, Circuit Judge.
On November 24, 1944, Ash Truck Lines, Inc., was adjudged a bankrupt in the District Court of the United States for the District of Kansas and thereafter the matter was duly referred to the referee in bankruptcy. The bankrupt filed its schedules, which, among other things, included a list of its creditors with their addresses. Two hundred forty creditors were listed. Thereafter, the referee, in accordance with § 58, sub. a, of the Chandler Act, 11 U.S. C.A. § 94, sub. a, caused a notice to be mailed to all creditors listed in the schedules at their respective addresses as listed, advising them that the first meeting of creditors would be held on December 18, 1944,, at 10 o’clock, a. m., at the office of the referee in Topeka, Kansas, and that at that meeting a trustee would be elected or appointed and the assets of the bankrupt sold at public auction. The referee also caused the notice to be published as provided by § 58, sub. d, of the Chandler Act, 11 U.S.C.A. § 94, sub. d.
At the time and place stated in the notice, the first meeting of the creditors was had and a trustee was duly elected. The assets of the bankrupt were offered for sale. The only assets of any substantial value owned by the bankrupt were a Certificate of Convenience and Necessity issued by the Interstate Commerce Commission for certain truck line operations between Omaha, Nebraska, and Kansas City, Missouri, a Conforming Certificate issued
by the State Corporation Commission of Kansas, and a Certificate of Convenience and Necessity issued by such Corporation Commission to operate intrastate lines in Kansas. Prior to the sale, these certificates had been appraised at $7,500 by an appraiser appointed by the referee. The highest bid was $4,250 made by the Union Transfer Company. All creditors present approved the sale and the referee thereupon confirmed the sale. Union paid the purchase price in full within the time provided by the order of confirmation. Under the terms of the contract of sale,. Union had six months in which to file applications with the Interstate Commerce Commission and the State Corporation Commission for transfer of the certificates. Union commenced the preparation of such applications and applications for temporary operating rights and made substantial expenditures on the faith of the sale. Thereafter, on January 6, 1945, Ed Mays deposited $6,250 with the trustee as a firm bid for the certificates. Thereafter, the trustee declined to transfer the certificates to Union.
On January 29, 1945, the Consolidated Builders Supply Company and the J. I. Case Company, having claims of $9 and $22.60, respectively, filed separate applications to set the sale aside, in which they set up that they were not listed in the schedules, did not receive any notice of the sale, and had no actual notice thereof; that a bona fide bidder had deposited $6,-250 with the trustee as a firm bid for the certificates; that if the sale be set aside and the bids reopened, bids in excess of $6,250 for the certificates would be received by the trustee. On January 31, 1945, after a hearing on these applications, the referee set aside the sale and the confirmation thereof and directed the certificates to be offered again at public auction. The referee entered an order directing that a hearing be held to determine the amount, if any, necessary to be paid to Union in excess of the bid price of $4,250 to restore it to its former status. At the second sale, the highest bid was $9,050, made by Watson Bros. Transportation Company, Inc. The certificates were struck off to Watson and the referee entered an order confirming the sale to it.
Union filed a petition for review. The trial court set aside the order confirming the sale to Watson, and entered its order confirming the original sale to Union.
The referee found that the Supply Company and the Case Company had no actual knowledge of the bankruptcy proceedings until after January 1, 1945, and that the amount bid by Union at the original sale on December 18, 1944, was grossly inadequate.
The trial court adopted the findings made by the referee. The issue presented is one of law: Did the referee abuse his discretion in setting aside the original sale and the confirmation thereof?
A court of bankruptcy is a court of equity. A proceeding in bankruptcy from the time of its commencement by the filing of the petition until the final settlement of the estate of the bankrupt is but one suit. A district court, for the purposes of its bankruptcy jurisdiction, is always open. It has no separate terms. The rule that a court may not vacate at a subsequent term an order made at a prior term has no application to a proceeding in bankruptcy. Proceedings in a bankruptcy suif at any time prior to its termination are open for re-examination upon application therefor in appropriate form; and any order made in the progress of the proceedings may be set aside and vacated upon proper showing made.
A court of equity may set aside an order of sale either before or after confirmation when it appears that the same was entered through mistake, inadvertence, or improvidence.
While a judicial sale will not be set aside on the ground of inadequacy of price alone, unless the inadequacy is so great as to shock the conscience of the chancellor, inadequacy of price, accompanied with other circumstances having a tendency to cause such inadequacy, or indicating any apparent unfairness or impropriety, will justify setting aside the sale. Such additional circumstances may be slight and insufficient in themselves to justify vacating the sale. “The integrity of judicial sales is as important as their stability.”
Here, there was inadequacy of price and the confirmation took place immediately after the sale and no opportunity was afforded the two creditors who did not have notice to object. But there were no' facts presented showing any unfairness or impropriety in the s"ale to Union or raising any doubt as to the integrity of the sale, and all of the creditors present approved the sale and agreed to its confirmation.
Notice of the sale was given in strict compliance with the statutory requirements. Jurisdiction of a bankruptcy court does not depend upon the correctness of the list of creditors in the schedules. Jurisdiction is acquired by the petition and adjudication and if the notices are published and served in accordance with the statutory requirements, the jurisdiction to proceed is not affected by failure of a creditor to receive notice. *
Section 94, supra, does not require notice to be given of a hearing on an application to confirm a sale.
There being no circumstances throwing doubt on the integrity of the sale to Union, and the inadequacy of the consideration not being such as to shock the conscience of the chancellor, the order confirming the sale to Union should not have been set aside by the referee.
Affirmed.
BRATTON, Circuit Judge, concurs in the result.
Hereinafter called Union.
Hereinafter called Watson.
Continental Illinois Nat. Bank & T. Co. of Chicago v. Chicago R. I. & P. R. Co., 294 U.S. 048, 675, 55 S.Ct. 595, 79 L. Ed. 1110; 8 C.J.S., Bankruptcy, g 21, p. 429.
Webster v. Barnes Banking Co., 10 Cir., 113 F.2d 1003,1005.
Webster v. Barnes Banking Co., 10 Cir., 113 F.2d 1003,1005.
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917827-8788 | LOKEN, Circuit Judge.
Charged with being a felon in possession of a firearm in violation of 18 U.S.C. § 922(g)(1), Donte Devell Dupree moved to suppress the firearm, which was discovered in his duffel bag during an investigative stop. When the district court denied that motion, Dupree entered a conditional plea of guilty and was sentenced to a mandatory minimum fifteen-year prison term. See 18 U.S.C. § 924(e)(1). He now appeals, arguing that the officers stopped him without reasonable suspicion and searched his duffel without his valid consent. We affirm.
At approximately 11:45 a.m. on August 15, 1998, Minneapolis police received an anonymous 911 call reporting that six or seven African-American men in their early to late twenties were selling drugs in an alley that runs parallel to Bloomington and Sixteenth Avenues between Lake and Twenty Ninth Streets. The caller said a large man with a cell phone wearing a white t-shirt and dark pants was the possible “main man.” The tip was immediately dispatched to patrol officers on the mobile data computer terminals in their patrol cars. Officers Radke and Petocnik were on patrol, driving eastbound on Twenty Ninth Street approaching Bloomington Avenue. Being very near the reported drug trafficking, they responded to the dispatch.
Radke and Petocnik arrived at the intersection of Twenty Ninth Street and Bloom-ington Avenue, some three hundred feet from the entrance to the alley, about thirty seconds after receiving the dispatch. They saw a group of five African-American men standing in the intersection. Upon seeing the squad car, two of the men headed south along Bloomington Avenue toward Lake Street, while the other three, including a stocky man in a white t-shirt and blue jeans, began walking in the opposite direction. The officers followed the group of three because it included the one man who appeared to fit the caller’s description of the “main man.” They pulled alongside the trio and stopped on a bridge just north of Twenty Ninth Street. As the officers exited their patrol car and asked if they could talk to the men, Officer Radke observed one of the three, later identified as Mallet, walk over to the side of the bridge and drop a small object over the railing. Based on the nature of the tip, Officer Radke suspected an attempt to destroy evidence of drug trafficking. He moved quickly to restrain Mallet and the man standing next to him, later identified as Williams, from throwing more evidence off the fifty-foot-high bridge.
After seizing Mallet and Williams, Officer Radke instructed them to walk to the patrol car and put their hands on top of the car. Meanwhile, Officer Petocnik brought the third man, Dupree, to the patrol car and told him to place his hands on the car. As he did so, Dupree placed a duffel bag he was carrying on the hood of the car. While Officer Petocnik stood watch, Officer Radke frisked Mallet and Williams and placed them in the back of the patrol car to protect the safety of the outnumbered officers. Radke next conducted a pat-down search of Dupree. During that search, Officer Petocnik asked Dupree if the blue duffel bag was his. Dupree said yes. Petocnik then asked whether there was “anything in the bag he should know about.” When Dupree replied no, Petocnik asked for permission to look inside the duffel. Both officers testified that Dupree consented before the duffel was searched. When a handgun was found in the duffel, the officers arrested Dupree for possession of the weapon. Mallet and Williams were identified and released.
Officers Radke and Petocnik and defendant Dupree testified at the pretrial suppression hearing. Adopting the Magistrate Judge’s report and recommendation, the district court denied Dupree’s motion to suppress, concluding there was reasonable suspicion to stop Dupree and his companions, and finding that Dupree voluntarily consented before the search of his duffel. On appeal, Dupree argues, as he did in the district court, that the investigative stop violated his Fourth Amendment rights and that he did not voluntarily consent to the search of his duffel.
The Terry Stop.
An investigative stop does not violate the Fourth Amendment if the police have reasonable suspicion “that the person stopped is, or is about to be, engaged in criminal activity.” United States v. Cortez, 449 U.S. 411, 417, 101 S.Ct. 690, 66 L.Ed.2d 621 (1981); see Terry v. Ohio, 392 U.S. 1, 88 S.Ct. 1868, 20 L.Ed.2d 889 (1968). Reasonable suspicion means “a particularized and objective basis for suspecting the person stopped of criminal activity.” Ornelas v. United States, 517 U.S. 690, 696, 116 S.Ct. 1657, 134 L.Ed.2d 911 (1996) (quotation omitted). We review the district court’s determination of reasonable suspicion de novo. However, we review the court’s findings of historical fact for clear error, giving “due weight to inferences drawn from those facts by resident judges and local law enforcement officers.” Id. at 699, 116 S.Ct. 1657.
Dupree argues that Officers Radke and Petocnik lacked reasonable suspicion because they stopped the three men solely on the basis of an anonymous tip that a bigger group of African-American men was selling drugs in an alley that the officers never even entered. Dupree further emphasizes that, while the tipster said the “main man” was large and carried a cell phone, Dupree is only five-feet-nine-inches tall and was not carrying a cell phone. Relying on the Supreme Court’s decision in Alabama v. White, 496 U.S. 325, 328-32, 110 S.Ct. 2412, 110 L.Ed.2d 301 (1990), Dupree contends that the anonymous tip had a low degree of reliability and therefore required substantially more corroboration than Officers Radke and Pe-toenik undertook before it could justify an investigative stop of Dupree and his companions.
We reject this contention because it fails to take into account all the relevant circumstances. Immediately after the anonymous tip was dispatched, Officers Radke and Petocnik arrived in the area and saw five men near the alley where the tipster said a somewhat bigger group had been selling drugs. As the officers approached, the group split up. The officers stopped alongside the threesome that included one man dressed like the tipster’s “main man” and asked if they could talk. No Fourth Amendment interest is violated when police officers “approach! ] an individual on the street” and “ask[ ] him if he is willing to answer some questions.” Florida v. Bostick, 501 U.S. 429, 434, 111 S.Ct. 2382, 115 L.Ed.2d 389 (1991). Thus, the only actions the officers took solely on the basis of the anonymous tip did not violate Dupree’s Fourth Amendment rights.
As he approached the group to talk, Officer Radke saw Mallet move quickly to the railing and drop a small object from the bridge to the railroad tracks far below. Based on the tip and his personal knowledge of frequent drug trafficking in that area, Radke reasonably suspected that Mallet was attempting to destroy evidence before talking to the police. Only then did Radke seize Mallet and Williams and begin the investigative stop. Even more than the “headlong flight” that justified a Terry stop in Illinois v. Wardlow, — U.S.-, 120 S.Ct. 673, 145 L.Ed.2d 570 (2000), Mallet’s evasive action in dropping a small object off the bridge before talking to the police gave Officer Radke reasonable suspicion that criminal activity was afoot, as the anonymous tipster had reported.
In response, Dupree argues that Mallet’s conduct did not give the officers reason to stop Dupree. We disagree. The suspects appeared to be traveling in a group. They had , split off from a bigger group near the alley where the tipster reported a group was selling drugs. Du-pree resembled the tipster’s “main man.” To paraphrase Terry, “it would have been poor police work indeed” if the officers had not included Dupree in their investigative stop. 392 U.S. at 23, 88 S.Ct. 1868. In these circumstances, we agree with the district court that the investigative stop was based upon constitutionally reasonable suspicion and therefore did not violate Du-pree’s Fourth Amendment rights.
The Search of the Duffel.
Dupree next contends that, even if the investigative stop was valid, Officer Petocnik unlawfully searched Dupree’s duffel without consent. At the suppression hearing, both officers testified that Dupree consented; Dupree testified that consent was neither asked nor given. The district court credited the officers’ testimony, a finding that is “virtually unreviewable on appeal.” United States v. Gleason, 25 F.3d 605, 607 (8th Cir.) (quotation omitted), cert. denied, 513 U.S. 911, 115 S.Ct. 283, 130 L.Ed.2d 199 (1994). We have reviewed the suppression hearing transcript and conclude that the finding of consent is not clearly erroneous.
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1859667-28640 | BARRETT, Senior Circuit Judge.
James R. Ershick, et al., plaintiffs below, appeal from an order and judgment entered in favor of United Missouri Bank of Kansas City (UMB) following trial to the court. A summary of the relevant facts will facilitate our review.
Gordon Greb founded Greb X-Ray Company (Greb X-Ray), a closely held corporation engaged in selling and servicing medical diagnostic equipment, in the 1950’s. Greb X-Ray was a Missouri corporation with its principal place of business in Le-nexa, Kansas. Gordon Greb served as the chief executive officer and chairman of the board of Greb X-Ray until his death in 1981. Donald Curtright (Curtright) succeeded Gordon Greb as chief executive officer and chairman of the board.
In 1959, Greb X-Ray established the Greb X-Ray Profit Sharing Plan. In 1982, after Gordon Greb’s death, the Greb X-Ray shareholders unanimously approved the adoption of the Greb X-Ray Company Employee Stock Ownership Plan (ESOP) to replace the Profit Sharing Plan. Appellants are all former employees of Greb X-Ray, who are fully vested in the ESOP.
The ESOP was established pursuant to the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001, et seq. The ESOP provided that “This Plan ... is intended to invest primarily in Company stock ... and shall be construed accordingly to permit investment of up to 100% of the Trust Fund therein.” (R., Vol. VII, Tab 164 at p. 3). The ESOP also provided for two fiduciaries, a trustee and an administrator. At all times relevant hereto, Greb X-Ray served as the administrator and UMB served as trustee. In addition to serving as trustee, UMB was also a major secured creditor of Greb X-Ray and was the executor of the Gordon Greb estate.
The ESOP provided how the administrator would administer the plan:
3. The Administrator shall administer this Plan and shall construe this Plan and Trust Agreement and determine all questions of interpretation or policy in a manner not inconsistent with this Agreement, and the Administrator’s construction or determination in good faith shall be final and conclusive.... The Administrator may correct any defect, supply any omission or reconcile any inconsistency in this Agreement in such manner and to such extents as shall be deemed necessary or advisable by it to carry out the purpose of this Agreement....
4. The Administrator shall have all powers necessary or appropriate to accomplish its duties under this agreement. Specifically, the Administrator shall have the following duties:
* * * * * *
(h) To pass upon administrative matters relative to this Plan and Trust;
******
(1) To direct the Trustee(s) with regard to purchases of Company stock and the fair market value thereof.
(Addendum to Brief of Appellants, Vol. I, Tab 1 at pp. 38-39).
The ESOP also detailed the duties of the trustee, including:
[T]he Trustee shall have the following powers in addition to those vested elsewhere in the plan or by law ...: ******
(1) To invest any or all of the Trust Fund in Company Stock.... All purchases and sales of Company Stock shall be made only at the direction of the Administrator. The Administrator shall determine the terms upon which all purchases of Company stock shall be made. All purchases shall be at prices which, in the best judgment of the Administrator, do not exceed the fair market value of the securities in question.
(Addendum to Brief of Appellants, Vol. I, Tab 1 at p. 30).
Following Gordon Greb’s death in 1981, Greb X-Ray’s fortunes declined precipitously under the direction of Curtright. (R., Vol. VII, Tab 164 at p. 4). By the summer of 1983, Greb X-Ray’s prospects were undermined by a number of factors, including: Curtright’s management style, which had alienated Greb X-Ray’s employees and customers; Greb X-Ray’s obligation to purchase company stock from Gordon Greb’s estate; UMB’s lowering of Greb X-Ray’s borrowing limit to three and one-half million dollars; Greb X-Ray’s spending of $50,000 per month for a company airplane; and Greb X-Ray loans made to Curtright at Curtright’s direction total-ling approximately $120,000. Id. at 4-5.
The ESOP did not purchase any Greb X-Ray stock in 1982. However, the ESOP did purchase 410 shares in 1983 at a price of $300 per share and 899 shares in 1984 at a price of $285 per share. The stock was purchased from Greb X-Ray employees. With these stock purchases, the ESOP be came the majority shareholder in Greb X-Ray. The ESOP did not purchase any Greb X-Ray shares after 1984.
These stock purchases were all made by UMB at the direction of Greb X-Ray as the ESOP’s administrator. Before implementing these purchase directives, UMB ascertained that a current stock valuation was on file and that it was used to fix the purchase price of the stock acquired. (R., Vol. VII, Tab 164 at p. 5). The stock valuations ($300 in 1983 and $285 in 1984) were established annually by an independent appraiser not affiliated with Greb X-Ray. Id.
From 1982 to 1985, the net asset balance of the ESOP fluctuated from a high of $2,430,658 in 1983 to a low of $1,062,668 in 1985. (R., Vol. IX at p. 308). Similarly, the ESOP’s general (non-Greb X-Ray stock) investments declined from $936,206 in 1982 to $117,061 in 1985. Id. During this same period, Greb X-Ray’s net pre-tax profits were: 1982, profit of $532,472; 1983, loss of $264,709; 1984, profit of $129,852; 1985, loss of $829,793. (R., Vol. VII, Tab 164 at p. 4).
Between March, 1985, and January, 1986, the appellants left the employ of Greb X-Ray. As fully vested ESOP participants, each appellant received an annual statement from UMB relative to their individual accounts. The 1986 statement reflected that their account values had declined by approximately 75% of their former values. (R., Vol. VIII at p. 128; Plaintiff’s Exhibits 10, 56-67).
Appellants filed this action in 1987 alleging that Greb X-Ray, UMB, the ESOP, and Curtright had violated their fiduciary duties under Section 404(a) of ERISA, 29 U.S.C. § 1104(a) by imprudently investing in Greb X-Ray stock (Count I), and by participating in prohibited transactions in violation of Section 406 of ERISA, 29 U.S.C. § 1106 (Count II). Appellants sought damages representing “the value of what their plan assets would have been worth, had they been prudently and properly invested” (R., Vol. I, Tab 4 at p. 4), interest, punitive damages, and attorney fees. Appellants also sought immediate distribution of benefits from the ESOP (Count III).
All parties moved for summary judgment. The district court entered an order in which it: denied appellants’ motion for summary judgment; granted summary judgment to Greb X-Ray, the ESOP, and Curtright as to Count III; granted UMB’s motion for summary judgment in full. Thereafter, appellants moved for reconsideration and Greb X-Ray, the ESOP, and Curtright moved for summary judgment on Counts I and II.
Subsequent thereto, the district court entered an order in which it granted appellants’ motion for reconsideration in part by reinstating their Count I claim against UMB. The court also granted summary judgment to Greb X-Ray, the ESOP, and Curtright on Count II but denied their motion for summary judgment on Count I.
Prior to trial, appellants settled with Greb X-Ray, the ESOP, and Curtright. Thereafter, a two-day trial to the court proceeded on appellants’ Count I claim against UMB within which appellants alleged that UMB had violated § 1104(a) by imprudently investing in Greb X-Ray during a time when the financial condition of Greb X-Ray was deteriorating and by fail ing to attempt to sell some or all of the Greb X-Ray stock held by the ESOP as it learned that the financial condition of Greb X-Ray was deteriorating.
UMB defended on the basis that it did not make or participate in any imprudent investments in violation of § 1104. UMB argued that it purchased the Greb X-Ray stock at the direction of Greb X-Ray as the ESOP’s administrator in accordance with the specific provisions of the ESOP.
Following trial to the court, the district court entered a memorandum order, finding that UMB had not violated any duty it owed appellants under ERISA. In so doing, the court found, inter alia, that: UMB purchased Greb X-Ray stock for the ESOP from Greb X-Ray employees who wished to sell their stock, which purchases were made at the direction of ESOP administrator; the value of the stock was determined annually by an independent appraiser not affiliated with Greb X-Ray; the credible evidence shows that the valuations were not done improperly; there was no credible evidence to show any prospective buyers, other than Greb X-Ray, its employees, or the ESOP for Greb X-Ray stock in the mid-1980’s; UMB was not informed of any potential buyers for Greb X-Ray stock nor did it make any inquiries concerning the existence of potential buyers; in 1985, unbeknownst to UMB, five employees attempted to oust Curtright; UMB routinely gave its proxy to Curtright; there was no evidence to indicate that UMB’s motive in giving Curtright its proxy was to perpetuate Curtright’s control of Greb X-Ray; and plaintiffs (appellants) introduced no credible evidence to show that UMB was aware of Curtright’s mismanagement.
The court concluded that: UMB, as a directed trustee under 29 U.S.C. § 1103(a)(1) , was required to follow the proper directions of the administrator unless the instructions violated ERISA; UMB was entitled to rely on the independent appraisal assessing the value of the Greb X-Ray stock; UMB did not violate its duties under ERISA by following the administrator’s directions to purchase additional shares of Greb X-Ray stock; UMB did not violate its duties under ERISA by retaining the Greb X-Ray stock in the absence of any offers to purchase the stock and in the absence of any directions from the administrator to sell the stock; ERISA did not require UMB to tender the stock back to Greb X-Ray and such action would have run counter to the ESOP; the decline in the price of the Greb X-Ray stock during 1985 and 1986 was insufficient to show imprudence on the part of UMB; and that, as a directed trustee, UMB was not required to weigh the merits of an investment in Greb X-Ray stock against all other available investment vehicles each time the administrator directed the acquisition or retention of Greb X-Ray stock. (R., Yol. VII, Tab 164 at pp. 8-9).
The district court also concluded that: ERISA requires trustees to carry out the aims of the plans they administer; trustees who disregard the stated purpose of an employee stock ownership plan to invest primarily in employer securities and who instead invest in non-employer investments may be liable for breach of fiduciary duties; federal agencies regulating banks had recommended that banks with commercial loan departments and trust departments separate the two; the federal agencies had developed and promoted the concept of erecting a “Chinese Wall” to obstruct the flow of information between bank lending and trust departments; and UMB’s commercial loan personnel had acted in conformity with the Comptroller of the Currency and Federal Reserve directives by not communicating Greb X-Ray’s commercial loan performance to UMB’s trust department personnel. Id. at p. 9.
On appeal, appellants contend: (1) the court erred in finding that UMB had not violated § 1104; (2) the court erred in finding that UMB was absolved of liability because its actions were allowed by the ESOP and made pursuant to the directions of the administrator; (3) UMB, once the ESOP became the majority shareholder of Greb X-Ray, was acting in violation of its fiduciary duties; (4) the court erred in finding that the stock purchase agreement restricted the ESOP sale of Greb X-Ray stock; (5) the court erred in finding that there were no other prospective buyers for Greb X-Ray stock in the mid-1980’s; (6) the court erred in granting summary judgement in favor of UMB on Count II and holding that UMB did not violate § 1106 by serving simultaneously as a trustee and secured creditor; and (7) that the payment of UMB attorney fees from ESOP assets was a prohibited transaction.
At the outset, we observe that Congress, in enacting ERISA, did not explicitly enumerate all the powers and duties of trustees and other fiduciaries. Central States Pension Fund v. Central Transport Inc., 472 U.S. 559, 570, 105 S.Ct. 2833, 2840, 86 L.Ed.2d 447 (1985). Rather, Congress invoked the common law of trusts to define the general scope of their authority and responsibility. Id. Under the common law, trustees are understood to have such powers as are necessary or appropriate for carrying out the purposes of the trust. Id. In exercising their powers, however, ERISA fiduciaries are required to interpret their plans "in accordance with the documents governing the plan insofar as such documents and instructions are consistent with ERISA § 1104(a)(1).” Pratt v. Petroleum Production Management Employee Savings Plan, 920 F.2d 651, 657 (10th Cir.1990).
The decisions of a fiduciary will be upheld unless they are arbitrary and capricious, not supported by substantial evidence or erroneous on a question of law. Woolsey v. Marion Laboratories, Inc., 934 F.2d 1452, 1457 (10th Cir.1991), citing Pratt v. Petroleum Production Management Employee Savings Plan, supra. Judicial review of fiduciary actions is highly deferential. Anderson v. Ciba-Geigy Corporation, 759 F.2d 1518, 1522 (11th Cir.1985). Deferential judicial review applies to the interpretation and implementation of a plan by a plan fiduciary. Hoover v. Blue Cross and Blue Shield of Alabama, 855 F.2d 1538, 1541 (11th Cir.1988).
Where, as here, trial is to the court, the resolution of factual issues and conflicting evidence lies solely within the province of the district court. Raydon Exploration, Inc. v. Ladd, 902 F.2d 1496, 1499 (10th Cir.1990). “The factual findings of the district court are presumed correct and should not be set aside on appeal unless they are clearly erroneous.” Id. Conclusions of law are reviewed de novo. In re Thompson, 894 F.2d 1227 (10th Cir.1990).
Mixed questions of fact and law are reviewed under either the clearly erroneous or de novo standards, depending on whether the mixed question involves primarily a question of fact or the consideration of legal principles. Supre v. Ricketts, 792 F.2d 958, 961 (10th Cir.1986); Love Box Company v. Commissioner of Internal Revenue, 842 F.2d 1213, 1215 (10th Cir.1988) (quoting Supre v. Ricketts), cert. denied, 488 U.S. 820, 109 S.Ct. 62, 102 L.Ed.2d 40 (1988). Inasmuch as appellants' allegations of error involve primarily questions of fact, we will uphold the findings of the district court unless the findings are clearly erroneous.
I.
Appellants contend that the court erred in finding that UMB had not violated § 1104. Specifically, appellants contend that UMB breached § 1104 by failing to discharge its duties for the exclusive benefit of the ESOP’s participants with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity would have used.
Appellants argue that UMB did not act for the exclusive benefit of the ESOP’s participants and their beneficiaries. With out citing to the record, appellants allege that UMB “unquestioningly participated with Mr. Curtright in the purchase and retention of sufficient stock to make the ESOP the majority shareholder in the Company”, allowed Curtright “to deal with the assets of the plan [ESOP] in his own interests”, and “aided Mr. Curtright in his misuse of the plan assets thereby depriving the plaintiffs [appellants] of their retirement security.” (Brief of Appellants at pp. 22-23.)
Appellants also argue that UMB failed to discharge its fiduciary duties as the ESOP’s trustee in a prudent manner. Appellants contend that prudence required UMB to take an active role in monitoring the ESOP’s investments; UMB could not take a passive role and “blindly and uncritically” accept the administrator’s directions to purchase the Greb X-Ray stock; UMB “should have known” that Greb X-Ray’s financial condition was deteriorating; UMB should not have acquired the Greb X-Ray stock and should not have retained it; UMB was imprudent in giving Curtright its proxy to vote the Greb X-Ray stock; and UMB was imprudent in not obtaining independent investment advice.
As set forth, supra, fiduciaries are required to interpret their plans in accordance with the documents governing the plans insofar as the documents and instructions are consistent with ERISA. Pratt v. Petroleum Production Management Employee Savings Plan, supra. The decisions of a fiduciary will be upheld unless they are arbitrary and capricious, not supported by substantial evidence, or erroneous on a question of law. Woolsey v. Marion Laboratories, Inc., supra. Judicial review of fiduciary actions is highly deferential. Anderson v. Ciba-Geigy Corporation, supra. Applying these standards, we hold that the district court’s findings that UMB did not violate ERISA are not clearly erroneous.
Contrary to appellants’ allegations that UMB “unquestioningly participated with Mr. Curtright” and “aided Mr. Curtright in his misuse of plan assets” and failed to discharge its duties as a trustee in a prudent manner in violation of ERISA, the district court specifically found, and we agree, that UMB did not violate ERISA.
The ESOP expressly provided that it was “intended to invest primarily in Company stock” and that the administrator, Greb X-Ray, would administer the plan, including, “directing] the Trustee(s) with regard to purchases of Company stock and the fair market value thereof.” Under § 1103(a)(1), UMB, as a directed trustee, was “subject to [the] proper directions of [Greb X-Ray as administrator] which are made in accordance with the terms of the plan and are not contrary to this chapter.”
Appellants have failed to establish that the ESOP was inconsistent with ERISA. Appellants have also failed to establish that UMB’s 1983 and 1984 purchases of Greb X-Ray stock, at the direction of Greb X-Ray as the ESOP’s administrator, were not made in “accordance with the terms of the” ESOP or “were contrary to” ERISA.
We observe that appellants' cause of action under Count I has, since the outset, been predicated on the fact that their ESOP account values declined dramatically from 1985 to 1986 and that they are entitled under ERISA to recover the value of what their plan assets would have been worth, had they been properly and prudently invested. Thus, appellants seek, having settled with Greb X-Ray, the ESOP, and Curtright, to recover under Count I by establishing that UMB’s actions were viola-tive of ERISA and caused the decline in their ESOP values. Appellants have failed to meet this burden.
Although the appellants established that UMB purchased stock in 1983 and 1984 and that the value of their ESOP accounts declined dramatically during 1985 and 1986, they have failed to establish that UMB’s actions were in violation of ERISA. The district court properly found that UMB did not violate ERISA by following the administrator’s directives to purchase the Greb X-Ray stock and by retaining the stock in the absence of any directions by the administrator otherwise. The court also properly found that appellants failed to present any credible evidence establishing that UMB was aware of Curtright's mismanagement.
Under these circumstances, we agree with the district court that the decline in the price of Greb X-Ray stock during 1985 and 1986 — over a year after UMB made its last purchase of Greb X-Ray stock — was insufficient to show imprudence on the part of UMB. ERISA guarantees only the right to receive vested benefits, not a particular amount. Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 512, 101 S.Ct. 1895, 1900, 68 L.Ed.2d 402 (1981). Under ERISA, private parties, not the government, control the level of the benefits, id. at p. 511, 101 S.Ct. at 1900, and the total benefits may vary from plan to plan. Id. at pp. 513-514, 101 S.Ct. at 1901.
II.
Appellants contend that the district court erred in finding that UMB was absolved of liability because its actions were allowed by the ESOP and pursuant to the directions of Greb X-Ray as the ESOP’s administrator. Appellants contend that Eaves v. Penn, 587 F.2d 453 (10th Cir.1978), effectively disposes of any argument that UMB was absolved of any responsibility simply because its actions were allowed by the plan documents. Appellants argue, citing to Eaves, that a fiduciary cannot escape liability by acting in accordance with the plan documents “if the actions under the documents violate ERISA.” Eaves is clearly distinguishable.
In Eaves, Ralph Penn (Penn) used his position as trustee to amend a profit sharing plan to an employee stock ownership plan without the prior specific consent of the plan’s participants and beneficiaries. As amended, the plan provided that plan assets, to the extent practicable, would be invested in the employer company stock. Penn subsequently utilized all of the plan’s funds, loan proceeds, and some of the company’s funds to acquire 97% of the employer company. Penn also personally purchased the remaining 3% of the employer company. As a result, Penn “personally and as trustee of the New Plan, acquired all the outstanding stock of the company.” 587 F.2d at 456.
We upheld the district court’s determination that Penn had failed to act solely in the interest of the plan’s participants and beneficiaries and with the care, skill and prudence required under § 1104(a)(1). In so doing we rejected Penn’s contentions that inasmuch as he had administered the plan in accordance with the plan documents by investing in the company, he had complied with the exclusive benefit and prudent man requirements of § 1104(a)(1).
In contrast, whereas Penn utilized his position as the plan’s trustee to effectuate his personal acquisition of a million dollar business to the detriment of the plan’s participants in violation of ERISA, there is no evidence that UMB ever utilized its position as trustee to further its own interests to the detriment of the ESOP participants in violation of ERISA. Furthermore, unlike Penn who was able to unilaterally orchestrate the use of plan funds to purchase a business, UMB was precluded under the ESOP from purchasing any Greb X-Ray shares unless directed to do so by the ESOP’s administrator, and then only at a price determined by an independent appraiser not associated with Greb X-Ray. Finally, UMB was obligated to follow the investment decisions of the administrator, and the ESOP specifically provided that UMB would not be liable for any losses resulting therefrom:
The Trustee(s) shall comply promptly with all such directions as long as such directions are not contrary to the Trustee’s Fiduciary responsibility as provided by law or contrary to the terms of the Plan and the Trust, and to such extent the Trustee(s) shall not be liable or responsible for any loss resulting to the Trust Fund or to any present or future Participant or Beneficiary thereof by reason of any sale or investment made or other action taken pursuant to and in accordance with the direction of the Administrator. ...
(Addendum to Brief of Appellants, Yol. I, Tab 1, Article X, Section 10 at p. 35).
We hold that the district court did not err in finding that UMB was not liable to appellants under ERISA where, as here, its actions were allowed by the ESOP and undertaken pursuant to the directions of the administrator. Unlike Penn, whose “actions under the [plan] documents violate[d] ERISA,” UMB’s actions did not.
III.
Appellants contend that once the ESOP became the majority shareholder of Greb X-Ray, UMB was acting in violation of its fiduciary duties.
Appellants argue that after the ESOP became the majority Greb X-Ray shareholder in 1984, UMB should have taken action to insure that Greb X-Ray was being properly managed. While acknowledging that the district court specifically found that UMB was unaware of the mismanagement or of the decline in Greb X-Ray, appellants' nevertheless argue that UMB as trustee should have been aware of the mismanagement. Appellants argue that had UMB acquired such information, it could have acted prudently by changing the management of the corporation, changing the level of its ownership in the corporation, or even bringing a lawsuit for mismanagement.
UMB responds that these arguments were not presented to the district court and should not be considered for the first time on appeal. UMB also argues that these arguments are contrary to established Kansas law in that the “majority stockholder does not become a fiduciary for other shareholders by reason of mere ownership of stock” and that it is only when “one steps out of the role as a stockholder and acts in the corporate management, with disregard for the interests and welfare of the corporation and its stockholders that he assumes the burden of fiducial responsibility.” McDaniel v. Painter, 418 F.2d 545, 547 (10th Cir.1969).
Inasmuch as these arguments were not presented to and considered by the district court, we will not consider them for the first time on appeal. Burnette v. Dresser Industries, Inc., 849 F.2d 1277, 1282 (10th Cir.1988). Moreover, having held, supra, that the district court’s findings and conclusions that UMB had not violated ERISA by investing in Greb X-Ray stock were not clearly erroneous, we decline to hold that UMB nonetheless violated its fiduciary duties under ERISA once the ESOP became Greb X-Ray’s majority shareholder. Under McDaniel v. Painter, supra, it is clear that, under Kansas law, UMB did not become a fiduciary for the other Greb X-Ray shareholders merely because the ESOP became the majority shareholder.
IV.
Appellants contend that the district court erred in finding that the ESOP was bound by the Greb X-Ray stock purchase agreement which restricted the sale of Greb X-Ray. This argument is without merit.
The district court specifically found that:
Greb X-Ray is a closely held corporation whose stock is subject to a Stock Purchase Agreement. The Agreement restricts Greb X-Ray stock to the employees of Greb X-Ray, Greb X-Ray Company, and the ESOP.
(R., Yol. VII, Tab 164 at p. 4).
The above finding is in complete accord with the Stock Purchase Agreement which provides in part:
The Stockholders desire to guard against the introduction into the ownership of the Company strangers who may be unwilling or unable to contribute in like manner to the success of the Company. By restricting the privilege of ownership of the shares of stock of the Company to the Company, Stockholders who are actively employed by the Company, former Stockholders ... any Profit Sharing Plan and/or Stock Purchased Plan established by the Company....
(R., Defendant’s Exhibit 408).
Y.
Appellants contend that the district court erred in finding that there were no other prospective buyers for Greb X-Ray stock during the mid-1980's.
The district court found:
There is no credible evidence which would show that prospective buyers, other than Greb X-Ray, its employees or the ESOP, existed during the mid-1980’s. The Bank was not informed of any potential buyers nor did it make inquiries concerning the existence of potential buyers. The Bank was aware of the limitations concerning the sale of Greb X-Ray stock contained in the Greb X-Ray Stock Purchase Agreement.
(R., Vol. VII, Tab 164 at pp. 5-6).
Appellants argue that this finding was erroneous because.one Terrance Gooding testified via deposition that he had contacted Curtright and inquired about the acquisition of Greb X-Ray. Although Gooding did testify that he visited with Curtright concerning the acquisition of Greb X-Ray by Picker-International, he also testified that their discussions “never got beyond the fencing and discussions and the romance and good things.” (R., Supp.Vol. X at p. 24). Furthermore, Gooding testified that: he did not have any specific recollection of discussing specific purchase terms with Curtright; in order to ascertain the appraised value of Greb X-Ray he would have sent his own accountants and evaluators to determine Greb X-Ray’s book value and fair market value but he never sent them; and although he would, in the normal course of matters, have asked Curt-right for Greb X-Ray’s profit and loss statements, he did not recall doing so in this case.
Under these circumstances, we hold that the district court’s finding that “there is no credible evidence which would show” the existence of other prospective buyers for Greb X-Ray in the mid-1980’s was not clearly erroneous.
VI.
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1951616-23394 | RIVES, Chief Judge.
This action was commenced by Don J. Shaw against the Evans Production Company and was based upon a letter agreement between the parties dated May 28, 1953. The agreement in question, which is set out in full in the margin, provided for the purchase by Shaw of 483 shares of common stock in Evans with the right to re-sell this stock to Evans at a subsequent date The price to be paid by Shaw in the original purchase was specified in the agreement at $106.25 per share, thus making the total original purchase price $51,318.75 for the 483 shares. The price to be paid by Evans for the return of the shares in the event Shaw elected to exercise his option to re-sell was not specified with this same exactitude. Rather, the agreement attempted to set up a method by which that price could be ascertained by reference to the financial condition of the company at the time of the election.
Shaw bought the stock as contemplated by the agreement and, by letter dated January 22, 1957, attempted to exercise his right to re-sell. A controversy ensued as to the price which, under the agreement, Evans was obligated to pay for the shares. This controversy was never resolved and eventually resulted in this litigation. The controversy revolves about the interpretation to be given to the following language of the agreement:
“ * * * the Company will purchase all of said ‘stock’ at its book value as shown by the Company’s annual statement for the year ending March 31 last preceding the date of your request, plus a value of $.50 a barrel for proven oil reserves of the Company.”
Shaw took the position that this provision bound Evans to re-purchase the stock at a price to be determined by adding to the book value of the stock fifty cents for each barrel of proven oil reserves belonging to Evans as of January 22, 1957, when he chose to exercise his option to re-sell. Since the proven oil reserves on that date totaled 611,384 barrels, Shaw’s position was that the proper re-purchase price for his 483 shares was $452,596.03. Evans, on the other hand, took the position that the re purchase price was to be calculated by first adding fifty cents a barrel for proven oil reserves to the assets of the company as reflected in its annual statement of the March 31 preceding Shaw’s election, and, then determining the book value of the 483 shares. Since there were 9667 shares of stock outstanding, this method of calculation produced a price of $81,676.75.
The real gist of the argument, therefore, has been whether Shaw is entitled to the full fifty cents for each barrel of proven oil reserves, as would be the case under his interpretation of the agreement, or is entitled to only 483/9667 of fifty cents for each barrel of proven oil reserves, which would follow from Evans’ interpretation.
The district court held that the agreement itself was ambiguous and, consequently, permitted the introduction of extrinsic evidence relating to the circumstances surrounding the execution of the agreement. The case was then submitted to the jury under two special issues, both of which were answered favorably to Shaw. Evans’ motions for judgment notwithstanding the verdict and for a new trial were denied and judgment was entered in favor of Shaw in the amount of $452,596.03. In doing so, the district court rejected Shaw’s requests for interest from the date he attempted to re-sell the stock to Evans and for attorneys’ fees. Evans appealed from the adverse judgment on the merits. Shaw appealed from the judgment insofar as it denied his request for interest.
Evans’ attack on the judgment is three-pronged: first, that the district court erred in holding that the agreement was ambiguous; secondly, that assuming the agreement to be ambiguous, the extrinsic evidence clearly showed that the proper interpretation of the agreement was that advanced by Evans ; and, finally, that the district court adopted an entirely erroneous procedure in the submission of the case to the jury. These three contentions will be separately considered.
Upon a consideration of the entire agreement, we conclude that Evans’ first contention, i. e., that the language of the agreement unambiguously supports its interpretation, must fail. Indeed, considered alone, the language of the provision for determining price in the event of an election to re-sell (quoted above) might be viewed as unambiguously contra to Evans’ interpretation. Evans seeks to have us read the word “plus” in that provision as equivalent to “adjusted by adding,” even though it has failed to show us a single instance in which that word was given such a meaning. Such a novel interpretation would be wholly unjustified, unless required when the re-purchase provision is considered in the context of the whole agreement.
In support of its contention that such an interpretation is required, Evans points to two other aspects of the agreement. First, the recital at the outset of the agreement that its purpose was “to enable you [Shaw] to obtain a proprietary interest in the affairs of Evans Production Company” is stressed. Assuming for the moment that this recital is inconsistent with Shaw’s interpretation of the agreement, the argument is nevertheless unavailing. For, it ignores the further recital that the stock arrangement was designed “as an incentive for you [Shaw] to work for the best interests of Evans Production Corporation and to assist you in your realization of the results of such efforts.” That this second recital is entirely consistent with Shaw’s interpretation of the agreement is obvious. Thus, Evans’ argument on this point would fail even if the asserted inconsistency with the first recital existed. 7 It is apparent, however, that no such inconsistency does exist. Quite clearly, the agreement was designed to give Shaw a proprietary interest in the company. The essential question is not the nature of Shaw’s interest but, rather, the extent of it.
Evans’ next contention is that when clause (1) of the agreement (the re-purchase provision) is read in the light of clause (2), it is apparent that the interpretation it urges is correct. Clause (2) recites that Evans has taken out a policy of insurance upon Shaw’s life in the amount of $50,000 and binds Evans to re-purchase the stock, if requested to do so by Shaw’s executor or administrator, out of “the insurance proceeds and other money if necessary.” Evans argues that the use of the words “if necessary” precludes Shaw’s interpretation for, under that interpretation, “other money” would inevitably be necessary. We deem it sufficient to say that we find that argument inconclusive. Finally, Evans argues that clause (2) renders Shaw’s interpretation incredible for, under that interpretation, Shaw’s stock would have been worth approximately $200,000 if he had died the very day he signed the agreement, with the result that Evans would have assumed a $150,000 risk on insurance of only $50,000. Again we find the argument unconvincing. Variations between the value of objects insured and the amount of insurance carried thereon are the rule rather than the exception. This Court certainly cannot measure Shaw’s interest by Evans’ insurance.
We conclude, therefore, that the district court was correct in ruling that the agreement did not unambiguously support Evans’ interpretation. The admission of extrinsic evidence to aid in the interpretation of the agreement was thus not injurious to Evans.
There was a sharp conflict in the evidence presented to support each of the opposing contentions. Evans attempted, for example, to show that Shaw was quite adequately compensated by his salary and, to this end, introduced considerable testimony tending to minimize the importance and value of Shaw’s services to the company. Shaw, on the other hand, attempted to show that, considering his salary alone, he was grossly underpaid for services which his witnesses characterized as highly valuable. The verdict of the jury, of course, resolved this controversy in favor of Shaw. We must, therefore, assume that Shaw was an extremely important employee whose services were worth the price called for by his interpretation of the agreement. It is in the light of this now settled fact that the evidence relating to the negotiations which led up to the execution of the agreement here in question must be considered.
No really serious conflict as to the basic facts of the negotiations appears. It is undisputed that Shaw wanted a so-called “Vé carried interest” in the reserves of the company. It is equally undisputed that Evans was reluctant to, and, indeed, finally refused to, give him such an interest. Evans argues that this one fact precludes Shaw’s interpretation for that interpretation operates to give Shaw an interest even greater than the 14 carried interest which he was refused. Here again, however, we are compelled to reject Evans’ argument.
The interest contended for here by Shaw is, at most, roughly equal to a *4 carried interest. And it clearly appears from the testimony of Evans’ president himself that the demand for a % carried interest was refused, not because such an interest would give Shaw too great a financial reward, but because Evans’ president felt that the interests of the company would be better served if Shaw did not have that kind of interest. We therefore conclude that the extrinsic evidence adduced did • raise a question of fact for the jury and the district court was correct in refusing to grant Evans’ motions for a directed verdict and for judgment notwithstanding the verdict.
Evans’ third and last contention is that the district court submitted the case to the jury under an erroneous procedure. We find this contention wholly without merit. The procedure adopted was that of instructing the jury as to the law governing the case and then submitting to it the ultimate issue as to the proper interpretation of the contract. Such a procedure has long been sanctioned as appropriate where the extrinsic evidence presents a question of fact. Jackson v. King, was reversed, not because of the procedure adopted, but because the instructions given were inadequate. Here, Evans has failed to preserve any objections to the district court’s instructions. See Maryland Casualty Co. v. Reid, 5 Cir., 1935, 76 F.2d 30, 33. Without passing upon the adequacy of the instructions given in this case had those instructions been given in the face of proper objection, we hold that they were not so grossly inadequate as to warrant reversal in the absence of such objection.
We conclude, therefore, that the case must be affirmed insofar as Evans’ appeal is concerned. There remains only the question of whether the district court should have allowed interest from January 22, 1957, as contended by Shaw in his appeal.
Under the law of Texas, which both parties concede to be controlling on this issue, it is well settled that interest is collectible “as a matter of law if the amount of recovery, whether under a contract or for a tort, depends on conditions existing at the due date, though unascertained and disputed till the time of the trial.” Since the measure of recovery in this case, i. e., the book value of the stock plus fifty cents per barrel of proven oil reserves, clearly depended on conditions existing on January 22, 1957, the allowance of interest from that date was mandatory unless the case was removed from the operation of this general rule by the existence of special circumstances.
Evans contends that it was so removed. This contention is based on the fact that Shaw’s original demand upon Evans to re-purchase the stock was predicated upon the theory that there were 950,000 barrels of proven oil reserves, whereas, in fact, there were only 775,-353 barrels of such reserves at the time. On the basis of this fact, Evans attempts to rely on the decision of the Texas Supreme Court in Ingham v. Harrison, where it was held that where the failure to pay on the due date is due to the fault of the plaintiff in insisting upon unjust claims, interest is not recoverable. In our view, this case is not controlling. For here, the failure to pay cannot, in any proper sense, be attributed to the insistence of Shaw upon unjust claims. He put forth 950,-000 barrels as his good faith estimate of the amount of proven oil reserves. Evans then refused to counter this estimate with an estimate of its own, and contended, rather, that Shaw had misconstrued the agreement. Indeed, the fact that disagreement as to the amount of the proven oil reserves was not the cause of the refusal to pay is clearly shown by the fact that, even though the parties were eventually able to enter a stipulation as to the amount of these reserves, the refusal to pay and this litigation persisted. The exception to the general rule laid down in the Ingham case is thus not available to Evans. There being no other theory upon which the operation of this rule is sought to be avoided, we hold that it must apply. The district court was in error in denying Shaw’s request for interest from January 22, 1957. The judgment must be modified to grant that request, and it is so
Modified and affirmed.
. “Evans Production Corporation
“1932 Oliver Building
“Pittsburgh 22, Pa.
“May 23, 1953
“Mr. Don J. Shaw
“4510 Versailles Street
“Dallas, Texas
“Dear Mr. Shaw:
“To enable you to obtain a proprietary interest in the affairs of Evans Production Corporation, the Company has assisted you in financing the purchase of 483 shares of Common Stock without par value — stated value $50.00 per share of Evans Production Corporation Common Stock (hereinafter referred to as ‘stock’) at its book value March 31, 1953 or $106.25 per share. As security for this advance, you have given us your note (hereinafter referred to as ‘note’) together with the 483 shares of ‘stock,’ (with stock assignment form or forms duly executed) so purchased by you, as collateral security for this advance.
“As an incentive for you to work for the. best interests of Evans Production Corporation and to assist you in your realization of the results of such efforts, tlie Company agrees that;
“(1) After you have owned the aforesaid ‘stock’ and have boon in the continuous employ of the Company for a period of two years from this date, upon your one and only written request to be made at any time between May 28, 1955 and within ton days after May 28, 1958, the Company will purchase all of said ‘stock’ at its book value as shown by the Company’s annual statement for the year ending March 31 last preceding the date of your request, plus a value of $.50 a barrel for proven oil reserves of the Company.
“(2) The Company has, at its own expense, taken out a five year $50,000.00 convertible and renewable term life insurance policy upon your life. The beneficiary of the policy is Evans Production Corporation and in the event of your death during the original five year term of this policy and provided your death occurs while in the employ of the Company, the Company will apply the insurance proceeds and other money if necessary to purchase the aforementioned stock at its book value as shown by the Company’s annual statement for the year ended March 31, preceding your death, plus a value of $.50 a barrel for proven oil reserves of the Company, provided the properly authorized executor or administrator of your estate, within 60 days after your death, makes a written request of the Company to purchase said stock.
“(3) If at any time, prior to two years from the date of this letter, there is an unpaid balance on the note and you leave the employ of the Company or desire to secure a refund of the monies paid on account of the note, the Company will upon your written request refund without interest all payments made upon the principal of the note and look only to the collateral pledged under the note for payment of the note which note automatically becomes due and payable.
“You agree that after or simultaneously with the Company’s purchase of said stock at your request or the refund of any monies that this letter will be surrendered to the Company and that there shall be no waivers of any of the provisions or conditions of this letter for any reason whatsoever.
“Your signed acceptance of one copy of this letter will constitute acknowledgment that this letter is given voluntarily by the Company and is the entire agreement between the Company and yourself and pertains only to the specific 483 shares of ‘stock’ aforementioned.
“Yours very truly,
“T. M. Evans,
“President.
“Accepted:
“Don J. Shaw.”
. The agreement limited the period during which Shaw could exercise this right to re-sell to a period beginning May 28, 1955, and ending within ten days after May 28, 1958.
. Which date was within the limitation described in note 2, supra.
. “Special Issue No. 1: Was it the agreement and understanding between Evans Production Corporation and Don ,T. Shaw that Evans was to repurchase from Shaw 483 shares in Evans Production Corporation for the book value thereof plus 500 per barrel on 483/0667 of the proven oil reserves of Evans Production Corporation, or was such agreement and understanding that Shaw was to receive said book value plus 500 per barrel for 100% of the proven oil reserves of Evans Production Corporation?
“Answer: The book value plus 500 per barrel on 483/9667 of the proven oil reserves or
“The book value plus 500 per barrel for 100% of the proven oil reserves.
“Answer: The book value plus 500 per barrel for 100% of tke proven oil reserves.
“Special Issue No. 2: Was it the agreement and understanding of the parties that the determination of the amount of oil reserves was to be made as of January 22, 1957 or March 31, 1956?
“Answer: March 31, 1956 or January 22, 1957.
“Answer: January 22, 1957.”
. This conclusion, reached entirely upon the basis of the words used in rc-purchase provision, is reinforced when attention is directed to the punctuation of that provision. Eor, even if Evans succeeded in establishing its contention that “plus” could mean “adjusted by adding,” the presence of the comma immediately preceding “plus” would tend to indicate that such was not its meaning in this particular context.
. We do not view tlie use of the word “value,” instead of the word “sum,” in referring to the fifty cents for each barrel of proven oil reserves as of any particular significance. We agree with Evans that “value” was probably chosen because the fifty cents was to be added to a figure already referred to as “book value.” But the essential question is when this addition was to take place. And, on this crucial point, the use of the word “value” is uniiluminating.
. This follows from the fact that the two recitals are, for present purposes, at least alternative. Indeed, an argument could be made that since the second recital immediately precedes the re-purchase provision, it is the more important of the two in the interpretation of that provision.
. We may point out that the argument, as presented, is an overstatement. “Othther money” would not inevitably be necessary under either interpretation. The difference is actually only one of probabilities, with there being a stronger probability of need for “other money” under Shaw’s interpretation.
. Of. In re United States Commission to Appraise Washington Market Co. Property, 1924, 54 App.D.C. 129, 295 E. 950, 954, where the opinion correctly observes :
“The amount of insurance which an owner places upon a given piece of property is little or no index of its value. One may feel impelled to carry a much larger percentage of risk than another. The amount of insurance may depend upon the character of the property insured. The probability of destruction by fire is much greater in a frame building, for example, than in a brick building, and, though the buildings are of equal value, the amount of insurance carried in the one case might be very much larger than in the other. Hence the mere fact that a building is insured for a certain amount is not necessarily an index of its value.”
The fact that Evans’ risk here may have been underinsured may reflect no more than its belief that Shaw, a young man whose health, so far as appears, was excellent, would not die in the immediate future.
. Shaw did not contend that the agreement unambiguously supports his interpretation, so that question is not before this Court.
. The jury might well have believed that Shaw was almost singlehandedly responsible for the success of an enterprise which netted Evans several millions of dollars and, if so, the conclusion that his services were worth roughly one-half million dollars is certainly not unreasonable.
. It is not clear, either from the records or the briefs in this case, just exactly what a “% carried interest” amounts to. Shaw contends that such an interest would entitle him to % of all oil produced by the Company. If so, such an interest would be worth approximately seventy cents for each barrel of oil produced since the evidence showed that the market value of oil was $3.00 per barrel at the time of Shaw’s election to re-sell. Evans, on the other hand, attempts to relate the so-called “% carried interest” to the value of the oil in the ground. Since the evidence shows that, at this stage, the value of the oil was only $1.35, Evans contends that a % carried interest would have been worth only about thirty-four cents per barrel. We find it unnecessary to resolve this conflict in view of the fact that both of these figures are close enough to fifty cents per barrel when considered in the light of the tax consequences of each. See note 13, infra.
. Thus, T. M. Evans, the company president, testified as follows:
“Q. And you were very definite that you did not want him to have that character of interest? A. It wasn’t I didn’t want him to have it; but I didn’t think he could operate in the company’s best interests if he had an interest different from the Company’s. After all, if the Company or I were paying for the drilling, it would be to his advantage to drill a well anywhere, because it wouldn’t cost him anything. You might find oil outside of this Courthouse. I wanted to try to avoid that and not get so many dry holes.”
In this connection, Shaw also points out the different tax consequences which follow from a “% carried interest” and the fifty cents per barrel formula used in the agreement. A carried interest” would give the owner thereof an interest in the oil itself sufficient to entitle him to the tax depletion allowance, whereas the fifty cents per barrel arrangement actually agreed upon leaves the depletion allowance for the entire value of the oil with Evans.
. At this juncture, we can dispose of one other, relatively minor, point presented by Evans’ appeal. That point involves the question of whether the agreement contemplated the determination of the amount of proven oil reserves as of the date of an election to re-sell, or as of the date of the last annual statement immediately preceding that election. In our view, Evans’ position on this point, i. e., that the appropriate date is that of the last annual statement, is inextricably tied to its position on the primary question of interpretation, and its failure there precludes it on this point. The question was submitted to the jury as Special Issue No. 2 and the jury’s answer is determinative.
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7403705-27932 | MEMORANDUM OPINION
LAMBERTH, District Judge.
This case comes before the court on defendant Nedimyer’s motion to dismiss the complaint for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). Upon consideration of the filings of counsel and the relevant law, defendant Nedimyer’s motion to dismiss is granted in part and denied in part in accordance with this memorandum opinion.
I. Introduction
In his complaint, plaintiff seeks to recover damages for civil rights violations, violations of the Fair Credit Reporting Act, and pendent state-law claims. Kenneth Nedimyer moves to dismiss the only claim naming him as a defendant, the alleged violations of plaintiffs civil rights under 42 U.S.C. § 1981.
A. Motion to Dismiss
Plaintiffs factual allegations must be presumed true and liberally construed in favor of the plaintiff when reviewing the adequacy of a complaint for purposes of a Rule 12(b)(6) motion. Phillips v. Bureau of Prisons, 591 F.2d 966, 968 (D.C.Cir.1979) (citing Miree v. DeKalb County, Georgia, 433 U.S. 25, 27 n. 2, 97 S.Ct. 2490, 2492 n. 2, 53 L.Ed.2d 557 (1977)). In addition, the plaintiff must be given every favorable inference that may be drawn from his allegations of fact. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974). “However, legal conclusions, deductions or opinions couched as factual allegations are not given a presumption of truthfulness.” 2A Moore’s Federal Practice, § 12.07, at 63 (2d ed. 1986) (footnote omitted); see Haynesworth v. Miller, 820 F.2d 1245, 1254 (D.C.Cir.1987) (citing Pauling v. McElroy, 278 F.2d 252, 254 (D.C.Cir.), cert. denied, 364 U.S. 835, 81 S.Ct. 61, 5 L.Ed.2d 60 (1960)).
Dismissal is only appropriate if it appears beyond doubt that no set of facts proffered in support of plaintiffs claim would entitle him to relief. Haynesworth, 820 F.2d .at 1254 (citations omitted); Phillips, 591 F.2d at 968. Plaintiffs factual allegations are set out below.
B. Facts
Plaintiffs interminable complaint is mired by numerous redundancies and inconsistencies. Wading through this bog, it appears that plaintiff, an African-American employee of Philip Morris, alleges that he was the target of at least one conspiracy motivated by racial animus. Compl. ¶¶ 8, 30-50. First, Mr. Wiggins seems to allege that there was a conspiracy within Philip Morris, Inc. to downgrade plaintiffs performance evalua tions, providing a basis for terminating him. See id. ¶ 16. Plaintiff alleges that defendant Nedimyer, plaintiffs second-line supervisor, and others agreed that “plaintiff would be discredited, defamed and financially destroyed by defendants’ systematically marking down plaintiffs’ [sic] performance ratings and transmitting the false results in a fraudulent manner in interstate commerce.” Id. ¶ 73(1). According to plaintiff, “[t]he plan’s goal was achieved on March 5, 1990.” Id. ¶ 36. However, plaintiff claims that he was unlawfully terminated from Philip Morris in violation of his civil rights on February 9, 1990. Compl. ¶¶ 13, 78.
II. Inapplicability of 42 U.S.C. § 1981
Plaintiff claims that he was harassed because of his race during the course ■ of his employment and that this racial animus caused him to be fired. However, these claims were not cognizable under 42 U.S.C. § 1981 prior to the enactment of the Civil Rights Act of 1991, and these claims fail to state a cause of action upon which relief can be granted today.
The Civil Rights Act of 1991 became effective on November 21, 1991. See Landgraf v. USI Film Products, — U.S.-,-, 114 S.Ct. 1483, 1488-89, 128 L.Ed.2d 229 (1994); Van Meter v. Barr, 778 F.Supp. 83, 83 (D.D.C.1991). Prior to this time, the text of the statute read as follows:
(a)All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other.
Congress enacted the 1991 amendments to section 1981 in response to the Supreme Court decision in Patterson v. McLean Credit Union, 491 U.S. 164, 109 S.Ct. 2363, 105 L.Ed.2d 132 (1989). The Court concluded that racial harassment claims related to existing employment conditions were not actionable under section 1981, excluding recovery for conduct occurring after the formation of a contract that did not interfere with the enforcement of the contract.
With the 1991 amendments, Congress expanded the scope of actions covered by section 1981, adding the following definition for “make and enforce contracts”:
(b) For purposes of this section, the term “make and enforce contracts” includes the making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship.
(c) The rights protected by this section are protected against impairment by nongovernmental discrimination and impairment under color of State law.
A. Retroactivity of the Civil Rights Act of 1991
In a recent Supreme Court decision, the Court determined that section 101 of the Civil Rights Act of 1991 does not apply retroactively. Rivers v. Roadway Express, Inc., — U.S.-,-, 114 S.Ct. 1510, 1513, 128 L.Ed.2d 274, 1994 U.S. Lexis 3294, *5-6 (April 26, 1994). Therefore, to the extent that plaintiff contends that the Act should apply retroactively to this case, the claim is denied.
The complaint in this case was filed after the Civil Rights Act of 1991 became law. However, the conduct that forms the basis of the complaint occurred before the Act became law. The application of a new statute to conduct that occurred prior to its passage must be considered a retroactive application of the statute. This court has held that the Civil Rights Act of 1991 does not apply retroactively to pre-Act conduct. See Gersman v. Group Health Ass’n, 975 F.2d 886, 900 (D.C.Cir.1992); Allen v. McEntee, 1993 WL 121513, 1993 U.S.Dist. LEXIS 4122 (D.D.C. Apr. 2, 1993). Accordingly, to the extent that plaintiff contends that the Act was intended to include preenactment conduct, his claim is denied.
Thus, plaintiffs claim is only cognizable if it would survive under pre-1991 Amendment section 1981. “The rights of the parties must be adjudicated as they were under the law prevailing at the time of the conduct.” Gers-man, 975 F.2d at 900.
B. The Patterson, Pre-Act Standard
Plaintiffs allegations were not viable under 42 U.S.C. § 1981 prior to the enactment of the Civil Rights Acts of 1991. Mr. Wiggins contends that defendant Nedimyer subjected him to racial harassment during his employment. Compl. ¶ 73. Plaintiff maintains that this racial animus led to his termination. Id. ¶¶ 70-78. Mr. Wiggins also asserts that he was denied training and that defendant deliberately obstructed plaintiffs rights to participate in the grievance procedures of Philip Morris.
Pre-Act section 1981 protects two rights: the right to enter into contracts and the right to enforce contracts. The facts as alleged by plaintiff do not implicate either right. As the Supreme Court stated in Patterson v. McLean Credit Union, section 1981 “does not apply to conduct which occurs after the formation of a contract and which does not interfere with the right to enforce established contract obligations.” Patterson v. McLean Credit Union, 491 U.S. 164, 171, 109 S.Ct. 2363, 2369, 105 L.Ed.2d 132 (1989) (“Section 1981 cannot be construed as a general proscription of racial discrimination in all aspects of contract relations_”).
Section 1981 does not protect an employee against discriminatory treatment during the course of his employment, including the imposition of discriminatory working conditions. See Patterson, 491 U.S. at 177, 109 S.Ct. at 2372-73; Gersman v. Group Health Ass’n, 931 F.2d 1565, 1570-72 (D.C.Cir.1991), vacated and remanded, — U.S.-, 112 S.Ct. 960, 117 L.Ed.2d 127 (1992). Moreover, section 1981 does not apply to breaeh-of-con-tract or contract-termination claims. See Gersman, 931 F.2d at 1571 (“A termination necessarily arises after the contract is already made, and, like a breach of contract, is more appropriately dealt with under state contract law.”). Thus, plaintiffs claims of racial harassment during his employment and discriminatory termination under section 1981 are dismissed.
An employer’s refusal to offer training to an employee is not conduct involving the refusal to make a contract or the impairment of the enforcement of an established contractual right. See Patterson, 491 U.S. at 178-79, 109 S.Ct. at 2373-74.
Plaintiffs claim that defendant Nedi-myer obstructed his “right” to participate in the internal Philip Morris grievance process is also not cognizable under section 1981. Plaintiff fails to allege the existence of any formal grievance procedure, his “established contractual right” to any such procedure, or any denial or obstruction of that right. A fair reading of plaintiffs complaint suggests the contrary: plaintiff made complaints and participated in meetings with supervisors at Philip Morris to air those complaints. Plaintiff now protests his employer’s substantive response to those complaints. Plaintiff is simply challenging another condition of his employment that is not actionable under Patterson.
III. Other Claims in Count Two
Within the text of his section 1981 claim, plaintiff makes vague allegations of two counts of tortious interference with plaintiffs employment, defamation, and violations of the Fair Credit Reporting Act, the federal wire and mail fraud statutes, 18 U.S.C. §§ 1341, 1343, the D.C.Code, conspiracy under 42 U.S.C. § 1985(3), and civil conspiracy.
A. Tortious Interference with Contract
Plaintiff alleges that the defendants “interfere[d] by unlawful means with [p]laintiffs employment.” Compl. ¶ 73. Plaintiff states that he “was employed by and had an employment contract with Phillip Morris [sic].” Id. ¶ 72.
“Tortious interference with contractual relations arises when a defendant interferes with a contract between the plaintiff and some third party.” Weaver v. Gross, 605 F.Supp. 210, 216 (D.D.C.1985) (citing Donohoe v. Watt, 546 F.Supp. 753, 757 (D.D.C. 1982), aff'd, 713 F.2d 864 (D.C.Cir.1983)). In order to recover for intentional interference with contractual relations, the plaintiff must prove four elements: “(1) existence of a contract, (2) knowledge of the contract, (3) intentional procurement of its breach by the defendant, and (4) damages resulting from the breach.” Sorrells v. Garfinckel’s, Brooks Brothers, Miller & Rhoads, Inc., 565 A.2d 285, 289 (D.C.1989) (quoting Alfred A. Altimont, Inc. v. Chatelain, Samperton & Nolan, 374 A.2d 284, 288 (D.C.1977)); see Connors, Fiscina, Swartz & Zimmerly v. Rees, 599 A.2d 47, 51 n. 6 (D.C.App.1991). Once these elements are shown, plaintiff may recover for intentional interference with contract “unless the defendant proves that his or her conduct was justified or privileged.” Sorrells, 565 A.2d at 290.
“[T]he law affords ... a supervisor such as [defendant Nedimyer] a qualified privilege to act properly and justifiably toward a fellow employee and that employee’s true employers _” Sorrells, 565 A.2d at 291. “[T]his privilege is vitiated when the supervisor acts with malice for the purpose of causing another employee’s contract to be terminated.” Id. (emphasis added).
Plaintiffs bare allegations seem to suggest that defendant Nedimyer could have been maliciously motivated by racial animosity to procure the termination of Mr. Wiggins’ contract with Philip Morris. Defendant’s motion to dismiss as to plaintiffs claim for tortious interference with contract is denied.
B. Defamation
In count two, Mr. Wiggins asserts that “defendants and each of them” “defame[d] plaintiff’ as they engaged in a conspiracy to unlawfully terminate the plaintiff by marking down plaintiffs performance ratings and by disseminating false, criminal record information contained in an Equifax credit report.
In a common-law defamation case, the court must determine “whether the challenged statement is ‘capable of bearing a particular meaning’ and whether ‘that meaning is defamatory.’ ” Fleming v. AT & T Info. Servs., 878 F.2d 1472, 1475 (D.C.Cir.1989) (quoting Tavoulareas v. Piro, 817 F.2d 762, 779 (D.C.Cir.1987) (en banc), cert. denied sub nom. Tavoulareas v. Washington Post Co., 484 U.S. 870, 108 S.Ct. 200, 98 L.Ed.2d 151 (1987)); Moss v. Stockard, 580 A.2d 1011, 1023 (D.C.1990) (citations omitted). This statement “must be more than unpleasant or offensive; the language must make the plaintiff appear ‘odious, infamous, or ridiculous.’ ” Howard University v. Best, 484 A.2d 958, 989 (D.C.1984) (quoting Johnson v. Johnson Publishing Co., 271 A.2d 696, 697 (D.C.1970)). A statement is considered to be defamatory “if it tends to injure the plaintiff in his trade, profession or community standing, or lower him in the estimation of the community.” Moss, 580 A.2d at 1023. The plaintiff must prove the defamatory nature of the publication; however, “to accuse one of a crime is libel per se.” Weaver v. Grafio, 595 A.2d 983, 988 (D.C.1991) (citing Johnson, 271 A.2d at 698).
All averments of defamation must be plead with particularity. See Hoffman v. Hill and Knowlton, Inc., 777 F.Supp. 1003, 1005 (D.D.C.1991) (quoting Asay v. Hallmark Cards, Inc., 594 F.2d 692, 699 (8th Cir.1979)) (“[T]he use of in hoc verba pleadings on defamation charges is favored in the federal courts because generally knowledge of the exact language used is necessary to form responsive pleadings.”); 5 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1309 (1990) (“In libel and slander suits, the time and place of the publication should be specifically stated in the complaint.”). Conclusory allegations are insufficient to state a claim. See Hoffman, 111 F.Supp. at 1005; Ridgewells Caterers v. Nelson, 688 F.Supp. 760, 763 (D.D.C.1988). A plaintiff should plead the time, place, content, speaker, and listener of the alleged defamatory matter. Id.; see also Wiggins v. Equifax, Inc., 848 F.Supp. 213 (D.D.C.1993).
The content of the alleged defamatory matter contained in the consumer credit report is not in dispute. The report stated that Mr. Wiggins had a felony cocaine conviction. This accusation of conviction of a crime is libelous per se. However, the allegations with respect to the other elements that must be plead with specificity are woefully deficient. This court cannot determine from the complaint if Mr. Nedimyer ever conveyed the contents of this consumer report to anyone at any time.
Allegations of defamation pertaining to the employment performance reports likewise fail; plaintiff makes no allegations as to the content of the defamatory statements placed in his personnel file. See Compl. ¶¶ 26, 30, 38.
Even if plaintiffs allegations were not wholly inadequate on their face, plaintiffs defamation claim would be barred for another reason, the District of Columbia’s one-year statute of limitations. D.C.Code § 12 — 301(4). Plaintiff alleges that between 1988 and 1990, defendants published the allegedly defamatory remarks. But this civil action was not filed until February 27, 1992. These claims are clearly outside the one-year bar. See supra note 3.
Given the heightened pleading standard in defamation actions and the applicable statute of limitations, any claim by plaintiff averring defamation is dismissed.
C. Wire Fraud and Mail Fraud
The claims for federal wire and mail fraud must be dismissed because they are criminal offenses that have no corresponding private right of action. See, e.g., Official Publications, Inc. v. Kable News Co., 884 F.2d 664, 667 (2d Cir.1989) (“18 U.S.C. §§ 1341 and 1343 (1982) ... do not provide a private right of action.”); Ryan v. Ohio Edison Co., 611 F.2d 1170, 1179 (6th Cir.1979) (Section 1341); Napper v. Anderson, 500 F.2d 634, 636 (5th Cir.1974), cert. denied, 423 U.S. 837, 96 S.Ct. 65, 46 L.Ed.2d 56 (1975) (Section 1343).
D. Title 1-2530 of the District of Columbia Code
Plaintiff provides no allegations whatsoever that support a finding of a violation of section 1-2530 by defendant Nedimyer.
E. Conspiracy under 42 U.S.C. § 1985(3)
In order to plead a viable cause of action under 42 U.S.C. § 1985(3), a plain tiff must specifically allege (1) an act in furtherance of (2) a conspiracy (3) to deprive any person or class of persons of the equal protection of the laws, or of equal privileges and immunities under the laws. Great American Fed. Savings & Loan Ass’n v. Novotny, 442 U.S. 366, 372, 99 S.Ct. 2345, 2349, 60 L.Ed.2d 957 (1979). In this case, plaintiff fails to allege an underlying violation of federal law.
“Section 1985(3) provides no substantive rights itself; it merely provides a remedy for violation of the rights it designates.” Novot-ny, 442 U.S. at 372, 99 S.Ct. at 2349. Thus, the question is whether violations of the federal laws asserted in this case equate to a deprivation of “ ‘the equal protection of the laws, or of equal privileges and immunities under the laws’ within the meaning of § 1985(3).” Id. As one court has stated, “absent the violation of a substantive federal right that prohibits purely private conduct there can be no cause of action under 42 U.S.C. § 1985(3).” Nieto v. United Auto Workers Local 598, 672 F.Supp. 987, 992 (E.D.Mich.1987); see also Holmes v. Finney, 631 F.2d 150, 154 (10th Cir.1980); Cohen v. Illinois Inst. of Tech., 524 F.2d 818, 828 (7th Cir.1975), cert. denied, 425 U.S. 943, 96 S.Ct. 1683, 48 L.Ed.2d 187 (1976).
The Novotny court concluded that Title VII cannot be the basis for a cause of action under section 1985(3). Novotny, 442 U.S. at 378, 99 S.Ct. at 2352 (“Unimpaired effectiveness can be given to the plan put together by Congress in Title VII only by holding that deprivation of a right created by Title VII cannot be the basis for a cause of action under § 1985(3).”).
Likewise, this court has concluded that the Fair Credit Reporting Act cannot be the basis for a cause of action under section 1985(3). See Wiggins v. Philip Morris, — F.Supp. - — , C.A. No. 92-493, § VI(E)(3) (D.D.C. May 13,1994) (denying and granting in part defendant Philip Morris, Inc.’s motion to dismiss). Moreover, there are no allegations in the complaint which support Mr. Nedimyer’s participation in a conspiracy to violate the Fair Credit Reporting Act. See infra § III(F).
Plaintiff also maintains that 42 U.S.C. § 1981 should be used as a basis for a cause of action under 1985(3). This court has recognized that federal statutory rights such as those protected under section 1981 may provide a substantive basis for a section 1985(3) claim. See Alder v. Columbia Historical Soc., 690 F.Supp. 9, 15 (D.D.C.1988) (Bryant, J.); Nieto, 672 F.Supp. at 992; Thompson v. International Assoc. of Machinists and Aerospace Workers, 580 F.Supp. 662, 668 (D.D.C.1984) (Green, Joyce Hens, J.) (“[Section] 1981 is clearly a federal source of rights and unlike Title VII, ‘§ 1981 is not derived from a statutory scheme whose policies would be frustrated by the relitigation under another remedial statute.’ ” (quoting Hudson v. Teamsters Local Union No. 957, 536 F.Supp. 1138, 1147 (S.D.Ohio 1982)) (footnote omitted)). However, plaintiff fails to allege a substantive violation of section 1981 by Nedi-myer. See supra § II. The complaint is also devoid of allegations of the requisite elements supporting a finding of a conspiracy to violate section 1981. Thus, plaintiffs claim under section 1985(3) must fail.
F. The Fair Credit Reporting Act
Plaintiff also mentions the Fair Credit Reporting Act (“FCRA”) throughout the complaint. To the extent that Mr. Wig gins attempts to allege that defendant Nedi-myer violated any provision of the FCRA, the complaint is dismissed for failure to state a claim upon which relief can be granted.
The FCRA creates civil liability for consumer reporting agencies and users of consumer reports that fail to comply with its requirements.
This court concludes that there are- no allegations within the complaint evidencing that defendant Nedimyer saw, used, or disseminated a consumer report.
G. Civil Conspiracy
Plaintiff charges defendants with two alleged conspiracies. Plaintiff claims that defendants worked with Equifax, Inc. and Philip Morris in a conspiracy to tortiously interfere with plaintiffs contract and to violate the FCRA. Plaintiffs allegations as to defendants’ acts in furtherance of the alleged conspiracies are numerous.
It is well established that “there is no recognized independent tort action for civil conspiracy in the District of Columbia,” Waldon v. Covington, 415 A.2d 1070, 1074 n. 14 (D.C.1980); however, District of Columbia law “acknowledges the concept of civil conspiracy.” Halberstam v. Welch, 705 F.2d 472, 479 (D.C.Cir.1983). “Since liability for civil conspiracy depends on performance of some underlying tortious act, the conspiracy is not independently actionable; rather it is a means for establishing vicarious liability for the underlying tort.” Id.
Under District of Columbia law, the elements of a claim for civil conspiracy are “an agreement to do an unlawful act or a lawful act in an unlawful manner; an overt act in furtherance of the agreement by someone participating in it; and injury caused by the act.” Okusami v. Psychiatric Institute of Washington, Inc., 959 F.2d 1062, 1066 (D.C.Cir.1992) (citing Halberstam, 705 F.2d at 487). Moreover, “[t]o establish liability, the plaintiff also must prove that an unlawful overt act produced an injury and damages.” Id. An agreement may be inferred from the underlying facts. Id.
1. Conspiracy to Violate the FCRA.
To the extent that plaintiff attempts to include defendant Nedimyer in a group that deliberately and willfully conspired to violate the Fair Credit Reporting Act, the claim is dismissed. As previously stated, there .are no allegations in the complaint which support a finding of defendant Nedimyer’s participation in a conspiracy to violate the Fair Credit Reporting Act.
2. Conspiracy to Tortiously Interfere with Employment Contract
Plaintiff also alleges that defendants conspired together to tortiously interfere with plaintiffs rights in his employment. Compl. ¶¶ 49, 73(1). There is an underlying tort under D.C. law for tortiously interfering with an employment contract. See supra § 111(A). Again, plaintiff has alleged facts that support at least an inference of an agreement to participate in a scheme to tor-tiously interfere with Mr. Wiggins’ employment contract.
Defendant’s motion to dismiss with respect to count two as it relates to a conspiracy to tortiously interfere with plaintiffs employment is denied.
IV. Dismissal of State Law Claims
The only causes of action surviving defendant Nedimyer’s motion to dismiss are tor- tious interference with contract and conspiracy to tortiously interfere with plaintiffs employment, both state-law claims. No federal claims remain against defendant Nedimyer; the court sua sponte considers whether it should entertain these state-law causes of action.
The remaining state-law claims against defendant Nedimyer fall under what was formerly called “pendent party jurisdiction.” Before the Judicial Improvements Act of 1990, federal courts frowned upon the use of pendent party jurisdiction to hear claims that lacked an independent basis for federal jurisdiction. Now, however, courts must employ “supplemental jurisdiction”:
[I]n any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.
28 U.S.C.A. § 1367(a) (1998). As David D. Siegel notes in the Practice Commentary accompanying the 1990 adoption of supplemental jurisdiction:
The conferral [of supplemental jurisdiction] is in mandatory terms-the court “shall” have the supplemental jurisdietion-but subdivision (e), treated below, gives the court discretion to “decline to exercise” the supplemental jurisdiction in various circumstances.
A court may decline to exercise supplemental jurisdiction if: “(1) the claim raises a novel or complex issue of State law, (2) the claim substantially predominates over the claim or claims over which the district court has original jurisdiction, (3) the district court has dismissed all claims over which it has original jurisdiction, or (4) in exceptional circumstances, there are other compelling reasons for declining jurisdiction.” 28 U.S.C.A. § 1367(c) (1993) (emphasis added).
In the present case, federal claims under Title VII remain against Philip Morris, Inc. Plaintiffs state conspiracy and tortious interference with contract claims against defendant Nedimyer arise from essentially the same conduct alleged in the discrimination count against Philip Morris and is “so related” to the other federal claims in the complaint that they “form part of the same case or controversy.” Although this court has the discretion to decline jurisdiction, the court retains jurisdiction over the state-law counts enduring defendant Nedimyer’s motion to dismiss.
V. Conclusion
Plaintiff fails to make any allegations indicating an infringement of his right to make or enforce his contract. Even if Mr. Wiggins was discharged or suffered disparate treatment during his employment with Philip Morris because of racial harassment, his claim under section 1981 must be dismissed as a matter of law. Plaintiffs only cognizable allegations are for tortious interference with contract and conspiracy to tortiously interfere with plaintiffs employment; the remainder of plaintiffs complaint against defendant Nedimyer is dismissed.
A separate order shall issue this date.
ORDER
This case comes before the court on defendant Nedimyer’s motion to dismiss. It is hereby ORDERED that defendant Nedi-myer’s motion to dismiss the complaint for failure to state a claim upon which relief can be granted is GRANTED in part and DENIED in part in accordance with the accompanying memorandum opinion. Plaintiffs only surviving claims against defendant Ned-imyer are his tortious interference with contract and conspiracy to tortiously interfere with contract claims. All other claims against defendant Nedimyer are hereby DISMISSED.
SO ORDERED.
. Plaintiff’s complaint is so poorly pled that his § 1981 count also contains minimal allegations of tortious interference with plaintiff's employment, defamation, mail fraud, wire fraud, violations of 42 U.S.C. § 1985(3), the Fair Credit Reporting Act, “and other federal laws.” Counts one, three, and four of the complaint are directed solely at codefendant Philip Morris and are not addressed in this motion. Only in count two, based on 42 U.S.C. § 1981, does plaintiff demand judgment against defendant Nedimyer. Compl. ¶ 78(d). The remainder of the bare allegations are dealt with in section III infra.
. Second, Mr. Wiggins seems to maintain that there was some sort of conspiracy between employees of Philip Morris, District Cablevision, and Equifax, Inc. to fire him based on a false Equifax background check. Compl. ¶¶ 30-50, 76, 77.
This second alleged conspiracy is the basis for plaintiff's claim in count four, requesting relief under the Fair Credit Reporting Act ("FCRA”). Although defendant Nedimyer is mentioned in the allegations of that count as being a purported member of the conspiracy, the count itself names only Philip Morris as a defendant. Id. ¶¶ 85, 94— 97. The allegations of violations of the Fair Credit Reporting Act and the conspiracy theory under the FCRA are summarily dismissed infra Section III.
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596840-15138 | PER CURIAM.
Lindsey O’Neal appeals his 151-month sentence for sentence for distribution of 5 grams or more of cocaine base (crack), in violation of 21 U.S.C. § 841(a)(1). O’Neal also claims that his trial counsel was ineffective. After review, we vacate O’Neal’s sentence and remand for resentencing, and we dismiss without prejudice O’Neal’s ineffective-assistance-of-counsel claim.
I. BACKGROUND
A. Plea Colloquy
Pursuant to a written plea agreement, O’Neal pled guilty to distributing 5 grams or more of cocaine base, in violation of 21 U.S.C. §§ 841(a)(1) and (b)(1)(B). During the plea colloquy, the government set forth the following facts, which O’Neal admitted as true. On February 28, 2001, state and federal law enforcement officers met with an informant after searching the informant and his vehicle for drugs and money and finding none. The law enforcement officers then provided the informant with $500, a transmitter, and a recording device. The informant placed a call to defendant O’Neal to arrange for the purchase of crack cocaine. The informant and O’Neal arranged to meet at a residence in Dublin, Georgia, to consummate the sale. The informant was then surveilled as he went to the residence and met with O’Neal. The informant paid O’Neal $400 in exchange for 11 grams of crack.
B. PSI
The PSI indicated that O’Neal was responsible for 161.9 grams of crack. This 161.9 gram amount included: (1) the 11 grams of crack O’Neal admitted to selling during the plea colloquy; (2) the crack amounts in four other drug transactions; and (3) the crack in an automobile O’Neal was driving. Specifically, according to the PSI, O’Neal was involved in the following four other drug transactions and a separate traffic stop at which drugs were seized: (1) 25.2 grams of crack O’Neal sold to an informant on January 12, 2001; (2) 24.2 grams of crack O’Neal sold to an informant on March 6, 2001; (3) 11.3 grams of crack O’Neal sold to an informant on April 4, 2001; (4) 51.5 grams of crack, which informants purchased from O’Neal and Sterling Jackson on December 12, 2001; and (5) 38.7 grams of crack seized from an automobile O’Neal was driving on August 5, 2001. In addition to the 38.7 grams of crack, law enforcement officers also seized a firearm from O’Neal’s automobile on August 5, 2001.
The PSI recommended a base offense level of 34, based on the drug quantity of 161.9 grams of crack. See U.S.S.G. § 2Dl.l(c)(3) (drug offenses involving at least 150 grams but less than 500 grams of crack have a base offense level of 34). The PSI also recommended a two-level increase, pursuant to U.S.S.G. § 2Dl.l(b)(l), because O’Neal possessed a firearm on August 5, 2001. Thus, O’Neal’s total offense level was 36. With a criminal history category of II, O’Neal’s Guidelines range was 210-262 months’ imprisonment.
O’Neal objected to the PSI on several grounds. First, O’Neal objected to the drug quantity set forth in the PSI. Specifically, O’Neal asserted that he should be attributed with only 49.7 grams of crack, the sum of the crack involved in the February 28 sale and the August 5 traffic stop. Thus, O’Neal disputed that he sold crack on January 12, March 6, April 4, and December 12. Second, O’Neal objected to the two-level enhancement for possession of a firearm. Third, O’Neal objected to the PSI’s failure to recommend a reduction for acceptance of responsibility pursuant to U.S.S.G. § 3E1.1. According to O’Neal, his offense level should have been 27, yielding a Guidelines range of 78-97 months’ imprisonment.
C. Sentencing
During the sentencing hearing, the government offered witnesses in support of the drug quantity enhancement, and O’Neal testified regarding the firearm enhancement. Specifically, as to drug quantity, the government offered witnesses who testified that O’Neal was involved in the January 12, March 6, April 4, and December 12 crack sales. After the testimony, O’Neal withdrew his factual objections regarding those sales. However, he reserved his right to object to the drug quantity enhancement based on Blakely v. Washington, 542 U.S. 296, 124 S.Ct. 2531, 159 L.Ed.2d 403 (2004). Specifically, O’Neal’s attorney stated:
In light of the testimony from the witnesses today [defendant O’Neal] wants to withdraw his objection to those particular factual situations. I have spoken with [the prosecutor] about this because I didn’t want Mr. O’Neal to lose his acceptance credit.... We would like to reserve his right to object to the relevant conduct being used to enhance his sentence as being unconstitutional, but in terms of any factual objection he would like to withdraw that objection.
The district court then specifically asked O’Neal if he wished to withdraw the factual objection to the drug quantity, to which O’Neal responded: “I want to withdraw the objection.” The district court overruled O’Neal’s Blakely objection to the drug quantity, noting that pursuant to this Court’s precedent, Blakely did not apply to the Sentencing Guidelines.
O’Neal then testified with respect to the firearm enhancement. Specifically, O’Neal admitted that on August 5, 2001, he had crack and a firearm in his automobile. He testified, however, that he had purchased the firearm for his mother so that she could protect herself, and that the firearm was not related to the crack. The district court overruled O’Neal’s objection to the U.S.S.G. § 2Dl.l(b)(l) firearm enhancement, stating that “I find it more probable than not that [the firearm] was connected. It may well be that the reason his mother needed the protection she did was due to [O’Neal’s] own drug activity.”
In sentencing O’Neal, the district court awarded O’Neal a three-level reduction for acceptance of responsibility. The district court calculated O’Neal’s total offense level at 33 and his Guidelines range at 151-188 months’ imprisonment. The district court sentenced O’Neal to 151 months’ imprisonment followed by a 5-year term of supervised release.
O’Neal timely appealed.
II. DISCUSSION
A. Firearm Enhancement
On appeal, O’Neal asserts that the district court erred in enhancing his sentence by two-levels because he possessed a firearm. See U.S.S.G. § 2Dl.l(b)(l). He admits that he did have crack and a firearm in his car when law enforcement officers pulled him over for not wearing a seatbelt. However, he asserts that: (1) the testimony that he bought the gun for his mother for her protection; and (2) the fact that no firearms were present during the other drug deals he was indicted for, were enough to establish that it was clearly improbable that the firearm was connected to the drug offense.
Under the Guidelines, a defendant receives a two-level enhancement if he possessed a firearm. U.S.S.G. § 2Dl.l(b)(l). The commentary to § 2D1.1 states that the adjustment should be applied if the firearm was present, “unless it is clearly improbable that the weapon was connected with the offense.” U.S.S.G. § 2Dl.l(b)(l), cmt. n. 3. “Once the government shows that a firearm was present, ‘the evidentiary burden shifts to the defendant to show that a connection between the firearm and the offense is clearly improbable.’ ” United States v. Fields, 408 F.3d 1356, 1358 (11th Cir.2005) (quoting United States v. Hall, 46 F.3d 62, 63 (11th Cir.1995)).
Here, the government clearly met its burden to show that O’Neal possessed the firearm because O’Neal admitted that he did. Thus, the burden shifted to O’Neal to show that a connection between the firearm and the crack in the automobile was “clearly improbable.” At sentencing, the district court actually found just the opposite: that a connection between the firearm and crack was “more probable than not.” Given the connection was “more probable than not,” inherent in the district court’s statement is a finding that O’Neal did not meet his burden to show a connection was “clearly improbable.”
We also conclude that the district court did not clearly err in its finding. O’Neal stated that he had both the crack and the firearm in his car. Although he claimed that he had just bought it for his mother for her protection, O’Neal failed to provide any other evidence to support his self-serving claim, such as testimony from his mother verifying that she needed a gun to protect herself, or that she had asked him to purchase the firearm for her protection. Absent such evidence, there is nothing to suggest that O’Neal’s statement that he planned to give the firearm to his mother is anything other than self-serving and it does not render the district court’s finding clearly erroneous. See United States v. Moses, 289 F.3d 847, 851 (6th Cir.2002) (concluding that the defendant’s “self-serving testimony [was] inadequate to justify setting aside the district court’s finding that [the defendant] failed to satisfy the ‘clearly improbable’ standard”). Accord ingly, the district court did not clearly err in its finding about the firearm.
B. Booker Error
O’Neal next argues that the district court erred under United States v. Booker, 543 U.S. -, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005) when it enhanced his sentence based on facts that were not charged in the indictment and that he did not admit. Specifically, O’Neal claims that the district court erred under Booker by determining that he was responsible for 161.9 grams of crack and in finding a connection between the crack and the firearm.
In Booker, the Supreme Court held that Blakely applied to the Sentencing Guidelines. United States v. Rodriguez, 398 F.3d 1291, 1297-98 (11th Cir.2005). Under Booker, “there are two types of sentencing errors: one is constitutional and the other is statutory.” United States v. Dacus, 408 F.3d 686, 687 (11th Cir.2005). “[T]he Sixth Amendment right to trial by jury is violated where under a mandatory guidelines system a sentence is increased because of an enhancement based on facts found by the judge that were neither admitted by the defendant nor found by the jury.” Rodriguez, 398 F.3d at 1297. The statutory error occurs when the district court sentences a defendant “under a mandatory Guidelines scheme, even in the absence of a Sixth Amendment enhancement violation.” United States v. Shelton, 400 F.3d 1325, 1330-31 (11th Cir.2005).
In this case, we conclude that there is no Sixth Amendment violation as to the drug quantity enhancement, but that there is a Sixth Amendment violation as to the firearm enhancement. As to drug quantity, the PSI held O’Neal responsible for 161.9 grams of crack. Of that amount, O’Neal admitted in his plea colloquy that he sold 11 grams of crack to an informant on February 28, 2001. Further, O’Neal failed to object to the 38.7 grams of crack found in his car on August 5, 2001. Finally, during sentencing O’Neal waived all of his factual objections to the drug quantity in the PSI, which included the remaining quantities of crack: 25.2 grams, 24.2 grams, 11.3 grams, and 51.5 grams (for a sum total of 161.9 grams of crack). Thus, O’Neal admitted to being responsible for 161.9 grams of crack, and there is no Sixth Amendment violation. See United States v. Burge, 407 F.3d 1183, 1191 (11th Cir.2005) (“Burge waived his objections to the factual statements about his relevant conduct in the presentence report and, therefore, admitted the facts in that report.”); see also United States v. Shelton, 400 F.3d 1325, 1330 (11th Cir.2005) (concluding that because defendant raised no objections to the factual statements in the PSI and stated that he did not dispute matters in the PSI, the defendant admitted to the facts in the PSI and there was no Sixth Amendment violation).
As to the two-level firearm enhancement, O’Neal also admitted that he had both crack and a firearm in his car. However, as outlined above, O’Neal never admitted that a connection existed between the firearm and the crack. The district court made that fact-finding. Although we affirm that fact-finding, O’Neal’s Sixth Amendment rights were violated because O’Neal’s sentence was enhanced, under a mandatory Guidelines system, based on facts neither found by a jury nor admitted by O’Neal. The Sixth Amendment violation stemmed not from the district court’s extra-verdict enhancements, but from the district court’s use of those extra-verdict enhancements in sentencing O’Neal in a mandatory Guidelines scheme. Rodriguez, 398 F.3d at 1301.
O’Neal properly preserved his Booker claim in the district court by objecting based on Blakely. When there is a timely objection in the district court, we review the defendant’s Booker claim de novo and determine whether the error is harmless. See United States v. Paz, 405 F.3d 946, 948 (11th Cir.2005).
After reviewing the record, we conclude that the government has failed to meet its burden to show that the Booker constitutional error was harmless. See Paz, 405 F.3d at 948-49. In Paz, which was a Soofcer-constitutional-error case, we explained that harmless error analysis puts the burden on the government to show “beyond a reasonable doubt that the error complained of did not contribute to the sentence obtained.” Id. at 948. Thus, the government must show beyond a reasonable doubt that the mandatory, as opposed to the advisory, application of the guidelines did not contribute to the defendant’s sentence. See United States v. Davis, 407 F.3d 1269, 1270 (11th Cir.2005). In the record in this case, there is no evidence indicating what effect, if any, changing from a mandatory to an advisory approach would have had on the district court’s sentencing decision. Accordingly, “[w]e simply do not know what the sentencing court would have done had it understood the guidelines to be advisory rather than mandatory, and had properly considered the factors in 18 U.S.C. § 3553(a).” Id. at 1271. “Therefore, the Government cannot meet its burden of showing that the mandatory application of the guidelines in violation of [O’Neal’s] Sixth Amendment right was harmless beyond a reasonable doubt.” Id.
Thus, we vacate O’Neal’s sentence and remand for resentencing. We note that the district court correctly calculated O’Neal’s Guidelines range of 151 to 188 months’ imprisonment. See United States v. Crawford, 407 F.3d 1174, 1177 (11th Cir.2005) (stating that after Booker, district courts must consult the Guidelines and “[t]his consultation requirement, at a minimum, obliges the district court to calculate correctly the sentencing range prescribed by the Guidelines”). Accordingly, on remand, the district court is required to sentence O’Neal under an advisory Guidelines regime, and shall consider the Guidelines range of 151-188 months’ imprisonment and “other statutory concerns as well, see [18 U.S.C.] § 3553(a) (Supp. 2004).” Booker, 125 S.Ct. at 757.
C. Ineffective Assistance of Counsel
Finally, O’Neal contends that his trial counsel was ineffective because (1) at sentencing, his trial attorney withdrew his objections to the relevant conduct used to enhance the amount of drugs attributed to him so that O’Neal would not lose his credit for acceptance of responsibility, and (2) his attorney advised him to admit to conduct other than the 5 grams of cocaine base alleged in the indictment.
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3526745-14169 | OPINION
MAYER, Judge.
Plaintiff Sullivan brought suit for severance pay because she was involuntarily separated from a limited term appointment in the federal service. Defendant denies her entitlement because regulations of the Office of Personnel Management (OPM) implementing 5 U.S.C. § 5595 prohibit these payments to former federal employees in plaintiff’s circumstance. The case is before the court on defendant’s motion to dismiss for failure to state a claim upon which relief can be granted and plaintiff’s motion for summary judgment.
FACTS
Plaintiff was a competitive service federal employee with the Department of Justice and the Department of Housing and Urban Development from September 23, 1966, until March 3, 1974. On that day, without a break in service, she voluntarily transferred to a time-limited, excepted service appointment in the National Institute of Education (NIE). When she transferred, she retained her seniority, leave entitlement, health insurance, retirement and other benefits. She was first given a three-year limited appointment. However, upon her promotion in August of 1976 she was given a new three-year appointment. On August 1, 1979, she was given a one-year appointment without change in salary or grade. The one-year appointment was successively renewed in 1980 and 1981. At the end of the stated term on July 30, 1982, however, she was separated “in order to accommodate the changing needs of NIE research-oriented mission.” At that time she had 15 years and 10 months of federal service.
When plaintiff was initially appointed, NIE had authority to hire personnel exempt from civil service requirements. This was primarily to attract scientists and researchers for short-term assignments who could then return to their prior employment. As a matter of policy and practice, however, the authority to hire outside the civil service rules was exercised with a wide variety of program and planning employees. The officer responsible for hiring, now with the Office of Management and Budget, hired plaintiff with the mutual understanding that her job was to be a continuing one and that her term appointment would be renewed as long as her job performance was satisfactory, there was a continued need for her job function and adequate agency funding existed. On that basis, plaintiff left her tenured position in the civil service and accepted a limited term appointment.
When she was separated in 1982, she applied for severance pay. Her application was approved by the personnel office of NIE but that approval was reversed by higher authority in the Department of Education.
DISCUSSION
The issues for decision are whether, as plaintiff says, 5 U.S.C. § 5595 requires payment of severance pay or, as defendant says, OPM regulations, specifically 5 C.F.R. § 550.704(b)(4)(i), take her out of the apparent coverage of the statute. If plaintiff is correct, the other question is whether she left federal service voluntarily or involuntarily.
Statutory Construction
The crux of the argument over the statute is plaintiff’s position that it specifically authorizes her to receive severance pay upon her involuntary separation from federal service and that the OPM regulation disqualifying her is inconsistent with the statute and void. In pertinent part, section 5595 says:
(a) For the purpose of this section—
(2) “employee” means—
(A) an individual employed in or under an agency; ... but does not include—
(i) [certain employees paid at a rate provided in the Executive Schedule];
(ii) an employee serving under an appointment with a definite time limitation, except one so appointed for full-time employment without a break in service of more than 3 days following service under an appointment without time limitation;
(iii) [certain aliens];
(iv) [retirement eligible employees and military retirees];
(v) [disability payees];
(vi) [recipients of other government severance pay];
(vii) [TVA employees]; or
(viii) such other employee as may be excluded by regulations of the President or such other officer or agency as he may designate.
(b) Under regulations prescribed by the President or such officer or agency as he may designate, an employee who—
(1) has been employed currently for a continuous period of at least 12 months; and
(2) is involuntarily separated from the service, not by removal for cause on charges of misconduct, delinquency, or inefficiency; is entitled to be paid severance pay in regular pay periods by the agency from which separated. [Emphasis added.]
The parties agree that plaintiff was an employee as defined in subsection (a)(2)(ii) because she did not have a break in service of more than three days between the end of her employment in the competitive service and her appointment to the term position. But defendant says that a long-standing OPM regulation promulgated under authority of the statute, 5 C.F.R. § 550.704(b)(4)(i), requires that for plaintiff to be eligible for severance pay the termination of her tenured competitive service appointment must have been involuntary. Because she voluntarily relinquished it to accept the term appointment she is prohibited from receiving the payment, even if her ultimate separation was involuntary.
The court concurs in the proposition that the long-standing consistent interpretation of a statute manifested by regulations promulgated by the agency charged with implementing it is due significant deference. United States v. Clark, 454 U.S. 555, 565, 102 S.Ct. 805, 811, 70 L.Ed.2d 768 (1982). But this axiom is tempered by the admonition that a regulation which is clearly incompatible with the statute under which it was ostensibly promulgated must give way. See Bureau of Alcohol, Tobacco & Firearms v. FLRA,-U.S.-,-, 104 S.Ct. 439, 444, 78 L.Ed.2d 195 (1983); Dixon v. United States, 381 U.S. 68, 74, 85 S.Ct. 1301, 1305, 14 L.Ed.2d 223 (1965); Hampton Roads Industrial Electronics Corp. v. United States, 147 Ct.Cl. 635, 641, 178 F.Supp. 474, 477 (1959). This regulation is facially inconsistent with the statute. It takes away what Congress clearly gave.
This should be the end of the inquiry. See United States v. Clark, 454 U.S. at 560, 102 S.Ct. at 809; Consumer Product Safety Commission v. GTE Sylvania, Inc., 447 U.S. 102, 108, 100 S.Ct. 2051, 2056, 64 L.Ed.2d 766 (1980). But courts should not lightly strike a regulation and should consider any reasonable basis on which it might be sustained. See Mourning v. Family Publications Service, Inc., 411 U.S. 356, 369, 93 S.Ct. 1652, 1660, 36 L.Ed.2d 318 (1973). Defendant cites two provisions which give the agency authority to issue regulations and argues they should be generously construed. See id. The first is subsection (a)(2)(viii), which authorizes the agency to exclude “other” employees. The difficulty with this proposition is that that subsection is parallel to the one which specifically includes plaintiff. Congress clearly considered employees in her circumstance and specifically included them in the definition of employee. The catchall provision authorizing excluding regulations was intended to cover situations other than those Congress had anticipated, not to permit the agency to amend the statute.
Defendant relies on Akins v. United States, 194 Ct.Cl. 477, 439 F.2d 175 (1971), as confirming OPM’s authority to disqualify employees in plaintiff’s circumstance. In that case, employees of a temporary federal agency, the National Capital Transportation Agency (NCTA), were offered employment with a successor nonfederal agency, the Washington Metropolitan Area Transit Authority, when NCTA was abolished. The plaintiff employees all accepted the offer and joined the new agency without missing a day of work, at the same grade and at the same or higher pay. Before NCTA was abolished, the employees had been told they would be entitled to severance pay under section 5595. However, a few days before the operative date, OPM’s predecessor, the Civil Service Commission, issued a regulation, now found at 5 C.F.R. § 550.701(b)(5), which specifically precluded the employees from receiving severance pay.
Relying on the section 5595(a)(2)(viii) provision authorizing regulations excluding other employees, the Court of Claims held that the situation of the employees in Akins was precisely the type of unforeseeable situation Congress contemplated when by that provision it gave the agency broad discretion to implement exclusionary regulations. 194 Ct.Cl. at 485, 439 F.2d at 178. Our plaintiff’s situation is the converse of that one. It was clearly foreseen and specifically addressed by Congress in the statute.
Akins also cautioned that “[t]he court must be guided by the provisions of the whole law, its object and policy, and the purpose clearly manifested by Congress .... A statute cannot be divorced from the circumstances existing at the time it was passed or from the evil which Congress sought to correct and prevent.” 194 Ct.Cl. at 483, 439 F.2d at 177. Therefore, the court canvassed the circumstances existing when the Federal Employees Salary Act of 1965, Pub.L. No. 89-301, 79 Stat. 1111, 1118-20, codified at 5 U.S.C. § 5595, was enacted. Congress was impelled to pass the legislation because a significant contraction of Defense Department activities for economy reasons had left many former federal employees out of work and unable to be absorbed into the work force. It therefore provided severance pay as “ ‘reasonable compensation to help tide Federal employees over difficult transition periods’ when they became separated from Federal service through no fault of their own. H.R.Rep. No. 792,89th Cong., 1st Sess. 11 (1965) .... [T]he express purpose of the severance pay provisions of the Act was to afford monetary relief to Federal employees who, after long years of faithful public service, ‘find themselves out in the cold without work and without retirement,’ and with the complete loss of earned employee rights. 111 Cong.Rec. 25677 (1965) .... ” 194 Ct.Cl. at 484, 439 F.2d at 178.
The situation prevailing in Akins was not what the Act was intended to redress. Those employees were not put out of work by the abolition of their agency, but were immediately reemployed under circumstances at least as favorable as they enjoyed in federal service. Plaintiff Sullivan, on the other hand, falls squarely within the embrace of the congressional purpose in passing the legislation. While the immediate impetus for the Act was the sudden and widespread dismissal of Defense Department employees, the legislation has been made permanent and of general applicability to other employees who suffer the same fate. With more than 15 years of federal service, plaintiff is precisely the type employee whose hardship Congress hoped it was ameliorating. Therefore, this‘exercise of OPM’s concededly broad discretion to exclude other employees from coverage was improper.
Defendant’s reliance on the agency’s authority to issue regulations under section 5595(b) is similarly unavailing. If, as the court holds, OPM cannot exclude plaintiff under the specific provision authorizing its exclusionary regulations, it may not accomplish the same end under this more generalized grant of authority. It is intended to permit development of regulations governing the administration of the program, not as redundant authority to define eligibility.
It is difficult to see how Congress could have been clearer in stating its intention by section 5595(a)(2)(ii). When it legislates vaguely or gives discretion to the executive to administratively address unanticipated events, there may be room for judicial or administrative interpretation. But when Congress clearly articulates its policy in a statute, executive agencies may not substitute their judgment, even if, as here, other parts of the same statute permit policy-directed regulations. See United States v. Clark, 454 U.S. at 560, 102 S.Ct. at 809; Morton v. Ruiz, 415 U.S. 199, 232, 94 S.Ct. 1055, 1073, 39 L.Ed.2d 270 (1974). This is not to say that the policy reflected in the regulations is unreasonable, only that Congress has already spoken, and only Congress can change it. See Tennessee Valley Authority v. Hill, 437 U.S. 153, 194, 98 S.Ct. 2279, 2301, 57 L.Ed.2d 117 (1978). With the substitution of but a few words, Congress could have accomplished what the regulation purports to require. But the agency may not do the same thing by drawing hidden distinctions in the guise of interpretation.
Voluntariness
The other question is whether plaintiff’s separation was involuntary and “not for cause on charges of misconduct, delinquency, or inefficiency ...” as required by section 5595(b)(2). That section is intended to be given a generous construction, see Spring v. United States, 492 F.2d 1053, 1054 (4th Cir.1974), but neither the statute nor the regulations define “involuntary separation.”
Defendant does not attempt to define it either but cites a statement by OPM that “[s]everanee pay was not designed to aid an employee serving in a position with a definite time limitation because his eventual separation is not unexpected and he should therefore be prepared for that certainty.” Federal Personnel Manual Supplement 990-2, book 550, § S7-3(c)(vii). Defendant says, “A term employee has no legal (or, even, logical) expectation of continuing employment and knows (s)he will face unemployment at the end of that term. An employee who resigns voluntarily [to accept a term appointment] chooses to place him/herself in a position facing unemployment and thus merits no exceptional relief.” These are conclusory statements of policy which do not aid in the voluntariness determination. They amount to a presumption that one who leaves the security of a tenured position for another with a stated expiration date thereby manifests willingness to depart upon its expiration. Defendant also fears that inquiring into voluntariness will give rise to difficulties of determination because of the subjectiveness of reasons why employees leave federal service. But similar determinations are frequently required in the management of federal personnel and this concern is not well founded.
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8938299-12652 | PATRICK E. HIGGINBOTHAM, Circuit Judge:
DIRECTV, Inc. (“DTV”) appeals the district court’s grant of summary judgment on its claims for illegal interception of its satellite transmissions in violation of 47 U.S.C. § 605(a) and 18 U.S.C. § 2511(1)(a), and for modification of a pirate access device in violation of 47 U.S.C. § 605(e)(4). We vacate and remand.
I
DTV is a nationwide provider of direct-to-home satellite programming, including movie channels, sports, major cable networks, and local channels. A typical DTV system consists of a small DTV-compatible satellite dish, a DTV receiver, and a DTV access card. Although DTV encrypts its transmissions to guard against unauthorized access, numerous “pirate access devices” have been developed to allow users to view DTV programming without paying for it, usually by altering a valid access card.
Defendant Randall Minor is a professional network engineer and website administrator, with a degree in computer information systems in addition to postgraduate training. DTV first became aware of Minor following its execution of a writ of seizure at a mail shipping facility used by a device merchant named PC Ease. Records acquired subsequent to the raids indicate that Minor purchased a Vector Fusion Unlooper (“the unlooper”) from PC Ease in April 2001. DTV claims that the unlooper has no commercially significant purpose other than to modify DTV access cards, and that its primary function is to gain unauthorized access to DTV satellite programming. More specifically, the unlooper can be used to alter or restore functionality to DTV access cards that have been disabled by misuse or by an ECM; it acts as a smart card reader/writer, but with additional capabilities. Upon further investigation, DTV discovered that Minor had a DTV dish installed on the outside of his house. Minor is not a DTV subscriber.
Minor claimed that he ordered the un-looper to prevent “[his] son, kids, anybody in the family from accessing my [comput er] system when I wasn’t home.” He paid between $100 and $300 for it; however, he claims that after he was unable to make the unlooper work to secure his computer, and after he was unsuccessful in soliciting help via telephone, he threw the device away.
As to the DTV dish, he claimed that he had “a company come in and do ... wiring ... for telephone, cable[ — ]any possible communications.” Minor later described this company as “just workers in the area that needed some extra money.” In his appellate brief Minor explained the dish as an improvement that would increase the value of his home. Although Minor testified that the dish was “to be used as an antenna” and that “[tjhere’s a round device over the top of it ... that gathers reception for local channels,” according to DTV, the satellite dish attached to Minor’s house is incapable of functioning as an antenna to receive local station broadcasts.
Before us are DTV’s claims against Minor for violations of the Communications Act of 1934, as well as for violations of Title III of the Omnibus Crime Control and Safe Streets Act of 1968 (Wiretap Act). Specifically, DTV brought claims against Minor for illegal interception of its satellite transmissions, in violation of 47 U.S.C. § 605(a) and 18 U.S.C. § 2511(l)(a), and for the illegal modification of a device primarily used for piracy, in violation of 47 U.S.C. § 605(e)(4).
The district court granted summary judgment to Minor on these three claims. The court treated as dispositive its conclusion that there was insufficient evidence to support a factual finding that Minor intercepted DTV’s signal. DTV timely appeals.
II
We review a grant of summary judgment de novo, applying the same standard as the district court. “Summary judgment is proper when the pleadings and evidence demonstrate that no genuine issue of material fact exists and the movant is entitled to judgment as a matter of law.”
The district court was obligated to “consider the evidence in the light most favorable” to DTV as the nonmovant, and to “indulge every reasonable inference from the facts” in favor of DTV. If a movant alleges an absence of specific facts necessary for a nonmovant to establish an essential element of its case, then the non-movant “must respond by setting forth ‘specific facts showing that there is a genuine issue for trial.’ ” “After the nonmov-ant has been given an opportunity to raise a genuine factual issue, if no reasonable juror could find for the nonmovant, summary judgment will be granted.”
Ill
DTV urges that it presented sufficient evidence to forestall summary judgment on its claims for violation of § 605(a) and § 2511(l)(a). We agree.
Section 605(a) provides, in part, that
no person receiving [or] assisting in receiving ... any interstate or foreign communication by wire or radio shall divulge or publish the ... contents ..., except [in authorized circumstances.] No person not being authorized by the sender shall intercept any radio communication and divulge or publish the ... contents ... of such intercepted communication to any person. No person not being entitled thereto shall receive or assist in receiving any interstate or foreign communication by radio and use such communication ... for his own benefit or for the benefit of another not entitled thereto.
Section 605(e)(3)(A), in turn, provides a civil remedy for “[a]ny person aggrieved by any violation of [§ 605(a)] or [§ 605(e)(4)].”
Similarly, § 2511(1)(a) imposes criminal liability upon any person who “intentionally intercepts, endeavors to intercept, or procures any other person to intercept or endeavor to intercept, any wire, oral, or electronic communication.” A civil action is provided in § 2520(a): “[A]ny person whose wire, oral, or electronic communication is intercepted, disclosed, or intentionally used in violation of this chapter may in a civil action recover from the person or entity, other than the United States, which engaged in that violation such relief as may be appropriate.”
DTV’s claims per § 605(a) and § 2511(l)(a) hinge here upon whether DTV has created a triable issue on the key element of actual interception. While circumstantial evidence can serve this end, we have cautioned that where “circumstantial evidence of interception is confined largely to demonstrating the purchase and possession of the devices at issue, rather than the use of those devices to intercept DTV’s transmissions,” summary judgment may be proper. In DIRECTV, Inc. v. Robson, we affirmed sum mary judgment for the defendant where evidence was lacking as to other DTV components — dish, receiver, and access card- — ■ and the quantum of evidence added up to little more than purchase and possession. As we noted in Robson, there is “no civil action for merely possessing or purchasing a pirate access device.”
The evidence in the present case differs in that there is a DTV dish on the roof of an individual who is not and has never been a DTV subscriber. With the dish, then, comes the possibility of surreptitious interception, recognizing that the other equipment is capable of being kept in secret; in Robson, evidence of such a visible component — -necessary for actual interception — was lacking. Of course, whether or not Minor’s explanations for this particular fixture are credible is not something we gauge here. Together with his purchase of the unlooper, these facts are sufficient to raise a question whether Minor used the unlooper to intercept DTV’s transmissions. Indulging all reasonable inferences, we are persuaded that the evidence here takes us sufficiently beyond purchase and possession of the unlooper; that is, the admitted purchase of the unlooper in conjunction with the DTV dish on the home of this technically savvy non-subscriber creates a triable fact issue on the key element of interception.
IV
DTV also argues that summary judgment should not have been granted as to its claims under § 605(e)(4), per the corresponding civil action provided for in § 605(e)(3)(A), for modification of a pirate access device. We agree.
Section 605(e)(4) reads:
Any person who manufactures, assembles, modifies, imports, exports, sells, or distributes any electronic, mechanical, or other device or equipment, knowing or having reason to know that the device or equipment is primarily of assistance in the unauthorized decryption of satellite cable programming, or direct-to-home satellite services, or is intended for any other activity prohibited by [§ 605(a)], shall be [criminally liable].
In its brief on appeal, DTV describes its claim for violation of this provision as follows:
DIRECTV alleges that Minor violated 47 U.S.C. § 605(e)(4) by using a device called an unlooper to illegally modify a DIRECTV access card to enable the access card to decrypt DIRECTV’s satellite transmissions.
The district court disposed of this claim based on its conclusion that it was unsupportable absent a showing of actual interception, and we are persuaded that this was in error. Nothing on the face of § 605(e)(4) requires interception, as it addresses “[a]ny person” who engages in any of the listed activities, including “modifi[cation].” Further, no interception is required for DTV to qualify as “[a]ny person aggrieved” in order to bring a civil action under the terms of § 605(e)(3)(A). The district court cited a portion of § 605(d)(6) — which is a provision that provides guidance as to “any person aggrieved” — in reaching its conclusion that civil claims brought for violation of § 605(e)(4) require actual interception. This implicitly treats § 605(d)(6) as an exhaustive list of those who fit within the scope of “any person aggrieved.” We rejected such a contention today in a related case and need not plow the same ground here. We offer no opinion on whether Minor’s alleged actions using the unlooper to alter a DTV access card qualifies as “modifi[cation]” within the meaning of § 605(e)(4). We leave that to the district court to consider again in the first instance. We further decline to address Minor’s additional arguments raised for the first time on appeal.
V
For the foregoing reasons, we vacate the district court’s summary judgment in favor of Minor. The evidence presented permits a reasonable of inference of actual interception, as is required for civil claims alleging violations of § 605(a) and § 2511(l)(a). Actual interception is not required to sustain a § 605(e)(4) claim.
VACATED and REMANDED.
. We heard oral argument in this case on May 11, 2005, with two related cases, which are also issued today. See DIRECTV, Inc. v. Budden, No. 04-20751, 420 F.3d 521 (5th Cir. Aug.9, 2005); DIRECTV, Inc. v. Robson, No. 04-30861, 420 F.3d 532 (5th Cir. Aug.9, 2005).
. See DIRECTV, Inc. v. Nicholas, 403 F.3d 223, 224 (4th Cir.2005) ("pirate access devices" are those devices "that can surreptitiously steal DIRECTV's transmissions”); DIRECTV, Inc. v. Brown, 371 F.3d 814, 816 (11th Cir.2004) ("pirate access devices” are those used "to circumvent this conditional access technology and allow users to receive the satellite transmissions provided by DTV without paying DTV any fees”); see also DIRECTV, Inc. v. Barnes, 302 F.Supp.2d 774, 776 (W.D.Mich.2004).
. In order to combat the proliferation of illegally modified access cards, DTV periodically sends out electronic countermeasures ("ECMs”) embedded within its satellite transmissions. ECMs detect and disable modified access cards, sending them into an infinite “loop.” See Robson, No. 04-30861, 420 F.3d at 535 n. 4.
. DTV also produced evidence that at some point after the commencement of suit Minor accessed a website that offers advice to would-be pirates.
. 48 Stat. 1064, as amended (codified in relevant part at 47 U.S.C. § 605).
. Pub.L. No. 90-351, tit. Ill, § 802, 82 Stat. 211, 212-23, as amended (codified at 18 U.S.C. §§ 2510-2522).
. The remaining claims are not at issue here. DTV previously dismissed its claim for civil conversion and does not challenge the district court's ruling regarding claims per 18 U.S.C. § 2512 and Tex. Civ. Prac. & Rem.Code § 123.002.
. See DIRECTV, Inc. v. Minor, No. SA-03CA-782-OG (W.D.Tex. Jun. 29, 2004).
. See id. at 2 ("In order to prevail on these claims [under § 605(a) and § 605(e)(4)], DIRECTV must prove that Minor received, assisted in receiving, or intercepted DIRECTV's proprietary satellite transmissions.”); id. at 5 ("DIRECTV has failed to meet its burden to raise a fact issue that Minor actually intercepted and then divulged its communication.”); id. at 7 (granting summary judgment on § 2511 claim because DTV "has failed to raise a fact issue that Minor intercepted DIRECTV's signal”).
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32406-11810 | GIGNOUX, District Judge. .
This is a petition for a writ of habeas corpus by a prisoner presently serving a life sentence in the Maine State Prison. The sentence was imposed following petitioner’s conviction upon his plea of guilty to the crime of murder, entered at the May, 1948 Term of the Lincoln County, Maine, Superior Court. His petition for habeas corpus, accompanied by an affidavit of poverty, was filed with this Court on February 3, 1961. It attacks petitioner’s conviction and sentence upon the ground that he was denied due process of law in violation of the Fourteenth Amendment because: (1) There was an unreasonable delay between the time of his arrest and the time of his arraignment before a magistrate; (2) A confession which he signed shortly following his arrest was obtained by coercion and without a full explanation to petitioner of his rights; (3) He was inadequately represented by his court-appointed counsel; and (4) He did not understand the charge to which he was pleading when he tendered his plea of guilty. -
To show compliance with the requirements of 28 U.S.C. § 2254 as to exhaustion of state remedies, petitioner relies upon the denial by two justices of the Maine Superior Court of two petitions for writ of error coram nobis encompassing essentially the same grounds for release as are now asserted before this Court. The first such petition was filed by petitioner, some ten years following his conviction, at the November, 1958 Term of the Lincoln County Superior Court, and was denied, on the merits, by Justice Rudman in an opinion dated January 31,1959. Petitioner made no attempt to appeal from this denial. The second petition was filed by petitioner at the November, 1960 Term of the same court, and was dismissed, without hearing, by Justice Marden on January 7, 1961. By a further order dated January 16, 1961, Justice Marden denied petitioner the right to prosecute an appeal from his decision in forma pauperis, the order of denial reciting that although petitioner was without funds, the court was without authority to allow him to proceed at the expense of the state.
Being satisfied that, at least as of the date the instant petition was filed in this Court, there was no procedure by which petitioner, because of his poverty, could obtain a review by the Supreme Judicial Court of Maine of Justice Marden’s order of dismissal, this Court concluded that petitioner had exhausted the remedies available to him in the courts of the State of Maine. Robbins v. Green, 218 F.2d 192, 195 (1st Cir., 1954); Duncan v. State of Maine, 295 F.2d 528, (1st Cir., November 2, 1961). The Court therefore granted petitioner leave to file and to proceed in forma pauperis upon his present petition. Counsel were appointed to represent petitioner at his request, and after several continuances at the request of petitioner and his counsel for time in which to prepare his case, a full hearing on the merits was held on August 15 and October 20, 1961.
At the hearing, petitioner was represented by his Court-appointed counsel and appeared as the sole witness in sup port of- his allegations. Respondent was represented by an Assistant Attorney General of the State of Maine. Testifying for respondent were the Captain of the Maine State Police and the Special Investigator of the Maine Attorney General’s Office, who had conducted the joint investigation leading to petitioner’s arrest and ultimate conviction, and the former Attorney General of the State of Maine and the County Attorney of Lincoln County, who had been in charge of petitioner’s prosecution in the Lincoln County Superior Court. It was stipulated that Justice Sewall, the presiding justice at the May, 1948 Term of the Lincoln County Superior Court, the Clerk of that Court, and George O. LaRochelle, Esq., the attorney who had represented petitioner at that time, were unavailable as witnesses because they had all died some years ago. It was further stipulated that there was no record of the May, 1948 proceedings in the Lincoln County Superior Court or of the coram nobis hearing before Justice Rudman.
The undisputed facts concerning petitioner’s arrest and conviction are as follows: Petitioner, then 19 years of age and a member of the U. S. Air Force stationed at Dow Air Base, Bangor, Maine, was arrested in his barracks at approximately 2:30 A.M. on Saturday, December 6, 1947 by the Base Provost Marshal, the Maine State Police and the Sheriff of Lincoln County, Maine. He was taken directly to the State Police Barracks in Bangor, where he was interrogated, along with one Edward S. Wodarski, then 17 years of age and also a member of the U. S. Air Force stationed at Dow Air Base. The interrogation lasted, with several intermissions, until some time between 6:00 A.M. and 9:00 A.M. on Saturday morning, when petitioner signed a confession to the murder of one Rene Brown, committed on November 26, 1947. The details of this confession were amplified at subsequent interviews with petitioner on December 8 and 12, 1947, which were conducted by the Special Investigator of the State Attorney General’s Office.
Petitioner was arraigned in the Lincoln Municipal Court at 9:00 A.M. on Tuesday, December 9, 1947. At his arraignment, petitioner tendered a plea of guilty, but the presiding judge entered a plea of not guilty in his behalf and ordered him held for the Lincoln County Grand Jury. Thereafter, on the second Tuesday of May, 1948 petitioner and Wodarski were jointly indicted for murder, and in a separate indictment, for robbery and larceny. On the morning of May 17, 1948, in the Lincoln County Superior Court, petitioner and Wodarski, in the presence of court-appointed counsel, entered pleas of not guilty to both indictments. In the afternoon of the same day, also in the presence of counsel, petitioner retracted his plea of not guilty and entered a plea of guilty to the murder indictment, and was sentenced to life imprisonment. At the same time, Wodarski entered a plea of guilty to the robbery and larceny indictment, and was sentenced to 10 to 20 years imprisonment.
I
Petitioner’s plea for relief because he was detained, as he alleges, for an unduly long time before his arraignment is wholly without merit. It is based upon McNabb v. United States, 318 U.S. 332, 63 S.Ct. 608, 87 L.Ed. 819 (1943). But the Supreme Court has repeatedly stated that the rule there applied is not a limitation imposed by the Constitution and is not applicable to state criminal proceedings. Culombe v. Connecticut, 367 U.S. 568, 601, 81 S.Ct. 1860, 6 L.Ed. 2d 1037 (1961); Stein v. New York, 346 U.S. 156, 187-188, 73 S.Ct. 1077, 97 L.Ed. 1522 (1953); Brown v. Allen, 344 U. S. 443, 476, 73 S.Ct. 397, 97 L.Ed. 469 (1953); Gallegos v. Nebraska, 342 U. S. 55, 63-64, 72 S.Ct. 141, 96 L.Ed. 86 (1951). And even if the McNabb rule were to be converted into a Constitutional limitation upon the states, the facts in petitioner’s case would not support its application. The McNabb rule is one against the use of confessions obtained during illegal detention, and it furnishes no basis for attack upon this
conviction based upon a plea of guilty in open court, particularly since petitioner makes no allegation that his confession induced the plea. Townsend v. Burke, 334 U.S. 736, 68 S.Ct. 1252, 92 L.Ed. 1690 (1948). Furthermore, United States v. Mitchell, 322 U.S. 65, 64 S.Ct. 896, 88 L.Ed. 1140 (1944) makes it clear that confessions made during the period immediately following arrest and before any delay in arraignment becomes unlawful are not to be excluded, even in the federal courts, under the rule of McNabb. See Culombe v. Connecticut, supra, 367 U.S. at 599, fn. 50, 81 S.Ct. 1860. By petitioner’s own testimony, his confession was signed not later than 9:00 A.M. on the morning of his arrest, so that even if he was detained an unduly long time before his arraignment, any unlawful delay was after his confession and could not have been its cause. Cf. Gallegos v. Nebraska, supra, 342 U.S. at 69, 72 S.Ct. 149 (concurring opinion, Jackson, J.)
II
Petitioner attacks his conviction on the ground that his confession was obtained by coercion and without a full explanation of his rights. This contention is without substance because petitioner’s conviction was based upon his plea of guilty some five months after his confession and the confession was never used against him. See Townsend v. Burke, supra, 334 U.S. at 738, 68 S.Ct. 1252. His only arguable position therefore must be that his plea of guilty was involuntary because it was induced by a confession which had been illegally obtained. See Pennsylvania ex rel. Herman v. Claudy, 350 U.S. 116, 118, 76 S.Ct. 223, 100 L.Ed. 126 (1956). Petitioner makes no such allegation. Moreover, there is not the slightest evidence in this record that the circumstances of the confession in any way induced petitioner’s subsequent guilty plea, or that his plea was not voluntarily entered after consultation with competent appointed counsel and with a full understanding of his rights under the law. Cf. United States v. French, 274 F.2d 297 (7th Cir., 1960); Barnhart v. United States, 270 F.2d 866 (10th Cir., 1959); United States v. Morin, 265 F.2d 241 (3d Cir., 1959); Hall v. United States, 259 F.2d 430 (8th Cir., 1958), cert. denied, 359 U.S. 947, 79 S.Ct. 728, 3 L.Ed.2d 680 (1959); Voltz v. United States, 196 F.2d 298 (5th Cir., 1952), cert. denied, 344 U.S. 859, 73 S.Ct. 99, 97 L.Ed. 667 (1952). Cf. Kent v. United States, 272 F.2d 795, 798 (1st Cir., 1959). But cf. Pennsylvania ex rel. Herman v. Claudy, 350 U.S. 116, 118, 76 S.Ct. 223, 100 L.Ed. 126 (1956) and Application of Cicenia, 148 F.Supp. 98, 101 (D.C.N.J.1956), aff’d, sub nom. Cicenia v. Lagay, 357 U.S. 504, 78 S.Ct. 1297, 2 L.Ed.2d 1523a (1958).
■ Even if the existence of the confession might conceivably have influenced petitioner in entering his plea, petitioner has adduced no substantial evidence to show that the confession itself was other than his free and voluntary act. There is no showing of physical mistreatment or mental duress, or of excessively prolonged questioning which might have had any coercive effect. Petitioner does not contend that he at any time requested counsel or other assistance, which was denied to him. He made no complaint that he was dissatisfied with his treatment by the law enforcement authorities to his counsel, to the prosecuting officials, to the trial judge, or in fact to anyone, until some ten years after his sentence. In summary, this record is wholly devoid of the factors discussed as indicative of coercion in Mr. Justice Frankfurter’s recent opinion, Culombe v. Connecticut, 367 U.S. 568, 621-635, 81 S.Ct. 1860, 6 L.Ed. 2d 1037 (1961).
Petitioner’s further allegation that he was not advised of his Constitutional rights merits little discussion. The testimony of the State Police Captain that he expressly warned petitioner of his Constitutional rights at the start of the first interrogation is corroborated by a written recital in the first paragraph of the confession itself. Furthermore, the Court has been presented no authority to support the proposition that a failure so to warn, in the absence of coercion, would in itself invalidate a subsequent plea of guilty. In fact, even when a conviction is based upon a confession obtained without warning, the failure to warn is but one factor bearing upon the question of coercion. Culombe v. Connecticut, supra, 367 U.S. at 625, 630, 81 S.Ct. 1860.
Ill
The next ground for relief asserted by petitioner is that he was inadequately represented by his court-appointed counsel because counsel was not appointed in time to perform his duties properly, because counsel was incompetent, and because counsel misled or coerced him concerning his plea of guilty.
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6053200-15330 | CHARLES R. RICHEY, District Judge.
Introduction
The following facts are undisputed. On July 6, 1987, Detective Robert J. Flatley of the District of Columbia Metropolitan Police received a tip that a woman was being held against her will at 3120 Banneker Drive, N.E., Washington, D.C., by Calvin Ellis Knox, also known as Calvin “Sonny” Knox. Affidavit of Sergeant John J. Hickey, Jr. in connection with Application for a Seizure Warrant (“First Hickey Affidavit”), 1. Upon receiving this information, the police went to 3120 Banneker Drive, N.E., freed the woman, and arrested Calvin Knox for kidnapping. Id. at 2.
When Mr. Knox was searched incident to his arrest, the police discovered a glassine bag containing a white powder in his pocket. Id. Both the field test performed by the police and the test subsequently performed at the DEA Laboratories revealed that this bag contained 3 ounces of cocaine. Plaintiffs Opposition to Claimant’s Motion for Summary Judgment, Exhibits II and III.
This was not the only link the police discovered between Calvin Knox, 3120 Banneker Drive, N.E., and the narcotics trade. The woman who had been held by Mr. Knox told Sergeant John J. Hickey that she had purchased cocaine from Mr. Knox at 3120 Banneker Drive, N.E., “on numerous occasions” during the preceding year. Affidavit of Sergeant John J. Hickey, Jr. (“Second Hickey Affidavit”), 111. According to Sergeant Hickey, the woman had returned to 3120 Banneker Drive, N.E., to purchase additional cocaine, but Mr. Knox would not let her leave until she settled a debt she allegedly owed him. Id.; First Hickey Affidavit, at 1. Again according to the police, this woman, while held against her will, observed Mr. Knox and another man “cracking” cocaine and also saw a variety of drug paraphernalia stored inside what appeared to be a dishwasher. Affidavit in Support of an Application for a Search Warrant, If 3.
On the basis of the narcotics seized from Mr. Knox at the time of his arrest, and the narcotics and related paraphernalia seen by the woman detained by Mr. Knox, the police obtained a warrant to search 3120 Banneker Drive, N.E., for narcotics and related items. Plaintiffs Motion for Summary Judgment, Exhibit II. When the warrant was executed, the police discovered three loaded weapons as well as two vials of “crack” concealed in a clothes dryer. First Hickey Affidavit, at 2.
In this suit, the United States of America, pursuant to 21 U.S.C. § 881(a)(6), seeks the forfeiture of 3120 Banneker Street N.E., Washington, D.C., the property owned and allegedly used by Calvin Knox to facilitate the illegal distribution of narcotics. The parties have submitted cross-motions for summary judgment. After considering these motions, the legal memoranda submitted by the parties, the arguments advanced in open court, and the underlying law, the Court must grant plaintiffs motion for summary judgment and must deny defendant’s motion for summary judgment.
PLAINTIFF HAS SHOWN PROBABLE CAUSE THAT THE DEFENDANT PROPERTY WAS USED TO FACILITATE A VIOLATION OF THE NARCOTICS LAWS.
Plaintiff seeks to recover the defendant property under 21 U.S.C. § 881(a)(7), which is a civil forfeiture provision. That statute provides, in pertinent part, that:
(a) The following shall be subject to forfeiture to the United States and no property right shall exist in [it]:
(7) All real property ... which is used, or intended to be used, in any manner or part, to commit, or to facilitate the commission of, a violation of this title punishable by more than one year’s imprisonment, except that no property shall be forfeited under this paragraph, to the extent of an interest of an owner, by reason of any act or omission established by that owner to have been committed without the knowledge or consent of that owner.
The summary judgment inquiry under this statute is not precisely akin to the law' of summary judgment that federal courts employ daily. While a court must
... evaluate every summary judgment by viewing the evidence and the inferences therefrom in the light most favorable to the party opposing the motion, ... the ‘summary judgment procedures under Rule 56, Fed.R.Civ.P., must necessarily be construed in the light of the statutory law of forfeitures, and particularly the procedural requirements set forth therein. Those procedures themselves are quite summary, especially when compared to normal civil actions.’
United. States v. One 56-Foot Motor Yacht Named the Tahuna, 702 F.2d 1276, 1281 (9th Cir.1983) (quoting United States of America v. One 1975 Mercedes 280S, 590 F.2d 196, 199 (6th Cir.1978) (per curiam)).
Forfeitures under § 881 are governed by the provisions relating to the seizure and forfeiture of property for violations of the customs laws. 21 U.S.C. § 881(d). The procedural requirements under the customs laws, and therefore in civil forfeiture actions, are clear.
The government has the initial burden, and it “need only demonstrate probable cause that [the] property was involved as alleged in violations of the narcotics statutes.” United States v. Brock, 747 F.2d 761, 762 (D.C.Cir.1984) (per curiam). “Probable cause” is more commonly used in the search and seizure context, but its meaning here is no different: the government must supply evidence that, under the totality of the circumstances, establishes reasonable grounds for believing that the property facilitated the sale of drugs. See, e.g., United States v. One 1974 Porsche 911-S, 682 F.2d 283, 285 (1st Cir.1982); see generally, e.g., Illinois v. Gates, 462 U.S. 213, 230-31, 103 S.Ct. 2317, 2328-29, 76 L.Ed.2d 527 (1983).
If the government can show probable cause, the burden shifts to the claimant, who must show by a preponderance of the evidence that the property was not involved in violations of the narcotics law or is otherwise not subject to forfeiture. United States v. Brock, 747 F.2d at 762; see also 19 U.S.C. § 1615 (forfeiture under customs laws). In contrast to the criminal forfeiture laws, where conviction is a prerequisite for forfeiture of the property, see 21 U.S.C. § 853, a property is subject to civil forfeiture even if its owner is acquitted of — or never called to defend against— criminal charges. See, e.g., United States v. One Clipper Bow Ketch Nisku, 548 F.2d 8, 10 n. 2. (1st Cir.1977); United States v. One 1972 Toyota Mark II, 505 F.2d 1162 (8th Cir.1974); United States v. One 1977 Pontiac Grand Prix, 483 F.Supp. 48 (N.D.Ill.1979).
In this case, the government has submitted affidavits that, in pertinent part, are not controverted. Those affidavits establish that the Metropolitan Police Department had been investigating narcotics transactions at 3120 Banneker Drive, N.E. Second Hickey Affidavit, ¶ 1. During the course of that investigation, two women informed the police that they had purchased cocaine from Calvin Knox at that address. Id. at Ilf 1, 2. When the police responded to a call for help at the defendant property, they arrested Calvin Knox and discovered a large quantity of cocaine, more than would be consistent with personal use, on his person. Id. at ¶¶ 5-7; First Hickey Affidavit, 1. They also discovered a variety of drug paraphernalia in the kitchen of the house. First Hickey Affidavit, at 2.
When the police executed a search warrant at the defendant property after Mr. Knox’s arrest, they discovered additional evidence of narcotics use or distribution on the premises. They discovered two vials of crack concealed in a clothes dryer, as well as two loaded handguns and a loaded shotgun. Id.
On the basis of this undisputed evidence, the Court finds that there is probable cause to believe that 3120 Banneker Drive, N.E., Washington, D.C., was used “to facilitate the commission of a violation” of the narcotics laws. 21 U.S.C. § 881(a)(6).
DEFENDANT HAS NOT SHOWN THAT THE PROPERTY IS NOT SUBJECT TO FORFEITURE.
In light of the government’s showing of probable cause, defendant has the burden of proving that the property was not used to facilitate a narcotics transaction or that, for some other reason, forfeiture is inappropriate. Defendant has advanced several arguments, but they are unavailing.
First, defendant maintains that the property is not subject to forfeiture unless the government shows, and the claimant does not refute, that the property was “substantially connected” to the illegal narcotics activity. While defendant admits that this alleged requirement is not articulated in the language of 21 U.S.C. § 881(a)(7), it argues that the statute’s legislative history demands this reading. This argument cannot stand.
For one, the argument ignores the cardinal principal that a court may not consider legislative history where a statute is clear on its face. See, e.g., Board of Governors v. Dimension Financial Corp., 474 U.S. 361, 368, 106 S.Ct. 681, 686, 88 L.Ed.2d 691 (1986). This principle controls the issue here. The forfeiture statute unambiguously makes forfeitable “all real property ... which is used, or intended to be used, in any manner or part, to commit or facilitate” a violation of the narcotics laws. 21 U.S.C. § 881(a)(7) (emphasis added). Clearly, the property need not be “substantially connected” to the narcotics transaction; any use, in any manner, in connection with the drug trade can result in forfeiture.
But it is no secret that ambiguity may exist even when a statute seems strikingly clear on its face. See Young v. Community Nutrition Institute, 476 U.S. 974, 106 S.Ct. 2360, 90 L.Ed.2d 959 (1986). Two district courts have implicitly found the statute ambiguous and, based on their reading of § 881(a)(7)’s legislative history, have demanded a “substantial connection” between property and an illegal drug transaction before the property could be forfeited. United States v. $12,585 in United States Currency, 669 F.Supp. 939 (D.Minn.1987); United States v. Certain Lots in Virginia Beach, 657 F.Supp. 1062 (E.D.Va.1987); see also United States v. 1966 Beechcraft Aircraft Model King Air, 777 F.2d 947 (4th Cir.1985) (cited in both cases and interpreting similar language). These cases do not affect the Court’s decision. Even if the Court were to find the forfeiture statute ambiguous in some respect, and were to reach the legislative history, nothing in those congressional expressions supports those cases or defendant’s argument.
The statutory provision at issue, 21 U.S. C. § 881(a)(6), was enacted as part of the Comprehensive Forfeiture Act of 1984. 98 Stat. 2040. It is true that, as defendant asserts, the Senate Report accompanying this Act noted that the proposed forfeiture statute would lead to the seizure and forfeiture of property “indispensable to the commission of a crime.” S.Rep. No. 225, 98th Cong., 1st Sess. 195, reprinted in 1984 U.S.Code Cong. & Admin.News 3182, 3378. But the Senate interpreted the new forfeiture provisions far more broadly: in the section-by-section analysis of the Senate bill, the Committee noted that the language that would become 21 U.S.C. § 881(a)(7) would provide for forfeiture of “real property which is used or intended to be used in a felony violation of the Drug Abuse Prevention and Control Act.” Id. at 3398 (emphasis added).
The obvious implications of the Report’s language are that property is subject to civil forfeiture if it is used — even if tangentially used — in connection with a drug transaction. As such, it is clear that Congress did not envision a constricted scope for forfeitures; instead, in keeping with the statute’s emphasis on deterring drug transactions by attacking the profitability of crime, see id. at 3378, Congress intended the Act to provide for forfeitures of property used in connection with an illegal narcotics trade, regardless of whether the property was “substantially connected” to the deal or not.
The claimant also challenges the forfeiture on grounds related to the nature and amount of the substance seized on the property. Specifically, he questions whether the substance found on the property was cocaine and argues that, even if it truly was cocaine, the substance was for his personal use; he also asserts that forfeiture of the property would be a penalty out of all proportion to the amount of cocaine seized. These arguments do not refute the government’s showing of probable cause.
First, the government has provided laboratory reports, together with affidavits documenting the chain of custody of the samples, showing that the white powder found on the property was in fact cocaine. Plaintiffs Opposition to Defendant’s Motion for Summary Judgment, Exhibits II and III. Defendant has not challenged these findings. Second, Sergeant Hickey, who has had thirteen years of experience as a police officer and six years as a specialist in narcotics investigations, has submitted an affidavit that the three ounces of cocaine seized from Mr. Knox’s person “is an amount inconsistent with personal use and is indicative of possession with intent to distribute.” Second Hickey Affidavit, at II7. While the claimant states that any cocaine found on the premises was intended for his own use only, Defendant’s Motion for Summary Judgment, at 6, his bare statement does not establish an issue of material fact that would defeat a summary judgment motion. Ped.R.Civ.P. 56(e).
Finally, defendant’s “proportionality” argument is unavailing. The forfeiture statute is designed to deter narcotics violations by striking at the instruments of crime; it does not demand that the value of the property seized by proportional to the value of narcotics seized. See 21 U.S.C. § 881(a)(7); see also S.Rep. 225, reprinted in 1984 U.S.Code Cong. & Admin.News, at 3378. It is the use for crime, and not some dollar-for-dollar calculation, to which the law must look in a forfeiture case.
Defendant also argues that the affidavits submitted by the government are not consistent with each other and therefore cannot be deemed reliable. Like defendant, the Court is aware of some inconsistency in Sergeant Hickey’s affidavits. These arise from the fact that Sergeant Hickey in one affidavit states that he personally spoke with the informant during the course of an ongoing investigation into narcotics activity at 3120 Banneker Drive, while in the other affidavit he states that the informant telephoned another police officer. Ultimately, however, this inconsistency is irrelevant to a determination of these motions.
The minor disparities between the affidavits do not create material issues of fact. Regardless of the source of the tip to the police, when the police acted on the tip and arrived at 3120 Banneker Drive, N.E., they found illegal narcotics and related paraphernalia. That is the material fact for the purposes of this case, and it stands unaffected by any small, unrelated disparities in plaintiff’s proof.
Defendant’s final argument challenges the nature of the proof put forth by the government. Specifically, defendant argues that the affidavits rely on statements of admitted drug users and thus depend on hearsay evidence that is inherently unreliable. Moreover, in an attempt to controvert this evidence, defendant has supplied an affidavit from Mr. Knox’s common law wife that is intended to show that 3120 Banneker Street, N.W., was not used to ply the narcotics trade. The Court must reject these arguments.
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625581-7096 | McVICAR, District Judge.
The Court, after hearing and consideration, makes the following findings of fact and conclusions of law:
Findings of Fact.
1. At all times hereinafter mentioned, the plaintiff was and now is a corporation sovereign.
2. The defendant, Eleanor B. Munroe, was the wife of the late Robert W. Patterson, and was known as Eleanor B. Patterson, until on March 31, 1931, the said Eleanor B. Patterson became the wife of Robert Munroe III, and at all times since said date she has been and now is known as Eleanor B. Munroe, residing at 6017 Kentucky Avenue, Pittsburgh, Pa.
3. On or about June 14, 1928, Robert W. Patterson, late of Pittsburgh, Pa., died testate, and thereafter Eleanor B. Patterson was duly appointed the executrix of the estate of Robert W. Patterson, deceased, and at all times since her appointment, she has been and now is the duly appointed, qualified and acting executrix of the said estate.
4. This is an action of a civil nature brought by the United States to recover taxes, and was commenced at the request of the Commissioner of Internal Revenue and by direction of the Attorney General of the United States.
5. On or about March 15, 1927, Robert W. Patterson filed an individual income tax return for the calendar year 1926, disclosing a tax due in the sum of $93.74, which said sum has been paid.
6. After the filing of said return, the Commissioner of Internal Revenue determined a deficiency income tax owing from the said Robert W. Patterson for the year 1926 in the sum of $4,562.51 and on March 10, 1930, mailed to Eleanor B. Patterson, Executrix of the Estate of Robert W. Patterson, deceased, a notice proposing assessment of the said tax.
7. On April 26, 1930, the said Eleanor B. Patterson, Executrix of said estate, filed a petition with the Board of Tax Appeals for a re-determination of said tax.
8. Upon written stipulation signed by counsel for the parties and filed on March 16, 1932, the matter of re-determination of said tax came on for hearing before the Board of Tax Appeals on March 23, 1932, whereupon the Board ordered that a deficiency income tax in the sum of $4,562.51 existed for the year 1926.
9. On May 21, 1932, the Commissioner of Internal Revenue duly assessed the tax of $4,562.51 and interest of $1,418.88 for the total sum of $5,981.39 on the May III, 1932 List, 23rd Pennsylvania District.
10. On June 20, 1932, a notice of a tax lien was duly filed in the proper office of Allegheny County, Pennsylvania, in the City of Pittsburgh.
11. On August 11, 1932, a proof of claim was filed with the executrix for the unpaid taxes and interest.
12. The following payments, totaling $875, have been made on said assessment on the dates and in the sums, to wit:
Date. Amount. Date. Amount. 8/12/32 $ 50.00 6/20/33 $ 50.00 9/13/32 50.00 7/12/33 50. CO 10/14/32 50.00 8/15/33 50.00 11/16/32 50.00 9/15/33 50.00 12/13/32 50.00 10/17/33 50.00 1/17/33 50.00 11/16/33 50.00 2/15/33 50.00 1/15/34 25.00 3/22/33 50.00 2/26/34 25.00 4/13/33 50.00 3/29/34 25.00 5/12/33 50.00 $375.00 $500.00 Total, $875. leaving a balance in the sum of $5,106.39 due and unpaid, together with interest thereon.
13. The defendant, Eleanor B. Munroe, is the sole devisee and legatee named in the will of Robert W. Patterson, and has possession and control over all of the property owned by the decedent at the time of his death. On March 7, 1931, under direction of the Orphans’ Court of Allegheny County, all of the assets of said estate amounting to $181,816.18 were distributed and conveyed to Eleanor B. Patterson, widow of the decedent and the executrix of his estate, thereby leaving no property in the estate to pay the aforesaid taxes due the United States.
14. Eleanor B. Patterson, executrix, filed Tax Collection Waivers on the dates hereafter set forth, extending the time within which said tax, interest and other additions could be collected by distraint or by a proceeding in court as follows:
Date o£ Waiver. 9/20/37 9/20/38 9/13/39 10/23/40 10/21/41
Time extended to 12/31/38 12/31/39 12/31/40 12/31/41 12/31/42
15. On. August 25,1942, the said Eleanor B. Patterson, executnx, submitted to the Commissioner of Internal Revenue, an offer in the sum of $1,000 in compromise of the balance due on the assessment for in come taxes for the year 1926, above alleged, which said offer contained the following provision:
“* * * the proponent hereby expressly waives: * * *
“2. The benefit of any statute of limitations applicable to the assessment and/or collection of the liability sought to be compromised, and agrees to the suspension of the running of the statutory period of limitations on assessment and/or collection for the period during which this offer is pending and for one year thereafter.”
The said offer in compromise was rejected on August 16, 1943.
16. Due demand for the payment of the aforesaid sum has been made upon Eleanor B. Patterson, as Executrix of the Estate of Robert W. Patterson, deceased, and upon Eleanor B. Munroe as the sole devisee and legatee named in the will, and the said Eleanor B. Patterson, executrix and Eleanor B. Munroe, individually, refuse to pay the said sum or any part thereof.
Conclusions of Law.
I. The United States is entitled to judgment against Eleanor B. Munroe as executrix, and personally, in the amount of $5,136.39, together with interest from the date of assessment.
II. Defendant should pay the costs.
III. No accounting is ordered at this time because defendant made known, through her counsel at the hearing, that if the judgment was adverse to her, she would pay the same without an accounting.
Opinion.
This is an action by the United States against Eleanor B. Munroe, formerly Eleanor B. Patterson, individually and as Executrix of the Estate of Robert W. Patterson, deceased, for the recovery of income taxes due from Robert W. Patterson for the year 1926. The facts are set forth in the foregoing findings of fact, therefore, there is no necessity for a repetition thereof in this opinion.
The defendant, Eleanor B. Munroe, formerly Eleanor B. Patterson, alleges as a defense the statute of limitations, and claims that she is not liable individually because no proceeding for the collection of the tax against her as an individual was instituted within six years after the assessment of the tax. She also alleges as a defense, that the assessment of the tax against her, as executrix, having been made March 7, 1931 and after distribution of the property of her deceased husband to her, that the plaintiff acquired no valid lien as against the property received by her from her husband’s estate.
At the trial, the defendant conceded that the United States is entitled to judgment against her as executrix but not against' her as an individual.
There is no question about the validity of the tax in this case. There is no doubt that if Robert W. Patterson had lived, he would have been required to pay said tax. Defendant received all of his property under his will; therefore, all of the decedent’s property became the property of the wife. Is she liable individually?
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9378972-22041 | MELLOY, Circuit Judge.
In this immigration case the. petitioner, Edy Uzor Ikenokwalu-White (“Ikenokwa-lu”), seeks review of a final order issued by the Board of Immigration Appeals (“the Board”) which found that she did not qualify for suspension of deportation or voluntary departure. The Board held that Ike-nokwalu had failed to establish her good moral character, a statutory prerequisite to the Attorney General’s discretionary authority to suspend deportation or permit voluntary departure in lieu of deportation. After concluding that we have jurisdiction to review the Board’s order, we reject Ikenokwalu’s contention that the Board relied on impermissible factors in making its moral character determination and affirm its decision.
I.
Ikenokwalu is a 44 year old native and citizen of Nigeria who entered the United States on August 21, 1977. She has a long history with the Immigration and Naturalization Service (“INS”), including two re-scissions of permanent resident status. The instant proceedings commenced in 1995 when the INS issued an Order to Show Cause charging that Ikenokwalu was subject to deportation for, inter alia, overstaying her student visa. After hearings on the matter, an Immigration Judge found Ikenokwalu deportable and denied her applications for suspension of deportation under 8 U.S.C. § 1254(a)(3) and voluntary departure under 8 U.S.C. § 1254(e). The Immigration Judge found that Ike-nokwalu failed to establish that she was of good moral character and that her deportation would cause extreme hardship to herself or her family, both of which were statutory prerequisites to the Attorney General’s discretionary suspension authority. See 8 U.S.C. § 1254(a)(3). The finding that Ikenokwalu lacked good moral character also meant she was statutorily ineligible for voluntary departure in lieu of deportation. See 8 U.S.C. § 1254(e).
Ikenokwalu appealed, and on December 14, 2001, the Board affirmed the Immigration Judge’s order. The Board held that Ikenokwalu was “statutorily ineligible for suspension of deportation as she has failed to establish good moral character.” Having so concluded, the Board found it unnecessary to address whether Ikenokwalu could show extreme hardship or whether she merited relief as a matter of discretion. The Board did not separately analyze the voluntary departure issue, but noted that the same evidence of lack of good moral character meant Ikenokwalu was also statutorily ineligible for voluntary departure. This appeal followed.
II.
In this appeal, Ikenokwalu argues that the Board, and the Immigration Judge, relied on improper factors to conclude that she lacked the good moral character requisite to discretionary relief under 8 U.S.C. § 1254(a)(3) or 1254(e). Specifically, Ike-nokwalu contends that the Board imper-missibly relied on expunged convictions and conduct which occurred outside the three-year period for which good moral character was required. In response, the government argues that this court lacks jurisdiction to review the Board’s moral character determination. If jurisdiction does exist, the government contends that the Board’s consideration of Ikenokwalu’s expunged convictions and prior conduct was proper, and that substantial evidence supports the Board’s decision that Ikenok-walu failed to establish her good moral character.
A.
We first address, and reject, the government’s contention that we lack jurisdiction over this matter. See Vasquez-Velezmoro v. INS, 281 F.3d 693, 695 (8th Cir.2002) (“[T]his Court has jurisdiction to determine preliminary jurisdictional issues.”). Because Ikenokwalu was placed in deportation proceedings before April 1, 1997, and the final order of deportation was issued after October 31, 1996, this case is governed by the IIRIRA transitional rules. See IIRIRA § 309(c)(4) (explaining applicability of “transitional changes in judicial review”). Thus, this court has jurisdiction under 8 U.S.C. § 1105a(a) unless the IIRI-RA transitional rules preclude review. See IIRIRA § 309(c)(4)(E).
IIRIRA § 309(c)(4)(E) provides that appellate courts have jurisdiction to review nondiscretionary aspects of the Attorney General’s suspension of deportation and voluntary departure determinations, but lack jurisdiction to review discretionary aspects of those decisions. Accordingly, “[t]he exact basis for the denial ... and the nature of the challenge to that denial are important to the issue of whether § 309(c)(4)(E) precludes jurisdiction.” Bernal-Vallejo v. INS, 195 F.3d 56, 61 (1st Cir.1999).
Ikenokwalu applied for suspension of deportation under Section 244(a) of the Immigration and Nationality Act (“INA”), codified at 8 U.S.C. § 1254(a)(3). This provision, added by the Violence Against Women Act of 1994, Title IV of Pub.L. No. 103-322, § 40703(a), 108 Stat. 1796, 1902-55, states that the Attorney General “may, in his discretion, suspend deportation” in cases where the alien:
(1) “has been physically present in the United States for a continuous period of not less than 3 years immediately preceding the date of such application;”
(2) “has been battered or subjected to extreme cruelty in the United States by a spouse or parent who is a United States citizen ...
(3) “proves that during all of such time in the United States the alien was and is a person of good moral character;” and
(4) “is a person whose deportation would, in the opinion of the Attorney General, result in extreme hardship to the alien or the alien’s parent or child.”
The moral character element at issue here is informed by INA § 101(f), 8 U.S.C. § 1101(f). That section lists seven categories, any one of which, if applicable, mandates a finding that the applicant for suspension of deportation lacks good moral character. See id For example, an applicant will be ineligible for suspension of deportation if it is established that he or she is a habitual drunkard or an illegal gambler. See id. None of these per se categories is at issue here. Section 1101(f) also includes a “catchall” category which states that “[t]he fact that any person is not within any of the foregoing classes shall not preclude a finding that for other reasons such person is or was not of good moral character.” Id. It is under this catchall provision that the Immigration Judge and Board based their finding against Ikenokwalu.
The government argues that where, as here, the good moral character determination is based on Section 1101(f)’s catch-all provision, it is a discretionary detennination that is not reviewable. by this court under IIRIRA § 309(c)(4)(E). This is an issue of first impression in this circuit.
Two circuits have discussed the “good moral character” element and concluded that although findings based on Section 1101(f)’s enumerated categories are reviewable, those made under the catchall provision are not. See Bernal-Vallejo v. INS, 195 F.3d 56 (1st Cir.1999); Kalaw v. INS, 133 F.3d 1147 (9th Cir.1997). These courts make a distinction between the per se categories which require mere “application of law to factual determinations”-e.g., the alien does or does not have two prior convictions for gambling-and the catchall provision, which they view as inherently discretionary and thus unreviewable. See Bernal-Vallejo, 195 F.3d at 62-63 (“[I]f a [Board] decision [on moral character] turned on a dispute about whether the applicant fit one of the per se categories, § 309(c)(4)(E) would not bar this court’s review. If, however, the determination of lack of good moral character was not based on the per se categories, then judicial review would be barred, for that determination would be a discretionary one.”); Kalaw, 133 F.3d at 1151 (“Apart from the per se categories, however, whether an alien has good moral character is an inquiry appropriate for the Attorney General’s discretion.”).
As noted by Ikenokwalu, however, the moral character element was not essential to the above-noted decisions since, in each of those cases, that element was not in dispute. In each instance the Boai'd found in favor of the alien on the good moral character element but against the alien on the “extreme hardship” element, which was subsequently held to be unreviewable. See Bernal-Vallejo, 195 F.3d at 63 (“Here, the denial of Bernal’s application was based on a determination that he would not suffer extreme hardship if deported, Kalaw, 133 F.3d at 1152-53 (reviewing the Board’s decision that applicants had failed to satisfy the extreme hardship test). Accordingly, the effect of an adverse ruling on moral character was not squarely before the reviewing courts. Therefore, Ikenokwalu argues, the courts’ jurisdictional discussions regarding the good moral character element were dicta not subject to the briefing and litigation process and should be found unpersuasive.
In this appeal, the question of jurisdiction is squarely before us because the Board’s decision turned solely on the moral character element. After careful review of the relevant statutory language, the purposes underlying the statute, and the treatment of the issue by courts prior to enactment of the IIRIRA, we are persuaded that we have jurisdiction under 8 U.S.C. § 1105a(a) to review the Board’s finding on moral character under any aspect of 8 U.S.C. § 1101(f). In other words, the determination that an alien has failed to establish good moral character under the catchall provision of Section 1101(f) is, like the per se categories, a question of applying the law to the facts and results in a nondiscretionary, reviewable determination.
In so concluding, we first note that there is a clear distinction between the statutory language used with respect to the extreme hardship element, which plainly and expressly recognizes the Attorney General’s discretionary role, and that used with respect to the good moral character element, which contains no similar language. See Kalaw, 133 F.3d at 1152 (noting that “[t]he language of INA § 244(a)(1) ... itself commits the [extreme hardship] determination to ‘the opinion of the Attorney General’ ”). Second, we agree with Ikenok-walu that it would be anomalous to allow judicial review of a moral character determination to someone who was allegedly a habitual drunkard, with the attendant factual disputes that such a finding might involve, but to deny judicial review to someone in Ikenokwalu’s position whose alleged misconduct was not severe enough to bring her within any of Section 1101(f)’s per se categories. And finally, we observe that the solid majority of pre-IIRIRA cases-including at least one unpublished case in this circuit-reviewed moral character determinations on a substantial evidence standard rather than for abuse of discretion. We find these points compelling and hold that the moral character determination under 8 U.S.C. § 1101(f), including one made under the catchall provision, is nondiscretionary and reviewable.
B.
Turning to the merits of the appeal, Ikenokwalu first argues that the Board erred in considering expunged convictions in its moral character determination. “We review the Board’s legal determinations de novo but recognize that its interpretation of the INA is entitled to deference.” Nyirenda v. INS, 279 F.3d 620, 623 (8th Cir.2002) (citing Ling Tang v. INS, 223 F.3d 713, 718 (8th Cir.2000)); Escudero-Corona v. INS, 244 F.3d 608, 613 (8th Cir.2001) (according “substantial deference to the agency’s interpretation of the federal statutes that [the agency] implements”).
At issue are several Kansas misdemean- or convictions that were expunged prior to the deportation hearing in this case: a 1985 conviction for theft and battery; a 1989 conviction for welfare fraud; and a 1991 conviction for welfare fraud. During the deportation proceedings, the Immigration Judge heard testimony and received evidence regarding these convictions. His decision indicates that he considered the convictions relevant to the moral character determination. On appeal, the Board held that consideration of Ikenokwalu’s expunged convictions was proper.
We agree with the Board that an Immigration Judge may consider expunged convictions in making a moral character determination in conjunction with an application for suspension of deportation. We reject Ikenokwalu’s suggestion that to do so is an affront to state sovereignty. See Franklin v. INS, 72 F.3d 571, 572 (8th Cir.1995) (“[T]he consequences a state chooses to place on [a] conviction in its own courts under its own laws cannot control the consequences given to the conviction in a federal deportation proceeding.” (citation omitted)). Where, as here, the moral character inquiry is governed by the catchall provision of 8 U.S.C. § 1101(f), the Immigration Judge may properly consider the rehabilitative judgment of a state, as evidenced by an expungement. The Immigration Judge need not, however, act as if the offenses or convictions never occurred. See Renteria-Gonzalez v. INS, 310 F.3d 825, 835 (5th Cir.2002) (discussing effect of vacated conviction on deportation proceedings and noting that “five circuits ... have concluded that a vacated or otherwise expunged state conviction remains valid ...” for purposes of the immigration laws); Vasquez-Velezmoro, 281 F.3d at 698-99 (rejecting alien’s contention that expunged state drug conviction is not a “conviction” for immigration purposes). We note that a contrary holding would lead to anomalous results whereby an alien’s treatment for immigration purposes would depend upon the vagaries of state law and geographical happenstance. See Renteria-Gonzalez, 310 F.3d at 835 (rejecting interpretation of immigration law by which “aliens convicted of identical crimes would face different immigration consequences based on the fortuity of the state in which they committed their crimes”).
The next issue before us is whether, and to what extent, the INS may consider conduct predating the statutorily-prescribed period for which good moral character must be established. Ikenokwalu sought suspension of deportation under the battered spouse amendment to the INA. 8 U.S.C. § 1254(a)(3). For purposes of this appeal, we accept the parties’ position that the amendment reduces to three years the period of time during which Ikenokwalu must prove good moral character. Given this interpretation, Ikenokwalu argues that the Board’s consideration of conduct predating the relevant three year period was improper.
We find reasonable the Board’s interpretation of 8 U.S.C. § 1254(a)(3) to permit consideration of past (pre-statutory period) conduct in determining present moral character. The ultimate determination is whether an applicant has established good moral character during the relevant statutory time period. That determination, however, may be informed by evidence of past misconduct. “Whether the petitioner can establish that he has reformed and rehabilitated from this prior conduct is germane to the determination of whether he has established good moral character from the beginning of the [statutory] period to the present.” Santamaria-Ames v. INS, 104 F.3d 1127, 1132 (4th Cir.1996) (evaluating good moral character element of noncitizen veteran’s application for naturalization under a statute which requires showing of good moral character for one year prior to application). “If the petitioner demonstrates ‘exemplary conduct with every evidence of reformation and subsequent good moral character’ from the beginning of the [statutory] period to the present, then his application cannot be denied based solely on his prior [misconduct], although it is highly relevant to the ultimate determination.” Id. (emphasis added) (internal citation omitted); see also Gatcliffe v. Reno, 23 F.Supp.2d 581, 585 (D.Vi.1998) (citing cases for proposition that, with regard to naturalization applications, acts outside the relevant statutory period “must be considered together with any rehabilitation which occurred afterward.”). We find the reasoning set forth in Santamaria-Ames equally applicable here and hold that conduct predating the relevant statutory time period may be considered relevant to the moral character determination under 8 U.S.C. § 1254(a)(3), but that such conduct cannot be used as the sole basis for an adverse finding on that element.
In light of the above, we conclude that the Board’s factual determination that Ikenokwalu failed to establish good moral character during the three year statutory period was supported by substantial evidence on the record and we affirm the Board’s legal determination that she was therefore not eligible for discretionary suspension of deportation. See Nyirenda, 279 F.3d at 623 (applying substantial evidence review to the Board’s factual findings and de novo review to its legal determinations). In order to qualify for discretionary suspension of deportation, Ikenokwalu was required to prove that in the three years preceding her application for suspension she was a person of good moral character. The Board expressly considered both negative and positive aspects of Ikenokwalu’s character and did not solely rely upon her past conduct in making its moral character determination. Rather, the Board concluded that Ikenokwalu’s instances of misconduct within the statutory period, viewed in the context of her previous record of transgressions with legal and immigration authorities, offset the positive factors she presented and undercut her claim of rehabilitation.
It is true that Ikenokwalu’s conduct pri- or to the relevant statutory period may have been objectively more egregious. However, the Board expressly rejected Ik-enokwalu’s contention that the -Immigration Judge had given disproportionate weight to her nearly decade-old criminal convictions and found that Ikenokwalu “had also engaged in more recent conduct which indicates a lack of good moral character.” We note that the deportation hearing in this case lasted several days and is replete with evidence which places Ikenokwalu’s present character and veracity at issue, particularly in light of her past misconduct. After careful review of the entire record, we agree that it demonstrates a pattern of deceptive conduct which continues into the present and supports a finding that Ikenokwalu failed to meet her burden of establishing good moral character during the three years prior to her application for suspension of deportation.
C.
Finally, we briefly address Ikenokwalu’s due process claim that the Board’s consideration of expunged convictions and pre-statutory time period conduct was fundamentally unfair and made the resulting decision unreliable. She also claims a procedural due process violation because she was unprepared to counter the Board’s use of such evidence. Even assuming we have jurisdiction to consider constitutional challenges to INS proceedings, see Lukowski, 279 F.3d at 646-47 (noting debate on this jurisdictional issue), we find no error in the Board’s consideration of the expunged convictions and/or the earlier conduct. Accordingly, Ikenokwalu cannot establish substantive or procedural due process violations.
III.
For the foregoing reasons, we affirm the Board’s decision that Ikenokwalu has not established the good moral character necessary to the Attorney General’s exercise of discretionary relief under 8 U.S.C. § 1254(a)(3) or 1254(e).
. Statutory references to the Immigration and Naturalization Act (''INA”), as codified in Title 8 of the United States Code, will refer,, in this opinion, to the version in effect at the time Ikenokwalu’s deportation proceedings were initiated. Although the immigration laws were substantially overhauled by the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 ("IIRIRA”), Pub.L. No. 104-208, 110 Stat. 3009, that law expressly states that the old law would generally remain applicable to then-pending proceedings such as these. See IIRIRA § 309(c)(1).
. IIRIRA § 309(c)(4)(E) states that "there shall be no appeal of any discretionary decision under section 212(c), 212(h), 212(i), 244, or 245 of the Immigration and Nationality Act (as in effect at the date of the enactment of this Act).” The suspension of deportation and voluntary departure denials at issue in this appeal fall within Section 244.
. Ikenokwalu also appeals the Board’s denial of her application for voluntary departure under 8 U.S.C. § 1254(e). Prior to the Attorney General's exercise of discretionary relief under Section 1254(e), the alien must, inter alia, establish good moral character for a period of five years preceding the application. Thus, in this case, our analysis and conclusions with regard to 8 U.S.C. § 1254(a)(3) are also dis-positive of Ikenokwalu’s appeal of the voluntary departure denial.
. Outside the context of the Violence Against Women Act, the generally applicable suspension of deportation provisions require the alien to prove either seven years or ten years of continuous physical presence in the United States. See 8 U.S.C. § 1254(a)(1), (a)(2).
. Section 1101(f) precludes a finding of good moral character where it is established that the alien: is a habitual drunkard; is a drug offender; derives his income principally from illegal gambling; has two or more gambling convictions; has given false testimony for the purpose of obtaining any benefits under the immigration laws; has been in prison for 180 days or more during the statutory period; or has been convicted of an aggravated felony. 8 U.S.C. § 1101(f). The government did not rely upon any of these categories in its case against Ikenokwalu.
. All circuits that have addressed the “extreme hardship” element have found it plain from the language of the statute that extreme hardship is a discretionary determination which is not reviewable by the judiciary. See, e.g., Al Najjar v. Ashcroft, 257 F.3d 1262, 1298 (11th Cir.2001); Ramos v. INS, 246 F.3d 1264, 1267 (9th Cir.2001); Escalera v. INS, 222 F.3d 753, 755-56 (10th Cir.2000); Moosa v. INS, 171 F.3d 994, 1012-13 (5th Cir.1999); Skutnik v. INS, 128 F.3d 512, 513-14 (7th Cir.1997).
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288519-9596 | HARRISON L. WINTER, Chief Judge:
In a Chapter 11 proceeding, the district court reviewed an order of the bankruptcy court entered upon the application of Grundy National Bank (Grundy), a secured creditor, for relief from the automatic stay provided in 11 U.S.C. § 362 to enable it to repossess and liquidate certain collateral on which it had valid liens. The district court affirmed the bankruptcy court’s refusal to vacate the stay and its order to require Tandem Mining Corporation (Tandem) to make periodic payments for Grundy’s protection, but the district court reversed the bankruptcy court’s ruling that Tandem pay interest on its unpaid obligations to Grundy during the pendency of the Chapter 11 proceedings.
Grundy appeals, and we affirm in part and reverse in part. We further order that the collateral be released unless Tandem produces an approved plan of reorganization within sixty days from the issuance of our mandate.
I.
Tandem, a deep coal mine contractor, obtained two two-year secured loans from Grundy in 1982 with interest at 20.21% and gave Grundy an uncontested security interest in, inter alia, a wheel loader and a battery charger. The parties do not dispute that the fair market value of the loader is $26,000 and that of the battery charger is $1,200. At the time of the hearing in the bankruptcy court, the unpaid principal balance on the loader was $25,-968.51 (excluding interest of $3,781.43). The battery charger was only partial security for an even larger debt.
On November 4, 1982, Tandem filed a Chapter 11 petition and thereafter was adjudicated a debtor-in-possession. At the time of the proceedings in the bankruptcy court and the district court which give rise to this appeal — and, indeed, to the time of argument of this appeal — neither Tandem nor any creditor had proposed a plan of reorganization.
Since both loans were in default, Grundy, on February 28, 1983, petitioned the bankruptcy court to lift the automatic stay so that it could foreclose on its collateral. The bankruptcy court denied this relief with respect to the loader and the battery charger. It found that the appraised value of the loader and the charger were equal to the unpaid balance of the loans with respect to each, that each had a remaining useful life of five years and that each was necessary for the reorganization of Tandem. Recognizing that a secured creditor is entitled to relief from the automatic stay if adequate protection of his property interests is not arranged, 11 U.S.C. § 362(d), the bankruptcy court concluded that adequate protection could be provided by requiring Tandem to make periodic payments to Grundy in the amount computed by dividing the current unpaid balances on the two items by their remaining useful life of sixty months with interest from the date of hearing at the rate of 9.5%.
Grundy then appealed to the district court. It contended that it was entitled to relief from the automatic stay, that the bankruptcy court erred in extending the payment schedule for the loader and the charger for sixty months, and that the bankruptcy court should have allowed interest at the then-current market rate (16%) rather than the prime rate (9.5%). The district court modified the bankruptcy court’s order to provide that the periodic payments would continue only until a plan of reorganization is confirmed and that interest would not be allowed in the periodic payments. In all other respects, it affirmed the bankruptcy court’s findings of fact and conclusions of law.
Grundy then appealed to us, persisting in its contention that it is entitled to relief from the automatic stay, and, if not, that it is entitled to interest on the periodic payments at the current market rate. Although it took no cross-appeal, Tandem contends that the bankruptcy court entered no final order and hence there was no jurisdiction for an appeal to the district court or to us. We consider these issues in inverse order.
II.
We see no merit in Tandem’s argument that both the district court and this court lack jurisdiction to entertain this appeal. Although entitled “Memorandum Opinion and Order” and signed by the bankruptcy judge, it is true that the concluding language of the document ordered counsel “to compute [the periodic] payments and tender forthwith an Order incorporating the provisions set out in this Memorandum Opinion” and that no formal order was ever presented or entered. But the memorandum opinion was precise in its terms and was self-executing, and we were told in oral argument that despite the absence of a formal order, Tandem has been making the periodic payments that the order would have required. We therefore cannot conclude that the absence of a formal order converted the bankruptcy court’s memorandum opinion into a non-appealable interlocutory ruling.
We also reject the argument that since the district court “merely modified” the order of the bankruptcy court, there was no final order within the meaning of 28 U.S.C. § 1293 so as to give us appellate jurisdiction. The order of the district court did not require further proceedings in the bankruptcy court other than continuation of the bankruptcy proceedings, so we think it was final. Despite the contrary view expressed in 1 Collier on Bankruptcy 11 3.03[7][e] (15th ed. 1979), we are in agreement with our sister circuits that an order denying relief from the automatic stay is a final appealable order. See In re American Mariner Industries, Inc., 734 F.2d 426, 429 (9 Cir.1984); In re Leimer, 724 F.2d 744 (8 Cir.1984); In re Comer, 716 F.2d 168, 171-74 (3 Cir.1983); In re Regency Woods Apartments, Ltd., 686 F.2d 899, 902 (11 Cir.1982); In re Taddeo, 685 F.2d 24, 26 n. 4 (2 Cir.1982).
III.
We next consider whether there was reversible error in the conclusion of the bankruptcy court and the district court not to lift the automatic stay.
The statutory standards for terminating an automatic stay are contained in 11 U.S.C. § 362(d):
On request of a party in interest and after notice and a hearing, the court shall grant relief from the stay ... such as by terminating, annulling, modifying, or conditioning such stay—
(1) for cause, including lack of adequate protection of an interest in property of such party in interest; or
(2) with respect to a stay of an act against property ..., if—
(A) the debtor does not have an equity in such property; and
(B) such property is not necessary to an effective reorganization.
Section 362(g) further provides that Grundy has the burden of proof on Tandem’s equity in the property but that Tandem has the burden of proof on all other issues.
We think that the standards for denying relief from the automatic stay were met. The Bankruptcy Code does not define “adequate protection” as used in § 362(d)(1), but § 361 does set forth three examples that satisfy that standard. The first exam-pie contemplates the payment of money to liquidate the debtor’s interest in the pledged property. This is precisely what the bankruptcy court provided, and its ruling was substantially affirmed by the district court. It computed Grundy’s interest in the property, and the property’s useful life. It then required Tandem to pay periodically the amounts necessary to liquidate completely Grundy’s equity over the useful life of the property, or, as modified by the district court, “until a plan is confirmed, the case is closed or dismissed, or the property is relinquished, whichever comes first.” As we have said, we were told in argument that the payments are being made. Leaving aside the question of interest on those payments, we think that both courts acted within their statutory authority.
Similarly, we think that the alternative test of § 362(d)(2) was met at the time of the bankruptcy court’s order. While there is apparently no dispute that Tandem lacks any equity in the pledged property, the bankruptcy court found that the property was “necessary to an effective organization.” § 362(d)(2)(B). While the evidence with regard to the charger is considerably weaker than that with regard to the loader, we do not think that this finding is clearly erroneous with regard to either item.
We are mindful, however, that § 362(d)(2)(B) presupposes that the property must be necessary to an “effective ” reorganization if relief from the stay is to be properly denied. Both courts made the finding that the property was necessary to an effective reorganization, and we cannot say that these findings were clearly erroneous when made. But the Chapter 11 proceeding was begun on November 4, 1982, the bankruptcy court spoke on April 14, 1983, and the district court on February 20, 1984, and still no plan of reorganization has been proposed. The business and affairs of Tandem are not, in our view, widespread or complex. We can therefore only con-elude from inaction on the part of Tandem and its creditors in proposing a plan of reorganization over the period of time which has elapsed since the Chapter 11 proceeding was begun, that an effective reorganization may not be possible. We therefore direct that, if within sixty days after our mandate has issued a plan is not proposed and approved, the bankruptcy court shall forthwith lift the automatic stay and permit Grundy to foreclose on its collateral,
¡y
Finally, we consider whether Grundy is entitled to interest on the periodic pay-merits required to be made by Tandem, The bankruptcy court ruled that the payments should bear interest at 9.5% which it deemed the then-current market rate. The district court ruled that as a matter of law> interest was not payable,
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388385-8379 | DEVITT, Chief Judge.
In this patent infringement action involving the construction of magnetic recording heads for use in the tape recording industry, the principal issue is as to the validity of the patent in the light of the claimed obviousness of its subject matter examined in the light of the prior art.
The Court has jurisdiction. 28 U.S. C.A. § 1338(a).
The patent, Moehring and Murphy #2,835,742, embodying nine claims, was issued to plaintiff’s assignor on May 20, 1958. Claims 2, 3 and 4 are the only ones in issue. Claim 2, admittedly representative of all, is set out in the footnote.
Plaintiff and defendant are each engaged in the manufacture and sale of magnetic pick-up heads for tape recorders. The head is a cartridge-like element over which magnetic tape runs during the operation of a tape recorder. During the recording operation the head serves to impart a series of magnetic signals to the tape on which the signals are recorded. When the re-wound tape is passed over the head it plays back the recorded signals. Together the plaintiff and defendant produce practically all of the recording heads for the industry.
Plaintiff claims that the defendant is producing and selling magnetic heads which infringe its patent and seeks an injunction and damages.
Defendant denies infringement, claims the patent is invalid and asserts the defenses of equitable estoppel and laches. We turn to the issue of validity.
Under 35 U.S.C.A. § 282 a patent is presumed valid, and the burden of establishing invalidity rests on the party asserting invalidity, the defendant here. Long v. Arkansas Foundry Co., 247 F.2d 366 (8th Cir. 1957). Such a presumption is not conclusive, however, and is weaker in instances of so-called combination patents, since a rather severe test must be applied in light of the difficulty and improbability of finding invention in the assembly of old elements. Great Atlantic & Pacific Tea Co. v. Supermarket Equipment Corp., 340 U.S. 147, 71 S.Ct. 127, 95 L.Ed. 162 (1950); Sperry Rand Corp. v. Knapp-Monarch Co., 307 F.2d 344 (3rd Cir. 1962); Zoomar, Inc. v. Paillard Products Co., 258 F.2d 527 (2nd Cir. 1958). Likewise, the presumption is weakened when the patent examiner, as here, apparently did not consider certain applicable prior art. John Deere Co. of Kansas City v. Graham, 333 F.2d 529 (8th Cir. 1964).
One of plaintiff’s principal witnesses was Charles Murphy, co-inventor of the patent. His testimony (Record p. 214 et seq.), reflective of that of other witnesses for the plaintiff, was to the effect that the signal features of his patent are:
(1) a grinding and lapping of core pieces and core holders (case halves) into common flat planes, enabling the defining of straight and uniform gaps in the recording heads;
(2) the use of a single coil with single connections;
(3) the simplicity of the complete set of parts enabling the easier and economical production of high-quality recording heads.
The record is abundantly clear that all of this is prior art. It is undisputed that (1) above, the grinding and lapping processes, previously had been used in the manufacture of multi-channel heads. Murphy admitted that the process was shown in Eckert, #2,618,709, November 18, 1952.
It is also undisputed that (2) above, the single - coil - with - single - connections feature, had been used in heads similar to plaintiff’s. Murphy admitted that the Shure Brothers’ head employed this feature. Competent testimony at the trial showed that the choice of single or multiple coils and the placement of coils were well-known alternatives of industrial design. While the single coil was not desirable in multi-channel heads, it was the obvious choice for ease of manufacture in recording heads such as described in the patent in suit.
As to the third claimed significant feature of the patent, (8) above, simplicity of the complete set of parts, the Court sees no inventive significance to this. Many of the references in the prior art contained components and features which would obviously support that conclusion.
At the time of the alleged invention of the patent in suit, Murphy was very familiar with the Shure Brothers’ magnetic head- — -in fact, was seeking to improve upon it. The Shure Brothers’ head had a variation in the front gap. Murphy’s idea was to obviate the variation by fastening U-shaped core pieces into molded core holder half sections and then grind and lap the surface into a common plane. This was the significant feature stressed before the Patent Office. It was apparently a good one and constituted a marked improvement over the Shure Brothers’ design.
But the record shows that the same feature, apparently unknown to Murphy and his partner, Moehring, and undiscovered by the Patent Examiner, was embodied in Kornei, #2,743,527, May 1, 1956 and Eckert, #2,618,709, November 18, 1952.
In determining the question of validity, therefore, it appears that the single issue is as to obviousness under 35 U.S.C.A. § 103. That section provides that:
A patent may not be obtained though the invention is not identically disclosed or described * * * (in the prior art), if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains.
Several considerations invite our attention in determining whether an alleged invention was obvious under § 103 in light of the applicable prior art. First, under § 103, as contrasted to novelty under 35 U.S.C.A. § 102, obviousness depends on all the prior art rather than a single description within the prior art. Whether a given combination -of references within the prior art invalidates a patent for obviousness depends on what such references reasonably and realistically reveal to those ordinarily skilled in the art. Application of Free, 329 F.2d 998 (C.C.P.A.1964). Second, the prior art includes matter found in patent applications filed prior to the application for the patent in suit even though the patents on these prior applications were issued after the filing of the application for the patent in suit. Sperry Rand Corp. v. Knapp-Monarch Co., supra. Third, the state of the pertinent prior art in general, and not merely that portion of the prior art with which a particular patentee was acquainted, is the appropriate background against which to judge whether an alleged invention was obvious to one ordinarily skilled in the art. The alleged inventor is presumed to have had knowledge of all the applicable prior art, whether or not he did in fact. Application of Zenitz, 333 F.2d 924 (C.C. P.A.1964).
Another principle pertinent to the issues here should be borne in mind and that is whether an alleged invention was obvious under § 103 depends upon the state of the art at a point of time immediately prior to the filing of the patent application. The teachings of the patent in suit must not be read into the prior art so that something unobvious at the time of the alleged invention appears obvious in hindsight. Application of Foster, 343 F.2d 980, 990 (C.C.P.A.1965).
Attentive to this word of caution against hindsight determination, the Court is satisfied that the evidence in this case demonstrates the invalidity of the patent in suit on the ground of obviousness under § 103. Keeping in mind that obviousness does not require absolute predictability, Application of Graf, 343 F.2d 774, 776 (C.C.P.A.1965), it is our view that there is no substantial difference between the subject matter embodied in the patent in suit and the prior art — i. e., Eckert, Sager, Kornei, Shure Brothers, Latchford and Kleis — ■ and such differences as do exist would have been obvious at the time of the invention to a person having ordinary skill in this art.
The only difference between the disclosures contained in Eckert, #2,618,709 and the patent in suit relate to the location of the magnetic coil. In Eckert the coil is wrapped around the central arm of the core pieces, and in the patent in suit the coil is wrapped around the inner arms of the core pieces. The evidence supports the conclusion that the technique of different placement of coils were well known alternatives of industrial design and would be obvious to any person skilled in the art.
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8935856-18109 | OPINION
BASSLER, Senior District Judge.
In the midst of a massive bankruptcy case, Debtor G-I Holdings, Inc. (“G-I”) and its non-bankrupt subsidiaries seek a declaratory judgment that the subsidiaries are not successors to the liabilities of G-I and that the subsidiaries are not the alter ego of G-I. In response, the Legal Representative of Present and Future Holders of Asbestos-Related Demands (“Legal Representative”) filed this motion for judg ment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c).
The Court properly exercises jurisdiction over this matter pursuant to 28 U.S.C. §§ 1334(b) and (e). Venue is proper in this district pursuant to 28 U.S.C. § 1409(a).
For the following reasons, the Court grants the Legal Representative’s motion for judgment on the pleadings.
BACKGROUND
Plaintiff G-I is a holding company and the successor to GAF Corporation. (Comply 2.) G-I is the parent company of Plaintiffs Building Materials Corporation of America, Building Materials Investment Corporation, and Building Materials Manufacturing Corporation (collectively “BMCA”). (Id.) The Court refers to G-I and BMCA collectively as “Plaintiffs.”
On January 5, 2001, G-I filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code. GI claims that it was forced to file for bankruptcy due to an increase in both the number of asbestos claims filed against GI and the settlement amounts demanded by asbestos claimants. (Id. ¶ 3.) Asbestos claimants have also sued BMCA under theories of “successor liability” and/or “alter ego” between G-I and BMCA. (Id. ¶ 5.) In fact, approximately 2,500 state law actions were filed pre-petition against BMCA alleging asbestos-related claims. (Legal Rep.’s Moving Br. at 8.)
The Bankruptcy Court appointed the Official Committee of Asbestos Claimants (the “Committee”) to represent the interests of G-I’s present asbestos claimants: those individuals exposed to G-I’s asbestos products pre-petition that manifest an asbestos-related injury prior to plan confirmation. The four individual defendants named in this action qualify as “present asbestos claimants”; each has sued BMCA alleging liability based on theories of successor liability and alter ego.
In addition, the Bankruptcy Court appointed the Legal Representative to represent the interests of any future claimants: those individuals currently unknown to the parties that have not yet manifested an asbestos-related injury but may hold future claims.
On February 7, 2001, Plaintiffs commenced an adversary proceeding against six individual asbestos claimants “on behalf of themselves and all others similarly situated, including all future asbestos claimants.” (Compl. at 1.) Under the Declaratory Judgment Act, 28 U.S.C. § 2201(a), Plaintiffs sought a declaration that BMCA is not liable for asbestos claims under theories of successor liability and/or alter ego.
The individual defendants answered on March 13, 2001. The Committee moved to intervene, and the Bankruptcy Court granted this request in November 2001. In addition to its answer and affirmative defenses, the Committee asserted counterclaims against Plaintiff seeking declaratory relief that BMCA was liable under theories of successor liability and piercing the corporate veil. (Committee’s Counterclaims ¶¶ 129-35.) On October 18, 2002, Plaintiffs amended the Complaint to add the Legal Representative as a defendant.
DISCUSSION
I. Standard for 12(c) Motion
The Legal Representative now moves for judgment on the pleadings, alleging that Plaintiffs have failed to state a claim for which relief may be granted. Rule 12(c) provides that “after the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings.” Fed.R.Civ.P. 12(c). A Rule 12(c) motion is governed by the same standard as a Rule 12(b)(6) mo tion to dismiss for failure to state a claim upon which relief can be granted. See Children’s Seashore House v. Waldman, 197 F.3d 654, 657 n. 1 (3d Cir.1999); Turbe v. Gov’t of the Virgin Islands, 938 F.2d 427, 428 (3d Cir.1991).
Motions to dismiss for failure to state a claim are viewed with disfavor. See Caldwell Trucking PRP Group v. Spaulding Composites Co., 890 F.Supp. 1247, 1252 (D.N.J.1995). “In deciding a motion to dismiss for failure to state a claim, all allegations in the pleadings must be accepted as true and the plaintiff must be given the benefit of every favorable inference that can be drawn from those allegations.” Id. (internal citations omitted). The test for reviewing a motion to dismiss for failure to state a claim is whether under a reasonable reading of the pleadings, the plaintiff may be entitled to relief. Simon v. Cebrick, 53 F.3d 17, 19 (3d Cir.1995).
II. Appropriateness of this Declaratory Judgment Action
The Declaratory Judgment Act provides that a court “may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C. § 2201(a) (emphasis added). Courts have considerable discretion as to whether or not a declaratory judgment should be entered. See Sun Oil Co. v. Transcontinental Gas Pipe Line Corp., 108 F.Supp. 280, 282 (E.D.Pa.1952), aff'd, 203 F.2d 957 (3d Cir.1953). Nonetheless, courts should liberally interpret the Act to permit declaratory judgment actions. See Exxon Corp. v. F.T.C., 588 F.2d 895, 900 (3d Cir.1978) (citations omitted).
The Legal Representative claims entitlement to judgment on the pleadings on three grounds: (1) BMCA may not use the Declaratory Judgment Act to obtain a preemptive declaration of non-liability based on state law defenses; (2) this action does not involve a controversy of sufficient immediacy; and (3) Plaintiffs may not seek relief under the Declaratory Judgment Act because Congress has enacted a statute that provides for the specific relief requested. As will be elaborated upon below, the Court finds persuasive the third ground and need not reach the first two grounds for dismissal.
III. Channeling Injunction Under 11 U.S.C. § 524(g)
The Legal Representative argues that declaratory relief is improper here because 11 U.S.C. § 524(g) applies to this case. The Bankruptcy Code was amended in 1994 to include § 524(g) so that companies could “globally resolve claims and free [themselves] from future asbestos tort liability.” (Legal Rep.’s Br. at 13.) The Legal Representative argues that reliance upon nonbankruptcy procedural mechanisms such as the Declaratory Judgment Act to resolve future asbestos liabilities would “significantly undermine the protections for creditors built into the Bankruptcy Code.” Ortiz v. Fibreboard Corp., 527 U.S. 815, 860 n. 34, 119 S.Ct. 2295, 144 L.Ed.2d 715 (1999). In addition, the Legal Representative argues that his use as a proxy for future claimants in Plaintiffs’ successor liability action is an abuse of the Legal Representative’s role under the Bankruptcy Code.
Section 524(g) provides asbestos defendants with the benefit of a statutory “channeling injunction” applicable to present and future holders of asbestos-related tort claims. 11 U.S.C. § 524(g)(1). Under section 524(g)(2)(B)(ii), the debtor creates a trust as part of its plan of reorganization. The trust is then vested with the reorganized debtor’s stock, which will pay present and future asbestos-related claims. § 524(g)(2)(B)(i)(II). In exchange for funding the trust, the debtor, its predecessors and successors in interest, and any affiliates receive broad protection from any asbestos-related claims through the bankruptcy court’s issuance of a “channeling injunction” directing asbestos claims exclusively to the trust. § 524(g)(3)-(4).
“[A]s part of the proceedings leading to issuance of such [channeling] injunction, the court appoints a legal representative for the purpose of protecting the rights of persons that might subsequently assert demands of such kind.” § 524(g)(4)(B)(i). In this case, the Bankruptcy Court granted the Legal Representative “standing as a party in interest to be heard on every matter relevant to the interests of Demand Holders in GI’s chapter 11 case, including but not limited to, adversary proceedings, contested matters, and matters involving section 524(g).” (Order Appointing Legal Rep. of Present and Future Holders of Asbestos-Related Demands in G-I’s Chapter 11 Case (“Appointment Order”) of 10/10/01.)
Based on the Appointment Order, Plaintiffs contend that “the purpose of the Legal Representative is to represent demand holders (future claimants) so that complete relief can be granted in the [declaratory judgment] case, and the company can then be reorganized to maximize value without a cloud of future claims reducing the value of the reorganized company.” (Pis.’ Suppl. Br. at 3.) Plaintiffs argue that the fact that 524(g) requires the appointment as a prerequisite to a channeling injunction does not mean that the role of the Legal Representative is solely limited to matters involving 524(g). The Legal Representative counters that “the Legal Representative’s involuntary participation in this case as a defendant has no statutory basis, and is in fact a distortion of his role in G-I Holdings Inc.’s reorganization proceedings.” (Legal Rep.’s Suppl. Br. at 2.)
In fact, the scope of the Legal Representative’s function is not clearly established. Section 524(g) makes no mention of the role of the Legal Representative in bankruptcy proceedings. Furthermore, the term “legal representative” is not used in any other provision of the Bankruptcy Code. Whether the Legal Representative can be conscripted to defend the interests of future asbestos claimants in this declaratory judgment action is an issue of first impression.
Plaintiffs make two main arguments regarding the standing of the Legal Representative in this case. First, Plaintiffs argue that the Appointment Order and the Legal Representative’s own filings in other proceedings support Plaintiffs’ contention that the Legal Representative is a proper defendant here. Second, Plaintiffs contend that the Legal Representative acts as a guardian ad litem for the future claimants whose virtual representation of his constituents will properly bind them to this Court’s determination of successor liability-
A. Appointment Order and Legal Representative’s Memoranda
Plaintiffs note that' the Appointment Order states that the Legal Representative has “standing as a party in interest to be heard on every matter” related to G-I’s bankruptcy. (Appointment Order at 2 (emphasis added).) This broad language allowed the Legal Representative to intervene in another adversary proceeding related to G-I’s bankruptcy in which the Committee and the Legal Representative are seeking to avoid the transfer of International Specialty Products stock (“ISP Avoidance Action”). See In re G-I Holdings, Inc., 292 B.R. 804, 806-07 (Bankr.D.N.J.2003). In moving to intervene, the Legal Representative argued:
Resolving a tortfeasor’s liability to unknown persons who cannot represent their own interests in the bankruptcy proceedings raises a significant due process problem. The participation of a legal representative of demand holders in the bankruptcy proceedings is designed to remedy this due process problem and ensure that the resolution of future tort claims is binding on demand holders as they manifest disease, and seek compensation for their injuries, throughout the future.
(Legal Rep.’s Memo, in Support of Motion for Authority to Seek Intervention as Co-Pl. in the ISP Avoidance Action Against Samuel Heyman, at 3, ¶ 7.) In granting the motion, the Bankruptcy Court concluded that “[n]othing in the plain language or the legislative history of § 524(g) suggested that Congress intended to limit the role of the legal representative.” 292 B.R. at 809. To the contrary, “limiting the role of a legal representative is inappropriate because the facts of different cases may require that a legal representative have a different one.” Id.
Despite this sweeping language, the ISP Avoidance Action cannot confer upon Plaintiffs the power to conscript the Legal Representative as an unwilling defendant in this action. The Legal Representative’s purpose in the ISP Avoidance Action was fundamentally different from his role in this proceeding. In the ISP Avoidance Action, the Bankruptcy Court granted the Committee and the Legal Representative permission to wield G-I’s powers under § 544(b) of the Bankruptcy Code to avoid a fraudulent transfer. As co-representatives of the estate, the Committee and the Legal Representative acted for the benefit of all creditors. Moreover, the fruits of the avoidance action would be returned to the estate; the future claimants may in turn see greater benefits placed into a § 524(g) trust.
This case, however, is essentially a non-bankruptcy action to determine whether BMCA, a non-debtor, carries successor liability from G-I and is therefore liable to asbestos claimants. Plaintiffs desire the Legal Representative’s participation so as “to ensure the binding determination on successor liability.” (Pis.’ Suppl. Br. at 13.) But conscripting the Legal Representative in this manner does not comport with notions of due process.
The concept of a legal representative is embedded in § 524(g) as part of a framework for dealing with massive asbestos liabilities in bankruptcy. “[S]ection 524(g) provides a special form of supplemental injunctive relief for an insolvent debtor [and its non-debtor affiliates] facing the unique problems and complexities associated with asbestos liability.” In re Combustion Eng’g, Inc., 391 F.3d 190, 234 (3d Cir.2004). The statute calls for the creation of a channeling injunction and trust that will cleanse the debtor corporation of its present and future asbestos liability while providing a source of funding to pay future claims. § 524(g)(1), (2)(B); see also Combustion Eng’g, 391 F.3d at 234. “[A] debtor must satisfy the perquisites set forth in 524(g)” to obtain this relief. Id. The statutory prerequisites are “specifically tailored to protect the due process rights of future claimants.” Id. at 234 n. 45. The appointment of a legal representative is only one of the many procedural safeguards that protect future claimants, who will be bound by terms of the channel ing injunction. See, e.g. § 524(g)(2)(B), 4(B).
In this action, however, Plaintiffs are not seeking to utilize the Legal Representative for the purpose of obtaining a § 524(g) channeling injunction. Plaintiffs counsel represented to this Court during oral argument that this declaratory judgment action is meant to avoid § 524(g) : “There is no need to get to the 524(g) stage if we are successful in showing there is no successor liability ...” (2/24/05 Tr. at 18:6-8.) Instead, non-debtor BMCA is seeking a declaratory judgment, which is a form of nonbankruptcy relief, that BMCA holds no successor liability. By virtue of the Legal Representative’s participation, Plaintiffs hope to bind future claimants to that judgment. Mere participation by the Legal Representative, however, cannot bind future claimants to the result of this non-bankruptcy proceeding.
“The general rule always has been that a judgment in an inpersonam action is not binding on anyone who has not been designated as a party and been served with process.” 7AA Charles Alan Wright et al., Federal Practice and Procedure § 1789, at 546 (citing Pennoyer v. Neff, 95 U.S. (5 Otto) 714, 24 L.Ed. 565 (1877)). Outside of bankruptcy, this due process problem can be solved by the maintenance of a class action pursuant to Fed.R.Civ.P. 23. To maintain a class action, a party must satisfy the prerequisites of Rule 28(a) and come within one provision of Rule 23(b) in order to ensure that binding absent class members comports with notions of fairness and due process. See In re General Motors Corp. Pick-Up Truck Fuel Tank Prods. Liability Litig., 55 F.3d 768, 785 (3d Cir.1995).
Plaintiffs originally filed this case as a defendant class action, but withdrew their class allegations upon amending the complaint to add the Legal Representative as a defendant. Rather than complying with the requirements of Rule 23, Plaintiffs seek to conscript the Legal Representative for their own purposes. But Plaintiffs are also avoiding the prerequisites built into § 524(g) because they do not feel a channeling injunction is necessary at this time. This approach essentially bypasses the safeguards of both Rule 23 and § 524(g) that protect the due process rights of the future claimants. Without those safeguards in place, the Court cannot require the Legal Representative to remain in this action.
B. Guardian Ad Litem
Despite the lack of safeguards in this case, Plaintiffs contend that the Legal Representative “is essentially a guardian ad litem for future claimants that protects the court from having to make all future claimants parties.” (Pis.’ Suppl. Br. at 13.) Citing In re Johns-Manville Corp., 36 B.R. 743, 758-59 & n. 7 (Bankr.S.D.N.Y.1984), Plaintiffs argue that the Legal Representative properly represents the future claimants in this action through the doctrine of equitable virtual representation. Plaintiffs’ reliance on JohnsManville is misplaced.
Johns-Manville was the model for § 524(g), and thus for the legal represen tative. In Johns-Manville, the bankruptcy court determined that it would appoint a representative for future claimants but did not finalize a form of representation:
This Court herewith considers in preliminary fashion several formulations of legal representation: guardian ad litem, amicus curiae and examiner. These alternative forms of representation are no more than precatory and are not preclu-sive of other considerations.
36 B.R. at 758-59 (emphasis added). The Court noted that the guardian ad litem model would allow a legal representative to bind future claimants by virtue of the doctrine of virtual representation. Id. at 758 n. 7. Instead of adopting this model, the Court ordered supplemental briefing and scheduled a hearing on the issue. Id. at 759.
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10543598-7668 | HAYNSWORTH, Senior Circuit Judge:
After the indictment of these two drug couriers for drug offenses, the district court granted a motion to suppress the cocaine that had been seized from them. It concluded that the case was controlled by Reid v. Georgia, 448 U.S. 438, 100 S.Ct. 2752, 65 L.Ed.2d 890 (1980), and that there was no probable cause for their arrest. On the government’s appeal, we conclude that Reid v. Georgia is not controlling, and reverse the suppression order.
I.
At the suppression hearing, the testimony of the two law enforcement officials was taken. The defendants presented no evidence, so the operative facts are disclosed entirely by the uncontradicted testimony of the law enforcement officials.
On the night of November 6, 1985 William Haye and Claudius Reid arrived at the Washington National Airport on a flight from Miami, Florida. The attention of Drug Enforcement Administration agent John Lee and Washington Metro Police officer Michael Bernier was drawn to the two as they deplaned and proceeded through the terminal. Reid appeared nervous, while Haye followed some 20 to 25 feet behind him but furtively keeping Reid under constant observation. Because they exhibited some of the characteristics of the drug courier profile, the officers approached the two just as the two came together after leaving the terminal building. Bernier held up his credentials and announced that they were police, whereupon Haye and Reid bolted in different directions.
Lee ran after Haye, while Bernier ran in pursuit of Reid.
Lee shouted to Haye, “Police, stop,” and then, “stop or I’ll blow your damned brains out.” Haye then stopped. As Lee approached Haye, he exhibited his credentials and again identified himself as a law enforcement officer. Haye was unresponsive when asked by Lee why he had run and if he had anything in his carry-on bag. Lee then asked, “Now, the stuff’s in the bag, isn’t it?”, to which Haye responded affirmatively. Lee testified that he had no doubt that Haye understood the word “stuff” to mean cocaine.
As the two men walked back toward the terminal, Lee inquired if Haye would permit him to look into the handbag, and Haye agreed. Lee did not then open the bag, but placed Haye under arrest and gave him the Miranda warnings.
Meanwhile, Bernier overtook the fleeing Reid. The two men wrestled and fell to the ground. Reid continued to struggle, though Bernier again informed him that he was a police officer. Finally, Bernier forced Reid’s hands behind his back and cuffed them. Bernier testified that he could not have detained Reid with any less force because Reid was persistent in his attempt to get away.
As Reid got to his feet, Bernier saw a bulge about the size of a baseball below Reid’s belt. Bernier squeezed the bulge and concluded that it was narcotics. Reid then inquired why he was being arrested, and Bernier, pointing to the bulge, said “that.”
After their arrest, the two men were escorted to the airport police station. There Haye’s handbag was searched and five ounces of cocaine were found in it. The bulge on Reid’s person was found to contain three ounces of cocaine.
II.
In Reid v. Georgia, 448 U.S. 438, 100 S.Ct. 2752, 65 L.Ed.2d 890 (1980), it appeared that two men arrived at the Atlanta airport on a flight from Fort Lauderdale, Florida. They were carrying only shoulder bags, and they exhibited several characteristics of the drug courier profile. When accosted, both nervous men produced identification, the airline tickets indicating a one-day stay in Fort Lauderdale. They agreed to return to the terminal for a search of their shoulder bags. Reid then attempted to flee, however, and he abandoned his shoulder bag. Focusing upon the facts known to the officers at the time of the initial stop, the Supreme Court held that they did not create a reasonable suspicion that Reid was involved in criminal activity sufficient to justify an involuntary investigative detention. Id. at 441, 100 S.Ct. at 2754.
Under the Supreme Court's Reid decision, it is clear that at the time of the initial encounter the officers did not have reasonable suspicion sufficient for an involuntary investigative detention. Haye and Reid could have declined to answer questions and walked away. Florida v. Royer, 460 U.S. 491, 497-98, 103 S.Ct. 1319, 1323-24, 75 L.Ed.2d 229 (1983). That was not the course that Haye and Reid took, however. Instead, there was sudden panic and precipitous flight. Without considering whether the circumstances gave probable cause for an arrest at that time, as the district court did, we conclude that all of the circumstances, including the flight, furnished reasonable suspicion for a brief, involuntary, investigative stop.
This case is altogether different from the Supreme Court’s decision in Reid. In that case, the Georgia court had held the fact that the men met the drug courier profile provided reasonable suspicion warranting a brief, involuntary, investigative stop. The Supreme Court disagreed and held that more was required than the presence of drug courier profile characteristics. Concentration was thus upon the facts known to the officers at the time of the initial encounter. This is made doubly clear by the concurring opinion of Justice Powell. Reid, 448 U.S. at 442-43,100 S.Ct. at 2754-55. In Reid, Reid’s attempted flight did not occur until later and did not enter into the assessment of the presence of a reasonable suspicion at the time of the initial encounter. In this case, there is nothing to indicate that the officers intended to initiate anything more than a consensual conversation. They announced that they were policemen, but that is a necessary prelude to inquiries of a traveler about such things as his name and his flight ticket. It was then, however, that the two men bolted in sudden panic.
Innocent passengers fly on airplanes from such cities as Miami that are known sources of drug supplies. Some of them may take circuitous routes through airline terminals and appear to be nervous or furtive, but they do not break into precipitous flight upon being informed by a man in civilian clothing that he is a policeman. Against the background of drug courier characteristics they had shown, their flight from the presence of two men upon their announcement that they were policemen gave the policemen reasonable, articulable suspicion, based upon objective facts, quite sufficient to warrant a Terry stop. See Terry v. Ohio, 392 U.S. 1, 88 S.Ct. 1868, 20 L.Ed.2d 889 (1968); United States v. Place, 462 U.S. 696, 702, 103 S.Ct. 2637, 2642, 77 L.Ed.2d 110 (1983).
This case is quite similar, factually, to United States v. Pope, 561 F.2d 663 (6th Cir.1977), in which it was held that flight under such circumstances supplies sufficient ground for a limited, investigative stop.
The defendants complain, nonetheless, of the use of force. By its very nature, however, a Terry stop is involuntary, and the suspect is not free to avoid it by flight. To that extent, his freedom is limited, and the policeman is authorized to use such reasonable force as may be necessary to accomplish the purpose of the limited stop. See United States v. Sharpe, 470 U.S. 675, 678, 105 S.Ct. 1568, 1571, 84 L.Ed.2d 605 (1985); United States v. Jones, 759 F.2d 633, 636 (8th Cir.), cert. denied, 474 U.S. 837, 106 S.Ct. 113, 88 L.Ed.2d 92 (1985); cf. Immigration and Naturalization Service v. Delgado, 466 U.S. 210, 215, 104 S.Ct. 1758, 1762, 80 L.Ed.2d 247 (1984).
III.
Haye was arrested only after he admitted that he had cocaine in his bag. His admission was quite sufficient to provide probable cause for his arrest and the subsequent search of the bag.
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9394276-8119 | ORDER
O’KELLEY, Senior District Judge.
The captioned case is before the court on appeal from the United States Bankruptcy Court for the Northern District of Georgia. Appellants contend that the bankruptcy court erroneously construed 11 U.S.C. § 523(a)(8) to permit a partial discharge of appellee’s student loan indebtedness absent a showing of “undue hardship.” 11 .U.S.C. § 523(a)(8) (2001). Therefore, appellants argue, this court must reverse the bankruptcy court’s order reducing the principal balance of appellee’s student loans from $114,000 to $50,000.
I. Background
Appellee, an attorney licensed to practice law in Georgia and Michigan, filed an offensive debtor complaint on March 19, 2001, seeking to discharge $114,000 in student loans he accrued while obtaining his J.D. from Thomas Cooley Law School and his L.L.M. in taxation from the University of Alabama [R. 1]. Despite holding a total of four degrees, including an A.A. from Gainesville Junior College and a B.A. from North Georgia College, appellee was unable to secure a job that suited him, so he attempted to establish his own law practice in Cumming, Georgia. Appellee nonetheless found himself unable to simultaneously satisfy his student loan repayment obligations and maintain his law practice, thus he filed the underlying student loan discharge action pursuant to 11 U.S.C. § 523(a)(8), claiming that he could not meet said loan obligations without suffering undue hardship. See 11 U.S.C. § 523(a)(8) (2001). Further, appellee secured non-legal employment with his brother’s landscaping company, earning a salary of $24,000 per year, and began winding down his law practice.
A trial of this matter was held before United States Bankruptcy Judge Robert E. Brizendine on February 20, 2001 [R. 37 (“Order & J.”)]. Judge Brizendine found that (1) appellee is currently unable to maintain a minimal standard of living, given the totality of circumstances; (2) appel-lee has made good faith efforts to repay his student loans; and (3) given appellee’s skills, his current inability to repay his loans is not likely to be a permanent condition [Order & J. ¶¶ 2-4]. Consequently, the bankruptcy court determined that ap-pellee had failed to articulate “undue hardship as contemplated by 11 U.S.C. § 523(a)(8) as would justify total discharge of [appelleej’s student loans” [Order & J. ¶ 4]. Nevertheless, Judge Brizendine ordered appellee’s student loan indebtedness reduced by more than 50% — from $114,000 to $50,000 — in light of the “magnitude of the ... existing student loans and the accumulation of interest ... [appellee]’s history, expenses, and potential.... ” [Order & J. ¶ 4],
The Illinois Student Assistance Commission, The Educational Resources Institute, Inc., Hemar Insurance Corporation of America, and the United States of America (“appellants”) subsequently petitioned for appellate review of Judge Brizendine’s decision [3-1]. Appellants argue that the bankruptcy court improperly interpreted the statutory provision at issue. Specifically, appellants contend that under § 523(a)(8) a court may discharge student loan indebtedness only upon a showing of undue hardship by the debtor. Here, the debtor failed to make the requisite showing. Therefore, they argue, appellee was not entitled to a partial discharge and Judge Brizendine’s order reducing appel-lee’s student loans must be reversed. In other words, appellants posit that § 523(a)(8) does not permit a “partial” discharge; once a bankruptcy court determines that undue hardship is lacking, it must dismiss the debtor’s § 523(a)(8) complaint.
Appellee, on the other hand, argues that nothing in the language of § 523(a)(8) precludes partial dischargeability and that appellants’ “all or nothing” position undermines the bankruptcy system’s “fresh start” rationale. Further, appellee contends that 11 U.S.C. § 105(a), which authorizes bankruptcy courts to exercise discretionary equitable powers, weighs in favor of partial dischargeability. See 11 U.S.C. § 105(a) (2001) (authorizing bankruptcy courts to “issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title.”). Although appellee admits that the Eleventh Circuit has not yet addressed the issue, he nonetheless argues that a “majority” of federal courts have approved of partial dischargeability under § 523(a)(8). Appellee essentially argues that in light of the totality of circumstances, the bankruptcy court’s decision should be affirmed. Alternatively, appellee suggests that if this court reverses Judge Brizendine’s order, it must remand the case to the bankruptcy court so that it may (1) make “undue hardship” findings as to each individual loan; and (2) adjust or clarify its factual findings in light of this court’s legal ruling.
II. Standard of Review
In reviewing the decisions of a United States Bankruptcy Court, this court functions as an appellate court. See 28 U.S.C. §§ 158(a), (c)(1)(B) (2001); see also Fed.R.Bankr.P. 8013. Accordingly, the bankruptcy court’s “[findings of fact ... shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the bankruptcy court to judge the credibility of the witnesses.” Fed.R.Bankr.P. 8013. On the other hand, the bankruptcy court’s “legal conclusions ... are reviewed by this court de novo.” Schlein v. Mills, 8 F.3d 745, 747 (11th Cir.1993). The district court must therefore defer to the bankruptcy court’s factual findings if they are supported by substantial evidence but may “freely examine[ ] the applicable principles of law to see if they were properly applied and freely examine[ ] the evidence in support of any particular finding to see if it meets the test of substantiality.” State Farm Mut. Auto. Ins. v. Fielder, 799 F.2d 656, 657 (11th Cir.1986). Following such an examination, the district court “may affirm, modify, or reverse a bankruptcy judge’s judgment, order, or decree or remand with instructions for further proceedings.” Fed.R.Bankr.P. 8013.
III. Undue Hardship
Congress specifically exempted student loans from dischargeability when it enacted § 523(a)(8). See 11 U.S.C. § 523(a)(8) (2001). That section provides, in part:
(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt—
(8) for an educational benefit overpayment or loan made, insured or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution, or for an obligation to repay funds received as an educational benefit, scholarship or stipend, unless excepting such debt from discharge under this paragraph will impose an undue hardship on the debtor and the debtor’s dependents....
11 U.S.C. § 523(a)(8) (2001) (emphasis added). In the same breath in which it exempted student loans from discharge-ability, therefore, Congress authorized the discharge of student loans upon a showing of “undue hardship” by the debtor. 11 U.S.C. § 523(a)(8) (2001). However, when it drafted § 523(a)(8), Congress failed to define what constitutes “undue hardship.”
To evaluate undue hardship claims, a majority of federal courts have thus applied the three-part test set forth by the United States Court of Appeals for the Second Circuit in Brunner v. New York State Higher Education, 831 F.2d 395 (2d Cir.1987). See Jennifer L. Frattini, Comment, The Dischargeability of Student Loans: An Undue Burden?, 17 Bankr. Dev.J. 537, 558 n. 124 (2001) (compiling cases applying or explicitly adopting the Brunner test); In re Rivers, 213 B.R. 616, 619 (Bankr.S.D.Ga.1997) (referring to Brunner as the “leading authority” on the undue hardship exception). To articulate undue hardship within the meaning of § 523(a)(8), the Brunner court required proof that (1) the debtor cannot currently maintain a minimal standard of living if forced to repay the loans; (2) this condition is likely to continue throughout the loan repayment period; and (3) the debtor has made good faith efforts to repay the loans. See Brunner, 831 F.2d at 396.
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11141583-26541 | BRORBY, Circuit Judge.
Appellant Douglas Christopher Gay, Jr. entered a conditional guilty plea to possession of cocaine base with intent to distribute, in violation of 21 U.S.C. § 841(a)(1), and possession of a firearm after conviction of a felony offense, in violation of 18 U.S.C. § 922(g)(1). Mr. Gay’s conditional plea reserved the right to appeal the district court’s denial of his motion to suppress evidence. The district court sentenced Mr. Gay to 235 months imprisonment, with a four-year term of supervised release, and a $200.00 special assessment. On appeal, Mr. Gay challenges the district court’s denial of his motion to suppress and the court’s sentencing calculation under United States Sentencing Guideline (U.S.S.G.) § 4B1.1 career offender provision. We exercise jurisdiction pursuant to 28 U.S.C. § 1291 and affirm.
FACTUAL BACKGROUND
The facts in this case are not in dispute. In 1997, an Oklahoma City police officer apprehended Mr. Gay who, at the time of his arrest, held several plastic bags containing approximately fifty-three grams of cocaine base. As the result of an investigation, authorities determined Mr. Gay was “fronted” nine ounces, or 255.15 grams, of cocaine base from another individual, and Mr. Gay had sold all but the fifty-three grams found in his hand at the time of his arrest. Thereafter, Mr. Gay apparently fled while on bail, and for two years the United States Marshal Service made numerous attempts to locate and arrest Mr. Gay, based on an outstanding 1997 Drug Enforcement Agency arrest warrant issued for Mr. Gay. In 1999, Deputy McNeil, with the United States Marshal Service, learned from an informant Mr. Gay lived with a relative — possibly his uncle — in Shawnee, Oklahoma. Informants from the Shawnee Police Department and the District Attorney Narcotics Task Force told Deputy McNeil the uncle was a known drug dealer and that possibly a relative involved in the drug business lived with him.
Law enforcement agents obtained a state search warrant for the uncle’s West Kirk Street residence, which authorized the agents to search the residence for both Mr. Gay and any drugs and firearms. On the morning of August 3, 1999, Deputy McNeil and other law enforcement agents (hereinafter “officers”) executed the search warrant at the West Kirk Street residence, but did not find Mr. Gay. The same morning, a confidential informant at that residence told the officers Mr. Gay presently dealt drugs and was “armed at all times.” Furthermore, the informant divulged Mr. Gay did not live with, but frequently visited, his uncle at the West Kirk Street residence. The confidential informant knew, from personal experience and numerous visits, Mr. Gay lived approximately two miles away on Pottinger Street. Soon after disclosing the location of Mr. Gay’s current residence, the informant accompanied the officers to Pottinger Street, showed them the location of the house, pointed out the duplex, and told the officers Mr. Gay was presently in his home.
Some time between nine and ten in the morning, and within five minutes of learning the location of Mr. Gay’s current residence, Deputy McNeil knocked on the door of the Pottinger Street residence and shouted “police.” Deputy McNeil immediately heard a “thud” from inside the residence. After two or three seconds, another officer twice kicked on the door to effect a forcible entry. The officers entered the residence and found Mr. Gay standing just inside the door. A gun was at his feet. The officers found 2.49 grams of crack cocaine in plain view on the couch. After the officers arrested Mr. Gay and advised him of his rights, he admitted he owned the gun and cocaine base.
A grand jury indictment charged Mr. Gay in Count 1 with possession of cocaine base with intent to distribute on March 5, 1997, in violation of 21 U.S.C. § 841(a)(1); in Count 2 with possession of cocaine base with intent to distribute on August 3,1999, in violation of 21 U.S.C. § 841(a)(1); in Count 3 with possession of a firearm in connection with the 1999 drug trafficking crime; and in Count 4 with possession of a firearm on August 3, 1999 after conviction of a felony offense, in violation of 18 U.S.C. § 922(g)(1).
Mr. Gay filed a motion in district court to suppress evidence challenging, among other things: (1) the officers’ use of the unknown confidential informant to form their reasonable belief that Mr. Gay resided in, and was within the dwelling at the time of entry; and (2) the officers’ unreasonable knock and announce before forcibly entering the Pottinger Street residence. The district court held a suppression hearing and overruled Mr. Gay’s motion. Mr. Gay entered a conditional guilty plea to Counts 2 and 4 of the Indictment, while reserviiig the right to appeal the district court’s denial of his motion to suppress evidence. The district court then sentenced Mr. Gay to 235 months imprisonment on Count 2, a concurrent 120 month imprisonment on Count 4, a four-year term of supervised release, and a $200.00 special assessment. Mr. Gay appeals the district court’s denial of his motion to suppress evidence, and challenges the district court’s sentencing calculation under U.S.S.G. § 4B1.1 career offender guideline.
STANDARD OF REVIEW
In reviewing the denial of a motion to suppress, this court considers the totality of the circumstances and views the evidence in the light most favorable to the government. United States v. Long, 176 F.3d 1304, 1307 (10th Cir.), cert. denied, 528 U.S. 921, 120 S.Ct. 283, 145 L.Ed.2d 237 (1999). We accept the district court’s findings of facts unless clearly erroneous. United States v. Green, 178 F.3d 1099, 1104 (10th Cir.1999). “A district court’s factual finding is clearly erroneous only ‘if it is without factual support in the record or if this court, after reviewing all the evidence, is left with a definite and firm conviction that a mistake has been made.’ ” United States v. Patrono-Montano, 228 F.3d 1184, 1188 (10th Cir.2000) (alteration omitted) (quoting Manning v. United States, 146 F.3d 808, 812 (10th Cir.1998)). “The ultimate determination of reasonableness under the Fourth Amendment is a question of law we review de novo, considering the totality of the circumstances.” United States v. Dickerson, 195 F.3d 1183, 1186 (10th Cir.1999).
DISCUSSION
I. Motion to Suppress
Mr. Gay does not dispute the validity, or the underlying probable cause, of his 1997 outstanding arrest warrant. Moreover, Mr. Gay acknowledges, as he must, an officer has limited authority based on the arrest warrant to enter a dwelling where the suspect resides. See Payton v. New York, 445 U.S. 573, 603, 100 S.Ct. 1371, 63 L.Ed.2d 639 (1980). However, Mr. Gay suggests officers could not lawfully enter the Pottinger Street residence without a search warrant supported by probable cause because it was not his home, but a third person’s home. Accordingly, he asserts a Steagald, rather than Payton, analysis should apply to the facts of this case. We disagree.
In Payton, the Supreme Court recognized the common law maxim “every man’s house is his castle” is part of our Fourth Amendment jurisprudence prohibiting unreasonable searches and seizures. Pay-ton, 445 U.S. at 590, 597 n. 45, 100 S.Ct. 1371 (stating the Fourth Amendment draws a “firm line at the entrance to the house [and][a]bsent exigent circumstances, that threshold may not reasonably be crossed without a warrant”). Although searches and seizures inside a home without a search warrant are presumptively unreasonable, “an arrest warrant founded on probable case implicitly carries with it the limited authority to enter a dwelling in which the suspect lives when there is reason to believe the suspect is within.” Pay-ton, 445 U.S. at 603,100 S.Ct. 1371.
In contrast, the Supreme Court held in Steagald that absent exigent circumstances or consent, law enforcement officers could not legally search for the subject of an arrest warrant in the home of a third party without first obtaining a search warrant. Steagald, 451 U.S. at 205-06, 101 S.Ct. 1642. Nevertheless, the Steag-ald Court reiterated the principle articulated in Payton that “an arrest warrant alone will suffice to enter a suspect’s own residence to effect his arrest.” Id. at 221, 101 S.Ct. 1642.
In a Payton analysis, this court recognizes a two-prong test: officers must have a reasonable belief the arrestee (1) lived in the residence, and (2) is within the residence at the time of entry. Valdez v. McPheters, 172 F.3d 1220, 1224-25 (10th Cir.1999) (rejecting argument “reasonable belief’ standard is the equivalent of “probable cause”). Thus, whether Steagald or Payton applies is resolved under the first prong of the Payton test. For the following reasons, we conclude the Payton analysis applies.
A. Reasonable belief arrestee lives in the residence
To satisfy the first prong of the Payton test, the officers must reasonably believe Mr. Gay lived in the Pottinger Street residence at the time of entry. We recognize the “officers’ belief need not prove true in fact[;] it is sufficient if the belief was objectively reasonable at the time of entry.” Valdez, 172 F.3d at 1225. In addition, Mr. Gay need not actually live in the Pottinger Street residence, so long as he “possesses common authority over, or some other significant relationship to, the residence entered by police.” Id. (quotation marks omitted). As we noted in Valdez, “people do not five in individual, separate, hermetically sealed residences!, but] live with oth er people[;] they move from one residence to another.” Id.
Mr. Gay argues an officer’s reasonable belief cannot be based on information acquired from an unknown confidential informant. Mr. Gay cites Florida v. J.L., 529 U.S. 266, 120 S.Ct. 1375, 146 L.Ed.2d 254 (2000) as support for his argument a “bald assertion” from an unknown informant fails to demonstrate the informant’s basis of knowledge or veracity. In J.L., the Court held “an anonymous tip that a person is carrying a gun, without more” does not give rise to a reasonable suspicion justifying a stop and frisk. 120 S.Ct. at 1377-79. This is because an anonymous tip alone lacks the moderate indicia of reliability necessary to justify reasonable suspicion. Id. at 1379-80.
The J.L. case is legally and factually distinguishable from this one. To satisfy the Payton test the officers must have a “reasonable belief’ the arrestee lives in the residence, not a “reasonable suspicion” necessary to justify a “stop and frisk” under Terry v. Ohio, 392 U.S. 1, 88 S.Ct. 1868, 20 L.Ed.2d 889 (1968). See United States v. Clayton, 210 F.3d 841, 844 n. 3 (8th Cir.2000) (distinguishing “reasonable belief’ from “reasonable suspicion”). These are two different legal standards. Nevertheless, we note the officers in this case, unlike in J.L., rely on more than an anonymous tip. The officers engaged in a face-to-face discussion with the informant, who knew Mr. Gay was currently involved in criminal activity, told the officers the location of the residence based on personal knowledge, personally accompanied the officers to the residence, pointed at the dwelling, and presumably remained accountable if the tip was fabricated. See United States v. Salazar, 945 F.2d 47, 50-51 (2d Cir.1991) (“[A] face-to-face informant must, as a general matter, be thought more reliable than an anonymous telephone tipster, for the former runs the greater risk that he may be held accountable if his information proves false.”), cert. denied, 504 U.S. 923, 112 S.Ct. 1975, 118 L.Ed.2d 574 (1992). Based on the evidence as a whole, we find the officers could reasonably rely on the confidential informant’s personal knowledge concerning Mr. Gay’s residence; thus, the officers possessed an objectively reasonable belief Mr. Gay lived at the Pottinger Street residence at the time of entry.
B. Reasonable belief arrestee is within the residence
Under the second prong of the Payton test, the officers must reasonably believe Mr. Gay was within the residence or present at the time of entry. We recognize we “must be sensitive to common sense factors indicating a resident’s presence.” Valdez, 172 F.3d at 1226 (quotation marks omitted). The officers are not required to actually view the suspect on the premises. Id. “Indeed the officers may take into account the fact that a person involved in criminal activity may be attempting to conceal his whereabouts.” Id.
In this case, the officers relied on the confidential informant to form their belief Mr. Gay was within the dwelling at the time of entry. The informant, who knew Mr. Gay personally, knew of his drug selling activities, and visited the Pottinger Street residence on numerous occasions, explicitly told the officers Mr. Gay was currently in his home. Soon after the confidential informant told them of Mr. Gay’s presence, Deputy McNeil knocked loudly on the front door of the residence and heard a thud from inside the home, which suggested to him a person was inside the 4uplex at that time. After hearing the thud, the officers forcibly entered the Pottinger Street residence. Here, too, because the officers received information concerning Mr. Gay’s whereabouts in a face-to-face encounter with the informant, we hold the officers could rely on the same informant’s tip Mr. Gay was within the residence at the time of entry.
Viewing the evidence in the light most favorable to the government, as we must, and considering the totality of the circumstances, we hold the officers reasonably believed Mr. Gay lived in the residence and was within the residence at the time of entry. See Long, 176 F.3d at 1307.
C. Knock and Announce Requirement
Mr. Gay asserts the officers’ failure to properly “knock and announce” their presence and purpose before seeking entry into Mr. Gay’s residence renders the ensm ing arrest and seizure of evidence constitutionally unreasonable. The federal “knock and announce” statute, which applies to the execution of both an arrest and search warrant, provides:
The officer may break open any outer or inner door or window of a house, or any part of a house, or anything therein, to execute a search warrant, if, after notice of his authority and purpose, he is refused admittance or when necessary to liberate himself or a person aiding him in the execution of the warrant.
18 U.S.C. § 3109; see Miller v. United States, 357 U.S. 301, 308-309, 78 S.Ct. 1190, 2 L.Ed.2d 1332 (1958). “If the occupants do not admit the officers within a reasonable period of time, the officers may be deemed to be constructively refused admittance, and they may then enter by force.” United States v. Moore, 91 F.3d 96, 98 (10th Cir.1996) (questioning whether, in the absence of exigent circumstances, three seconds between announcement and entry is constructive refusal); but see United States v. Jenkins, 175 F.3d 1208, 1213 (10th Cir.) (dismissing a bright-line rule for time that must elapse between announcement and entry), cert. denied, 528 U.S. 913, 120 S.Ct. 263, 145 L.Ed.2d 221 (1999). In this case, we need not decide whether the two or three seconds that elapsed between the officers’ announcement and their entry was a reasonable period of time under 18 U.S.C. § 3109 because we agree with the district court that exigent circumstances permitted the officers’ immediate entry.
D. Exigent Circumstances
Unquestionably, the presumption in favor of announcement gives way when exigent circumstances exist. United States v. King, 222 F.3d 1280, 1285 (10th Cir.2000). Exigent circumstances exist when officers are presented with an emergency situation, including threat of physical violence. See Moore, 91 F.3d at 98. “In order to justify a ‘no-knock’ entry, the police must have a reasonable suspicion that knocking and announcing their presence, under the particular circumstances, would be dangerous or futile.” Richards v. Wisconsin, 520 U.S. 385, 394, 117 S.Ct. 1416, 137 L.Ed.2d 615 (1997). We are mindful “[t]he mere statement that firearms are present, standing alone, is insufficient. The government must go further and demonstrate that the presence of firearms raised a concern for the officers’ safety.” Moore, 91 F.3d at 98.
In this case, the district court held exigent circumstances existed because the arresting officers obtained information from multiple informants that Mr. Gay carried a weapon at all times, currently dealt drugs, and recently participated in a shootout with the police. According to the district court, these facts suggest the officers faced a threat of physical violence such that knocking and announcing their presence may have jeopardized their lives and safety.
. On appeal, Mr. Gay argues the officers did not possess reasonable suspicion that knocking and announcing their presence would be dangerous. He contends the officers lacked reasonable suspicion of his dangerousness because the only information available to the officers involved his past shoot out with police and unsubstantiated hearsay from multiple informants. As support for his argument, Mr. Gay cites to United States v. Stewart, 867 F.2d 581, 584 (10th Cir.1989), in which we stated:
The conclusion of exigency ... must be especially clear ... where there was no knock or warning whatsoever, where there was no information as to who was in the house, where the destruction of physical property took place, and where the occupants of the residence could be injured as a result of the entry.
Id. In Stewart, the officers believed the defendant was dangerous because an informant under the influence of marijuana told another informant he once saw the defendant with a semi-automatic pistol. Id. at 585. Based on little more than that statement, the Denver S.W.A.T. team forcibly entered the defendant’s home, without knocking and announcing their presence, used a battering ram and detonated a stun grenade upon entry. Id. at 583.
The facts in this case, to say the least, are distinguishable. The quality and quantity of the officers’ information regarding Mr. Gay’s dangerousness is significantly greater than the information in Stewart. Here, the officers relied on at least four informants who each'corroborated that Mr. Gay was armed at all times. In addition, Deputy McNeil learned from another agent, and the Tulsa police department confirmed, Mr. Gay participated in a police shoot-out two years prior to his 1999 arrest. In discussing the events of the shoot-out, Tulsa police told Deputy McNeil that Mr. Gay admitted he would involve himself in another shoot-out with police to avoid jail. Moreover, the circumstances surrounding the forcible entry into the Pottinger Street residence are less extreme than those in Stewart. In this case, the arresting officers knocked, announced “police,” waited two or three seconds, heard a thud, and twice kicked, rather than rammed, the door before entering. After carefully reviewing the transcript of the suppression hearing, we conclude the district court’s factual findings are not clearly erroneous, are fully supported by the evidence, and this court is not left with a “definite and firm conviction that a mistake has been made.” Patrorir-Montano, 223 F.3d at 1188 (quotation marks and citation omitted). Based-on these facts, we hold exigent circumstances justified the officers’ forcible entry into Mr. Gay’s Pot-tinger Street residence.
II. CAREER OFFENDER SENTENCING
On appeal, Mr. Gay does not dispute the district court’s finding he is a career offender within the meaning of U.S.S.G. § 4B1.1, but instead challenges the court’s sentencing calculation under the career offender provision. In order to understand the basis of Mr. Gay’s appeal, a brief recitation of the probation officer’s sentencing computation, which the district court adopted, is necessary.
The probation officer found Mr. Gay accountable for a total 257.64 grams of cocaine base, based on the 255.15 grams, or nine ounces, he was “fronted” in 1997, and the 2.49 grams he possessed when arrested in 1999. Under the Sentencing Guidelines, Mr. Gay’s base offense level for 257.64 grams of cocaine base is 34. The probation officer added two levels, pursuant to Sentencing Guideline § 2D1.1(B)(1), because Mr. Gay possessed a firearm during the offense, resulting in a base offense level of 36. The probation officer then reduced by three levels, pursuant to Sentencing Guidelines § 3El.l(a)-(b), because Mr. Gay accepted responsibility and assisted authorities, resulting in a total offense level of 33.
Mr. Gay’s initial criminal history category was IV. However, Mr. Gay satisfies the § 4B1.1. career offender guideline requirements because he was at least eighteen years old at the time he committed the instant offense, which involved a controlled substance, and had been convicted of at least two prior crimes of violence. See U.S.S.G. § 4B1.1. Thus, the probation officer assigned Mr. Gay a criminal history category VI, pursuant to § 4B1.1 which requires category VI in “every case.” Id.
The probation officer also explained § 4B1.1 provides an alternative method for calculating a career offender’s base offense level. The § 4B1.1 base offense level must be applied if it is greater than the offense level calculated under § 2D1.1. Id. Mr. Gay’s § 4B1.1 base offense level is 34 because the maximum statutory penalty for his violation of 21 U.S.C. § 841(b)(l)(B)(iii) is forty years. Because Mr. Gay’s base offense level of 36 under § 2D1.1 is greater than his offense level of 34 under § 4B1.1, the probation office calculated Mr. Gay’s sentence applying the § 2D1.1 base offense level. Id.
The district court adopted the probation officer’s sentencing calculation, which combined the adjusted § 2D1.1 offense level (33) to the criminal history category VI specified in § 4B1.1 and resulted in a sentencing range of 235 to 293 months imprisonment. See U.S.S.G. Chapter 5 (Sentencing Table). The district court sentenced Mr. Gay to 235 months in prison.
On appeal, Mr. Gay argues the district court applied a piecemeal, and ultimately higher, sentence by using the greater § 2D1.1 offense level with the § 4B1.1 criminal history category. Mr. Gay contends that because the district court did not apply the offense level listed in the career offender guideline, the higher criminal history category VI also may not be applied. Stated differently, Mr. Gay asserts the district court erred because the “career offender provision must be applied in toto, or not at all.”
We review the district court’s factual findings regarding sentencing for clear error and review its legal interpretation of the Sentencing Guidelines de novo. United States v. Maldonado-Acosta, 210 F.3d 1182, 1183 (10th Cir.2000). The § 4B1.1 career offender provision states, in relevant part: “If the offense level for a career criminal from the table below is greater than the offense level otherwise applicable, the offense level from the table below shall apply. A career offender’s criminal history category in every case shall be Category VI.” U.S.S.G. § 4B1.1 (2000). The table specified in the provision contains offense levels geared to the maximum sentence under the statute of conviction. In enacting § 4B1.1, Congress intended career offenders to “receive a sentence of imprisonment at or near the maximum term authorized.” U.S.S.G. § 4B1.1 comment, (backg’d) (quotation marks omitted).
This court has stated the guidelines must be interpreted as if they were a statute or court rule. United States v. Checora, 175 F.3d 782, 790 (10th Cir.1999). As with general statutory interpretation, “our analysis must begin with the language of the guidelines in question.” United States v. Smith, 900 F.2d 1442, 1446 (10th Cir.1990). “The guidelines, as criminal statutes, are ‘given their fair meaning in accord with the manifest intent of the lawmakers.’” United States v. Mojica, 214 F.3d 1169, 1171 (10th Cir.2000) (quoting United States v. Moore, 423 U.S. 122, 145, 96 S.Ct. 335, 46 L.Ed.2d 333 (1975)).
It is evident § 4B1.1, adopted for the purpose of enhancing the sentences for career offenders, articulates two opposed offense levels. The first offense level is that listed in the career offender table; the second is the “otherwise applicable” Chapter Two offense level. See U.S.S.G. § 4B1.1. The career offender guideline plainly directs the sentencing court to apply the listed career offender offense level if it is greater than the offense level otherwise applicable. Based on the “fair meaning” of § 4B1.1, it logically follows that if the “otherwise applicable” (i.e., Chapter Two) offense level is greater, then the sentencing court must apply that offense level. See Mojica, 214 F.3d at 1171. Our reading of § 4B1.1 and its explanatory background notes is consistent with the legislatures’ manifest intent for offenders with a career criminal background to receive at or near the maximum sentence authorized, and the fact § 4B1.1 is intended as a sentence enhancement. United States v. Robinson, 935 F.2d 201, 206 (11th Cir.1991), cert. denied, 502 U.S. 1037, 112 S.Ct. 885, 116 L.Ed.2d 789 (1992); see also U.S.S.G. § 4B1.1 comment. (backg’d).
Additionally, our holding is in accord other circuits’ case law. The Eleventh Circuit, when confronted with a similar question, stated, “[i]t would appear the negative corollary of [§ 4B1.1] must also apply; i.e., if the offense level from the career offender table is less than the otherwise applicable offense level, the greater of the offense levels shall apply.” Robinson, 935 F.2d at 205-06. See United States v. Marrone, 48 F.3d 735, 740 n. 9 (3d Cir.) (“A career offender’s offense level is the greater of the offense level applicable to the underlying conduct or the appropriate offense level specified in section 4B1.1. A career offender automatically receives a criminal history category of VI.”), cert. denied, 516 U.S. 836, 116 S.Ct. 115, 133 L.Edüd 66 (1995). For the reasons, stated, we hold Mr. Gay’s “otherwise applicable” offense level, under § 2D1.1, applies because it is greater than his career criminal offense level.
However, our resolution of the applicable offense level does not end our inquiry. We now must resolve Mr. Gay’s appropriate criminal history category. Mr. Gay contends his criminal history category is inextricably intertwined with his applicable offense level. Thus, he suggests the sentencing court may only apply the specified § 4B1.1 criminal history category VI if that court also uses the listed career offender offense level. We reject such a constrained reading of § 4B1.1.
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10524385-11594 | PER CURIAM.
Plaintiff-appellant Hospice of Metro Denver, Inc. (Hospice) appeals from the dismissal of its promissory estoppel claim against defendant Group Health Insurance of Oklahoma, Inc., d/b/a Blue Cross and Blue Shield of Oklahoma (Blue Cross). The district court dismissed the claim as preempted by the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 to § 1461 (ERISA). On appeal, Hospice argues that there is no ERISA preemption as to its state common law claim of promissory estoppel. Additionally, Hospice requests sanctions, attorney’s fees, and costs. We agree that Hospice’s state law claim is not preempted by ERISA. Accordingly, we reverse the district court and remand for proceeding in accordance with this opinion. Hospice’s requests for attorney’s fees, sanctions, and costs are denied.
The infant son of Mr. and Mrs. Michael Samsel underwent two surgeries. Following the second surgery, he was admitted to Hospice in order to receive around-the-clock care. The infant remained in the hospice for approximately four months. Mr. Sam-sel’s employer, Anchor Paint and Manufacturing Company, provides group health care benefits from Blue Cross for its employees. Hospice alleges that it contacted Blue Cross, prior to admitting the infant, about insurance coverage, and was informed that coverage was available. Hospice further alleges that during the course of the infant’s care, Blue Cross repeatedly assured it that the care was covered, and payment would be forwarded. Following the infant’s discharge from the hospice, Blue Cross denied coverage and payment relying on the policy’s preexisting conditions provisions.
Hospice sued Blue Cross in state court alleging (1) detrimental reliance (later changed to promissory estoppel), (2) quantum meruit and (3) claims as a third-party beneficiary. Blue Cross removed the action to federal district court, and filed a motion to dismiss all claims as preempted by section 514(a) of ERISA, 29 U.S.C. 1144(a). The district court granted the motion, holding that Hospice’s first two claims were preempted under ERISA. The district court further concluded that although Hospice’s third claim was actionable under ERISA, Hospice was not a participant, beneficiary, or fiduciary of the plan pursuant to 29 U.S.C. § 1132(a)(1), and therefore, did not have standing to bring a civil suit.
We review a dismissal under Fed.R.Civ.P. 12(b)(6) de novo and “accept all factual allegations of the complaint as true, and draw all reasonable inferences in favor of the plaintiff.” Zilkha Energy Co. v. Leighton, 920 F.2d 1520, 1523 (10th Cir.1990). Dismissal of a case pursuant to Fed.R.Civ.P. 12(b)(6) requires the legal determination that the plaintiff can prove no set of facts in support of his claim to entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957); Morgan v. City of Rawlins, 792 F.2d 975, 978 (10th Cir.1986).
Colorado has adopted the promissory estoppel doctrine in the Restatement (Second) of Contracts § 90 (1981). Vigoda v. Denver Urban Renewal Auth., 646 P.2d 900, 905 (Colo.1982). Although the facts alleged state a promissory estoppel claim, the issue is whether Hospice’s promissory estoppel claim is preempted by ERISA § 514(a), 29 U.S.C. § 1144(a). Section 514(a) states that “[e]xcept as provided in subsection (b) of this section, the provisions of this subchapter and subchapter III of this chapter shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan_” 29 U.S.C. § 1144(a) (emphasis added).
We must decide whether § 514(a) preempts a state cause of action by a third-party health care provider against a plan encompassed by ERISA. The Supreme Court has interpreted the phrase “relate[d] to any employer benefit plan” in its broad sense, including any law that has a “connection with or reference to such a plan.” Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97, 103 S.Ct. 2890, 2900, 77 L.Ed.2d 490 (1983). The Court also has held that ERISA preempts state common law tort and contract actions for improper processing of claims under ERISA regulated employee benefit plans. Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 48, 107 S.Ct. 1549, 1553, 95 L.Ed.2d 39 (1987). After considering congressional intent, the Court determined that ERISA’s preemption provision was broad enough to become the “ ‘sole power to regulate the field of employee benefit plans.’ ” Id. at 46, 107 S.Ct. at 1552 (quoting 120 Cong.Rec. 29197 (1974) (statement of Rep. Dent)). However, state actions which affect plans in “too tenuous, remote, or peripheral a manner,” will not be preempted as a law relating to the plan. Shaw v. Delta Air Lines, Inc., 463 U.S. at 100 n. 21, 103 S.Ct. at 2901 n. 21, Uselton v. Commercial Lovelace Motor Freight, Inc., 940 F.2d 564, 583 (10th Cir.1991). “ERISA does not preempt claims that are only tangentially involved with a benefit plan.” Settles v. Golden Rule Ins. Co., 927 F.2d 505, 509 (10th Cir.1991). The Second Circuit, in deciding whether a state statute was preempted, considered when a cause of action “related” to the plan. When a state law “does not affect the structure, the administration, or the type of benefits provided by an ERISA plan, the mere fact that the [law] has some economic impact on the plan does not require that the [law] be invalidated.” Rebaldo v. Cuomo, 749 F.2d 133, 139 (2d Cir.1984), cert. denied, 472 U.S. 1008, 105 S.Ct. 2702, 86 L.Ed.2d 718 (1985).
Blue Cross argues that Hospice specifically “refers to the plan” in its complaint, and that these references automatically relate the claim to the ERISA plan. Appel-lee’s Answer Brief at 5. We do not agree. Blue Cross’s denial of payment to Hospice was a mere consequence of its denial of coverage to Samsel. Hospice does not claim any rights under the plan, and does not claim any breach of the plan contract. The promissory estoppel claim does not seek to enforce or modify the terms of the plan, nor is there any “threat of conflicting and inconsistent State and local regulation.” Shaw v. Delta Air Lines, Inc., 463 U.S. at 99, 103 S.Ct. at 2901 (quoting 120 Cong.Rec. 29197 (1974) (statement of Rep. Dent)). Hospice’s references in its complaint to the preexisting condition provision are not offered to support Hospice’s claim. Rather those references provide a background factual explanation of Blue Cross’s decision to deny benefits to Samsel. Samsel is not a party to this action, and his right to receive benefits under the plan is not at issue.
In Memorial Hosp. Sys. v. Northbrook Life Ins. Co., 904 F.2d 236 (5th Cir.1990), the court addressed the preemption question relative to an ERISA plan’s refusal to pay hospital expenses after the plan had orally represented coverage to the hospital. The court stated:
If a patient is not covered under an insurance policy, despite the insurance company’s assurances to the contrary, a provider's subsequent civil recovery against the insurer in no way expands the rights of the patient to receive bene fits under the terms if the health care plan.... A provider’s state law action under these circumstances would not arise due to the patient’s coverage under an ERISA plan, but precisely because there is no ERISA plan coverage.
Id. at 246 (emphasis added). The court stressed the importance of considering the “commercial realities” of a preemption decision in this factual setting, stating that if health care providers have no recourse under ERISA or under state law, there will be reluctance on the part of health care providers to extend care without prepayment. Id. at 247. We agree.
A preemption decision would shield Blue Cross from liability and leave the Hospice without recourse. We are aware that preemption normally is not dependent upon the availability of ERISA remedies. See Pilot Life Ins. Co., 481 U.S. at 54, 107 S.Ct. at 1556; Lister v. Stark, 890 F.2d 941, 946 (7th Cir.1989) (“[T]he availability of a federal remedy is not a prerequisite for federal preemption.”), cert. denied, — U.S. -, 111 S.Ct. 579, 112 L.Ed.2d 584 (1990); but see Perry v. P*I*E Nationwide Inc., 872 F.2d 157, 162 (6th Cir.1989) (preemption only applies where Congress has provided an adequate remedy), cert. denied, 493 U.S. 1093, 110 S.Ct. 1166, 107 L.Ed.2d 1068 (1990). In Pilot Life, the Supreme Court stated that “[t]he policy choices reflected in the inclusion of certain remedies and the exclusion of others under the federal scheme would be completely undermined if ERISA-plan participants and beneficiaries were free to obtain remedies under state law that Congress rejected in ERISA.” Pilot Life Ins. Co., 481 U.S. at 54, 107 S.Ct. at 1556. Hospice, however, is not a participant or a beneficiary as enumerated in the Supreme Court opinion or in the statute itself, and, therefore, its lack of alternate remedies in the event of preemption is deserving of consideration.
Hospice has not alleged any conduct on the part of Blue Cross which relates to the administration of the plan, to the processing of any covered claim, or which impinges on any employee’s ERISA rights. See Clark v. Coats & Clark, Inc., 865 F.2d 1237, 1243-44 (11th Cir.1989) (tort claim which had no effect on the administration of an employee benefit plan not preempted); Ethridge v. Harbor House Restaurant, 861 F.2d 1389, 1404 (9th Cir.1988) (“ERISA preempts only those state law claims that arise out of the administration of a covered plan”); but see St. Mary Medical Center v. Cristiano, 724 F.Supp. 732, 739 (C.D.Cal.1989) (state common law claims for misrepresentation preempted by ERISA where misrepresentation is related to entitlements under employee health benefit plan).
If Hospice prevails, merely because its damages would be based upon the amount of potential plan benefits does not implicate the administration of the plan, and is not consequential enough to connect the action with, or relate the action to, the plan. See Memorial Hosp. Sys., 904 F.2d at 247. The payment of the judgment would be a one time, lump-sum amount and would not further burden the plan, either financially or administratively. See Totton v. New York Life Ins. Co., 685 F.Supp. 27, 31 (D.Conn.1987).
We recognize the unlimited “relate to” language of ERISA’s preemption provision and the expansive interpretation given the phrase by the courts. ERISA’s legislative history decidedly points to Congress’ intent that the act be broad and expansive. Cefalu v. B.F. Goodrich Co., 871 F.2d 1290, 1293 (5th Cir.1989) (citing 120 Cong.Rec. 29197 (1974)). However, the “ultimate touchstone” in determining preemption is the Congressional purpose in enacting ERISA. Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 8, 107 S.Ct. 2211, 2215, 96 L.Ed.2d 1 (1987). The Act states its purpose as,
[T]o protect ... participants in employee benefit plans and their beneficiaries, by requiring the disclosure and reporting to participants and beneficiaries of financial and other information with respect thereto, by establishing standards of conduct, responsibility, and obligation for fiduciaries of employee benefit plans, and by providing for appropriate remedies, sanctions, and ready access to the Federal courts.
29 U.S.C. § 1001(b). See also Shaw v. Delta Air Lines, Inc., 463 U.S. at 90, 103 S.Ct. at 2896 (purpose is “to promote the interests of employees and their beneficiaries in employee benefit plans”); Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 148, 105 S.Ct. 3085, 3093, 87 L.Ed.2d 96 (1985) (purpose is “to protect contractually defined benefits”).
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11824813-19931 | PAULINE NEWMAN, Circuit Judge.
The parties to Patent Interference No. 102,598 are Gilbert P. Hyatt, inventor of United States Patent No. 4,942,516 entitled “Single Chip Integrated Circuit Computer Architecture” (the ’516 patent), and Gary W. Boone, inventor of patent application Serial No. 07/473,541 entitled “Variable Function Programmed Systems” (the ’541 application). Mr. Hyatt appeals the decision of the Board of Patent Appeals and Interferences, entering judgment against him and cancelling the relevant claims of his ’516 patent. Mr. Boone cross-appeals the Board’s entry of judgment against him. We affirm the Board’s decision, with modification of the judgment to declare Boone the prevailing-party in the interference.
DISCUSSION
Determination of priority of invention invokes a complex body of procedural and substantive law, applied in the first instance in administrative proceedings in accordance with 35 U.S.C. § 135(a) (“The Board of Patent Appeals and Interferences shall determine questions of priority of the inventions and may determine questions of patentability.”) The interference proceeding implements the principle of United States law that the right to a patent derives from priority of invention, not priority of patent application filing.
The general rule is that the first person to conceive the invention is the first inventor, see Irving Kayton, The United States Patent as a Legal Instrument, in 1 Patent Practice 2-1, 2-39 (Irving Kayton and Karyl S. Kayton eds., 4th ed. 1989) (“The earliest possible date of invention, therefore, is the date of conception.”), provided that when the first to conceive the invention is the last to reduce it to practice, the person who was first to conceive must have exercised reasonable diligence to his own actual or constructive reduction to practice, “from a time prior to conception by the other.” 35 U.S.C. § 102(g). See Charles L. Gholz, Interference Practice, in 6 Patent Practice, supra, 24-1, 24-6(c); Paulik v. Rizkalla, 760 F.2d 1270, 1272, 226 USPQ 224, 225 (Fed.Cir.1985) (in banc). Thus, during an interference proceeding evidence may be presented of conception, reduction to practice, and diligence, as appropriate to the positions of the parties, see id.; see generally Gholz, supra, at 24-1, or a party may rely on the patent document to establish the facts of priority of invention. See Gholz, supra, at 24-45.
The contested invention is a computer formed on a single integrated circuit chip, having specified circuits and functions. The sole count of the interference is:
A computer on a chip comprising:
an integrated circuit chip having a computer implemented thereon;
an integrated circuit main memory storing computer instructions, wherein said integrated circuit main memory is included on said integrated circuit chip;
an integrated circuit operand memory storing operands, wherein said integrated circuit operand memory is included on said integrated circuit chip; and
an integrated circuit processing circuit processing the operands stored by said . integrated circuit operand memory in response to the instructions stored in said integrated circuit main memory, wherein said processing circuit is included on said integrated circuit chip.
The interference contest was initiated by Boone after Hyatt’s ’516 patent issued. Boone followed the procedure of copying certain of Hyatt’s patent claims into his pending application and asking the patent examiner to “declare” the interference. 37 C.F.R. § 1.607 (1990). The examiner so acted. See 37 C.F.R. § 1.611 (1990).
Both parties claimed the benefit of earlier-filed patent applications, relying on the earlier applications for constructive reduction to practice of the subject matter of the count. See 37 C.F.R § 1.626 (1990). Conception is not at issue in this appeal, and neither party presented evidence of actual reduction to practice. At the Motions stage from which the Board’s decision evolved, the only issue was each party’s entitlement to certain asserted dates of constructive reduction to practice.
Boone was granted an effective filing date, through a chain of nine prior applications, of an application filed on July 19, 1971. Hyatt was granted an effective filing date, through a chain of four prior applications, of an application filed on December 14, 1977. The Board denied Hyatt the benefit of the filing date of his December 28, 1970 application No. 05/101,881 (the ’881 application) as to the subject matter of the count. Hyatt disputes the denial of the ’881 application filing date, and also challenges the date awarded to Boone.
I
HYATT’S ’881 APPLICATION
The filing of a patent application serves as conception and constructive reduction to practice of the subject matter described in the application. Yasuko Kawai v. Metlesics, 480 F.2d 880, 885, 178 USPQ 158, 162 (CCPA 1973) (“[T]he act of filing the United States application has the legal effect of being, constructively at least, a simultaneous conception and reduction to practice of the invention.”); see Hybritech Inc. v. Monoclonal Antibodies, Inc., 802 F.2d 1367, 1376, 231 USPQ 81, 87 (Fed.Cir.1986) (“constructive reduction to practice occurs when a patent application on the claimed invention is filed”); In re Glass, 492 F.2d 1228, 1232, 181 USPQ 31, 34 (CCPA 1974). There is no need for proof or corroboration of the subject matter that is included in the application unless a date earlier than the filing date is sought to be established. Yasuko Kawai, 480 F.2d at 886, 178 USPQ at 163 (“the written specification in the application is the evidence proving the invention of that which is reduced to practice”). Thus the inventor need not provide evidence of either conception or actual reduction to practice when relying on the content of the patent application.
However, the patent application must comply with the legal requirements for support of the interference count. When a party to an interference seeks the benefit of an earlier-filed United States patent application, the earlier application must meet the requirements of 35 U.S.C. § 120 and 35 U.S.C. § 112 ¶ 1 for the subject matter of the count. The earlier application must contain a written description of the subject matter of the interference count, and must meet the enablement requirement. Fiers v. Revel, 984 F.2d 1164, 1170, 25 USPQ2d 1601, 1606 (Fed.Cir.1993) (section 112 paragraph 1 must be met by the earlier application). The Board found that Hyatt’s ’881 application did not provide the requisite written description; the Board did not decide the question of enablement.
A
We review the Board’s findings on the standard of clear error, for compliance with the written description requirement is a question of fact. Vas-Cath Inc. v. Mahurkar, 935 F.2d 1555, 1563, 19 USPQ2d 1111, 1116 (Fed.Cir.1991). Hyatt relies as written description on the text of claim 40 as that claim was originally filed in the ’881 application, viewed with the entire specification.
The claims as filed are part of the specification, and may provide or contribute to compliance with § 112. See Northern Telecom, Inc. v. Datapoint Corp., 908 F.2d 931, 938, 15 USPQ2d 1321, 1326 (Fed.Cir.1990) (the original claims are part of the patent specification); In re Benno, 768 F.2d 1340, 1346, 226 USPQ 683, 686-87 (Fed.Cir.1985); In re Frey, 35 C.C.P.A. 970, 166 F.2d 572, 575, 77 USPQ 116, 119 (CCPA 1948). Hyatt’s original claim 40 is for a data processing system implemented on a single integrated circuit chip, as follows:
40. An electronic data processing system including read only memory means, alterable memory means and program means, said system being implemented on a single integrated circuit chip.
There is no other mention in the ’881 specification of a single integrated circuit chip, although other electronic data systems are extensively described.
Hyatt’s position is that the text of claim 40 describes the subject matter of the interference count, in that the “read only memory means” of claim 40 is the same as the “integrated circuit main memory storing computer instructions” of the count, the “alterable memory means” of claim 40 is the same as the “integrated circuit operand memory storing operands” of the count, and the “program means” of claim 40 is the same as the “integrated circuit processing circuit” of the count. Hyatt states that the ’881 specification contains detailed descriptions of various computer circuits, which supplement the text of claim 40 in that the specification describes a computer made up of numerous integrated circuits mounted on multiple printed circuit boards and comprising a “physically distributed, operatively dispersed system.”
The Board held that the written description must be sufficient, when the entire specification is considered, that the “necessary and only reasonable construction” that would be given it by a person skilled in the art is one that clearly supports each positive limitation in the count. The Board found that the term “program means” in claim 40 is used to describe only computer instructions or as a modifier of “program control means,” and does not describe or require the interpretation that the program processes the operands stored by the alterable memory in accordance with instructions stored in the read only memory, as is required by the count. The Board also found that the “read only memory means” of claim 40 need not be a main memory storing computer instructions, and that the “alterable memory means” of claim 40 need not be an operand memory storing operands. Thus the Board found that original claim 40 could be read as describing subject matter other than that of the count, and thus did not establish that Hyatt was in possession of the invention of the count. The Board found that the parts of the written description that are lacking from claim 40 are not provided elsewhere in the ’881 specification, whose systems and circuitry neither describe nor suggest a computer on a single chip. The Board concluded that “[w]hile two memories and a computer program may generally constitute a data processing system of some sort, they do not describe the invention set forth by the count.”
Rejecting Hyatt’s argument, supported by testimony of witnesses, that the absent description would have been apparent to persons of skill in this field, the Board stated that “if ‘program means’ can be a circuit (processor) that responds to a program as indicated by [Hyatt’s] witnesses, it is at least as likely that it can be a memory that merely stores a program without processing operands.” The Board held that witnesses can not “establish facts which the disclosure itself should provide,” citing In re Smyth, 38 C.C.P.A. 1130, 189 F.2d 982, 990, 90 USPQ 106, 112 (CCPA 1951). Hyatt challenges these findings and conclusions, as well as the Board’s legal standard for determining compliance with the written description requirement.
B
For an earlier-filed application to serve as constructive reduction to practice of the subject matter of an interference count, the applicant must describe the subject matter of the count in terms that establish that he was in possession of the later-claimed invention, including all of the elements and limitations presented in the count, at the time of the earlier filing. Although Hyatt is correct that known details need not be included in a patent specification, see In re Eltgroth, 57 C.C.P.A. 833, 419 F.2d 918, 921, 164 USPQ 221, 223 (CCPA 1970) (“This court has often observed that minutiae of descriptions or procedures perfectly obvious to one of ordinary skill in the art yet unfamiliar to laymen need not be set forth.”), when an explicit limitation in an interference count is not present in the written description whose benefit is sought it must be shown that a person of ordinary skill would have understood, at the time the patent application was filed, that the description requires that limitation. As discussed in Martin v. Mayer, 823 F.2d 500, 505, 3 USPQ2d 1333, 1337 (Fed.Cir.1987), “It is ‘not a question of whether one skilled in the art might be able to construct the patentee’s device from the teachings of the disclosure.... Rather, it is a question whether the application necessarily discloses that particular device.’ ” (quoting Jepson v. Coleman, 50 C.C.P.A. 1051, 314 F.2d 533, 536, 136 USPQ 647, 649-50 (CCPA 1963)). See Lockwood v. American Airlines, Inc., 107 F.3d 1565, 1571-72, 41 USPQ2d 1961, 1966 (Fed.Cir.1997). It is insufficient as written description, for purposes of establishing priority of invention, to provide a specification that does not unambiguously describe all limitations of the count. See, e.g., Wagoner v. Barger, 463 F.2d 1377, 1380, 175 USPQ 85, 86-87 (CCPA 1972); Dyer v. Field, 55 C.C.P.A 771, 386 F.2d 466, 156 USPQ 85 (CCPA 1967); Bocciarelli v. Huffman, 43 C.C.P.A. 873, 232 F.2d 647, 109 USPQ 385 (CCPA 1956).
Hyatt and Boone presented conflicting views of the knowledge of a person of ordinary skill in the field of the invention at the time the ’881 patent application was filed, and disputed whether such a person would have understood the text of Hyatt’s original claim 40 as describing all of the limitations of the count. Hyatt’s witnesses testified that a person of skill in this field would have known that the program means processes the operands in accordance with the read-only memory instructions, and would have readily understood that the program means, read only memory means, and alterable memory means cooperate in the way stated in the count. The Board criticized this testimony on the ground that although Hyatt’s witnesses stated that it was well known that a data processing system must include a processing circuit of some sort, they did not address “whether a data processing system must necessarily include the specific processing circuit required by the count.” We have not been shown dear error in the Board’s findings as to the content of the written description, and the conclusion that the missing subject matter was not known details, but significant claim limitations; the missing subject matter was not shown to be part of the prior art that would be understood as part of the description of the subject matter of the count.
Hyatt states that even if the Board’s findings are not clearly erroneous as to the content of the written description, the Board applied an incorrect legal standard in requiring that the specification “necessarily” describe the entire subject matter of the count. Hyatt states that a separate body of precedent, typified by Vas-Cath Inc. v. Mahurkar, 935 F.2d 1555, 19 USPQ2d 1111 (Fed.Cir.1991), states a different and better standard. In Vas-Cath the court stated that the applicant must “convey with reasonable clarity to those skilled in the art that, as of the filing date sought, he or she was in possession of the invention.” Id. at 1563-64, 935 F.2d 1555, 19 USPQ2d at 1117. Other cases have used the same words in assessing the adequacy of the written description. See, e.g., Fujikawa v. Wattanasin, 93 F.3d 1559, 1570, 39 USPQ2d 1895, 1904 (Fed.Cir.1996) (“the disclosure need only reasonably convey to persons skilled in the art that the inventor had possession of the subject matter in question”); Fiers v. Revel, 984 F.2d at 1170, 25 USPQ2d at 1606 (same); In re Kaslow, 707 F.2d 1366, 1375, 217 USPQ 1089, 1096 (Fed.Cir.1983) (same). Hyatt states that he readily met this requirement, in that original claim 40 of his ’881 application reasonably conveyed to persons of skill in this field that he possessed the invention of the count.
Hyatt argues that “reasonably conveys to the artisan” is a less rigorous and more reasonable measure of the written description requirement than the “necessary and only reasonable construction” standard that the Board applied. Precedent has used both phrases, as well as others. See, e.g., In re Wertheim, 646 F.2d 527, 538-39, 209 USPQ 554, 565 (CCPA 1981) (the disclosure relied on must “constitute[ ] a full, clear, concise and exact description ... of the invention claimed”). We do not view these various expressions as setting divergent standards for compliance with § 112. In all cases, the purpose of the description requirement is “to ensure that the inventor had possession, as of the filing date of the application relied on, of the specific subject matter later claimed by him.” In re Edwards, 568 F.2d 1349, 1351-52, 196 USPQ 465, 467 (CCPA 1978). Thus, the written description must include all of the limitations of the interference count, or the applicant must show that any absent text is necessarily comprehended in the description provided and would have been so understood at the time the patent application was filed.
The Board did not clearly err in finding that Hyatt did not establish in the ’881 application’s written description that he possessed the entire subject matter of the count. This finding comports with the criterion not only of whether the description conveyed to the artisan the specific subject matter of the count, but also of whether the applicant established that this was the necessary construction of that description. The written description must include the limitations of the count with sufficient clarity and specificity that “persons of ordinary skill in the art will recognize from the disclosure that appellants invented processes including those limitations,” In re Wertheim, 541 F.2d 257, 262, 191 USPQ 90, 96 (CCPA 1976). The denial to Hyatt of benefit of the ’881 application date as constructive reduction to practice of the interference count is affirmed.
II
BOONE’S ’565 APPLICATION
Hyatt objected to the action of the administrative patent judge in according Boone the benefit of the July 19, 1971 filing date of application Serial No. 163,565 (the ’565 application), the first of ten applications culminating in the ’541 application in interference. Hyatt’s objection is that at least two of these ten applications are invalid continuation applications, thus breaking the chain of priority. Hyatt states that Boone’s second and eighth applications, both of which were filed under the “streamlined” procedures of 37 C.F.R. § 1.60 (Rule 60) with photocopies of the prior specification and oath, contained amended claims and thus could not have been filed under Rule 60, but required a new oath. Boone concedes the facts of these filings, but argues that these are not flaws, or not flaws fatal to his entitlement to trace priority through the chain.
Rule 60, at the time of Boone’s first challenged continuation application in 1973, was as follows:
37 C.F.R. § 1.60 [1973]. A continuation or divisional application ... which discloses and claims only subject matter disclosed in a prior application may be filed as a separate application before the patenting or abandonment of or termination of proceedings on the prior application. If the application papers comprise a copy of the prior application as filed, signing and execution by the applicant may be omitted.... Only amendments reducing the number of claims or adding a reference to the prior application (§ 1.78(a)) will be entered before calculating the filing fee and granting of the filing date.
By 1987, when Boone’s eighth continuation was filed, Rule 60 had been elaborated as follows:
37 C.F.R. § 1.60(b) [1987]. An applicant may omit signing of the oath or declaration in a continuation or divisional application if ... (2) applicant files a true copy of the prior complete application as filed including the specification (including claims), drawings, oath or declaration showing the signature or an indication it was signed, and any amendments referred to in the oath or declaration filed to complete the prior application.... Only amendments reducing the number of claims or adding a reference to the prior application (§ 1.78(a)) will be entered before calculating the filing fee and granting of the filing date.
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5903544-18065 | Chapter 11
DECISION WITH RESPECT TO NO STAY PLEADING AND RELATED MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION (ELLIOTT PLAINTIFFS)
ROBERT E. GERBER, UNITED STATES BANKRUPTCY JUDGE:
Once again, a plaintiff group wishing to proceed ahead of all of the others (only one week after I issued the written opinion memorializing my earlier oral ruling proscribing such an effort) has asked for leave to go it alone. Its request is denied. With a single exception, the issues raised by this group (the “Elliott Plaintiffs”) don’t differ from those addressed in Pha-neuf. And as to that single exception— their claim that I don’t have subject matter jurisdiction to construe and enforce the Sale Order in this case — their contention is frivolous, disregarding controlling decisions of the United States Supreme Court and Second Circuit; district court authority in this District; four earlier decisions that I personally have issued; three decisions by other bankruptcy judges in the Southern District of New York, and the leading treatise in the area, Collier, The Elliott Plaintiffs’ motion to dismiss for lack of subject matter jurisdiction thus likewise is denied.
Discussion
Given the ease of these issues, and my earlier discussion in Phaneufiincorporated into this decision by reference), this discussion will be brief.
I.
Subject Matter Jurisdiction
In addition to contending that they should be allowed to proceed on their own because the Sale Order should not be deemed to apply to them, the Elliott Plaintiffs contend that I lack subject matter jurisdiction to enforce the Sale Order. They say “[bjecause New GM’s claims are not ‘related to’ any proceedings before this Court, this Court lacks jurisdiction to stay their lawsuit or to restrict the Elliotts in anyway....”
I disagree. Their argument misses the point. “Related to” jurisdiction has nothing to do with the issues here. Bankruptcy courts (and when it matters, district courts) have subject matter jurisdiction to enforce their orders in bankruptcy cases and proceedings under those courts’ “arising in ” jurisdiction. The nearly a dozen cases cited above expressly so hold.
As explained in many of those cases, section 1334 of the Judicial Code, 28 U.S.C. § 1334 — which immediately follows the provisions covering subject matter jurisdiction in federal question, diversity, and admiralty cases, 28 U.S.C. §§ 1331, 1332 and 1333, respectively — addresses the subject matter of the district courts (and hence the bankruptcy courts) with respect to the exercise of their bankruptcy jurisdiction. After providing, in its subsection “(a),” that the district courts have jurisdietion (and, indeed, exclusive jurisdiction) over cases under title 11 (a matter not relevant here), § 1334 provides, in relevant part, with respect to bankruptcy ‘proceedings (which include the contested matter and adversary proceeding that are before me here):
(b) .... the district courts shall have original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11.
The three types of jurisdiction that district (and hence bankruptcy) courts may exercise are thus those colloquially referred to as (1) “arising under”; (2) “arising in”; and (3) “related to” jurisdiction. The second of these — “arising in” — focuses on whether the claim would have no existence outside of bankruptcy. “Matters involving the enforcement or construction of a bankruptcy court order are in this category.”
As in Ames Department Stores, the Elliott Plaintiffs make their subject matter jurisdiction contentions on the premise that the outcome of the sale order interpretation would have no effect on the debtor’s estate. But even assuming such is true (though I am not sure that it is, since if New GM is not liable for an otherwise enforceable obligation, that increases the likelihood that Old GM would be), it misses the point. Effect on the estate is the standard for “related to” jurisdiction, not “arising in.” The bankruptcy court’s subject matter jurisdiction when it comes to construing or enforcing its earlier orders has wholly different underpinnings, as, review of any of the nearly dozen decisions cited above would have revealed.
Nor is it an answer for the Elliott Plaintiffs’ to premise jurisdictional arguments on the conclusion they ultimately want me to reach — that upon construction of the Sale Order and the Sale Agreement, their claims would be permissible under each. That assumes the fact to be decided, in the proceedings the Elliott Plaintiffs wish to sidestep. Their argument conflates the conclusion I might reach after analysis of matters before me — that certain claims ultimately might not be covered by the Sale Order — with my jurisdiction to decide whether or not they are.
The motion to dismiss for asserted lack of subject matter jurisdiction is denied.
II.
The No Stay Request
I then reach the issue that the plaintiffs in 86 other Ignition Switch actions did not bother to raise, and that I addressed in the only other exception, Phaneuf. The Elliott Plaintiffs have given me no greater reason to conclude that they should be a special case than the Phaneuf Plaintiffs did.
Like Phaneuf plaintiffs Lisa Phaneuf, Adam Smith, and Catherine and Joseph Cabral, Elliott Plaintiffs Lawrence and Celestine Elliott purchased a car manufactured by Old GM — in this case, a 2006 Chevy Cobalt. The Sale Order provided, among other things, that except for the Assumed Liabilities expressly set forth in the Sale Agreement, New GM would not
have any liability for any claim that arose prior to the Closing Date, relates to the production of vehicles prior to the Closing Date, or otherwise is assertable against the Debtors or is related to the Purchased Assets prior to the Closing Date.
On their face, the Elliott Plaintiffs’ claims “relate[ ] to the production of vehicles pri- or to the Closing Date” — even assuming, without deciding, that the Elliott Plaintiffs do not also assert liability for a claim that “that arose prior to the Closing Date,” or “otherwise is assertable against the Debtors or is related to the Purchased Assets prior to the Closing Date.”
And while the Elliott Plaintiffs’ brief disclaims reliance on Old GM acts, their complaint doesn’t bear that out. Though to a lesser degree than in Phaneuf, the Elliott Plaintiffs’ complaint also relies on the conduct of Old GM in asserting claims against New GM, accusing Old GM of “unlawful concealment”: “New GM acquired all the books, records and accounts of [Old GM], including records that document the unlawful concealment of defects in vehicles sold by Old GM prior to New GM’s existence.”
As in Phaneuf, I find that the Elliott Plaintiffs are asserting claims with respect to vehicles that were manufactured before the 868 Sale, and, although to a lesser extent than in Phaneuf, relying on the conduct of Old GM. Thus I find as a fact, or mixed question of fact and law, that the threshold applicability of the Sale Order— and its injunctive provisions — has been established in the first instance.
And once again, even if the Sale Order did not apply in the first instance, a preliminary injunction would also be appropriate here, for the reasons discussed at length in Phaneuf, which I will not repeat at comparable length here — other than to say that the prejudice to all of the other litigants, and to the case management concerns I had with respect to the Phaneuf Plaintiffs, is just as much a matter of concern here.
As in Phaneuf, I will not allow the Elliott Plaintiffs to 'go it alone. The Elliott Plaintiffs’ claims can be satisfactorily addressed — and will have to be addressed— as part of the coordinated proceedings otherwise pending before me.
Conclusion
For the reasons set forth above and in Phaneuf, the relief requested in the Elliott Plaintiffs’ No Stay Pleading (including their motion to dismiss for lack of subject matter jurisdiction) is denied. The Elliott Plaintiffs’ claims will be treated the same as those in all of the other Ignition Switch Actions. The stay already imposed by the injunctive provisions of Paragraphs 8 and 47 of the Sale Order (and that the Court may also impose by preliminary injunction) will remain in place insofar as it affects the Elliott Plaintiffs’ complaint — subject to the right, shared by all of the other plaintiffs in the Ignition Switch Actions, to ask that the Court revisit the issue after September 1.
. This written decision memorializes and amplifies on the oral decision that I issued after the close of oral argument at the hearing on this matter on August 5, 2014. Because it had its origins in the originally dictated decision, it has a more conversational tone.
. In re Motors Liquidation Company, 513 B.R. 467 (Bankr.S.D.N.Y.2014) (“Phaneuf"), incorporated here by reference.
. Defined terms are as used in Phaneuf.
. Travelers Indem. Co. v. Bailey, 557 U.S. 137, 151, 129 S.Ct. 2195, 174 L.Ed.2d 99 (U.S.2009) ("Travelers ”) ("the only question left is whether the Bankruptcy Court had subject-matter jurisdiction to enter the Clarifying Order. The answer here is easy: as the Second Circuit recognized, and respondents do not dispute, the Bankruptcy Court plainly had jurisdiction to interpret and enforce its own prior orders”).
. Luan Investment S.E. v. Franklin 145 Corp. (In re Petrie Retail, Inc.), 304 F.3d 223 (2d Cir.2002) (“Petrie Retail ”) ("A bankruptcy court retains post-confirmation jurisdiction to interpret and enforce its own orders, particularly when disputes arise over a bankruptcy plan of reorganization. The plan consummation motion was filed in response to Luan’s demand for excluded liabilities and sought enforcement of the injunction provisions outlined in the sale order, plan of reorganization, and confirmation order. Therefore, the dispute between Luan and Marianne involved interpretation of the bankruptcy court's orders. The bankruptcy court thus had jurisdiction over the plan consummation motion and, specifically, had jurisdiction to consider whether Luan was seeking excluded liabilities and, if so, to enforce the injunction provisions of its orders.”) (citations omitted); Universal Oil Ltd. v. Allfirst Bank (In re Millenium Seacarriers, Inc.), 419 F.3d 83, 97 (2d Cir.2005) (“Millenium Seacarriers”) ("Bankruptcy courts retain jurisdiction to enforce and interpret their own orders.” (citing Petrie Retail)).
. Lothian Cassidy, LLC v. Lothian Exploration & Dev. II, L.P., 487 B.R. 158, 162 (S.D.N.Y.2013) (Marrero, J.) (“Lothian Cassidy") (" 'Arising in’ claims may include '[m]atters involving the enforcement or construction of a bankruptcy court order.... ’ ”).
. See Sterling Vision, Inc. v. Sterling Optical Corp. (In re Sterling Optical Corp.), 302 B.R. 792, 801 (Bankr.S.D.N.Y.2003) (“Sterling Optical ”) ("Matters involving the enforcement or construction of a bankruptcy court order are in [the ‘arising in’] category.”); NWL Holdings, Inc. v. Eden Ctr., Inc. (In re Ames Dep't Stores, Inc.), 317 B.R. 260, 272 (Bankr.S.D.N.Y.2004) ("Ames Department Stores ”) ("As in Petrie Retail and Millenium Seacani-ers, this Court has subject matter jurisdiction to enforce its orders not only because they were entered in proceedings in a case under title 11 ... with respect to which it undoubtedly had subject matter jurisdiction, but also by reason of the power granted to any federal court to enforce its own orders.”) (citation omitted); In re Motors Liquidation Co., 457 B.R. 276, 287 (Bankr.S.D.N.Y.2011) ("GMUAW ”) ("And it's well established, of course, that bankruptcy courts, like other federal courts, have the jurisdiction to enforce their earlier orders, even after confirmation.”); Trusky v. Gen. Motors Co. (In re Motors Liquidation Co.), 2013 Bankr.LEXIS 620, at *33, 2013 WL 620281, at *11 (Bankr.S.D.N.Y. Feb. 19, 2013) ("GM-Trusky ”) ("There is subject matter jurisdiction in this Court under the ‘arising in' prong of 28 U.S.C. § 1334, for me to construe my Sale Order, though I have great difficulty in seeing how I’d have subject matter jurisdiction to decide anything else.”).
.In re Portrait Corp. of Am., Inc., 406 B.R. 637, 641 (Bankr.S.D.N.Y.2009) (Drain, J.) ("Portrait Corporation of America”) (determining not just that court had subject matter jurisdiction to "interpret and enforce” the sale order in that case; it was a core matter); Moelis & Co., LLC v. Wilmington Trust FSB (In re Gen. Growth Props., Inc.), 460 B.R. 592, 598 (Bankr.S.D.N.Y.2011) (Gropper, J.) ("General Growth ") (determining not just that court had subject matter jurisdiction to interpret and enforce the sale order in that case; it was a core matter: The argument that the dispute did not "arise in” the Chapter 11 Cases was "wholly specious.” The controversy "implicated] the ‘enforcement or construction of a bankruptcy court order,’ in this case the confirmation order. A bankruptcy court always has jurisdiction to interpret its own orders. It does not matter that the State Court Action is purportedly between two non-debtors, or that the Chapter 11 Cases have been confirmed.”) (emphasis added) (citations omitted); Morgan Olson, LLC v. Frederico (In re Grumman Olson Indus.), 445 B.R. 243, 248 (Bankr.S.D.N.Y.2011) (Bernstein, C.J.) (“Grumman Olson ") ("In addition, Morgan’s request for declaratory and injunctive relief asks the Court to interpret and enforce the Sale Order by enjoining the Fredericos from proceeding with their successor liability claims. The presence of these two factors renders the dispute core.... [T]he Court has subject matter jurisdiction to interpret and enforce the Sale Order.”) (citations omitted).
. See 10 Collier ¶ 7087.01 (discussing GM-Trusky, noting that while the bankruptcy court's subject matter jurisdiction over the underlying merits of a contract dispute between New GM and the UAW was debatable, construction of the Sale Order was a matter over which the bankruptcy court had "unquestioned subject matter jurisdiction” under the “arising in” prong of 28 U.S.C. § 1334).
. Though the argument comes second in the Elliott Plaintiff’s brief, I consider it as a threshold issue. See, e.g., Millenium Seacarriers, Inc. v. Allfirst Bank (In re Millenium Seacarriers, Inc.), 2004 WL 63501, at *4 (S.D.N.Y.2004) (Patterson, J.) ("Millenium Seacarriers (S.D.N.Y.) ") ("When a court’s jurisdiction is challenged, the court has an obligation to resolve that issue before proceeding to the other issues in a proceeding.”), aff'd, Millenium Seacarriers, n.5 above; Ames Department Stores, 317 B.R. at 268 & n. 29 (same, quoting Millenium Seacarriers (S.D.N.Y.)).
. Elliott Pis.' Br. at 5.
. See page 381 below. For this reason, I found the Elliott Plaintiffs’ reference to Johns-Manville puzzling. See Elliott Pis.’ Br. at 28, 32, 33 (citing Johns-Manville Corp. v. Chubb Indem. Ins. Co. (In re Johns-Manville Corp.), 517 F.3d 52 (2d Cir.2008) ("Johns-Manville ”)), rev’d and remanded sub nom. Travelers, see n.4 above. Preliminarily, the Elliott Plaintiffs twice cited Johns-Manville for its asserted relevance to "related to” jurisdiction, which is not the question here. And the controversy in Johns-Manville didn’t deal with a Bankruptcy court’s subject matter jurisdiction to construe and enforce its own orders; in fact the Johns-Manville court assumed that a Bankruptcy court had jurisdiction to interpret and enforce its own orders, Johns-Manville at 60-61 ("It is undisputed that the bankruptcy court had continuing jurisdiction to interpret and enforce its own 1986 orders.”). And though the Supreme Court in Travelers reversed the Second Circuit’s order for other reasons, it agreed with the Second Circuit in that respect. See n.4 above. While Johns-Manville may be argued to be relevant in proceedings hereafter to determine whether or not the language of the Sale Order is determinative, it does not deprive me of subject matter jurisdiction to construe and enforce my earlier order now.
. See, e.g., Sterling Optical, 302 B.R. at 800-02; Ames Department Stores, 317 B.R. at 268-69. See also ML Media Partners, LP v. Century/ML Cable Venture (In re Adelphia Commc’ns Corp.), 285 B.R. 127, 136-37 (Bankr.S.D.N.Y.2002) (Gerber, J.) ("Adelphia”).
. This is analytically the same as “federal question” jurisdiction, but the claim must arise under title 11, as contrasted to any other title or provision, of the U.S. Code. It is not relevant here.
. See, e.g., Ames Dept. Stores, 317 B.R. at 269.
. See Sterling Optical, 302 B.R. at 801.
. Id. Accord Lothian Cassidy, 487 B.R. at 162 (" ‘Arising in’ claims may include ‘[m]at-ters involving the enforcement or construction of a bankruptcy court order ... ’ ”).
. See n.22 below.
. See Elliott Pis.’ Br. at 5 (“Because their claims are not ‘related to’ any proceedings before this Court, this Court lacks jurisdiction to stay their lawsuit or to restrict the Elliotts in any way ...."); id. at 31 (“The technical jurisdiction issue presented is whether the Elliotts' claims against New GM 'relate to’ any proceeding properly before the Court _”); id. at 32 ("The Second Circuit has ... made clear that this Court’s ‘related to’ jurisdiction is limited to power over litigants in proceedings only when the outcome of that proceeding could conceivably have any effect on the estate being administered in bankruptcy” (emphasis in original) (citing Cuyahoga Equipment, n. 21 below)). In the portion of their brief beginning at page 31 (captioned “The Elliotts Claims Do Not 'Relate to’ Any Proceeding Before the Court”), the Elliott Plaintiffs continue in conclusory terms, after stating the issue to be whether their claims against New GM " 'relate to' any proceeding properly before the Court,” “that their claims themselves assuredly do not 'arise in’ the proceedings that Old GM initiated.” Id. That conclusory assertion is the only place in their brief where "arising in” jurisdiction is mentioned, and — apart from misstating how "arising in” jurisdiction is analyzed — it is made without any explanation or, especially, authority.
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5393476-6728 | EDITH BROWN CLEMENT, Circuit Judge:
Richard Painter pleaded guilty to one count of possession with intent to distribute approximately 85 grams of methamphetamine and one count of possession with intent to distribute approximately 42 grams of cocaine, in violation of 21 U.S.C. § 841(a)(1), (b)(1)(B), and (b)(1)(C). Painter received a sentence of 115 months and did not file a direct appeal. Painter then moved, under 28 U.S.C. § 2255, to vacate, set aside, or correct his sentence. The district court denied this motion and declined to issue a certificate of appealability (“COA”). Painter timely appealed. The Fifth Circuit issued a COA on two issues: “(1) whether counsel’s erroneous advice regarding offenses for which Painter could have been prosecuted following extradition rendered- his guilty plea involuntary, and (2) whether the procedural default doctrine applies to claims based on the rule of specialty or whether such claims may be raised for the first time in a § 2255 motion.” The court also stated: “In addition, the parties are directed to brief whether Painter has standing to assert claims based on the rule of specialty.” We affirm.
I. FACTS AND PROCEEDINGS
On July 6, 1999, Corpus Christi police officers arrested Painter and searched his home pursuant to a warrant. They found marijuana, LSD, methamphetamine, cocaine, Rohypnol, currency, and several guns. On June 14, 2001, the government charged Painter with possession with intent to distribute methamphetamine and possession with intent to distribute cocaine. Painter was released on bond on June 18, 2001.
Painter failed to appear for his July 30, 2001 rearraignment and his July 31, 2001 final pre-trial conference. On December 12, 2001, the government charged him with two counts of failure to appear. At some point during these events, Painter absconded to Costa Rica where he was arrested on April 4, 2002. The United States government sought extradition based on both the drug possession and failure to appear charges. Painter fought the extradition, but Costa Rica extradited him pursuant to a Spanish-language extradition order, issued by a court, which stated, unbeknownst to the parties at the time because the document was untranslated, that:
The delivery of the individual requested is subject to the existence of a formal pledge, on the part of the authorities of the United States Government, that Richard Stuart Painter will not be tried for acts different from those that prompted the extradition and that they will not apply penalties different from those indicated in Title 21, Article 841(a)(1) of the Code of the United States of America.
On February 20, 2003, Painter appeared for a pre-trial conference on the failure to appear charges. The government announced that, upon Painter’s guilty plea or guilty verdict in the pending drug case, it would move to dismiss the failure to appear indictment. That same day, Painter pleaded guilty to both counts of the drug possession indictment. Later, the district court dismissed the failure to appear indictment on the government’s motion.
The pre-sentence report (“PSR”) recommended upward adjustment for obstruction of justice and denial of acceptance of responsibility, based on Painter’s failure to appear and flight to Costa Rica. Painter, through appointed counsel, filed objections to the PSR, but he did not challenge either recommendation on the ground that it violated the Rule of Specialty—a provision in the extradition treaty between the United States and Costa Rica, common to such treaties, allowing a country to extradite only for specified crimes. Painter never raised a direct Rule of Specialty objection, but he argued for acceptance of responsibility and against the government’s suggestion of an upward departure based on inadequacy of criminal history. The court adopted the PSR in its entirety, rejecting an upward departure. The applicable range was 97 to 121 months. The government recommended 108 months, Painter sought 97 months, and the court sentenced him to 115 months on each count, to run concurrently, citing his flight and disrespect for the court.
Painter did not file a direct appeal. He moved, under 28 U.S.C. § 2255, to vacate, set aside, or correct his sentence. Painter raised four issues: (1) that the denial of acceptance of responsibility violated the Rule of Specialty because it was based on the failure to appear offense; (2) that the upward adjustment for obstruction violated the Rule of Specialty for the same reason; (3) that he was denied effective assistance of counsel by his counsel’s failure to raise the first two grounds; and (4) that his plea was unknowing and involuntary because he pleaded guilty to avoid prosecution for failure to appear, he could not be charged with failure to appear given the Rule of Specialty, and his counsel was ineffective in not advising him as such. The district court denied the motion and declined to issue a COA. Painter timely appealed and also filed a motion, under Fed.R.Civ.P. 60(b), seeking relief from the judgment, which the district court denied.
Painter sought a COA from this court. This court granted the COA, in part, regarding: “(1) whether counsel’s erroneous advice regarding offenses for which Painter could have been prosecuted following extradition rendered his guilty plea involuntary, and (2) whether the procedural default doctrine applies to claims based on the rule of specialty or whether such claims may be raised for the first time in a § 2255 motion.” The court also stated: “In addition, the parties are directed to brief whether Painter has standing to assert claims based on the rule of specialty.” In his brief, Painter concedes all claims except for ineffective assistance of counsel. We therefore address only this claim.
II. STANDARD OF REVIEW
In evaluating the district court’s denial of a 28 U.S.C. § 2255 motion, we review findings of fact for clear error and questions of law de novo. United States v. Scott, 987 F.2d 261, 264 (5th Cir.1993). The district court’s conclusion on an ineffective assistance of counsel claim constitutes a mixed question of law and fact, which we review de novo. United States v. Bass, 310 F.3d 321, 325 (5th Cir.2002).
III. DISCUSSION
On appeal, Painter argues that his guilty plea was involuntary because it was predicated on advice from his trial counsel that he could be prosecuted for failure to appear if he did not plead guilty to the drug charges. Painter alleges that his trial counsel told him that the failure to appear indictment was still viable and that, if he were convicted of both the drug charges and the failure to appear charges, his sentences for drug possession and failure to appear would be consecutive.
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1310636-10993 | CLARK, Circuit Judge:
On December 21, 1971, the Leon Federal Savings and Loan Association, University Branch, in Tallahassee, Florida, was robbed at gunpoint of 1,313 dollars. Herbert Beasley was first tried on the charge of robbing this federally-insured savings and loan association in February 1972. The first prosecution ended in a mistrial. Beasley was subsequently retried and convicted. He appeals. We affirm.
Double Jeopardy
Beasley contends that his second trial should have been barred by the Fifth Amendment protection against double jeopardy. Beasley’s first trial ended in a mistrial as a result of a single question put to the defendant’s chief alibi witness during cross-examination. On direct examination, Rebecca McCardell, Beasley’s sister, testified that she regularly knew of the defendant’s whereabouts and, in fact, had seen him in Houston, Texas, at the exact hour when, according to the government’s case, Beasley was engaged in robbing Leon Federal in Tallahassee. During cross-examination the prosecutor closely questioned Mrs. McCardell concerning her claim that she normally knew of her brother’s whereabouts. Among the questions posed to Mrs. McCardell was the following: “On October 27, 1971, did the FBI visit you and advise you of the Harboring Statute?” The defendant promptly objected to the question on the ground of relevancy. The court ruled the question inadmissible and promised to give an admonitory instruction to the jury. Defense counsel then moved for a mistrial on the basis that the prosecutor’s question was already in the record and “is so highly prejudicial to the defendant that I do not believe he can get a fair trial from this jury.” Thereupon, a mistrial was granted.
We note at the outset that the mistrial was granted in response to defendant’s motion. “[A] motion by the defendant for mistrial is ordinarily assumed to remove any barriers to reprosecution, even if the defendant’s motion is necessitated by prosecutorial or judicial error.” United States v. Jorn, 400 U.S. 470,. 485, 91 S.Ct. 547, 557, 27 L.Ed.2d 543 (1971); United States v. Iacovetti, 466 F.2d 1147 (5th Cir. 1972), cert. denied, 410 U.S. 908, 93 S.Ct. 963, 35 L.Ed.2d 270 (1973); Vaccaro v. United States, 360 F.2d 606 (5th Cir. 1966). An exception to the waiver of the right against reprosecution exists, however, when the mistrial motion is the product of prosecutorial overreaching, United States v. Jorn, supra; Downum v. United States, 372 U.S. 734, 83 S.Ct. 1033, 10 L.Ed.2d 100 (1963). The accused has a “valued right to have his trial completed by a particular tribunal.” Wade v. Hunter, 336 U.S. 684, 689, 69 S.Ct. 834, 837, 93 L.Ed. 974 (1949). It would be offensive to the fundamental constitutional guarantee against successive, oppressive prosecutions, if the government, at a trial in which its case is going badly, could by gross misconduct precipitate a mistrial and thereby gain “another, more favorable opportunity to convict the accused.” Gori v. United States, 367 U.S. 364, 369, 81 S.Ct. 1523, 1526-1527, 6 L.Ed.2d 901 (1961). At the same time, Wade v. Hunter, supra, makes it clear that when a mistrial results from prosecutorial error which does not amount to gross negligence or intentional misconduct, the state is not barred from reprosecuting the defendant.
The double-jeopardy provision of the Fifth Amendment . . . does not mean that every time a defendant is put to trial before a competent tribunal he is entitled to go free if the trial fails to end in a final judgment. Such a rule would create an insuperable obstacle to the administration of justice in many cases in which there is no semblance of the type of oppressive practices at which the double-jeopardy prohibition is aimed.
336 U.S. at 688-689, 69 S.Ct. at 837.
The appellant argues that the prosecutor by asking a baseless and inflammatory question, precipitated a mistrial to rescue an inadequate prosecution before the ease went to the jury. Our review of the record discloses no evidence of gross negligence or intentional misconduct such as would bar reprosecution. The question directed to Mrs. McCardell, although undoubtedly improper because it suggested that the defendant had been a fugitive from justice as a result of some undisclosed crime two months prior to the Tallahassee robbery, was part of a legitimate line of cross-examination calculated to impeach the witness’s testimony that she regularly knew of the defendant’s whereabouts. The fact that the government attorney later stated to defense counsel that he was not displeased with a mistrial does not prove that the prosecutor intended to abort the proceedings in order to improve the chance of a conviction on retrial. The record as a whole indicates that the district attorney preferred to continue with the first trial. Since the prosecution presented virtually the same witnesses and evidence at both trials, there is no evidence that the mistrial allowed the state an opportunity to strengthen its case. Compare Downum v. United States, supra.
Our decision that a second trial of the defendant is not barred by the Fifth Amendment is supported by the recent opinion in Somerville v. Illinois, 410 U.S. 458, 93 S.Ct. 1066, 35 L.Ed.2d 425 (1973). The Court there upheld a second-trial conviction where the first jury had been dismissed at the insistence of the state, over defendant’s objection, following the discovery of a defect in the drafting of the indictment. Somerville stands for the proposition that mistrial which is the result of official error not involving “prosecutorial manipulation”, 410 U.S. at 464, 93 S.Ct. at 1070, does not bar retrial even where the defendant does not consent to the termination of the first trial short of judgment. In the present case the defendant moved for a mistrial, and since this motion was not the product of pros-ecutorial manipulation or overreaching, we find no constitutional barrier to retrial and conviction.
The Search
The appellant also contends that a silver-plated cap pistol found in his overcoat pocket at the time of his arrest was improperly admitted into evidence.
Beasley’s arrest occurred on a frosty January night in a roadside park near Wichita, Kansas. A state highway patrolman, having observed the defendant’s automobile parked overnight in the rest area, made a routine check of its license number through the National Crime Information Center computer. The cheek revealed that the tag number and description corresponded to those of the vehicle used in the Tallahassee robbery and that an arrest warrant had been issued for its owner, Herbert Beasley. Having summoned assistance, the patrolman approached the car and arrested the defendant who was asleep in the front seat. While questioning the suspect at the scene of the arrest, one of the officers reached into the backseat and obtained the defendant’s overcoat to protect him from the night’s chill. Before placing the coat over the handcuffed suspect’s shoulders, the patrolman searched the pockets and discovered the pistol.
We have no difficulty in upholding the search procedures which led to the seizure of the pistol. According to testimony of the arresting officer, which we credit here over a conflicting version told by the defendant, the coat was in plain view, the night was cold, and the suspect had asked for his overcoat. At the time of the arrest the patrolmen knew that they were dealing with an individual wanted for armed robbery. A limited search for weapons prior to handing the garment to the defendant was completely reasonable for the officers’ self-protection. Terry v. Ohio, 392 U.S. 1, 88 S.Ct. 1868, 20 L.Ed.2d 889 (1968); United States v. Edwards, 469 F.2d 1362,1366 (5th Cir. 1972).
The Second Trial
Beasley also complains of several alleged errors relating to his second trial. First, he asserts that he was denied the right to subpoena essential witnesses at government expense. Prior to the second trial the defendant sought to subpoena 16 witnesses. After a hearing, the court agreed to permit him to subpoena five individuals who could furnish alibi testimony. The court denied subpoenas for six additional witnesses who as-sertedly could testify to Beasley’s general residency in Houston, Texas, but who could add nothing to his specific alibi. Four custodial witnesses were sought for the purpose of introducing exculpatory evidence seized during the Kansas arrest. Although these witnesses were not subpoenaed, such favorable evidence as they could have produced was introduced through an FBI agent who testified as a defense witness. The motion also sought to subpoena the attorney who had represented Beasley at the first trial to testify on his double jeopardy motion. The record shows that Beasley’s present counsel abandoned this request and that the testimony had already been presented to the court in affidavit form.
District courts have wide discretion to determine which witnesses requested by an indigent defendant should be subpoenaed at government expense and its decision will not be disturbed except in cases of clear abuse. Taylor v. United States, 329 F.2d 384, 386 (5th Cir. 1964). In the present ease, the court granted subpoenas for the primary witnesses sought by the defendant. Those not subpoenaed would have provided testimony which was cumulative or immaterial to the defense. Thus there was no violation of F.R.Crim.P. 17(a) or the Sixth Amendment. United States v. Deaton, 468 F.2d 541, 544 (5th Cir. 1972); Thompson v. United States, 372 F.2d 826, 828 (5th Cir. 1967).
Beasley next contends that the jury charge was defective because the court failed to instruct the jury that the presence of the defendant at the time and place of the offense was an essential element to be proved by the government, thereby placing the burden of proof in regard to alibi on the defendant. To the contrary, the jury was generally instructed that the government must prove beyond a reasonable doubt that the defendant committed the robbery at the Leon Federal. Furthermore, the court’s express instructions on the alibi defense required the jury to find beyond a reasonable doubt that the defendant was present at the time and place of the alleged crime. The charge included proper instructions on each essential element of the offense.
The appellant’s further allegations of improper jury instructions, prejudicial intrusions by the court during the trial, and testimonial argument by the prosecutor are without merit.
Finally, Beasley asserts that he was denied effective assistance of counsel. At several points, both before and during the trial, the defendant requested the court to dismiss his counsel and to allow him to proceed pro se. However, on each occasion after consultation with the court, the defendant expressed confidence in his appointed counsel and withdrew his request for dismissal. There is no evidence to support the allegation that the court forced the defendant to accept counsel against his will.
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4220406-12431 | J. F. T. O’CONNOR, District Judge.
This action is founded in tort. The plaintiff prays judgment against the defendant for actual damages in the sum of $100,000 and punitive damages in the sum of $100,000, making a total of $200,000. Both plaintiff and defendant are citizens and residents of the State of California. There are two questions to be decided by the court. (1) The sufficiency of the affidavit of prejudice, and (2) the jurisdictional question. In order to pass upon the first question, a brief summary of the allegations in the complaint will be stated.
The plaintiff alleges a violation of Regulation 53 of the Emergency Price Control Act and, among the enumerated alleged violations, are:
“ * * * the defendant refused to furnish steam heat, electric current for refrigeration, hot and cold running water in kitchen and some in bathroom, use sun room on roof, and use of telephone, reduced lighting in lobby making same ‘unsafe and impossible to read or enjoy’, denied plaintiff use of porches and lobby by threatening plaintiff when plaintiff used same. The complaint alleges that when plaintiff required steam heat ‘defendant assaulted plaintiff threatening to do him great bodily harm, shouted at him in a loud and angry tone and shaking his fist in plaintiff’s face.’
“ * * * attempted to force plaintiff out of apartment in violation of Regulation No. 53. Defendant advised plaintiff he could rent apartment at $7.50 per month above ceiling price.”
The plaintiff alleges a second assault, “ * * * again assaulted plaintiff, advancing toward him with fists swinging and in a loud and boisterous voice and in an harassing and threatening manner, told plaintiff that he was going to throw him out of said tenancy on the 9th day of September, 1943, and that he intended to beat plaintiff until plaintiff was unconscious on the floor and then hurl him bodily out of the apartment”, also calling the plaintiff bad names. The complaint then alleges that other tenants in the same apartment have had their rent raised by the defendant in excess of the ceiling rentals, and alleges that the plaintiff is not in default in the payment of his rent. The defendant answered and denies specifically and generally all of the allegations of the complaint, and as a separate defense contends the court has no jurisdiction of the cause of action; and further that the complaint does not state a claim upon which relief can be granted in this court.
It will be noted that the plaintiff does not allege a battery, and counsel frankly admit that the defendant never committed a battery of any kind upon the plaintiff.
The allegations in the complaint, if established, would show continued irritating conduct on the part of defendant toward the plaintiff, and alleges further: “permanently impaired the range of plaintiff’s vision * *
At the pretrial hearing the court called the plaintiff’s attention to what the court' considered a prayer for excessive damages under the facts alleged in the complaint, and expressed surprise that any attorney would allege damages in the amount of $200,000 under the facts stated. The attorney for the plaintiff contends that it was an act of prejudice on the part of the court to make any such comment upon the pleadings. In other words, the plaintiff contends that such comment on the part of the court disqualifies the court from hearing the case. If the contention of the plaintiff is sound in law, then a court cannot make any comment upon any pleadings. No reference was made by the court to the plaintiff in the action, and the record shows that the court did not know either the plaintiff or the plaintiff’s attorney. The plaintiff, in his affidavit, stated-referring to the court: “* * * has a personal bias and prejudice against me and against my attorney, Mr. James G. Whyte, and is therefore disqualified from proceeding further herein;”
The court feels it is proper to quote from the affidavit of prejudice of the plaintiff, which affidavit is approved by the attorney for the plaintiff, alleging that the affidavit is “made in good faith by him”. The affidavit, omitting the formal parts and omitting the reasons for delay in filing it, and including the entire comments made upon which the plaintiff bases his right to disqualify the court, states:
“* * * that said prejudice was manifest by the court in certain comments made by the court at the hearing of a second pretrial conference held on October 23rd, 1944, particularly in a statement twice made by the court substantially as follows: ‘Counsel, I am astonished that any lawyer would come before any court and make such a statement.’ That the court’s attitude and bias is shown by the following quotation from the reporter’s transcript of the hearing held on Monday, October 23rd, 1944:
“ ‘The Court: Counsel, do you seriously consider the damages you have prayed for should be pleaded by any lawyer, under the statements you have made to the court now, asking for $200,000 damages? How do you explain it?
“ ‘Mr. Whyte: It is our contention that this man has lost the use of one eye in the assault that has been performed on him.
“ ‘The Court: Supposing he has; supposing that is true, can you find a case anywhere in the United States which would award him $100,000? I don’t think there has been an award of $100,000 in such a situation.
“ ‘Mr. Whyte: I think there has been award as high as $50,000 for the loss of an eye.
“‘The Court: You have asked for $200,000 damages. Do you think it is good practice, counsel, in any court of justice, to plead $100,000 exemplary damages, in a matter of this kind?
“ ‘Mr. Whyte: If the course of conduct of this man is what we think it is, and what we think can be shown, I think it is. This man owns, and we can show he owns some eight or nine — at least seven apartment hotel buildings, and if he has indulged in a course of practice, as he has in regard to this particular tenant, I don’t think $100,000 exemplary damages would be out of line.
“ ‘The Court: Counsel, I am astonished that any lawyer would come before any court, and make such a statement. I will hear the other side.’ ”
It will be noted that the remarks were made at pretrial conference on the 23rd of October, 1944, and that the affidavit of prejudice was filed November 17, 1944. The remarks were directed to the attorney for the plaintiff and not to either party to the action. The statute, Jud.Code § 21, 28 U.S.C.A. § 25, does not include attorneys. It provides that whenever a party to an action or proceeding “* * * shall make and file an affidavit that the judge * * * has a personal bias or prejudice either against him or in favor of any opposite party to the suit * * *.” In each instance the statute refers to a party — not to an attorney. Whenever an affidavit of bias or prejudice is filed against a judge, it is the duty of the judge to pass on its sufficiency and, ’ if found insufficient, to strike it from the files. His action is reviewable on appeal. Benedict v. Seiberling, D.C., 17 F.2d 831. The legal sufficiency of the affidavit is the only question before the court and the court cannot pass upon the truth or falsity of the facts alleged therein. Berger v. United States, 41 S.Ct. 230, 255 U.S. 22, 65 L.Ed. 481; Henry v. Speer, 5 Cir., 201 F. 869, 120 C.C.A. 207; Saunders v. Piggly-Wiggly Corp., D.C., 1 F.2d 582; Chafin v. United States, 4 Cir., 5 F.2d 592, certiorari denied, 269 U.S. 552, 46 S.Ct. 18, 70 L.Ed. 407; Lewis v. U. S., 8 Cir., 14 F.2d 369; Nations v. United States, 14 F.2d 507, cer tiorari denied 273 U.S. 735, 47 S.Ct. 243, 71 L.Ed. 866.
United States v. 16,000 Acres of Land, More or Less, 49 F.Supp. 645. The District Judge remarked to the attorney for the government that he was a “pettifogger” and had been “pettifogging” for two and a half hours, and did not establish personal bias against the United States or against counsel requesting disqualification of the judge. The judge further stated in the same action that it appeared that unfair advantage had been taken of the landowner, that counsel were trying to cover up evidence relating to value of land involved in the condemnation proceedings.
The judge owes it to his oath of office and to the litigant who has invoked the jurisdiction of the court over which he regularly presides not to withdraw from the case, however much his personal feelings may incline him to do so. Benedict v. Seiberling, supra. If the affidavit is legally insufficient, the judge should refuse to disqualify himself, or because the litigant prefers some other judge, and should not abandon the position assigned to him by the sovereign unless required so to do -by the law, particularly in criminal cases. United States v. Pendergast, D.C., 34 F.Supp. 269. It is the duty of the judge not to permit the use of an affidavit of prejudice as a means to accomplish delay and otherwise embarrass the administration of justice. United States v. Murphy, D.C., 19 F.Supp. 987. A judge, to be disqualified, must have a personal bias or prejudice against a party or in favor of an opposite party, and judicial rulings cannot ordinarily be made the basis of a charge of bias, since any error in such ruling may be corrected on appeal. Ryan v. United States, 8 Cir., 99 F.2d 864, certiorari denied, 1939, 306 U.S. 635, 59 S.Ct. 484, 83 L.Ed. 1037, rehearing denied, 1939, 306 U.S. 668, 59 S.Ct. 586, 83 L.Ed. 1063.
The orderly administration of justice requires that affidavits of personal bias or prejudice of a trial judge filed under the statute be strictly construed so as to prevent abuse, and that they state facts showing personal bias or prejudice of the judge against the affiant. Beland v. United States, 117 F.2d 958, certiorari denied 313 U. S. 585, 61 S.Ct. 1110, 85 L.Ed. 1541, rehearing denied 314 U.S. 708, 62 S.Ct. 54, 86 L.Ed. 565.
It is well settled that the affidavit of bias or prejudice filed against a judge must be strictly construed, and the terms of the statute strictly followed. Fieldcrest Dairies v. City of Chicago, D.C., 27 F.Supp. 258.
The court finds the affidavit of prejudice filed by the plaintiff is not sufficient as a matter of law, and the motion to strike it from the files is granted.
Jurisdiction.
The plaintiff and the defendant are both citizens and residents of the State of California. In the absence of diversity of citizenship, jurisdiction of the federal court can only be invoked if Congress has conferred jurisdiction upon the court or if the right which the plaintiff claims and seeks to enforce arises under a law of Congress and the interpretation of the law in one manner would sustain his right, while the interpretation of the law in one manner would defeat it. Jurisdiction cannot be affected by waiver or conferred by agreement of the parties. Mitchell v. Maurer, 293 U.S. 237, 55 S.Ct. 162, 79 L.Ed. 338; West Publishing Co. v. McColgan, 9 Cir., 138 F.2d 320; Williams v. Miller, 48 F. Supp. 277, affirmed 317 U.S. 599, 63 S.Ct. 258, 87 L.Ed. 489. The instant action is one sounding in tort and the District Court is without jurisdiction where diversity of citizenship is lacking and no federal or constitutional question is involved. Thomason v. War Projects Administration, 47 F.Supp. 51, affirmed 138 F.2d 342.
Where the state courts have long enjoyed jurisdiction over the subject matter of an action, jurisdiction is not withdrawn by federal statute unless such an intention is distinctly manifested. Elliott v. Steinfeldt, 254 App.Div. 739, 4 N.Y.S.2d 9; followed in Murphy v. Steinfeldt, 254 App. Div. 741, 4 N.Y.S.2d 10; 21 C.J.S., Courts, § 526, p. 800.
In order to sustain the jurisdiction of the District Court it is necessary for the complaint to clearly establish that the action arises under the laws of the United States and substantially involves a dispute respecting the validity and construction or effect of the federal statute. Jud.Code § 24(1) (a), 28 U.S.C.A. § 41(1) (a), Malone v. Gardner, 4 Cir., 62 F.2d 15; Johnson v. Thomas, D.C., 16 F.Supp. 1013, 1014: “Suit does not have its origin in laws of United States, so as to confer jurisdiction on federal court, unless it involves a real and substantial controversy respecting validity, construction, or effect of such laws on which determination of result depends, and such fact must appear by distinct allegations in legal and logical form and cannot rest on inference, argument, or anticipated defense.”
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1411562-15593 | CHARLES CLARK, Circuit Judge:
The plaintiffs as owners of securities purchased by Eunice V. Johnson brought this action against Mark Yerger, J. D. Wilson, and Kenneth H. Tribble in the United States District Court for the Southern District of Mississippi, alleging that the defendants fraudulently induced Eunice Johnson to purchase 5,000 shares of the common stock of Mississippi Candies, Inc. The complaint alleged violations of §§ 12 and 17 of the Securities Act of 1933, 15 U.S.C. §§ 77e, 77j, § 10 of the Securities Act of 1934, 15 U.S.C. § 78j, and the Security and Exchange Commission’s Rule 10b — 5, 17 C.F.R. § 240.10b-5. A pendent state claim alleged violations of the Mississippi Securities Act, Miss.Code Ann. §§ 75-71-1 to -57 (1972 & Cum.Supp. 1979). The plaintiffs sought to recover the $4,500.00 purchase price of the securities, legal interest from the date of purchase, and reasonable attorney’s fees. The district court, grounding its decision in common law fraud, awarded the plaintiffs $3,500.00 with interest of 8% from October 10, 1973, denied the plaintiffs an award of attorney’s fees, and assessed the costs of the district court litigation against the plaintiffs. Yerger appeals. The plaintiffs cross-appeal against all three defendants. Because of the unique manner in which the parties dealt with each other, we must analyze the liability of defendants Tribble and Wilson separately from the liability of defendant Yerger, the dealer who “fronted” the transaction. This separate analysis produces different bases for civil liability under the Mississippi Securities Act, resulting in different measures of damages. The judgment appealed from is, in part, modified and affirmed and, in part, vacated. The action is remanded to the district court for further proceedings consistent with this opinion.
I. Facts
Eunice V. Johnson [Johnson] was an active shareholder in Mississippi Candies, Inc. [Mississippi Candies] from its inception in 1971 and served on the advisory committee of the corporation. Defendant Yerger worked as a broker and dealer in intrastate securities pursuant to a license issued by the State of Mississippi. Defendant Wilson served as a director and treasurer of Mississippi Candies and was employed as a salesman of the corporation’s securities. Defendant Tribble promoted, organized, and incorporated Mississippi Candies and served as a director and president of the corporation.
In early 1973, Mississippi Candies began to experience extreme financial difficulties. The record supports the district court’s finding that, at the time of the challenged transaction, Johnson was aware of the company’s precarious financial position. Sometime between February and April 1973, Johnson received a letter from the corporation advising that it was out of operating funds. In August 1973, Johnson attended a shareholder meeting in Jackson, Mississippi. At that meeting, Johnson heard detailed discussions of the corporation’s financial condition and was provided with a copy of the corporation’s trial balance. Approximately two weeks later, Johnson and some twenty other people attended a meeting in Natchez, Mississippi, at which the company’s financial problems again were considered. Throughout this period, the officers, directors, and shareholders of Mississippi Candies actively sought the requisite financial capital to keep the corporation in business.
On September 28, 1973, Wilson, after a series of telephone conversations with Trib-ble, spoke to Johnson in her Natchez, Mississippi, office. Wilson advised Johnson that 5,000 shares of Mississippi Candies common stock'currently were available at ninety cents per share. Wilson represented to Johnson that he was anxious to sell this quantity of stock because it belonged to an estate. Johnson asked Wilson to whose estate the stock belonged. Wilson replied that he did not know because he was dealing through a dealer named Yerger. Johnson told Wilson she would purchase the 5,000 shares of stock at ninety cents per share. Wilson told Johnson that Yerger required that the purchaser sign a statement acknowledging both a desire to purchase the stock and a knowledge of the financial condition of the company. Wilson drafted and Johnson signed such a statement. On September 28, 1973, Johnson issued her check dated October 1, 1973, for $4,500.00 payable to Mark Yerger. On October 2,1973, Johnson received three certificates dated September 28, 1973, representing 5,000 shares of Mississippi Candies common stock.
In reality, the 5,000 shares of common stock purchased by Johnson were not part of an estate, but rather previously were owned by Tribble and his wife. Tribble testified that, during his telephone conversations with Wilson, he never specified the source of the 5,000 shares of stock. Indeed, Tribble testified that on September 28, 1973, despite having told Wilson he could obtain 5,000 shares for Johnson at a fixed and specified price, he had no specific stock in mind and intended to purchase the entire 5,000 shares in the secondary market for resale to Johnson. Liquidity problems prevented Tribble from carrying out his intentions. Tribble purchased 2,500 shares of Mississippi Candies common stock in the secondary market through Thomsen Securities Corporation at forty cents per share and supplemented these shares with 2,500 additional shares that were owned by his wife. Yerger testified that he purchased these 5,000 shares of common stock from Tribble as an addition to inventory at a price of eighty-five cents per share and, in what he described as a principal transaction, subsequently sold the stock to Johnson at ninety cents per share.
The record demonstrates that Tribble approached Yerger and requested that he handle the stock transaction. The district court found that Tribble “elected to employ and use Yerger for appearance reasons to consummate the transaction.” Tribble’s testi mony describing Yerger as a conduit through which Tribble acted to effect the stock sale supports the district court finding.
The record shows that Yerger made no affirmative recommendation or suggestion to Johnson that induced her purchase of common stock. However, the record evidences Yerger’s knowledge both of Tribble’s insider status in Mississippi Candies and of the corporation’s precarious financial position. Furthermore, Yerger himself testified that at the time of the stock transaction he knew that half of the shares of common stock sold to Johnson previously had been owned by Mrs. Tribble and half recently had been purchased in the secondary market by Mr. Tribble. The district court found that, in spite of such knowledge, “Yerger voluntarily elected to become a party to the transaction.”
Mississippi Candies became bankrupt shortly after Johnson purchased the 5,000 shares of common stock.
II. Civil Liability
The Mississippi Securities Act requires that an investment company seeking a certificate of authority for the sale of its securities file a surety bond with the Secretary of State. Miss.Code Ann. § 75-71-13 (1972). Persons induced to purchase a security by a misrepresentation of a material fact possess a statutory right to bring suit against this bond. Id. § 75-71-25. That section provides in relevant part that:
Any person or persons who shall be induced to purchase any stocks, bonds or other securities, by any investment company, by the officers, agents, employees or promoters or trustees thereof, by reason of any misrepresentation of any material fact concerning such stocks, bonds or other securities, shall have the right to bring suit upon the bond provided for by § 75-71-13 ....
Id. Mississippi case authority makes clear that a purchaser’s § 75-71-25 remedy extends beyond the bond itself and permits the imposition of personal liability on those corporate officers and directors who actively make or participated in a misrepresentation of materia] fact that induces the purchase of securities. First Mobile Home Corp. v. Little, 298 So.2d 676, 678-80 (Miss. 1974). However, the same case authority makes equally clear that the § 75-71-25 remedy does not extend so far as to impose personal liability on a dealer or broker who, although actively involved in consummating the challenged securities transaction, personally makes no misrepresentation of a material fact. Id. at 683-84.
A review of the evidence presented to the district court demonstrates clearly that Wilson actively made and Tribble actively participated in a misrepresentation of material fact that induced the purchase of securities by Johnson. By misrepresenting to Johnson that the stock was owned by an estate, and thus was available for sale due to the fortuity of a death, these defendants concealed that the chief executive officer of Mississippi Candies, although outwardly seeking financial capital for the financially plagued company, in fact, had chosen to divest himself of a portion of his investment in the corporation. See generally Lewelling v. First California Co., 564 F.2d 1277, 1279 (9th Cir. 1977). In this context, the misstatement of the ownership of the securities offered for sale was a misrepresentation of material fact because there is a substantial likelihood that a reasonable investor would have considered the true ownership important in deciding on his course of action with respect to the transaction. Accordingly, both Wilson and Tribble are civilly liable to the plaintiffs under § 75-71-25. Yerger, however, although actively involved in consummating the challenged securities transaction, incurred no § 75 — 71—25 liability because he personally made no misrepresentation of material fact to Johnson. See First Mobile Home Corp. v. Little, 298 So.2d at 683-84.
The facts adduced at trial also show that Wilson and Tribble each engaged in acts and practices violative of the antifraud provisions of the Mississippi Securities Act. Miss.Code Ann. § 75-71-43 (1972). That section provides in relevant part that it is an unlawful fraudulent practice
[f]or any person, in connection with any sale or purchase of securities, . either directly or indirectly (1) to employ any device, scheme or artifice to defraud, or (2) to engage in any act, practice, transaction or course of business which operates or would operate as a fraud or deceit upon the purchaser, seller, or investor.
Id. § 75-71-43(b). By affirmatively misrepresenting the prior ownership of the Mississippi Candies common stock being offered to Johnson, Wilson engaged in an act that operated as a fraud and deceit upon the purchaser of the securities in violation of § 75-71-43(b)(2). See Hodge, Civil Liability Under the Mississippi Securities Act, 43 Miss.L.J. 597, 604 (1972). Furthermore, by utilizing Yerger’s services to conceal his position, Tribble took affirmative action to perpetuate Wilson’s misrepresentation. By so doing, Tribble employed a device, scheme or artifice to defraud in violation of § 75-71-43(b)(l) and engaged in an act that operated as a fraud and deceit upon the purchaser of the securities in violation of § 75-71-43(b)(2).
Johnson, as purchaser of a security whose sale was made in violation of the antifraud provisions of the Mississippi Securities Act, statutorily is entitled to rescind the transaction. Miss.Code Ann. § 75-71-31(2) (1972). That section, in relevant part, provides that “[e]very sale ... of any security made in violation of any provisions of this chapter shall be voidable at the election of the purchaser, who shall be entitled to recover from the seller in an action at law.” Id.
Yerger, as the seller of the securities, is civilly liable to Johnson under the statutory rescission provisions of § 75 — 71— 31(2). This section requires that the purchaser, as a precondition to recovery under the statutory rescission provisions, “tender to the seller . . . the security sold, in proper form for transfer, together with the amount of all dividends, interest, and other income and distributions received by the purchaser from or upon such security.” Id. On appeal, Yerger complains for the first time that no proper tender was made. However, the plaintiffs made a legally sufficient tender of the securities to the defendants in paragraphs nineteen and twenty-five of their complaint and no point of lack of tender was raised in the court below. Yerger also complains that the plaintiffs never pled § 75-71-31. This is literally true. However, they pled the predecessor of the statutory section in their complaint, which gave the defendants more than adequate notice of the plaintiffs’ claim to rescission. See note 2, supra, at 955.
III. Damages
A. Tribble and Wilson
A person induced by a misrepresentation of material fact to purchase securities may recover damages under § 75-71— 25, but may not “recover more than the money paid . . . for such stocks, bonds or other securities, with legal interest from the date of payment . . . and reasonable attorney’s fee.” Miss.Code Ann. § 75-71-25 (1972). By fixing a ceiling on damage recoveries under § 75 — 71—25, the statutory language appears to permit a substantive damage award of less than the full purchase price of the securities. However, case authority developed under § 75-71 — 25 uniformly has awarded successful plaintiffs substantive damages equalling the full purchase price paid for the securities. See Seaboard Planning Corp. v. Powell, 364 So.2d 1091 (Miss.1978); Irving v. Bankers Mortgage Co., 169 Miss. 890, 151 So. 740 (1934); Bankers Mortgage Co. v. McMullan, 165 Miss. 382, 141 So. 331 (1932). Our examination of these cases coupled with the obvious compensatory nature of § 75-71 — 25 indicates that, absent special circumstances, a person induced by a misrepresentation of material fact to purchase securities should recover substantive damages under § 75-71 — 25 equalling the full purchase price of the securities. Accordingly, the plaintiffs in this action are entitled to recover substantive damages of $4,500.00 from those defendants whose liability arises under § 75-71-25.
The plaintiffs also are entitled to legal interest on their substantive recovery from the date of payment. Miss.Code Ann. § 75-71-25 (1972). Under Mississippi law, the legal rate of interest is 6%. Id. at 75-17—1. Accordingly, the plaintiffs are entitled to recover interest at 6% on the purchase price of the securities from October 10, 1973.
Additionally, § 75-71-25 expressly provides for an award of attorney’s fees to those induced through a misrepresentation of material fact to purchase securities. Mississippi case authority consistently awards attorney’s fees in cases arising under this section. See Seaboard Planning Corp. v. Powell, 364 So.2d 1091 (Miss.1978); New Amsterdam Casualty Co. v. Wood, 213 Miss. 499, 57 So.2d 141 (1952); Bankers Mortgage Co. v. McMullan, 165 Miss. 382, 141 So. 331 (1932). The district court erred in failing to award the plaintiffs reasonable attorney’s fees against those defendants whose liability arises under § 75-71-25. The district court on remand must determine the proper amount of attorney’s fees recoverable by the plaintiffs against Tribble and Wilson.
B. Yerger
The damages recoverable by the purchaser of securities from the seller in cases of statutory rescission are specified by § 75-71-31(2) as “the full amount paid by such purchaser for such security, with interest from the date of purchase.” Miss.Code Ann. § 75-71-31(2) (1972). Accordingly, the plaintiffs are entitled to recover from Yerger the full purchase price of the securities, $4,500.00, with interest of 6% from October 10, 1973.
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9464787-29819 | MEMORANDUM AND ORDER
SAFFELS, District Judge.
This matter is before the court on defendants’ Motion for Summary Judgment (Doc. 50). Plaintiff has filed a Response (Doc. 62), and defendants have filed a Reply (Doc. 67). In this 42 U.S.C. § 1983 action, plaintiff seeks damages for the deprivations he allegedly endured as a result of excessive police force. In its Order (Doc. 66) dated August 28, 2000, the court granted defendants Aaron Kern, D.W. Jackson, and the City of Wichita, Kansas’s Motion for Summary Judgment (Doc. 47). Therefore, the remaining defendants all join in presenting the instant request for summary judgment. For the following reasons, defendants’ motion shall be granted in part and denied in part.
I. BACKGROUND
The following facts concerning plaintiffs claims are either uncontroverted or, if controverted, are construed in a light most favorable to plaintiff.
A. Plaintiffs Arrest
In the early morning hours of October 28, 1998, plaintiff was observed by Officer Kern of the Wichita Police Department inside a local convenience store. According to Officer Kern, plaintiff exuded a strong odor of alcohol and his speech was slurred. Plaintiff, on the other hand, has no recollection of ever being inside the convenience store. (PI. Dep. at 88, 90). Plaintiff exited the store and entered a white van parked outside. Officer Kern approached plaintiff and advised him he should not be driving if he had been drinking. Apparently choosing not to head this advice, plaintiff drove the van out of the lot by making an improper right hand turn and striking the curb on the far side of the roadway.
Officers Kern and Wiley pursued plaintiff until plaintiff stopped the van in a residential driveway. Plaintiff was removed from the vehicle and placed in handcuffs. Plaintiff alleges he was forcibly removed and thrown to the ground before being handcuffed. At some point, plaintiffs body and head struck the side of his van as the officers placed him in a tactical control position. The officers allege this was done in response to plaintiffs aggressive behavior. Eventually, a blood alcohol test (“BAT”) van was called to the scene. Plaintiff refused to participate in the test, and the officers decided to place plaintiff in the rear of the van for transport to the Sedgwick County Adult Detention Facility (“jail”). Once again, plaintiff has no independent recollection of the existence of the BAT van, his presence inside it, or his eventual transport to the jail. (PI. Dep. at 98).
B. Plaintiffs Detention
Plaintiff arrived at the jail at approximately 5:15 a.m. The BAT van was met outside the jail by Deputies Carlton and Tracey. Plaintiff has no recollection of his arrival at the jail. (PLResp-¶ 20). Deputy Carlton testified plaintiff was wet and had some cuts and bruises about his head upon arrival. While plaintiff was being escorted from the BAT van to the jail’s entrance, he physically resisted the deputies and entered a “violent frenzy.” (Carlton Aff. ¶ 14). Ás a result, plaintiff was forced to the ground on multiple occasions, and the deputies administered “pressure techniques” to physically control him. These events are uncontroverted due to plaintiffs persistent failure of recollection.
Once inside the jail’s processing facility, plaintiff continued to demonstrate aggressive behavior coupled with a high state of intoxication. A search of plaintiff was performed, wherein deputies were forced to apply physical pressure to effectuate the search. After the search, plaintiff was placed in a restraint chair. The restraint chair completely immobilizes an individual by the use of several straps attached to the chair. Plaintiff has no recollection of being placed in the chair. (PLResp^ 41).
In conformance with established jail policy, plaintiff was examined by medical personnel shortly after being placed in the restraint chair. Plaintiff has no recollection of this examination. From approximately 5:30 a.m. to 6:30 a.m., plaintiff remained in the chair. Plaintiff continued to be hostile during this time by yelling obscenities and threatening the deputies and staff. Plaintiff does recall yelling for an hour. (PI. Dep. at 305). At 6:30 a.m., plaintiff was released from the restraint chair to have breakfast.
At approximately 6:50 a.m., while plaintiff remained handcuffed in his cell, the jail staff underwent a shift change. During this time, plaintiff was still yelling and kicking his cell’s door. What transpired next is highly controverted and is the foundation of plaintiffs claim. According to plaintiff:
from that point a black officer with sergeant stripes came to the door and opened the door, entered the cell, which I thought he was there to remove the handcuffs, and hit me behind the ear on the left side on the back of my head knocking me onto the steel bed, knocking my head off the steel wall, and then proceeding to take his thumb and grind it in behind my ear on the left side.
At which point another officer entered the cell and they proceeded attacking and torturing me on every joint in my body, elbows, shoulders, knees. And by the end of it all, they had beaten me unconscious ....
(PI. Dep. at 101-02). To date, plaintiff has been unable to positively identify any defendants as his attackers.
On the other hand, defendants deny any beating took place. Instead, defendants direct the court to an incident report filed by Sergeant Scott Farmer. In the report, Sgt. Farmer details how he entered plaintiffs cell in an attempt to quell his yelling and kicking of the cell door. Upon entering the cell, Sgt. Farmer thought plaintiff was attempting to attack him, so Sgt. Farmer struck plaintiff with an open hand; knocking him onto the cell’s bed. Once face down on the bed, plaintiffs handcuffs were switched out with another pair, and plaintiff was warned to stop kicking the cell door. Defendants assert this is the totality of physical contact that occurred in plaintiffs cell.
Plaintiff was questioned at length in his deposition regarding the similarity of these two descriptions. Although plaintiff could only identify the first deputy by rank and race, after reviewing Sgt. Farmer’s report, plaintiff agreed “it sounds like the incident I’ve described to you, only different.” (PL Dep. at 289). Additionally, plaintiff concluded: “I believe this is a report written as a cover-up for the torture that was inflicted upon me in Cell 28.” (Id. at 286).
According to defendants, plaintiff continued to yell and kick the door, so at approximately 7:11 a.m., Sgt. Farmer ordered plaintiff to be placed in the restraint chair. Plaintiff has no recollection of being placed in the chair. Instead, he asserts he regained consciousness after the beating to find that he had defecated himself and was bound in the restraint chair. In any event, it is uncontroverted plaintiff remained in the chair until approximately 9:15 a.m. While in the chair, plaintiff alleges he was struck in the back of the head by an unidentified individual and commanded to shut up. After being released from the chair, plaintiff was again examined by medical personnel at 9:88 a.m. The incident inside the cell and the blow to his head comprise the total of plaintiffs allegations of excessive force. (PI. Dep. at 139).
II. PLAINTIFF’S CLAIMS
The court interprets plaintiffs filings and the Pretrial Order (Doc. 64) as raising four claims: (1) a § 1983 claim premised on excessive police force during plaintiffs arrest against defendants Kern, Jackson, and the City of Wichita; (2) a § 1983 claim premised on excessive police force during plaintiffs detention at the jail against defendants Hill, Pulice, Peterson, White, Carlton, Tracey, Russell, and the Board of County Commissioners (“County defendants”); (3) a § 1983 claim premised on defendants’ failure to supervise and/or train against defendants Hill, Pulice, and the Board of County Commissioners; (4) a § 1983 claim premised on defendants’ negligent or purposeful withholding of medical care against the County defendants.
Plaintiff now concedes summary judgment should be granted to defendants Hill, Pulice, and the Board of County Commissioners on his failure to train and/or supervise claim. (PI. Resp. at 14). The court will, therefore, grant summary judgment to defendants Hill, Pulice, and the Board of County Commissioners on plaintiffs failure to train claim. In addition, as mentioned above, the court previously granted summary judgment on all claims against defendants Kern, Jackson, and the City of Wichita. Thus, only plaintiffs claims of excessive police force and inadequate medical care against the County defendants are viable for consideration within the instant motion for summary judgment.
III. STANDARD OF REVIEW
Summary judgment is appropriate if the moving party demonstrates that there is “no genuine issue as to any material fact” and that it is “entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c). The rule 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, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The substantive law identifies which facts are material. Id. at 248, 106 S.Ct. 2505. A dispute over a material fact is genuine when the evidence is such that a reasonable jury could find for the nonmovant. Id. “Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Id.
The movant has the initial burden of showing the absence of a genuine issue of material fact. Shapolia v. Los Alamos Nat’l Lab., 992 F.2d 1033, 1036 (10th Cir.1993). The movant may discharge its burden “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, 91 L.Ed.2d 265 (1986). The movant need not negate the nonmovant’s claim. Id. at 323, 106 S.Ct. 2548. Once the movant makes a properly supported motion, the nonmovant must do more than merely show there is some metaphysical doubt as to the material facts. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The nonmovant must go beyond the pleadings and, by affidavits or depositions, answers to interrogatories, and admissions on file, designate specific facts showing there is a genuine issue for trial. Celotex, 477 U.S. at 324, 106 S.Ct. 2548 (interpreting Fed. R.Civ.P. 56(e)). Rule 56(c) requires the court to enter summary judgment against a nonmovant who fails to make a showing sufficient to establish the existence of an essential element to that party’s case, and on which that party will bear the burden of proof. Id. at 322, 106 S.Ct. 2548. Such a complete failure of proof on an essential element of the nonmovant’s case renders all other facts immaterial. Id. at 323, 106 S.Ct. 2548.
A court must view the facts in the light most favorable to the nonmovant and allow the nonmovant the benefit of all reasonable inferences to be drawn from the evidence. See, e.g., United States v. O’Block, 788 F.2d 1433, 1435 (10th Cir.1986) (“The court must consider factual inferences tending to show triable issues in the light most favorable to the existence of those issues.”). The court’s function is not to weigh the evidence, but merely to determine whether there is sufficient evidence favoring the nonmovant for a finder of fact to return a verdict in that party’s favor. Anderson, 477 U.S. at 249, 106 S.Ct. 2505. Essentially, the court performs the threshold inquiry of determining whether a trial is necessary. Id. at 250, 106 S.Ct. 2505.
IV. DISCUSSION
A. Claims Generally Under 42 U.S.C. § 1983
Claims brought pursuant to § 1983 seek relief for deprivations of federally secured rights. To prevail on his § 1983 claims, plaintiff “must establish that [he was] deprived of a right secured by the Constitution or laws of the United States, and that the alleged deprivation was committed under the color of state law.” American Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40, 49-50, 119 S.Ct. 977, 143 L.Ed.2d 130 (1999). See generally Sutton v. Utah State Sch. for the Deaf & Blind, 173 F.3d 1226, 1237 (10th Cir.1999). While § 1983 is a vehicle by which plaintiff may seek relief, the statute neither grants or creates any independent substantive rights. Baker v. McCollan, 443 U.S. 137, 144 n. 3, 99 S.Ct. 2689, 61 L.Ed.2d 433 (1979) (noting § 1983 is not itself a source of substantive rights, but merely provides “a method for vindicating federal rights elsewhere conferred”).
B. Excessive Force Claim
1. Applicable Constitutional Standard
The court must first consider what constitutional right plaintiffs claim of excessive police force implicates — establishing the respective standard governing the court’s analysis. The court begins by stating the general rule: “all claims that law enforcement officers have used excessive force-deadly or not-in the course of an arrest, investigatory stop, or other ‘seizure’ of a free citizen should be analyzed under the Fourth Amendment and its ‘reasonableness’ standard, rather than under a ‘substantive due process’ approach.” Graham v. Connor, 490 U.S. 386, 395, 109 S.Ct. 1865, 104 L.Ed.2d 443 (1989) (emphasis in original). In typical excessive force claims, a putative plaintiff, in line with the above holding of the Supreme Court, will present their arguments under the Fourth Amendment framework. Unfortunately, in the case at bar, plaintiff has faded to explicitly submit his claim under the Fourth Amendment.
Defendants assert this omission compels the court to consider plaintiffs claim under the substantive due process analysis embodied in the Fourteenth Amendment. The court disagrees. The holding of Graham is couched in such inclusive language as to make defendants’ proposition untenable. See generally Williams v. Tulsa Police Dep’t, 66 F.3d 339 (10th Cir.1995) (table) (“the district court correctly pointed out that a claim a law enforcement officer used excessive force in the course of an arrest must be analyzed under the Fourth Amendment”) (emphasis added). The court will, therefore, transform plaintiffs claim of excessive force as one brought under the Fourth Amendment made applicable via the Fourteenth Anendment. While rare, the court is compelled to take this action to maintain its own analysis-as compared to plaintiffs substantive claims-in accordance with the appropriate authority. See Curley v. Village of Suffern, 268 F.3d 65, 70 (2d Cir.2001) (published opinion) (“We note initially that the district court correctly reclassified plaintiffs claim as one brought under the Fourth Anendment, which prohibits unreasonable seizures of persons, as opposed to the Fourteenth Amendment, which guarantees substantive due process.”).
As a final matter, the court also finds the Fourth Amendment’s analysis appropriate even though plaintiffs claims flow from his detainment post-arrest. See Austin v. Hamilton, 945 F.2d 1155, 1162 (10th Cir.1991) (holding Fourth Amendment applies to excessive force claims arising during confinement but before a defendant is formally charged or brought before a judicial officer), abrogated on other grounds by Johnson v. Jones, 515 U.S. 304, 115 S.Ct. 2151, 132 L.Ed.2d 238 (1995).
Under the “reasonableness” analysis “the question is whether the officers’ actions are ‘objectively reasonable’ in light of the facts and circumstances confronting them, without regard to their underlying intent or motivation.” Graham, 490 U.S. at 397, 109 S.Ct. 1865 (internal citations omitted). Three factors, in particular, are relevant to this fact-specific inquiry: (1) the severity of the crime at issue; (2) whether the suspect presents an immediate threat to the safety of the officers or others; and (3) whether the suspect is actively resistant or attempting to evade arrest. Id. at 396, 109 S.Ct. 1865. With this standard established, the court turns to the facts of the present case to determine if plaintiff has presented a viable excessive force claim.
2. Application to Facts
Without question, there is considerable dispute over what took place in plaintiffs cell during the early morning hours of October 28,1998. As noted above, within a summary judgment motion, the court is required to view the evidence in a light most favorable to the non-moving party. In this context, therefore, the court must accept plaintiffs version of what transpired inside his cell. See Dixon v. Richer, 922 F.2d 1456, 1458, 1463 (10th Cir.1991) (affirming a denial of summary judgment when viewing allegations of excess force solely from the plaintiffs’ accounting of the facts); Fordyce v. City of Kansas City, Kansas, No. 95-2285, 1996 WL 570195, at *4 (D.Kan. Sept.30, 1996) (denying summary judgment in excessive force claim while accepting plaintiffs version of the facts).
Accepting as true plaintiffs description of being beaten into a state of unconsciousness, such activity would appear to be objectively unreasonable. No officer could reasonably find it necessary to severely beat an individual confined to a jail cell and restrained in handcuffs. In any event, at this stage of the analysis, plaintiff must only demonstrate a genuine issue of material fact regarding the reasonable nature of defendants’ behavior. In regards to both the beating and the blow to the head, plaintiff has carried this burden.
While the finding would appear to conclude the court’s analysis and require a denial of summary judgment, in this case, unfortunately, the analysis is far from over. In particular, the court must pause to consider three additional issues: first, the personal liability of the individually named defendants; second, whether the individual defendants are entitled to qualified immunity; and third, the Board of County Commissioners’ liability under § 1983.
3. Individual Liability
Plaintiff brings his claim against the individual defendants in their individual capacities. As mentioned above, plaintiff testified to two attackers, yet he levies his claim against seven deputies. It is well established that for individual liability under § 1983 to attach, a defendant must personally participate in the alleged deprivation. See Foote v. Spiegel, 118 F.3d 1416, 1423 (10th Cir.1997) (“individual liability under § 1983 must be based on personal involvement in the alleged constitutional violation”); Moffitt v. Town of Brookfield, 950 F.2d 880, 886 (2d Cir.1991) (“[Pjersonal involvement of defendants in alleged constitutional deprivations is a prerequisite to an award of damages under § 1983.”) (internal citation and quotation marks omitted).
Although only two defendants were directly responsible for the attack, the remaining five may still be liable if they were in a position to prevent the attack but failed to do so. See, e.g., Mick v. Brewer, 76 F.3d 1127, 1136 (10th Cir.1996) (holding it is well established that a police officer has a duty to intervene to prevent use of excessive force by another police officer); Anderson v. Branen, 17 F.3d 552, 557 (2d Cir.1994) (“all law enforcement officials have an affirmative duty to intervene to protect the constitutional rights of citizens from infringement by other law enforcement officers in their presence”). Cf. Universal Calvary Church v. City of New York, No. 96-4606, 2000 WL 1538019, at *18 (S.D.N.Y. Oct. 17, 2000) (granting summary judgment in excessive force claim by stating “mere presence at the site of a melee involving hundreds of people is not evidence of personal involvement for the purpose of holding individual defendants liable for constitutional violations”). At a bare minimum, therefore, the record must demonstrate that the individual defendants were near plaintiffs cell during his alleged beating. See Henry v. Board of Leavenworth County Comm’rs, 64 F.Supp.2d 1042, 1051 (D.Kan.1999) (finding summary judgment appropriate as to defendants shown not to be present at the time of the alleged deprivation). As to several defendants, plaintiff has failed to allege sufficient facts to sustain this minimal burden.
First, defendant White’s affidavit and accompanying employment records reveal he was off-duty and had no contact with plaintiff during all relevant times associated with plaintiffs claim. (White Aff. at 2). Plaintiff offers no counter affidavit or any other evidence refuting this assertion. Second, the record is wholly devoid of any facts-remotely placing defendants Hill or Pulice in the vicinity of plaintiffs cell, or even in the jail, during the times relevant to plaintiffs claim. Third, to the extent plaintiff is attempting to attach individual liability to defendants Hill and Pulice based on their apparent supervisory role over the jail, the court must grant summary judgment. As has been reiterated numerous times, “there is no concept of strict supervisor liability under [§ ] 1983.” Jenkins v. Wood, 81 F.3d 988, 994 (10th Cir.1996) (internal citation and quotation marks omitted). See also Brown v. Reardon, 770 F.2d 896, 901 (10th Cir.1985) (holding a supervisor cannot be held liable under § 1983 on a respondeat superior theory). The court finds no reasonable jury could find these defendants violated plaintiffs constitutional rights, so the court finds summary judgment appropriate for defendants Hill, Pulice, and White.
On the other hand, defendants Peterson’s, Carlton’s, and Russell’s affidavits all demonstrate they were present and near plaintiffs cell during the approximate time of plaintiffs alleged beating. While the record contains no affidavit from defendant Tracey, defendant Russell’s affidavit sufficiently alleges defendant Tracey was also present.
Although not argued by defendants, the court notes the remaining defendants can not escape liability merely because plaintiff is unable, at this stage of the proceedings, to positively identify which deputies beat him. See, e.g., Rutherford v. City of Berkeley, 780 F.2d 1444, 1448 (9th Cir.1986) (holding where facts surrounding the alleged beating are disputed and the plaintiff cannot identify any specific officer who beat him, the very presence of a particular officer at the scene may constitute sufficient evidence to infer that the officer participated in the beating); Smith v. Delamaid, 842 F.Supp. 453, 459 (D.Kan.1994) (rejecting argument officers could not be liable because the plaintiff was unable to identify which officer abused him); Jones v. Village of Villa Park, No. 91-7095, 1993 WL 437415, at *3 (N.D.Ill. Oct. 27, 1993) (denying summary judgment on excessive force claim even though plaintiffs recollection was extremely limited), rev’d on other grounds sub nom. Jones v. Johnson, 26 F.3d 727 (7th Cir.1994), aff'd, 515 U.S. 304, 115 S.Ct. 2151, 132 L.Ed.2d 238 (1995). The issues of the defendants’ degree of culpability and plaintiffs credibility are best reserved for trial. Summary judgment is denied as to this issue.
4. Qualified Immunity
Generally, public officials performing discretionary functions enjoy qualified immunity from personal liability under § 1983 “unless their conduct violates ‘clearly established statutory or constitutional rights of which a reasonable person would have known.’ ” Baptiste v. JC Penney Co., 147 F.3d 1252, 1255 (10th Cir.1998) (quoting Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S.Ct. 2727, 73 L.Ed.2d 396 (1982)). On a motion for summary judgment based on a defense of qualified immunity, the relevant question is whether a reasonable official could have believed his actions were lawful in light of clearly established law and the information the official possessed at the time of his allegedly unlawful conduct. Anderson v. Creighton, 483 U.S. 635, 639, 107 S.Ct. 3034, 97 L.Ed.2d 523 (1987).
The burdens within this analysis differ from those the court generally employs under summary judgment. Once a defendant has asserted the qualified immunity defense, the burden shifts to the plaintiff to demonstrate: (1) “that the defendant’s actions violated a constitutional right,” Albright v. Rodriguez, 51 F.3d 1531, 1534 (10th Cir.1995), and (2) that the right at issue was clearly established at the time of defendant’s action. Id. Once the plaintiff has met this two-step burden, the defendant must come forward and demonstrate “that there are no genuine issues of material fact and that he or she is entitled to judgment as a matter of law.” Id. at 1535.
Much has been written regarding the interplay or overlap of the qualified immunity defense and the general analysis of excessive force claims brought under the Fourth Amendment. Both questions seek to measure an official’s actions against a yardstick notched by objective reasonableness. Due to this repetition of analysis, many courts have noted the decreased usefulness of the qualified immunity defense within excessive force cases. See, e.g., Quezada v. County of Bernalillo, 944 F.2d 710, 718 (10th Cir.1991) (“[I]n excessive force cases the substantive inquiry that decides whether the force exerted by police was so excessive that it violated the Fourth Amendment is the same inquiry that decides whether the qualified immunity defense is available to the government actor.”); Dixon v. Richer, 922 F.2d 1456, 1463 (10th Cir.1991) (“[I]n excessive force claims asserted under the Fourth Amendment, the qualified immunity question is usually answered in the Fourth Amendment inquiry.”).
Recently, the Tenth Circuit reexamined this interplay, and the circuit court stressed that the redundancy in analysis does not, standing alone, obviate this court’s duty to rule on the legal question raised by the qualified immunity defense. Medina v. Cram, 252 F.3d 1124, 1131 (10th Cir.2001). In this case, however, the court’s analysis under the immunity defense must track with the court’s earlier findings under the Fourth Amendment standard. This conclusion is warranted because, unlike in Medina, there is great dispute over the material facts substantiating plaintiffs claim. Cf. id. (“Because the material facts in this case are undisputed, we must follow the Court’s approach to qualified immunity and decide whether the defendants’ actions were reasonable as a matter of law.”). With such a dispute, the court may not now proceed and rule as a matter of law that defendants are entitled to immunity. As the Sixth Circuit noted in a similar case, “the legal question of qualified immunity is completely dependent upon which view of the facts is accepted by the jury.” Brandenburg v. Cureton, 882 F.2d 211, 215 (6th Cir.1989). Therefore, summary judgment on the issue of qualified immunity must be denied.
5. County’s Liability
As alluded to above, plaintiff brings his excessive force claim against defendants Hill and Pulice in their individual and official capacities. A suit, however, against a governmental official in his or her official capacity is the equivalent of a suit against the governmental entity. See Kentucky v. Graham, 473 U.S. 159, 165, 105 S.Ct. 3099, 87 L.Ed.2d 114 (1985). The court, therefore, considers these claims in solidarity with plaintiffs claim against the Board of County Commissioners (“the County”).
The County may be held liable for plaintiffs deprivations only if those deprivations were the result of an unconstitutional policy or custom of the County. Monell v. Department of Social Servs., 436 U.S. 658, 98 S.Ct. 2018, 56 L.Ed.2d 611 (1978). A governmental entity may also be liable if “a deliberate choice to follow a course of action-is made from among various alternatives by the official or officials responsible for establishing final policy with respect to the subject matter in question.” Pembaur v. City of Cincinnati, 475 U.S. 469, 483, 106 S.Ct. 1292, 89 L.Ed.2d 452 (1986). The court finds summary judgment appropriate, for plaintiff has utterly failed to plead any facts demonstrating his deprivation was the result of, or prompted by, any County policy or custom. Nor has plaintiff alleged any decision by a final policy-maker lead to his deprivation.
In sum, as to plaintiffs excessive force claim, summary judgment is granted in all respects to defendants Hill, Pulice, White, and the County. The claim remains viable for trial as to defendants Peterson, Carlton, Tracey, and Russell.
C. Inadequate Medical Care
Plaintiffs second claim asserts he was deprived of his Eighth Amendment right to be free from cruel and unusual punishment when the County defendants denied him adequate medical care. (Pretrial Or. at 3, 13). Defendants assert this claim is meritless because the Eighth Amendment is only applicable to post-conviction incarcerations. See Whitley v. Albers, 475 U.S. 312, 318, 106 S.Ct. 1078, 89 L.Ed.2d 251 (1986). The court agrees and finds summary judgment to be appropriate.
In the alternative, even if the court were to construe the claim as properly asserting plaintiffs rights under the Fourteenth Amendment, the court would still find summary judgment appropriate. The Tenth Circuit has made clear, that “ ‘[u]nder the Fourteenth Amendment’s due process clause, pretrial detainees ... are entitled to the same degree of protection regarding medical attention as that afforded convicted inmates under the Eighth Amendment.’ ” Barrie v. Grand County, Utah, 119 F.3d 862, 867 (10th Cir.1997) (quoting Frohmader v. Wayne, 958 F.2d 1024, 1028 (10th Cir.1992)). “Thus, [plaintiffs] inadequate medical attention claim must be judged against the ‘deliberate indifference to serious medical needs’ test of Estelle v. Gamble, 429 U.S. 97, 104 [97 S.Ct. 285, 50 L.Ed.2d 251] (1976).” Id. (quoting Frohmader, 958 F.2d at 1028).
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3010263-14911 | MEMORANDUM OPINION AND ORDER
WILLIAM E. DOYLE, District Judge.
I
SUMMARY OF THE CASE
Plaintiff, Joel D. Rich, a registrant of Selective Service Local Board No. 76 in Tulsa, Oklahoma, was given notice to report for induction into the armed services by his local board in a letter dated April 25, 1969. Claiming that the board had acted without jurisdiction and in violation of administrative regulations, Rich brought this action challenging the validity of his order to report for induction and seeking an order requiring his board to reclassify him pursuant to C.F.R. § 1632.30. The judgment which has been heretofore announced from the bench is formalized in this opinion.
II
THE FACTS
From December 17, 1963, to June 9, 1967, the plaintiff attended undergraduate school at Oklahoma State University and graduate school in business administration at the University of Denver. During this period he was classified II-S. After receiving his masters degree, Rich was reclassified I-A by his local board. He appealed this reclassification to the State Appeal Board, claiming that he was entitled to a II-S classification since he had enrolled as a full time student for the 1967-68 school year at the University of Denver School of Law. On August 2, 1967, Rich was reclassified II-S until July 29, 1968, pursuant to the recommendation of the State Appeal Board. The local board reclassified Rich I-A on March 20, 1968, at which time he reported for his preinduction physical examination at Denver Armed Forces Entrance and Examining Station and was found acceptable for induction; however, on April 4, 1968, he was again classified II-S until July 29, 1968, in compliance with the Appeal Board’s recommendation.
On August 14, 1968, Local Board No. 76 reclassified the plaintiff I-A, his appeal was denied on November 14, 1968, and an Order to Report for Induction on December 12, 1968, SSS Form 252, was issued to him on November 22, 1968. Rich wrote to his board on November 25, 1968, requesting a postponement of his induction on the ground that final examinations for the fall quarter of law school would not terminate until December 11,1968, and, immediately thereafter, wrote to Colonel Herbert Hope, Oklahoma State Director of Selective Service, requesting “a postponement of induction in order to allow the Department of the Navy to complete processing of my application for their Officer Candidate School Program.” On December 9, 1968, the local board postponed his induction until December 15, 1968, and mailed him SSS Form 264 so providing. Shortly thereafter, the board notified Rich that “Your Postponement of Induction has been amended to read, ‘Postponed until February 1, 1969’ per instructions received from the Oklahoma State Headquarters.”
On February 1, 1969, Rich was notified to report for induction at Tulsa, Oklahoma on February 25, 1969. He immediately requested a I-S(c) classification under 32 C.F.R. § 1622.15(b), which was denied by his local board. Rich then requested and was granted a transfer of induction, SSS Form 230, from Tulsa, Oklahoma, to Denver, Colorado, and Local Board No. 3, Denver, Colorado, ordered him to report for induction, SSS Form 253, on March 24, 1969.
Rich filed suit in this Court on March 17, 1969, claiming that he had an absolute statutory right to a I-S classification. He sought an injunction prohibiting his induction and a writ of mandamus directing the Selective Service to classify him I-S. This Court denied the requested relief and dismissed the action. The Tenth Circuit Court of Appeals affirmed. 408 F.2d 944.
Pursuant to the original order issued November 22, 1968, Rich was again notified to report for induction at Denver, Colorado, on April 9, 1969. He reported as ordered, but was found not acceptable for induction under current medical standards because of “active psychotherapy and external thrombosed hemorrhoids.” The examining doctor recommended re-examination in one year. No independent psychiatric examination was conducted at the induction station. The diagnosis was based purely on psychiatric reports from Dr. Helen P. Ger-ash, M. D., and Dr. Warren H. Walker, M. D., which were sent to the induction station on April 7, 1969 by Rich’s attorney. Dr. Gerash’s report recommended that Rich receive immediate intensive psychiatric treatment, and Dr. Walker’s report consisted of a letter which certified that Rich was under psychiatric treatment and could not be effective in the military service at that time.
After Rich was found unacceptable for induction, his medical file was sent to Oklahoma State Selective Service System Headquarters, whereupon Colonel Hope submitted it to the Oklahoma Medical Advisory Committee for review and recommendation. The Committee suggested “that the registrant be re-examined, with probably consultation from psychiatrist in this area.” Colonel Hope then advised Local Board No. 76 that it was the recommendation of State Headquarters that Rich be “ordered to report for induction on May 14, 1969, to your local board at Tulsa, Oklahoma, for forwarding to the Oklahoma City Armed Forces Examining and Entrance Station.” Local Board No. 76 followed the recommendation of State Headquarters and in a letter dated April 25,1969, advised Rich:
An Order to Report for Induction, SSS Form 252, was issued to you under date of November 22, 1968, and that order is still outstanding.
You are therefore ordered to report for induction to the Local Board Office, Room 322, Federal Building, 333 West 4th Street, Tulsa, Oklahoma, at 7:30 A.M., May 14, 1969 * * *.
Rich objected to this order and requested that the board reclassify him because of the Denver Induction Station’s finding that he was unacceptable for induction. No action was taken in response to Rich’s request. He then brought the present action claiming that the order of November 22, 1968 is no longer valid; that the Selective Service regulations require that he be reclassified; and that the board’s actions are without any basis in law or fact.
Ill
THE LAW
Plaintiff’s complaint seeks preinduction judicial review of certain actions of his local board. The government contends that this Court is precluded from granting such review at this time by virtue of § 10(b) (3) of the Selective Service Act of 1967, which provides that there can be no judicial review of the classification or processing of any registrant except as a defense to criminal prosecution for failure to report for induction.
In exercising the authority to classify Selective Service registrants under the Selective Service Act and the regulations adopted pursuant thereto, the local boards must make findings of fact and exercise their judgment as to the implications of these facts in light of the applicable regulations. In so doing, their decisions are vulnerable to attack on two grounds: (1) that the facts found are not supported by the evidence, and (2) that the judgment of the board as to the legal meaning of the applicable regulations was erroneous. ' Of course, these claims might possibly arise every time a local board classifies an individual pursuant to the Selective Service Act and regulations. Congress, in adopting 10 (b) (3), determined that to allow such suits prior to induction would substantially impair the ability of this country to effectively raise an army.
In Oestereich v. Selective Service System Bd. No. 11, 393 U.S. 233, 89 S.Ct. 414, 21 L.Ed.2d 402 (1968), the Supreme Court distinguished the above described situation — where the board exercises its judgment in applying the Act and regulations — from one in which the board acts in blatant disregard of mandatory provisions which allow no room for the exercise of judgment or discretion. Oestereich, a student at a theological school, brought a preinduction suit to enjoin his reclassification to I-A under the delinquency provisions of the regulations. The Court held that preinduction review was permissible despite 10(b) (3) because the statute granting exemptions to theological students was mandatory and left no room for judgment as to its meaning, and the board had not purported to act pursuant to this statutory requirement, but rather had acted in accordance with certain regulations which could not legitimately be used to destroy the statutory exemption. Thus, 10(b) (3) is inapplicable where (1) the statutory or regulatory provision under which the board should have acted is mandatory, and (2) the claim is not that the board erroneously applied the applicable statute or regulation, but rather that the board acted in complete disregard of it.
The present case falls within the Oestereich exception to § 10(b) (3). First, § 1632.30 is mandatory and clearly states what shall be done if an induction station finds a registrant not qualified for service in the Armed Forces: “[T]he local hoard shall reopen his classification and classify him anew.” (Emphasis added.) Second, plaintiff’s claim is not that the local board or Oklahoma State Headquarters misapplied § 1632.30. He contends that the attempt to induct him pursuant to the November 22, 1968 order amounted to a clear disregard of § 1632.-30 and constituted lawless action beyond the scope of the board’s jurisdiction.
In such a case preinduction review is clearly proper under Oestereich.
The government also argues that the Denver Induction Station improperly relied on plaintiff’s evidence of change in physical and mental condition. They maintain that since Rich had failed to inform his local board of his change in physical condition and the fact that he was undergoing psychiatric treatment, the induction station should have refused to consider it. This argument has no merit. Failure of a registrant to advise his local board of a change in status subjects him to possible criminal prosecution, see e. g., United States v. Wain, 162 F.2d 60 (2d Cir. 1947), but nothing in the Selective Service Act or the regulations dictate that the induction center is precluded from considering such a change. Absent some allegation and proof of fraud, the action of the Denver Induction Station must stand as valid.
We now come to the merits of the case. On November 22, 1968, Local Board No. 76 issued a valid order to report for induction. Its validity was unaffected by the various postponements and Rich was obligated to report for induction on April 9, 1969. See 32 C.F.R. § 1632.2(d). Rich complied fully with this order by reporting at the induction center and submitting himself for induction. See 32 C.F.R. § 1632.14. At this time he was found unacceptable for military service. By ordering Rich in for induction, the Selective Service Board fulfilled its function. After that the authority was vested in the induction center, which is subject to the Secretary of Defense, to accept or reject him. They rejected him, and the propriety of their determination is not subject to review or rejection by Selective Service.
The Selective Service Act of 1967 provides :
No person shall be inducted into the Armed Forces for training and service or shall be inducted for training in the National Security Training Corps under this title * * * until his acceptability in all respects, including his physical and mental fitness, has been satisfactorily determined under standards prescribed by the Secretary of Defense.
Pursuant to this provision, the Secretary of Defense adopted Regulation § 1632.30 which states that if one “who has been forwarded for induction has been inducted or finally found not qualified for service in the Armed Forces, the local board shall reopen his classification and classify him anew.” (Emphasis added.) Plaintiff’s Selective Service file clearly shows that the induction station’s finding of unacceptability was final. In the absence of some showing of fraud, and there has been none, this ruling is binding.
Thus, the board was obligated to comply with the mandatory requirement of § 1632.30 and reclassify him. This the board failed to do.
IV
DISPOSITION
Instead of acting in accordance with § 1632.30, the board attempted to order plaintiff to again appear for induction pursuant to the November 22,1968 order. This order was beyond the board’s authority and was void. When the plaintiff appeared at the Denver Induction Station on April 9, 1969, he fully carried out the November 22, 1968 order. After that, its force was spent and it could have no further operative effect. Certainly the board lacked power, based on its November 22, 1968 order, to take another run at it, so to speak, based on its own dissatisfaction with the result.
Because, then, of these failures to meet the mandatory requirements of the Selective Service regulations, it follows that the board proceeded wholly without authority in attempting to induct plaintiff into the Armed Forces.
Plaintiff is entitled to the relief prayed for, an injunction prohibiting any attempt to induct plaintiff pursuant to the November 22, 1968 order and absent compliance with § 1632.30.
Counsel for Rich will promptly prepare and submit an appropriate judgment for signature.
. Section 1632.30 reads as follows:
Upon receiving notice from the induction station that a selected man who has been forwarded for induction has been inducted or finally found not qualified for service in the Armed Forces, the local hoard shall reopen his classification and classify him anew.
. Report of Medical Examination, Standard Form 88; Statement of Acceptability, DD Form 62; Transfer for Armed Forces Physical Examination or Induction, Part 4. — Disposition, SSS Form 230; Record of Induction, DD Form 47.
. Both of these reports were originally sent to Rich’s attorney and Rich has never seen them.
. Letter from F. Redding Hood, M.D., Chairman to Colonel H. Hope, April 21, 1969.
. Letter from Colonel Herbert Hope to Local Board No. 76, April 22, 1969.
. Section 10(b) (3) provides:
No judicial review shall be made of the classification or processing of any registrant by local boards, appeal boards, or the President, except as a defense to a criminal prosecution instituted under section 12 of this title, after the registrant has responded either affirmatively or negatively to an order to report for induction, or for civilian work in the case of a registrant determined to be opposed to participation in war in any form: Provided That such review shall ,go to the question of the jurisdiction herein reserved to local boards, appeal boards, and the President only when there is no basis in fact for the classification assigned to such registrant.
. This type of attack is directed at what Mr. Justice Harlan, concurring in Oestereich v. Selective Service System Bd. No. 11, 393 U.S. 233, 240, 89 S.Ct. 414, 417, 21 L.Ed.2d 402 (1968), described as “the numerous discretionary, factual, and mixed law-fact determinations which a Selective Service board must make prior to issuing an order to report for induction.”
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1789957-13959 | ANDERSON, Circuit Judge.
In this suit on a bond, due execution and breach were found by the court below, but on proceedings to chancerize the bond a verdict and judgment were entered for the defendant. The ease comes up on agreed facts, which may be summarized as follows:
On January 17,1923, the British schooner Dorin was picked up in distress about 200 miles from Nantucket Lightship, and towed into the port of Providence, whore, on Ja.nuary 19,1923, she was duly entered and á copy of her manifest filed. This manifest, sworn to by Brin L. Coats, as master, showed the schooner was loaded with a cargo of liquors, shipped from St. Pierre, Miquelon, and consigned to the order of the shipper at Nassau in the Bahama Islands. In order to obtain clearance, she was required to give a bond for tbe estimated amount of duties on said cargo, in the sum of $41,900, conditioned as follows: “If no merchandise laden on said British Schooner Dorin, shall be landed in the United States without entry therefor having been made and a permit secured from the Customs Officer, and if within six months from the date hereof, such landing certificate or other evidence shall be deposited with the Collector of Customs at the Port of Providence, Rhode Island,-as the Secretary of the Treasury may by general regulation require, then this obligation shall he void; otherwise, it shall remain in full force and effect.”
This was a statutory bond, given under section 442 of the Tariff Act of 1922, c. 356, 42 Stat. 858, 952, 19 USCA § 252. This stat ute provides that, when any vessel having on board merchandise shown by the manifest to be destined to a foreign port, after report and entry of such vessel, she may be required “to give a bond in an amount equal to the estimated duties conditioned that no merchandise shall be landed in the United States from such vessel without entry therefor having been made and a permit secured from the customs officer and for the production of such, landing certificates or other evidence of compliance with such bond as the Secretary of the Treasury may by general regulations require.”
The applicable regulation of the Treasury Department provides: “When a vessel clears for a foreign port with merchandise destined to such port or to a number of foreign ports and also when a vessel clears for a foreign port with merchandise to one or more other domestic ports, a bond should be taken on Customs Form 3219 and cancelled upon the production of consular certificates showing the landing at such foreign ports of the merchandise manifested therefor.”
The Dorin cleared from Providence on January 30, 1923. On February 16, 1923, she was found by the steamship Vasari flying distress signals about 30 miles southeast of Sandy Hook. The captain of the Dorin then gave Ms name as Charles H. Smith, and told the first officer on the Vasari that he had “no cargo on board, it having been discharged into some other vessel.” He also said that he had no fuel or water; that he wanted to abandon the Dorin. The Vasari took off the crew, and landed them in New York on February 16. Two days later the Dorin was found by the coast guard cutter Seneca and towed into New York, arriving on February 19. It was then found that, although her foremast and jib boom had been broken off and her anchors and chains lost, otherwise she was in excellent condition. She was released to her owners in New York in June, 1923, and proceeded to sea.
With the agreed facts, affidavits of four alleged members of the Dorin’s crew were submitted, each of which, after describing the wrecking by the storm conditions met by the vessel, ended with this statement — “that no part of the cargo of the said vessel ‘Dorin’ was taken off or unloaded at any time from the time we left the port of Providence until the time we abandoned the said vessel, and at the time we abandoned the said vessel the said cargo was still aboard the said vessel.”
In 1926 the United States brought suit on ■ this bond against the surety only. In three counts plaintiff alleged the execution and breach of the bond, by reason of failure to deposit with the collector of customs at Providence any landing certificate showing the landing of > said merchandise then on said British schooner Dorin either at a foreign port or at any port of the United States or any other evidence of landing of said merchandise at any place.
On December 28, 1927, the defendant pleaded that it had “Well and truly observed, performed, fulfilled and kept all and singular, the covenants, articles, clauses, provisos, conditions and agreements.”
By amendment filed on February 28, 1929, it pleaded the general issue; thus denying that .the “supposed writing obligatory” is its deed.
Jury was duly waived, and the case was heard by the District Judge, who found that the bond was properly -required under the Tariff Act, supra, and that it was duly executed; and:
“3. Prior to the institution of this suit no application was made to the Collector of Customs to obtain a cancellation of the bond, be-, cause of the inability of the owners of the schooner to produce the landing certificates, supported by adequate proof within the intendment of the customs regulations. •
“4. There was a breach of the terms of the bond by the owners of the Schooner Dorin in failing to file with the Collector of Customs at the port of Providence the landing certificate, or in lieu thereof satisfactory evidence of its inability so to do, within the intendment of the customs regulations.
“5. Counsel for the Government and for the, defendant [have] stipulated that the bond in this case is to be dealt with as an indemnity and not a penal or forfeiture bond.”
Judgment was thereupon entered for the plaintiff and the bond ordered to be chan-’ cerized. In the chaneerizing proceedings, no evidence beyond that already outlined was offered on either side. The court thereupon ruled as follows:
“On the question of whether there has been a breach by the obligor of the terms and conditions of the bond, the court holds that there has been, by virtue of the failure of the obligor to produce the landing certificate at a foreign port of the cargo or in lieu thereof any evidence establishing without its fault, the inability of the obligor so to do. The question here presented is whether, after the bond has been chancellorized in a proceeding to establish the damages to the government, there is any basis to assume such landing merely because of the breach of the obligor through its failure to produce a landing certificate. It is the contention of the government that knowledge of the disposition of the cargo is peculiarly within the knowledge of the Dorin Shipping Company, Ltd., and therefore that the government should he permitted to rest upon the assumption that the cargo had been landed and recover the full amount of the bond in the same manner as if it were a penal bond. The Dorin Shipping Company, Ltd., which alone in any practical sense could be assumed to be possessed of that knowledge, has never been made a defendant to this action. The ease is solely against the surety company.
“The court has examined with care the stipulated facts and finds therein nothing which would constitute a prima facie case of the landing of any part of the ‘Dorin’s’ cargo in the United States. If the cargo had consisted of something other than liquors it is doubtful if anyone would seriously urge the propositions advanced by the government in this case as a matter of law. I know of no rule of law applicable to an action of this kind which would warrant a different course of procedure or the application of different rules of evidence merely because of the nature of the merchandise constituting the cargo. In order to uphold the position of the government in this case it would be necessary to add an additional paragraph to the bond itself, substantially a paragraph which would amount to a stipulation between the parties that upon the failure of the obligor to file within the stipulated time the landing certificate it could he presumed and assumed that the cargo had been landed in the United States and that the burden would fall upon the obligor to disprove that inference. Such 'an added provision would materially alter the scope and character of the undertaking entered into. No cases have been cited which would warrant the following of such a practice. The verdict in this case may be entered for the defendant.”
As above noted, this is a statutory bond, given to secure the government for the exact amount of the estimated duties on the Dorin’s cargo. This bond, like every other written instrument, is to he so construed as to effect the purpose of the parties.
The obvious purpose of the bond i°s to require the payment of the estimated duties on the cargo, unless and until the defendant furnishes the evidence designated in the condition of the bond. The instrument is therefore to he differentiated from bonds given, with an arbitrary penal sum, to secure the performance of an undertaking, where the damages to the plaintiff may be, and generally are, much less tlian the penal sum of the bond. Some light is thrown upon the proper interpretation of the bond by the following provision of Rev. St. § 960, 28 USCA § 784, which reads:
“Suits on Ronds for Recovery of Duties; Judgment; Continuance. When suit is brought on any bond for the recovery of duties due to the. United States, it shall be the duty of the court to grant judgment at the return term, upon motion, unless the defendant, in open court (the United States attorney being present) makes oath that an error has been committed in the liquidation of the duties demanded upon such bond, specifying the errors alleged to have been committed, and that the same have been notified in writing to the collector of the district before the said return term; whereupon a continuance may be granted until the next term, and no longer, if the court is satisfied that such continuance is necessary for the attainment of justice.”
The language in this statute, that judgment shall be promptly rendered “unless the defendant * * * makes oath that am error has been committed im the liquidation of the duties demanded upon such bond,” etc., plainly imports that the burden is upon the defendant to show that the real duties are less than the penal sum of the bond given as security for their payment.
Some weight is to be given also to Rev. St. § 963, 28 USCA § 787, providing:
“Interest; in Suits on Bonds for Recovery of Duties. Upon all bonds, on which-suits are brought for the recovery of duties, interest shall be allowed, at the rate of 6 per centum a year, from the time when said bonds became due.”
Clearly, unless the penal sum is no larger than the duties, there would be no occasion for this statute allowing interest in order to give the government the full and timely payment of the duties. Compare 2 Sedgwick on Damages (9th Ed.) § 678 and cases cited.
As pointed out in 2 Sedgwick on Damages (9th Ed.) § 680, entitled “Statutory Bonds,” “The measure of damages is substantially indicated by the terms of the instrument as authorized by the statute. ’ The cases turn chiefly on the interpretation of particular words, and the construction of particular statutes; and the ordinary rules for measuring damages yield to the construe tion of the statute under which the bond is given.”
In 2 Sutherland Damages (4th Ed.) § 438, it is said: . .
“An important consideration at the outset of the inquiry of damages, and at every step in its progress, is the burden of proof, or to what extent the plaintiff has made a prima facie showing. If his action is upon an express promise to pay money the establishment of the right to maintain it involves a prima facie showing of the amount due according to the purport and tenor of the promise. Matter of discharge or reduction must be shown by the defendant.”
Obviously, in such a suit as this, if the damages and the penal sum are not equivalent, the taking of such bond by the government would, in most cases, be an idle proceeding. The government could rarely prove that a cargo was smuggled, for smuggling is always (at least in attempt) a secret, undertaking.
We eannot reconcile the decisions bearing on the burden of proof in the cases arising either under federal or under the analogous state statutes, in which judgment is always entered for the penal sum and the bond then chancerized. That the burden in this or in analogous issues is upon the defendant see: Glidden v. Whipple, 23 R. I. 304, 310, 49 A. 997; Douglas v. Hennessy, 15 R. I. 272, 284, 3 A. 213, 7 A. 1, 10 A. 583; Andrews v. Belilove, 49 R. I. 446, 143 A. 857. 2 Greenleaf on Evidence (16th Ed.) § 300. See, also, Gray v. Gardner, 17 Mass. 188; Thayer v. Connor, 5 Allen (Mass.) 25; Jennison v. Stafford, 1 Cush. (Mass.) 168, 48 Am. Dec. 594; 9 C. J. p. 119.
In Call v. Foster, 52 Me. 257, 259, it is stated that in the case of Sargent v. Pomroy, 33 Me. 388, it was decided that a poor debtor bond is subject to chancery, though it is a statute bond, and that the plaintiff can recover only his actual damages; “but it is also held that, when he shows the amount of his judgment, he shows the amount of his damage, unless the defendant offers some proof which should control it.”
The court also says (52 Me. 259): “In many of the cases reported, the damages assessed have been less than the debt, but in all such cases, so far as we have been able to ascertain, the damages were reduced by proof on the part of the defendant.”
Cf. also Campfield v. Sauer (C. C. A.) 189 F. 576, 38 L. R. A. (N. S.) 837.
Apparently holding that the burden remains throughout on the plaintiff are the following: Gowen v. Nowell, 2 Greenl. (Me.) 13; State v. Hays, 30 W. Va. 107, 3 S. E. 177; Archer v. Archer’s Adm’r, 8 Grat. (Va.) 539; Turck v. Marshall Silver Min. Co., 8 Colo. 113, 5 P. 838; Wright v. Wright, 49 Mich. 624, 14 N. W. 571.
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3669696-15739 | MEMORANDUM
BALLINGER, Bankruptcy Judge.
Appellant, John E. Hudson (“Hudson” or “Debtor”), appeals the bankruptcy court’s “Order Granting Motion For Relief From Stay Under 11 U.S.C. § 362 (Unlawful Detainer)” (the “Stay Lift Order”). The Stay Lift Order annulled the automatic stay retroactive to the bankruptcy petition date. The central issue on appeal is whether the bankruptcy court erred in admitting evidence that a foreclosure sale occurred pre-petition. We REVERSE the bankruptcy court’s ruling that the sale occurred pre-petition and the order annulling the stay.
I. FACTS
Hudson filed a chapter 13 bankruptcy petition on March 5, 2013, at 10:28 a.m., in the Central District of California. According to Appellee, Martingale Investments, LLC (“Martingale”), earlier that day, at 10:01 a.m., a trustee’s sale was completed at which Martingale purchased Hudson’s home located at 1658, 1660, 1662 and 1664 South Vann Ness Avenue, Los Angeles, California (“Property”). A Trustee’s Deed Upon Sale was issued to Martingale on March 12, 2013 (“Trustee Deed”). After receiving a Notice to Quit, Hudson did not vacate the Property. On March 26, 2013, Martingale filed a complaint for unlawful detainer in state court.
In April, 2013, Martingale filed a motion to lift the stay in order to continue the unlawful detainer action and obtain possession of the Property. In the stay lift motion, Martingale asserted that it purchased the Property at a foreclosure sale just prior to .the filing of the petition and that Martingale subsequently commenced the unlawful detainer action without knowledge of the bankruptcy filing. Martingale sought annulment of the stay ret roactive to the petition date to avoid having to re-file the unlawful detainer action. Attached to the stay lift motion was a declaration of Olivia Reyes, Martingale’s property manager (the “Reyes Declaration”).
In her declaration, Reyes stated that she was a “custodian” of Martingale’s books and records with “personal knowledge” of the Hudson account and that Martingale was unaware of the bankruptcy at the time the unlawful detainer action was commenced. More important, Reyes claimed Martingale purchased the Property at a public sale on March 5, 2013, and that the “sale was completed at 10:01 a.m.” Attached in support of the Reyes Declaration was a report (“Sale Report”) obtained from the trustee who conducted the sale, NDex West, LLC (“NDex”). The Sale Report is actually an e-mail message prepared by Priority Posting & Publishing, Inc. (“Priority Posting”) containing essential information about the sale, including the date and time it was conducted, sales price, number of bidders and witnesses, etc.
Hudson objected to the stay lift motion, arguing two main points. First, he claimed there was no admissible evidence that the sale occurred pre-petition because the Sale Report was not properly authenticated and was comprised of inadmissible hearsay statements by Reyes, who lacked personal knowledge regarding the sale. Second, Hudson argued the post-petition recording of the Trustee Deed voided the sale. Hudson attached a declaration to his objection in which he stated his intention to file a motion to rescind the sale. He also asserted that while the Sale Report indicated “Sale Conducted at: 10:01 AM,” “conducted” does not mean the same as “completed” or “concluded.”
Martingale replied, claiming inter alia, that the recording of the Trustee Deed did not violate the automatic stay because it related back to the date of the trustee sale. Martingale submitted the declaration of Ric Juarez (“Juarez Declaration”), an NDex employee, in which Juarez stated that “the sale was completed at 10:01 a.m.” The Juarez Declaration also based its conclusion solely on the contents of Priority Posting’s email message.
The bankruptcy court held a hearing on the stay relief request on May 15, 2013, and stated:
THE COURT: I reviewed the motion, as well as the opposition, and the timing is that — and I believe there is admissible evidence, although Debtor argues there isn’t. The foreclosure sale took place at 10:01 a.m. on March 5th. The bankruptcy case was filed a few minutes later....
May 15, 2013 Hr’g Tr. at 1:13-19. After hearing from the parties, the court addressed Martingale’s counsel:
THE COURT: [Y]ou included supplemental evidence regarding the time of sale, and it was before the time of the bankruptcy. The foreclosure was at 10:01 and the bankruptcy was at 10:28.
May 15, 2013 Hr’g Tr. at 2:19-22. The bankruptcy court granted the stay lift motion, finding that Martingale’s evidence as to the time of the sale was admissible and that under California law the post-petition recording of the Trustee Deed did not violate the automatic stay. On May 21, 2013, the court entered the Stay Lift Order granting the motion. This timely appeal followed.
II.JURISDICTION
The bankruptcy court had jurisdiction pursuant to 28 U.S.C. §§ 1334 and 157(b)(2)(A) and (G). This Court has jurisdiction under 28 U.S.C. § 158.
We also have an independent duty to determine whether an appeal is moot. See United States v. Golden Valley Elec. Ass’n, 689 F.3d 1108, 1112 (9th Cir.2012). We lack jurisdiction over moot appeals. I.R.S. v. Pattullo (In re Pattullo), 271 F.3d 898, 901 (9th Cir.2001). General ly, the failure to obtain a stay of an order that approves a sale or lifts the automatic stay moots an appeal. See Onouli-Kona Land Co. v. Estate of Richards (In re Onouli-Kona Land Co.), 846 F.2d 1170, 1171 (9th Cir.1988). The record indicates Hudson did not obtain a stay of the Stay Lift Order. However, the issue here is whether there was an automatic stay in effect at the time of the foreclosure sale. See Schwartz v. United States (In re Schwartz), 954 F.2d 569, 571 (9th Cir.1992) (violations of the automatic stay are void, not voidable). The failure to obtain a stay pending appeal does not prevent us from determining whether the automatic stay was applicable at the time of the foreclosure sale. If the stay was in effect, then the sale is void.
We also find that it is possible to grant Hudson effective relief by vacating the Stay Lift Order. “The test for mootness of an appeal is whether the appellate court can give the appellant any effective relief in the event that it decides the matter on the merits in his favor. If it can grant such relief, the matter is not moot.” Felster Publ’g v. Burrell (In re Burrell), 415 F.3d 994, 998 (9th Cir.2005) (quoting Garcia v. Lawn, 805 F.2d 1400, 1402 (9th Cir.1986)). “The basic question in determining mootness is whether there is a present controversy as to which effective relief can be granted.” See Feldman v. Bomar, 518 F.3d 637, 642 (9th Cir.2008)(quoting Nw. Envtl. Def. Ctr. v. Gordon, 849 F.2d 1241, 1245 (9th Cir.1988)). Here, there is a live controversy as to whether the foreclosure sale occurred prior to the petition date.
III.ISSUE
Did the bankruptcy court abuse its discretion when it admitted evidence as to the time of the foreclosure sale?
IV.STANDARDS OF REVIEW
We review an order granting relief from stay for abuse of discretion. Veal v. Am. Home Mortg. Servicing, Inc. (In re Veal), 450 B.R. 897, 915 (9th Cir. BAP 2011). A bankruptcy court’s evidentiary rulings are also reviewed under the abuse of discretion test and should not be reversed unless the error was prejudicial. Latman v. Burdette, 366 F.3d 774, 786 (9th Cir.2004) (“To reverse on the basis of an erroneous evidentiary ruling, we must conclude both that the bankruptcy court abused its discretion and that the error was prejudicial.”).
In applying an abuse of discretion test, we first “determine de novo whether the [bankruptcy] court identified the correct legal rule to apply to the relief requested.” United States v. Hinkson, 585 F.3d, 1247, 1262 (9th Cir.2009). If the bankruptcy court identified the correct legal rule, we then determine whether its “application of the correct legal standard [to the facts] was (1) ‘illogical,’ (2) ‘implausible,’ or (3) without ‘support in inferences that may be drawn from the facts in the record.’ ” Id. (quoting Anderson v. City of Bessemer City, N.C., 470 U.S. 564, 577, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985)). If the bankruptcy court did not identify the correct legal rule, or its application of the correct legal standard to the facts was illogical, implausible, or without support in inferences that may be drawn from the facts in the record, then the bankruptcy court has abused its discretion. Id. We may also affirm on any ground supported by the record. Shanks v. Dressel, 540 F.3d 1082, 1086 (9th Cir.2008).
V. DISCUSSION
Hudson argues that the bankruptcy court erred when it found the Sale Report constituted admissible evidence. Specifically, Hudson claims that the Sale Report is unauthenticated because both Reyes and Juarez lacked personal knowledge of the date and time of the sale.
With respect to the question of when the Property was sold, the bankruptcy judge acknowledged Hudson’s objection at the stay lift hearing, but found there was admissible evidence supporting Martingale’s position. The bankruptcy court made no specific reference to the Sale Report. However, because the Sale Report is the only substantive evidence supporting Martingale’s position as to the time of the trustee’s sale, it is clear the court gave it evidentiary value. If the admission of the Sale Report was an abuse of discretion and prejudicial, then the Stay Lift Order must be reversed.
The Business Records Exception
Bankruptcy court decisions must be supported by admissible evidence. All of the evidence supporting the court’s ruling in this case is hearsay. FRE 802 requires that when, as here, there is an objection to this type of evidence, it must be excluded unless an exception to the hearsay rule applies.
FRE 803(6) sets forth an often-used hearsay exception, commonly referred to as the “business records exception” that provides, in pertinent part:
The following are not excluded by the rule against hearsay, regardless of whether the declarant is available as a witness:
(6) Records of a Regularly Conducted Activity. A record of an act, event, condition, opinion, or diagnosis if:
(A) the record was made at or near the time by — or from information transmitted by — someone with knowledge;
(B) the record was kept in the course of a regularly conducted activity of a business, organization, occu pation, or calling, whether or not for profit;
(C) making the record was a regular practice of that activity;
(D) all these conditions are shown by the testimony of the custodian or another qualified witness, ...; and
(E) neither the source of the information nor the method or circumstances of preparation indicate a lack of trustworthiness.
As shown below, although Reyes and Juarez are qualified custodians or witnesses, the proper foundation was not laid for the admission of the Sale Report.
The Declarants are Custodians or Qualified Witnesses Under FRE 803(6)
The foundational requirement found in FRE 803(6) dictates that offered records be authenticated by testimony from a custodian or other qualified witness from the business. Hudson argues that because there is no declaration from a party with first-hand knowledge of the time of the sale, the bankruptcy court should have excluded the Sale Report as hearsay. It is true that both Reyes and Juarez lacked knowledge as to whether the Sale Report was “made at or near the time” by “someone with knowledge.” But subsection (6) of FRE 803 does not require the business custodian to certify he or she has first-hand knowledge of the facts set forth in the records being authenticated. In addition, the business records exception does not require the records’ custodian to lay the foundational evidence for admission; some other qualified witness can provide the foundation. “A witness does not have to be the custodian of documents offered into evidence to establish Rule 803(6)’s foundational requirements.” United States v. Childs, 5 F.3d 1328, 1334 (9th Cir.1993). “The phrase ‘other qualified witness’ is broadly interpreted to require only that the witness understand the record-keeping system.” Id. (quoting United States v. Ray, 930 F.2d 1368, 1370 (9th Cir.1991)). Although Reyes and Juarez did not prepare the Sale Report, their declarations establish that they qualify both as custodians and other qualified witnesses. The problem here is that neither declaration contains the foundational showing required for admissibility of materials such as the Sale Report, which is not a Martingale document, but is a third party record of Priority Posting found in Martingale’s and NDex’s files.
FRE 803(6) Applies to Third Party Business Records
Where a business has a substantial interest in the trustworthiness and accuracy of the records, documents received from another business are admissible as business records under FRE 803(6). The Ninth Circuit has held that a document kept in the regular course of business, but not made by the business, can still qualify as a business record of the enterprise if there is testimony that the document was kept in the regular course of business and the business regularly relied on the document. Childs, 5 F.3d at 1334. In Childs, the Ninth Circuit held that documents prepared by third parties and incorporated into the records of an auto dealership were properly admitted based on witness testimony that the documents were kept in the regular course of the dealership’s business and were relied upon by the dealership. Id.; see also MRT Constr. Inc. v. Hardrives, Inc., 158 F.3d 478, 483 (9th Cir.1998) (“[Rjecords a business receives from others are admissible under [FRE 803(6) ] when those records are kept in the regular course of that business, relied upon by that business, and where that business has a substantial interest in the accuracy of the records.”). Several other circuits also interpret FRE 803(6) to permit admission of documents incorporated into a business’s records that were prepared by third parties. Simply put, for the Sale Report to be properly admitted, Martingale must establish (through a custodian of record or qualified witness) that it or NDex kept and relied on the Sale Report in the regular course of business.
Martingale Failed to Establish the Admissibility of the Sale Report
The Reyes Declaration referred to (and attached) Priority Posting’s Sale Report as evidence of the time of the sale. Reyes stated that “I have personal knowledge concerning the method of entry into the records and books. Those entries are made at or near the time of the occurrence during the ordinary course and scope of my duties.” Reyes then stated that the sale occurred at 10:01 a.m.
The Juarez Declaration also referred to the Sale Report as evidence of the time of sale. Juarez stated that he had “custody and control of the books and records” and that entries into those books and records were “made at or near the time of the occurrence during the ordinary course and scope of my duties.” However, neither Reyes nor Juarez testified that the Sale Report was kept in the regular course of Martingale’s or NDex’s business.
The declarations also failed to provide any evidence that either Martingale or NDex relied upon the Sale Report. No custodian or other qualified witness provided this required foundation. Thus the declarations fail to provide the necessary foundational showing required under the test set forth in Childs and MRT. Because the Sale Report lacks proper authentication, it cannot satisfy the business records exception to the hearsay rule. We conclude that the bankruptcy court abused its discretion when it admitted the Sale Report.
Hudson was Prejudiced by the Improper Admission of the Sale Report
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11104276-21415 | TERENCE T. EVANS, Circuit Judge.
Over 200 years ago, Edmund Burke proclaimed “the age of chivalry is dead.” And it hasn’t made much of a comeback. Certainly our appellant, Michael Lamarre, will win no awards for chivalry as his defense to an indictment charging him with five counts of bank fraud and one of using a phony social security number to obtain a loan was to pin the rap on his wife. A jury, apparently determining Mr. and Mrs. Lamarre were in cahoots, found him guilty, and he appeals. Although we conclude that the district judge erred in keeping from the jury a bit of evidence Lamarre wanted to offer to bolster his defense, we conclude the error was harmless.
The events that led to Michael La-marre’s trial began in Florida in 1986, where he and Carla, his wife, were known as Robert and Carla Harrell. Together they borrowed $200,000 from Farm Credit of Southwest Florida to purchase 203 head of cattle for their dairy farm business, Bristol Dairy, Inc. In return, the Harrells pledged the cattle and their farm equipment as security for the loan. This deal was destined to go sour as the Harrells provided a wealth of false information on their loan application, including false social security numbers, descriptions of assets they did not own, and grossly inflated earnings figures. Later, Farm Credit discovered that the Harrells were not caring for the cattle, so it obtained a writ of replevin and attempted to seize the herd. The Harrells filed for bankruptcy, but the bankruptcy court later dismissed their petition when they failed to attend a meeting of creditors. When the bank eventually seized its collateral, it discovered that 74 cows and various items of pledged farm equipment were missing. Thirty cows that were found did the bank little good as they had to be destroyed due to illness.
The Harrells missed the Florida meeting of creditors because they fled to Wisconsin. In September 1997 Carla, then using the surname Lamarre, contacted Mark Binversie, the president of Investor’s Community Bank in Manitowoc, Wisconsin. She told him that she and her husband were planning to relocate their dairy farming business, which she called “Northern Star Farms,” to Oconto, Wisconsin, and they were interested in borrowing money to purchase a herd of dairy cattle. Carla represented that she and Michael had substantial dairy experience and that her husband was still employed on a large farm in Florida. Binversie was impressed and told her that their farm experience was an important factor in the bank’s consideration of the loan request. Carla and Michael, also then using the surname La-marre, applied for the loan and submitted financial statements, federal income tax returns, information about their Florida loans, letters of recommendation, and a business plan naming Michael as the CEO of the business. Almost all of this information was false: the financial reports substantially inflated their financial status and did not disclose that they had declared bankruptcy; the social security numbers on the loan application were not theirs; the federal tax returns were never submitted to the IRS; the information about their Florida banker was false; and one of the letters of recommendation was from “John Harrell.” The bank did not verify this information prior to approving a loan for $180,000.
The Lamarres gave the bank security interests in their soon-to-be-purchased real estate, cattle, farm equipment, and proceeds from the sale of milk. A loan closing was held on December 1, 1997, and that was the first time Binversie met Michael. Binversie explained the loan agreement to the Lamarres line-by-line and read aloud every word of the agreement. He recalled that Michael appeared to understand both the agreement and the paperwork he signed. At the Lamarres’ request, the bank advanced $16,500 on the day of closing to enable them to purchase 15 cows. The Lamarres asked Binversie to make the check payable to “John Harrell,” who they said was the seller of the cattle. Later, Michael took the check to Florida and used it and another false social security number to open a bank account in the name of John Harrell. Michael endorsed the check with the name “Michael Harrell,” and in the teller’s presence he endorsed it again as “Robert Harrell.” He deposited $100 in the new account and took the rest in cash, telling the bank that he was a truck driver and that he needed the cash to repair his truck. Six days later he closed the account and returned to Wisconsin. Back in Wisconsin, the bank paid out the remainder of the loan, and the Lamarres used the money to purchase cattle.
On December 17, 1997, the Lamarres attended the closing on an Oconto dairy farm they had contracted to buy. Although they had agreed to make a $50,000 down payment on the property, Michael wanted to renegotiate the terms of the contract at the closing. The seller’s attorney testified that Michael appeared to fully understand the transaction and the terms of the contract and that Michael did most of the negotiating. After some haggling, the sellers agreed to sell their farm to the Lamarres for $350,000 with no down payment.
The Lamarres also applied for and received several credit cards from Binver-sie’s Manitowoc bank. After the loan closing they took out a $9,500 cash advance on one of the cards. Michael took out another $3,000 cash advance on another card, which he used as a down payment on a hog — not a farm animal but a $24,500 Harley Davidson motorcycle. Michael then leased a $25,000 Ford pickup and a $29,500 Oldsmobile sport utility vehicle. On all three contracts Michael provided false social security numbers and false information about his income, past employment, bankruptcy history, and education. The finance managers of the Ford and Oldsmobile dealerships testified that they completed lease applications for Michael based on his oral answers to their questions, and each stated that Michael appeared to understand the terms of the contracts. The Harley Davidson dealer testified that Michael inquired about the specifications of several cycles, haggled with him over the purchase price, and negotiated the down payment and interest rate of his installment contract.
All the while, the Lamarres attempted to conduct a dairy business. But by the spring of 1998 Binversie, himself a dairy farmer, became suspicious of the La-marres’ ability to run a dairy farm. Bin-versie had on several occasions taken Michael to look at cattle to purchase. Each time, Michael failed to inspect the “working end” of the cattle and purchased them without first inspecting their health records. Additionally, the terms of the loan required the Lamarres to deposit the proceeds of their milk sales into a bank account, and Binversie observed that then-deposits were too small for the amount of milk the Lamarres were supposed to be selling. (Unbeknownst to Binversie, the Lamarres diverted milk proceeds to accounts at other banks.) When Binversie visited the farm to see what was going on, he discovered the cows living in unhealthy conditions. Binversie also noticed that the encumbered farm equipment was not there. Michael told him it was in the process of being shipped from out of state, but on later visits Binversie never saw it.
Later, the Lamarres deposited a $23,240 check from “Bristol Dairies,” their defunct Florida business, in their Manitowoc bank account. Carla said the money was proceeds from the sale of cattle in Florida. The check bounced because the Bristol bank account no longer existed, but not before the Lamarres wrote several other checks on the account. Binversie confronted Michael about the bounced check and Michael expressed' surprise, telling Binversie that Bristol had always been a reliable customer. Binversie, now concerned about his security, quickly obtained a writ of replevin to seize the collateral. On May 4, 1998, the bank seized 117 unhealthy cows from the Lamarre’s farm. But 23 cows were missing. The bank seizures prompted the Lamarres to flee to Florida with the Ford, Oldsmobile, and Harley Davidson.
A grand jury indicted both Michael and Carla. Michael was charged with five counts of defrauding a federally insured banking institution in violation of 18 U.S.C. § 1344 and one count of using a false social security number to obtain a loan from a bank in violation of 42 U.S.C. § 408(a)(7)(B). The FBI arrested Michael and seized the vehicles in Florida a year later. When arrested, Michael had his legitimate social security card in his wallet.
The district court severed Michael’s and Carla’s trials, and Carla later pleaded guilty. Michael’s defense theory was that he was incapable of reading or understanding the various loan documents he signed and therefore could not have formed the specific intent to defraud the bank. His defense was that Carla “masterminded” the fraud and that he blindly signed documents at her instruction. In support of his theory, he proffered the opinion of Dr. Christopher Ovide, a board-certified clinical psychologist. Dr. Ovide tested Michael after his indictment and offered to testify that he had an IQ of 70, placing Michael in the second percentile for adults his age. Dr. Ovide described Michael as being in the “borderline intellectual functioning range of intelligence.” Dr. Ovide also determined that Michael had a second-grade reading ability and a first-grade spelling and arithmetic aptitude. The district judge, however, excluded Dr. Ovide as a witness, believing that his testimony would invade the province of the jury and would do nothing more than suggest that Michael was not intelligent enough to lie and defraud.
Michael’s stepchildren, Angel and Alan Lamarre, testified on his behalf. Angel testified that she never saw Michael read a book or newspaper — although she admitted that she had seen him read classified advertisements — and that she often assisted her stepfather in filling out the simplest of forms. Angel also stated that Carla handled all the household paperwork and financial matters, and she suggested that Carla had engaged in suspicious financial activity long before she married Michael. Alan confirmed Angel’s testimony and stated that in the 15 years he knew Michael he had never seen him read a book or newspaper. Neither Michael nor Carla testified.
The jury found Michael guilty on all counts. A presentence investigation report (PSR) recommended an adjusted offense level of 16 and 9 criminal history points, placing Michael in criminal history category IV with a sentencing range of 33 to 41 months. The government, however, believed that the recommended criminal history category did not adequately reflect Michael’s past criminal conduct and recommended adjusting his criminal history under U.S.S.G. § 4A1.3(e) to come up to a total of 15 points. The judge agreed, and Michael wound up in criminal history category VI with a sentencing range of 46 to 57 months. He was sentenced to a term at the top of the range.
Michael argues that the district judge abused his discretion by excluding Dr. Ovide’s testimony because the judge mis understood the purpose for which it was offered. He asserts that Dr. Ovide would have testified only that Michael lacked the intellectual capability to understand the nature of the various financial transactions that gave rise to his crimes, not that he was not intelligent enough to commit fraud. And because he was accused of committing specific intent crimes, Michael contends that the exclusion of Dr. Ovide’s testimony denied him the opportunity to challenge the government’s evidence of his mental state. We review evidentiary rulings for abuse of discretion. United States v. Byrd, 208 F.3d 592, 594 (7th Cir.2000).
The parties confined most of their argument in the district court on this issue to whether Michael gave the government sufficient notice under Federal Rule of Criminal Procedure 16(b)(1)(C) of his intent to call Dr. Ovide as an expert witness and whether Dr. Ovide’s testimony would be sufficiently reliable under the principles of Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993). The district judge chose not to address these arguments and rejected the proffer on its merits, stating:
The Court differs with both counsel. It believes that this type of opinion evidence goes — invades the common sense inquiry of jurors as to the circumstances under which a party may have been acting. And the fact is to indicate that because he has a second grade level of education that accordingly that suggests that he cannot be involved in a fraudulent activity is so far from what the Court believes to be appropriate in a matter of this nature that I have no qualms whatsoever in excluding this type of testimony. I can imagine that it’s going to be brought forward in practically 40 percent of all the cases which this Court ever has the opportunity to try.
And it would appear that the defense is that you’ve got a low level of education, you don’t read very well, you don’t write very well and, ergo, you certainly can’t commit any fraudulent conduct and the Court does not believe that that is appropriate testimony. It believes it is not relevant to the actions of which the defendant is charged. And the fact of the matter is, I have to take some judicial notice, even though I guess I shouldn’t, but my nine-year-old who’s in the third grade may have that level also but he sure knows what it is to tell an untruth. Now I realize this is an oversimplification and the Court’s going to be criticized for that, but from all the documents which this Court has read in this matter this Court believes that this is not an area for an expert to testify where the jury may use its common sense inquiry and they as untrained layman are able to make those determinations without the necessity of expert testimony. I realize that’s not the argument of the government but it jumps out at the Court when addressing a matter of this nature, and accordingly I’m going to exclude the testimony.
When faced with a proffer of expert testimony under Federal Rule of Evidence 104(a), trial judges must ensure that the expert’s testimony is reliable and relevant. United States v. Cruz-Velasco, 224 F.3d 654, 660 (7th Cir.2000). Daubert, 509 U.S. at 597, 113 S.Ct. 2786, and Kumho Tire Co. v. Carmichael, 526 U.S. 137, 147, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999), supply the reliability test. The government and Michael now both agree that Dr. Ovide’s testimony would have been scientifically valid and thus reliable under Daubert and, since the district judge made no findings on the validity of the doctor’s scientific methodology, we won’t question it. But before proceeding to relevance, we wish to reiterate the importance of applying the Daubert framework in cases such as this. Not only does the Daubert framework help judges distinguish between real and “courtroom” science, see Rosen v. Ciba-Geigy Corp., 78 F.3d 316, 318 (7th Cir.1996), but we have also stressed its importance in helping trial judges understand the purpose of the expert evidence, see United States v. Hall, 93 F.3d 1337, 1345 (7th Cir.1996). This is perhaps most important when dealing with experts in the field of social science. Parties typically offer experts in human behavior and mental disorders to testify about everyday subjects. Certainly laypersons are qualified to evaluate things within their everyday experience, but scientifically valid social science can be offered to show a jury that their commonly held beliefs are incorrect. See Tyus v. Urban Search Mgmt., 102 F.3d 256, 263 (7th Cir.1996); United States v. Hall, 165 F.3d 1095, 1118-19 (7th Cir.1999) {“Hall II”) (Easterbrook, J., concurring); Hall, 93 F.3d at 1345; Krist v. Eli Lilly & Co., 897 F.2d 293, 296-97 (7th Cir.1990); Carroll v. Otis Elevator Co., 896 F.2d 210, 215 (7th Cir.1990).
We think that is precisely the case here. Dr. Ovide proposed to testify that Michael had a very low IQ and the reading ability of a second grader. One of the facts at issue was whether Michael understood that his conduct was designed to defraud the banks. He wanted to prop up his claim that it was Car-la’s show, not his. Michael presented witnesses who testified that he truly was a dairy farmer, albeit not a very good one. It is also undisputed that Carla controlled the books and financial records. On .the other hand, the government presented several witnesses who testified that Michael appeared to understand the documents he signed. Dr. Ovide, however, would have testified that Michael’s low cognitive skills made him dependent on Carla to conduct their financial business. He believed that Michael’s personality suggested that he was somewhat “interpersonally dependent” and felt a “need to please others and avoid doing things that would alienate the person or persons he depends on.” The judge thought that the jury had the common sense to determine whether Michael understood that he was defrauding a bank. They did, but that alone does not justify excluding Dr. Ovide’s testimony. Trial courts are not compelled to exclude all expert testimony merely because it overlaps with matters within the jury’s experience. Hall, 93 F.3d at 1342, 1344.
Moreover, the government would have been free to challenge the weight of his report summarizing his evaluation of Michael on cross-examination. In the report, Dr. Ovide noted several possible inconsistencies with Michael’s purported mental functioning. For instance, on two tests that explored Michael’s ability to recognize spacial relationships, he scored “unusually low” on Block Design, yet he tested strongly on Object Assembly. Further, Dr. Ovide noticed that Michael’s intellectual ability was “far below what was expected given his history and general mental status and social interaction.” Dr. Ovide, however, also cautioned that Michael’s personality pattern suggested that he may have exaggerated his responses on some of the tests, although Dr. Ovide thought that the level of exaggeration was probably consistent with a person “facing his current situation,” ie., an indictment charging six felonies. We therefore conclude that the district court erred in excluding this testimony for the reason given by the judge. Whether it should have been excluded on notice grounds, as the government argued at trial, is a matter we need not consider for reasons that will soon become clear.
Evidentiary errors, of course, are subject to harmless error reviews United States v. Wesela, 223 F.3d 656, 663 (7th Cir.2000). We will not reverse unless the error affected substantial rights, Byrd, 208 F.3d at 594, or had a “substantial or injurious effect or influence on the jury’s verdict,” United States v. Jarrett, 133 F.3d 519, 529 (7th Cir.1998).
A bank fraud conviction requires proof that a defendant had the specific intent to defraud the bank. United States v. Moede, 48 F.3d 238, 241 (7th Cir.1995). “Specific intent to defraud” means that a defendant acted willfully and with specific intent to deceive or cheat, usually for financial gain for one’s self or the causing of financial loss to another. Id. Specific intent may be established by circumstantial evidence and inferences drawn from the scheme itself. See id. We have specifically held that actions such as knowingly depositing an NSF or forged check, knowingly writing checks on an inadequate account balance, and providing false information on loan documents constitute circumstantial evidence of specific intent to defraud. Id. at 242. Moreover, the evidence here of uncharged acts (the Florida matters and the vehicle deals) intricately related to the acts charged in the indictment were admissible to establish Michael’s fraudulent intent. See United States v. Gibson, 170 F.3d 673, 680 (7th Cir.1999); see also United States v. Ryan, 213 F.3d 347, 351 (7th Cir.2000) (evidence casting doubt on credibility of defendant’s claim that he was ignorant of fraudulent aspects of transaction is probative of specific intent to defraud).
Despite the undisputed evidence that Carla was the prime mover in this case, the testimony of witnesses suggesting that Michael appeared to understand the documents he signed was strong. Michael also, without Carla’s heeding, endorsed a bank check'intended for the purchase of cattle (the “John Harrell” check) over to himself, took it to Florida, assumed a different name, and cashed it, telling the bank he was a truck driver. Michael also deposited a $23,000 check drawn on a closed account from Bristol Dairies, his Florida business. When confronted, he told Binversie that he had never had trouble with Bristol Dairies before as they were always a reliable customer. He purchased and leased three vehicles by providing false financial and personal information. Michael used several false social security numbers, even though it appears he kept his legitimate social security card in his wallet, or at least had it there when he was arrested. The Lamarres also pledged farm equipment that never materialized for the loan, and, when confronted, Michael falsely told Binversie that the equipment was being shipped from out of state. Based on this evidence, we believe that no rational jury would think that Michael was ignorant of the fraud scheme, and thus we conclude that the exclusion of Dr. Ovide’s testimony was no more than harmless error.
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996879-16483 | JERRY E. SMITH, Circuit Judge:
Luv n’ care, Ltd. (“Luv n’ care”), a Louisiana corporation, appeals the dismissal of its suit against Insta-Mix, Inc., and several related entities (collectively “Insta-Mix”), citizens of Colorado, for lack of personal jurisdiction. We reverse and remand.
I.
Luv n’ care is an international corporation based in Monroe, Louisiana, that specializes in the design, manufacture, and sale of a variety of infant care products. Insta-Mix is a small Colorado corporation that holds the patent on a two-chambered plastic bottle with a freezable core, for use by both athletes and children. The design of the straw cap of Insta-Mix’s bottle allegedly bears resemblance to a bottle cap produced by Luv n’ care.
Insta-Mix has sold 82,224 of its patented bottles to Wal-Mart and a few other vendors. Although Wal-Mart resells the product at its retail locations, Insta-Mix does not ship the product directly to Wal-Mart stores but, instead, trucks or third-party carriers assigned by Wal-Mart transport the bottles from Insta-Mix’s dock in Colorado Springs to one of twenty-six distribution centers nationwide.
The vendor agreement that gives Wal-Mart the right to purchase and retail these bottles indicates that Wal-Mart assumes ownership of the bottles when they are loaded in Colorado Springs. The agreement also mentions several possible distribution centers, but none in Louisiana. Wal-Mart transported 3,696 copies of the bottle, or approximately 65 shipments, with total revenue to Insta-Mix of $8,923.20, to its distribution center in Opel-ousas, Louisiana.
Insta-Mix received and filled purchase orders from Wal-Mart via an “Electronic Data Interchange” (“EDI”) system, which contains information regarding the price, quantity, and destination of each shipment. Once an order is filled, the EDI system automatically sends to Wal-Mart an electronic invoice that contains the letterhead of an Insta-Mix-related entity and the destination address.
The record contains several invoices with a “send to” location of the Wal-Mart distribution center in Opelousas. Insta-Mix alleges that it had no knowledge of the destination of the products until it printed out information from the EDI system in response to a discovery request in this litigation. It appears that eventually some of Insta-Mix’s bottles reached Wal-Mart stores in Louisiana, repackaged under the Wal-Mart trade name.
It is undisputed that Insta-Mix has no employees or agent for service of process in Louisiana and conducts no direct sales or marketing there. Rather, its only contact with Louisiana is its sales of items to Wal-Mart.
II.
Luv n’ care sued Insta-Mix for copyright infringement, 17 U.S.C. § 101 et seq., and trademark dilution and unfair competition under the Lanham Act, 15 U.S.C. §§ 1125(a)(1)(A) and (B). Insta-Mix moved to dismiss under Federal Rule of Civil Procedure 12(b)(2) and (3) for lack of personal jurisdiction and improper venue.
The magistrate judge issued a recommendation that the suit be dismissed because “[sjimply placing [a] product in the stream of commerce is not sufficient to create personal jurisdiction even if it were foreseeable that the product might end up in Louisiana.” Because the magistrate judge found the jurisdictional issue dispos-itive, he did not reach the venue issue. The district court adopted the recommendation.
III.
We review de novo a district court’s determination that it lacks personal jurisdiction over a non-resident defendant. Adams v. Unione Mediterranea Di Sicurta, 220 F.3d 659, 667 (5th Cir.2000). Where a defendant challenges personal jurisdiction, the party seeking to invoke the power of the court bears the burden of proving that jurisdiction exists. Wyatt v. Kaplan, 686 F.2d 276, 280 (5th Cir.1982). The plaintiff need not, however, establish jurisdiction by a preponderance of the evidence; a prima facie showing suffices. Id. This court must resolve all undisputed facts submitted by the plaintiff, as well as all facts contested in the affidavits, in favor of jurisdiction. Id.
The Due Process Clause of the Fourteenth Amendment guarantees that no federal court may assume jurisdiction in personam of a non-resident defendant unless the defendant has meaningful “contacts, ties, or relations” with the forum state. Int'l Shoe Co. v. Washington, 326 U.S. 310, 319, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Jurisdiction may be general or specific. Where a defendant has “continuous and systematic general business contacts” with the forum state, Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984), the court may exercise “general” jurisdiction over any action brought against that defendant. Id. at 414, 104 S.Ct. 1868 n. 9. Where contacts are less pervasive, the court may still exercise “specific” jurisdiction “in a suit arising out of or related to the defendant’s contacts with the forum.” Id. at 414, 104 S.Ct. 1868 n. 8. This case presents only the question of specific jurisdiction.
A federal court may satisfy the constitutional requirements for specific jurisdiction by a showing that the defendant has “minimum contacts” with the forum state such that imposing a judgment would not “offend traditional notions of fair play and substantial justice.” Int'l Shoe, 326 U.S. at 316, 66 S.Ct. 154. In Nuovo Pignone v. STORMAN ASIA MJV, 310 F.3d 374 (5th Cir.2002), we consolidated the personal jurisdiction inquiry into a convenient three-step analysis: “(1) whether the defendant ... purposely directed its activities toward the forum state or purposely availed itself of the privileges of conducting activities there; (2) whether the plaintiffs cause of action arises out of or results from the defendant’s forum-related contacts; and (3) whether the exercise of personal jurisdiction is fair and reasonable.” Id. at 378 (citing Burger King Corp. v. RudzeuAcz, 471 U.S. 462, 474, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985)). The forum state may create, and this court would be bound to apply, additional jurisdictional restrictions by statute, Adams, 220 F.3d at 667, but Louisiana’s “long-arm” statute extends jurisdiction to the constitutional limit, La. R.S. 13:3201(B), so the two inquiries in this case fold into one.
A.
To determine whether Insta-Mix has “minimum contacts” with Louisiana, we must identify some act whereby it “purposely avail[ed] itself of the privilege of conducting activities [there], thus invoking the benefits and protections of its laws.” The defendant’s conduct must show that it “reasonably anticipates being haled into court” in Louisiana. World Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). Likewise, a defendant may permissibly alter its behavior in certain ways to avoid being subject to suit. Id.
The district court erred in holding that placing a product into the stream of commerce, at least where the defendant knows the product will ultimately reach the forum state, does not rise to the level of “purposeful availment.” This court has consistently held that “mere foreseeability or awareness [is] a constitutionally sufficient basis for personal jurisdiction if the defendant’s product made its way into the forum state while still in the stream of commerce.” We adopted this position in an effort faithfully to interpret World Wide Volkswagen, 444 U.S. at 298, 100 S.Ct. 559, which hold's that a state does not offend due process by exercising jurisdiction over an entity that “delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State.”
Where a defendant knowingly benefits from the availability of a particular state’s market for its products, it is only fitting that the defendant be amenable to suit in that state. We have, therefore, declined to follow the suggestion of the plurality in Asahi, 480 U.S. at 112, 107 S.Ct. 1026, that some additional action on the part of the defendant, beyond foreseeability, is necessary to “convert the mere act of placing the product into the stream into an act purposefully directed toward the forum State.” Applying this circuit’s more relaxed “mere foreseeability” test to the facts of this case, we conclude that Insta-Mix’s contacts with Louisiana are sufficient to withstand constitutional scrutiny.
Insta-Mix maintains that Wal-Mart had complete control over the ultimate destination of its goods once they left the warehouse in Colorado Springs and that Wal-Mart could even make a midstream decision to re-route the goods to other distribution centers not listed on the invoices. A “unilateral decision to take a chattel ... to a distant State” does not suffice to confer jurisdiction. World Wide Volkswagen, 444 U.S. at 314, 100 S.Ct. 559. This case, though, does not present facts to the effect that a buyer transported goods intended for Louisiana to a distribution center in a far-away state. Rather, in 2002 and 2003 Insta-Mix filled approximately sixty-five purchase orders for items bound for Louisiana and sent invoices to Wal-Mart confirming the same.
Insta-Mix claims that its employees had no actual knowledge of the intended destination of its goods until it consulted the EDI system in preparation for this litigation. This claim is implausible and could not defeat jurisdiction even if true. It is eminently foreseeable that Insta-Mix’s products would reach the market indicated on the company’s invoices. In fact, Insta-Mix derived substantial revenue (about 4.5% of its total distribution) from its sale of thousands of units bound for Opelousas. Although businesses should be able to take advantage of the increased efficiencies made possible by the electronic processing of purchase orders, they cannot then claim ignorance of the contents of those orders once their products inevitably reach the intended market.
Finally, Insta-Mix argues that it has structured its primary conduct to avoid jurisdiction by including in the vendor agreement a condition that transfers ownership from Insta-Mix.to Wal-Mart at the time that Wal-Mart receives its shipments in Colorado Springs. Jurisdiction, however, “does not depend on the technicalities of when title passes;” rather, jurisdiction may attach both to manufacturers who supply their own delivery systems and to those that make use of the distribution systems of third parties. Oswalt, 616 F.2d at 197 n. 8.
In the interest of promoting that “degree of predictability to the legal system that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit,” World Wide Volkswagen, 444 U.S. at 297, 100 S.Ct. 559, we conclude that a F.O.B. term does not prevent a court from exercising personal jurisdiction over a nonresident defendant where other factors, such as the quantity and regularity of shipments, suggest that jurisdiction is proper. This ■ reasoning is supported by authority that states that the primary purpose of a F.O.B. term is to allocate the risk of damage to goods between buyer and seller. Accordingly, Insta-Mix purposely availed itself of the benefit of the Louisiana market for its bottle, thereby establishing “minimum contacts” with the forum state.
B.
It is not enough to satisfy due process that Insta-Mix has some “minimum contacts” with Louisiana. Rather, the underlying cause of action must “arise out of’ the defendant’s contacts with the forum state. Luv n’ care alleges that the presence of Insta-Mix’s products in Louisiana infringed on Luv n’ care’s copyright.
“[T]his court has been reluctant to extend the stream-of-commerce principle outside the context of products liability cases,” including cases involving “contract or copyright.” Nuovo Pignone, 310 F.3d at 381. This is because contracting parties have more flexibility to tailor their relationship in view of jurisdictional considerations than do the manufacturer and consumer in a typical products liability case. Id. Nevertheless, we have found jurisdie tion where “the same public policy concerns that justify use of the stream-of-commerce principle in the products liability context are present.” Id.
In Nuovo Pignone, the defendant Fagio-li, an Italian shipper, allegedly damaged plaintiffs cargo with a defective onboard shipping crane while docking and unloading at a Louisiana port. We found jurisdiction even though Fagioli, like Insta-Mix, employed third-party intermediaries at the point of injury, i.e., the unloading dock. We further opined that Fagioli should have considered the possible damage that a defective crane aboard its vessel would cause in the forum state. Similarly, Insta-Mix should have known, when it availed itself of the Louisiana market for infant care products, that it could face potential liability from competitors with similarly-designed items.
The closest analogue to the present case is Ham v. La Cienega Music Co., 4 F.3d 413 (5th Cir.1993), in which we denied jurisdiction because there was a “highly attenuated” relationship between defendant’s contact with the forum state and plaintiffs declaratory judgment action for copyright infringement. Ham, 4 F.3d at 416. In Ham, however, the allegedly infringing song was different from the one that had been distributed through the stream of commerce to the forum state. The court suggested the result might be different if the song distributed in Texas and the allegedly infringing song were one and the same. Id. at 416 n. 13.
Luv n’ care claims infringement from the same bottle that traveled through the stream of commerce from Colorado to Louisiana. This connection between the allegedly infringing product and the forum state is sufficient to confer personal jurisdiction.
C.
It remains for us to inquire whether the exercise of jurisdiction would “offend traditional notions of fair play and substantial justice.” International Shoe, 326 U.S. at 316, 66 S.Ct. 154. When a plaintiff makes its prima facie case that the defendant has “minimum contacts” with the forum state, the burden of proof shifts to the defendant to show that the exercise of jurisdiction would be unreasonable. Nuovo Pignone, 310 F.3d at 382. In conducting the fairness inquiry, we examine (1) the burden on the nonresident defendant, (2) the forum state’s interests, (3) the plaintiffs interest in securing relief, (4) the interest of the interstate judicial system in the efficient administration of justice, and (5) the shared interest of the several states in furthering fundamental social policies. Felch v. Transportes LarMex SA De CV, 92 F.3d 320, 324 (5th Cir.1996).
Insta-Mix relies primarily on the third and fourth elements, arguing that Luv n’ care has not named Wal-Mart, the retailer, nor Royal King, the alleged manufacturer of the bottle top, as the more natural defendants. Nor can the district court grant full injunctive relief where Wal-Mart remains free to sell, and Royal King remains free to produce, the infringing cap. Therefore, Insta-Mix portrays this action as an effort by Luv n’ care, a major manufacturer, to intimidate a small competitor into exiting the market.
If Luv n’ care’s suit is indeed frivolous, the district court presumably will deal with that deficiency. But, where a product allegedly causes economic injury in Louisiana, it is in the interest of that state to have its courts mediate the dispute. Furthermore, it is not unreasonable to ask Insta-Mix to defend in Louisiana, where the company avails itself of the benefit of that state’s market for thousands of iterations of its product. The forum state (Louisiana) and the plaintiff (Luv n’ care, which is organized under Louisiana law and based there) obviously have some legitimate interest in' litigating this matter in Louisiana, where there has been regular distribution of a number of the allegedly offending products. Therefore, traditional notions of fair play and substantial justice do not require that this suit be dismissed for want of personal jurisdiction.
The judgment of dismissal is REVERSED, and this matter is REMANDED for further proceedings.
. Apparently the manufacturer, Royal King, claims proprietary rights to the molds from which the allegedly infringing bottle cap is produced.
. Federal courts may also always assume jurisdiction over a defendant in any action in which there is personal, in-state service of process. Burnham v. Superior Court, 495 U.S. 604, 110 S.Ct. 2105, 109 L.Ed.2d 631 (1990).
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11129015-26574 | Opinion by Judge REINHARDT; Dissent by Judge SILVERMAN.
REINHARDT, Circuit Judge:
Police Officer Greg Rutherford fired a “less lethal” lead-filled “beanbag round” into the face of Richard Leo Deorle, an emotionally disturbed resident of Butte County, California. Deorle was shot without receiving a warning and while unarmed. The projectile removed an eye and left lead shot implanted in his skull. We are presented on appeal with two issues: whether the force used was so excessive as to violate Deorle’s fourth amendment rights; and, if so, whether Officer Rutherford is entitled to qualified immunity.
BACKGROUND
On September 9, 1996, in Butte County, California, Richard Deorle (Deorle), upset at being diagnosed with Hepatitis C, and having consumed a half-pint of vodka and some Interferon, his prescribed medication, began behaving erratically. By four o’clock, Deorle had become suicidal. According to Mrs. Deorle, having “lost control of himself,” Deorle began screaming and banging on the walls of their house. In search of someone to help her with her distressed husband, Mrs. Deorle dialed 911.
Her call was answered by the police, who dispatched Officer Mahon to the Deorle residence. Mrs. Deorle, accompanied by their children, left the house. Deorle did not hinder their departure. He did, however, rather angrily, refuse to let Mahon enter the house without a warrant. Mahon escorted Deorle’s family one block from their house, radioed for “Code 3 Backup,” and requested that more officers be sent quickly.
At least 13 officers responded to Ma-hon’s request for “backup.” These officers set up roadblocks on the streets around the house to ensure that Deorle had no avenue of escape, and awaited the arrival of a Special Incident Response Team (“SIRT”) and a team of negotiators. SIRT members are trained to “arrest ... suspects in the most efficient and least hazardous manner ... [and] arrest suspect[s] with a minimum amount of risk or danger to the ... suspect.”
Deorle, though verbally intimidating, was physically compliant and followed all the officers’ instructions. When a canine team “tested” his behavior by making their dog bark aggressively at Deorle, he retreated towards his house. When a wooden board from the porch railings came away in his hands, Deorle dropped it at the officers’ command. Although shouting “kill me” and brandishing a hatchet at a police officer, he threw the hatchet away into a clump of trees when told to put it down. Officer Rutherford, who was at the scene for thirty to forty minutes, did not observe Deorle touch, let alone attack, anyone; he did, however, hear Deorle scream at him that he would “kick his ass.”
Rutherford was a member of the SIRT team. He was trained in the deployment of force against recalcitrant suspects and had arrived on the scene in response to Mahon’s Code 3 call. After briefing by his superiors and consultation with another officer on the scene, he decided to reconnoiter closer to Deorle. Accompanied by officers Estes and Nichols, Rutherford observed Deorle for about five to ten minutes from the cover of some trees before Deorle, carrying an unloaded plastic crossbow in one hand and what may have been a bottle of charcoal lighter fluid in the other, started shouting at the officers. Rutherford was armed with a twelve-gauge shotgun loaded with what appellees term'a “less-lethal” or “beanbag” round. These rounds are made of lead shot contained in a cloth sack, and are small enough to be fired from a shotgun. The rounds “could have lethal capabilities” at thirty feet, and are potentially lethal up to fifty feet.
In response to Deorle’s taunts, Rutherford shouted at him to put down the crossbow and Deorle “discarded” it. According to Rutherford, Deorle then:
walk[ed] directly at me at a steady gate [sic].... He didn’t run at me, he didn’t take his time getting to me, it was just a steady walk directly at me.... Once he started walking towards me I took a little wider stance with my feet to get a good stable base. As I leaned my weapon up against the tree to make it more stable and I focused on his lower right rib area as he was walking towards me for a target area.
Rutherford did not warn Deorle that he was going to shoot him. Nor did he order Deorle to halt. Instead, he waited until Deorle reached the predetermined point, then fired. The cloth-cased shot struck Deorle in the face, knocked him off his feet, and lodged “half out of his eye.” He suffered multiple fractures to his cranium, loss of his left eye, and embedded lead shot in his skull. A team of negotiators was still en route when Deorle was shot.
Deorle sued Rutherford, Mick Grey (the Butte County Sheriff), the County of Butte, and Defense Technology Corporation (the manufacturer of the cloth-cased shot), for, among other things, excessive force in violation of the fourth amendment. Rutherford and Grey asserted qualified immunity and moved for summary judgment. The district court held that Rutherford was entitled to qualified immunity, that he did not violate Deorle’s right to be free from excessive force, and that there was therefore no basis for holding the other defendants liable. The court granted summary judgment for defendants and denied Deorle’s motion for reconsideration. This appeal followed. . The excessive-force claim against Officer Rutherford, which was dispositive in the court below, is the only issue presented by the parties on appeal.
. STANDARD OF REVIEW
A court reviews de novo the issue of whether an officer’s use of force was objectively reasonable under the circumstances. See Liston v. County of Riverside, 120 F.3d 965, 976 (1997). A district court’s decision to grant summary judgment is also reviewed de novo. See Crow Tribe of Indians v. Racicot, 87 F.3d 1039, 1043 (9th Cir.1996).
DISCUSSION
When government officials assert the defense of qualified immunity to an action under 42 U.S.C. § 1983, a court evaluating the defense must first determine whether the plaintiff has shown the deprivation of a constitutional right. Wilson v. Layne, 526 U.S. 603, 609, 119 S.Ct. 1692, 143 L.Ed.2d 818 (1999). If so, the court then must determine “ ‘whether the right was clearly established at the time of the alleged violation,’ ” id. (quoting Conn v. Gabbert, 526 U.S. 286, 290, 119 S.Ct. 1292, 143 L.Ed.2d 399 (1999)), and whether a reasonable officer could have believed his conduct was lawful. See Act Up!/Portland v. Bagley, 988 F.2d 868, 871 (9th Cir.1993); Mendoza v. Block, 27 F.3d 1357, 1360 (9th Cir.1994). Accordingly, we first examine whether the force used to subdue Deorle was excessive as a matter of law.
I. Excessive Force
We examine the use of force to effect an arrest in light of the Fourth Amendment’s prohibition on unreasonable seizures. Graham v. Connor, 490 U.S. 386, 109 S.Ct. 1865, 104 L.Ed.2d 443 (1989); Chew v. Gates, 27 F.3d 1432, 1440 (1994). The officer’s actions are measured by the standard of objective reasonableness, Graham, 490 U.S. at 397, 109 S.Ct. 1865. The reasonableness of the force used to effect a particular seizure is determined by “careful[ly] balancing ... ‘the nature and quality of the intrusion on the individual’s Fourth Amendment interests’ against the countervailing governmental interests at stake.” Graham, 490 U.S. at 396, 109 S.Ct. 1865 (quoting Tennessee v. Garner, 471 U.S. 1, 8, 105 S.Ct. 1694, 85 L.Ed.2d 1 (1985)). As we have held, “[t]he force which [i]s applied must be balanced against the need for that force.” Liston v. County of Riverside, 120 F.3d 965, 976 (1997). See also Alexander v. City and County of San Francisco, 29 F.3d 1355, 1367 (9th Cir.1994).
A. Nature and Quality of Intrusion
We first assess the quantum of force used to arrest Deorle by considering “the type and amount of force inflicted.” Headwaters Forest Def. v. County of Humboldt, 211 F.3d 1121, 1133 (9th Cir.2000) (internal quotation marks omitted) (quoting Chew, 27 F.3d at 1440). In the instant case, Rutherford shot Deorle using a lead-filled, “less-lethal” round. This cloth-cased shot, which is something akin to a rubber bullet, is defined as a “long-range impact weapon.” It is fired from a 12-gauge shotgun, and calculated to stop “people who are violent or hostile and are threatening injury or death to themselves or others.” By Rutherford’s own admission, the cloth-cased shot was potentially lethal at thirty feet and could be lethal at distances up to fifty feet. Also by Rutherford’s own admission, “[t]he target area for lethal capabilities would probably be the facial area.... If it impacted at the heart it could stop the heart or possibly tear a vital artery.” Rutherford shot at Deorle’s torso from thirty feet: the round hit Deorle in the head and removed his left eye and lodged pieces of lead shot in his skull.
The force used was obviously enough to cause’ grave physical injury. It knocked Deorle off his feet, and removed one of his eyes. The force applied through use of the cloth-cased shot can kill a person if it strikes his head or the left side of his chest at a range of under fifty feet. Such force is much greater than that applied through the use of pepper spray, see Headwaters Forest, 211 F.3d at 1138, or a painful compliance hold, see Forrester v. City of San Diego, 25 F.3d 804, 806 (9th Cir.1994) (police force’s “pain compliance unit” dispersed demonstrators using “Orcutt Police Nonchakus” — two sticks of wood connected at one end by a cord — or using wrist- and arm-twisting and pressure point holds), and more likely to cause a life-threatening injury than most dog bites. See Vera Cruz v. City of Escondido, 139 F.3d 659, 663 (9th Cir.1997).
However, the cloth-cased shot appears to fall short of deadly force, defined in this circuit, as “that force which is reasonably likely to cause death.” Vera Cruz, at 663 (emphasis added). The shot is not like a regular bullet — it does not normally rip through soft tissue and bone on contact with the human body. It is designed to knock down a target, rendering the individual incapable of resistance, without (in the normal course of deployment) resulting in death. Nonetheless, the cloth-cased shot constitutes force which carries a significant risk of serious injury, and, thus, is not to be deployed lightly. To put it in terms of the test we apply: it is to be used only when a strong governmental interest compels the employment of so high a degree of force.
B. Governmental Interests at Stake
We measure the governmental interests at stake by evaluating a range of factors: they include “ ‘(1) the severity of the crime at issue, (2) whether the suspect pose[d] an immediate threat to the safety of the officers or others ... (3) whether he [was] actively resisting arrest or attempting to evade arrest by flight,’ and any other ‘exigent circumstances [that] existed at the time of the arrest.’ ” Headwaters Forest, 211 F.3d at 1133 (quoting Chew, 27 F.3d at 1440-1441 & n. 5). These factors, however, are simply a means by which to determine objectively “the amount of force that is necessary in a particular situation.” Graham, 490 U.S. at 396-97, 109 S.Ct. 1865.
The character of the offense is often an important consideration in determining whether the use of force was justified. See Chew, 27 F.3d at 1442 & n. 9; Headwaters Forest, 211 F.3d at 1138-1139 (same). In this case, the officers were initially on, or attempting to enter, Deorle’s property without a warrant. They arrived, not to arrest him, but to investigate his peculiar behavior. Deorle was clearly a deeply troubled, emotionally disturbed individual. Mrs. Deorle testified that pain, induced by a reaction to his medication, had driven Deoiie “out of control. He just didn’t want to live any more.” Deorle repeatedly asked officers to shoot him. Lt. Estes, reported that Deorle shouted he “ha[d] no reason to live ... that the pain was unbearable, and that he wanted to be done with the pain, and that there was no use in continuing.” Officer Johnson, Rutherford’s superior, heard Deorle asking other officers to kill him. Instead of seeking to counsel Deorle, at some point the officers determined to use force to arrest him. They* started by “testing” him with a police dog, and ended by firing the cloth-cased shot in his face. Deorle was eventually charged with obstructing the police in the performance of their duties. See Cal. Pen.Code § 69.
The problems posed by, and thus the tactics to be employed against, an emotionally distraught individual who is creating a disturbance or resisting arrest are, and must be, differentiated from those involved in efforts to subdue an armed and dangerous criminal who has recently committed a serious offense. In the former instance, increasing the use of force may, in a number of circumstances, exacerbate the situation; in the latter instance, a heightened use of less-than-lethal force will ordinarily be helpful in bringing a dangerous situation to a swift end. In the case of mentally unbalanced persons, the use of officers and others trained in the art of counseling is ordinarily advisable, and may provide the best means of ending the crisis. Even when an emotionally disturbed individual is “acting out” and inviting officers to use deadly force to subdue him, the governmental interest in using such force is diminished by the fact that the officers are confronted, not with a criminal, but with a mentally ill person.
We acknowledge that police officers’ decisions about the appropriate amount of force to use in a given circumstance “are often ... split-second judgments [made] in circumstances that are tense, uncertain, and rapidly evolving.” Graham, 490 U.S. at 396-97, 109 S.Ct. 1865; see also Washington v. Lambert, 98 F.3d 1181, 1186 (9th Cir.1996). However, the situation here was far from that of a lone police officer suddenly confronted by a dangerous armed felon threatening immediate vio lence. Rutherford was at the scene for over half an hour before he shot the emotionally disturbed Deorle. He had an opportunity to consult with his superiors before approaching to reconnoiter. Compare Chew, 27 F.3d at 1442. During that time, Deorle did not attempt to evade arrest by flight: he stayed on or adjacent to his own property. He did not pose an immediate safety threat: he responded to the officers’ instructions and did not attack anyone. He threw down his potential weapons when ordered to do so.
Rutherford observed Deorle at close proximity for about five to ten minutes before shooting. His testimony is that he fired his shotgun as Deorle was walking towards him, at a steady gait, and without any weapons. Rutherford decided that he would shoot when Deorle came within a certain range, steadied himself against a tree, and waited until Deorle reached that point; then, without a command to stop or a warning that force would be employed, he pulled the trigger. Rutherford did not make a split-second choice. See Headwaters Forest, 211 F.3d at 1138 (a reasonable fact finder could conclude that the decision to use non-lethal force was not made in the heat of the moment). Rather, he evinced unhurried deliberation in shooting Deorle.
Of course, Deorle might never have passed the pre-determined spot had Rutherford given him the warning to which he was entitled or a command to halt. An officer must give a warning, when feasible, before shooting a suspect. See Gamer, 471 U.S. at 11-12, 105 S.Ct. 1694; Jensen v. City of Oxnard, 145 F.3d 1078, 1086 (9th Cir.1998). Officers provide warnings, where possible, even when the force used is less than deadly. See Brewer v. City of Napa, 210 F.3d 1093, 1094-1095 (9th Cir.2000) (police officer gave warning before setting dog on suspect); Vera Cruz, 139 F.3d at 660 (same); Headwaters Forest, 211 F.3d at 1129 (police warned protesters before use of pepper spray); Katz, 194 F.3d at 970 (violently grabbing protester without warning and throwing him into police van was fourth amendment violation). Here, there was ample time to give a warning but no warning was given. Rutherford does not remember giving a warning; nor do any of the other eleven witnesses mention his doing so when describing the events they saw or heard. At most, Rutherford may have shouted “less lethal.” That cryptic statement was insufficient to alert a target to the force about to be deployed, and does not satisfy the pre-use of force warning requirement.
C. Weighing the Conflicting Interests
Viewing the facts presented by the record in the light we must, even though Rutherford used force that is properly classified as less than deadly, the force used was excessive compared to the governmental interests at stake. Deorle was obviously a deeply emotionally disturbed person. He had suffered such a severe reaction to his prescription medication that he begged various officers to shoot him to end the pain. Despite his distraught condition, however, he did not attack anyone. Instead, Officer Rutherford fired the cloth-cased round at him and left him with lead shot impacted in his skull and the cloth-cased round sticking “half out his eye.” Under the fourth-amendment objective-reasonableness standard, the shooting violated Deorle’s right to be free from unreasonable seizures. See Garner, 471 U.S. at 7, 105 S.Ct. 1694. We now consider whether Rutherford is protected by the defense of qualified immunity.
II. Qualified Immunity
The individual defendants, to the extent they have been sued in their individual capacities for violating § 1983, have raised the affirmative defense of qualified immunity. The doctrine of qualified immunity insulates government agents against personal liability for money damages for actions taken in good faith pursuant to their discretionary authority. See Harlow v. Fitzgerald, 457 U.S. 800, 807, 102 S.Ct. 2727, 73 L.Ed.2d 396 (1982). However, “governmental officials ... generally are shielded from liability for civil damages insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known.” 457 U.S. at 818,102 S.Ct. 2727.
In excessive-force cases, this circuit measures qualified immunity by the same standard it measures the excessive force at issue. In other words, the qualified immunity test is the same as the test on the merits. See Scott v. Henrich, 39 F.3d 912, 914 (9th Cir.1994); Headwaters Forest, 211 F.3d at 1141; Alexander, 29 F.3d at 1367; Chew, 27 F.3d at 1449 n. 19. Accordingly, in line with established Ninth Circuit precedent, it is clear that because, on the facts presented, viewed in the light most favorable to the plaintiff, the force used was unreasonable, Rutherford is not entitled to qualified immunity.
We note, however, that the Supreme Court has recently granted certiorari in Katz v. United States, 194 F.3d 962, 967 (9th Cir.1999), cert. granted, — U.S.-, 121 S.Ct. 480, 148 L.Ed.2d 464 (2000). Katz collects the cases that demonstrate that the overwhelming majority of circuits that have addressed the issue of qualified immunity for unreasonable uses of force follow the same rule as the Ninth Circuit, with the Fifth Circuit being the sole exception. The Fifth Circuit’s rule is set forth in Snyder v. Trepagnier, 142 F.3d 791 (5th Cir.1998), in which a jury found that the police officer’s use of force was excessive, but then granted him qualified immunity. Id. at 800. The Fifth Circuit upheld the jury verdict, applying a separate qualified-immunity test that first determines whether the officer’s use of force violated clearly established law, then inquires whether, on the facts as they appeared to the officer, he reasonably could have believed that he was not violating that law, or, as the Fifth Circuit put it, whether the circumstances indicate that “the officer ... ma[de] a constitutionally reasonable judgment based on a factual misperception.” Id. (internal quotations omitted) (quoting Melear v. Spears, 862 F.2d 1177, 1188 (5th Cir.1989) (Higginbotham, J., concurring)). Thus, the Fifth Circuit applies a traditional qualified immunity test to excessive force cases. In the case before us, we reach the identical result applying the traditional qualified immunity test as we do applying the “same as the merits” rule that we, and most of the other circuits, follow.
In applying the first part of the traditional qualified-immunity test— whether the law was clearly established— we start with the general proposition that the use of force that is objectively unreasonable is unlawful and that it is not necessary that a court have determined previously that the precise use of the particular force under similar circumstances is excessive. See Anderson v. Creighton, 483 U.S. 635, 640, 107 S.Ct. 3034, 97 L.Ed.2d 523 (1987) (requiring only that “the contours of the right ... be sufficiently clear that a reasonable official would understand that what he is doing violates that right”). As we said in Mendoza v. Block:
We do not believe that a more particularized expression of the law is necessary for law enforcement officials ... to understand that under some circumstances the use of such a “weapon” might become unlawful. For example, no particularized case law is necessary for a deputy to know that excessive force has been used when a deputy sics a canine on a handcuffed arrestee who has fully surrendered and is completely under control. An officer is not entitled to qualified immunity on the grounds that the law is not clearly established every time a novel method is used to inflict injury.
27 F.3d at 1362 (citing Anderson, 483 U.S. at 640, 107 S.Ct. 3034). It is therefore irrelevant “whether [the use of force] involves physical restraint, use of a baton, use of a gun, or use of a dog.” Id. (citing Anderson, 483 U.S. at 640,107 S.Ct. 3034). When it should be apparent to any reasonable officer that the force he uses is excessive, there is no justification for granting qualified immunity. Deorle was a distraught, disoriented, and emotionally disturbed. Rutherford shot him using a round composed of lead shot enclosed by a cloth casing and fired at speeds of up to three-hundred feet per second from a twelve-gauge shotgun. The force, designed to render a person incapable of resistance, was listed higher on the California police’s “escalation of force” chart than the other types of force short of deadly force that have sometimes been held to be excessive in this circuit. See, e.g., Chew, 27 F.3d at 1443. Although there is no prior case prohibiting the use of this specific type of force in precisely this type of situation, that is insufficient to entitle Rutherford to qualified immunity.
In addition, it has been long settled that an officer has a duty to warn, where feasible, before using significant force capable of causing serious injury upon an unarmed suspect. See Gamer, 471 U.S. at 11-12, 105 S.Ct. 1694; Quintanilla v. City of Downey, 84 F.3d 353, 357 (9th Cir.1996). This is so whether the force is classified as deadly or less than deadly. See Quintan-illa, 84 F.3d at 354 (police officer gave warning before setting dog on suspect); Mendoza, 2.1 F.3d at 1362 (proper, for purposes of qualified immunity inquiry, for court to determine whether officer had given warning before setting dog on suspect); Forrester v. City of San Diego, 25 F.3d 804, 806 (9th Cir.1994) (before each arrest, protesters warned that they would be subject to pain compliance measures if they did not move). See also Headwaters Forest, 211 F.3d at 1129 (police warned protesters before use of pepper spray); Katz, 194 F.3d at 970 (violently grabbing protester without warning and throwing him into police van was fourth amendment violation). Where a firearm is used by members of law enforcement, the phrase “Halt or I’ll shoot!” has long been a part of our national culture, and it is familiar to most youngsters whether they grow up reading books, watching television, or both. The commonly acknowledged and well-known practice of warning suspects, whenever feasible, before subjecting them to force that may cause serious injury demonstrates that “the defendant[’s] conduct [wa]s so patently violative of the constitutional right that reasonable officials would know without guidance from the courts that the action was unconstitutional, [and] closely analogous pre-existing case law is not required to show that the law is clearly established.” DeBoer v. Pennington, 206 F.3d 857, 864-865 (9th Cir.2000). By shooting Deorle with the cloth-cased shot without giving him a warning, Rutherford failed to act in accordance with clearly established law.
Furthermore, under the second part of the Fifth Circuit’s qualified-immunity standard, Rutherford could not have reasonably believed that his actions would not violate Deorle’s constitutional rights. The facts in this case are stark: as these facts appeared to Rutherford, he could not have made a reasonable judgment that the force he used was constitutional. Deorle was an emotionally disturbed individual; disoriented, “out of control,” and possibly intent upon suicide. At the time Rutherford shot him, Deorle was unarmed and walking towards Rutherford at a normal gait. Despite Deorle’s confused state, Rutherford determined that he would shoot at such time as Deorle reached a point thirty feet away. Without giving a warning, or even demanding that he stop his approach, Rutherford waited until Deorle came within the pre:established range, then fried. No officer could reasonably have believed that under these facts the shooting constituted reasonable force. Accordingly, applying either the Ninth Circuit’s standard or the Fifth Circuit’s traditional qualified-immunity standard, and viewing the facts in the light most favorable to the plaintiff, Rutherford was not entitled to qualified immunity for his use of excessive force.
CONCLUSION
Viewing the facts in the light we must, we conclude that, for purposes of summary judgment, Rutherford’s use of force was excessive and the defense of qualified immunity is unavailing. At a distance of thirty feet, Rutherford shot at a man who would have been better placed in a hospital than in custody. The degree of force was clearly in excess of the governmental interest at stake, and was used in circum stances that did not justify the failure to warn. There was no basis for any factual misperception and no reasonable officer could have concluded that the force employed was constitutional. Accordingly, we reverse the grant of summary judgment and remand for further proceedings consistent with this opinion.
REVERSED AND REMANDED.
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1039866-8900 | GEWIN, Circuit Judge:
Appellant, Douglas McDowell, was convicted after a jury trial of two counts of possession with intent to distribute cocaine, and two counts of distribution of cocaine, all in violation of 21 U.S.C. § 841(a)(1). He was sentenced to a five-year term on each count, to be served concurrently. On this appeal he argues that the trial court erred in the following rulings: (1) refusing to propound certain requested voir dire questions to the jury panel, (2) admitting certain evidence, (3) allowing the prosecutor to make allegedly highly prejudicial remarks during closing argument, and (4) sentencing appellant on all counts. After carefully reviewing the record and briefs, we find these contentions to be without merit and affirm.
The government’s key witness was Clarence Lydes, a convicted felon. In March of .1975, Lydes was incarcerated in the Palm Beach County Jail on several state charges. After negotiations with the sheriff’s office and Drug Enforcement Administration (DEA), it was agreed that Lydes would work for the DEA and make cases on known drug dealers. He was released on $350 bond. He was paid $25 per day in expense money, had the use of an apartment and a car, and received $2000 in relocation money. The state charges were dismissed about the same time that Lydes’ employment was ended. Lydes was requested to make contact with appellant, whom he had known for about five years.
Lydes met with appellant at appellant’s apartment in the first week of April, 1975. Lydes indicated he had a friend from Fort Pierce who wanted an ounce of “coke.” The first transaction took place on April 6, 1975, when Lydes was accompanied by DEA Agent Wells to appellant’s apartment. Wells was introduced as “Little Man”, a narcotics dealer from Fort Pierce. Appellant gave Wells four spoons of cocaine (28 grams) in return for $1000. During the transaction appellant stated he had been “selling dope since ’69” and had never been convicted. Another transaction occurred on April 11, when four more spoons of cocaine were purchased for $1000. During this transaction, appellant told Lydes to give “Little Man” his [appellant’s] telephone number so “Little Man” could reach him when he got back from Fort Pierce.
Agent Wells corroborated Lydes’ story and identified government exhibits 1 and 2 as the cocaine he had purchased from appellant. He also testified concerning the chain of custody of the exhibits. DEA Agent Campbell testified concerning his surveillance of the two purchases and the chain of custody of the exhibits. DEA Chemist Cooper testified that the substance in exhibits 1 and 2 was cocaine hydrochloride. Appellant did not take the stand. The jury found him guilty on all counts.
Appellant complains that the trial court erred in not asking the jury certain requested voir dire questions. The questions were:
8. Please state the name of any church, social club, fraternity or other organization to which you currently belong or were a member of within the past five (5) years.
16. Would the race or religion of any of the parties, witnesses or attorneys have any bearing on your decision in this case?
Rather, the court instructed the jury as follows:
THE COURT: This is a temple of justice; and this Court and all Courts in the nation, every person stands equal before the law, regardless of race, or col- or or religion, affiliation or nationality or sex or any other consideration.
Would you accept my statement to that effect and do you agree with it, each of you?
THE JURORS: (Indicate in affirmative.)
THE COURT: You will give the United States Government and this individual who is sitting here, represented by these two lawyers, capable lawyers, the same fair, impartial consideration in your verdict, without any preference one way or the other, in an effort to do justice in this case; will each of you do that?
THE JURORS: (Indicate in affirmative.)
The trial court possesses extensive discretion in conducting the voir dire examination, but is subject to the essential demands of fairness. United States v. Fernandez-Piloto, 426 F.2d 892 (5th Cir. 1970). There must be an abuse of that discretion for reversal on appeal. United States v. Hill, 500 F.2d 733 (5th Cir. 1974), cert. denied, 420 U.S. 952, 95 S.Ct. 1336, 43 L.Ed.2d 430 (1975). Appellant has shown no such abuse. Even in this court appellant has completely failed even to state the relevancy of his proposed inquiry number 8. The court’s instruction and inquiry that are quoted above were more than adequate to meet appellant’s extremely generalized and unexplicated fear that members of the jury venire might have been prejudiced against him because of his race. The district court did not err in refusing to give appellant’s inquiry number 16.
Appellant also alleges that the trial court erred in admitting the cocaine (government exhibits 1 and 2) over objection. He contends that the government did not establish a proper chain of custody. He argues there was no testimony that the evidence was weighed or field-tested before it was turned over to the DEA chemist. He also alleges that the evidence was stored with evidence in other cases and could have become intermingled with it.
Our decision in United States v. Daughtry, 502 F.2d 1019 (5th Cir. 1974), is quite instructive with respect to the admission of narcotics exhibits. That case involved the admission of heroin. In it we first noted that the admission of evidence is within the trial court’s broad discretion and that his decision concerning it will not be disturbed absent abuse of that discretion. We quoted with approval the criteria for admission of exhibits stated by the Eighth Circuit in United States v. Brown, 482 F.2d 1226, 1228 (8th Cir. 1973) (citations omitted):
[Tjhere must be a showing that the physical exhibit being offered is in substantially the same condition as when the crime was committed . . . Factors to be considered in making the determination of admissibility include the nature of the article, the circumstances surrounding its preservation and custody, and the likelihood of others tampering with it. If upon the consideration of such factors, the trial judge is satisfied that in reasonable probability the article has not been changed in any important respect, he may permit its introduction in evidence.
502 F.2d at 1022 n. 3. The chain of custody revealed by the testimony at trial clearly satisfied the Brown-Daughtry criteria.
Agent Wells testified that he placed the substance that appellant had sold him into bags and sealed them immediately upon his return to the DEA apartment. He also placed the DEA seal on the bags and his name and the date. The seals had not been disturbed or tampered with. Agent Campbell’s testimony supported that of Wells. Wells transmitted the bags to Sergeant Liles, a member of the DEA Task Force. Sergeant Liles locked the bags in a footlocker. Subsequently, the bags were received by DEA Chemist Cooper and they were undisturbed. After his tests, he sealed the bottom of the bags, which he had opened to remove the samples. Cooper also testified that at the time of trial the bags did not appear to have been tampered with and appeared to be exactly the same as after he sealed them.
Appellant introduced no evidence that the exhibits had been tampered with and there is no evidence of foul play. The cocaine was in two independent, identifiable, sealed packets and there was no evidence that it was commingled with other narcotics. The trial court did not abuse its discretion in admitting the exhibits.
Appellant asserts that the prosecutor’s comments during closing argument were extremely prejudicial and constitute reversible error. The comments objected to are as follows:
[Prosecutor:] . . . Ladies and gentlemen, I just want to conclude with this point: I think the issue in this case in my own mind boils down to this: It boils down to the credibility of the witnesses. There is no conflict in the testimony of any of the witnesses in this case, so in essence let me just put it to you this way: If you believe that Clarence Lydes, the informant, lied to you this morning, if you believe that Agent Wells lied to you this morning, if you believe that Mr. Campbell lied to you this morning, and if you believe that the chemist lied to you this morning, then it is your duty to return a verdict of not guilty.
[Defense Counsel] Your Honor, I object to that. There is nobody here said anybody was telling anything but the truth. Now, to infer that I inferred in my argument that anybody was lying, I would ask the Court to tell the jury to disregard that.
THE COURT: Counsel, I do not think that there is any inference at all that you made any such statement. Do you have an objection?
[Defense Counsel] Yes, sir, I object to the argument of counsel as not being responsive to my argument.
THE COURT: All right, sir. Objection overruled.
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1072270-28585 | MILLER, Associate Justice.
Appellants filed a petition in the lower court for a writ of mandamus to compel appellee to file with the Assessor of the District of Columbia returns for the fiscal years ending June 30, 1934 to 1937, inclusive, of the personal property, tangible and intangible, owned and held by it in its private capacity or as a fiduciary, for the purpose of assessment for taxation. The court overruled appellants’ demurrer to appellee’s answer; appellants elected to stand on the demurrer; the petition was thereupon dismissed and the rule to show cause, theretofore issued, was discharged. This appeal is from the order dismissing the petition and discharging the rule.
Appellee, the National Rifle Association of America, is a nonstock corporation organized under the laws of the State of New York, and, since about 1912, has maintained its sole office in the District of Columbia. In its answer in the lower court it alleged that it was a benevolent, charitable and scientific institution incorporated under the laws of the United States and consequently that its property was exempt from taxation because of the provisions of Section 755, Title 20 of the D.C.Code, 1929 (Act of July 1, 1902, 32 Stat. 620, c. 1352, § 6, par. 10). This contention has been abandoned on appeal and it is not necessary for us to consider it in either phase. Appellants conceded on argument that appellee is not required to file a return if its property is exempt from taxation. Whether some of appellee’s property is exempt or otherwise not subject to taxation is also immaterial, in view of the nafure of the present case. If any of it is liable to taxation, appellee is obliged to make the return required by law and, in the event of its failure, may be compelled to comply.
Appellee assumes on this appeal that appellants’ demurrer admitted the conclusion, pleaded in its answer, that all its property was used for educational purposes, with the resulting necessary conclusion that such property is exempt / from taxation under Section 713, Title 20 of the D.C.Code, 1929 (Act of July 1, 1902, 32 Stat. 616, c. 1352, § 5). But the assumption is unsound and the conclusion does not follow. The answer,' after setting out with particularity those parts of its certificate of incorporation and bylaws which disclosed its purposes, alleged: “... respondent [appellee] is therefore advised ... that the property of respondent corporation is all used for ‘educational purposes’ within the meaning of T. 20, § 713 of said Code.” This-is a conclusion of law as to the effect and purpose of the statute, and for that reason was not admitted by the demurrer.
Moreover, the conclusion of the pleader was not admitted by demurrer, in the present case, for a further reason, i. e., because it is a conclusion contrary to the specific facts alleged and from which it purports to be drawn,* ***** to say nothing of the purpose-revealing title of the New York Act under which appellee was incorporated, and which also appears in its answer. It is certainly not usual for societies and clubs, which are organized for social and recreative purposes, to be so engaged that all their property is used for educational purposes. The certificate of incorporation and the bylaws of appellee, which are set out in its answer, list the following objects and purposes of the association: (1) to educate the youth of the nation in marksmanship; (2) to improve the marksmanship of its members; (3) to provide a suitable range or ranges in the vicinity of the City of New York; (4) to secure the issuance of arms and ammunition to those practicing on ranges; (5) to encourage competition in marksmanship between teams and individuals in all parts of the United States; (6) to promote the introduction of the system of aiming drill and rifle practice as part of the military drill of the National Guard in all the states; (7) to encourage marksmanship throughout the United States, particularly among civilians, both as a sport and for the purpose of qualifying as finished marksmen those individuals who may be called upon to serve in time of war; (8) to create a public sentiment for the encouragement of rifle practice both as a sport and as a necessary means of national defense; and (9) to encourage legislation for the establishment and maintenance of suitable ranges. On argument, appellee stated that it engaged in lobbying activities not merely to encourage legislation for the establishment and maintenance of ranges but also (10) to prevent the passage of certain legislation concerning the regulation of manufacture and distribution ol firearms.
No one of these objects and activities is necessarily or exclusively educational in character. The promotion, propaganda and lobbying activities implicit in the eighth, ninth and tenth are definitely not educational. The first to seventh may be in some small measure educational ; they may. be purely for sport and recreation; they may involve promotion, propaganda and lobbying, as in the case of the eighth, ninth and tenth. It is idle to urge by way of analogy that because the officers of an educational institution or association may engage occasionally in lobbyist or propagandist activities, such an institution should be regarded in the same light as one which engages casually or incidentally or occasionally in educational activities. It is the primary use made of the property which determines whether it is exempt. School of Domestic Arts and Science v. Carr, 322 Ill. 562, 568, 153 N.E. 669, 671.
Assuming, therefore, ’ solely for the purpose of argument, that the allegation concerning educational use is a conclusion of fact; reading it in connection with the particular allegations of objects and'purposes; and giving to them all the most favorable possible interpretation under the ‘ authorities which define educational use, it is clear, in our view, that at most the educational phase of appellee’s activities is incidental and collateral to the ' social, recreative, promotional and propaganda phases which constitute its major reasons for existence. It does not, therefore, in any real sense relieve the government of its burden of public education. In fact, if appellee should succeed to any large extent in teaching the youth of the nation to shoot, without at the same time inculcating the discipline of military training, which is a fundamental part of the curriculum of colleges and. academies maintained and approved by the government to provide such training, it is much more probable that the result would be, instead, a tremendous increase in the governmental burden of crime control. Even well recognized methods of youth-training, such as physical education, when distorted and diverted from their 'legitimate uses, may cease to have educational character. And this may be true, even though such distortion and diversion occurs under the direction of educational institutions such as colleges and universities. No admission of performance, or even of capacity to perform the difficult task of military training, resulted from appellants’ demurrer, in spite of the conclusion of law pleaded in appellee’s answer.
For all these reasons, therefore, the necessity for governmental subsidy or immunity which is implicit in tax exemption —upon the theory that the government is relieved of its burdens — fails in the present case.
Appellee contends further that its personal property is exempt under the provisions of Section 713, Title 20 of the D. C.Code, 1929, which is the second paragraph of Section 5, Chapter 1352 of the1 Act of July 1, 1902, 32 Stat. 616. As appellee’s contention that its property is all being used for educational purposes must be rejected, it is unnecessary for us to decide whether the language in question was intended to have general application to all property or whether it should be limited to real estate. In any event, it refers only to property used for educational purposes.
Appellee also contends that its intangible personal property is exempt from taxation under the provisions of Section 754, Title 20 of the D.C.Code, 1929 (Act of September 1, 1916, 39 Stat. 717, c. 433, § 11, as amended), on the theory that it is neither a resident nor engaged in business within the District. The principle has long been settled that a corporation is a resident of the state in which it was incorporated. As appellee was incorporated under the laws of New York, its legal residence is in that State even though its principal office is located in the District of Columbia. On the other hand, it is clear that appellee enjoys and exercises within the District the privilege of a situs for carrying on its activities, whatever they may properly be called, as well as capacity to sue and he sued, to be served with process, to maintain offices and a staff of employees, to collect, expend, invest and reinvest large sums of money. However, it contends that it is not engaged in business within the meaning of the code section. It urges that its aims are like those of a chamber of commerce or club, even apart from the matter of educational activities; that it distributes no dividends and that its funds come from contributions of members, not from commercial relations with either the public or its own members.
What then is the meaning of the term “engaged in business” as employed in the statute? Webster’s Dictionary defines “business” as “Any particular occupation or employment habitually engaged in, especially for livelihood or gain.” In its broadest meaning therefore one could be said to be engaged in business if it were his habit to rummage through garbage cans in search of food, after the manner of the human derelicts who may be seen thus employed on the back streets of our large cities. However, rarely do we find the term employed so broadly in statutes or cases, although the language of a Tennessee statute is not far from it, i. e., “... ‘any transaction with persons or any transaction concerning any property situated in this state through any agency whatever
A consideration of the cases suggests extremes in meaning as follows: On the one hand, persons, associations and corporations engaged in manufacturing, trade and commerce for profit or gain, are beyond question engaged in business. On the other hand, the performance of essential governmental functions is not business within the meaning of statutes such as that here involved Persons or agen cíes so occupied are not engaged in business, but instead are invested with a portion of the sovereign power which they exercise for the public benefit. Between these two extremes it is difficult tp find universally applicable principles. The cases vary widely even in their interpretation of similar statutes. As was pointed out in Lindner Packing & Provision Co. v. Industrial Comm., 99 Colo. 143, 60 P.2d 924, 106 A.L.R. 1498, two meanings have been attributed to the term, one broad and one narrow, and it is necessary to determine in each case which meaning was intended. Under particular statutes it has been held that an occupation, in order to constitute a business, must be pursued for livelihood or profit; or that it shall be of a nature specified in the statute.
On the face of the statute there is nothing to indicate that Congress intended so to limit it, as to make it applicable only to persons, associations and corporations engaged in a commercial business for profit. This fact is significant in view of the further fact that taxing statutes frequently specify carrying on business for profit as a basis for taxation Moreover, the contrary intention appears from the fact that even as to the property of library, benevolent, charitable and scientific institutions, such property is exempt only when it belongs to such institutions as are incorporated under the laws of the United States or the District of Columbia.
Neither is the source of its income of particular importance. It may be. receiving interest from an endowment fund ; it may be collecting tuition from students, dues from members, dividends from stock. Nor is it necessary that an institution should earn income or profit in order that it may be said to be carrying on business. It may be losing money every day; it may be rapidly approaching bankruptcy; it may be actually in the hands of a receiver and still be conducting business.
In a number of cases it has been held that professions are not included within the term “trade or business.” But it is not necessary to determine that question in the present case for appellee is not engaged in a profession. A single or occasional disconnected act does not constitute engaging in business. It requires that acts of business be conducted, prosecuted and continued “not from time to time but all the time.” (Lewellyn v. Pittsburgh, B. & L. E. R. Co., 3 Cir., 222 F. 177, 186), or at least for a substantial portion of the time. But appellee’s acts are continuous and uninterrupted. It has been held under particular statutes that corporations organized for social purposes, or for the general welfare of society, are not engaged in business; but in other cases exactly the contrary has been held. And the Supreme Court of the United States has said that where a state — perhaps even in its sovereign capacity — engages in a business, i. e., an activity which does not constitute an essential governmental function, and even though it is not conducted for profit, but instead, for the facilitating of commerce and improving harbors, it subjects itself to regulatory action in the same manner as a private corporation. United States v. California, 297 U.S. 175, 183, 185, 56 S.Ct. 421, 80 L.Ed. 567.
The term “engaged in business,” together with its synonyms, “carrying on business” and “doing business,” has been most frequently interpreted and defined in connection with laws taxing and regulating the activities of corporations in states other than states of residence. Here again, such statutes frequently speak in terms of business conducted for profit or gain; but, as previously noted, that limitation does not appear in the pertinent statute in the present case; hence, interpretations based thereon are inapplicable.
Another group of cases interpreting statutes relating to foreign corporations, which statutes do not contain a qualification concerning business conducted for profit or gain, hold that such corporations are engaged in business when they are engaged in the activities for which they were incorporated. The present case falls properly within this group. '
Appellee collects a minimum of approximately $240,000 to $250,000 per year; expends most thereof each year in paying salaries of officers and employees, and in other respects to further the purposes set forth in the charter and by-laws. Its officers control and manage personal property in the form of office inventories, furniture and equipment, cash on hand and subject to check, securities and savings, which varies in amount from year to year and which in 1936 approximated $140,000. The handling, investment and reinvestment of these substantial funds, by what must be a considerable staff of officers, agents and employees, in onr view, dearly constitutes the carrying on of business-in the District of Columbia within the meanlnf ^e pertinent statute and the aPPllcable decisions.
The Commissioners are specifically authorized to compel the filing of a sworn return by any person required by law to ■ such a return. Appellee has failed to show that it comes within any exemption provided by law, and the lower court erred in entering the order from which this appeal was taken,
Reversed.
STEPHENS, Associate Justice, concurs in the result.
Act of February 18, 1929, 45 Stat. 1227, c. 259, § 5,. D.C.Code 1929, tit. 20, § 758: “If any person neglects or refuses to file a return of personal property as required by law, and tbe assessor certifies to the board of commissioners that, . in bis opinion, tbe best information obtainable does not afford a satisfactory basis for assessment, the board of commissioners may, by petition to the Supreme Court of the District of Columbia [now the District Court of the United States for the District of Columbia] for mandamus against such person, compel the filing of a sworn return, and in such case tbe court shall require the person at fault to pay all expenses of the proceeding.”
D.C.Code 1929, tit. 20, §§ 753, 754.
“The following personal property shall be exempt from taxation.
“First. The personal property of all library,' benevolent, charitable, and seientifie institutions incorporated under the laws of the United States or of the Dis-ti'ict of Columbia and not conducted for private gain.”
See note 1, supra.
“Property used for educational purposes that is not used for private gain shall be exempt from taxation, and all other property used for educational purposes shall be assessed and taxed as other property is assessed and taxed.”
Pennie v. Reis, 132 U.S. 464, 469, 470, 10 S.Ct. 149, 33 L.Ed. 426; Nortz v. United States, 294 U.S. 317, 324, 325, 55 S.Ct. 428, 79 L.Ed. 907, 95 A.L.R. 1346; Newport News Shipbuilding & Dry Dock Co. v. Schauffler, 303 U.S. 54, 57, 58 S.Ct. 466, 82 L.Ed. 646; Pierce Oil Corp. v. City of Hope, 248 U.S. 498, 500, 39 S.Ct. 172, 63 L.Ed. 381. Cf. Interstate Land Co. v. Maxwell Land Grant Co., 139 U.S. 569, 577, 578, 11 S.Ct. 656, 35 L.Ed. 278; Equitable Life Assurance Society v. Brown, 213 U.S. 25, 43, 29 S.Ct. 404, 53 L.Ed. 682; Interstate Commerce Comm. v. Goodrich Transit Co., 224 U.S. 194, 204, 32 S.Ct. 436, 56 L.Ed. 729; Bishop & Co., Inc., v. Midland Bank, 9 Cir., 84 F.2d 585, 587, certiorari denied 299 U.S. 587, 57 S.Ct. 111, 81 L.Ed. 432; Clark v. Mutual Reserve Fund Life Ass’n, 14 App.D.C. 154, 172, 43 L.R.A. 390; Donaldson v. Wright, 7 App.D.C. 45, 54.
Dillon v. Barnard, 21 Wall. 430, 437, 22 L.Ed. 673; Gould v. Evansville & Crawfordsville R. Co., 91 U.S. 526, 536, 23 L.Ed. 416; Clark v. Mutual Reserve Fund Life Ass’n, supra note 6; Farm & Home Savings & Loan Ass’n v. Armstrong, 337 Mo. 349, 355, 85 S.W.2d 461, 464; Culbreath v. M. Kutz Co., 37 Ga.App. 425, 140 S.E. 419, 421.
“An Act for the incorporation of Societies or Clubs, for certain social and recreative purposes . . .
“II. Object:
“The object for which said association is formed, is the improvement of its members in mark’manship, and to promote the introduction of the system of aiming drill and rifle practice as part of the military drill of the National Guard of this and other states, and for those purposes to provide a suitable range or ranges in the vicinity of the City of New York.”
“Article One
“Objects
“In accordance with and in addition to the purposes and objects of the Association as set forth in the original and amended charter, the objects of this Association shall be to educate the youth of the nation in marksmanship, to encourage marksmanship throughout the United States, particularly among civilians, both as a sport and for the purposes of qualifying as finished marksmen those individuals who may be called upon to serve in time of war; to encourage competition in marksmanship between teams and individuals in all parts of the United States; to encourage legislation for the establishment and maintenance of suitable ranges; to secure the issuance of arms and ammunition to those practicing on such ranges; and to create a public sentiment for the encouragement of rifle practice both as a sport and as a necessary means of national defense.”
To ascertain whether a corporation falls within an exemption statute, it must he judged not only by its declared objects but also by what activities are actually carried on. See Bistline v. Bassett, 47 Idaho 66, 71, 272 P. 696, 697, 698, 62 A.L.R. 323; Catholic Woman’s Club v. City of Green Bay, 180 Wis. 102, 192 N.W. 479; University Club v. Lanier, 119 Fla. 146, 161 So. 78; People ex rel. Thompson v. Dixon Masonic Bldg. Ass’n, 348 Ill. 593, 181 N.E. 434.
Vanderbilt v. Commissioner, 1 Cir., 93 F.2d 360, 362: “The procuring of the enactment * * * of bills, their advocacy, the furnishing of facts and information in their support, and the payment' of the cost of carrying on such activities are not educational but political.” See also, Leubuscher v. Commissioner, 2 Cir., 54 F.2d 998, 1000. Cf. Cochran v. Commissioner, 4 Cir., 78 F.2d 176.
See Slee v. Commissioner, 2 Cir., 42 F.2d 184, 72 A.L.R. 400 (American Birth Control League); State of Missouri v. Business Men’s Athletic Club, 178 Mo. App. 548, 564, 565, 163 S.W. 901, 907, 908 (athletic club); Memphis Chamber of Commerce v. Memphis, 144 Tenn. 291, 232 S.W. 73 (chamber of commerce); In re Dunham’s Estate, 121 Misc. 589, 201 N.Y.S. 847 (local chapter of a college fraternity); In re Daly’s Estate, 79 Misc. 586, 141 N.Y.S. 199, affirmed 163 App.Div. 949, 148 N.Y.S. 1111, affirmed 215 N.Y. 620, 109 N.E. 1072 (American Society for the Prevention of Cruelty to Animals); City of Knoxville v. Ft. Sanders Hosp., 148 Tenn. 699, 257 S.W. 408 (local hospital); State v. Rowan, 171 Tenn. 612, 106 S.W.2d 861 (University Club); Turnverein “Lincoln” v. Board of Appeals of Cook County, 358 Ill. 135, 192 N.E. 780 (gymnastic and athletic association). See also, Cardinal Pub. Co. v. Madison, 205 Wis. 344, 237 N.W. 265, affirmed 208 Wis. 517, 243 N.W. 325 (college newspaper).
District of Columbia v. Mt. Vernon Seminary, 69 App.D.C. 251, 100 F.2d 116.
Allen v. Regents, 304 U.S. 439, 58 S.Ct. 980, 82 L.Ed. 1448. See also, dissenting opinion of Hutcheson, J., in Page v. Regents, 5 Cir., 93 F.2d 887, 893.
District of Columbia v. Mt. Vernon Seminary, supra note 14; Lloyd Library & Museum v. Chipman, 232 Ky. 191, 22 S.W.2d 597; Miller v. Lamar Life Ins. Co., 158 Miss. 753, 773, 131 So. 282, 286; People ex rel. Carr v. Alpha Pi, 326 Ill. 573, 158 N.E. 213, 54 A.L.R. 1376; State v. Snyder, 29 Wyo. 199, 212 P. 771; Carteret Academy v. State Board of Taxes and Assessment, 102 N.J.L. 525, 133 A. 886; Beta XI Chap ter v. New Orleans, 18 La.App. 130, 137 So. 204; Connecticut Junior Republic Ass’n v. Litchfield, 119 Conn. 100, 174 A. 804, 95 A.L.R. 56.
“qvhe moneys and credits, including moneys loaned and invested, bonds and shares of stock * * * of any person, firm, association, or corporation resident or engaged in business within said District shall be scheduled and appraised in the manner provided by section 753 of this title for listing and appraisal of tangible personal property * *
Bank of Augusta v. Earle, 13 Pet. 519, 10 L.Ed. 274; Fairbanks Steam Shovel Co. v. Wills, 240 U.S. 642, 36 S.Ct. 466, 60 L.Ed. 841; Barbour v. Paige Hotel Co., 2 App.D.C. 174; Babcock & Wilcox Co. v. Spaulding, 1 Cir., 86 F.2d 256.
See Wheeling Steel Corp. v. Fox, 298 U.S. 193, 56 S.Ct. 773, 80 L.Ed. 1143; First Bank Stock Corp. v. Minnesota, 301 U.S. 234, 57 S.Ct. 677, 81 L.Ed. 1061, 113 A.L.R. 228; Smith v. Ajax Pipe Line Co., 8 Cir., 87 F.2d 567, 571, certiorari denied 300 U.S. 677, 57 S.Ct. 670, 81 L.Ed. 882. Cf. Act of July 3, 1920, 44 Stat. 833, c. 759, § 2, as amended, 45 Stat. 1227, D.C.Code 1929, tit. 20, § 756.
See Memphis Chamber of Commerce v. Memphis, 144 Tenn. 291, 232 S.W. 73.
Romaine v. Union Ins. Co., C.C.W.D. Tenn., 55 F. 751, 754. See also, In re Alabama & C. R. Co., 1 Fed.Cas. p. 271, No. 124; Flint v. Stone Tracy Co., 220 U. S. 107, 171, 31 S.Ct. 342, 55 L.Ed. 389, Ann.Cas.l912B, 1312.
See Brush v. Commissioner, 300 U. S. 352, 364 et seq., 57 S.Ct. 495, 81 L.Ed. 691, 108 A.L.R. 1428; Flint v. Stone Tracy Co., 220 U.S. 107, 157, 158, 31 S.Ct. 342, 55 L.Ed. 389, Ann. Cas.1912B, 1312; Ohio v. Helvering, 292 U.S. 360, 368, 54 S.Ct. 725, 78 L.Ed. 1464; Metcalf & Eddy v. Mitchell, 269 U.S. 514, 46 S.Ct. 172, 70 L.Ed. 384; Williams v. City of Talladega, 226 U.S. 404, 33 S.Ct. 116, 57 L.Ed. 275; United States v. California, 297 U.S. 175, 56 S.Ct. 421, 80 L.Ed. 567; New York ex rel. Rogers v. Graves, 299 U.S. 401, 408, 57 S.Ct. 269, 81 L.Ed. 306. Cf. Los Angeles County v. Industrial Accident Comm., 89 Cal.App. 736, 740, 265 P. 362, 364 (special statutory inclusion for purposes of Workmen’s Compensation Act); Massolini v. Driscoll, 114 Conn. 546, 159 A. 480 (idem).
See Dade County v. State, 95 Fla. 465, 116 So. 72; State of North Carolina ex rel. Harris v. Watson, 201 N.C. 661, 161 S.E. 215, 79 A.L.R. 441; Moxon v. State ex rel. Binyon, 36 Ohio App. 24, 172 N.E. 680; City of Pekin v. Industrial Comm., 341 Ill. 312, 173 N.E. 339; Martin v. Fisher, 108 Cal.App. 34, 291 P. 276; State ex rel. Garrison v. McLaurin, 159 Miss. 188, 131 So. 89; Donges v. Beall, Tex.Civ.App., 41 S.W.2d 531; State ex rel. Davis v. Botts, 101 Fla. 361, 134 So. 219. See also, New York ex rel. Rogers v. Graves, supra note 22.
Deering v. Blair, 57 App.D.C. 367, 23 F.2d 975; Hanson v. Culton, 269 Mass. 471, 169 N.E. 272; DeBlois v. Commissioner, 276 Mass. 437, 177 N.E. 566; Morgan v. Salt Lake City, 78 Utah 403, 411, 3 P.2d 510, 513; Whipple v. Commissioner, 263 Mass. 476, 485, 486, 161 N.E. 593, 595.
Norman v. Southwestern R. Co., 42 Ga.App. 812, 157 S.E. 531.
Act of September 1, 1916, 39 Stat. 717, c. 433, § 11, as amended, D.C.Code 1929, tit. 20, § 754.
See, for example, the definition of' the term “business” in the tax on privilege of doing business. Act of August 17,. 1937, 50 Stat. 688, c. 690, § 1(d), D.C.. Code (Supp. III, 1937) tit. 20, § 970(d). See also, Flint v. Stone Tracy Co., 220 U.S. 107, 142, 143, 31 S.Ct. 342, 55 L.Ed. 389, Ann.Cas.l912B, 1312 (federal; corporation tax law of 1909).
Act of July 1, 1902, 32 Stat. 620, c. 1352, § 6, par. 10, as amended, D.C.. Code 1929, tit. 20, § 755.
Trinidad v. Sagrada Orden, 263 U.S., 578, 581, 44 S.Ct. 204, 68 L.Ed. 458. Cf. New York Society v. MacFadden Publications, Inc., 129 Misc. 408, 221 N.Y.S. 563, 565, affirmed 222 App.Div. 739, 226 N.Y.S. 870.
New York Society v. MacFadden Publications, Inc., supra note 29.
See Atlantic Postal Telegraph-Cable Co. v. City of Savannah, 133 Ga. 66, 74, 65 S.E. 184, 188; Whipple v. Commissioner, 263 Mass. 476, 485, 486, 161 N.E. 593, 595.
Hughes v. Commissioner, 10 Cir., 38 F.2d 755, 758, 759 (profession of law); People v. Kelly, 255 N.Y. 396, 175 N.E. 108 (profession of singing or of music). But cf. Semple v. Schwarz, 130 Mo.App. 65, 109 S.W. 633 (profession of medicine); Earle v. Commonwealth, 180 Mass. 579, 63 N.E. 10, 57 L.R.A. 292, 91 Am.St.Rep. 326 (idem); Young v. Board of Medical Examiners, 93 Cal. App. 73, 268 P. 1089 (idem); In re Kaffenburgh, 188 N.Y. 49, 56, 57, 80 N.E. 570, 572, 573 (profession of law).
See Building Commissioner v. McManus, 263 Mass. 270, 160 N.E. 887 (undertaking a business, not a profession); In re Dawson, 136 Okl. 113, 277 P. 226 (idem); Becker v. Pickersgill, 105 N.J.L. 51, 143 A. 859 (master electricians are engaged in business, not profession); Iselin v. Flynn, 90 Misc. 164, 154 N.Y.S. 133 (dressmaking a business).
Hutchings v. Burnet, 61 App.D.C. 109, 58 F.2d 514; Liquid Veneer Corp. v. Smuckler, 9 Cir., 90 F.2d 196, 202; Washburn v. Commissioner, 8 Cir., 51 F.2d 949, 953; Hughes v. Pallas, 84 Colo. 14, 267 P. 608.
Walsh v. Industrial Comm., 345 Ill. 366, 369, 178 N.E. 82, 83; Los Angeles County v. Industrial Accident Comm., 89 Cal.App. 736, 740, 265 P. 362, 364. Cf. Deering v. Blair, 57 App.D.C. 367, 23 F.2d 975.
See Jones v. Rhea, 130 Va. 345, 107 S.E. 814. But note that this ease was expressly limited by Knights of Ku Klux Klan v. Commonwealth ex rel. State Corporation Comm., 138 Va. 500, 508, 122 S.E. 122, 125, in such manner as to make it inapplicable to the present ease. See also, Easterbrook v. Hebrew Ladies’ Orphan Society, 85 Conn. 289, 298-300, 82 A. 561, 564, 565, 41 L.R.A.,N.S., 615 (Decision confined to the language of a restrictive covenant, which was held not to bar certain kinds of business not for livelihood or profit); Cuzner v. California Club, 155 Cal. 303, 100 P. 868, 20 L.R.A.,N.S. 1095 (However, the court expressly recognized that under an ordinance properly drawn, such a club could be taxed for doing business).
See Army and Navy Club v. District of Columbia, 8 App.D.C. 544; Brooklyn Children’s Aid Society v. Industrial Board, 136 Misc. 379, 240 N.Y.S. 70, 73, affirmed 231 App.Div. 845, 246 N.Y. S. 907, affirmed 256 N.Y. 651, 177 N.E. 178. And see cases cited in note 40, infra.
Von Baumbach v. Sargent Land Co., 242 U.S. 503, 514, 515, 37 S.Ct. 201, 61 L.Ed. 460; People ex rel. Manila Electric R. & Lighting Corp. v. Knapp, 229 N.Y. 502, 510, 128 N.E. 892, 895.
Act of September 1, 1916, 39 Stat. 717, c. 433, § 11, as amended, D.C.Code (1929) tit. 20, § 754.
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122810-23512 | MEMORANDUM OPINION AND ORDER
MATSCH, District Judge.
This age discrimination class action under 29 U.S.C. § 216(b) is based upon an EEOC charge filed by the plaintiffs’ named representative, Harry C. Drake. Drake asserted in that charge that 1) he was a first assistant manager of distribution services at Mountain Bell; 2) he was advised that he had been declared surplus on November 18, 1982; 3) he was offered a position that was a “considerable downgrade;” 4) he was told he had the alternative of retiring, was offered and elected to receive the company’s Supplemental Income Pension Plan (SIPP); and 5) his job functions were still being performed at the company by three employees, all under age forty (but under a different job classification). He contended that the company failed or refused to reclassify him and retain him in the job. On August 14, 1987, the defendant moved for summary judgment arguing that Drake has failed to establish a prima facie case of age discrimination. Mountain Bell asserts that even if Drake has established a prima facie case, he has failed to show that Mountain Bell’s articulated non-discriminatory reasons for relocating and demoting Drake are pretextual. On September 23, 1987, the plaintiff filed a response to defendant’s motion to which the defendant filed a reply on October 27, 1987. This court heard oral argument on defendant's motion for summary judgment on February 17, 1988.
The parties agree on the following facts: Plaintiff Harry C. Drake was employed by Mountain Bell in Albuquerque, New Mexico from November 3, 1952 to December 29, 1982. Plaintiff’s date of birth is July 12, 1929. Drake was employed as a non-management or “craft” employee from November 1952 until his promotion to a first level management position in 1970. For approximately eighteen months prior to his retirement, Drake held the position of Assistant Staff Manager, a first level management position, in Network Distribution Services.
Network Distribution Services is the department within Mountain Bell responsible for the engineering, construction, installation and maintenance of the telephone hardware used to connect telephone subscribers to Mountain Bell’s switching offices and switching offices to one another.
The first level of management at Mountain Bell is the lowest of six management levels. There are three “bands” or tiers within the first level of management, level “1-1” positions, level “1-2” positions and level “1-3” positions. Drake held a job at the highest tier of first level management, a level 1-1 position, prior to his retirement.
Drake’s job within the Network Distribution System at Mountain Bell was in the field of electronic carrier or “pair gain.” Pair gain is the modern technology which converts analog signals (i.e., the human voice) to digital signals and then back again to analog signals. Drake describes his position as a “Loop Electronic Scheduler in Local Loop Design Engineering.” During 1982 the Network Distribution Services (NDS) department began a transition involving the transfer of electronic carrier or “pair gain” functions from another department, Network Switched Services, to the NDS department. Following the transfer of pair gain functions, NDS initially treated pair gain functions or responsibilities as a specialized or “state staff” function, as opposed to a function of the two NDS engineering “districts”. During the fall of 1982, NDS decided to disband some “state staff” functions, including pair gain, to the various NDS districts.
At that time, there were seven NDS “districts” in New Mexico, each under the supervision of a district manager, as follows:
district district manager
Installation and Maintenance— Metro Jon Shumard
Installation and Maintenance— North Harold Nicholson
Installation and Maintenance— South Dick Brittain
Construction — South and Metro Wallace Herman
Construction — North Paul Johnson
Engineering — North; Assignment —Metro, North and South William Wallace
Engineering — South and Metro Charles Hubbard
In early November 1982, Mountain Bell announced that several departments, including Network Distribution Services, would be reconstructed by January 1,1983. The reorganization of NDS involved changing from a three region structure comprised of central, northern and southern regions to a two region organization, with a north and south area. The new south area would be composed of Arizona, New Mexico and Utah, with area headquarters located in Phoenix. As reported in a November 23, 1982, Mountain Bell Newsletter, “[t]he change was made to ensure a greater degree of flexibility needed to make quick responses to the many changes coming in the company, to continue working toward objectives for increasing management span of control, to improve efficiency and streamline operations to meet the service and earning needs of the company.” Affidavit of Roy Stage with attachments.
In addition to that company-wide reorganization of NDS which became effective in approximately January 1983, the engineering functions within NDS in New Mexico were restructured with new reporting alignments and job responsibilities for several hundred NDS engineering employees. It also resulted in the downgrading of some management employees and the promotion of some non-management personnel into mid-level (level “1-2”) management positions.
Prom approximately July through September 1982, while working in a “state staff’ capacity, Mr. Drake reported to Neel G. Roch, a second level manager in Albuquerque in the NDS district then known as “Engineering — Metro and South.” Mr. Roch’s date of birth is March 1,1942. During the months that Drake reported to Roch, his primary responsibilities were (1) foreclosing of plug-in units; (2) tracking the cost of pair gain projects; and (3) coordinating job authorization with the Network Switched Services department. Drake states that Roch talked “down about me in front of my subordinates as if to be trying to demoralize me.” Drake Affidavit, ¶ 8. Drake states that Roch once said to him in a demeaning and derogatory manner, “All you old guys are alike.” Drake Affidavit, ¶ 8.
In approximately October 1982, as a result of the departmental decision to disband some state staff functions, including pair gain planning and engineering, to the various NDS districts, plaintiff was assigned to report to second level manager Kim Maul-din Hahn, and third level or “district” manager William T. Wallace, located in Santa Fe. Wallace was responsible for the district then known as “Engineering — North; Assignment — Metro, South and North.” When plaintiff began reporting to Ms. Hahn and Mr. Wallace in the “North” engineering district, Drake’s pair gain responsibilities included the northern area of New Mexico only. Drake states that during the period he reported to Mauldin “that Maul-din was particularly trying to ignore me____ Mauldin would not show up for scheduled meetings after I had travelled all the way from Albuquerque to Santa Fe to meet with her as previously planned____ Mauldin would not return my phone calls. I might get one call out of ten returned.” Drake Affidavit, 1113.
Prior to the engineering reorganization in fall of 1982, all of the engineering planning functions within Wallace’s “north” district were based in Santa Fe. As part of the engineering reorganization, Kim Maul-din Hahn and Wallace, plaintiff’s second and third level supervisors, determined that the north planning group should remain in Santa Fe and that plaintiff's pair gain functions should be moved to Santa Fe. Wallace and Hahn intended that a portion of plaintiffs responsibilities would be assigned to Carlos G. Martinez, a 39 year old first level (level 1-1) manager under their supervision who was then involved in pair gain planning in Santa Fe. The remaining portion of plaintiff’s functions would be performed by plaintiff in Santa Fe as a level 1-2 manager in pair gain design engineering. As a result of the engineering reorganization, both Carlos Martinez and plaintiff were to be downgraded within the first level of management from level 1-1 to level 1-2 positions.
On November 22, 1982, Hahn and Wallace came to Albuquerque from Santa Fe to meet with Drake to explain how the engineering reorganization would affect his job. During that meeting, Wallace advised Drake that, as a result of the reorganization, his job would be located in Santa Fe, New Mexico and would be downgraded from a level 1-1 to a level 1-2 position. Mountain Bell and Drake disagree about what else was said at the November 22, 1982 meeting. Mountain Bell asserts that Wallace did not advise Drake what the salary would be for the Santa Fe position. Drake submitted an affidavit with his response to defendant’s motion for summary judgment, and in it states that Wallace told him that the demotion “would mean eventually a substantial pay decrease.” Drake Affidavit, ¶ 18.c. Had Drake accepted the Santa Fe first level position, his salary would not have been reduced for twelve months following the transfer, in accordance with Section 17 of Mountain Bell’s Human Resources Guide. As a management employee of Mountain Bell, Drake had been provided with his own copy of the Human Resources Guide. After twelve months in the Santa Fe job, plaintiff’s salary ($33,784) would have been adjusted, depending upon his management performance rating at that time, to an annual salary of no more than $35,280 and no less than $29,400.
Mr. Wallace told Mr. Drake, during the November 22, 1982 meeting, that he could take retirement with benefits under the non-management plan known as Supplemental Income Protection Plan (SIPP). Under SIPP, Mr. Drake would receive a total of $18,000, paid in monthly installments over a four year period. To retire with SIPP benefits, Drake had to agree to retreat on paper for one day to a non-management job title and receive pension benefits under the non-management pension plan.
As of November 22, 1982, Drake was eligible to retire with pension benefits under Mountain Bell’s management pension, but his pension benefits would be discounted 3% per year (or .25% per month) if plaintiff were to retire prior to age 55. Had plaintiff retired in December 1982, with benefits under the management pension, his pension would therefore have been subject to a 4.75% discount or penalty since he would not reach age 55 until July 1984.
During the meeting on November 22, 1982, Mr. Drake advised Mr. Wallace and Ms. Hahn that he did not want to commute to Santa Fe or accept a demotion, and according to Mr. Drake, Mr. Wallace then told plaintiff that “Well, I guess I don’t blame you. You really don’t have a choice. Take the SIPP retirement and get out. SIPP is offered now and it isn’t going to get better. It should be clear which is the best choice. You’d be a fool not to take SIPP! Retirement with SIPP is the only thing you have going for you.” Drake Affidavit, 1119. Drake states that he requested some time to make his decision but that Wallace insisted on having Drake’s decision immediately. According to Drake, Wallace stated “What the hell is there to think about. It should be clear which is the best choice! You can tell me right now! You know which is the best way to go!” Drake Affidavit, ¶ 20. Drake advised Wallace that he would retire with SIPP benefits, and Wallace stated “Well good — that settles it — I’ll go tell the big boss, the higher-ups!” Drake Affidavit, 1120.
Drake executed a Mountain Bell form requesting retirement with SIPP benefits on December 15, 1982, and completed a company “Application for Pension” form on December 22, 1982. Drake designated February 20, 1983, as his retirement date. On Drake’s “Application for Pension” form, Mountain Bell indicated that Drake’s retirement was due to “force surplus.”
Drake took his last scheduled week of vacation for 1982 during the last week of December 1982. Drake states that on December 29,1982, he received a phone call at his residence from Human Resources Supervisor Dorothy Dahl who stated that “Roy Stage (the Department Division Manager) wants you to be retired by December 31, 1982.” Drake claims that he said to Dahl, “he can’t expect that, I’ve submitted my papers with a retirement date in February. How can this happen? He can’t change my retirement date just like that!” Dahl’s reply, “Well, I don’t know” ended the conversation. Drake Affidavit, ¶ 26.
Drake reported to work on January 3, 1983 and performed all his usual job duties. He also worked all of January 4,1983 when he went to Estancia, New Mexico to clear Carrier Engineering problems with network engineers. At the end of the workday on January 4, 1983, Drake got a mes sage that district level manager Larry Hahn wanted to see him. At 5:15 p.m. on January 4,1983, Hahn told Drake: “You’re not supposed to be here. The company retired you on December 30th. You’re not supposed to be working here anymore and the company is not going to pay you for the work you’ve done these last two days. Don’t come back here anymore because you’re retired.” Drake did not report to work again. Drake Affidavit, 1Í 28.
In 1983, after the reorganization of NDS, there were five districts in New Mexico, with realigned areas of responsibility. The post-reorganization districts were as follows:
district district manager
Installation and Maintenance— Metro Jon Shumard
Installation and Maintenance— Outstate Harold Nicholson
Construction — New Mexico Paul Johnson
Engineering and Assignment— Metro Charles Hubbard
Engineering and Assignment— Outstate Larry Hahn
In each of the reorganized districts, “Engineering and Assignment — Metro” and “Engineering and Assignment — Outstate,” there were first level managers responsible for pair gain planning and first level managers responsible for pair gain design engineering.
Drake’s district level manager, Wallace, who had been in charge of the district which included Engineering — North and Assignment — Metro, South and North, retired at the end of December 1982. Mr. Larry Hahn, a district level manager in NDS in Denver, became the district manager for the new Engineering and Assignment — Outstate district. As a result, the Engineering — North planning functions previously based in Santa Pe under Mr. Wallace’s supervision were moved to Albuquerque, where Mr. Hahn planned to locate his district office. The design engineering functions previously supervised by Mr. Wallace remained in Santa Fe, Las Cruces, Farmington and Roswell, New Mexico.
Carlos G. Martinez, who had been working for Ms. Hahn as a level 1-1 manager in pair gain planning prior to the engineering restructure, was downgraded to a level 1-2 position in Santa Fe and assumed the pair gain design engineering responsibilities which plaintiff would have assumed had he chosen to remain in the employ of Mountain Bell.
In 1983, following the engineering restructure, the following individuals were responsible for pair gain planning and pair gain design engineering for the two NDS engineering district:
Engineering and Assignment — Outstate District Pair Gain Planning:
Location Level Date of Birth
Dan T. Creel Albuquerque 1-2 8/15/34
Gabriel J. Rodriguez Albuquerque 1-2 2/24/38
Pair Gain Design Engineering:
Carlos G. Martinez Santa Fe 1-2 6/19/43
Manuel G. Garcia Las Cruces 1-2 5/26/41
Thomas Shinas Farmington 1-2 10/18/45
Engineering and Assignment — Metro District
Pair Gain Planning;
Frederick R. Wingfield Albuquerque 1-1 8/3/46
Jaime Villegas Albuquerque 1-2 4/7/57
Pair Gain Design Engineering:
Gary L. Cullen Albuquerque 1-2 11/11/37
Wilmer Riecke Albuquerque 1-2 12/4/40
In March 1983, Drake was asked to return to work in the Network Switched Services Department on a contract basis. Drake states that upon returning to his former Albuquerque office, he observed three persons performing his former pair gain planning job functions:
Dan T. Creel age about 48
Fred R. Wingfield age about 37
Gabriel J. Rodriguez age about 44
Based on these observations, and the manner in which his employment ended, Drake filed the age discrimination charge with the Albuquerque District EEOC office.
Plaintiff receives a monthly pension check from Mountain Bell in the amount of $1,032.29 and received $18,000 in SIPP benefits paid out over four years following his retirement. In addition, following his retirement, plaintiff was re-employed by Mountain Bell through Manpower, Inc. on a temporary basis during the period March 28, 1983 through February 27, 1984 and received approximately $19,800 for this work.
PRIMA FACIE CASE OF AGE DISCRIMINATION
Drake alleges in his second amended complaint that:
106. In effecting a reduction in work force in anticipation of the economic ef fects of the Divestiture Order, Defendants willfully and unlawfully targeted employees in the protected age group and discriminated against plaintiffs and members of the Section 216(b) Class with respect to their terms, conditions and privileges of employment because of plaintiffs’ age, including designating plaintiffs and members of the Section 216(b) class as surplus or AFR [available for reassignment], and/or using the availability of early retirement plans in order to induce members of the Section 216(b) Class to terminate their employment.
107. Upon information and belief, Mountain Bell has recruited and/or promoted a cadre of younger Management employees not in the protected age group to perform the same duties as Plaintiffs and members of the Section 216(b) Class in implementing its discriminatory practices directed at Plaintiffs.
* * * * * *
109. Mountain Bell’s willful use of age as a criterion in implementing its reduction in force during divestiture and reorganization evidences a pattern and practice of age discrimination in violation of the ADEA.
To establish a prima facie case of age discrimination, a plaintiff must show that he is within the protected age group, that he was doing satisfactory work, that he was discharged despite the adequacy of his work, and that his position was filled by a younger person. Cockrell v. Boise Cascade Corp., 781 F.2d 173, 177 (10th Cir. 1986). Mountain Bell admits that Drake was within the protected age group during 1982 and that he was performing satisfactory work at the time of his retirement. Mountain Bell asserts that it is entitled to summary judgment because Drake has failed to establish that he was discharged despite the adequacy of his work, and that his position was filled by a younger person.
Drake asserts that the facts establish that he was constructively discharged since he had no real choice but to retire early given the alternative of a demotion and transfer of job location. In Irving v. Dubuque Packing Co., 689 F.2d 170, 172 (10th Cir.1982), the Tenth Circuit Court of Appeals stated that a “constructive discharge occurs when an employer deliberately makes or allows the employee’s working conditions to become so intolerable that the employee has no other choice but to quit.” The court explained in Cockrell v. Boise Cascade Corp., 781 F.2d at 177 that “The test is whether a reasonable man would view the working conditions as intolerable and would feel compelled to resign.” In Cockrell, the court considered constructive discharge in the context of a perceived demotion or reassignment. The plaintiff, a regional manager of several lumberyards, was asked to accept reassignment to manage one lumberyard. When he told management that he was not interested in running one lumberyard again, the plaintiff’s supervisor gave the plaintiff only the choice of running the lumberyard or resigning. The supervisor testified that the company did not intend to reduce plaintiff’s salary and stated that managing the lumberyard was not a demotion under the company’s reorganization plan. The plaintiff testified that nothing was said about salary, nor had he been informed of the company’s elevated role for yard managers. The Cockrell court held that the plaintiff adduced sufficient evidence of intolerable working conditions to warrant submitting the issue of constructive discharge to the jury.
Based upon the facts recited above and all the fair inferences therefrom, a jury could find that Drake was constructively discharged. Drake told Wallace at the November 22, 1982 meeting that he did not want to relocate. Yet, like the plaintiff in Cockrell, Drake was given only the choice of relocating and accepting a demotion or retiring with SIPP benefits. The facts surrounding Drake’s retirement are even more compelling than those involved in Cockrell because Mountain Bell admits Drake’s new job was a demotion. Drake was also pressured to make a decision quickly, without time for discussing his options with others. Drake may have concluded that the job in Santa Fe would be intolerable, especially since his supervisor, Wallace, told him that he would be a fool not to accept retirement and the SIPP benefits.
The defendant cites two Seventh Circuit Court of Appeals decisions involving early retirement in support of its contention that Drake was not constructively discharged. In Henn v. National Geographic Society, 819 F.2d 824 (7th Cir.1987), the court affirmed the trial court’s decision granting the defendant’s motion for summary judgment on the ground that the plaintiffs had failed to establish that they were constructively discharged. The plaintiffs asserted that they were constructively discharged because their decision to take early retirement was involuntary in light of management’s real and implied threats of unpleasant consequences if the plaintiffs did not increase their sales. The court concluded that pressure to sell more ads did not amount to making the plaintiffs’ jobs intolerable: “Selling is a risky profession, and it does not make a salesman’s job unbearable to remind him that he must produce and that there are penalties for failure.” Id. at 830. The court further explained that “The reasonable inferences from this record would not allow a jury to infer that the plaintiffs would have been fired (in violation of the ADEA) had they turned down the offer of early retirement, and without such a constructive discharge they cannot undo their choice to retire.” Id. In Bartman v. Allis-Chalmers Corp., 799 F.2d 311 (7th Cir.1986), employees of the defendant retired early to take advantage of their pension benefits which were uncertain in light of the fast approaching expiration of their collective bargaining agreement. The trial court granted defendant’s motion for summary judgment on the ground that the plaintiffs failed to establish that their early retirements amounted to constructive discharge. In affirming, the Seventh Circuit Court of Appeals explained that the condition that made the plaintiffs’ situation apparently intolerable was not any action of the defendant, but rather expiration of the pension plan, an event brought about by the failure of the contract negotiations and the passage of time.
In both of these cases cited by Mountain Bell, the plaintiffs were not required to elect between reassignment and retirement —they had the option of continuing their same work. Drake, however, was forced to choose between retirement on the one hand and transfer and demotion on the other. The offer made to Drake was not beneficial. Only “When one option makes the recipient better off, and the other is the status quo” can the offer be considered beneficial. Henn, 819 F.2d at 826. Hence, the facts support an inference that Drake was discharged.
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1710214-12631 | WINTER, Circuit Judge:
This is an appeal from Judge Korman’s decision upholding the denial by the Secretary of the Department of Health and Human Services (“Secretary”) of Medicare benefits for a portion of Friedman’s hospital stay during 1982. We initially issued a summary order affirming the judgment under our Rule 0.23, but have since vacated that order at the government’s request. We again affirm, but on a different rationale.
BACKGROUND
George Friedman was admitted to the intensive care unit of Southampton Hospital on January 28, 1982, for treatment of head injuries sustained in a fall. Friedman, then age 79, also suffered from Parkinson’s disease and phlebitis. He was diagnosed on admission as having a probable skull fracture with subdural hematoma. A Dr. Flores examined Friedman and ordered administration of an EEG and a CT scan.
During Friedman’s stay at the hospital, he received various medications, including Dyazide, Haldol, and Tylenol, and his vital signs were monitored. No further testing or substantial changes in his care were ordered, however, after he was transferred out of intensive care on February 20, 1982. The physicians’ progress records thereafter consist primarily of notations that Friedman’s “condition [is] stable” and “unchanged.” After March 6, the physicians’ order sheet consists almost exclusively of the notation “renew orders.” The nurses’ notes indicate that after Friedman’s Foley catheter was removed on March 9, his treatment consisted solely of occasional back care, administration of fleet enemas, and application of a posey jacket to restrain his movements. None of these treatments was administered on a daily basis.
On March 8, 1982, the hospital’s utilization review committee (“URC”) notified Friedman that his care as of that date required the “daily services of skilled personnel” rather than “the service of an acute-care hospital.” The notice stated that Friedman’s Medicare coverage would continue “provided that efforts are being made to find an alternate skilled facility for you.” Notes from the hospital’s Social Services Department reflect that from March 8 to September 29, it sought to place Friedman in a skilled nursing facility (“SNF”).
On April 9, 1982, the hospital notified Friedman that his stay was no longer necessary and that he was no longer covered by Medicare. The Social Services Department decertified Friedman for coverage as of that date and notified his family of the decertification. The Department’s notes indicate that a bed became available at a private nursing home on April 30, but that Friedman’s family rejected it. The physicians’ progress records in March and thereafter contain the repeated notation that Friedman was “awaiting ECF” (extended care facility). Two DMS-1 forms, filled out by a registered nurse and dated May 13 and September 9, indicated that Friedman’s care should involve “skilled nursing supervision.” In September, New York Blue Cross (“NYBC”), the Medicare program’s fiscal intermediary, informed Friedman that no further hospital insurance benefits would be allowed for care after April 12, 1982. Friedman remained in the hospital until October 6, 1982.
Friedman initially sought reconsideration of the termination of his benefits by NYBC. In her comments on the case, NYBC reviewer Nancy Johnsen noted that Friedman received “skilled services 1-28 [to] 4-12; beginning] 4-13 care supportive while awaiting SNF.” On October 15, 1982, NYBC formally advised Friedman that it had determined that its original denial of benefits was correct.
Friedman, through his attorney, then requested a hearing before an Administrative Law Judge (“AU”) to challenge the denial of Medicare coverage. At the April 1983 hearing, Friedman’s son-in-law, William Batkin, testified on Friedman’s behalf, and Dr. Meyer Texon, Associate Professor of Medicine at the New York University Medical Center and President of the New York County Medical Society, testified as a medical adviser to the ALT. Batkin testified that he had visited his father-in-law “a few times” during his nine-month hospitalization and that he had spoken twice to Friedman’s doctor. Batkin could not recall the doctor’s name, but testified that he would recognize it if he saw it. According to Batkin, the doctor said Friedman “belonged in a skilled nursing home and to send him back home would, literally, destroy and kill Mrs. Friedman,” who was 80 years old and herself in sickly condition.
Dr. Texon had not examined Friedman personally but had reviewed his hospital records and medical history. Dr. Texon concluded that Friedman required neither acute hospital care nor skilled nursing care from April 13 to October 6, 1982. He based this conclusion on the facts that after April 12, Friedman’s condition was stable, he no longer needed intravenous medication, and his treatment “consisted of just repeating orders at intervals as required.” According to Dr. Texon, Friedman “needed care, but not skilled nursing care.”
The AU denied Medicare benefits as of April 13, 1982, on the ground that Friedman did not require or receive skilled nursing care as of that date. The ALJ’s ruling became the final decision of the Secretary when it was approved by the Appeals Council on October 31, 1983. The claimant then sought review of the Secretary’s decision in the Eastern District of New York pursuant to 42 U.S.C. §§ 405(g) and 1395ff(b). The district judge dismissed the complaint in an oral decision from the bench.
DISCUSSION
A. The Requirement of Physician’s Certification
In the district court, the Secretary argued that the denial of benefits should be upheld because Mr. Friedman had not produced a physician’s certification of need for the medical services as required by 42 U.S.C. § 1395f(a)(2) (Supp. Ill 1985). The district judge agreed and upheld the denial of benefits principally on that ground. The Secretary repeated the argument on appeal to this court, and we originally affirmed the ruling below by an unpublished order that relied upon that contention.
The United States Attorney’s Office subsequently informed us, however, that the Secretary had erred in his reading of the statute and was thus modifying his argument in this and similar cases. The Secretary now maintains that the certification requirement of 42 U.S.C. § 1395f(a)(2) relates only to payment for services rendered under the Medicare program, not to coverage for such services. The Secretary notes that coverage and payment are treated as two separate inquiries: first, the Secretary determines whether the individual and the services involved are covered by Medicare, and, second, if coverage exists, the Secretary determines whether the other requirements for payment to the provider have been met. Moreover, once coverage is established, the provider of services, not the patient, is responsible for obtaining the necessary physicians’ certifications, 42 C.F.R. § 405.1625(b) (1986), and for bearing the risk of nonpayment if such certifications are unavailable. 42 C.F.R. § 489.-21(b)(1) and 489.40(b) (1986).
We agree with the Secretary’s interpretation of the statute. Because the claimant in the instant case disputes the Secretary’s determination concerning coverage, the certification requirement is irrelevant. Accordingly, we vacated our earlier order.
B. Custodial Versus Skilled Care
We now consider the coverage issues, bearing in mind that a determination by the Secretary as to an individual’s entitlement to Medicare benefits is conclusive if supported by substantial evidence. 42 U.S.C. § 405(g); Ridgely v. Secretary, 475 F.2d 1222, 1224 (4th Cir.1973); Gartmann v. Secretary, 633 F. Supp. 671, 679 (E.D.N.Y.1986). We must thus uphold the Secretary’s findings “if a reasonable mind, reviewing the evidence in the record as a whole, could accept it as adequate to support his conclusion.” Rodriguez v. Secretary, 647 F.2d 218, 222 (1st Cir.1981) (citing Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 216, 83 L.Ed. 126 (1938)).
It is conceded that after April 12, 1982, Friedman did not receive care reimbursable under the Medicare provisions covering inpatient hospital care, 42 U.S.C. § 1395d(a)(l). Friedman contends, however, that the services received during this period are reimbursable under the provisions covering extended care services, 42 U.S.C. § 1395d(a)(2)(A), which provide for up to 100 days of post-hospital extended care services during any spell of illness. Although post-hospital extended care services ordinarily consist of those services furnished to an individual after transfer from a hospital to an SNF, see 42 U.S.C. § 1395x(h) and (i), a patient who needs skilled nursing care and remains in the hospital solely because no SNF bed is available may be reimbursed for that care. 42 C.F.R. § 405.1627(b). See Monmouth Medical Center v. Harris, 646 F.2d 74, 80 & n. 10 (3d Cir.1981). Friedman thus argues that from April 13 to October 6, 1982, he was receiving skilled nursing care and was awaiting discharge to a skilled nursing facility. The government counters that during this period Friedman did not need skilled care and that the care he received was merely custodial. See 42 U.S.C. §§ 1395y(a)(l)(A) (no payment may be made for any expenses “not reasonable and necessary for the diagnosis or treatment of illness or injury”) and (a)(9) (no payment may be made for “custodial care”).
Custodial care is not defined in the Social Security Act, and the regulations merely provide illustrations of services that do not fall within the terms. 42 C.F.R. § 409.-33(d)(1986). The regulations do state that “[cjustodial care is any care that does not meet the requirements for coverage as post hospital SNF care.” 42 C.F.R. § 405.-310(g)(1986). Posthospital SNF care is defined as services that, inter alia, (1) are ordered by a physician, (2) require the skills of technical or professional personnel, and (3) are necessary on a daily basis. 42 C.F.R. § 409.31. See also 42 C.F.R. § 409.33 (setting forth examples of skilled nursing services).
A determination of a Medicare claimant’s need for skilled nursing care as opposed to custodial care should be guided by two principles. First, the decision should be based upon a common sense, non-technical consideration of the patient’s condition as a whole. E.g., Gartmann, 633 F.Supp. at 679; Howard v. Heckler, 618 F.Supp. 1333 (E.D.N.Y.1985). Second, the Social Security Act is to be liberally construed in favor of beneficiaries. E.g., Rivera v. Schweiker, 717 F.2d 719, 723 (2d Cir.1983); See also Ridgely v. Secretary, 345 F.Supp. 983, 993 (D.Md.1972) (“the purpose of the custodial care disqualification ... was not to disentitle old, chronically ill and basically helpless, bewildered and confused people ... from the broad remedy which Congress intended to provide for our senior citizens”), aff'd, 475 F.2d 1222 (4th Cir.1973). A claimant nevertheless has the burden of proving entitlement to Medicare benefits. Morton v. Heckler, 586 F.Supp. 110, 111 (W.D.N.Y.1984); Rendzio v. Secretary, 403 F.Supp. 917, 918 (E.D. Mich. 1975).
In rendering his decision, the AU stated that he had considered all of the evidence in the record, and he detailed those portions on which he relied. We conclude that substantial evidence supports his decision. The testimony of Dr. Texon provided a detailed explanation of why Friedman’s overall condition and needs were such that he was not receiving and did not need skilled nursing services. This conclusion is consistent with the statements in the nurses’ notes, the physicians’ progress records and order sheets, and the URC reports. Thus, “[t]his is not a case in which the AU and reviewing physician reached a decision contrary to the uncon-troverted medical testimony, or unsupported by other adequate acceptable evi dence.” Warncke v. Harris, 619 F.2d 412, 416 (5th Cir.1980).
The strongest evidence supporting Friedman’s position is contained in the two DMS-1 forms, which conclude that he needed “SNF” care. The details in these forms do not necessarily support this conclusion. For example, thirteen categories of “nursing care and therapy,” including “other,” are listed. Each is checked “none.” Moreover the forms state that the patient’s condition was not “unstable so that an R.N. must detect/evaluate need for modifications of treatment/care on a daily basis.” Statements that the patient was “awaiting ECF” in the physicians’ progress records establish only that Friedman was awaiting transfer to an extended care facility and have no bearing on what type of care Friedman received during the pertinent time.
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3851401-12860 | OPINION
LUDINGTON, District Judge.
Patrick Reilly pled guilty to two counts of distribution of child pornography and was sentenced to 151 months in custody. He appeals the imposition of that sentence, arguing that although it is within the United States Sentencing Guidelines range of 151 to 188 months, the sentence is substantively unreasonable. We affirm.
I.
The Kentucky State Police began investigating Reilly in early 2008 for his potential involvement in child pornography. A woman who had met Reilly on the internet contacted the police after Reilly proposed including a child in their sexual activities and sent her five videos containing images of children engaging in graphic sexual acts with adults.
Initiating an undercover investigation, a male police detective posed as the woman online. After he sent Reilly a message that a fourteen-year-old girl had taken up residence in the woman’s home, Reilly responded with instructions for grooming the child for sexual activity. A short time later, Reilly sent seven more videos to the woman’s online account. The videos contained images of female children engaging in graphic sexual acts with adults. Reilly instructed the woman to watch the videos with the child. Making plans to meet the woman and child at a hotel, Reilly wrote that he intended to videotape himself having sex with the child. Reilly later modified the travel arrangements, planning instead for the woman and child to travel to Reilly’s home in Tennessee when his wife and child would be out of town.
Police then executed a search warrant for Reilly’s residence, seizing a computer. Forensic examination of the computer revealed that Reilly had exchanged child pornography with forty-nine people. Police found more than a thousand photos and videos containing child pornography, some involving children as young as four years old. Police also found a series of messages between Reilly and another woman who he had met online. Messages recovered from this woman’s computer showed that Reilly requested that the woman’s three-year-old daughter perform oral sex on him. The request was not complied -with.
A grand jury indicted Reilly on one count of enticement, twelve counts of child pornography distribution, and two counts of forfeiture. Pursuant to a plea agreement, Reilly pled guilty to two counts of distributing child pornography in violation of 18 U.S.C. § 2252(a)(2). In his presentencing memorandum, Reilly moved for a departure under § 5K of the Sentencing Guidelines and a variance under 18 U.S.C. § 3553(a) based on his extraordinary contribution to his country as a soldier. His decade of service included three combat tours with the United States Army as an improvised explosive device (IED) inspector in Iraq and Afghanistan, during which he sustained repeated concussions from IEDs. His final tour was cut short by an IED that fractured his back, necessitating surgery. At his sentencing hearing in 2009, a psychologist testified that Reilly had sustained organic brain injury while in the service, which, combined with his pain medications, led to his interest in child pornography. The district court denied Reilly’s motion for a downward departure and variance, sentencing him to the most lenient sentence recommended by the Sentencing Guidelines, 151 months. This timely appeal followed.
II.
“The question of whether a sentence is reasonable is determined using the abuse-of-discretion standard of review.” United States v. Webb, 616 F.3d 605, 609 (6th Cir.2010). Reasonableness “has both a procedural and substantive component.” United States v. Brown, 579 F.3d 672, 677 (6th Cir.2009) (citing United States v. Jones, 445 F.3d 865, 869 (6th Cir.2006)). When a party like Reilly does not challenge the procedural reasonableness of his sentence, however, this Court limits its review to whether the sentence was substantively unreasonable. See United States v. Lanning, 633 F.3d 469, 474 (6th Cir.2011) (quoting United States v. Tate, 516 F.3d 459, 469 (6th Cir.2008)).
“A sentence will be found to be substantively unreasonable when the district court selects the sentence arbitrarily, bases the sentence on impermissible factors, fails to consider pertinent § 3553(a) factors or gives an unreasonable amount of weight to any pertinent factor.” United States v. Sexton, 512 F.3d 326, 332 (6th Cir.2008) (internal quotation marks omitted) (quoting United States v. Borho, 485 F.3d 904, 908 (6th Cir.2007)).
Reilly argues “that given all the factors, including most importantly, a complete and total lack of criminal history and a beautiful service record, that a departure and/or variance was appropriate.” Appellant’s Br. 11. We find his argument unpersuasive.
A.
Congress created the United States Sentencing Commission, the drafter of the Sentencing Guidelines, as part of the Sentencing Reform Act of 1984, 18 U.S.C. §§ 3551-3742; 28 U.S.C. §§ 991-998. Among its assignments, the Commission was tasked with the responsibility to
establish sentencing policies and practices for the Federal criminal justice system that—
(A) assure the meeting of the purposes of sentencing as set forth in section 3553(a)(2) of title 18, United States Code;
(B) provide certainty and fairness in meeting the purposes of sentencing, avoiding unwarranted sentencing disparities among defendants with similar records who have been found guilty of similar criminal conduct while maintaining sufficient flexibility to permit individualized sentences when warranted by mitigating or aggravating factors not taken into account in the establishment of general sentencing practices; and
(C) reflect, to the extent practicable, advancement in knowledge of human behavior as it relates to the criminal justice process[.]
28 U.S.C. § 991(b)(1). Subsection (A) references § 3553(a)(2), which describes the general purposes of sentencing, including punishment, deterrence, incapacitation, and rehabilitation. See 18 U.S.C. § 3553(a)(2). Subsection (B) references the competing interests that are balanced in crafting a sentencing range — reducing unjustified disparities while preserving the district court’s power to justly tailor the individual punishment to the particular crime.
In the wake of Booker, the Guidelines sentencing range is no longer mandatory, of course, but advisory. See United States v. Booker, 543 U.S. 220, 245, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005). Yet the Guidelines continue to inform district courts’ sentencing decisions. “As a matter of administration and to secure nationwide consistency,” the Court instructs, “the Guidelines should be the starting point and the initial benchmark.” Gall v. United States, 552 U.S. 38, 50, 128 S.Ct. 586, 169 L.Ed.2d 445 (2007). To reduce unwarranted sentencing disparities, the Guidelines do more than provide a recommended range, they enumerate specific factors that the district court should — and should not — consider in deciding whether to depart from the advisory sentencing range.
Specifically, § 5H of the Guidelines identifies a number of offender characteristics that may be “relevant” to “the determination of whether a sentence should be outside the applicable guideline range.” U.S.S.G. § 5H intro, cmt. (2009). One subsection, for example, identifies military service as a possible ground for downward departure. Id. § 5H1.11. Crucially, however, Congress has specifically instructed that child crimes and sexual offenses are to be treated differently than other types of crimes — the “sole grounds” permissible for a downward departure are those “expressly enumerated” in Park 5K. Id. § 5K2.0(b); see also id. app. C, amend. 649 (2003) (noting that the amendments to §§ 5K2.0 and 5K2.22 were “made directly by [Congress as part of] the PROTECT ACT, Pub.L. 108-21”). Neither a defendant’s lack of prior criminal history nor his or her military service are enumerated in § 5K. Accordingly, although these considerations are permissible grounds of departure for other types of crimes, these two factors are specifically excluded from consideration for child crimes and sexual offenses. See id. §§ 4A1.8(b) (identifying possible downward departure for criminal history); 5H1.11 (identifying possible downward departure for military service). As the Guidelines commentary notes make explicit: “The standard for a downward departure in child crimes and sexual offenses differs from the standard for other departures.” Id. § 5K2.0 cmt. (4)(B). Moreover, the notes caution:
As reaffirmed in the Prosecutorial Remedies and Other Tools to end the Exploitation of Children Today Act of 2003 (the “PROTECT ACT”, Public Law 108-21), circumstances warranting departure should be rare. Departures were never intended to permit sentencing courts to substitute their policy judgments for those of Congress and the Sentencing Commission. Departure in such circumstances would produce unwarranted sentencing disparity, which the Sentencing Reform Act was designed to avoid.
Id. § 5K2.0 background cmt. Thus, the Guidelines prohibited the district court from departing downward from Reilly’s sentencing range based on either his lack of prior criminal history or his exemplary service in the armed forces. Granting Reilly’s motion for a downward departure would have violated both the text of the Guidelines and the intent of Congress.
In any event, “we do not review a district court’s decision not to depart downward unless the record shows that the district court was unaware of, or did not understand, its discretion to make such a departure.” United States v. Santillana, 540 F.3d 428, 431 (6th Cir.2008) (citing United States v. Puckett, 422 F.3d 340, 344 (6th Cir.2005)); see also United States v. Lucas, 357 F.3d 599, 609 (6th Cir.2004) (“A district court’s failure to grant a downward departure can only be reviewed by us upon appeal if the lower court erroneously believed that it lacked authority to grant such a departure as a matter of law.”). Such is not the ease here. Thus, the district court’s decision not to depart downward is not reviewable by this Court.
B.
Reilly’s argument that a variance is “appropriate” is likewise “simply beyond the scope of our appellate review, which looks to whether the sentence is reasonable, as opposed to whether in the first instance we would have imposed the same sentence.” United States v. Ely, 468 F.3d 399, 404 (6th Cir.2006). “The fact that the appellate court might reasonably have concluded that a different sentence was appropriate is insufficient to justify reversal of the district court.” Gall v. United States, 552 U.S. 38, 51, 128 S.Ct. 586, 169 L.Ed.2d 445 (2007). Moreover, even if one overlooks the semantic flaws of Reilly’s argument to consider the substance of his contentions, his sentence was in fact substantively reasonable.
As a preliminary matter, although Reilly’s military service and lack of criminal history were not relevant to the “departure” determination under the Guide lines, they were permissible considerations in the “variance” determination under 18 U.S.C. § 3553(a). That section identifies seven factors a court shall consider in imposing a sentence. The factors include:
(1) the nature and circumstances of the offense and the history and characteristics of the defendant;
(2) the need for the sentence imposed—
(A) to reflect the seriousness of the offense, to promote respect for the law, and to provide just punishment for the offense;
(B)to afford adequate deterrence to criminal conduct;
(C) to protect the public from further crimes of the defendant; and
(D) to provide the defendant with needed educational or vocational training, medical care, or other correctional treatment in the most effective manner;
(3) the kinds of sentences available;
(4) the kinds of sentence and the sentencing range established for—
(A) the applicable category of offense committed by the applicable category of defendant as set forth in the guidelines—
(i) issued by the Sentencing Commission
(ii) that ... are in effect on the date the defendant is sentenced ...
(5) any pertinent policy statement—
(A) issued by the Sentencing Commission pursuant to section 994(a)(2) of title 28 ...; and
(B) that, except as provided in section 3742(g), is in effect on the date the defendant is sentenced.
(6) the need to avoid unwarranted sentence disparities among defendants with similar records who have been found guilty of similar conduct; and
(7) the need to provide restitution to any victims of the offense.
18 U.S.C. § 3553(a). Consequently, while “district courts must begin their analysis with the Guidelines and remain cognizant of them throughout the sentencing process,” courts must also remain conscious that “the range of choice dictated by the facts of the case is significantly broadened [under § 3553(a) ].” Gall, 552 U.S. at 50 n. 6, 59, 128 S.Ct. 586 (internal quotation marks omitted).
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12407445-11601 | Per Curiam.
Plaintiffs in this case claim that West Virginia’s 2011 congressional redistrieting plan violates the “one person, one vote” principle that we have held to be embodied in Article I, §2, of the United States Constitution. A three-judge District Court for the Southern District of West Virginia agreed, declaring the plan “null and void” and enjoining West Virginia’s secretary of state from implementing it. App. to Juris. Statement 4. The state defendants appealed directly to this Court. See 28 U. S. C. § 1253. Because the District Court misapplied the standard for evaluating such challenges set out in Karcher v. Daggett, 462 U. S. 725 (1983), and failed to afford appropriate deference to West Virginia’s reasonable exercise of its political judgment, we reverse.
⅜ ⅜ ‡
Article I, §2, of the United States Constitution requires that Members of the House of Representatives “be apportioned among the several States . . . according to their respective Numbers” and “chosen every second Year by the People of the several States.” In Wesberry v. Sanders, 376 U. S. 1 (1964), we held that these commands require that “as nearly as is practicable one man’s vote in a congressional election is to be worth as much as another’s.” Id., at 7-8. We have since explained that the “as nearly as is practicable” standard does not require that congressional districts be drawn with “precise mathematical equality,” but instead that the State justify population differences between districts that could have been avoided by “a good-faith effort to achieve absolute equality.” Karcher, supra, at 730 (quoting Kirkpatrick v. Preisler, 394 U. S. 526, 530-531 (1969); internal quotation marks omitted).
Karcher set out a two-prong test to determine whether a State’s congressional redistricting plan meets this standard. First, the parties challenging the plan bear the burden of proving the existence of population differences that “could practicably be avoided.” 462 U. S., at 734. If they do so, the burden shifts to the State to “show with some specificity” that the population differences “were necessary to achieve some legitimate state objective.” Id., at 741, 740. This burden is a “flexible” one, which “depend[s] on the size of the deviations, the importance of the State’s interests, the consistency with which the plan as a whole reflects those interests, and the availability of alternatives that might substantially vindicate those interests yet approximate population equality more closely.” Id., at 741. As we recently reaffirmed, redistricting “ordinarily involves criteria and standards that have been weighed and evaluated by the elected branches in the exercise of their political judgment.” Perry v. Perez, 565 U. S. 388, 393 (2012) (per curiam). “[W]e are willing to defer to [such] state legislative policies, so long as they are consistent with constitutional norms, even if they require small differences in the population of congressional districts.” Karcher, supra, at 740.
In this case, plaintiffs claim that West Virginia’s redistricting plan, adopted following the 2010 decennial United States census, violates Article I, § 2, of the United States Constitution and, separately, the West Virginia Constitution. The 2010 census did not alter West Virginia’s allocation of three congressional seats. But due to population shifts within the State, West Virginia nonetheless began redistricting to comply with the requirements in our precedents.
In August 2011, the West Virginia Legislature convened an extraordinary session, and the State Senate formed a 17-member Select Committee on Redistricting. The committee first considered a redistricting plan championed by its chair, Majority Leader John Unger, and dubbed “the Perfect Plan” because it achieved a population difference of a single person between the largest and smallest districts. That appears, however, to have been the only perfect aspect of the Perfect Plan. State legislators expressed concern that the plan contravened the State’s longstanding rule against splitting counties, placed two incumbents’ residences in the same district, and moved one-third of the State’s population from one district to another.
The following day, members of the Redistricting Committee introduced seven additional plans. The committee eventually reported to the full Senate the eighth proposal, referred to as S. B. 1008. The full Senate rejected a ninth proposal offered as an amendment on the floor and adopted S. B. 1008 by a vote of 27 to 4. The House of Delegates approved the bill without debate by a vote of 90 to 5. Governor Earl Tomblin signed the bill into law on August 18, 2011.
S. B. 1008, codified at W. Va. Code Ann. § 1-2-3 (Lexis 2012 Supp.), does not split county lines, redistrict incumbents into the same district, or require dramatic shifts in the population of the current districts. Indeed, S. B. 1008’s chief selling point was that it required very little change to the existing districts: It moved just one county, representing 1.5% of the State’s population, from one district to another. This was the smallest shift of any plan considered by the legislature. S. B. 1008, however, has a population variance of 0.79%, the second highest variance of the plans the legislature considered. That is, the population difference between the largest and smallest districts in S. B. 1008 equals 0.79% of the population of the average district.
The Jefferson County Commission and two of its county commissioners sued to enjoin the State from implementing S. B. 1008. At trial, the State conceded that it could have adopted a plan with lower population variations. The State argued, however, that legitimate state policies justified the slightly higher variances in S. B. 1008, citing this Court’s statement from Karcher that “[a]ny number of consistently applied legislative policies might justify some variance, including, for instance, making districts compact, respecting municipal boundaries, preserving the cores of prior districts, and avoiding contests between incumbent Representatives.” 462 U. S., at 740. The State noted Karcher’s approving reference to a District Court opinion upholding a previous West Virginia redistricting plan with a population variance of 0.78%—virtually identical to the variance in S. B. 1008. See id., at 740-741 (citing West Virginia Civil Liberties Union v. Rockefeller, 336 F. Supp. 395 (SD W. Va. 1972)).
The District Court nonetheless granted the injunction, holding that the State’s asserted objectives did not justify the population variance. With respect to the objective of not splitting counties, the District Court acknowledged that West Virginia had never in its history divided a county between two or more congressional districts. The court speculated, however, that the practice of other States dividing counties between districts “may portend the eventual deletion” of respecting such boundaries as a potentially legitimate justification for population variances. App. to Juris. Statement 15, n. 6. The court also faulted the West Virginia Legislature for failing “to create a contemporaneous record sufficient to show that S. B. 1008⅛ entire 4,871-person variance—or even a discrete, numerically precise portion thereof—was attributable” to the State’s interest in respecting county boundaries and noted that several other plans under consideration also did not split counties. Id., at 15, 16.
The court further questioned the State’s assertion that S. B. 1008 best preserved the core of existing districts. Preserving the core of a district, the court reasoned, involved respecting the “ ‘[sjocial, cultural, racial, ethnic, and economic interests common to the population of the area,’ ” id., at 17 (quoting Graham v. Thornburgh, 207 F. Supp. 2d 1280, 1286 (Kan. 2002)), not a “dogged insistence that change be minimized for the benefit of the delicate citizenry,” App. to Juris. Statement 20. The District Court concluded that although acclimating to a new congressional district and Congressperson “may give rise to a modicum of anxiety and inconvenience, avoiding constituent discomfort at the margins is not among those policies recognized in Karcher as capable of legitimizing a variance.” Ibid.
With respect to preventing contests between incumbents, the District Court again faulted the legislature for failing to build a record “linking all or a specific part of the variance” to that asserted interest. Id., at 22. And the District Court found that although 0.79% was a minor variation when Karcher was decided, the feasibility of achieving smaller variances due to improved technology meant that the same variance must now be considered major. Because the District Court concluded that the redistricting plan was unconstitutional under Article I, §2, it did not reach plaintiffs’ challenges under the West Virginia Constitution.
Chief Judge Bailey dissented. He argued that the record demonstrated the legitimacy of the State’s concerns, and that no other plan satisfied all those concerns as well as S. B. 1008. He also took issue with the majority’s disregard for Karcher’s characterization of 0.78% as an acceptable disparity. App. to Juris. Statement 39.
We stayed the District Court’s order pending appeal to this Court, 565 U. S. 1175 (2012), and now reverse.
Given the State’s concession that it could achieve smaller population variations, the remaining question under Karcher is whether the State can demonstrate that “the population deviations in its plan were necessary to achieve some legitimate state objective.” 462 U. S., at 740. Considering, as Karcher instructs, “the size of the deviations, the importance of the State’s interests, the consistency with which the plan as a whole reflects those interests, and the availability of alternatives that might substantially vindicate those interests,” id., at 741, it is clear that West Virginia has carried its burden.
As an initial matter, the District Court erred in concluding that improved technology has converted a “minor” variation in Karcher into a “major” variation today. Nothing about technological advances in redistricting and mapping software has, for example, decreased population variations between a State's counties. See id., at 733, n. 5. Thus, if a State wishes to maintain whole counties, it will inevitably have population variations between districts reflecting the fact that its districts are composed of unevenly populated counties. Despite technological advances, a variance of 0.79% results in no more (or less) vote dilution today than in 1983, when this Court said that such a minor harm could be justified by legitimate state objectives.
Moreover, our cases leave little doubt that avoiding contests between incumbents and not splitting political subdivisions are valid, neutral state districting policies. See, e. g., id., at 740. The majority cited no precedent for requiring legislative findings on the “discrete, numerically precise portion” of the variance attributable to each factor, and we are aware of none.
The District Court dismissed the State’s interest in limiting the shift of population between old and new districts as “ham-handed,” App. to Juris. Statement 19, because the State considered only “discrete bounds of geography,” rather than “ ‘[sjocial, cultural, racial, ethnic, and economic interests common to the population of the area.’ ” Id., at 17 (quoting Graham v. Thornburgh, supra, at 1286). According to the District Court, that did not qualify as “preserving the cores of prior districts” under Karcher, 462 U. S., at 740-741.
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602837-7855 | ORDER AND JUDGMENT
LUCERO, Circuit Judge.
Bobby G. Lyghtle, Jr., appearing pro se, appeals the district court’s dismissal under 28 U.S.C. § 1915(e)(2)(B)(iii) of his 42 U.S.C. § 1983 suit. We exercise jurisdic tion under 28 U.S.C. § 1291 and AFFIRM.
Lyghtle alleged that Aaron Breitenbaeh, a state prosecutor, and Terry Pullman, a state court judge, conspired to have him arrested on false charges. Specifically, Lyghtle alleged that Breitenbach caused him to be arrested and taken into police custody despite the fact that the traffic offenses used to justify the arrest had previously been dismissed. In addition, Lyghtle alleged that Breitenbach prepared an alias arrest warrant and a bond forfeiture order that were based on “false, deceptive and deceitful facts.” With respect to Judge Pullman, Lyghtle alleged that he “conspire[d] to conceal the actions of Mr. Breitenbach and Mr. Breitenbach’s illegal initiation of and participation in the warrant requirement process.” He also alleged that “Judge Pullman ... cause[d him] to be further confined until an illegal and improper $10,000 own recognizance bond could be processed.”
The district court dismissed sua sponte Lyghtle’s claims against both Breitenbach and Pullman based on absolute immunity. The court explained its reasoning as follows:
Plaintiffs allegations center on an alias arrest warrant and order for forfeiture of bond, based on plaintiffs failure to appear at a scheduled court hearing in a case that had been dismissed three months earlier. Notwithstanding plaintiffs contention that both defendants were fully aware the case had been dismissed, this does not defeat either defendant’s [absolute] immunity in this case. The issuance of an alias arrest warrant and order for forfeiture of bond clearly falls within the state court judge’s authority. Also, the prosecutor’s motion for forfeiture of bond and proposed journal entry, based on a party’s failure to appear at a scheduled hearing, involves activities by the prosecutor that are intimately associated with the judicial phase of the criminal process. Although plaintiff contends the hearing should no longer have been scheduled after the case had been dismissed, the prosecutor was still functioning as an advocate for the State in a judicial proceeding.
Lyghtle filed a notice of appeal regarding the dismissal order. Subsequently, he filed a timely motion under Fed.R.Civ.P. 59(e) to alter or amend judgment. In addition to the claims asserted in his complaint, Lyghtle alleged for the first time in his Rule 59(e) motion that Breitenbach had violated his constitutional rights by failing to comply with a traffic court order directing Breitenbach to prepare a journal entry/order reflecting that the court had dismissed the traffic case at issue. The district court denied Lyghtle’s Rule 59(e) motion. To date, plaintiff has not filed a separate or amended notice of appeal to appeal the order denying his Rule 59(e) motion.
In this appeal, Lyghtle has reasserted the claims that he pled in his complaint regarding the issuance of the alias arrest warrant and the bond forfeiture order. In addition, as he did in his motion for reconsideration, he claims that Breitenbach violated his constitutional rights by failing to comply with a traffic court order. We conclude that Lyghtle is not entitled to any relief with regards to the former claims, and that we do not have jurisdiction to consider the last claim.
‘We review determinations of absolute immunity de novo.” Scott v. Hem, 216 F.3d 897, 908 (10th Cir.2000). Having conducted the required de novo review, we agree with the district court that Lyghtle’s claims regarding the alias arrest warrant and the bond forfeiture order are barred by the doctrine of absolute immunity. A prosecutor is absolutely immune from liability under § 1983 for damages based on information that is contained in an arrest warrant or the documentation supporting a warrant unless the prosecutor actually “attested to the truth of those facts.” Id. at 909. This rule is derived from the Supreme Court’s decision in Kalina v. Fletcher, 522 U.S. 118, 118 S.Ct. 502, 139 L.Ed.2d 471 (1997), where the Court held that a prosecutor “stepped outside the role of prosecutor and into the role of complaining witness when she attested to the truth of those facts [supporting a warrant].” Scott, 216 F.3d at 909.
In this case, Breitenbach did not swear or attest to the truth of the information contained in the alias arrest warrant and the bond forfeiture order. Instead, his name and address simply appear on the top of both documents, and he approved the bond forfeiture order by signing it. Applying Kalina, these actions are insufficient to strip Breitenbach of his absolute immunity as a prosecutor, and Breitenbach is therefore absolutely immune from liability for any claims related to the alias arrest warrant and the bond forfeiture order.
We also agree with the district court that Judge Pullman’s conduct in signing and approving the alias warrant and the bond forfeiture order cannot form the basis for liability for damages under § 1983. As the district court explained, “[j]udges are protected by absolute immunity in civil rights actions from liability for damages based on their judicial actions.” See Stump v. Sparkman, 435 U.S. 349, 362-64, 98 S.Ct. 1099, 55 L.Ed.2d 331 (1978). There are only two exceptions to this absolute immunity from suit: (1) “a judge is not immune from liability for nonjudicial actions, i.e., actions not taken in the judge’s judicial capacity;” and (2) “a judge is not immune for actions, though judicial in nature, taken in the complete absence of all jurisdiction.” Míreles v. Waco, 502 U.S. 9, 11-12, 112 S.Ct. 286, 116 L.Ed.2d 9 (1991). Here, plaintiffs claims against Judge Pullman all arise out of actions that he took in his judicial capacity. As a result, Judge Pullman is entitled to absolute immunity unless he acted in the absence of all jurisdiction, which Lyghtle has failed to establish.
Finally, we do not have jurisdiction over Lyghtle’s claim regarding Breitenbach’s failure to prepare a journal entry/order reflecting that the traffic court had dismissed the traffic case at issue. As set forth above, after the district court entered its order and the related judgment dismissing Lyghtle’s complaint on July 28, 2004, the following occurred: (1) on August 4, 2004, Lyghtle filed a timely notice of appeal regarding the dismissal order; (2) on August 10, 2004, Lyghtle filed a timely motion under Fed.R.Civ.P. 59(e) to alter or amend judgment, and, for the first time, he asserted his claim regarding the journal entry/order; and (3) on February 8, 2005, the district court entered an order denying plaintiff’s Rule 59(e) motion. This chronology is critical because the filing of plaintiff’s Rule 59(e) motion caused the underlying judgment to lose its finality, and this court was then deprived of jurisdiction over the underlying judgment until February 8, 2005, when the district entered its order denying the Rule 59(e) motion. See Stone v. INS, 514 U.S. 386, 402-03, 115 S.Ct. 1537, 131 L.Ed.2d 465 (1995) (stating that a timely Rule 59 motion divests the appellate court of jurisdiction); Fed. R.App. P. 4(a)(4)(B)(i) (“If a party files a notice of appeal after the court announces or enters a judgment— but before it disposes of [a Rule 59(e) motion] — the notice becomes effective to appeal [the] judgment ... when the order disposing of the [Rule 59(e)] motion is entered.”). In addition, according to Fed. R.App. P. 4(a)(4)(B)(ii):
A party intending to challenge an order disposing of [a Rule 59(e)] motion ... must file a notice of appeal, or an amended notice of appeal — in compliance with Rule 3(c) — within the time prescribed by this Rule measured from the entry of the order disposing of the [Rule 59(e)] motion.
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777740-14518 | ORDER
TIDWELL, Judge:
This case is before the court on defendant’s motion to dismiss plaintiffs claim of statutory entitlement to the maximum award permissible under 19 U.S.C. § 1619 (1994) pursuant to RCFC 12(b)(1) & (4), and defendant’s motion for summary judgment on plaintiffs breach of contract claim pursuant to RCFC 56(b). For the reasons set forth below, the court grants defendant’s motion to dismiss for failure to state a claim on plaintiffs theory of statutory entitlement and grants summary judgment in favor of defendant on the breach of contract claim.
FACTS
Plaintiff, Robert J. Freed, provided the United States Customs Service with documentation and other original information pertaining to certain fraudulent import practices by L.A. Gear, Inc. Freed’s information resulted in the Customs Service recovering in excess of $1,000,000 from L.A. Gear. In recognition of his assistance, Customs approved a $70,000 award for Freed pursuant to 19 U.S.C. § 1619. Unhappy with the $70,-000, Freed claimed he was entitled to the maximum award provided for in the statute, $250,000. After Customs declined to pay the $250,000, Freed filed this action seeking that amount. Freed alleges that section 1619 requires the Customs Service to pay $250,000, and that failure to pay that full amount was arbitrary, capricious and an abuse of discretion.
Freed also claims to have entered into an express and implied contract with the United States. The existence of this contract is based upon conversations between Freed and Customs agents, whereby they allegedly told him, or induced him into believing, that he would receive the maximum award provided for in the statute. In support of the alleged contract, Freed also points to a Customs flyer intended to induce parties to report businesses engaging in import fraud. The flyer states in part:
The U.S. Customs Service is authorized to award up to 25 percent of amounts recovered (not to exceed $250,000) to any person who furnishes original information concerning any fraud on the Customs laws leading to the recovery of any fíne, penalty or forfeiture (19USC1619). If such compensation is warranted, every effort will be made to insure you are expeditiously rewarded.
Complaint, Exhibit B (emphasis in original).
DISCUSSION
I. Motion to Dismiss
Defendant asks the court to dismiss plaintiffs claim of a statutory entitlement to the maximum award provided for in 19 U.S.C. § 1619 for lack of subject matter jurisdiction pursuant to RCFC 12(b)(1) and for failure to state a claim pursuant to RCFC 12(b)(4).
In considering defendant’s motion to dismiss, “whether on the ground of lack of jurisdiction over the subject matter or for failure to state a cause of action, unchallenged allegations of the complaint should be construed favorably to the pleader.” Hamlet v. United States, 873 F.2d 1414, 1416 (Fed. Cir.1989) (citing Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974)). Generally, the court must accept as true any undisputed allegations of fact made by the non-moving party for purposes of the motion. Cupey Bajo Nursing Home, Inc. v. United States, 23 Cl.Ct. 406, 411 (1991) (citing Reynolds v. Army & Air Force Exch. Serv., 846 F.2d 746, 747 (Fed.Cir.1988)). If subject matter jurisdiction is questioned, the non-moving party bears the burden of establishing the court’s jurisdiction. Reynolds, 846 F.2d at 748.
The Tucker Act defines the jurisdiction of this court as follows:
The United States Court of Federal Claims shall have jurisdiction to render judgment upon any claim against the United States founded either upon the Constitution, or any Act of Congress or any regulation of an executive department, or upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort____
28 U.S.C. § 1491(a)(1) (1994).
However, the Tucker Act alone does not create a substantive right to recover money damages, El Dorado Springs v. United States, 28 Fed.Cl. 132, 134 (1993). Rather, it waives the United States’ sovereign immunity when an independent substantive right exists and when certain conditions are met. United States v. Mitchell, 445 U.S. 535, 538, 100 S.Ct. 1349, 1351-52, 63 L.Ed.2d 607 (1980). Only parties that have formed an express or implied contract with the government may bring a suit under the Tucker Act. United States v. Johnson Controls, Inc., 713 F.2d 1541, 1550 (Fed.Cir.1983).
A Lack of Subject Matter Jurisdiction
Citing Doe v. United States, 32 Fed.Cl. 472 (1994), the government seeks dismissal of this action for lack of subject matter jurisdiction, arguing that the statute is not money-mandating. The statute sets forth in pertinent part:
(a) In general
If—
(1) any person who is not an employee or officer of the United States— ...
(B) furnishes to a United States attorney, the Secretary of the Treasury, or any customs officer original information concerning—
(i) any fraud upon the customs revenue, or
(ii) any violation of the customs laws or the navigation laws which is being, or has been, perpetrated or contemplated by any other person; and
(2) such detection and seizure or such information leads to a recovery of—
(A) any duties withheld, or
(B) any fine, penally, or forfeiture of property incurred;
the Secretary may award and pay such person an amount that does not exceed 25 percent of the net amount so recov-ered____
(c) Dollar limitation
The amount awarded and paid to any person under this section may not exceed $250,000 for any case.
19 U.S.C. § 1619 (1994). The government’s motion to dismiss for lack of subject matter jurisdiction is denied because the court possesses subject matter jurisdiction in section 1619 claims. Lewis v. United States, 32 Fed. Cl. 59 (1994) (“Lewis I”). In Lewis I, the court held that the statute is sufficiently money-mandating to grant subject matter jurisdiction to this court. Id. at 64.
Although not unmindful of the disagreement among members of the court as to whether subject matter jurisdiction exists in such cases, this court views 19 U.S.C. § 1619 as money-mandating. Compare Doe v. United States, 32 Fed.Cl. at 474 (1994) with Lewis v. United States, 70 F.3d 597 (1995), affg 32 Fed.Cl. 301 (1994) (“Lewis II”). In Doe, the court held that section 1619 was no longer money-mandating because of certain amendments to the statute, which were adopted in 1986. The Doe court viewed these amendments as divesting the court of jurisdiction over section 1619 claims. This court disagrees with Doe and the government’s reliance thereon. As the court reasoned in Lewis I, “... the statutory use of the word ‘may,’ while ordinarily permissive, is given a mandatory meaning in 19 U.S.C. § 1619.” Lewis I, 32 Fed.Cl. at 64. Moreover, the Federal Circuit has urged the court to take jurisdiction of claims brought under section 1619 and to decide such cases on their merits that res judicata may operate. Were this court to grant the government’s motion to dismiss for lack of subject matter jurisdiction, the plaintiff would be free to bring his claim in this or another forum at a later date. The court’s assertion of jurisdiction in this case acts as an adjudication on the merits, and thus bars such a result. See Lewis II, 70 F.3d at 601. Accordingly, the government’s motion to dismiss for lack of subject matter jurisdiction is denied.
B. Statutory Entitlement: Failure to State a Claim
In addition to its motion to dismiss for lack of subject matter jurisdiction, defendant moves to dismiss because plaintiff’s theory of statutory entitlement fails to state a claim upon which relief can be granted. The court agrees. Freed argues that 19 U.S.C. § 1619 requires the Secretary of the Treasury (“Secretary”) to award him the maximum percentage and amount permissible under the statute. This argument must be rejected because no plausible reading of section 1619 supports Freed’s claim. Although the court reads section 1619 as compelling some level of award, it cannot read the statute to require that the maximum amount be awarded. This court has held that “[t]he only obligation the government has under section 1619 is to pay the party who provides original information a portion of any amount actually recovered.” Lems II, 32 Fed.Cl. 301, 305, affd, 70 F.3d 597 (1995). The court declines to extend its holding in Lewis II to precipitate a result beyond what the plain language of the statute supports. The statute clearly provides the Secretary with substantial latitude in determining the quantum of the award; the only constraints imposed are: (1) some award must be made because the statute is money-mandating; and (2) the amount may not exceed 25 percent of the recovery, or exceed $250,000.
Plaintiff points to no authority, and the court is unable to find any, which construes section 1619 as mandating the maximum award permissible under the statute. On the contrary, the Federal Circuit has determined not only that the Secretary enjoys a measure of discretion in setting an informant’s award, but also has highlighted that the 1986 amendments to section 1619 expanded that discretion. Lewis II, 70 F.3d at 601. In the face of this enhanced discretion and in the absence of any compelling authority otherwise, the court cannot ignore precedent and misread the statute to achieve a result contrary to that intended by Congress. Accordingly, Freed’s claim of statutory entitlement to the maximum percentage and amount permissible is dismissed because he has failed to state a claim upon which relief can be granted. RCFC 12(b)(4).
Plaintiff also argues that the government’s offer to award him $70,000 is arbitrary, capricious and an abuse of discretion. The government counters that the court is powerless to review such awards because, according to the government, the Secretary’s discretion is absolute. The court accepts neither proposition. The taking of jurisdiction in section 1619 cases will sometimes require a cursory examination of whether the award is so ridiculously low as to constitute an affront to congressional intent. However, plaintiffs eonclusory and generalized assertions merit no such review. Plaintiff offers no evidence beyond his own assertions and opinions. For example, he asks “What if Customs offered Freed $7 rather than $70,-000?” (Pl.’s Resp. at 10). That is not the case before the court. Even if Freed had met his burden to provide more than conclusory or generalized assertions, the court cannot say, as a matter of law, that an award of $70,000 offends congressional intent.
II. Motion for Partial Summary Judgment
Defendant asks the court to grant summary judgment on plaintiff’s breach of contract claim. Defendant acknowledges the court’s jurisdiction over this claim, but argues that the Customs officials did not have any contracting authority to bind the United States. The court grants summary judgment in favor of defendant on plaintiffs breach of contract claim.
Summary judgment is appropriate only when there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law. RCFC 56(c). In evaluating a motion for summary judgment, any doubt as to whether a genuine issue of material fact exists must be resolved in favor of the non-moving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970); Campbell v. United States, 2 Cl.Ct. 247, 249 (1983). A genuine issue of material fact is one that would change the outcome of the litigation. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). In deciding a motion for summary judgment, the court does not “weigh the evidence and determine the truth of the matter but [only] determine[s] whether there is a genuine issue for trial.” Id. at 249,106 S.Ct. at 2511. When the moving party has carried its burden, the non-moving party must come forward with specific facts showing that a genuine issue for trial exists. 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 non-moving party may not discharge its burden by cryptic, eonclusory, or generalized responses. See Willetts v. Ford Motor Co., 583 F.2d 852, 856 (6th Cir.1978); Tunnell v. Wiley, 514 F.2d 971, 976 (3d Cir.1975).
Arguing that the government did not enter into a contract with Freed, the defendant seeks summary judgment based on Freed’s breach of contract claim. The defendant is correct; accepting Freed’s pleadings as true, he has not satisfied all of the elements necessary to form a binding contract with the government. Accordingly, the court grants summary judgment in favor of defendant on plaintiffs breach of contract claim.
Plaintiff asserts that: (1) he entered into an express and implied contract with the government, based on conversations with Customs agents, thus binding the government to pay him $250,000; and (2) he believed such agents possessed the authority to bind the government in contract. Both assertions are devoid of any legal merit. First, legally binding contracts must contain sufficiently definite terms. The Federal Circuit has stated that informants such as Freed may not use section 1619 as terms of an alleged contract between them and the government. Lewis II, 70 F.3d at 601 (citing Merrick v. United States, 846 F.2d 725 (Fed. Cir.1988)). Freed’s claim of an express or implied contract relies, in part, on the lan guage of section 1619. For example, his complaint states the following:
The refusal and failure of United States Customs Service ... to award the Plaintiff ... $250,000 as provided for in [19 U.S.C. § 1619] is a breach of the express and implied contract the United States ... has to award [the maximum amount].
Complaint at 3 (emphasis added). Subsumed within that argument is Freed’s premise that contractual terms may be drawn from section 1619. Lewis II precludes Freed from using the statute to supply any terms for this alleged contract because the language of section 1619 is too indefinite to support a contract. Lewis II, 70 F.3d at 601. Hence, Freed’s reliance on the statute is incorrect, and his contract claim must fail. Moreover, because the statute is neither intended to be construed as an offer nor sufficiently definite to support a contract, the court rejects plaintiffs assertion that a promotional flyer mentioning the statute evidences an offer to contract or in any way supports the existence of a contract. See id.
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1861947-24594 | TUTTLE, Senior Circuit Judge:
Charles Kenneth Foster appeals from the district court’s denial of his petition for a writ of habeas corpus. Petitioner was convicted of first degree murder in Florida and sentenced to death. In this collateral appeal, he challenges: (1) the competency of his counsel in the guilt and penalty phases of his trial; (2) the constitutionality of instructions to the jury on the weighing of aggravating against mitigating circumstances; (8) the Florida Supreme Court’s alleged use of non-record material in reviewing his sentence; and (4) the constitutionality of jury instructions allegedly limiting consideration of non-statutory mitigating circumstances.
After a careful review of the entire record, including petitioner’s state trial transcript and the transcript of his federal habeas evidentiary hearing, we affirm the district court’s decision with respect to these claims. We are compelled, however, to re verse because of the trial judge’s inadequate findings of fact on the mitigating circumstances, as required by the Florida Death Penalty statute. It is impossible to determine whether petitioner’s sentence was the product of reasoned judgment rather than of caprice and arbitrariness, and thus whether it comports with the constitutional requirements expressed by the Supreme Court. See Gregg v. Georgia, 428 U.S. 153, 96 S.Ct. 2909, 49 L.Ed.2d 859 (1976); Proffitt v. Florida, 428 U.S. 242, 96 S.Ct. 2960, 49 L.Ed.2d 913 (1976); Furman v. Georgia, 408 U.S. 238, 92 S.Ct. 2726, 33 L.Ed.2d 346 (1972).
I. BACKGROUND
Petitioner was convicted of first degree murder and robbery for the July 15, 1975, killing of Julian Lanier. Petitioner apparently met Lanier for the first time at a bar on the evening of July 14, where they became acquainted over several drinks. Lanier asked petitioner if he knew of any women they could hire to engage in sexual relations. Petitioner and Lanier then traveled to another bar where they met two women, at least one of whom knew petitioner, and persuaded them to travel to a remote wooded area in Lanier’s motorhome. Both petitioner and Lanier were, apparently, quite intoxicated.
In the early morning hours of July 15, just as Lanier and one of the women were about to engage in sexual intercourse, petitioner, without provocation, screamed that Lanier was taking advantage of his sister and brutally attacked Lanier with his fists. Petitioner then slit Lanier’s throat with a knife. With the assistance of the two frightened women, petitioner dragged Lanier out of the motorhome to the woods and covered him, face down, with sticks and leaves. Hearing him breathing, petitioner, with one slice, severed Lanier’s spinal cord at the base of his neck. Petitioner and the two women returned to the motorhome, where they allegedly then found Lanier’s wallet and divided the money it contained.
Police, acting on information provided by the women, arrested petitioner on the day of the murder. Five days later petitioner gave the police a detailed confession of the crime. His subsequent motion to suppress the confession was denied. Petitioner’s appointed counsel then filed a suggestion of insanity, and three court appointed psychiatrists examined petitioner. Two of these psychiatrists had treated petitioner extensively before for emotional disturbances. All three determined that petitioner was competent to stand trial and that he was likely sane when he committed the crime. The court adopted the psychiatrists’ conclusions.
Petitioner was found guilty by a jury on October 3, 1975, of murder in the first degree, Fla.Stat.Ann. 782.04(1) (West Supp.1982), and of robbery. During the trial, Foster made a dramatic witness stand confession. The jury recommended the death penalty. Judge Spear sentenced petitioner to death on the murder charge and life imprisonment on the robbery charge. Petitioner’s motion for a new trial was denied. The Florida Supreme Court, in an automatic appeal mandated by Florida’s death penalty statute, affirmed petitioner’s conviction and sentence. Foster v. State, 369 So.2d 928 (Fla.1979). A motion for rehearing was denied, as was a petition for certiorari to the United States Supreme Court. 444 U.S. 885, 100 S.Ct. 178, 62 L.Ed.2d 1116 (1979).
On May 5, 1981, the Governor of Florida signed u death warrant ordering petitioner’s execution on June 3,1981. The Florida Circuit Court denied petitioner’s application for a stay of execution and motion for post-conviction relief on May 15, 1981. The Florida Supreme Court affirmed this decision on May 28, 1981. 400 So.2d 1 (Fla.1981).
The United States District Court for the Northern District of Florida granted a stay of execution when petitioner sought habeas relief from the district court. 515 F.Supp. 22 (N.D.Fla.1981). After a two day evidentiary hearing, the district court denied the petition for a writ. 517 F.Supp. 597 (N.D.Fla.1981). Petitioner appealed to this Court. After hearing oral argument in the case, we deferred consideration until this Court issued its en banc decision in Ford v. Strickland, 696 F.2d 804 (11th Cir.1983), because that decision addresses several issues which we face here. We now proceed to a consideration of each of petitioner’s claims.
II. INEFFECTIVE ASSISTANCE OF COUNSEL
Fourteenth Judicial Circuit Public Defender Virgil Mayo assumed representation of Foster’s case from an assistant about a month before the trial. Mayo has been a member of the Florida Bar since 1951. He has represented defendants at numerous criminal trials, having held the public defender's position since 1963. His experience with capital cases under the recently amended death penalty statute was limited, as was every other attorney’s at the time, although Mayo had tried cases under the old statute before it was invalidated by the Supreme Court’s decision in Furman v. Georgia. Mayo was assisted in the defense by Bill Wagers, a new assistant public defender, whom the district court noted was a highly competent criminal defense lawyer.
Foster asserts that his trial counsel rendered ineffective assistance at both the guilt and penalty phases. We turn to these contentions.
A. Guilt Phase
Petitioner alleges that his counsel failed to provide adequate representation during the guilt phase of his trial. He cites numerous instances of this alleged inadequacy, the most significant of which are that: (1) Mayo failed to inform the examining psychiatrist and the court of Foster’s “irrational behavior” exhibited at pre-trial conferences; (2) Mayo failed to challenge the psychiatrists’ reports on competency by interviewing the psychiatrists and requesting a competency hearing rather than merely submitting the competency issue on the basis of the reports; (3) Mayo failed to raise effectively the competency issue after the confession and after he discovered Foster’s use of Valium during the trial; and (4) Mayo failed to investigate and present an insanity defense.
In evaluating petitioner’s claim, we note that he was not entitled to, “errorless counsel, and not counsel judged ineffective by hindsight, but counsel reasonably likely to render and rendering reasonably effective assistance.” MacKenna v. Ellis, 280 F.2d 592, 599 (5th Cir.1960), modified, 289 F.2d 928 (5th Cir.), cert. denied 368 U.S. 877, 82 S.Ct. 121, 7 L.Ed.2d 78 (1961). In order to establish a claim of constitutionally deficient representation that may be redressed in a habeas action, petitioner must not only show ineffective assistance, he must also “demonstrate that the ineffective assistance created not only ‘a possibility of prejudice but that [it] worked to his actual and substantial disadvantage.’ ” Washington v. Strickland, 693 F.2d 1243, 1258 (5th Cir.1982) (Unit B, en banc), quoting United States v. Frady, 456 U.S. 152, 170, 102 S.Ct. 1584, 1596, 71 L.Ed.2d 816 (1982) (emphasis in original).
It is clear from the record that defense counsel performed his duties competently and conscientiously. Mayo did not fail to discover information that was necessary for the competent defense of Foster. The district court did not clearly err, based upon our review of the record, in finding that Mayo interviewed Foster’s mother and that he studied all the relevant medical records, including the psychiatric reports of Foster’s medical records at the hospitals and clinic where his emotional disturbances were treated. Mayo investigated adequately the competency issue.
Three psychiatrists examined Foster at the court’s request, two of whom, Dr. Mason and Dr. Sapoznikoff, had treated him extensively for prior episodes of emotional disturbance. The unanimity of the three professionals that Foster was competent to stand trial and legally sane at the time of the crime weighs heavily against the suggestion that Mayo, by requesting a hearing, somehow could have altered the outcome of the competency determination. Moreover, it does not appear that Mayo possessed any unique information that would have contributed measurably to the doctors’ or the court’s competency determinations. While Mayo’s testimony indicates he had serious doubts about Foster’s psychiatric health, the testimony does not demonstrate that Mayo believed Foster was legally incompetent to stand trial in Florida.
Nor did Mayo act inappropriately following Foster’s in-court confession. Mayo promptly raised the competency issue after the confession by moving for a continuance and additional psychiatric examinations. The denial of this motion should not reflect upon Mayo’s effectiveness in raising this issue. Nor is it apparent that Mayo should have challenged Foster’s competency to stand trial when he later learned that petitioner was taking Valium during the trial. The record fails to indicate that the district court erred in finding that Foster did not sleep through much of his trial and that, in light of Foster’s extensive history of prescription and nonprescription drug use, a dosage of 10 milligrams three times per day of a mild sedative had an insignificant effect on Foster’s ability to appreciate the surrounding events.
Petitioner also alleges that Mayo failed to investigate and present an insanity defense. The facts as found by the district court indicate that Mayo had no choice but to refrain from doing so. Mayo apparently favored presenting a second degree murder defense based upon a “depraved mind.” Mayo felt he could “sell” such a defense to the jury, based upon Foster’s unpredictable and disturbed past and the fact that the victim was drunk and engaging a prostitute at the time of the murder. Over the course of several pre-trial conferences, Mayo also explored with petitioner the consequences of pleading not guilty by reason of insanity. Foster rejected both of these defense strategies and insisted that he pin the blame on the two women present at the murder and attribute his inaction at the time of the killing to one of his infrequent epileptic fits. In light of Foster’s adamance, Mayo had an ethical obligation to comply with his client’s wishes and was thus unable to present an insanity defense. Petitioner, who preempted his attorney’s strategy choice, cannot now claim as erroneous the very defense he demanded Mayo present.
B. Sentencing Phase
Petitioner contends that Mayo failed to utilize properly his expert witness, Dr. Mason, to convey the impact of Foster’s mental illness upon Foster’s ability to appreciate the criminality of his conduct. Petitioner also urges that Mayo was ineffective because he failed to present testimony by friends and family of Foster’s “crazy behavior.” Thus, petitioner claims, the jury and the judge did not have before them crucial evidence supporting several mitigating circumstances.
Mayo put Foster’s ex-wife and Dr. Mason, the psychiatrist, on the stand during the sentencing phase. Foster’s ex-wife testified to Foster’s disturbed emotional state and Dr. Mason bolstered her testimony with medical corroboration of Foster’s illness. Also, Mayo introduced certain medical records into evidence, so that the jury had, during its deliberations, written evidence of Foster’s emotional health. In addition, the judge should have considered the pre-trial competency reports as part of the material adduced to support the existence of mitigating factors.
Mayo’s assessment of the Bay County, Florida, jury as more likely to respond to an appeal to emotion than to complicated medical proof, and his consequent presentation of the mitigating evidence in this manner, does not rise to the level of constitutionally ineffective assistance of counsel. The evidence Mayo in fact presented covered essentially the same subjects as that which petitioner would now have him present. Mayo’s choice to present mitigating evidence in the manner he did was a strategic decision informed by years of criminal practice in the region. Mayo’s assistance in this regard was not ineffective, nor did it work to petitioner’s actual and substantial disadvantage. Washington v. Strickland, 693 F.2d at 1260.
III. WEIGHT OF AGGRAVATING VS. MITIGATING CIRCUMSTANCES
Petitioner alleges that the failure of the court to instruct the jury that any aggravating circumstances must outweigh the mitigating circumstances “beyond a reasonable doubt” for the jury to suggest the death penalty is a denial of due process. Petitioner reasons that the conclusion that aggravating circumstances outweigh any mitigating circumstances is a fact “necessary to constitute the crime of” capital murder and therefore is subject to the due process requirement of In Re Winship, 397 U.S. 358, 364, 90 S.Ct. 1068, 1072, 25 L.Ed.2d 368 (1970), and its progeny of proof beyond a reasonable doubt.
This Court recently held that, under the Florida bifurcated death penalty trial which provides for guilt and penalty phases, the Florida sentencing determination is a separate proceeding dealing with facts that are not elements of the crime itself. Ford v. Strickland, 696 F.2d 804 at 817-19. Thus, a finding that the aggravating circumstances outweigh mitigating circumstances is not subject to the due process requirements of In Re Winship. The Ford court noted that the petitioner in that case seriously confused the proof of facts and the weighing of facts in sentencing. The court determined that the weighing process, “is not a fact susceptible of proof under any standard.... ” Id., at 818. The holding of the Ford court in this regard applies fully to petitioner’s claim in the instant action.
IV. THE BROWN ISSUE — NON-RECORD MATERIAL BEFORE THE REVIEWING COURT
Petitioner argues that the Florida Supreme Court relied on nonrecord information, such as psychiatric and pre-sentence investigation reports, in the direct review of his conviction and sentencing. Petitioner claims that this practice infringed on his constitutional guarantees including the right to due process of law, the effective assistance of counsel, confrontation, freedom from cruel and unusual punishment, and the protection against compelled self-incrimination. He argues that the use of this material runs afoul of the principles of Gardner v. Florida, 430 U.S. 349, 97 S.Ct. 1197, 51 L.Ed.2d 393 (1977) (petitioner was denied due process when death sentence was imposed, at least in part, on the basis of information that he had no opportunity to deny or explain).
The en banc court in Ford denied an identical claim in that action. The Ford court relied upon the Florida Supreme Court’s opinion in Brown v. Wainwright, 392 So.2d 1327, cert. denied, 454 U.S. 1000, 102 S.Ct. 542, 70 L.Ed.2d 407 (1981), to conclude that:
Even if members of the [Florida Supreme CJourt solicited the material with the thought that it should, would or might be used in the review of capital sentences, the decision of the Florida court that it should not be so used, the statement that it was not used, and the rejection of the notion that it affected the judgment of the court ends the matter when addressed at the constitutional level.
Ford v. Strickland, at 811. We therefore deny petitioner’s Brown claim in the instant action.
V. THE LOCKETT ISSUE-INSTRUCTIONS ON MITIGATING CIRCUMSTANCES
Petitioner’s final claim is that the trial judge’s instructions precluded the jury from considering non-statutory mitigating circumstances, in violation of the holding of Lockett v. Ohio, 438 U.S. 586, 98 S.Ct. 2954, 57 L.Ed.2d 973 (1978). The Supreme Court in Lockett held that the “Eighth and Fourteenth Amendments require that the sentencer not be precluded from considering, as a mitigating factor, any aspect of a defendant’s character or record and any circumstances of the offense the defendant proffers as a basis for a sentence less than death.” Lockett, 438 U.S. at 604, 98 S.Ct. at 964-65 (footnote omitted) (emphasis in original).
During the sentencing phase, the trial judge instructed the jury, “The aggravating circumstances which you may consider are limited to such of the following as may be established by the evidence.” The judge then read the statutory aggravating circumstances. He next instructed on the mitigating circumstances by stating, “[t]he mitigating circumstances which you may consider if established by the evidence are these.” The judge then read the seven statutory mitigating circumstances. Foster contends that this instruction was insufficient to permit the jury reasonably to understand that they were entitled to consider non-statutory .factors in mitigation of petitioner’s sentence. Petitioner claims that he adduced evidence of several non-statutory mitigating factors, including: his willingness to cooperate with the police and to confess the crime; the effect of alcohol, due to his mental illness, on petitioner’s ability to premeditate and possess the requisite intent to commit murder; and petitioner’s need for psychiatric treatment. The State of Florida argues that consideration of this issue is barred under the procedural default doctrine of Wainwright v. Sykes, 433 U.S. 72, 97 S.Ct. 2497, 53 L.Ed.2d 954 (1977), due to Foster’s failure to object at trial or to raise this issue on direct appeal.
The petitioner in Ford raised a similar Lockett claim. In Ford, the trial judge instructed the jury, “You shall consider only the following aggravating circumstances ...,” and read the statutory language. With regard to mitigating circumstances, he said, “You shall consider the following ...,” omitting the word “only” and reading the statutory mitigating circumstances. The Ford Court found that petitioner failed to meet the cause and prejudice exception to Sykes. The Court noted that petitioner’s trial occurred two years before Cooper v. State, 336 So.2d 1133, 1139 n. 7 (Fla.1976), cert. denied, 431 U.S. 925, 97 S.Ct. 2200, 53 L.Ed.2d 239 (1977), in which the Florida Supreme Court ruled explicitly that the jury could consider only statutory mitigating circumstances, and four years before Lockett, which provided a directly contrary resolution of the issue. Nonetheless, the Ford Court refrained from determining whether this constituted “cause” for petitioner’s state procedural default because the Court found that petitioner failed to meet the Sykes prejudice prong. The Court determined that the challenged jury instructions did not rise to the level of “actual and substantial disadvantage, infecting [the] entire trial with error of constitutional dimensions.” United States v. Frady, 456 U.S. 152, 170, 102 S.Ct. 1584, 1596, 71 L.Ed.2d 816, 832 (1982) (emphasis in original).
We note at the outset of our analysis that the proof of nonstatutory mitigating circumstances adduced by petitioner béars a striking resemblance to the statutory factors the jury indisputably could have considered. We thus treat all but one category of petitioner’s adduced proof as encompassed within the statutory mitigating cir cumstances. Petitioner’s proffered evidence of his willingness to confess and cooperate with the police is the only proof which raises the Lockett claim.
We are unable to conclude that Foster’s Lockett claim is controlled entirely by the Ford decision. The en banc Court in Ford did not reach the merits of the constitutionality of the jury instructions under Lockett. Despite the fact that the instructions in Ford and the instant action are virtually identical, several features of petitioner’s sentencing hearing militate against applying the Sykes bar to Foster’s claim. First, the case for cause is similarly strong here as it is in Ford. Foster’s trial occurred in 1975, one year before Cooper and three years before Lockett. It would be difficult to characterize the Lockett claim as “available” during petitioner’s trial, as the Supreme Court recently required to support a finding of procedural default:
Where the basis of a constitutional claim is available, and other defense counsel have perceived and litigated that claim, the demands of comity and finality counsel against labelling alleged unawareness of the objection as cause for a procedural default.
Engle v. Isaac, 456 U.S. 107, 134, 102 S.Ct. 1558, 1574-75, 71 L.Ed.2d 783 (1982).
The second reason for not applying the Sykes bar to Foster’s claim rests on the en banc court’s discussion of the trial judge’s order in Ford that, “[Tjhere are no mitigating circumstances existing — either statutory or otherwise — which outweigh any aggravating circumstances.” The en banc Court interpreted this statement as weighing in favor of the conclusion that the jury did not perceive a restriction on the use of any mitigating evidence and that there was a total absence of such evidence. There was no such indication in the instant action. In addition, as we discuss infra at n. 13, petitioner adduced substantial evidence of statutory mitigating factors. Thus, Ford is not necessarily dispositive of our resolution of the prejudice issue here because of this factual distinction.
While we conclude that the Ford decision does not prevent our examination of the merits of petitioner’s Lockett claim, we find that Foster has failed to adduce sufficient facts to overcome the Sykes prejudice prong in order to establish a constitutional claim deserving of redress in this habeas action. The only mitigating factor petitioner proffered, which was not already contemplated by the statutory categories, concerns his willingness to confess and cooperate with the police. The record contains only scant evidence to support this claim. Foster called the police to turn himself in only after investigators had already discovered blood soaked clothes in his bathtub. We decline to regard petitioner’s pretrial confession as a factor in mitigation of his crime because petitioner attempted to suppress this confession. Foster cannot in retrospect claim to. have cooperated once he lost his confession motion. Similarly, petitioner waited until he was deeply enmeshed in perjured testimony before he confessed on the witness stand. The circumstances of his confession during trial therefore fairly negate any inference of petitioner’s cooperativeness.
Because we are not persuaded that petitioner presented significant nonstatutory mitigating evidence that would justify our overturning the state court’s factual findings to the contrary, especially in light of the presumption of correctness that attaches to these findings under 28 U.S.C. § 2254(d), we conclude that petitioner’s Lockett claim is properly barred by the Sykes prejudice prong.
THE JUDGMENT OF THE TRIAL COURT DENYING THE WRIT IS AFFIRMED.
No member of this panel nor Judge in regular active service on the Court having requested that the Court be polled on rehearing en banc (Rule 35, Federal Rules of Appellate Procedure, Eleventh Circuit Rule 26), the Suggestion for Rehearing En Bane is DENIED.
. We restrict our consideration here to whether Mayo was ineffective and do not address the issue of whether Foster was indeed incompetent because that issue has not been raised properly before this Court.
. We reach this conclusion after conducting an independent analysis of the facts of this case, as this Court has required:
Whether counsel has rendered effective assistance is a mixed question of law and fact which requires the appellate court to independently apply legal principles to the district court’s findings of basic common historical facts of the case. Young v. Zant, 677 F.2d 792, 798. Thus, while we must defer to the district court’s finding as to what counsel did or did not do, absent a clearly erroneous determination, we independently evaluate whether counsel’s representation satisfied the standards of the Sixth and Fourteenth Amendments.
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10539716-10615 | KENNEDY, Circuit Judge.
This case requires us to decide whether the election of political party officers is arguably state action under 42 U.S.C. § 1983 for the purpose of an award of attorneys’ fees. The plaintiffs, four newly elected Republican precinct executives, filed suit alleging that the Republican Party of Hamilton County, Ohio, and various officials of the party had denied them the right to participate in the election of their respective ward chairmen and thereby violated section 1983. After the filing of the suit, the defendants agreed to hold new elections for ward chairmen. The plaintiffs then moved for the award of attorneys’ fees pursuant to 42 U.S.C. § 1988 claiming that their lawsuit was the catalyst for the Republican Party’s action. The District Court denied relief finding that the Republican Party’s actions did not constitute state action. 707 F.Supp. 323. We AFFIRM.
I.
On May 3, 1988, plaintiffs-appellants were selected as Republican precinct executives in Hamilton County, Ohio. The results of this election were officially certified by the Hamilton Board of Elections on May 19, 1988. Shortly after the election, Republican precinct executives selected their ward chairmen. The plaintiffs complain that they were not afforded the opportunity to vote for their respective ward chairman as provided for in the party constitution. These complaints are based on one of two allegations: (1) that some plaintiffs were not notified of the meetings to select ward chairmen; or (2) that other plaintiffs were denied the opportunity to participate in the circulation and signing of petitions for the selection of ward chairman because a majority of the precinct executives of their ward had already signed peti tions. The plaintiffs assert that they were excluded because they are sympathetic to the right-to-life movement, though they did not allege this in their complaint.
On the same day the complaint was received the chairman of the County Executive Committee called the plaintiffs’ counsel regarding the allegations. Rather than dispute the merits of the suit, the defendants volunteered to hold new election meetings. The parties did not enter into a formal, written settlement, however.
In Ohio the precinct executives of a county, taken as a group, form a party’s central committee for that county. The central committee is ultimately responsible for acting on behalf of the county party. Pursuant to Ohio law, the central committee of each party is also responsible for filling vacancies that occur in certain county offices formerly held by party members. Ohio Rev. Code Ann. § 305.02 (Anderson, 1987).
Under the constitution of the Republican Party of Hamilton County, the precinct executives of each ward are also responsible for electing a ward chairman. All of a county’s ward chairmen together form the Executive Committee of the County Central Committee. Ohio law mandates that the party elect an executive committee but does not specify the method of election. Ohio Rev.Code Ann. § 3517.03 (Anderson, 1988). The Executive Committee, in turn, is responsible for acting on behalf of the Central Committee during the intervals between the Central Committee meetings.
II.
In Johnston v. Jago, 691 F.2d 283, 286 (6th Cir.1982), this Court established a two-prong test for determining whether a party is a prevailing party within the meaning of section 1988 when a settlement of the suit has occurred. First, “a plaintiff must demonstrate that his or her lawsuit was eausally related to securing the relief obtained.” Second, the plaintiff must demonstrate that the defendant’s conduct is legally required by a federal civil rights statute. This second prong does not require a trial on the merits, “[r]ather, the trial court need only consider whether the plaintiff’s claim is ‘frivolous, unreasonable or groundless.’ ” Id. at 286 (citation omitted).
The District Court did not address the merits of the case under the first prong of this test but proceeded to the second prong. Since the claim for attorneys’ fees was made on the basis of the § 1983 cause of action, the court correctly determined that plaintiffs must allege that the defendants: (1) deprived the plaintiffs of some right or privilege secured by the constitution and laws of the United States; and (2) acted under color of state law. See, e.g., Graham v. NCAA, 804 F.2d 953 (6th Cir.1986). The court determined that the plaintiffs could not meet the state action requirements. Accordingly, the Court declined to award attorneys’ fees.
We need not decide whether the plaintiffs have established that they were deprived of a right protected under the constitution since we decide that the defendants did not act under color of state law. The plaintiffs claim that they have established a colorable claim of state action in two ways. First, they argue that the special powers granted to the county central committees of major political parties by the State of Ohio raises a colorable argument that all the actions of a committee constitute state action. We disagree. While section 305.02 delegates to the central committees of a state party the power to appoint certain county officials when a vacancy occurs, this does not mean that all actions of a central committee constitute state action. When performing the narrow duties assigned to it under section 305.02, the Cen tral Committee of the Republican Party may well be engaging in state action. State ex rel. Hayes v. Jennings, 173 Ohio St. 370, 374, 182 N.E.2d 546 (1962) (“[t]he power conferred by Section 305.02, Revised Code, upon central committeemen makes them public officers”); see also Smith v. Allwright, 321 U.S. 649, 663, 64 S.Ct. 757, 764, 88 L.Ed. 987 (1944) (“[t]he party takes its character as a state agency from the duties imposed upon it by state statutes; the duties do not become matters of private law because they are performed by a political party”). When engaging in party activities, such as electing ward chairmen, distinct from their official governmental duties, the members of the Central Committee do not continue to act under color of state law merely because they have some governmental duties. There must be some allegation that the activities directly influence the governmental duties.
It could be argued that the selection of the ward chairmen who together constitute the Executive Committee in some way influences the Central Committee in the exercise of its section 305.02 appointment power. The constitution of the Republican Party of Hamilton County undercuts this assertion, however. While the Executive Committee does take care of matters that arise between Central Committee meetings, it has no formal control over the Central Committee. The Central Committee elects officers separately from the Executive Committee. The party constitution does not grant Executive Committee members any additional authority within the Central Committee or any additional duties during Central Committee meetings because of their Executive Committee membership. Cf. State ex rel. McCurdy v. DeMaioribus, 9 Ohio App.2d 280, 283, 224 N.E.2d 353 (1967) (since central committeemen are public officials then the presiding officer of the Central Committee is also a public official). Finally, the constitution does not give the Executive Committee the right to veto any decision made by the Central Committee, much less the authority to veto an appointment decision made under the authority of section 305.02. Cf. State ex rel. Cain v. Kay, 38 Ohio St.2d 15, 19, 309 N.E.2d 860 (1974) (state party chairman is not a governmental official merely because county central committee exercises governmental functions).
The plaintiffs also suggest that since Ohio law mandates that the party elect an executive committee, the election itself is under color of state law. Again, we disagree. Initially, we express grave doubts that the statute is enforceable in light of the Supreme Court’s recent decision in Eu v. San Francisco County Democratic Central Comm., — U.S. -, 109 S.Ct. 1013, 1025, 103 L.Ed.2d 271 (1989) (“a State cannot substitute its judgment for that of the party as to the desirability of a particular internal party structure, any more than it can tell a party that its proposed communication to party members is unwise”). Further, merely because the Republican Party has chosen to do something that the state has required them to do does not mean that the voluntary action of the party becomes state action. See Eu, 109 S.Ct. at 1021 n. 15.
Second, the plaintiffs argue that the defendants act under color of state law in the same manner that the Texas Democratic Party and the Jaybird Association did in the so-called white primary discrimination cases, Terry v. Adams, 345 U.S. 461, 73 S.Ct. 809, 97 L.Ed. 1152 (1953), and Smith, 321 U.S. 649, 64 S.Ct. 757. In Terry, the Supreme Court held that the “Jaybird Association,” a private, all-white political club associated with the Democratic Party, so dominated the election process through its private primary that blacks were effectively disenfranchised. While there was no majority opinion, the important element to the case was that “[t]he Jaybird primary [had] become an integral part, indeed the only effective part, of the elective process that determines who shall rule and govern in the county.” 345 U.S. at 469, 73 S.Ct. at 813 (Black, J., announcing the judgment and writing an opinion in which Douglas, J., and Burton, J., joined). In Smith, the Supreme Court struck down the Texas Democratic Party’s whites-only primary voting policy. The Court reasoned that since the party primary was an integral part of the election process then blacks must be allowed to vote in order to secure their constitutional right to ballot access.
These cases are easily distinguishable from the case before us. The Supreme Court did not assert that the Jaybirds had become a state actor for every purpose, only that the Jaybirds were state actors, acting under color of state law insofar as they had been assigned an “integral part” in the election process, a governmental function. Other courts facing this question have reached similar conclusions.
The primary election cases do not hold that a political party is part of the state, or that any action by a political party other than conducting an election is state action.... The primary election cases merely hold that conducting an election is a governmental function and constitutes state action, no matter who actually conducts the election.
California Republican Party v. Mercier, 652 F.Supp. 928, 934 (C.D.Cal.1986).
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961393-3539 | SANBORN, Circuit Judge.
This appeal is from a judgment in an action at law tried to the court without a jury. There was no written nor oral stipulation waiving a jury, in accordance with chapter 357, 46 Stat. 486, 28 USCA § 773. There is no bill of exceptions, and the record contains only the pleadings, a motion to dismiss the plaintiff’s complaint, an opinion of the court below, and the judgment, in which is incorporated certain general findings. The judgment recites that the case was submitted to the court upon the pleadings, a motion of the defendant to dismiss, a complaint in intervention, and the arguments of counsel. The court below must have based the judgment upon admissions made by counsel in their arguments, since, upon the pleadings, neither party was entitled to judgment.
The complaint alleged, in substance, that the defendant (appellant), as representative of the estate of R. Carnahan, was indebted to the plaintiff (appellee) in the sum of $2,-000 with interest, on account of the estate’s ownership of twenty shares of stock of the National Bank of Arkansas, upon which stock an assessment of 100 per cent, had been duly levied by the Comptroller of the Currency; and that the plaintiff was indebted to the defendant in the sum of $1,639.94, which had been received by the bank from the estate, and which should be applied to the reduction of the estate’s liability growing out of the stock assessment. The answer denied that the estate owned the stock or was liable for the assessment levied thereon, asserted that no claim based upon such assessment had been filed against the estate in the probate proceedings in the probate court of Jefferson county, Ark., and alleged ¡that it had been determined by that court, in ¡a proceeding of which it had jurisdiction and which was between the same parties and involved the same subject-matter, that the $1,639.94 due the estate from the bank should not be applied in reduction of any liability of the estate on account of the assessment.
There were, therefore, several clear-cut issues of fact and law presented by the pleadings :
1. Did the estate of Carnahan own twenty shares of the stock of the bank at the time the assessment was made ?
2. Was the estate liable to the plaintiff, he having failed to file a claim against the estate in the probate proceedings?
3. Was the $1,639.94, which it was conceded that the plaintiff owed the estate, to be applied to the reduction of the stockholder’s liability of the estate, if any existed, in view of the order of the probate court with respect thereto?
None of the specifications of error relate to any questions arising upon the primary record.
The first specification charges that the court erred in making a certain finding. The record fails to show the finding complained of. Moreover, the findings of the court or the refusal of the court to make findings could not be challenged upon the record before us. Manzo et al. v. United States (C. C. A. 8) 66 F.(2d) 579, 581; Desha County, Ark. v. Crocker First National Bank (C. C. A. 8) 72 F.(2d) 359, 360; Arthur C. Harvey Co. v. Malley et al., Former Collectors, 288 U. S. 415, 53 S. Ct. 426, 77 L. Ed. 866.
The other specifications, with the exception of the last specification, challenge “holdings” of the court. These obviously refer to the reasons which are given in the opinion for the conclusion reached.
In the case of E. R. Squibb & Sons v. Mallinckrodt Chemical Works (C. C. A. 8) 69 F.(2d) 685, 686, this court said, with reference to such assignments:
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11590964-14560 | BEEZER, Circuit Judge:
The district court entered judgment in which John Doe (“Doe”), a juvenile, is determined to be a juvenile delinquent. The court found that Doe knowingly imported merchandise (marijuana) subject to seizure in violation of 18 U.S.C. § 545. On appeal, Doe challenges the sufficiency of the certification that allowed him to be prosecuted in federal court. Doe also asserts that his confession should be suppressed both because he requested counsel and because the government failed to notify his mother of his Miranda rights. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm.
I
At approximately 8:00 a.m. on October 15, 1997, customs inspectors stopped the van Doe attempted to drive into California from Mexico. Inspectors discovered more than 100 pounds of marijuana in the van and detained Doe and his two companions traveling with him. Doe was placed in a holding cell.
Around 9:30 a.m., United States Customs Service Special Agent James Plitt (“Plitt”) encountered Doe, introduced himself and informed Doe of the large amount of narcotics recovered from the van. Before Plitt could begin to explain the booking process or to interrogate Doe, Doe asked him, “What time will I see a lawyer?” Plitt responded that Doe could see an attorney within two days if the state prosecuted him and within one day if the federal government prosecuted him. Plitt advised Doe that he did not have to make any statements in the meantime, that Plitt would review Doe’s rights with him in detail a little later and that, other than providing some preliminary biographical information, Doe did not have to make any statements.
Following an unsuccessful attempt to contact Doe’s mother, Plitt left a message with a family member, explaining Doe’s custody. At approximately 12:30 p.m., Doe’s mother returned the call. Using a second family member as an interpreter, she spoke with Plitt. Plitt explained the circumstances under which Doe had been detained. Plitt did not inform her of Doe’s Miranda rights.
Plitt took Doe to the interrogation room at approximately 2:00 p.m., formally arrested him and read him his Miranda rightá. Doe indicated that he understood his rights and initialed an adviee-of-rights form. Before Plitt could ask any substantive questions, Doe asked Plitt what would happen to his companions. Plitt explained that he could not answer that question until he had all of the facts. Doe inquired whether, if he answered Plitt’s questions, Plitt could guarantee that his companions would be released. Plitt informed Doe that he could make no guarantees and that Doe’s decision to answer any questions would have to be independent of any guarantees, deals or coercion. Doe asked whether any information he provided would assist his companions’ release. Plitt reiterated his earlier answer. Over the course of the next 30-45 minutes, Doe answered Plitt’s questions and explained his involvement in the smuggling. Plitt testified that Doe appeared somewhat nervous, but not frightened.
Between 4:00 and 4:30 p.m., Doe’s mother arrived. Shortly thereafter, Plitt reviewed Doe’s notice to appear in court, first with Doe alone and then with Doe and his mother. Plitt explained the notice and recommended that Doe seek counsel prior to his appearance. Plitt arranged for Doe to leave with his mother, instead of being taken to juvenile detention.
The government filed a three-count Superseding Information (“the Information”), signed by a Special Assistant United States Attorney, which charged Doe with juvenile delinquency for importing marijuana, possessing marijuana with intent to distribute, and importing merchandise subject to seizure. Attached to the Information was a Certificate signed by the United States Attorney, attesting that state juvenile court had “declined” to assume jurisdiction over Doe.
The district court denied Doe’s motion to suppress his confession. Although the court concluded that Plitt’s failure to notify Doe’s mother about Doe’s Miranda rights was a statutory violation, it determined that this error was harmless and that Doe’s confession was knowing, intelligent and voluntary. Following a bench trial, the district court found Doe guilty beyond a reasonable doubt for importing merchandise subject to seizure and adjudged Doe a juvenile delinquent. The court sentenced Doe to serve time in a treatment center and placed Doe on probation until the conclusion of his minority.
II
To prosecute a juvenile in federal court, the government must follow the certification procedures required by 18 U.S.C. § 5032. Certification is a jurisdictional requirement. See United States v. Doe (“Doe II”), 98 F.3d 459, 460 (9th Cir.1996). We review de novo whether a certification complies with the requirements of § 5032. See id. We conclude that the government met the certification requirements here.
The Certificate recites that the state “declined” to prosecute Doe. Section 5032 requires that the state must “refuse[ ]” to prosecute a juvenile. Doe asserts that the use of “declined” rather than “refused” renders the certification invalid. We disagree. In applying § 5032, federal courts “refuse to elevate form over substance.” United States v. White, 139 F.3d 998, 1002 (4th Cir.), cert. denied, — U.S. -, 119 S.Ct. 343, 142 L.Ed.2d 283 (1998). In United States v. Allen, 574 F.2d 435, 438 (8th Cir.1978), the Eighth Circuit paraphrased § 5032 as requiring certification that the appropriate state court “declines jurisdiction.” In United States v. Hill, 538 F.2d 1072, 1076 (4th Cir.1976), the Fourth Circuit approved a § 5032 Certificate asserting that the state court “would decline to accept jurisdiction.” The Certificate in the instant case was not defi-ciently worded.
Doe also asserts that the certification is invalid because the United States Attorney signed the Certificate but not the accompanying Information. We have held that the language of § 5032 and 28 C.F.R. § 0.57 are violated where a Certificate is signed by an Assistant United States Attorney rather than a United States Attorney. See Doe II, 98 F.3d at 461. In this case, however, the United States Attorney, the person “in whom the power to decide whether the United States will proceed against a juvenile is vested,” id., signed the Certificate. His signature on the Certificate insures that the duly authorized official decided to prosecute the juvenile in the federal system and fulfills the requirements of the statute and its accompanying regulation. Cf. United States v. Wellington, 102 F.3d 499, 504 (11th Cir.1996) (holding that where the “purpose of the certification requirement has been satisfied by an authorized person making the decision to file,” the certification is valid). We will not create an additional requirement that the charging document must also be signed by an official authorized to sign the Certificate. The absence of the United States Attorney’s signature on the Information does not invalidate the certification.
III
We reject Doe’s argument that he invoked his Fifth Amendment right to have counsel present during the interrogation. There is no dispute as to the words Doe used: “What time will I see a lawyer?” We review de novo whether these words invoke the right to counsel. See United States v. Ogbuehi 18 F.3d 807, 813 (9th Cir.1994). In particular, we examine whether a suspect “articulate[d] his desire to have counsel present sufficiently clearly that a reasonable police officer in the circumstances would understand the statement to be a request for an attorney.” Davis v. United States, 512 U.S. 452, 459, 114 S.Ct. 2350, 129 L.Ed.2d 362 (1994). We conclude that Doe did not invoke his right to have counsel present during interrogation.
Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966), protects a “suspect’s ‘desire to deal with the police only through counsel.’ ” McNeil v. Wisconsin, 501 U.S. 171, 178, 111 S.Ct. 2204, 115 L.Ed.2d 158 (1991) (quoting Edwards v. Arizona, 451 U.S. 477, 484, 101 S.Ct. 1880, 68 L.Ed.2d 378 (1981)). Miranda applies only where a suspect requests “the particular sort of lawyerly assistance that is the subject of Miranda,” namely, assistance during interrogation, not assistance in the subsequent judicial process. McNeil, 501 U.S. at 178, 111 S.Ct. 2204. A statement concerning an attorney made before interrogation begins is far less likely to be a request for attorney assistance during interrogation than a similar statement made during custodial interrogation. See Grant-Chase v. Commissioner, New Hampshire Dep’t of Corrections, 145 F.3d 431, 436 n. 5 (1st Cir.), cert. denied, — U.S. -, 119 S.Ct. 361, 142 L.Ed.2d 298 (1998); see also United States v. Scurlock, 52 F.3d 531, 537 (5th Cir.1995) (defendant’s pre-interrogation request for an attorney “could reasonably be understood to be a recognition by the defendant of her need for an attorney in the future_”). Here, Doe questioned Plitt about an attorney before being read his Miranda rights, before being interrogated and even before biographical questioning began. Plitt’s response addressed when, in the course of the judicial process, Doe would be appointed counsel. We conclude that Doe’s question was an inquiry regarding the time at which appointed counsel would be made available. Plitt was not required to forgo interrogation.
IV
We next decide whether Plitt’s failure to explain Doe’s Miranda rights to Doe’s mother before the interrogation violates the requirement of 18 U.S.C. § 5033 that arresting officers notify parents of the rights of the juvenile. We determine that Plitt’s failure to advise her of Doe’s Miranda rights violates § 5033; however, we conclude that this violation was harmless and does not require suppression of Doe’s confession.
A
Whether § 5033 requires an arresting officer to notify a juvenile’s parents of the juvenile’s Miranda rights prior to interrogation is a question of first impression. Section 5033 requires an arresting officer immediately to advise the juvenile of his legal rights and immediately to notify the juvenile’s parents that the juvenile is in custody. It also requires the arresting officer to notify the juvenile’s parents of the juvenile’s rights and of the nature of the alleged offense. Section 5033 does not identify which rights need be explained to parents or the timing of any such explanation. We conclude that parental notification of the juvenile’s Miranda rights must be given contemporaneously with the notification of custody.
The government argues that Congress did not intend to require parental notification of juveniles’ pre-judicial rights, such as Miranda, when it modified § 5033. There is some support for this position. In 1967, the Supreme Court held that adjudications of juvenile delinquency “must measure up to the essentials of due process....” In re Gault, 387 U.S. 1, 30-31, 87 S.Ct. 1428, 18 L.Ed.2d 527 (1967) (internal quotation marks omitted). Gault concerned only “the right to notice of judicial proceedings,” Harris, 93 F.3d at 585-86, not, as here, rights regarding pre-judicial proceedings. In 1974, Congress amended § 5033 in response to Gault’s concern with the lack of due process protections in juvenile proceedings. See S.Rep. No. 93-1101 (1974), reprinted in 1974 U.S.C.C.A.N. 5283, 5312. In doing so, Congress did not “extend Gault’s due process requirement to the pre-judicial stages of the juvenile process.” Doe III, 155 F.3d at 1076. Congress may not have intended to address Miranda in promulgating the current version of § 5033.
In a related context, Congress in 1968 passed 18 U.S.C. § 3501, which addresses the admissibility of confessions in federal court. Whatever the impact of § 3501 on Miranda, it is “perfectly clear that Congress enacted § 3501 with the express purpose of legislatively overruling Miranda. United States v. Dickerson, 166 F.3d 667, 686 (4th Cir.1999). Thus, the argument continues, maintaining that § 5033 requires law enforcement officials to notify a juvenile’s parents of that juvenile’s Miranda rights imputes to Congress an intent to extend Miranda only six years after Congress attempted to overrule Miranda.
Nevertheless, we conclude that § 5033 requires the government to inform the juvenile’s parents of the juvenile’s Miranda rights. First, the text requires the arresting officer-not a subsequent official who might handle the judicial phases of the matter-to carry out all of the notification requirements listed in the lead paragraph of § 5033. The statute also requires immediate parental notification as to the existence of initial custody; failing to include Miranda information would undermine the value of such a requirement. Second, our interpretation of § 5033’s parental notification requirement stresses that such parental communication “must have substantive content....” United States v. Doe, 862 F.2d 776, 779 (9th Cir.1988) (“Doe I ”). Advising the parent of the juvenile’s Miranda rights prior to interrogation is among the most substantive information an arresting officer can communicate to the parent.
Third, courts have recognized that children need parental involvement during interrogation. For example, the Supreme Court has noted that unique concerns arise in the context of interrogating juveniles. See, e.g., Gault, 387 U.S. at 55, 87 S.Ct. 1428 (“special problems may arise with respect to [a juvenile’s] waiver” of the right to have counsel present during questioning); Haley v. Ohio, 332 U.S. 596, 600, 68 S.Ct. 302, 92 L.Ed. 224 (1948) (stressing a minor’s need for “counsel and support if he is not to become the victim first of fear, then of panic” during interrogation). We have expressed apprehension over “parents concerned with protecting the interests of their children” being left in the dark during interrogation. Harris, 93 F.3d at 585. The Seventh Circuit has noted that a “parent may significantly aid a juvenile in asserting his Fifth Amendment privilege.” United States ex rel. Riley v. Franzen, 653 F.2d 1153, 1160 (7th Cir.1981). We conclude that § 5033 requires the arresting officer to inform parents of a juvenile’s Miranda rights. To ensure that this requirement provides meaningful protection, we further hold that notifying a parent of the juvenile’s Miranda rights must be given contemporaneously with the notification of custody.
B
We next consider whether the government’s violation of § 5033 affected Doe’s waiver of his Miranda rights. We conclude, as a matter of law, that Doe’s statements were properly admitted and that the violation was harmless.
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5549496-15938 | ORDER ON APPEAL FROM BANKRUPTCY COURT’S RULING
LARRY J. McKINNEY, District Judge.
This is an appeal from a ruling in the Bankruptcy Court brought by appellant, John Francis Beale (“Beale”), pursuant to 28 U.S.C. § 158. Specifically, Beale challenges the Bankruptcy Court’s decision that a debt owed to his ex-wife, Catherine A. Kurtz (“Kurtz”), is non-dischargeable.
For the reasons discussed herein, the ruling in the Bankruptcy Court is AFFIRMED.
I. BACKGROUND
The relevant history regarding the debt in question dates back to the time of Beale’s divorce from Kurtz. Beale and Kurtz executed a Property Settlement Agreement in January 2005. See PL’s Ex. 12. Pursuant to the terms of that agreement, Kurtz would receive, inter alia, a 2003 Jeep Cherokee (“the Jeep”) and Beale was expected to make his best efforts to refinance the vehicle, be responsible for the same, and hold Kurtz harmless on the debt. Among other things, Beale received the marital home, but he was obligated to pay Kurtz $3,600.00 for draperies that Kurtz purchased on her credit card for the marital home. This arrangement for the distribution of assets was approved and adopted by the Vigo Superi- or Court on February 1, 2005, when it entered the Decree of Dissolution dissolving the couple’s marriage. See PL’s Ex. 11.
Approximately four and a half months after the Decree of Dissolution was entered, Beale and Kurtz signed an agreement whereby Kurtz would relinquish the $3,600.00 credit card debt in exchange for Beale’s agreement to finance the trade-in of the Jeep for a 2005 Dodge Grand Caravan. See PL’s Ex. 16. They also both signed a Retail Installment Contract and Security Agreement with Vigo Dodge, Inc., for the new vehicle. See PL’s Ex. 17. The amount financed was the same amount of the debt owed on the Jeep, $15,981.00. See Trial Tr. at 67-68; PL’s Ex. 17. In addition, Kurtz was required to make a cash down payment of $5,551.25 for the new vehicle. See id.
On October 15, 2005, less than four months after the trade-in of the Jeep and signing of the Retail Installment Contract and Security Agreement, Beale filed a Petition for Chapter 7 Bankruptcy seeking to discharge his debts, including the one owed to Kurtz for the Jeep. Kurtz brought an adversary proceeding against Beale, opposing the attempt to discharge the debt owed to her on the basis that the debt was non-dischargeable pursuant to 11 U.S.C. § 523(a)(15). Following a trial, the Bankruptcy Court agreed with Kurtz and concluded that the debt owed to Kurtz was non-dischargeable under § 523(a)(15) and ordered Beale to pay it. This appeal followed.
II. APPLICABLE STANDARDS OF REVIEW
When reviewing a decision of the Bankruptcy Court, this Court acts as an appellate tribunal and is governed by the traditional standards of appellate review. Specifically, the Court “is constrained to accept the [Bankruptcy [CJourt’s findings of fact unless they are clearly erroneous.” In re Excalibur Auto. Corp., 859 F.2d 454, 457 n. 3 (7th Cir.1988). See also In re FedPak Sys., Inc., 80 F.3d 207, 211 (7th Cir.1996); In re Longardner & Assocs., Inc., 855 F.2d 455, 459 (7th Cir.1988). “A finding is clearly erroneous if upon review of the entire record the reviewing court is left with the definite and firm conviction that a mistake has been committed.” Graham v. Lennington, 74 B.R. 963, 965 (S.D.Ind.1987). “Generally, as long as the bankruptcy judge’s inferences are reasonable and supported by the evidence, they will not be disturbed.” Id.
Conclusions of law made by the Bankruptcy Court, however, must be reviewed de novo. See Excalibur Auto. Corp., 859 F.2d at 457 n. 3 (citing In re Kimzey, 761 F.2d 421, 423 (7th Cir.1985)); Longardner & Assocs., Inc., 855 F.2d at 459. Likewise, where the challenged finding is a mixture of law and fact, the clearly erroneous standard is also inapplicable. See Graham, 74 B.R. at 965.
With these general standards in mind, the Court addresses the issues raised in the instant appeal.
III. DISCUSSION
Beale raises three questions on this appeal: whether the Bankruptcy Court erred by (1) concluding that the debt owed to Kurtz was non-dischargeable under § 523(a)(15); (2) admitting certain evidence regarding Beale’s ability to pay the debt; and (3) finding that Beale did not satisfy his burden of establishing that the debt should be discharged pursuant to § 523(a)(15)(B). The Court addresses each of these issues in turn.
A. WHETHER THE DEBT WAS NON-DISCHARGEABLE UNDER § 523(a)(15)
Beale first argues that the Bankruptcy Court erred in finding the debt non-dis-chargeable under § 523(a)(15). Beale argues that the debt arises from an agreement that was unrelated to the Property Settlement Agreement and which actually extinguished the obligations under that agreement. In addition, he contends that the statutory provision should be strictly construed against Kurtz. In response, Kurtz contends that the provision applies because the debt was made in connection with or related to the Decree of Dissolution and Property Settlement Agreement, and she asserts that Beale’s extinguishment argument fails because the later agreement in no way evinces an intent to replace the Property Settlement Agreement in its entirety. This Court agrees with Kurtz.
First, under normal circumstances an exception to a discharge provision is strictly construed against a creditor and requires the creditor to prove by a preponderance of the evidence that a debt is not dischargeable. However, this general policy does not hold true when a debt arises from a divorce or separation agreement. When that happens, the policy is “tempered” and the exception is construed more liberally in favor of the creditor. See In re Crosswhite, 148 F.3d 879, 881-82 (7th Cir.1998). This shift reflects a longstanding policy of protecting a debtor’s former spouse and children. See id. at 882 (noting that legislative history of § 523(a)(15) reveals the same policy interest that is found in § 523(a)(5)). Thus, Beale is incorrect to insist that the statute- ry provision be strictly construed against Kurtz.
Further, the Court agrees with the Bankruptcy Court that the debt in question falls under subsection (a)(15). That provision applies to property settlement debts that are incurred “in the course of a divorce or separation agreement or in connection with a separation agreement, divorce decree or order a court of record....” 11 U.S.C. § 523(a)(15). This provision is intended to cover divorce-related debts that “ ‘should not justifiably be discharged.’ ” In re Crosswhite, 148 F.3d at 882 (quoting King, Collier on BANKRUPTCY ¶ 523.21). This Court agrees with the Bankruptcy Court’s prior decision in Boyd-Smith v. Brock (In re Brock), 227 B.R. 813, 814 (Bankr.S.D.Ind.1997), where the court concluded that the plain language of this provision indicates that it applies when the parties entered into an agreement regarding a marital debt or where the dissolution court orders one of the parties to pay a marital debt.
Applying this understanding to the debt in question, the Court concludes that the debt is covered by subsection (a)(15). Beale was ordered by the dissolution court to make his best efforts to refinance the vehicle and to hold Kurtz harmless on the debt. He opted to buy himself a new vehicle and then later agreed to finance the trade-in of the Jeep for a 2005 Dodge Grand Caravan and be responsible for the debt, which was the same amount as that owed on the Jeep. In exchange, Kurtz agreed to relinquish another debt that Beale owed. The agreement specifically referenced the decree of dissolution. See PL’s Ex. 16.
Based on the foregoing, the Court has no trouble concluding that the agreement concerned a marital debt. Beale essentially agreed to remain responsible for the amount that he was obligated to pay via the new loan, which, practically speaking, resulted in a refinancing of the old loan. The debt was certainly related to the old one, and the circumstances suggest that the debt is one from which Beale should not justifiably be discharged because it would be unfair to release him from an obligation that he reaffirmed.
Moreover, the Court is unpersuaded by Beale’s reliance on state law to support his claim that the old debt was extinguished. Beale’s argument rests on Indiana law governing novations and substituted contracts. One of the elements of the applicable test is that there must be an extin-guishment of the old contract in favor of the new one. See, e.g., Winkler v. V.G. Reed & Sons, Inc., 638 N.E.2d 1228, 1233 (Ind.1994); Calvary Temple Church, Inc. v. Paino, 827 N.E.2d 125, 136 (Ind.Ct.App.2005) (applying novation test to a substituted contract). Here, the new agreement does not express an intent to extinguish the Property Settlement Agreement or to replace all of its provisions. Instead, it simply involved two of those provisions: the credit card debt for the draperies in the marital home and the Jeep. Moreover, Kurtz did not relinquish Beale from his obligation concerning the Jeep. Therefore, the Court finds that Indiana law on nova-tions and substituted contracts does not apply in this case and that Beale’s reliance on that law is misplaced.
In summary, the Court concludes that Beale has failed to demonstrate that the Bankruptcy Court erred in finding the debt non-dischargeable under § 523(a)(15).
B. ADMISSION OF EVIDENCE
Beale next challenges the Bankruptcy Court’s admission of several exhibits, specifically Plaintiffs Exhibits 8, 9, 10, 13, 14, and 21. These exhibits are financial state- merits for Beale’s bank and retirement accounts. Beale claims that the exhibits contain inadmissible hearsay and that Kurtz failed to lay any foundation for their admission.
As an initial matter, the Court notes that the Bankruptcy Court indicated that it relied on witness testimony to reach its conclusions rather than the exhibits. See Trial Tr. at 129. Thus, any error in the admission of the exhibits was harmless. In fact, the admission of at least one of the exhibits, Exhibit 13, was particularly harmless because the information contained therein was duplicative of some of the same information contained in Beale’s own exhibit. Compare PL’s Ex. 13 with Def.’s Ex. B. Notwithstanding the harmlessness of the admission of the exhibits in this case, the Court concludes that the Bankruptcy Court did not abuse its discretion in admitting the documents.
First, there is no issue regarding the authenticity of the documents. Beale admitted that the records were from his financial institutions and that he provided them to Kurtz during discovery. As the Seventh Circuit has noted, “the very act of production [i]s implicit authentication.” United States v. Brown, 688 F.2d 1112, 1115-16 (7th Cir.1982). Therefore, there is no question that the records are what they purport to be.
Further, even though the documents may contain hearsay, there was no abuse in admitting them. Federal Rule of Evidence 803(6) provides an exception to the hearsay rule for business records. As the Fifth Circuit has observed, the issue of admissibility under this provision is largely a matter of trustworthiness. See Mississippi River Grain Elevator, Inc. v. Bartlett & Co., Grain, 659 F.2d 1314, 1319 (5th Cir.1981) (quoting United States v. Veytia-Bravo, 603 F.2d 1187, 1191-92 (5th Cir.1979), cert denied, 444 U.S. 1024, 100 S.Ct. 686, 62 L.Ed.2d 658 (1980)). In addition, the Tenth Circuit has recognized that “a foundation for admissibility may at times be predicated on judicial notice of the nature of the business and the nature of the records as observed by the court, particularly in case of banks and similar statements.” Fed. Deposit Ins. Corp. v. Staudinger, 797 F.2d 908, 910 (10th Cir.1986) (quoting 4 Jack B. Weinstein, Weinstein’s Evidence ¶ 803(6)[02] (1985)). See also United States v. Johnson, 971 F.2d 562, 571 (10th Cir.1992) (providing that “bank records are particularly suitable for admission under Rule 803(6) in light of the fastidious nature of record keeping in financial institutions, which is often required by governmental regulation”). Finally, the Court is cognizant of the general purpose of the hearsay rules to preclude the admission of evidence that is considered to be less reliable than in-person testimony while not frustrating justice by preventing the admission of evidence that can be deemed trustworthy and reliable. See United States v. Hernandez, 333 F.3d 1168, 1179 (10th Cir.2003); Prudential Ins. Co. v. Kaltofen, No. 90-3750, 1991 WL 275581, *8 (7th Cir. Dec. 23, 1991) (unpublished decision).
Here, the nature of the exhibits and the circumstances under which they were received was sufficient to establish their status as business records kept in the ordinary course of business, and there is no concern regarding their trustworthiness. Beale acknowledged that the exhibits were statements from his banks and retirement account, and there is no serious dispute regarding the transactions that are reflected on the exhibits. It is common knowledge that such statements on financial accounts are prepared daily and that they consist of debit and credit entries based on the deposits received, withdrawals or distributions made, and any service charges to the account. While mistakes may be made in such entries, such matters may be developed on cross-examination and should not affect the admissibility of the statements themselves. Indeed, the accuracy of the documents goes to their weight rather than their admissibility.
Even if the business records exception does not strictly apply, the exhibits could have been admitted under the residual exception. See Fed.R.Evid. 807. As noted, the circumstances underlying the documents demonstrate their trustworthiness, and there is no question that the documents were probative on the issues under subsections (a)(15)(A) and (a)(15)(B). Accordingly, for all of the foregoing reasons, the Court concludes that the Bankruptcy Court did not abuse its discretion in admitting the exhibits.
As a final matter, the Court pauses to note with some concern Beale’s suggestion that the Bankruptcy Court improperly concluded that he had the ability to pay the debts based on social security funds. See Appellant’s Br. at 8 (Docket No. 6). A review of the transcript reveals that Beale’s suggestion is inaccurate. The Bankruptcy Court specifically concluded that Beale had the ability to repay the debt based on his pension. See Trial Tr. at 129. Thereafter, the Bankruptcy Court simply noted in passing that Beale would be eligible for social security in a few years. See id. Thus, Beale’s suggestion misstates the Bankruptcy Court’s actual conclusion, and counsel is advised not to take such liberties with his representations to this Court in the future.
C. THE BANKRUPTCY COURT’S CONSIDERATION UNDER § 523(a)(15)(B)
Beale’s final issue involves the Bankruptcy Court’s determination under § 523(a)(15)(B). Beale devotes a single paragraph to this issue and contends that the Bankruptcy Court failed “to apply the balancing test to determine the relative ability of the parties to pay.” . Appellant’s Br. at 9 (Docket No. 6). Beale argues that the record reveals that he cannot pay the debt but that Kurtz is able to pay the debt. See id. Therefore, Beale concludes that the Bankruptcy Court should have found the debt dischargeable pursuant to § 523(a)(15)(B). See id.
As an initial matter, the Court notes that Beale has not specifically raised an issue under subsection (a)(15)(A) regarding the Bankruptcy Court’s conclusion that Beale was able to pay the debt from his pension. Instead, he focuses exclusively on the balancing test under subsection (a)(15)(B). Therefore, the Court concludes that Beale has waived any issue with respect to the Bankruptcy Court’s determination that he has funds to pay the debt. Thus, this Court will only consider the Bankruptcy Court’s decision as it relates to subsection (a)(15)(B).
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1018074-15664 | OPINION
MARGOLIS, Senior Judge.
This contract action is before the Court on defendant’s motion for summary judgment pursuant to Rule 56 of the Rules of the United States Court of Federal Claims (“RCFC”). Plaintiff, a former United States Drug Enforcement Administration (“DEA”) informant, claims that he was promised by the government, in return for the information he provided, a certain percentage of the value of any property seized as a result of that information. He asserts that he is entitled to relief because the government failed to compensate him as promised. Defendant denies that the United States entered into any contractual agreement with plaintiff in which it agreed to give monetary compensation in return for his information. After consideration of the parties’ written and oral arguments, defendant’s motion for summary judgment is GRANTED.
FACTS
On July 22, 1996, the Puerto Rico Department of Justice, Special Investigations Bureau (“NIE”) arrested plaintiff—who is using the fictitious name “Dick Tracy” in order to protect his identity—for his alleged involvement in a drug trafficking transaction. At the time of his arrest, plaintiff was reportedly holding a substantial amount of cocaine and firearms, and he was, therefore, charged with drug trafficking and firearms offenses. Plaintiff subsequently agreed to cooperate with Puerto Rican judicial authorities and their investigators in exchange for a dismissal of his pending criminal charges.
Several months later, plaintiff agreed to cooperate with the DEA, and was therefore processed as a DEA confidential source by NIE Special Agent Edwin Gonzalez, who was a deputized task force officer with the DEA. Plaintiff claims that the agreement with the DEA was independent of his earlier agreement to cooperate with NIE, and that his cooperation with the DEA had nothing to do with the dismissal of his criminal charges. Instead, he maintains that he agreed to provide information to the DEA only after Gonzalez promised that plaintiff would receive a percentage of the value of any property that was seized due to information that he provided. Plaintiff also claims that this oral agreement was later verbally ratified by several DEA officers, including Jesus Marrero, Edwin Gonzalez, James Y. Clifford, Ivan Rios, Dirk Lamagno, and by U.S. Attorney Guillermo Gil.
Defendant, however, asserts that plaintiffs cooperation with the DEA was a part of the original agreement into which plaintiff had entered with NIE. According to the defendant, although at some point Special Agent Gonzalez did tell plaintiff that an award may be possible if the United States seized property from a target of the investigation, at no point did he promise such a payment, and he specified that no such payment could be made without authorization from the appropriate supervisors. In addition, defendant maintains that U.S. Attorney Guillermo Gil believes that the agreement to cooperate with the DEA was in return for the dismissal of the criminal charges and that he has no knowledge of any offer of payment or award to plaintiff. Furthermore, defendant argues that none of the people with whom the plaintiff claims to have contracted had either actual or implied authority to contract on behalf of the government.
In June 2000, plaintiff brought action in the United States District Court for the District of Puerto Rico, claiming that the DEA owed him money in return for the information that he provided. The district court dismissed his claim for lack of jurisdiction, refusing to transfer it to this Court. Dick Tracy v. United States, No. 00-1754(HL) (D.P.R. Oct. 30, 2000). Plaintiff then brought action in this Court seeking to enforce the compensation promises allegedly made to him. He asserts that, by refusing to compensate him, defendant is in breach of a verbal contract in which defendant allegedly agreed to give him a percentage of the value of the seized property as consideration for his information and that defendant is therefore violating 28 U.S.C. § 524(c)(1)(B) and (C). Defendant filed a motion for summary judgment maintaining that defendant is entitled to judgment as a matter of law because the individuals who plaintiff claims entered into the contract with him on behalf of defendant deny that they entered into such an agreement and, in any event, did not possess authority to enter into contracts on behalf of the United States.
DISCUSSION
The government moves for summary judgment, claiming that there are no genuine issues of material fact in dispute and that, therefore, defendant is entitled to judgment as a matter of law. Summary judgment is appropriate “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” RCFC 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A material fact is one that will affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The movant for summary judgment bears the burden of demonstrating that “there is an absence of evidence to support the nonmoving party’s case.” Celotex, 477 U.S. at 325, 106 S.Ct. 2548. “In reaching summary judgment, the trial court must construe facts and resolve inferences in the light most favorable to the non-movant.” Godley v. United States, 5 F.3d 1473, 1474 (Fed.Cir.1993).
I. The DEA agents with whom plaintiff spoke lacked authority to contract on behalf of the United States.
Plaintiff bases his claim on the existence of a contract between himself and the United States. He argues that several DEA agents, who were contracting on behalf of the government, verbally promised him that he would be compensated monetarily for the information that he provided. In addition, he maintains that this agreement was later ratified by the U.S. Attorney for the District of Puerto Rico. Plaintiff acknowledges that there was no written contract; he is alleging that the verbal assurances by each of these individuals were sufficient to bind the government. Defendant, however, has submitted declarations made by all of the government officials cited by the plaintiff, each denying that they entered into such a contract. Even if they had, however, the government argues that none of the government representatives with whom plaintiff claims to have contracted had the requisite authority to enter into contracts on behalf of the government.
“To establish a valid contract with the United States, a plaintiff much demonstrate: (1) mutuality of intent; (2) consideration; (3) lack of ambiguity in the offer and acceptance; and (4) that the [government representative whose conduct is relied upon had actual authority to bind the [government in contract.” Humlen v. United States, 49 Fed.Cl. 497, 503 (2001) (internal quotations omitted); see also Total Med. Mgmt., Inc. v. United States, 104 F.3d 1314, 1319 (Fed.Cir.1997), cert. denied, 522 U.S. 857, 118 S.Ct. 156, 139 L.Ed.2d 101 (1997); City of El Centro v. United States, 922 F.2d 816, 820 (Fed.Cir.1990), cert. denied, 501 U.S. 1230, 111 S.Ct. 2851, 115 L.Ed.2d 1019 (1991). The government asserts that the plaintiff has not demonstrated that any of the required elements of a valid contract were present. In determining whether such a contract existed, the Court will focus on whether the plaintiff has demonstrated that any of the government representatives identified by the plaintiff had the requisite authority to bind the United States.
For a valid contract to have been formed, plaintiff must have relied upon the conduct of a government agent who had actual authority to bind the government; the government “cannot be bound by the apparent authority of its agents.” Humlen v. United States, 49 Fed.Cl. at 503; see also City of El Centro, 922 F.2d at 820. Therefore, even if a government employee purports to have authority to bind the government, the government will not be bound unless the employee actually has that authority. Humlen, 49 Fed.Cl. at 503 (citing Fed. Crop Ins. Corp. v. Merrill, 332 U.S. 380, 384, 68 S.Ct. 1, 92 L.Ed. 10 (1947)). It is plaintiffs responsibility, as the party asserting the existence of a contract with the United States, to prove that the person with whom he contracted had the requisite authority to contract on behalf of the United States. City of El Centro v. United States, 922 F.2d at 820-21. Plaintiff acknowledged in the hearing that occurred on February 20, 2003, that the DEA agents lack the authority to enter into this agreement. But since plaintiff indicated previously that he believed that the DEA agents entered into the contract, the Court will examine whether they had authority to bind the government in such a contract. Amend. Comp. ¶ 7; Tr. 16.
The Court will first examine whether any of the aforementioned individuals had express authority to contract on behalf of the government. “A government agent possesses express actual authority to bind the government in contract only when the Constitution, a statute, or a regulation grants it to that agent in unambiguous terms.” McAfee v. United States, 46 Fed.Cl. 428, 435 (2000); see also Roy v. United States, 38 Fed.Cl. 184, 188 (1997). Plaintiff cites only 28 U.S.C. § 524(c), and, although it is not entirely clear, the Court interprets his argument to be that section 524(c) served to grant the DEA agents the authority to contract with him regarding compensation for his assis tance. Section 524 authorizes the Attorney General and his delegees, at their discretion, to make “payment of awards for information or assistance leading to a civil or criminal forfeiture involving” certain federal agencies. 28 U.S.C. § 524(c)(1)(C); see also Khairallah v. United States, 43 Fed.Cl. 57 (1999). The Attorney General, however, has delegated that authority only to the Administrator of the DEA and the Deputy Assistant Administrator for Operations. See 28 C.F.R. § 0.101(d); U.S.Dep’t of Justice, DEA, Agents Manual § 6612.44(B)(4); see also Khairallah, 43 Fed.Cl. at 62, 65 n. 16. None of the DEA agents with whom plaintiff claims to have spoken about compensation for his information served as the Attorney General, the Administrator of the DEA, or the Deputy Assistant Administrator for Operations during the applicable time period. Therefore, none of them had the express authority to enter into such a contract on behalf of the United States based on 28 U.S.C. § 524.
Plaintiff has not identified any other statute or regulation that would expressly grant the DEA agents the authority to enter into contracts. Defendant has, however, pointed to several regulations that specify that in order for the DEA agents to have contracting authority on behalf of the DEA, such authority must be specifically delegated to them in writing. 48 C.F.R. §§ 1.601,1.602.1. According to the declaration of Christinia Sisk, Deputy Assistant Administrator for the Office of Acquisition Management, DEA, who supervises all contract and small purchase activities within the DEA, none of the DEA agents referenced by plaintiff had contracting authority during the relevant time period. Plaintiff has not produced any evidence to the contrary. Therefore, the Court finds that the DEA agents in question did not possess express authority to bind the government in contract.
Under certain circumstances, however, the requirement that the government representative that entered into the contract has actual authority to contract on behalf of the United States can sometimes be satisfied even where the representative is found not to have express authority. Implied actual authority can bind the government, and it is “generally implied when such authority is considered to be an integral part of the duties assigned to a government employee.” H. Landau & Co. v. United States, 886 F.2d 322, 324 (Fed.Cir.1989) (internal quotations omitted).
This Court has addressed the issue of whether a DEA agent has the implied actual authority to contractually bind the government to make such payments to informants several times. Doe v. United States, 48 Fed.Cl. 495 (2000); Khairallah, 43 Fed.Cl. at 63-64; Cruz-Pagan v. United States, 35 Fed.Cl. 59 (1996). In Cruz-Pagan, the Court explained that DEA agents do not have such authority because it is not considered to be an integral part of the duties assigned to DEA agents, and therefore, DEA agents do not meet the test set forth in H. Landau. Cruz-Pagan, 35 Fed.Cl. at 61-62. Alternatively, the Court held that DEA agents could not have implied actual authority because DEA’s “internal regulations specifically preclude [them] from exercising such authority.” Id. at 62-63 (explaining that section 6612.45 of the DEA Agent’s Manual controls the manner in which such awards may be approved, the persons who are permitted to approve such awards, and expressly prohibits agents from promising “any award in any amount to an individual”). In each of the subsequent cases in which the implied actual authority issue was addressed, the Court has agreed with the conclusion drawn in Cruz-Pagan. Doe v. United States, 48 Fed.Cl. at 503 (holding that DEA agents lack implied actual authority because “contracting authority is not an integral part of [their] duties” and “DEA’s internal procedures expressly preclude DEA agents from exercising contractual authority”); Khairallah, 43 Fed.Cl. at 62-63 (concluding that DEA agents do not have the authority to award payments of this type because such authority can not be implied “under circumstances in which Congress has set up a specific device for rewarding informants”). Plaintiff has failed to convince the Court that either the reasoning behind those decisions was flawed or that this case requires different treatment. This Court, therefore, holds that none of the DEA agents that were specified by plaintiff had either express or implied actual authority to enter into the contract alleged by plaintiff.
II. Plaintiff fails to demonstrate that U.S. Attorney Gil had the requisite authority to enter into, or ratify, contracts regarding informant compensation on the behalf of the United States.
Plaintiff maintains that, even if the Court finds, as it does, that the DEA agents in question did not have the authority to bind the government in contract, U.S. Attorney Gil’s participation in this agreement made it binding upon the United States. It is unclear whether the plaintiff believes that Gil participated in the formation of the contract or ratified a contract made by the DEA agents. Defendant counters that, even if the facts were as plaintiff alleges, and that Gil entered into or ratified an agreement with plaintiff concerning compensation for his information, plaintiff has not demonstrated that this agreement was binding on the government. Whether Gil was forming a contract or ratifying a contract, it is not binding on the government unless plaintiff can demonstrate that he had the actual authority to contract on behalf of the government in such a manner. Perri v. United States, 53 Fed.Cl. 381, 401 (2002) (explaining that ratification of an unauthorized official’s promise may result in a binding contract where there is “knowing acceptance of the benefits by those empowered to bind the government” (internal quotations omitted) (emphasis added)); City of El Centro, 922 F.2d at 820 (stating that, among other things, a government agent must have the actual authority to bind the government in contract in order for the government to be so bound).
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6053049-13889 | OPINION
THOMAS, Circuit Judge:
This appeal presents the question of whether we have appellate jurisdiction to review a district court’s decision not to impose a provisional sentence until the defendant is competent to be sentenced. We conclude that we lack appellate jurisdiction and dismiss the appeal.
I
Mohammad Yousuf Chaudhry was convicted on sixteen counts related to tax fraud. He submitted an ex parte application to continue sentencing so that he could undergo a psychiatric examination, although competency had not been an issue to that point.
Chaudhry’s doctor reported that Chaudhry had a “mental illness” that was “impairing his ability to understand his current legal situation” and ultimately rendered him “unable to have a rational understanding of the proceedings against him.” Chaudhry then requested the district court to determine whether he was presently suffering from a mental disease or defect that required custody for care and treatment under 18 U.S.C. § 4244.
The government argued that the court should proceed under 18 U.S.C. § 4241 and determine whether there was a mental disease or defect that prevented Chaudhry from understanding the nature of the proceedings. The court agreed with the government that 18 U.S.C. § 4241 was the applicable statute and proceeded accordingly.
The court then ordered a second doctor, one of two doctors suggested by the government, to “examine [Chaudhry] and determine his mental competency.” The second doctor concluded that Chaudhry did not, at that point, understand the nature of the criminal proceedings or have the ability to assist counsel in his defense. Based on this report and (at the government’s suggestion) applying § 4241(d), the district court found “by a preponderance of the evidence that the defendant is presently suffering from a mental disease or defect rendering him mentally incompetent to the extent that he is unable to understand the nature and the consequences of the proceedings against him or to assist properly in his defense.” The government did not object or otherwise request the opportunity to present more evidence or hold a hearing.
The district court committed Chaudhry to the custody of the Attorney General, under § 4241, “to determine whether there is a substantial probability that in the foreseeable future he will attain the capacity to permit the proceedings to go forward.” Chaudhry was committed to the Federal Medical Center in Butner, North Carolina, for evaluation.
Several months later, the government recanted its position on the applicable statute. It submitted a memorandum to the district court arguing that 18 U.S.C. § 4244 was the only section that applies to mentally ill defendants who have been convicted but not sentenced and that the court had, as a result, erred in proceeding under § 4241.
The question of which section applied was critical to determining the next procedural step. If § 4241 applied, Chaudhry would be assessed for dangerousness. If found dangerous, Chaudhry would be civilly committed; if not, he would be released. If, instead, the court proceeded under § 4244, the district court would have needed to determine whether Chaudhry’s mental condition required him to be committed for mental health treatment in lieu of imprisonment; if not, the court would sentence him. If Chaudhry’s condition required treatment, the court would commit him provisionally for the maximum sentence authorized by law (and to be resentenced to imprisonment if he recovered). Chaudhry objected to the government’s argument that § 4244 applied to the proceedings.
The district court held two hearings on the question and, at one point, recessed for two weeks in order to permit the government to obtain documentation showing that the Attorney General agreed with its interpretation of the statutory scheme. The government never submitted the requested documentation.
In a published decision on August 17, 2009, United States v. Chaudhry, 646 F.Supp.2d 1140 (N.D.Cal.2009) (the “August Order”), the district court determined that 18 U.S.C. § 4241 governs cases where a party questions the competency of a convicted defendant to be sentenced. The court then determined that 18 U.S.C. § 4244 applies in situations where a defendant is thought to have a mental disease or defect that, rather than rendering him incompetent to be sentenced, would require him to be committed to a mental health facility instead of imprisoned. The court had already determined that Chaudhry was incompetent to be sentenced and unlikely to be restored to competency within a reasonable period of time (findings that the government did not challenge). The district court followed 18 U.S.C. § 4241(d)’s directive to evaluate the defendant under the civil commitment statute, codified at 18 U.S.C. § 4246, and it once again ordered Chaudhry transferred to the Federal Medical Center for evaluation. The district court committed Chaudhry for 45 days (a time period later extended by 30 days at the request of the warden) and ordered the facility to file a report with the court at the end of that period “explaining whether Chaudhry ‘is presently suffering from a mental disease or defect as a result of which his release would create a substantial risk of bodily injury to another person or serious damage to property of another.’ ”
The government immediately appealed the August Order. On appeal, we directed the government to show cause why the appeal should not be dismissed for lack of appellate jurisdiction, suggesting the appealed decision was not final.
During the pendency of the appeal, the district court retained jurisdiction over the case. The court explained it would hold further proceedings in the case even if Chaudhry was not rendered “dangerous” by the Federal Medical Center and, in particular, within seven-days receipt of the report from the Federal Medical Center.
On December 2, 2009, the Federal Medical Center submitted its report to the district court. The report concluded that Chaudhry was not dangerous and did not meet the criteria for civil commitment under 18 U.S.C. § 4246. On December 10, 2009, following briefing and a hearing, the district court ordered that Chaudhry be released from the Federal Medical Center (“December Order”). Because an appeal was pending, the district court set conditions on Chaudhry’s release, apparently releasing him under 18 U.S.C. § 3143 (rather than § 4246).
The government does not appeal the December Order. Instead, it appeals only the August Order and argues that the district court incorrectly concluded that 18 U.S.C. § 4241 applied, rather than 18 U.S.C. § 4244. We do not address this question, though, because we do not have jurisdiction over the government’s appeal.
II
Generally, we have jurisdiction over the government’s appeal in a criminal case when (1) the government has a right to appeal under 18 U.S.C. § 3731 and (2) the decision being appealed is a “final judgment” under 28 U.S.C. § 1291. See United States v. Russell, 804 F.2d 571, 573 (9th Cir.1986). But, despite 28 U.S.C. § 1291’s finality requirement, “Section 3731 can, and does, make it lawful for the government to take certain appeals even though there is no final judgment.” United States v. Woodruff, 50 F.3d 673, 675 (9th Cir.1995); see also United States v. Boren, 278 F.3d 911, 913 (9th Cir.2002). Nevertheless, we conclude that we do not have jurisdiction over the August Order under 18 U.S.C. § 3731 and that the August Order was not final for the purposes of 28 U.S.C. § 1291. As a result, we dismiss the government’s appeal.
Section 3731 delineates three bases on which the government may file an appeal in a criminal case:
In a criminal case an appeal by the United States shall lie to a court of appeals from a decision, judgment, or order of a district court dismissing an indictment or information or granting a new trial after verdict or judgment, as to any one or more counts, or any part thereof, except that no appeal shall lie where the double jeopardy clause of the United States Constitution prohibits further prosecution.
An appeal by the United States shall lie to a court of appeals from a decision or order of a district court suppressing or excluding evidence or requiring the return of seized property in a criminal proceeding, not made after the defendant has been put in jeopardy and before the verdict or finding on an indictment or information, if the United States attorney certifies to the district court that the appeal is not taken for purpose of delay and that the evidence is a substantial proof of a fact material in the proceeding.
An appeal by the United States shall lie to a court of appeals from a decision or order, entered by a district court of the United States, granting the release of a person charged with or convicted of an offense, or denying a motion for revoca tion of, or modification of the conditions of, a decision or order granting release. The appeal in all such cases shall be taken within thirty days after the decision, judgment or order has been rendered and shall be diligently prosecuted. The provisions of this section shall be liberally construed to effectuate its purposes.
18 U.S.C. § 3731. Paragraphs one and three are relevant to this case.
A
The first paragraph of 18 U.S.C. § 3731 permits the government to appeal any decision terminating a prosecution, as long as the Double Jeopardy Clause would not be implicated by further prosecution. See United, States v. Wilson, 420 U.S. 332, 337, 95 S.Ct. 1013, 43 L.Ed.2d 232 (1975); accord United States v. Stanton, 501 F.3d 1093, 1098 (9th Cir.2007). This paragraph operates to confer jurisdiction when the district court’s order “effectively preclude[s]” the “government’s prosecution of the defendant” or is “tantamount to dismissal” of the government’s case. See United States v. Cote, 51 F.3d 178,181 (9th Cir.1995). Where the district court’s order effectively terminates prosecution, § 1291 provides us with jurisdiction to hear appeals of those final judgments.
We do not have jxirisdiction in this case under this paragraph. It is true that the imposition of a provisional sentence is considered a final order, appealable at least by the defendant. See, e.g., Corey v. United States, 375 U.S. 169, 84 S.Ct. 298, 11 L.Ed.2d 229 (1963); United States v. Ewing, 494 F.3d 607, 613-15 (7th Cir. 2007); United States v. Abou-Kassem, 78 F.3d 161, 167-68 (5th Cir.1996); United States v. Donaghe, 924 F.2d 940, 942-43 (9th Cir.1991). But the question here is whether the refusal to impose a provisional sentence is also a final order. Cf Carroll v. United States, 354 U.S. 394, 414, 77 S.Ct. 1332, 1 L.Ed.2d 1442 (1957) (explaining that whether a decision is final is not contingent on whether “an opposite decision would also have been final.”). Under the circumstances here, we hold that it is not.
While the district court refused to impose a provisional sentence under 18 U.S.C. § 4244, it did not permanently refuse to sentence Chaudhry. Rather, it refused to sentence him for the time being because he was incompetent to be sentenced. The government cites no authority for its assertion that it has been left “without any means of proceeding to sentencing should his competency be restored” — i.e., that § 4241 does not permit the district court to reassess Chaudhry’s competence after he has been released. Nor is there such authority.
Indeed, as long as the district court and the government choose to not dismiss the indictment against Chaudhry, the government may continue to file requests for Chaudhry’s competency to be reviewed. See 18 U.S.C. § 4241(a) (stating that a motion for a competency hearing can be filed “[a]t any time ... prior to the sentencing of the defendant”); United States v. Lapi 458 F.3d 555, 561 (7th Cir.2006) (indicating that “the district court can reevaluate a defendant’s competency ... under 18 U.S.C. § 4241 at any time so long as a federal indictment remains pending ...”); United States v. Ecker, 78 F.3d 726, 729 (1st Cir.1996) (explaining “that a prosecutor bent on trying” a person found incompetent to stand trial once can “file a motion under section 4241 for a new evaluation of competency”); but see 18 U.S.C. § 4241(a) (directing the court to order an evaluation where “the defendant may presently be” incompetent). Chaudhry may someday be sentenced under this indictment and jury verdict because the district court’s August Order did not end the criminal case; it only ended the criminal case for now. Thus, since the district court can proceed to sentencing if Chaudhry regains competency, the August Order was not “tantamount to dismissal” of the government’s case. See Cote, 51 F.3d at 181.
The government relies on United States v. Von Moos, 660 F.2d 748 (9th Cir.1981) for the proposition that we have jurisdiction to review a district court’s refusal to sentence a defendant. Von Moos is distinguishable on a critical point. There, the district court found itself permanently deprived of the authority to sentence the defendant and closed the case. Id. at 749. Here, the district court found itself without authority to sentence the defendant only for the indefinite future. The fact that the government might be foreclosed from appealing the decision of the warden to not issue a dangerousness certificate does not imply it would be foreclosed from appealing the decision of the district court to release Chaudhry in light of the warden’s decision.
B
We are also without jurisdiction under the third paragraph of 18 U.S.C. § 3731. That paragraph permits the government to appeal decisions “granting the release of a person charged with or convicted of an offense.” Irrespective of whether the decision is final under 28 U.S.C. § 1291, we have explained that § 3731 itself grants this court jurisdiction over such appeals. See Woodruff, 50 F.3d at 675 (9th Cir.1995).
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4116155-17664 | MEMORANDUM
TROUTMAN, District Judge.
On June 22,1979, defendants were arrested pursuant to a sealed indictment, Count One of which charged each defendant with conspiracy to possess with intent to distribute and to distribute Phencyclidine (PCP), a Schedule III non-narcotic controlled substance, in violation of 21 U.S.C. §§ 841(a)(1) and 846. The indictment further charged that the plan and purpose of the conspiracy —acquisition, possession with intent to distribute, distribution and sale for profit of PCP — began in June 1973 and continued until August 1977. Twenty-eight overt acts, stretching in time from February 1974 until October 1975, allegedly furthered and effected the objects of the conspiracy. Counts Two through Twenty-eight included charges of possession with intent to distribute a controlled substance, distribution of a controlled substance, and aiding and abetting, in violation of 21 U.S.C. § 841(a)(1) and 18 U.S.C. § 2(a). Defendants have filed numerous motions to dismiss all or parts of the indictment.
Moving to dismiss the indictment as barred by the statute of limitations, defendants contend that the statute of limitations runs from the time that the conspiracy effects its primary goal, not when the last overt act occurs or when the conspiracy actually terminates. In the instant situation the goal and purpose of the conspiracy, to manufacture and sell PCP, occurred prior to not only the last overt act but also the termination of the conspiracy. Therefore, defendants argue, several substantive offenses as well as the conspiracy itself occurred outside the permissible time period.
An indictment charging a non-capital offense must be returned within five years of the date of the offense. 18 U.S.C. § 3282. Where a conspiracy offense requires proof of an overt act, the statute of limitations does not begin to run until the completion of the last overt act taken in furtherance of the conspiratorial agreement. Grunewald v. United States, 353 U.S. 391, 396-97, 77 S.Ct. 963, 1 L.Ed.2d 931 (1957), United States v. Johnson, 165 F.2d 42 (3d Cir. 1947), cert. denied, 332 U.S. 852, 68 S.Ct. 355, 92 L.Ed. 422 (1948), United States v. Cerilli, 428 F.Supp. 801, 808 (W.D. Pa.), aff’d, 558 F.2d 697 (3d Cir.), cert. denied, 434 U.S. 966, 98 S.Ct. 507, 54 L.Ed.2d 452 (1977). However, 21 U.S.C. § 846 does not require proof of any overt act to sustain a conviction thereunder. United States v. Knuckles, 581 F.2d 305 (2d Cir.), cert. de nied, 439 U.S. 986, 99 S.Ct. 581, 58 L.Ed.2d 659 (1978), United States v. Palacios, 556 F.2d 1359 (5th Cir. 1977), United States v. Dreyer, 533 F.2d 112 (3d Cir. 1976), United States v. Bermudez, 526 F.2d 89 (2d Cir. 1975), cert. denied, 425 U.S. 970, 96 S.Ct. 2166, 48 L.Ed.2d 793 (1976). Accordingly, the statute of limitations did not begin to run until the conspiracy actually terminated. United States v. Grunewald, supra, United States v. Kissel, 218 U.S. 601, 610, 31 S.Ct. 124, 54 L.Ed. 1168 (1910), United States v. Costello, 222 F.2d 656, 662 (2d Cir.), cert. denied, 350 U.S. 847, 76 S.Ct. 62, 100 L.Ed. 755 (1955). In this instance the conspiracy did not end until August 1977. A grand jury returned the indictment in June 1979, well within the five-year period. Defendants’, motion will be denied.
Defendants also move to dismiss the indictment on the grounds that the government improperly delayed indictment. Defendants’ argument runs as follows. The government predicated the indictment almost entirely on evidence obtained from a state investigation and prosecution almost five years ago. The only purpose of this delay was to “lull defendants into a sense of false security, to gain a tactical advantage over them” and to obtain more evidence. The delay prejudices defendants because they are unable to account for their whereabouts during the period set forth in the indictment, to locate other witnesses who could provide exculpatory testimony and to locate alibi witnesses.
Several considerations resist this conclusion. Even a cursory reading of the indictment discloses that none of the substantive counts and only one of the twenty-eight overt acts tangentially involves the 1974 state prosecution. Too, as noted above, the conspiracy ended in August 1977, and delay is measured from this date. Finally, pre-indictment delay rises to the level of a constitutional deprivation only when defendants show that the delay resulted in actual and substantial prejudice to their right to a fair trial and that the government intentionally delayed prosecution to gain a tactical advantage over defendants. United States v. Lovasco, 431 U.S. 783, 97 S.Ct. 2044, 52 L.Ed.2d 752 (1977), United States v. Marion, 404 U.S. 307, 92 S.Ct. 455, 30 L.Ed.2d 468 (1971), United States v. Stanzione, 466 F.Supp. 838 (E.D.N.Y.1979). Cf. United States v. Peifer, 474 F.Supp. 498 (E.D.Pa.1979) (defendant must demonstrate prejudice occasioned by delay between arrest and initial appearance). Except for the unadorned allegation of dimmed memories, defendants do not specify what exculpatory evidence eludes them, the names of material witnesses who cannot now be located and the substance of their testimony. Reliance on the possibility of dimmed memories, inaccessible witnesses and lost evidence without any specific factual information by which to judge whether defendants can receive a fair trial will not justify dismissing the indictment. United States v. Marion, 404 U.S. at 326, 92 S.Ct. 455. Without even a glimmer of insight into the proposed testimony of these witnesses
its potential benefit or detriment to the defendants cannot accurately be evaluated. . . (A) trier of fact might as well assume that the (unnamed witnesses) would have placed all of the blame on the defendants, as to assume that they would have exonerated them. In either case, the conclusions appear to us as mere speculation, which cannot serve as the grounds for a finding of actual prejudice, (emphasis added)
United States v. Mays, 549 F.2d 670, 679-80 (9th Cir. 1977), United States v. Stanzione, 466 F.Supp. at 842-43. To dismiss the indictment on defendants’ unnourished allegations would in effect judicially fashion a shorter statute of limitations. Defendants’ motion will be denied.
Defendants’ allegation that this federal prosecution is based “almost entirely” on the previous state criminal prosecution against defendant Heldon also forms the basis of defendants’ motion to dismiss the indictment because of former prosecution. Conceding that the double jeopardy provisions of the Fifth Amendment do not preclude successive prosecutions by state and federal authorities for the same acts, Ab bate v. United States, 359 U.S. 187, 79 S.Ct. 666, 3 L.Ed.2d 729 (1959), Bartkus v. Illinois, 359 U.S. 121, 79 S.Ct. 676, 3 L.Ed.2d 684 (1959), defendants emphasize the “unfairness” of the federal prosecution, particularly in the absence of a compelling federal interest. As noted above, none of the substantive counts involve defendant Heldon’s drug-related activities in Lackawanna and Luzerne Counties. If defendants truly considered any counts to be based on criminal activity occurring outside of this district, they would have included these counts in their motion to dismiss for lack of venue. Furthermore, the fact that only one of twenty-eight overt acts mentions the Lackawanna County incident hardly supports the inference that the federal prosecution is “virtually a second state investigation”. The government has represented that it will present evidence that defendant Heldon, assisted by co-defendants Brewer and Johnston, engaged in a continuing, widespread conspiracy to distribute PCP over a large geographical area in large quantities. The substantial federal interest in controlling wholesale distribution of illegal drugs on this scale and the inability of local authorities to investigate and prosecute this activity scarcely requires comment. The “unfairness” of the federal prosecution, even by defendants’ standards, is untenable. Defendants’ motion will be denied.
Finally, defendants urge dismissal of Count One of the indictment. Analysis of the overt acts suggests to defendants a multiple, not single, conspiracy. No one overt act or substantive count includes all three defendants. However, the essence of conspiracy is an agreement for an unlawful purpose between two or more persons. United States v. Falcone, 311 U.S. 205, 210, 61 S.Ct. 204, 85 L.Ed. 128 (1940), United States v. DeCavalcante, 440 F.2d 1264, 1272 (3d Cir. 1971). Where individuals make such an agreement the act of any one of them becomes the act of all. Hyde v. United States, 225 U.S. 347, 369, 32 S.Ct. 793, 56 L.Ed. 1114 (1912). Whether an overt act in a conspiracy count charges all co-conspirators is irrelevant, for
(t)he fact that a conspirator is not present at, or does not participate in, all of the conspiratorial activities does not, by itself, exonerate him. . . . (I)t is not necessary for each conspirator to have entered into the unlawful agreement at its inception.
United States v. Ashley, 555 F.2d 462, 467 (5th Cir.), cert. denied sub nom. Leveritte v. United States, 434 U.S. 869, 98 S.Ct. 210, 54 L.Ed.2d 147 (1977). The government has represented that at trial it will introduce testimony of several persons who had direct dealings with one or more of defendants. Some of these witnesses will testify that they were present when defendants Heldon and Johnston discussed distribution of PCP. Some witnesses will testify that they personally observed defendant Brewer receive large quantities of PCP from defendant Heldon for redistribution. Co-conspiratorial statements made in the presence of these witnesses will establish that defendants Heldon and Johnston were involved in the wholesale distribution of PCP and that defendant Brewer was one of their largest and most regular outlets within the distribution process. If proven at trial, the government will have established a general scheme to illegally distribute PCP and that each defendant entered into an agreement to further that scheme. A single conspiracy has been charged. United States v. Kenny, 462 F.2d 1205, 1216 (3d Cir.), cert. denied, 409 U.S. 914, 93 S.Ct. 233, 34 L.Ed.2d 176 (1972). Defendants’ motion will be denied.
Defendants have filed several other pre-trial motions. First, under Fed.R. Crim.P. 14, defendants move for relief from misjoinder and for a severance. Fed.R. Crim.P. 8(a) permits the joinder of two or more offenses in the same indictment if “the offenses charged . . . are of the same or similar character or are based on the same act or transaction or on two or more acts or transactions connected together or constituting parts of a common scheme or plan”. Rule 8(b) allows defendants to be joined if “they are alleged to have participated in the same act or transaction or in the same series of acts or trans actions constituting an offense or offenses”. Defendants argue that joinder of these charges was improper because the indictment on its face does not connect each of the substantive counts into a common scheme or plan. Defendants point to the fact that in no instance are all three defendants joined in the same overt act or substantive count of the indictment. However, so long as the evidence introduced at trial connects each of the defendants to an overall general scheme, joinder is proper. United States v. Kenny, 462 F.2d at 1216. See also United States v. Boyd, 595 F.2d 120, 128 (3d Cir. 1978) (an “agreement between co-conspirators, may continue over an extended period of time and involve numerous transactions”). The government has represented that at trial it will establish that defendants Heldon and Johnston began distributing PCP in or about June 1973 through a network of confederates including defendant Brewer. Several witnesses who either assisted Heldon and Johnston in the distribution of PCP, purchased PCP from them, or were present when transactions including defendants occurred will be called at trial. Some of these witnesses will testify that they distributed PCP to Brewer at Heldon’s request; some will testify that, at the request of Heldon and Johnston jointly, they distributed PCP to persons not named in the indictment; others will testify that they distributed PCP to Brewer for resale at Heldon’s request and with Johnston’s knowledge and participation. Still other witnesses will testify that they were present when Heldon and Johnston had discussions regarding distribution of PCP. Having charged a single conspiracy, the government properly joined these offenses.
Defendants further argue that joinder of the defendants was improper, and that, to avoid prejudice which will result to each defendant when evidence against the other defendants is admitted at trial, severance ought to be granted. Defendants must demonstrate that failure to grant a severance will result in “real, not fanciful” prejudice. United States v. Segal, 534 F.2d 578, 583 (3d Cir. 1976). Whether the jury can reasonably be expected to “compartmentalize” the evidence admitted against defendants named in a particular count without considering that as evidence of guilt against the defendants not named in that count is the controlling consideration. United States v. DeLarosa, 450 F.2d 1057, 1065 (3d Cir. 1971). The “mere possibility” that evidence may be admitted against one defendant which is inadmissible against the others is not alone sufficient reason to require three trials on charges based upon a closely related series of transactions, for “(t)he prospect that certain evidence will be admissible against one defendant but not against another is a feature of all joint trials”. United States v. Kenny, 462 F.2d at 1218. The government has adduced some evidence linking each defendant to the conspiracy. Evidence of acts of one co-conspirator may well be admissible against them all. Baker v. United States, 131 U.S.App.D.C. 7, 401 F.2d 958, 974 (1968), cert. denied, 400 U.S. 965, 91 S.Ct. 367, 27 L.Ed.2d 384 (1970), United States v. Cohen, 197 F.2d 26, 29 (3d Cir. 1952). The difficulty of compartmentalizing evidence will be proportionately reduced. Defendants have failed to demonstrate “real” prejudice. Accordingly, the interests of convenience and economy as well as the efficient administration of justice dictate that defendants, having been properly joined in one indictment, be tried together. United States v. Kulp, 365 F.Supp. 747, 765 (E.D. Pa.1973), aff’d mem., 497 F.2d 921 (3d Cir. 1974).
Defendants, also seeking to discover all pre-arrest statements which they made to government witnesses during the course of the conspiracy, postulate that they should receive before trial all defendants’ statements regardless of to whom they were made. In effect defendants seek to discover not only those statements made to known agents during the course of interrogation but also statements made by defendants during the course of the conspiracy and intended for use by the government at trial. Fed.R.Crim.P. 16(a)(1)(A) requires that
(u)pon request of a defendant the government shall permit the defendant to inspect and copy or photograph . the substance of any oral statement which the government intends to offer in evidence at the trial made by the defendant whether before or after arrest in response to interrogation by any person then known to the defendant to be a government agent, (emphasis added)
The language of the rule is clear. Unless defendants’ statements to third parties were in response to interrogation by a person then known to defendants as a government agent, defendants are not entitled to copies thereof. Defendants have not satisfied either requirement; the requested material remains under the protection of the Jencks Act, 18 U.S.C. § 3500. United States v. Viserto, 596 F.2d 531, 538 (2d Cir. 1979), United States v. Rinn, 586 F.2d 113, 120 (9th Cir. 1978), United States v. Zarattini, 552 F.2d 753, 757 (7th Cir.), cert. denied, 431 U.S. 942, 97 S.Ct. 2661, 53 L.Ed.2d 262 (1977). See also United States v. Azzarelli Construction Co., 459 F.Supp. 146, 151-52 (E.D.Ill.1978) and United States v. Brighton Building & Maintenance Co., 435 F.Supp. 222, 233 (N.D.Ill.1977). Defendants’ motion will be denied.
Finally, defendants move for a bill of particulars in which they seek specific times and places at which defendants possessed, distributed or conspired to possess and distribute PCP, the names of persons to whom defendants delivered PCP, whether these persons were government agents, defendants’ acts and statements which furthered the conspiracy, names of persons who attended any meetings in connection therewith and any overt acts furthering the conspiracy but not specified in the indictment. The purpose of granting a bill of particulars under Fed.R.Crim.P. 7(f) is to inform the defendant of the nature of the charges against him so that he may adequately prepare a defense, to avoid surprise during trial and to protect against a second prosecution for an inadequately described offense. United States v. Addonizio, 451 F.2d 49, 63-64 (3d Cir.), cert. denied, 405 U.S. 936, 92 S.Ct. 949, 30 L.Ed.2d 812, reh. denied, 405 U.S. 1048, 92 S.Ct. 1309, 31 L.Ed.2d 591 (1972). However,
the defendant is not entitled, in advance, to a complete preview of the government’s evidence and case or to “wholesale discovery” of the prosecutor’s file. Prior to trial defendant is not entitled to know the identity of government witnesses through a motion for a bill of particulars . Similarly, defendant is not entitled to disclosure of the government’s legal theories or evidentiary details, (citations omitted)
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556410-16521 | ALITO, Circuit Judge.
Eight automobile dealers appeal the District Court’s dismissal of their claims against the Ford Motor Company for lack of standing. Because their complaint alleges concrete and particularized injuries that are fairly traceable to Ford’s behavior and redressable in court, we reverse and remand.
I.
In November 2000, a putative nationwide class of Ford dealers brought suit, claiming that Ford’s recently introduced Blue Oval Program (“BOP”) violated state and federal law. A District Court dismissed the case without prejudice for lack of standing. Danvers Motor Co. v. Ford Motor Co., 186 F.Supp.2d 530 (D.N.J.2002) (‘Danvers /”).
Instead of appealing Danvers I, the Plaintiffs revised their complaint and filed it anew on May 6, 2002. Ford responded with a motion to dismiss, which prompted Plaintiffs’ latest effort, an “amended and supplemented” complaint filed on January 7, 2003. In an unpublished opinion we will call Danvers II, the District Court held that eight of the nine named Plaintiffs “do not yet have an injury that will support constitutional standing.” Joint Appendix (“App.”) at 24. The ninth Plaintiff is not a party to this appeal.
A.
“When reviewing an order of dismissal for lack of standing, we accept as true all material allegations of the complaint and construe them in favor of the plaintiff.” Conte Bros. Automotive, Inc. v. Quaker State-Slick 50, Inc., 165 F.3d 221, 224 (3d Cir.1998). We therefore relate the facts as alleged in the Plaintiffs’ complaint.
Plaintiffs sell Ford automobiles in accordance with “the terms of a standard Ford Franchise Agreement.” Complaint ¶¶ 33-36. They claim that Ford’s BOP “is part of a coordinated objective to control and micromanage all Ford dealerships.” Id. ¶ 42. Ford describes its BOP, introduced in April 2000, as a nationwide customer service and satisfaction incentive program designed to improve dealer performance. It is technically voluntary, but every Ford dealer is forced to bear the costs of the program, while only those who are “BOP certified”.may reap its benefits. All eight dealers on appeal have been certified.
In order to finance its BOP, Ford charges an additional 1% for its automobiles, leaving the Manufacturer’s Suggested Retail Price unchanged. When dealers sell the vehicles, Ford essentially reimburses them by giving them a “bonus” of 1.25% if the dealers met the initial certification requirements by April 17, 2001. The bonus drops to 1% if the dealer applied on or after April 1, 2001, and achieved certification prior to April 1, 2002. Ford originally planned to drop the bonus to .75% in April 2004, and to .5% in 2005, but it has since abandoned this plan. See App. at 77.
Certification entitles dealers to a number of benefits beyond these reimbursements. According to the complaint, dealers also receive 10% transportation assistance allowance bonuses; 50% discounts on all retail invoice messages; 401K plans for dealers’ employees; access to the Blue Oval Certified Healthcare Plan; and Blue Oval National Advertising. See id. at 78.
Plaintiffs allege that the certification process is onerous, requiring significant expenditures of time and money, and resulting in a substantial loss of control over dealership activities. Certification requires dealers to meet standards under a number of performance criteria, including leadership, concern resolution, sales, service, facilities, and customer service. See id. at 75. As explained at length in the complaint, the criteria are detailed, comprehensive, and difficult to meet.
A necessary condition for BOP certification is the so-called National Voice of the Consumer Target, a creation of JD Power & Associates. To become certified, most dealers must receive sufficiently high survey scores from customers on four survey questions. See Danvers I, 186 F.Supp.2d at 582-33; App. at 79-81. If their scores are high enough, all other certification requirements are waived. Plaintiffs aver that “the only way a dealer’s score can increase” is if a customer marks “completely satisfied” in response to every question. Complaint ¶ 72 (emphasis in original).
Another criterion for BOP certification is a set of facilities requirements, which allegedly “encompass all the ordinary routine aspects of running a dealership which are normally within the responsibilities and concerns of the dealer, safe from the intrusion of Ford or its agents.” Danvers 1, 186 F.Supp.2d at 533. See also App. at 84-85. “Under the current standard, [in densely populated areas,] J.D. Power must deem the dealers’s facility equal to or better than two of four full-line dealerships within a ten-mile radius.” Complaint ¶ 90.
BOP certification does not end a dealer’s obligations. According to the complaint, the Program requires annual recertification, which may involve “unilaterally altered standards.” See App. at 81. For example, from 2001 to 2002, Ford increased the Voice of the Customer survey scores necessary to remain certified, and demanded “[o]ne-day service appointment availability, down from two business days.” Complaint ¶ 73. “A dealer had to satisfy Ford’s requirements each and every year or Ford will decertify the Certified dealers, withhold the reimbursements, and withdraw most benefits.” Id. ¶ 74. In 2002, due to increased certification targets, 100 dealers “fell off the Program,” and as of November 14, 2002, about 65 remained uncertified. Id. ¶ 77.
The complaint states that the BOP certification and recertification processes constitute nine violations of federal and state law. More generally, it claims that “Ford’s intent, through the Blue Oval Program ... is, has been and will continue to be, to constructively terminate virtually at will the number of dealers it chooses and to increase control of the operations of the remainder.” Id. ¶ 101. It seeks declaratory relief, an injunction against the BOP “in its entirety,” damages, and attorneys’ fees.
B.
Plaintiffs allege that the BOP caused them at least four types of injuries. They say it caused them: 1) to spend money against their will to comply with its certification requirements; 2) to relinquish control over certain aspects of dealership operations; 3) to forfeit interest payments which would be otherwise earned on money spent covering the BOP’s mandatory 1% fee; and 4) to face the constant threat of losing certification if Ford chooses to ratchet up BOP standards in the future.
Ford responded to Plaintiffs’ complaint with a motion to dismiss for lack of subject matter jurisdiction and a motion to dismiss for failure to state a claim. See Fed. R.Civ.P. 12(b)(1), (6). Limiting its discussion almost exclusively to the fourth species of alleged harm, the District Court granted the 12(b)(1) motion, holding that the Plaintiffs lacked standing. It reasoned that the ongoing threat of termination “is simply too speculative and remote to support a finding of constitutional standing.” App. at 24. The Court detected no “affirmative intent by Ford to terminate any dealer who does not achieve Blue Oval Certification.” Id. “Although it seems clear that many of the dealers who are currently certified will ‘fall off the program’ by 2006,” the Court concluded that “these dealers do not yet have an injury that will support constitutional standing.” Id.
Only one sentence in the District Court opinion arguably touches on the Plaintiffs’ allegations of past and present harms. This sentence states: “[Plaintiffs’] allegations pertaining to the cost of maintaining their certification in order to avoid potential termination are just not enough to establish a concrete and imminent, rather than conjectural, harm.” Id. (citing Complaint ¶¶ 102-32, 162-206, 219-42) (emphasis in original).
The Danvers II opinion relied heavily on the reasoning of Danvers I as further justification for its holding. In Danvers I, the Plaintiffs claimed that they “suffered injury-in-fact by the diversion of dealers’ funds, personnel, equipment, and time to the application for Blue Oval Certification, as well as from the severe financial losses attributable to the inequities of the Program.” 186 F.Supp.2d at 536. Nevertheless, the Court held that the Plaintiffs “have not articulated that they themselves have suffered any concrete harm” arising “from the mere attempt to certify.” Id. at 537.
For example, Plaintiffs aver that in order to satisfy the “facilities” criteria, “the dealer’s investment could have to increase sizeably.” Additionally, Plaintiffs’ allege that the process performed by J.D. Power, as part of Blue Oval certification, is “subject to manipulations [] and to annual unilateral change.” Plaintiffs further allege that the attempts to conform to the BOC program “will exact a financial burden that may jeopardize the viability of their dealerships.” Finally, Plaintiffs declare that the “hurdles of the Blue Oval Program will predictably bring about over time the termination of a significant minority of dealers.” Thus, even accepting Plaintiffs’ allegations as true, Plaintiffs have simply stated that implementation of the BOC program might cause a concrete and particularized injury.
Id. at 537-38 (emphasis added in original) (citations omitted). Based on this passage, it can be inferred that the District Court in this case found no standing for two reasons: the threats of future harm were not imminent, and the allegations of present and past harm were not sufficiently “concrete,” because the statements in the complaint were not sufficiently direct and unqualified.
II.
Constitutional standing requires (1) injury-in-fact, which is an invasion of a legally protected interest that is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical; (2) a causal connection between the injury and the conduct complained of; and (3) it must be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992); Khodara Environmental, Inc. v. Blakey, 376 F.3d 187, 193 (3d Cir.2004) (collecting cases). “Plaintiffs bear the burden of proving standing.” Storino v. Borough of Point Pleasant Beach, 322 F.3d 293, 296 (3d Cir.2003).
A “legally and judicially cognizable” injury-in-fact must be “distinct and palpable,” not “abstract or conjectural or hypothetical.” Raines v. Byrd, 521 U.S. 811, 819, 117 S.Ct. 2312, 138 L.Ed.2d 849, (1997); Allen v. Wright, 468 U.S. 737, 751, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984) (internal quotations omitted) (quoting Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975), and Los Angeles v. Lyons, 461 U.S. 95, 101-02, 103 S.Ct. 1660, 75 L.Ed.2d 675 (1983)). While it is diffi cult to reduce injury-in-fact to a simple formula, economic injury is one of its paradigmatic forms. In Havens Realty Corp. v. Coleman, for example, an organization devoted to fair housing practices suffered a “concrete and demonstrable injury” when a realty company’s racial “steering” practices “perceptibly impaired [its] ability to provide counseling and referral services for low-and moderate-income home-seekers,” resulting in a “drain on the organization’s resources.” 455 U.S. 363, 379, 102 S.Ct. 1114, 71 L.Ed.2d 214 (1982); see also San Diego County Gun Rights Comm. v. Reno, 98 F.3d 1121, 1130 (9th Cir.1996) (“Economic injury is clearly a sufficient basis for standing.”); Wright and Miller, Federal Practice and Procedure, § 3531.4 at 830 (2005 Supp.) (“Standing is found readily, particularly when injury to some traditional form of property is asserted.”).
Wright & Miller illustrate the concept of injury-in-fact with a simple example. “If customs officials were to institute a new and rigorous policy for inspecting packages brought in from other countries, ... [standing probably would be recognized for a business firm that asserted a commercial injury arising from increased delay or expense.” Wright & Miller, § 3531.4 at 830; see also id. at 847 n. 7 (“Standing always should exist to claim damages, unless perhaps the theory of damages is totally fanciful.”); Wright v. Riveland, 219 F.3d 905, 914 (9th Cir.2000) (prison inmates had standing to challenge a statute deducting 35% of all funds received by an inmate from outside sources).
The injury-in-fact requirement exists to assure that litigants have a “personal stake” in the litigation. See The Pitt News v. Fisher, 215 F.3d 354, 360 (3d Cir.2000). By ensuring that litigants present actual cases and controversies, it is also keeps the judicial branch from encroaching on legislative prerogatives, thereby preserving the separation of powers. See Valley Forge v. Americans United for Separation of Church and State, 454 U.S. 464, 473-74, 102 S.Ct. 752, 70 L.Ed.2d 700 (1982).
III.
The sole issue before us is whether the Plaintiffs have standing to sue Ford for injuries suffered due to the Blue Oval Program. Our review of a District Court’s denial of Article III standing, is plenary. See Hutchins v. IRS, 67 F.3d 40, 42 (3d Cir.1995). To be clear, Plaintiffs allege that the BOP itself is illegal. See Complaint ¶¶ 2-3 (describing the BOP as an “illegal” program which was “imposed” upon the dealers); id. ¶ 47 (explaining that although the Program is “purportedly ‘voluntary,’ ” it requires a “compelled payment” by “all Ford dealers”); id. ¶ 95 (calling the BOP requirements “coercive”). To state an injury-in-fact sufficient to survive a motion to dismiss, they must simply plead that they suffered some concrete form of harm because of the BOP. See Lujan, 504 U.S. at 561, 112 S.Ct. 2130 (“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.”) (internal quotations, brackets, and citation omitted).
The complaint is replete with assertions of cognizable harm. For example, page 2 of the Complaint contains a separate section called “Standing,” which begins: “Plaintiffs are Ford dealers who have suffered economic injury-in-fact as a result of ... the invasion by Defendant Ford Motor Company (‘Ford’) of its dealers’ legally protected interests, concretely and particularly described for each Plaintiff dealer in paragraphs 88 through 228 of this Complaint.” App. at 67. Later the point is repeated: “Ford’s Blue Oval requirements are coercive, unreasonable, intrusive, discriminatory, costly to the dealer, and fraught with material business uncertainties.” Id. at 85.
Ford argues, and the District Court apparently found, that these allegations were not specific enough. The dealers respond by pointing to the body of the Complaint, which discusses four types of injury at length.
The first kind of injury is the out-of-pocket expenses Plaintiffs made to become BOP-certified. “The Certification and Re-certification process,” they claim, “has required and continues to require substantial expenditures of dealership resources.” Complaint ¶ 12. “All Plaintiffs have made, proportionally, very significant out-of-pocket investments to comply with Ford’s requirements to become Certified and Re-certified under the Blue Oval Program.” Id. ¶ 59. “In satisfying the required [Facilities] criteria, however, the dealers’ investment has already increased sizably.” Id. ¶ 94. Plaintiffs even break down the amount of money spent per dealership.
There can be no doubt that this financial harm counts as injury-in-fact. Because we are bound to read the complaint as true, we cannot ignore Plaintiffs’ claims that the BOP is “illegal,” Complaint ¶ 3, “imposed” upon them, id. ¶ 2; “compelled,” id. ¶ 47, and “coercive,” id. ¶ 95. Once this is accepted, the allegations are indistinguishable from a garden-variety civil lawsuit: a plaintiff sues a defendant for illegally causing the plaintiff harm. See, e.g., General Motors Corp. v. Tracy, 519 U.S. 278, 286, 117 S.Ct. 811, 136 L.Ed.2d 761 (1997) (customers who pay more for a product because of a regulation allegedly “forbidden under the Commerce Clause satisfy the standing requirements of Article III”) (citing Bacchus Imports, Ltd. v. Dias, 468 U.S. 263, 267, 104 S.Ct. 3049, 82 L.Ed.2d 200 (1984)); NRA of America v. Magaw, 132 F.3d 272, 281 (6th Cir.1997) (gun manufacturers and dealers have standing to challenge the constitutionality of a law banning certain types of guns because the law caused them “immediate economic harm”).
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2216914-15414 | TRASK, Circuit Judge:
This is an interpleader action filed by The Franklin Life Insurance Company to determine those persons entitled to the proceeds of a life insurance policy written on the life of Elizabeth L. Mast. The policy was a Decreasing Term Policy in the face amount of $50,000 with a double indemnity provision in the event of accidental death. Mrs. Mast was killed in an automobile accident in November 1965 while the policy was in full force and effect. The Company paid the proceeds of the policy, in the sum of $98,950, into the registry of the court when it filed the action. Mrs. Mast was the applicant for, the insured under, and the sole owner of the policy. It provided when issued that C. Lee Mast, husband, was the primary beneficiary and “children born of the insured’s marriage to said husband” were the first contingent beneficiaries. Julie Ann Mast, Katherine Louise Mast and Jonathan Lee Mast, all minors, were children of the marriage. Both the husband and the children survived the insured.
An attempt to alter the shares of the beneficiaries as set forth in the policy provides the basis for this interpleader action. The policy contained a provision setting out the procedure for changing beneficiaries, but that provision was not followed, and the following sequence of events occurred.
On November 22, 1958, Mrs. Mast, executed a holographic will in which she created a testamentary trust designating the Southern Arizona Bank & Trust Company of Tucson, Arizona, as Trustee and the three Mast children as beneficiaries of the specific sum of money with the residue of the estate to her husband, C. Lee Mast.
On June 9, 1963, Mrs. Mast executed the First Codicil to her will in which she changed the devisee and legatee of the residue of her estate from her husband to the testamentary trustee for the benefit of her children.
On May 11, 1965, she signed an application for the insurance policy in question.
On May 14, 1965, she did execute a formal typewritten will in which her signature was attested and in which her husband received all income for life with the right to invade the principal.
Four days later on May 18, 1965, Mrs. Mast executed a Second Codicil to her holographic will. In this codicil she very positively revoked the formal attested will of May 14, 1965, and reaffirmed and republished the provisions of her original holographic will.
She also, in this will, referred to the insurance policy in question in these words:
“During the past week I have also signed at the insistence of my husband a Power of Attorney and an application for an insurance policy with the Franklin Life Insurance Company whose local agent is Mr. Tracy Prater. “At my death, I assume the Power of Attorney will be null and void, which is my wish.
“The beneficiary of the insurance policy is listed as my husband, Chancey Lee Mast or C. Lee Mast. Since I was induced to sign this policy because of concern for the welfare and educational needs of the children, I would like to direct — and do so direct if at all legally possible — that the proceeds of this policy be distributed as follows: $5000 to my husband Chancey Lee Mast; the remainder to be considered a part of my estate to be used for payment of just expenses after which the remainder shall go into the body of the trust or trusts to be used for the benefit of my designated heirs.”
On July 1, 1965, she executed a Third Codicil in which she republished her holographic will with the two prior codicils.
In all of these handwritten instruments she had expressed fear for her own safety, her concern that she might die a death which had been made to look accidental, her fear of her husband, and her concern to provide for her children with a minimum of regard for her husband’s participation in her estate. She died in an automobile accident on November 19, 1965. Her husband was indicted for murder but the charges were subsequently dismissed.
The holographic will of November 22, 1958, and the three holographic codicils were duly admitted to probate by the Superior Court of Pima County, Arizona, and executors appointed as designated. C. Lee Mast filed a Debtor’s Petition in the United States District Court on September 1, 1967, seeking an adjudication to be declared a bankrupt.
Those who assert a claim to the proceeds of the policy are: (1) The Mast children under the terms of the policy itself and the renunciation by C. Lee Mast of all of his i'ights under this specific policy. They assert that the holographic will and codicils were ineffective to change the beneficiaries in the face of the policy provision for change of beneficiaries. (2) The Southern Arizona Bank & Trust Company as a co-executor of the estate of the deceased claims under the holographic documents, asserting that they were effective to change the beneficiaries under the policy. (3) The Trustee in Bankruptcy for C. Lee Mast claims the entire policy proceeds, asserting that neither the holographic documents nor the renunciation were sufficient to defeat the terms of the policy making Mr. Mast the sole primary beneficiary of the policy.
The trial court (1) correctly held that the adjudication of the Superior Court of Pima County admitting the holographic will and codicils to probate as the last will and testament of Elizabeth Mast, was binding on the federal courts. (2) It held also that the holographic Second Codicil of May 18, 1965, was a legally effective change of the beneficiaries of the insurance policy with the result that $5,000 of the proceeds of that policy should be paid to C. Lee Mast and the remainder should go to Mrs. Mast’s estate. (3) Finally, the trial court held that the husband did not subsequent to his wife’s death effectively renounce his right under the policy to receive $5,000 and therefore this amount should be paid to him or to his Trustee in Bankruptcy. We agree with the trial court except for the finding that there was no legally binding renunciation by C. Lee Mast. In this respect we disagree and hold that $5,000 of the policy proceeds directed to be paid to Chancey Lee Mast should be paid to the children of Elizabeth Mast and C. Lee Mast; namely, Julie Ann Mast, Katherine Louise Mast and Jonathan Lee Mast, through their legally appointed guardian.
Jurisdiction was conferred upon the trial court under the provisions of 28 U.S.C. § 1332 (Diversity of Citizenship). The appeal comes to us under 28 U.S.C. § 1291.
Change of Beneficiaries of Policy
The adjudication of the Arizona court that the holographic will and its similarly drawn codicils were valid testamentary instruments and properly admitted to probate, is binding here. Markham v. Allen, 326 U.S. 490, 494, 66 S.Ct. 296, 90 L.Ed. 256 (1946); Byers v. MeAuley, 149 U.S. 608, 615, 13 S.Ct. 906, 37 L.Ed. 867 (1893); Republic of Iraq v. First National City Bank, 353 F.2d 47 (2d Cir.), cert. denied, 382 U. 5. 1027, 86 S.Ct. 648, 15 L.Ed.2d 540 (1966). The effect of the May 18, 1965, Second Codicil which purports to change the beneficiaries of the life insurance contract is properly within the jurisdiction of the federal court for determination. Markham v. Allen, supra. It is the basis upon which the executors must rely. They pin their reliance upon Doss v. Kalas, 94 Ariz. 247, 383 P.2d 169 (1963). The issue there, as here, was whether a will executed by a policy owner effected a change of beneficiaries in the face of a policy provision which specifically set out another procedure which should be followed. An earlier case, McLennan v. McLennan, 29 Ariz. 191, 240 P. 339 (1925) had held that the method of changing beneficiaries set out in the policy contract was exclusive and must be followed strictly. The Doss court reviewed its earlier holding and noted that in McLennan the court had stated three exceptions to the general rule requiring strict compliance with policy provisions: (1) If the insurer has waived strict compliance; (2) if it be beyond the power of the insured to comply literally with the regulations, equity will treat the change as regularly made; and (3) if the insured had done all in his power to effect the change, but before the change is completed he dies, equity will treat the change as having been made.
McLennan was not an attempt to change a beneficiary by will. It was an inter-vivos transaction in which the insured did not meet the policy requirements and was so notified and instructed as to the proper manner in which to change the beneficiary. Thereafter although ample time elapsed in which the proper change could have been made, it was not. Instead, there was an indication that the insured had changed his mind. Upon such a state of facts the court did not and could not say that the original abortive attempt came within any exception. The Doss court therefore distinguished its earlier decision on the facts. Doss, supra, 94 Ariz. at 251-252, 383 P.2d at 172.
It then stated the general rule from McLennan and continued as follows:
“Other authorities, however hold that when the power to make a change of the beneficiary is reserved to the insured by the policy, and the insurer does not demand full compliance with the procedure to effect the change as set out in the policy, the insured may change his beneficiary by a valid will.
‘We feel that the provisions of this policy setting up the method by which a beneficiary may be designated or changed are for the protection of the insurer, and we do not feel that the technical provisions are placed in the policy to protect the insured against hasty or impetuous action. In the case now before this court, the insurer is no longer a party, and the battle is between possible beneficiaries. Since this is the case, there is’ no reason to invoke technical provisions designed to protect an insurer against the possibility of double payment. We feel that the clearly manifested intent of the insured should control.’ Sears v. Austin, 292 F.2d 690, 693 (9th Cir. 1961).
We believe that the latter rule is founded on the better reasoning. The provisions in a policy of insurance as to the procedure for making a change of beneficiary are for the benefit of the insurer. If the insurer does not choose to require enforcement thereof, and the rights of the respective claimants alone are before the court, the intent of the insured should govern. Sears v. Austin, supra.” 94 Ariz. at 250-251, 383 P.2d at 171.
We note that in Doss there were two policies involved. One policy contained a provision for change of beneficiary and the other did not. The decision of the court applied to both policies and held that a will was effective to change the beneficiaries of both policies.
The court pointed out that if- a will can be effective to change the beneficiary of a policy in the face of a policy provision which provides a method for change but does not include change by will, then, a fortiori, a will would be effective to change the beneficiary of a policy which specified no particular method for doing so. The court emphasized the clear intent of the testator to make the change and the acquiescence of the company in his wishes after his death. The court also relied upon Sears v. Austin, 292 F.2d 690 (9th Cir.), cert. denied, 368 U.S. 929, 82 S.Ct. 365, 7 L.Ed.2d 192 (1961). While that case did interpret a policy of life insurance issued pursuant to a federal statute, the basic reasoning of the court is in accord with the principles of Doss. We believe as did the trial court that where, as here, there is no doubt about the intent of the insured and the insurer has clearly indicated that it does not assert strict compliance with the policy provision for its own protection, that intent as clearly expressed in a will duly admitted to probate is effective to change the beneficiary of the policy, under the law of Arizona.
Alternatively, the trial court found that the nature of Mrs. Mast’s mental state as expressed in her holographic documents was such that it was beyond her power to comply with the provisions of the policy. Said the court in its opinion:
“There is substantial evidence in this case that Mrs. Mast was a frightened mother, who did not want her husband to learn of the change in beneficiaries. It was beyond her power, in her then mental state, to literally comply with the requirements of the policy on the change of beneficiaries. Consequently, I should employ the powers of a court of equity and treat the change of beneficiaries as having been regularly made, all within the confines of the second exception mentioned and enunciated by the Arizona Supreme Court in McLennan v. McLennan.” 290 F.Supp. at 676.
As such the decision of the trial court was also predicated upon the second exception to the general rule as noted in McLennan.
We find that these determinations are not clearly erroneous and we affirm the trial court’s findings. Lundgren v. Freeman, 307 F.2d 104 (9th Cir. 1962). It follows that the trial court reached the correct conclusion by applying either Doss or McLennan.
Renunciation
The foregoing establishes the holographic will as effecting a change of beneficiaries from the terms in the policy. The holographic will directs that $5,000 be paid to C. Lee Mast and that the remainder be paid to the estate of the insured. We now consider whether action was taken by C. Lee Mast which divested him of his interest and passed his $5,000 share of the proceeds to the children. The executors disclaim any interest in this amount and leave the contest between the Trustee in Bankruptcy and the children. The district court found “with considerable reluctance” that the issue must be resolved against the children. It is as to this part of the decision that we disagree with the trial court.
After the death of Mrs. Mast in an automobile accident, her husband, C. Lee Mast, was indicted for first degree murder in connection with that death. While being held, he executed a power of attorney giving to Mr. Ashby Lohse, his attorney, complete power “to make any agreement he deems proper in connection with the probate of my wife’s estate, her will or wills, and all life insurance policies and all community assets.” This power was executed after a conversation in which Mast told Attorney Lohse that if his wife did not wish him to have the proceeds of the life insurance policies, he did not want them. Lohse deposition 11. Attorney Lohse, representing Mast as attorney in fact, and Attorney Robert Tullar, representing the Southern Arizona Bank and the Mast children, later entered into an agreement whereby Mast did in fact specifically agree to renounce all of his interest in the policy in question.
It is apparent that the letter constitutes an executory bilateral contract between Mast acting through his attorney as one party and his children acting through their attorney as the other. The children performed their part of the agreement, i. e., the typewritten will was offered for probate and the holographic will was withdrawn. The evidence appears clear that the later re-offer of the holographic documents was not of the children’s doing. Thus we conclude that Mast received his bargained-for exchange and that the children are entitled to their promised performance. Mast’s subsequent demand that he be paid the proceeds of the policy and his later refusal to sign the endorsements authorizing payment to the children can not relieve him of his obligation.
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1536149-19604 | JOHNSON, Circuit Judge:
We are called upon to consider the scope of disclosure to which a government agency may be subjected when that agency is party to a law suit seeking release of information possibly privileged under the Freedom of Information Act. For the reasons stated herein, we find that an agency must, at a minimum, submit to either of two methods of review by the district court in order to determine if the claim of privilege is properly made. Accordingly, we REVERSE the order of summary judgment below and REMAND this case for trial.
I.
David Ely is incarcerated in a federal prison facility. He filed a request with the Federal Bureau of Investigation [“the FBI” or “the Bureau”], under the Freedom of Information Act [“FOIA”], 5 U.S.C.A. § 552 (1985), for all files and information regarding Raymond J. Barry, who Ely alleged had some connection to the events that led to his imprisonment. Ely intended to use the information in his pending trial. In a letter dated August 24, 1983, the FBI advised Ely that it would neither confirm nor deny the existence of files on Barry unless Ely filed an affidavit from Barry giving Ely access to this information. The Bureau cited FOIA exemptions under 5 U.S.C.A. §§ 552(b)(3), (6) and (7)(C) as justification.
The appellant filed this action pro se, in forma pauperis in the Middle District of Florida seeking declaratory relief. The FBI filed a motion to dismiss; Ely filed a response. The court elected to treat the motion to dismiss as a motion for summary judgment. This conversion was performed consistent with the notice requirements articulated in Griffith v. Wainwright, 772 F.2d 822, 825 (11th Cir.1985) (per curiam).
The trial court granted the motion for summary judgment and dismissed the claim with prejudice in an order dated September 4, 1984. The court read FOIA Exemption 3, prohibiting release of matters “specifically exempted from disclosure by statute” as incorporating the provisions of the Privacy Act, 5 U.S.C.A. § 552a (1985), that in turn precluded disclosure of the desired information without Barry’s permission. Alternatively, the trial court held that the files were exempt under FOIA Exemptions 6 and 7(G) because they contained personnel and medical information as well as investigatory records. The trial court made this finding despite the fact that the FBI submitted no affidavits or summaries of the information and without conducting an in camera inspection. In fact the FBI would neither confirm nor deny for the court the existence of the requested information.
II.
Ely contends that the trial court lacked an adequate factual basis for its conclusion that the material in question was protected from disclosure under Exemptions 6 and 7(C). We agree.
A.
The FOIA is “primarily an access and disclosure statute.” 1984 U.S.Code Cong. & Ad.News at 3789. It provides for wide-ranging citizen access to government documents and presumes them subject to disclosure absent a clear showing to the contrary. F.B.I. v. Abramson, 456 U.S. 615, 621, 102 S.Ct. 2054, 2059, 72 L.Ed.2d 376 (1982); Cochran v. United States, 770 F.2d 949, 954 (11th Cir.1985). The Act’s disclosure provisions are read broadly, its exemptions narrowly. Department of Air Force v. Rose, 425 U.S. 352, 366, 96 S.Ct. 1592, 1601-02, 48 L.Ed.2d 11 (1976); Cochran, 770 F.2d at 954. The burden is squarely on the government to prove that the information in question is covered by one of the exemptions. Environmental Protection Agency v. Mink, 410 U.S. 73, 80, 93 S.Ct. 827, 832, 35 L.Ed.2d 119 (1973); Currie v. Internal Revenue Service, 704 F.2d 523, 530 (11th Cir.1983).
The FOIA creates a series of exemptions for material deemed privileged from disclosure for reasons of public policy or national security. 5 U.S.C.A. § 552(b)(1) — (5), (7)(A)-(B), (7)(D)-(F), (8)-(9). By its clear terms, FOIA places on the courts the obligation to consider and resolve competing claims of privilege and access, relegating the government to the role of furnishing evidence to rebut the presumption of disclosure. “[T]he court shall determine the matter de novo, and may examine the contents of such agency records in camera to determine whether such records or any part thereof shall be withheld under any of the exemptions set forth in subsection (b) of this section, and the burden is on the agency to sustain its action.” 5 U.S.C.A. § 552(a)(4)(B). By so crafting the statute, Congress made clear that the court, not the agency, is to be the ultimate arbiter of privilege. A fair arbitration requires a substantial quantum of information. Thus the court must have access to the possibly privileged documents.
In umpiring this contest, Congress has also directed that we give due deference to the competing private value of privacy— that is, the right of the individual citizen to limit access to information about him that the government has gathered. 5 U.S.C.A. § 552(b)(6), (7)(C). While we are to presume disclosure, we must deny access to certain personnel files if disclosure “would constitute a clearly unwarranted invasion of personal privacy,” id. at (b)(6), and we must prevent disclosure of investigatory records if production would “constitute an unwarranted invasion of personal privacy.” Id. at (b)(7)(C). As to both exemptions, we have directed our trial courts to resort to balancing tests as between the personal interest in privacy and the public interest in disclosure. Cochran, 770 F.2d at 955 (Exemption 6); L & C Marine Transport v. United States, 740 F.2d 919, 922 (11th Cir.1984) (Exemption 7(C)); see generally, Rose, 425 U.S. at 372, 96 S.Ct. at 1604.
In the instant case, the trial court struck this balance at the threshold of summary judgment and found that it tilted in favor of nondisclosure. The trial court reached that determination without reviewing the documents and without knowing if the requested documents even existed. It took the government at its word that disclosure of this information was a violation of the statute’s Exemptions 6 and 7(C) because the mere admission that the government even had files on Barry would be an invasion of his right to privacy. It effectively placed on Ely the burden of proving that the documents in question were not privileged.
B.
The former Fifth Circuit said in Stephenson v. Internal Revenue Service, 629 F.2d 1140, 1144 (5th Cir.1980), that the appellate court in cases of this sort has two duties: “(1) We must determine whether the district court had an adequate factual basis for the decision rendered and (2) whether upon this basis the decision reached was clearly erroneous.” Accord, Chilivis v. Securities & Exchange Commission, 673 F.2d 1205, 1210 (11th Cir.1982). Because the decision below fails under the first prong, it is not necessary to consider the merits of the balance struck, the assignment of burdens of proof, and the determination of privilege as required by prong 2 of Stephenson.
C.
An “adequate factual basis” is of necessity a somewhat elusive concept, especially in a case such as this, where the trial court made no findings on the record, save to accept the bare assertion of the government that the documents, if they exist at all, are privileged. Our jurisprudence offers the trial court two alternate methods by which to make the adequate factual basis determination: in camera review; and the so-called “Vaughn Index.” Under the terms of the statute, in camera review of the actual documents is discretionary with the trial court, NLRB v. Robbins Tire & Rubber Co., 437 U.S. 214, 224, 98 S.Ct. 2811, 2318, 57 L.Ed.2d 159 (1978), 5 U.S.C.A. § 552(a)(4)(B), as is resort to the Vaughn Index, Stephenson, 629 F.2d at 1145. But the obligation to find, by whichever means, an adequate factual basis to support the claim of privilege is not discretionary. It is a sine qua non. Stephenson, 629 F.2d at 1144.
1. In Camera Review.
If the court elects to satisfy this requirement by means of in camera review, then a priori the government must, at a minimum, tell the court whether the documents in dispute exist. Once that is done, the statute envisions an activist role for the trial court. It must take either of two alternate steps:
in instances where it is determined that records do exist, the District Court must do something more to assure itself of the factual basis and bona fides of the agency’s claim of exemption than rely solely upon an affidavit.... In situations where records do not exist, affidavits are probably not only sufficient but possibly the best method of verification. However, once it is established that records and documents are in the possession of the governmental agency, more is required. ... such as sanitized indexing, random or representative sampling in camera with the record sealed for review, oral testimony or combinations thereof [which would] more fully provide an accurate basis for decision.
Stephenson, 629 F.2d at 1145-46; Currie, 704 F.2d at 530-31, see also, Rose, 425 U.S. at 379-80, 96 S.Ct. at 1607-08 (“No court has yet seen the [contested information], and the Court of Appeals was therefore correct in holding that the function of examination must be discharged in the first instance by the District Court.”) (emphasis supplied). Failure of a trial court to undertake this probing and exacting review constitutes an erroneous default of its obligations under the statute and requires a vacation of summary judgment and a remand to develop an adequate factual basis. Stephenson, 629 F.2d at 1146.
2. The Vaughn Index.
As we noted in Currie, in camera review will usually not be wholly satisfactory for two reasons: 1) without the “controverting illumination” and focus attendant on the adversary process, merely presenting to a trial court for review hundreds or thousands of pages of documents is so burdensome as to waste judicial resources and to make such review ineffectual, 704 F.2d at 530-31; and 2) it tends seriously to erode the working of our adversarial system of dispute resolution. Vaughn v. Rosen, 484 F.2d 820, 824-25 (D.C.Cir.1973), cert. denied, 415 U.S. 977, 94 S.Ct. 1564, 39 L.Ed.2d 1564 (1974). These twin problems are often “compounded at the appellate level.” 484 F.Supp. at 825. Accordingly, in camera review “is to be utilized in only the rare case such as ... [when] the disputed documents are relatively brief, few in number, and where there are few claimed exemptions.” Currie, 704 F.2d at 531. The Vaughn Index is thus to be preferred.
In Vaughn the court recognized that assertions of privilege under FOIA, because the plaintiff is denied access to the very information he needs to prove his entitlement to release, tend to “seriously distort[ ] the traditional adversary nature of our legal system’s form of dispute resolution” because “the facts relevant to a dispute are [not] ... equally available to adverse parties.” 484 F.Supp. at 824. .In camera review is not wholly satisfactory because it “is necessarily conducted without benefit of criticism and illumination by a party with the actual interest in forcing disclosure.” Id. at 825. The District of Columbia Circuit offered a better way: an agency could “formulat[e] a system of itemizing and indexing that would correlate statements made in the Government’s refusal justification with the actual portions of the document.” Id. at 827. This would provide opposing counsel with at least a limited opportunity to focus and controvert the real issues, and hence would make for more effective court review. See, Currie, 704 F.2d at 532-33 (Kraviteh, J., concurring).
While we earlier considered and approved use of the Vaughn Index, we have not until today been called upon to consider the more particularized problem posed by situations where even the acknowledgment that certain information exists is, in and of itself, a violation of the privacy provisions of the Act. In the government’s jargon this is called “Glomarization,” derived from a request for information concerning the putatively covert operations of the ship HUGHES GLOMAR EXPLORER, adjudicated in Phillippi v. Central Intelligence Agency, 546 F.2d 1009 (D.C.Cir.1976). Absent modification, the Vaughn Index could not be used in such cases because to avoid a breach of confidentiality only in coimera review could be undertaken. This had the effect of shutting out plaintiff’s counsel. Id. at 1013.
The Phillippi court found this less than satisfactory and directed the trial courts to attempt to meld the competing Vaughn and in camera approaches by requiring an agency claiming privilege:
to provide a public affidavit explaining in as much detail as is possible the basis for its claim that it can be required neither to confirm nor to deny the existence of the requested records. The Agency’s arguments should then be subject to testing by appellant, who should be allowed to seek appropriate discovery when necessary to clarify the Agency’s position or to identify the procedures by which that position was established. Only after the issues have been identified by this process should the District Court, if necessary, consider arguments or information which the Agency is unable to make public.
Id. at 1013, accord, Lame v. United States Department of Justice, 654 F.2d 917, 921-22 (3d Cir.1981). We find this the better approach. Before resorting to the imperfect method of in camera review, “the District Court should attempt to create as complete a public record as is possible.” Phillippi, 546 F.2d at 1013. In so doing, the trial courts may achieve the best balance between the legitimate public or private . considerations suggesting privilege and the public interest in full and open access to government records so strongly endorsed by Congress. Further, the integrity of the adversary system may be, for the most part, preserved by this means.
In those rare cases where information is of such sensitive nature that even Phillip-pi ’s requirement of a public colloquy as to why admitting the existence of the document would be too much, then “the in camera inspection of a more detailed affi davit must be resorted to. Ferri v. Bell, 645 F.2d 1213, 1223 (3d Cir.1981) (emphasis supplied); Phillippi, 546 F.2d at 1013; see generally, Stephenson, 629 F.2d at 1145-46.
III.
From the foregoing discussion of the district court’s obligations under the statute, it follows ineluctably that the inquiry below was simply and completely inadequate as a matter of law. The district court required no Vaughn Index, no in camera inspection, no hearing, not even the filing of an affidavit to support the government’s claim. The effect was to give the government an absolute, unchecked veto over what it would or would not divulge, in clear violation of the provisions of the statute. It diverted to the agency the court’s obligation to decide these questions according to law. This was error and requires REVERSAL of the grant of summary judgment and a REMAND FOR A TRIAL during which the FBI will be required to make an adequate showing of privilege to be considered de novo by the trial court. In reaching this result we intimate no suggestion in any respect as to the merits of the underlying claim of privilege.
. The parties briefed an additional question decided below. The FBI and the trial court read FOIA Exemption 3, which states that FOIA does not permit access into matters “specifically exempted from disclosure by statute," as incorporating into FOIA the provisions of the Privacy Act, since that statute specially exempts from disclosure certain files. This is in accord with our holding in Painter v. FBI, 615 F.2d 689, 690-91 (5th Cir.1980). The government at oral argument informed us that it no longer advances this argument.
Painter has been implicitly overruled by statute, and explicitly rejected in the legislative history. H.R.Rep. No. 726, 98th Cong., 2d Sess. 1, 14, reprinted in 1984 U.S.Code Cong. & Ad.News 3741, 3788. Congress passed the CIA Information Act of 1984, Pub.L. No. 98-477, 98 Stat. 2209 (1984), codified at 5 U.S.C.A. § 552a (1985), which amended the Privacy Act and clarified the proper reading of the two statutes by decreeing, at section 552a(q), that (1) “]n]o agency shall rely on any exemption contained in section 552 of this title [FOIA] to withhold from an individual any record which is otherwise accessible to such individual under the provisions of this section [Privacy Act]” and (2) “[n]o agency shall rely on any exemption in this section [Privacy Act] to withhold from an individual any record which is otherwise accessible to such individual under the provisions of section 552 of this title [FOIA].” Information obtainable under FOIA but not under the Privacy Act must be released if sought under FOIA. Information available under the Privacy Act but not under FOIA must be disclosed if sought under the former. 1984 U.S.Code Cong. & Ad.News at 3791. This amendment was meant to apply to “all pending and future requests for access....” Id. Ely filed his request under the FOIA and under that Act the FBI bears the burden of proving the material requested was privileged. 5 U.S.C.A. § 552(a)(4)(B). Thus, the government’s concession of this point was correct, for the trial court’s decision on this question was clearly erroneous. Painter is no longer viable precedent.
. Though the trial court relied as well on Exemption 3 in reaching its result, as was noted in footnote 1, Exemption 3 is no longer applicable to this case due to the CIA Information Act. Exemption 6 prohibits disclosure of “personnel and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of privacy." Exemption 7 precludes disclosure of "investigatory records compiled for law enforcement purposes, but only to the extent that the production of such records would ... (C) constitute an unwarranted invasion of personal privacy_”
. Considerable words were spent at oral argument on the question of burden of proof and balancing of interests. The government suggested at one point that unless the plaintiff makes some initial showing of public interest in disclosure it would be a “needless formality” to require the government to inform the trial court whether the documents in question exist or to suffer in camera review.
This turns our case law on its head. As we noted in Cochran, 770 F.2d at 955, the determination that a given FOIA request is to be denied on grounds of privilege requires a two-step inquiry: the court must determine that "(1) the information' was [of the sort covered by the relevant exemption]” and then undertake “(2) a balancing of individual privacy interests against the public interest in disclosure [that may] reveal] ] that disclosure of the information constitutes a 'clearly unwarranted invasion of privacy.' ” From this we think it clear that the government must first establish to the court’s satisfaction that its claim of privilege is bona fide &emdash;that it properly comes within the ambit of one of the statutory exemptions. Only after that showing is made will the court move on to the second step of the Cochran analysis-the balancing of privacy interests against the presumption of disclosure. To hold otherwise would be to require the trial court to undertake the needless formality of the balancing test when no claim of privilege could properly be advanced.
. At oral argument counsel for the government relied heavily on three cases to support the Bureau’s contention that it need not disclose even to the court whether the files in question exist and what they contain. We find all three inapposite.
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226851-21507 | RULING ON COLEMAN -INVESTMENT, INC.’S AND ROBERT COLEMAN’S MOTION FOR SUMMARY JUDGMENT AND JUDGMENT ON THE PLEADINGS
POLOZOLA, District Judge.
Coleman Investments, Inc. (“Coleman Toyota”) and Robert Coleman (“Coleman”) have filed a motion for summary judgment and for judgment on the pleadings. Because the Court has considered and relied on evidence outside of the pleadings,, the Court will treat the motion as a motion for summary judgment. For reasons which follow, the motion for summary judgment filed by Coleman Toyota and Coleman is GRANTED.
FACTS & PROCEDURAL HISTORY
Lillie D. Brown (“Brown”) and Lois N. Gomes (“Gomes”) have filed separate claims against the various defendants under the Truth in Lending Act (“TILA”), the Racketeer Influenced and Corrupt Organizations Act (“RICO”) and a state law claim for “equitable restitution.” Plaintiffs have asserted claims under TILA and for “equitable restitution” against Coleman Toyota. The plaintiffs have also filed a RICO claim for a violation of 18 U.S.C. § 1962(c) against Coleman. The Court now turns to a brief discussion of the facts of this case.
On or about July 22,1995, Brown executed a retail installment contract with Coleman Toyota for the purchase of a 1994 Toyota Tercel. The Truth in Lending Disclosure statement prepared by Coleman Toyota disclosed an “amount financed” of $13,157.52, a “finance charge” of $3,487.08 and an “annual percentage rate” of 9.50%. Included in the $13,157.52 “amount financed” was a $40 charge for a “license fee.” The parties agree that the actual amount of the “license fee” charged by the State of Louisiana was $22.92. In addition, Coleman Toyota charged Brown the $25 cost of ad valorem taxes owed by Coleman Toyota as a result of the sale. Brown’s retail installment contract was assigned to TMCC which financed the vehicle.
On or about September 20, 1995, Gomes executed a retail installment contract with Coleman Toyota for the purchase of a 1995 Toyota Tercel. The Truth in Lending Disclosure statement prepared by Coleman Toyota disclosed an “amount financed” of $12,-212.42, a “finance charge” of $4,357.18 and an “annual percentage rate” of 12.50%. Included in the $12,212.42 “amount financed” was a $97 charge for a “license fee.” The actual amount of the “license fee” charged by the State of Louisiana was $25. In addition, Coleman Toyota also assessed Gomes the $21 cost of ad valorem taxes owed by Coleman Toyota. Gomes’s retail installment contract was assigned to Hibernia which provided the financing for the vehicle.
Based upon the above facts, Brown and Gomes have asserted the various claims listed above against Coleman Toyota and Coleman. The Court now turns to a discussion of the legal principles the Court must follow in ruling on this motion for summary judgment.
SUMMARY JUDGMENT STANDARD
Summary judgment Should bé granted if the record, taken as a whole, “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.” The Supreme Court has interpreted the plain language of Rule 56(e) to mandate “the entry of summary judgment, after adequate time for discovery and upon motion, 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 .” A party moving for summary judgment “must ‘demonstrate the absence of a genuine issue of material fact,’ but need not negate the elements of the nonmovant’s case.” “If the moving party fails to meet this initial burden, the motion must be denied, regardless of the nonmovant’s response.”
If the moving party meets this burden, Rule 56(c) requires the nonmovant to go beyond the pleadings and show by affidavits, depositions, answers to interrogatories, admissions on file, or other admissible evidence that specific facts exist over which there is a genuine issue for trial. The nonmovant’s burden may not be satisfied by conclusory, allegations, unsubstantiated assertions, metaphysical doubt as to the facts, or a scintilla of evidence. Factual controversies are to be resolved in favor of the nonmovant, “but only when there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts .” The Court will not, “in the absence of any proof, assume that the nonmoving party could or would prove the necessary facts.” Unless there is sufficient evidence for a jury to return a verdict in the nonmovant’s favor, there is no genuine issue for trial.
When affidavits are used to support or oppose a motion for summary judgment, the affidavits “shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affir matively that the affiant is competent to testify to the matters stated therein.” Affidavits that are not based on personal knowledge or that are based merely on information and belief do not satisfy the requirements of Rule 56(e), and those portions of an affidavit that do not comply with Rule 56(e) are not entitled to any weight and cannot be considered in deciding a motion for summary judgment. Neither shall conclusory affidavits suffice to create or negate a genuine issue of fact.
ANALYSIS
The Court will first address the various TILA claims filed against Coleman Toyota.
(I) TILA Claims
While each of the plaintiffs have alleged the same violations of TILA, each claim is based on a different set of facts. Brown has alleged the following violations of TILA by Coleman Toyota: (1) by charging $40 for a “license fee” that actually cost $22.92, Coleman Toyota understated the “finance charge” by $17.08, overstated the “amount financed” by $17.08 and understated the “annual percentage rate;” (2) Coleman Toyota failed to disclose the fact of or amount of the $17.08 upeharge in the “license fee;” and (3) Coleman Toyota assessed Brown $25 for ad valorem taxes which were legally owed by Coleman Toyota thereby understating the “finance charge.” Gomes has alleged the following violations of TILA: (1) by charging $97 for a “license fee” that actually cost $25, Coleman Toyota understated the “finance charge” by $72, overstated the “amount financed” by $72 and understated the “annual percentage rate;” (2) Coleman Toyota failed to disclose the fact of or amount of the $72 upeharge in the “license fee;” and (3) Coleman Toyota assessed Gomes $21 for ad valorem taxes which were legally owed by Coleman Toyota thereby understating the “finance charge.” The Court will discuss each of these claims separately.
(I)(A) Effects of the Alleged Understatement of the “Finance Charge”
These claims are based on the characterization of the “license fees” charged by Coleman Toyota to Brown and Gomes. Coleman Toyota charged Brown $40 for the “license fee” when the actual cost of the “license fee” was $22.92, amounting to an up-charge of $17.08. Coleman Toyota charged Gomes $97 for the “license fee” when the actual cost of the “license fee” was' $25, amounting to an upeharge of $72. The plaintiffs contend Coleman Toyota violated TILA by including the amount of the upcharges in the “amount financed,” instead of in the “finance charge.” Thus, a summary of the violations of TILA which plaintiffs claim result from the alleged miselassification of the upcharges may be summarized as follows:
1. Coleman ■ Toyota understated the “finance charge” disclosed to Brown and Gomes by $17.08 and $72, respectively, in violation of 15 U.S.C. §■ 1638(a)(3) and 12 C.F.R. § 226.18(d).
2. By understating the “finance charge,” Coleman Toyota necessarily overstated the “amount financed” disclosed to Brown and Gomes by $17.08 and $72, respectively, in violation of 15 U.S.C. § 1638(a)(2) and 12 C.F.R. § 226.18(b).
3. Because the “finance charge” and the • “amount financed” were understated and overstated, respectively, Coleman Toyota necessarily understated the “annual percentage rate” disclosed to Brown and Gomes in violation of 15 U.S.C. § 1638(a)(4) and 12 C.F.R. § 226.18(e).
Coleman Toyota argues the upcharges assessed to Brown and Gomes are not “finance charges” because the entire amount charged to Brown and Gomes for the “license fee” meets the comparable cash transaction exception to the definition of “finance charge.” The Court finds there are genuine issues of material fact in dispute which preclude summary judgment on the issue of whether the “license fees” charged to Brown and Gomes meets the comparable cash transaction exception to the definition of “finance charge.” Therefore, Coleman Toyota’s motion for summary judgment on this issue is denied.
(1) (B) Inaccurate Disclosure of a “License Fee”
The plaintiffs also claim that the $40 “license fee” and $97 “license fee” charged to Brown and Gomes, respectively, are inaccurate disclosures, in violation of 15 U.S.C. § 1638(a)(2)(B)(iii), 12 C.F.R. § 226.18(e)(l)(iii), and 12 C.F.R. § 226.18(c)(2), because Coleman Toyota failed to disclose the fact of or the amount of the upeharges. To resolve this claim, the Court must determine whether, under the above cited statute and regulations, Coleman Toyota must disclose: (1) the fact that an upcharge is included in the “license fee;” (2) the specific amount of the upcharge; or, (3) neither the fact nor the amount of the upeharge. The record clearly shows that Coleman Toyota has not disclosed the fact of or the amount of the upcharge.
For the reasons set forth in the Court’s “Ruling on Motion for Summary Judgment Filed by Hancock Bank of Louisiana” in Green v. Levis Motors, —F.Supp.-, 1997 WL 840034 (M.D.La.1997), the Court denies Coleman Toyota’s motion for summary judgment on this issue. The Court holds that Coleman Toyota must disclose either the fact that there is an upcharge or the amount of the upcharge.
Coleman Toyota asserts the “good faith” defense set forth in 15 U.S.C. § 1640(f) which provides as follows:
No provision of this section, section 1607(b), section 1607(c), section 1607(e), or section 1611 of this title imposing any liability shall apply to any act done or omitted in good faith in conformity with any rule, regulation, or interpretation thereof by the Board or in conformity with any interpretation or approval by an official or employee of the Federal Reserve System duly authorized by the Board to issue such interpretations or approval under such procedures as the Board may prescribe therefore notwithstanding that after such act or omission has occurred, such rule, regulation, interpretation, or approval is amended, rescinded, or determined by judicial or other authority to be invalid for any reason.
In Cox v. First Nat’l Bank of Cincinnati, the Court explained the meaning of § 1640(f) as follows:
This defense is available to a creditor only if he acts ‘in conformity' with certain official interpretations of the Truth in Lending Act. It does not protect a creditor who fails to conform with a regulation or interpretation through an honest, good faith mistake. In other words, § 1640(f) does not protect a creditor from its own mistaken interpretation of the law.
However, in Charles v. Krauss Company, the Fifth Circuit Court of Appeals held that “the congressional drafters of the good-faith defense amendment stated that they did not believe that ‘a creditor should be forced to choose between the Board’s construction of the Act and the creditor’s own assessment of how a court may interpret the Act.’ ”
The Court finds the good-faith defense applies under the facts of this case. The statute and regulation at issue here are 15 U.S.C. § 1638(a)(2)(B)(iii) and 12 C.F.R. § 226.18(c)(l)(iii), respectively. The Federal Reserve Board’s interpretation of this statute and regulation is extremely vague and ambiguous. Many courts have agreed with Coleman Toyota’s interpretation of the commentary holding that a creditor may, but is not required to, disclose the fact of or the amount of any upcharge included in amounts paid to others. A number of other courts have agreed with this Court holding that a creditor must disclose either the fact of or the amount of the upcharge included in amounts paid to others.
In this case, Coleman Toyota did not merely fail to comply with the commentary due to its own honest, good faith, mistake. Instead, Coleman Toyota complied in good faith with a reasonable interpretation of the commentary. Coleman Toyota also did not make a mistake in interpreting the commentary because Coleman Toyota’s good faith interpretation was in agreement with the interpretation made by many other courts. It is true that Coleman Toyota failed to accurately forecast how this Court would interpret the commentary. Under § 1640(f) and the Fifth Circuit’s opinion in Charles, however, Coleman Toyota had no duty to forecast this Court’s interpretation of the commentary and statute. Therefore, the Court finds the “good faith conformity” defense must and should apply under the facts of this ease. Therefore, the Court grants Coleman Toyota’s motion for summary judgment on the issue of whether it inaccurately disclosed the “license fee” to the plaintiffs by failing to indicate the fact of or the amount of the upcharge.
(I)(C) Disclosure of Ad, Valorem Tax
Coleman Toyota also assessed Brown and Gomes $25 and $21, respectively, for the cost of the ad valorem taxes owed by Coleman Toyota as a result of the sales. Coleman Toyota has a policy and practice of including in both the cash and credit price of a vehicle the amount of ad valorem taxes that Coleman Toyota is required to pay on the sale of each vehicle. For reasons set forth in the Court’s “Ruling on Toyota Motor Credit Corporation’s Motion for Summary Judgment and Judgment on the Pleadings,” the Court finds the charges for ad valorem taxes meet the comparable cash transaction exception to the definition of “finance charge.” "Therefore, Coleman Toyota’s motion for summary judgment on this issue is granted.
(I)(D) Summary and Conclusion — Substantive TILA Violations
Because there are genuine issues of material fact in dispute, the Court denies Coleman Toyota’s motion for summary judgment on the issue of whether the “amount financed,” “finance charge,” and “annual percentage rate” disclosed to Brown and Gomes were misstated due to the inclusion in the “amount financed” of the upcharges in the “license fees.” However, the Court grants Coleman Toyota’s motion for summary judgment on the issue of whether the fact of or the amount of the upcharges in the “license fees” must be disclosed to Brown and Gomes, respectively, due to the applicability of the “good faith conformity” defense. Finally, the Court grants Coleman Toyota’s motion for summary judgment on the issue of whether Coleman Toyota’s practice of passing through the cost of ad valorem taxes to its customers is a violation of TILA.
(II) RICO Claim
The plaintiffs have filed a RICO claim pursuant to 18 U.S.C.1962(c) against Coleman. “In order to state a claim under 18 U.S.C. § 1962, a plaintiff must allege: 1) the conduct; 2) of an enterprise; 3) through a pattern; 4) of racketeering activity.” In this case, the plaintiffs allege the racketeering activity is the use of the mail and wires to “intentionally] inflat[e] ... fees listed as governmental fees on retail installment contracts for motor vehicles, with the intention of pocketing the difference between the fee charged to consumers and the actual fees submitted to the state of Louisiana ... for license fees.” According to the plaintiffs, the racketeering activity also includes the allegedly fraudulent scheme of passing through the cost of ad valorem taxes to consumers. Coleman argues the plaintiffs’ RICO claims should be dismissed because the plaintiffs have failed to plead fraud with particularity in violation of Rule 9(b). The Court now turns to a discussion of the merits of Coleman’s argument.
The predicate acts alleged by the plaintiffs are mail fraud and wire fraud. Since the predicate acts alleged by the plaintiffs are mail fraud and wire fraud, Brown must comply with Rule 9(b) which requires particularity in pleading the “circumstances constituting fraud.” “At a minimum, Rule 9(b) requires allegations of the particulars of ‘time, place, and contents’ of the false representations, as well as the identity of the person making the misrepresentation and what he obtained thereby.” In other words, “articulating the elements of fraud with particularity requires a plaintiff to specify the statements contended to be fraudulent, identify the speaker, state when and where the statements were made, and explain why the statements were fraudulent.” Considering the above principles, Brown must particularly plead the following elements of fraud: “1) a misstatement or omission; 2) of material fact; 3) made with the intent to defraud; 4) on which the plaintiff relied; and 5) which proximately caused the plaintiffs injury.” Rule 9(b) does allow “Allegations about conditions of the mind, such as defendant’s knowledge of the truth and intent to deceive to be made generally.”
Based on the above principles, the plaintiffs have failed to meet the particularity requirement of Rule 9(b). The plaintiffs’ Second Amended Complaint is also devoid of any allegations of Coleman’s intent to defraud. Furthermore, neither the plaintiffs’ Second Amended Complaint nor their RICO Case Statement contains any allegations regarding the time, place or manner of specific actions taken by Coleman which furthered the alleged fraud. Moreover, the plaintiffs have failed to plead the when, where and how of the specific actions committed by Coleman which were fraudulent. The allegations in the plaintiffs’ Second Amended Complaint and RICO Case Statement fall short of the particularity necessary to plead fraud under Rule 9(b). Therefore, Coleman’s motion for summary judgment on the RICO claim is granted.
III. “Equitable Restitution”
The plaintiffs also assert a claim for “equitable restitution” against Coleman Toyota seeking to collect the amount of the upcharge included in the “license fees” and the amount of ad valorem taxes which were assessed to plaintiffs. For the reasons set forth in the Court’s “Ruling on Toyota Motor Credit Corporation’s Motion for Summary Judgment on the Pleadings,” Coleman Toyota’s motion for summary judgment is granted on this issue.
IV. Lack of an Indispensable Party
Coleman Toyota and Coleman argue this case should be dismissed pursuant to Rule 19 of the Federal Rules of Civil Procedure for failure to join an indispensable party. Brown’s husband, the now deceased Louis Brown, also signed the retail installment contract at issue in this suit. Thus, Coleman Toyota and Coleman contend the estate of Louis Brown is required for the complete adjudication of this matter. The Court agrees that the Estate of Louis Brown should be made a party plaintiff in this suit. Therefore, Brown has twenty days from the date of this order to amend her complaint and add the Estate of Louis Brown as a plaintiff or Brown’s suit will be dismissed.
V. Conclusion
In conclusion, the Court finds there are genuine issues of material fact which preclude summary judgment on the issue of whether the “finance charge” disclosed by Coleman Toyota was understated by the amount of the upeharges in the “license fees” paid by the plaintiffs. Based on the applicability of the “good faith conformity” defense set forth in 15 U.S.C. § 1640(f), the Court grants summary judgment on the issue of whether Coleman Toyota is required to disclose the fact of or the amount of the up-charges in “license fees” charged to the plaintiffs. The Court also, grants the motion for summary judgment, on the issue of whether the ad valorem tax, owed by Coleman Toyota, and passed through to the plaintiffs, should have been included in the “finance charge,” because the Court finds the cost of the ad valorem tax meets the comparable cash transaction exception to the definition of “finance charge.”
With regard to the RICO claim under § 1962(e), the Court grants Coleman’s motion for .summary judgment because of the plaintiffs’ failure to plead fraud with particularity in compliance with Rule 9(b) and the Fifth Circuit’s mandate in Williams.
The Court also grants Coleman Toyota’s motion for summary judgment on the claim for “equitable restitution.”
Finally, the Court orders the plaintiffs to add the estate of Louis Brown as a party plaintiff in this suit within twenty (20) days or this suit shall be dismissed.
IT IS SO ORDERED.
. The defendants in this action are Coleman Toyota, Toyota Motor Credit Corporation ("TMCC”), Hibernia National Bank (“Hibernia”), Coleman and Robert Coleman, Jr. The fictitious defendants named by the plaintiffs will be ignored by the Court pursuant to the Federal Rules of Civil Procedure.
. 15 U.S.C. § 1601, etseq.
. 18 U.S.C. § 1961, etseq.
. The plaintiffs filed a motion to certify this suit a class action lawsuit, but as of the date of this ruling, the Court has not ruled on that motion.
. See 15 U.S.C. § 1638(a)(2) for definition of “amount financed."
. See 15 U.S.C. § 1605(a) and 12 C.F.R. § 226.4(a) for definition of "finance charge.”
. See 15 U.S.C. § 1638(a)(4), 12 C.F.R. § 226.18(e) and 12 C.F.R. § 226.22 for discussion of the "annual percentage rate.”
. Fed.R.Civ.P. 56(c); New York Life Ins. Co. v. Travelers Ins. Co., 92 F.3d 336, 338 (5th Cir.1996); Rogers v. Int’l Marine Terminals, Inc., 87 F.3d 755, 758 (5th Cir.1996).
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