_id
stringlengths 9
14
| text
stringlengths 2.26k
32.7k
|
|---|---|
2243631-16030 | SWYGERT, Chief Judge.
This is a suit for refund of $382,353.-12, representing taxes and interest which the Anchor Coupling Company, Inc. paid after the Commissioner of Internal Revenue disallowed a $600,000 deduction on taxpayer’s federal income tax return for its fiscal year ending June 30, 1962. The issue is whether the district court correctly ruled that the $600,000 paid by taxpayer in settlement of litigation seeking specific performance of an alleged contract for the sale of Anchor’s assets to the Borg-Warner Corporation was deductible as an ordinary and necessary business expense rather than a nondeductible capital expenditure. We hold that the $600,000 payment was a nondeductible capital expenditure and, therefore, reverse.
Anchor Coupling Company is an Illinois corporation having its principal office in Libertyville, Illinois. The founders of the company were Charles Conroy and Walter Fritsch. In 1956 Conroy and Fritsch owned approximately ninety per cent of Anchor’s outstanding stock. Early in that year they entered into negotiations for the sale of Anchor’s assets to Borg-Warner. On February 20 Borg-Warner wrote Anchor setting forth a proposed agreement which gave Borg-Warner a sixty-day option to purchase Anchor’s assets. On February 29 Anchor replied, stating in substance that its assets could be purchased for $4,025,000, provided suitable assurance was given that Anchor’s lower level executive personnel would be retained by Borg-Warner. The letter was characterized by the Illinois Supreme Court as a “counter offer.”
Thereafter it became apparent that Borg-Warner intended upon consummation of the sale to reduce the salaries and responsibilities of certain executives and that some of the executives intended to seek employment elsewhere. As a result Conroy, over the opposition of Fritsch, decided to terminate the negotiations and to resist, by litigation if necessary, Borg-Warner’s efforts to acquire Anchor’s assets.
On November 3, 1956 Borg-Warner filed a complaint in the Circuit Court of Lake County, Illinois against Fritsch, Conroy, and Anchor, alleging that the intercompany correspondence between Anchor and Borg-Warner constituted a contract for the sale of Anchor’s assets and seeking specific performance. In May 1957 the Circuit Court dismissed the complaint on the grounds that Borg-Warner failed to allege a completed contract and that the alleged negotiations, even if they constituted a contract, were unenforceable by reason of the statute of frauds. Borg-Warner filed an amended complaint which was dismissed on similar grounds. On appeal the Illinois Supreme Court reversed, holding that the amended complaint stated a cause of action and remanded the case for trial to determine whether the parties had entered into a binding contract. Borg-Warner Corp. v. Anchor Coupling Co., Inc., 16 Ill.2d 234, 156 N.E.2d 513 (1958).
Trial before the court commenced on May 24, 1961, but was adjourned for the summer after two days of testimony. On July 5, 1961 Fritsch died. His son, John, and William Funck, as executor of the estate, became representatives of the Fritsch interests in Anchor. Thereafter, Anchor contacted Borg-Warner concerning a possible settlement of the litigation. In October 1961 a settlement was reached. In return for relinquishing all claim to Anchor’s assets and dismissing its suit, Borg-Warner received $1,000,000. As between the several representatives of the taxpayer, Conroy paid $150,000, the Fritsch estate $250,000, and Anchor $600,000.
Anchor deducted the $600,000 payment as an ordinary and necessary business expense on its federal income tax return for its fiscal year ending June 30, 1962. The Commissioner of Internal Revenue disallowed the deduction on the ground that the payment was a nondeductible capital expenditure. Anchor paid the tax and interest due as a result of the disallowed deduction and filed a claim for refund. The claim was disallowed, and the present suit followed.
The district court found that the pend-ency of the Borg-Warner litigation, from October 1956 to November 1961, had “an adverse effect upon plaintiff’s [Anchor] day-to-day operations.” Specifically the court determined that as a result of the litigation Anchor’s sales and income “remained stagnant” and its competitive position “deteriorated” during a time of “rapidly increasing demand” when Anchor, because of the suit, “curtailed nec essary expenditures.” As a result the court concluded that:
Plaintiff’s $600,000 payment to Borg-Warner was made in good faith and was reasonable in amount. The payment was made with a present business purpose to free plaintiff from the constraints imposed upon its business operations by the pendency of the litigation. The $600,000 payment in question bore a direct and proximate relationship to plaintiff’s operations and to the production of income from such operations and was made to conserve and protect property held by plaintiff for the production and generation of income.
Accordingly, the court held that the payment to Borg-Warner of $600,000 was an ordinary and necessary business expense and ordered the Government to pay Anchor $382,353.12 plus interest from September 15, 1966. This appeal followed.
The only question in this appeal is whether the $600,000 settlement of the Borg-Warner litigation was an ordinary and necessary business expense deductible from current income under section 162(a) of the Internal Revenue Code of 1954, or a nondeductible capital expenditure under section 263 of the Code. In holding that the settlement payment was an ordinary and necessary business expense, the district court relied primarily upon two factors: (1) the effect of the Borg-Warner claim and litigation on Anchor’s operations and the possible consequences of not settling the claim on taxpayer’s business; and (2) Anchor’s primary motivation in making the settlement was to avoid the consequences noted in (1) and to improve its earnings from current operations. Under the “primary purpose” test applied in previous cases these factors may be relevant in determining whether or not expenditures are deductible as payments made to protect ownership or to defend title to a capital asset. Rassenfoss v. Commissioner of Internal Revenue, 158 F.2d 764 (7th Cir. 1946); see generally, cases collected in 4A, J. Mertens, Law Of Federal Income Taxation §§ 25.24, 25A.16 (1966 ed.). The Government urges that the primary purpose test is no longer the appropriate test in light of the Supreme Court’s decisions in United States v. Gilmore, 372 U.S. 39, 83 S.Ct. 623, 9 L.Ed.2d 570 (1963); Woodward v. Commissioner of Internal Revenue, 397 U.S. 572, 90 S.Ct. 1302, 25 L.Ed.2d 577 (April 20, 1970); and United States v. Hilton Hotels Corp., 397 U.S. 580, 90 S.Ct. 1307, 25 L.Ed.2d 585 (April 20, 1970). We agree and hold that the district court erred in considering the possible consequences of the failure to settle on Anchor’s current operations and the taxpayer’s motives in entering into the settlement.
In Gilmore the Supreme Court was asked to determine whether litigation expenses were deductible business expenses or nondeductible personal expenses. The taxpayer and his wife were engaged in a hotly contested divorce proceeding. The taxpayer believed that loss of the divorce proceeding would threaten his controlling stock interest in an auto dealership and, by damaging his reputation, would endanger his ability to renew his General Motors franchise. He, therefore, deducted over $40,000 in legal expenses as an ordinary and necessary business expense. The Commissioner denied the deduction, but the Court of Claims held that eighty per cent of the expenses were deductible as defending community property claims against the taxpayer’s stockholdings. The Supreme Court reversed, holding that the Court of Claims had applied the wrong test in determining whether the legal expenses of the taxpayer were personal expenses or ordinary and necessary business expenses. The Court stated the proper test as follows: “[T]he origin and character of the claim with respect to which an expense was incurred, rather than its potential consequences upon the fortunes of the taxpayer, is the controlling basic test of whether the expense was ‘business’ or ‘personal’ and hence whether it is deductible or not under § 28(a) (2).” [Section 212 of the 1954 Code.] United States v. Gilmore, supra, 872 U.S. at 49, 83 S.Ct. at 629.
In the Woodward and Hilton Hotels cases the Court was asked to determine whether expenses in connection with appraisal litigation were capital expenditures incurred in the acquisition or disposition of a capital asset. In Woodward taxpayers controlled a majority of common stock in an Iowa publishing corporation. In 1960 the taxpayers voted their controlling shares in favor of perpetual extension of the corporate charter. Under Iowa law the majority shareholders were required to purchase the stock of shareholders who voted against renewal of the charter. The Eighth Circuit held that these expenses were nondeductible capital expenditures, Woodward v. Commissioner of Internal Revenue, 410 F.2d 313 (1969). The Hilton Hotels case concerned litigation expenses incurred pursuant to New York law in connection with the valuation of the shares of persons objecting to the merger of Hilton Hotels Corporation and Hotel Waldorf-Astoria Corporation. This court applied the primary purpose test announced in Rassenfoss v. Commissioner of Internal Revenue, 158 F.2d 764 (7th Cir. 1946), and held that “the proceeding was not necessary to the consummation of the merger nor did it function primarily to permit the acquisition of the objecting holders’ shares,” and that “the paramount purpose of the appraisal proceeding was to determine the fair value of the dissenting stockholders’ shares in Waldorf.” Hilton Hotels Corp. v. United States, 410 F.2d 194, 197 (1969). Accordingly, we held post-merger appraisal expenses were deductible as ordinary and necessary business expenses.
The Supreme Court reversed our decision in Hilton Hotels and affirmed the Eighth Circuit’s decision in Woodward, In so doing the Court held that the test to be applied in determining whether costs are incurred in the acquisition of a capital asset is a simple “inquiry whether the origin of the claim litigated is in the process of acquisition itself.” Woodward v. Commissioner, supra, 90 S.Ct. at 1306. The Court rejected the application of the primary purpose test in this area noting that: “A test based upon the taxpayer’s ‘purpose’ in undertaking or defending a particular piece of litigation would encourage resort to formalisms and artificial distinctions.” Woodward v. Commissioner, supra, at 1306. As the Court recognized, this approach fully comports with “objective” principles of deductibility established in Gilmore.
In Woodward in discussing its rejection of the primary purpose test proposed by this court in Hilton Hotels, the Court noted briefly the application of that theory to costs of defending title to a taxpayer’s property. The primary purpose test has never been directly reviewed by the Supreme Court and has been developed entirely by lower courts. As the Court explained: “This test [the primary purpose test] hardly draws a bright line, and has produced a melange of decisions, which, as the Tax Court has noted, ‘it would [sic] idle to suggest * * * can be reconciled.’ Hermann F. Ruoff, 30 T.C. 204, 208 (1952).” Woodward v. Commissioner, supra, at 1305. However, the Court did not intimate the extent to which the primary purpose test, as applied to costs incurred in protecting ownership, has been rejected by the adoption of an objective standard of deductibility in Gilmore and Woodward, We are convinced that the considerations which prompted the Court to announce such a test in these cases also impel us to fashion a similar test for determining whether the settlement payment in this case is a business expense or a capital expenditure.
In so doing we rely particularly on Gilmore. Taxpayer argues that Gilmore is inapplicable because we are asked here to determine whether a settlement constitutes an ordinary and necessary business expense or a capital outlay and not whether a payment is a deductible business expense or a nondeductible personal expense. We disagree. Although the two questions are admittedly different, substantially the same problems arise in each determination. Thus in both cases the court must determine the tax consequences of monetary outlays made in connection with contesting a claim on the taxpayer’s assets. Consideration of the taxpayer’s motive and the consequences of his failure to make a payment or to incur an expense create the same problems in both cases. For the deductibility of payments to depend upon such elusive determinations causes tremendous difficulties for the administration of the tax laws. Further, for deductibility to depend upon subjective considerations encourages schemes of tax avoidance and, as the Supreme Court noted in Gilmore, can lead to capricious results and a concomitant lack of uniformity in the application of our tax laws. Finally, as the Court noted in Woodward, a test based upon taxpayer’s purpose in defending or settling litigation would encourage resort to “formalisms and artificial distinctions.”
Taxpayer seeks to avoid these conclusions by arguing that here, as in contrast to Gilmore and Woodward, considerations of motive and the consequences on his business operations are necessary to determine whether the payment is made to protect or defend business property of the taxpayer. We see no such distinction. Admittedly, a settlement payment may have significant effect on current business operations, but as much could also be said for the legal expenses in Gilmore, or for that matter, the purchase of many capital assets. Accordingly, we hold that the origin and character of the claim with respect to which a settlement is made, rather than its potential consequences on the business operations of a taxpayer is the controlling test of whether a settlement payment constitutes a deductible expense or a nondeductible capital outlay.
When this test is applied to the instant case, it is evident that the Commissioner was correct in denying the deduction claimed by Anchor. The origin and nature of the claim by Borg-Warner, which was liquidated by Anchor’s settlement payment, directly concerns Anchor’s capital assets. The alleged contract between Anchor and Borg-Warner created a claim on Anchor’s assets by virtue of the doctrine of equitable conversion. Therefore, Anchor protected ownership to its assets by removing Borg-Warner’s claim through the settlement payment of $600,000.
This analysis is supported by two cases which have held that settlement payments constituted capital expenditures on facts nearly identical to those before us. In United States v. Wheeler, 311 F.2d 60 (5th Cir. 1962), cert. denied, 375 U.S. 818, 84 S.Ct. 54, 11 L.Ed.2d 53 (1963), the taxpayer, owner of a corporation, contracted to sell his stock in the corporation for $1,000,000, but refused to complete the sale because he believed that he had been duped by the purchaser’s attorney. The taxpayer subsequently settled a specific performance action brought by the purchaser for approximately $56,000. The Court of Appeals concluded that the facts “leave us in no doubt that the suit * * * was a suit for specific performance and direct ly involved title to the stock in question.” United States v. Wheeler, swpra, at 63. Similarly in Wise v. Commissioner of Internal Revenue, 311 F.2d 743 (2d Cir. 1963), the taxpayer leased land under an agreement which gave the tenant an option to purchase. The tenant exercised the option and sued for specific performance when the taxpayer refused to convey the property. The court held that the $7,000 settlement payment was made by the taxpayer to preserve his title to the property and, therefore, denied his claim that the payment was deductible.
|
284670-9034 | WILSON, Circuit Judge.
This is a petition to review a decision of the Board of Tax Appeals involving the income tax of the respondent and certain affiliated corporations for the year 1923. During that year four other corporations were affiliated with the respondent, viz.: Murphy Iron Works, Inc., A. W. Cash Company, Underfeed Stoker Company of America, and the Craig Damper Regulator Company.
The respondent and the Murphy Iron Works, Inc., were affiliated from January 1, 1921; the Underfeed Stoker Company and the Craig Damper Regulator Company became affiliated with the respondent company and the Murphy Iron Works, Inc., on June 12) 1922, and the A. W. Cash Company be came affiliated with the above group on August 31, 1922.
During the year 1921 and prior to June 12,1922, the Underfeed Stoker Company and the Craig Damper Regulator Company were affiliated with each other, but with no other company. The A. W. Cash Company was not affiliated with any other company in 1921, nor in 1922 until August 31.
During the calendar year of 1921, the Craig Damper Regulator Company sustained a net loss of $3,587.42, the Underfeed Stoker Company a net loss of $103,972.20, and the A. W. Cash Company a net loss of $38,739.-45.
It will be seen from the above facts that, under article 634 of Treasury Regulations 62, for three of the corporations the calendar year 1922 is divided into two parts; for the Underfeed Stoker Company and the Craig Damper Regulator Company from January 1 to June 12, and from June 12 to December 31, and for the A. W. Cash Company from January 1 to August 31, and from August 31 to December 31.
The issue decisive of this ease is whether the calendar year of 1922 is thereby divided into two “taxable years” in the case of the Underfeed Stoker Company, the Craig Damper Regulator Company, and the A. W. Cash Company, within the meaning of section 204 (b) of the Revenue Act of 1921 (42 Stat. 231), so that the losses suffered by these companies in 1921 cannot be carried over and deducted from their net income in making the consolidated return for 1923.
Section 200 of the Revenue Act of 1921 (42 Stat. 227) defines a taxable year as a calendar year or a fiscal year ending during such calendar year. It also provides that a fiscal year means an accounting period of twelve months ending on the last day of any month other than December, and that the first taxable year to be called the taxable year 1921 shall be the calendar year or any fiscal year ending during the calendar year 1921.
By section 204 (b) of the Revenue Act of 1921 it is provided:
“If for any taxable year beginning after December 31, 1920, it appears upon the production of evidence satisfactory to the Commissioner that any taxpayer has sustained a net loss, the amount thereof shall be deducted from the not income of the taxpayer for the succeeding taxable year; and if such net loss is in excess of the net income for such succeeding taxable year, the amount of such excess shall be allowed as a deduction in computing the net income for the next succeeding taxable year; the deduction in all cases to be made under regulations prescribed by the Commissioner with the approval of the Secretary.”
The Board of Tax Appeals sustained the taxpayer’s contention that a taxable year is a twelve months’ period; that under section 204 (b) the losses sustained by the Underfeed Stoker Company, the Craig Damper Regulator Company, and the A. W. Cash Company in the year 1921 were allowable against their net income, if any, in 1922; and any excess of net loss in 1921 over their 1922 incomes should be allowed against their net incomes in 1923 in making up a consolidated return. Woolford Realty Co., Inc., v. Rose, 286 U. S. 319, 52 S. Ct. 568, 76 L. Ed. 1128; Commissioner v. Ginsburg Co. (C. C. A.) 54 F.(2d) 238.
The government contends that the part of the year 1922 prior to affiliation and the part after affiliation constitute two taxable years, on the ground that sections 212 and 226 of the 1921 act (42 Stat. 237, 251) provide for the assessment of a tax for a part of a year when the taxable year is changed from a fiscal year to a calendar year, or vice versa.
The government fails, we think, to take into consideration not only the intent of Congress in enacting section 204 (b) of the Revenue Act of 1921, but also the language of section 226 of the 1921 act, which provides that in case of a change from a fiscal year to a calendar year, or vice versa, the separate return required is for the “period” between the dose of the old taxable year and the beginning of the new, and expressly refers to the fractional part of the year for which a separate return is required, not as a taxable year, but only as “a part of a taxable year.”
Congress, in providing in section 204 (b) of the Revenue Act of 1921 that the net loss in any year might be deducted from the net income of the two succeeding years, had in mind the economic conditions following the close of the war, and that a year in which great losses occurred might be followed by several years of prosperity, and, in view of the uncertain business conditions during the period of readjustment, that it was fair, and intended as a measure of relief to the taxpayers, to have their losses in a lean year spread over two succeeding years of prosperity.
To hold that, because a corporation which became affiliated on December 1, 1921, with another corporation that filed its tax return on a calendar basis, was obliged to file a separate return for the unaffiliated period from January 1 to December 1, during which period it suffered great losses, could not spread those losses over the succeeding two years of 1922 and 1923, because it was required to join in an affiliated return for the one month of December, 1921, would be, in a large measure, to deny to the taxpayer the very relief Congress intended to extend to him by section 204 (b) of the 1921 act.
The entire Revenue Act of 1921 and especially section 204 (b), and the Treasury Regulations under it, clearly treat a taxable year as a twelve months’ period.
Article 634, Treasury Regulations, provides :
“In either case the subsidiary or subordinate corporation whose status is changed during the taxable year should make a separate return for that part of the taxable year during which it was outside of the affiliated group. * * * ” (Italics supplied.)
The administrative officials in construing section 204 (b), both the Commissioner and the Board of Tax Appeals, have so construed the Act of 1921. Arthur Walker & Co., Inc., 4 B. T. A. 151; Turners Falls Power & Electric Co., 9 B. T. A. 435; Stevenson Consolidated Oil Co., 23 B. T. A. 610; Kinney Co., Inc., 26 B. T. A. 1091; Other instances might be cited.
The courts, where the issue here has been raised, have also held in construing section 204 (b) that a taxable year was a twelve months’ period, and the division of a year through a change from a fiscal to a calendar, or vice versa, or by reason of affiliation of corporations in the midst of a year, does not create two taxable years. United States v. Hoffman et al. (C. C. A.) 61 F.(2d) 294; Bankers’ Trust Co. et al. v. Bowers (C. C. A.) 295 P. 89, 31 A. L. R. 922; Corrugated Bar Co., Inc., v. Gage (D. C.) 58 F.(2d) 360, 363; Commissioner v. Death Valley Railroad Co. (C. C. A.) 62 F.(2d) 160.
We do not think eases like United States v. Carroll Chain Co. (D. C.) 8 F.(2d) 529, or Chess & Wymond Co. v. Lucas (D. C.) 33 F.(2d) 793, necessarily support the government’s contention in this case. In each of these cases, to have supported the government’s contention would have deprived the taxpayer of the relief to which he was clearly entitled under section 204 (b). In construing tax statutes, it is a well-established rule of construction that the act must be construed as an entirety, although the language used should not be extended except by a necessary implication beyond its ordinary import, and should, in case of doubt, be construed in favor of the taxpayer. United States v. Merriam, 263 U. S. 179, 187, 44 S. Ct. 69, 68 L. Ed. 240, 29 A. L. R. 1547, Gould v. Gould, 245 U. S. 151, 38 S. Ct. 53, 62 L. Ed. 211.
The only other ground relied upon by the government is that, since to section 200 of the Revenue Act of 1921, after the words, “The term ‘fiscal year’ means an accounting period of twelve months ending on the last day of any month other than December,” section 200 of the Revenue Acts of 1924 and 1926 (26 US CA § 931), added the words, “The term ‘taxable year1 includes, in the case of a return made for a fractional part of a year under the provisions of this title or under regulations prescribed by the commissioner with the approval of the Secretary, the period for which such return is made * * * ” (italics supplied) it indicated a change in the law and that this provision was retroactive.
We do not think it was intended by Congress that this added definition of a taxable year in section 200 of the Revenue Acts of 1924 and 1926 was intended to be retroactive.
|
9077510-28689 | MEMORANDUM OPINION
COOPER, District Judge.
This matter comes before the Court on the motion by defendant Osman Garba (“Garba”) pursuant to Federal Rule of Criminal Procedure (“Rule”) 11(d)(2)(B) to withdraw his plea of guilty before the imposition of sentence. Garba claims he should be permitted to withdraw his plea because, inter alia, it was unfair, unjust, unknowing, and entered in violation of both the Sixth Amendment to the United States Constitution and Rule 11. The United States (“the government”) opposes the motion on the grounds that, inter alia, Garba fails to produce any fair or just reason justifying withdrawal. Garba’s motion will be denied.
BACKGROUND
Garba emigrated from Ghana to the United States in 1983. (Garba Aff. at ¶ 2.) In 1997, Garba returned to Ghana. (Id. at ¶ 4.) A grand jury indicted Garba in August 2000 for, inter alia, conspiracy to distribute and possess with the intent to distribute 5 kilograms or more of cocaine, in violation of 21 U.S.C. § 846. (Gov.2002 Br. at 2.) Garba was arrested and extradited back to the United States in January 2001. (Garba Aff. at ¶ 4-5.)
Garba and the government engaged in intermittent plea negotiations beginning in March 2001. (Id. at ¶¶ 5-7; Gov.2002 Br. at 2-4.) The sticking point throughout the negotiations centered around the amount of cocaine that the agreement would stipulate was involved in the conspiracy. Garba wished to stipulate to 5 or more kilograms of cocaine, thereby subjecting him to a base offense level of 32 under the Federal Sentencing Guidelines. (Sent. Tr. at 17.) The government was only amenable to a stipulation to at least 15 but no more than 50 kilograms of cocaine, thereby carrying a base offense level of 34. (Id. at 17, 21.) The negotiations stalled.
The parties reached a plea agreement just as Garba’s trial was set to commence in March 2002. (Garba Aff. at ¶ 7.) Garba agreed to enter a plea of guilty to conspir ing to distribute and possess with the intent to distribute more than 5 kilograms of cocaine. (Gov. Sent. Br., Ex. A, at 1.) In exchange for this plea, the government agreed to move to dismiss all other charges pending against Garba. (Id.) As part of the plea agreement, the government and Garba “agree[d] to stipulate at sentencing” to certain statements. (Id. at 3.) The parties stipulated that “[t]he applicable quantity of powder cocaine is at least 15 but less than 50 kilograms. Accordingly, the base offense level is 34.” (Id. at 3, 6.)
The Court held a plea hearing pursuant to Rule 11 to determine whether it would accept Garba’s plea of guilty on March 11, 2002. The Court inquired whether Garba was “fully satisfied with the advice and representation that [he was] receiving from [his] attorney in this case,” Mr. Rhoads (“Rhoads”). (Plea H’g Tr. at 5.) The Court also asked whether Rhoads had “taken the time necessary to discuss the aspects of [the] case with [him], including the considerations that are important when [he] deeide[s] whether to plead guilty.” (Id.) Garba responded ‘Tes” to both questions. (Id.)
The Court then proceeded to review the plea agreement with Garba on the record. (Id.) The Court ascertained that Garba had read and discussed the agreement ■with Rhoads. (Id. at 6.) The Court noted that Garba would be entering a plea of guilty to “conspiring to distribute and possess with intent to distribute more than five kilograms of cocaine.” (Id. at 7.) The Court reiterated to Garba that the plea agreement stated the minimum sentence was ten years, and the maximum was life imprisonment. (Id. at 9.) The Court then addressed the stipulations.
THE COURT: Now, there are certain statements that you and the Government have agreed to.... These are called “stipulations” and what they mean, what that word means is that you and the Government have agreed that at the time of sentencing you will not be disputing these points that are relevant to sentencing. You may be disputing other points at the sentencing, but you won’t be disputing these stipulated points. Understand? These are agreed statements.
MR. GARBA: Yes, Your Honor.
THE COURT: Stipulation just means a statement which is agreed to by both sides. Now, before we go over the stipulations, I do need to point out that under the plea agreement the sentencing Judge is not required to agree with the stipulations at the time of sentencing. So the court is not bound by your stipulations, but you and the Government are. Understand?
MR. GARBA: Yes, Your Honor.
THE COURT: Also, the Court certainly will consider these stipulations and if the Court agrees, the Court will follow them. All right?
MR. GARBA: Yes, Your Honor.
THE COURT: Have you read each of these stipulations and discussed it with your lawyer? They’re part of the plea agreement?
MR. GARBA: Yes, Your Honor.
THE COURT: Okay. You have read each of these stipulations and discussed it with your lawyer, right?
MR. GARBA: Yes, Your Honor.
THE COURT: You don’t need for me to read these stipulations to you to make sure that you’re aware of them, do you?
MR. GARBA: Yes, Your Honor.
THE COURT: So you don’t need me to do that?
MR. GARBA: Yes, Your Honor, I don’t need to do that. Yes, I don’t need you to do that. Yes, Your Honor.
THE COURT: Okay, fine. I’ve read them. You’ve read them. We know what they say and you’re agreeing to be bound by them.
MR. RHOADS: Your Honor, just I guess for the record, if I — I’m referring to Schedule A and he’s looking as he speaks with you.
MR. GARBA: Yeah.
THE COURT: Okay.
MR. RHOADS: So we have gone over it.
(Id. at 11-12.) Later, the Court explained to Garba that he had “the right to take a position as to what [his] sentence should be at the time of sentencing,” but cautioned: “Except that you’ve agreed that these stipulations will not be disputed between yourselves, either at the time of sentencing or later. Understand?” (Id. at 13-14.) Garba responded: ‘Yes, Your Honor.” (Id. at 14.)
The Court next asked the government to question Garba on the record in order to establish a factual basis for the plea. (Id. at 24.) During the questioning, Garba conceded multiple times that the drug involved was cocaine, and that his “involvement with this conspiracy involve[d] the exportation of more than five kilograms of cocaine.” (Id. at 25-29.) The Court accepted Garba’s plea. (Id. at 31.)
Garba’s sentencing hearing was held on June 26, 2002. At that hearing, Garba stated that he had entered a plea of guilty on the understanding that there would be a hearing before his sentencing at which he could contest the amount of cocaine involved. (Sent. Tr. at 18.) Garba said he wanted the chance to argue that the amount involved was under 15 kilograms, thus resulting in a lower base offense level. (Id.) When the Court pointed out that Garba had stipulated that the quantity was between 15 and 50 kilograms, Garba responded that he had believed that stipulation could still be contested before sentencing. (Id. at 19-20.) Garba said his attorney had told him he would have this opportunity. (Id. at 18.) At that point, the Court discontinued the sentencing and ordered a hearing on whether Garba should be permitted to withdraw his plea of guilty.
Garba moved to withdraw his plea in November 2002. The Court held an evi-dentiary hearing on December 19, 2002 and May 27, 2003, to determine whether Garba’s motion should be granted. On the first hearing date, Garba testified that he thought he could still argue the cocaine amount because Rhoads had assured him the stipulation would not preclude such a claim. (12-19-02 H’g.) He further testified that he had been part of a conspiracy involving at least 5 kilograms of cocaine, but that the amount had been under 15 kilograms. (Id.) Garba claimed that he had (1) not read the stipulations, (2) not been paying careful attention to the Court’s questions during the plea colloquy, and (3) been just going through the motions. (Id.) On the second hearing date, Rhoads testified that he did not tell Garba that he could contest the amount recited in the plea, and that in fact he had carefully explained that the stipulation was binding on both Garba and the government. (5-27-03 H’g.) Rhoads further testified that Garba had admitted to him previously that the conspiracy involved more than 15 kilograms of cocaine. (Id.)
DISCUSSION
Garba argues the Court should grant his motion under Rule 11(d)(2)(B) because (1) his plea was given under the mistaken belief that he would be able to contest the amount of cocaine involved at a hearing before the sentencing; (2) his plea was the result of ineffective assistance of counsel in violation of the Sixth Amendment; and (3) the plea hearing conducted by the Court violated Rule 11 because Garba was not made aware that at trial the government would have to prove the quantity of cocaine involved to the jury beyond a reasonable doubt. Rule 11(d)(2)(B) states:
A defendant may withdraw a plea of guilty ... after the court accepts the plea, but before it imposes sentence if ... the defendant can show a fair and just reason for requesting the withdrawal.
This rule makes clear that “there is no absolute right to withdraw a guilty plea,” but rather that “acceptance of the motion is within the discretion of the trial court.” Gov’t of V.I. v. Berry, 631 F.2d 214, 219 (3d Cir.1980).
The Third Circuit has elucidated a three-pronged inquiry for assessing whether a defendant’s reasons for withdrawal are fair and just: “A district court must consider ... (1) whether the defendant asserts his innocence; (2) the strength of the defendant’s reasons for withdrawing the plea; and (3) whether the government would be prejudiced by the withdrawal.” United States v. Jones, 336 F.3d 245, 252 (3d Cir.2003). While “[t]he burden of demonstrating a ‘fair and just’ reason falls on the defendant, and that burden is substantial,” id., a defendant’s request to withdraw a plea “before sentencing should be construed liberally in favor of the accused.” United States v. Stayton, 408 F.2d 559, 560 (3d Cir.1969) (quotations omitted).
I. Assertions of Innocence
The first factor under Rule 11(d)(2)(B) is whether the defendant asserts his innocence. While “[i]t is not necessary for a defendant to allege that he is innocent of the crime charged ... the failure of a defendant to protest his innocence ... may be an important factor....” Id. at 561 n. 5. And even if he does allege his innocence, the defendant must support his assertion with “facts in the record that support a claimed defense” and “give sufficient reasons to explain why contradictory positions were taken” during his plea. United States v. Brown, 250 F.3d 811, 818 (3d Cir.2001) (citations and quotations omitted). “Bald assertions of innocence ... are insufficient to permit a defendant to withdraw [a] guilty plea.” Id.
Garba does not appear to have claimed innocence. He has contested neither that he was part of the conspiracy the government alleges, nor that the conspiracy involved at least 5 kilograms of cocaine. Garba’s affidavit in support of his motion states that he wanted to make the government “prove the amount of the narcotics,” but this contention is a far cry from a protestation of innocence. (Garba Aff. at ¶ 6.) Even were the Court to construe Garba’s desire to force the government to prove drug quantity as an assertion of some degree of innocence, Garba still fails to point to any facts in the record to support his allegation. Any claim of innocence is further undermined by Rhoads’s testimony that Garba had told him that there were more than 15 kilograms of cocaine involved in the conspiracy. (5-27-03 H’g.) Thus, the Court finds that Garba has not made a colorable claim of innocence to support his motion.
II. Strength of Reasons for Withdrawing
Garba’s failure to properly assert his innocence is not fatal to his motion. See Stayton, 408 F.2d at 561 n. 5. If any of his reasons for withdrawal are sufficiently weighty, the Court may still grant his motion. Garba asserts three such reasons.
a. Mistaken Belief
Garba claims he pleaded guilty only because he was misled to believe that even after doing so “a hearing would be held by the court to require the Government to prove its contentions that the amount of cocaine involved was 15 kilograms or more.” (Mot. to Withdraw Plea at 1.) A mistaken belief regarding the effect of a plea agreement is a permissible basis for withdrawing the plea, provided that the defendant’s mistake is reasonable. An unreasonable misapprehension is insufficient. In United States v. Crusco, 536 F.2d 21 (3d Cir.1976), the Third Circuit held that a defendant who was mistaken about the effect of his plea of guilty was entitled to withdraw that plea “[w]here the record shows that circumstances as they existed at the time of the guilty plea, judged by objective standards, reasonably justified his mistaken impression.” Id. at 24. See also United States v. Cucciniello, No. 89-206, 1990 WL 119317, at *5 (D.N.J. Aug. 9 1990) (allowing withdrawal of plea of guilty where defendant was reasonably mistaken about meaning of term in plea agreement); United States v. Trott, 604 F.Supp. 1045, 1054 (D.Del.1985) (denying motion to withdraw plea where “there is no basis in fact for [his] allegations that he did not understand the nature of the plea agreement”).
The Court, assuming arguendo that Garba was genuinely mistaken about the effect of the stipulations, finds this mistake unreasonable. The language of the plea agreement is so unambiguous that no reasonable person reading it could miss its significance. In the plea agreement, which is only six pages long, Garba unmistakably stipulates that the amount of cocaine involved was between 15 and 50 kilograms. (Gov. Sent. Br., Ex. A, at 6.) The agreement states that the government and Garba will still be able to litigate the extent of his role in the offense before sentencing. (Id.) No corresponding provision exists regarding the drug amount. The plea agreement also states that “[t]he parties have not reached an agreement on any other issue related to sentencing. Each party reserves the right to litigate any other issue.” (Id.) The clear meaning of this contractual language is that the few issues to which the parties did stipulate could not be litigated later.
The plea hearing further reinforced the plain meaning of the plea agreement. The Court reviewed the plea agreement with Garba, and Garba told the Court that he: (1) had read and understood the stipulations; (2) understood that he was bound by the stipulations; and (3) knew he would not be able to dispute the stipulations once the plea was entered. (Plea H’g Tr. at 11-14.) Indeed, at the hearing on the motion, Garba testified that he understood the language in the stipulation that gave him the right to dispute the extent of his role in the conspiracy. (12-19-02 H’g.) Garba testified that he listened to the Court’s explanation of the plea agreement, and understood. (Id.) Given these facts, no reasonable person could have been mistaken as to the effect of the stipulations. Garba is not entitled to withdraw his plea based on this unreasonable mistake.
b. Ineffective Assistance of Counsel
Garba asserts that “the advice of his then attorney ... misled him” regarding the effect of the stipulation in the plea agreement. (Mot. to Withdraw Plea at 1.) We construe this as a claim that his plea was a result of ineffective assistance of counsel in violation of the Sixth Amendment. Proof that a plea is the result of ineffective assistance of counsel is a strong reason justifying withdrawal. See Jones, 336 F.3d at 253 (“A court will permit a defendant to withdraw a guilty plea based on ineffective assistance of counsel.”).
The Sixth Amendment provides in pertinent part: “In all criminal prosecutions, the accused shall enjoy the right ... to have the Assistance of Counsel for his defence.” U.S. Const, amend. VI. A defendant has a Sixth Amendment right not just to counsel, but to “ ‘reasonably effective assistance’ of counsel.” United States v. Day, 969 F.2d 39, 42 (3d Cir.1992) (quoting Strickland v. Washington, 466 U.S. 668, 687, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984)). In cases where the defendant moves to withdraw a plea of guilty:
A court will permit a defendant to withdraw a guilty plea based on ineffective assistance of counsel only if (1) the defendant shows that his attorney’s advice was under all the circumstances unreasonable under prevailing professional norms, and (2) the defendant shows that he suffered sufficient prejudice from his counsel’s errors.
Jones, 336 F.3d at 253-54 (citations and quotations omitted).
The appropriate measure of attorney performance is “reasonableness under prevailing professional norms.” Strickland, 466 U.S. at 688, 104 S.Ct. 2052. A defendant asserting a claim of ineffective assistance of counsel must “identify the acts or omissions of counsel that are alleged not to have been the result of reasonable professional judgment.” Id. at 690, 104 S.Ct. 2052. There is a strong presumption that counsel has rendered adequate assistance and that all significant decisions were made in the exercise of reasonable professional judgment. Id. at 689, 104 S.Ct. 2052; see also Buehl v. Vaughn, 166 F.3d 163, 169 (3d Cir.1999); Reese v. Fulcomer, 946 F.2d 247, 256-57 (3d Cir.1991); United States v. Gray, 878 F.2d 702, 710 (3d Cir.1989). The evaluation of the objective reasonableness of counsel’s performance must be made “from counsel’s perspective at the time of the alleged error and in light of all the circumstances, and the standard of review is highly deferential.” Kimmelman v. Morrison, 477 U.S. 365, 381, 106 S.Ct. 2574, 91 L.Ed.2d 305 (1986).
The second prong of the Strickland test requires the defendant to show that counsel’s deficient performance prejudiced the defense. The defendant must show that “there is a reasonable probability that, but for counsel’s unprofessional errors, the result of the proceeding would have been different.” Strickland, 466 U.S. at 694, 104 S.Ct. 2052. When attacking the validity of a plea in particular, the defendant must show that, but for counsel’s deficient performance, there is a reasonable probability that he would not have pleaded guilty, but would have insisted on going to trial. See Hill v. Lockhart, 474 U.S. 52, 59, 106 S.Ct. 366, 88 L.Ed.2d 203 (1985).
The Court finds that Rhoads rendered reasonably effective assistance. Garba claims Rhoads performed deficiently because Rhoads told him that he was not bound by the stipulations in the plea agreement, and that he would have an opportunity to prove that the conspiracy involved under 15 kilograms of cocaine. (12-19-02 H’g; Mot. to Withdraw Plea at 1; Garba Aff. at ¶ 7.) Garba claims Rhoads gave him this information in a private conversation the two of them had in the basement of the courthouse just before Garba entered his plea of guilty. (Id.) Garba claims he agreed to enter his plea because Rhoads told him that he could contest the drug amount before sentencing. (Id.) By contrast, Rhoads testified that he told Gar-ba he would be bound by the stipulations in the plea agreement, and that Garba understood that he would be bound. (5-27-03 H’g.) Rhoads further testified that he never told Garba he would have a chance to argue at a later hearing that the amount of cocaine was under 15 kilograms. (Id.) In addition, the Court notes that Gar-ba stated in his plea colloquy that he understood he was bound by the stipulations in the plea agreement, and knew he could not later contest them. (Plea H’g Tr. at 11-12.)
The Court, based on the plea colloquy and the hearing on Garba’s motion, finds Rhoads’s version of what transpired more credible. As an experienced federal public defense attorney, Rhoads was thoroughly familiar with the effect that stipulations have on sentencing. The notion that he would misrepresent that effect to his client, especially when he knew full well that the Court would explain to Garba that stipulations are binding and cannot later be disputed, is dubious at best. That Gar-ba did not make this claim until the day of his sentencing, after having previously told the Court he fully understood the binding effect of his stipulations, further strains the limits of credibility.
The Court is bound to recognize the strong presumption that counsel has rendered adequate assistance. Strickland, 466 U.S. at 688, 104 S.Ct. 2052. In this case we have not only this presumption to guide the Court, but also a full evidentiary record that refutes Garba’s contentions. In sum, the Court finds no evidence of ineffective assistance of counsel by Rhoads. Garba’s motion to withdraw his plea will not be granted on this basis.
c. Rule 11 Violation
Garba asserts that the plea colloquy did not conform to the stringent requirements of Rule 11. Specifically, Garba complains of the Court’s failure to instruct him that at trial a jury would have to determine drug quantity beyond a reasonable doubt. Rule 11 establishes the procedures for the acceptance of a plea of guilty. The rule requires, inter alia, that the Court ensure that the defendant understands “the nature of each charge to which the defendant is pleading.” Fed. R.Crim.P. 11(b)(1)(G). While “the elements of the offense need not be recited in any ritualistic fashion,” the Court does need to make certain that the defendant understands all that the government needs to prove to a jury beyond a reasonable doubt in order to convict him of the offense charged. United States v. Cefaratti, 221 F.3d 502, 508 (3d Cir.2000) (quotations omitted). Failure to comply with Rule 11 “requires that the defendant’s guilty plea be set aside.” United States v. Cannistraro, 734 F.Supp. 1110, 1133 (D.N.J.1990). However, Rule 11 violations are subject to a harmless error limitation: if the district court’s “variance from the requirements of this rule ... does not affect substantial rights,” then the defendant should not be permitted to withdraw his plea. Fed. R.Crim.P. 11(h).
Garba pleaded guilty to a violation of § 846, which imposes criminal liability on those who conspire to commit one of a number of crimes. The conspiracy at issue here was the conspiracy to violate 21 U.S.C. § 841(a)(1), knowingly or intentionally distributing and possessing with the intent to distribute a controlled substance. The statutory elements of a § 841(a)(1) violation were recited to Garba at the plea hearing:
One, that the defendant, yourself, intentionally delivered or aided the delivery of narcotics to another person. Two, that at the time of the delivery you knew the substance that was to be transferred was a narcotic drug. And three, that you acted knowingly and intentionally.
(Plea H’g Tr. at 23.) Garba was also told the government would have to prove to the jury beyond a reasonable doubt that these elements were the object of the conspiracy. (Id. at 17.) It is undisputed that these three elements are all the government needs to show in order to prove the unlawful object of a § 846 conspiracy.
Garba alleges, however, that there is another, nonstatutory element to the unlawful objective of the § 846 conspiracy. Though it is not listed as an element under § 841(a)(1), Garba contends the Court was required by the Supreme Court’s decision in Apprendi v. New Jersey, 530 U.S. 466, 120 S.Ct. 2348, 147 L.Ed.2d 435 (2000) to inform him of the government’s obligation to prove drug amount beyond a reasonable doubt. Failure to do so, Garba argues, mandates that the Court grant his Rule 11(d)(2)(B) motion.
In Apprendi, the Supreme Court held: “Other than the fact of a prior conviction, any fact that increases the penalty for a crime beyond the prescribed statutory maximum must be submitted to a jury, and proved beyond a reasonable doubt.” Id. at 490, 120 S.Ct. 2348. In United States v. Minore, 292 F.3d 1109 (9th Cir.2002), the Ninth Circuit interpreted Apprendi to modify a judge’s responsibility under Rule 11. The court reasoned that since “[d]ue process requires that the defendant be informed of the ‘critical’ elements of the offense,” and in some instances the quantity of drug involved can expose a defendant to a higher statutory maximum sentence, then “the district court must advise the defendant that the government would have to prove drug quantity as it would prove any element-to the jury beyond a reasonable doubt.” Id. at 1115, 1117. Citing Minore, Garba claims the Court’s failure to advise him that the government would have to prove drug quantity to a jury violated Rule 11, and is thus grounds for granting his motion to withdraw his plea.
The Court, assuming arguendo that failure to tell Garba that a jury would have to determine the amount of cocaine involved was error, finds the error to be harmless. The Court first notes that Garba’s contention that the Court was required to inform him that a jury would have had to have found the drug quantity to be between 15 and 50 kilograms, rather than 5 kilograms, is incorrect. Per Apprendi, juries only have to find facts that would increase the statutory maximum sentence to which the defendant would be exposed. Apprendi, 530 U.S. at 490, 120 S.Ct. 2348. The statutory maximum sentence for the crime to which Garba pleaded guilty, conspiracy to distribute and possess with the intent to distribute 5 kilograms or more of cocaine, is life in prison. 21 U.S.C. §§ 846, 841(b)(1)(A). A finding that the amount of cocaine involved was no less than 15 but no greater 50 kilograms would not increase the maximum potential sentence; it would only affect the sentencing range under the Federal Sentencing Guidelines, U.S.S.G. §§ 2D1.1(a)(3), (c)(3), with which Apprendi is not concerned. Apprendi, 530 U.S. at 497 n. 21, 120 S.Ct. 2348. Thus, assuming that Apprendi modifies the requirements of a plea colloquy, the only instruction required in these circumstances is that a jury would have to determine, beyond a reasonable doubt, that the conspiracy involved at least 5 kilograms of cocaine.
Rule 11 violations, as stated supra, do not automatically entitle a defendant to withdraw his plea. If the violation did not affect the defendant’s substantial rights, the error is harmless, and Garba’s motion should be denied. Fed.R.Crim.P. 11(h); United States v. Mustafa, 238 F.3d 485, 490-91 (3d Cir.2001) (denying defendant’s motion to withdraw plea on grounds of Rule 11 violation because such violation was harmless error). The Third Circuit recently set out the standard for a Rule 11(h) harmless error inquiry:
This is a subjective, highly individualized test. We must focus on the defendant’s ability to tender a knowing and intelligent waiver of constitutional rights given the misinformation he or she received. ... [A]n error will be regarded as harmless under Rule 11(h) only if the government can establish that the error is unlikely to have affected a defendant’s willingness to waive his or her rights and enter a plea of guilty.
United States v. Powell, 269 F.3d 175, 185 (3d Cir.2001).
Garba cannot claim that the Court’s failure to inform him that at trial the government would have to prove to the jury that the conspiracy involved more than 5 kilograms of cocaine “affected [his] willingness to ... enter a plea of guilty.” Id. First, Garba’s primary complaint is that he was not told the government would have to prove beyond a reasonable doubt that the amount was between 15 and 50 kilograms. As discussed supra, however, the government would have no such burden: because any increase in quantity beyond 5 kilograms would not affect the statutory maximum sentence, Apprendi does not require that the jury find such a fact. See United States v. Henry, 282 F.3d 242 (3d Cir.2002) (holding that Apprendi requires jury to decide drug quantity where quantity affects statutory maximum sentence). Second, while Garba testified at the December 2002 hearing that he would not have pleaded guilty had he known of the government’s burden to prove drug amount at trial, his claim is not credible. (12-19-02 H’g.) Garba has admitted throughout that the conspiracy involved greater than 5 kilograms of cocaine. (Plea H’g Tr. at 29; Sent. Tr. at 17; 12-19-02 H’g.) His only point of contention has been that the conspiracy did not involve 15 or more kilograms of the drug. (Garba 2002 Br., at 1; 3-27-03 Barry Letter, at 3.) Accordingly, Garba cannot show that his substantial rights were harmed by the Court’s omission in this ease. The Court cannot credit Garba’s assertion that he would have de- eided not to enter a plea of guilty upon learning the government had to prove beyond a reasonable doubt that which he himself had conceded from the first.
III. Prejudice to the Government
|
65452-12779 | ORDER
KARLTON, Senior District Judge.
This court recently issued an order in the above-captioned case denying defendants’ motion to declare plaintiff and his attorney vexatious litigants. Wilson v. Pier 1 Imports, 411 F.Supp.2d 1196, 2006 WL 213823 (E.D.Cal.2006). The parties have also filed cross-motions for summary judgment. This order addresses one aspect of those motions.
As the previous order noted, plaintiff is a person with a disability who, on various occasions, has visited the store the defendants own and operate in Fairfield, California. He asserts that during his visits he has encountered various physical barriers to his enjoyment of the facility. By virtue thereof, he alleges that the defendants violated Title III of the Americans with Disabilities Act, 42 U.S.C. §§ 12181 et seq. and California’s Unruh Civil Rights Act, Cal. Civ.Code §§ 51 et seq.
Attached as Exhibit A to plaintiffs complaint is “a true and accurate list, to the extent known by [plaintiff], (with photos) of the barriers that denied him access to the store, or which he seeks to remove on behalf of others.” Compl. at ¶ 19. That list contains fifteen alleged violations.
After the filing of the complaint, Joe Card, who plaintiff tenders as an expert, inspected defendants’ facility. Card then issued a report identifying various purported barriers, some of which were not included in plaintiffs original complaint.
After completion of discovery, the parties brought the cross-motions now at bar. Resolution of those motions will require detailed examination of the cognizable violations asserted by plaintiff. That task, lacking general interest, will be accomplished in a future unpublished opinion. This opinion will deal with the defendants’ assertion that plaintiffs standing is limited to alleged barriers that he either personal ly encountered, or that he knew about and which deterred him as of the time his complaint was filed.
I.
STANDING AND THE AMERICANS WITH DISABILITIES ACT
As with the vexatious litigant motion, the defendants’ motion relative to standing is premised on recent district court cases. In this instance, they are two recent cases issued by judges of this court which advocate a strict standard for standing in physical barrier ADA cases. Martinez v. Longs Drug Stores, Inc., 2005 WL 2072013 (E.D.Cal.2005)(Levi, C.J.) and White v. Divine Investments, Inc., 2005 WL 2491543 (E.D.Cal.2005)(Damrell, J.). There is one conflicting case, however, issued by Judge Shubb of this court, which applies a more flexible test for standing. Pickern v. Best Western Timber Cove Lodge Marina Resort, 2002 WL 202442 (E.D.Cal.2002)(Shubb, J.).
I have previously explained that “[wjhile the opinion of another judge of this court is not binding on me, both considerations of orderliness and my respect for the opinions of my colleague[s] suggest great caution must be exercised before departing from [their] opinion[s].” United States v. Downin, 884 F.Supp. 1474, 1477 n. 4 (E.D.Cal.1995) (citation excluded). Those considerations are ' particularly weighty when two judges of this court have come to the same conclusion. That concern is diminished since a conflict already exists within the district. In any event, for the reasons explained- below, I cannot concur in the view of Judges Levi and Damrell.
The Supreme Court has explained that to demonstrate a “case or controversy” within the meaning of Article III of the Constitution, and thus constitutional standing, a plaintiff must show that:
(1) [he has] suffered an “injury in fact” that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.
Friends of the Earth, Inc. v. Laidlaw Environmental Services, Inc., 528 U.S. 167, 181, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000).
The defendants’ motion raises the issue of whether the plaintiff has suffered an injury in fact if he did not encounter a barrier himself, or was not made aware of the barrier until his expert paid a visit to the store.
Judge Damrell, following Chief Judge Levi’s lead, held that a plaintiff does not have standing under such circumstances. He acknowledged that a plaintiff need not encounter every barrier he raises in the ease, but he held that he “must, at a minimum, know of or have reason to know of, and be deterred by, the barrier at the time the complaint is filed....” White v. Divine Investments, Inc., 2005 WL 2491543 (E.D.Cal.2005) (Damrell, J.); Martinez v. Longs Drug Stores, Inc., 2005 WL 2072013, *4 (E.D.Cal.2005)(Levi, C.J.).
As defendants suggest, this standard presents serious difficulties for plaintiff. Mr. Wilson admits that he visited the store regularly, and that the barriers he encountered did not deter him from returning; moreover, plaintiff alleges that he plans to visit again in the future. Focusing on the deterrence language in White, the defendants claim that because plaintiff was not deterred from entering the store and in tends to return, he lacks standing to sue. Moreover, as to those violations discovered by Card, but not encountered by plaintiff, it seems clear that under the White/Martinez standard, since plaintiff was not aware of the barriers at the time he filed the complaint, he also would lack standing under that standard.
Because I believe the White/Martinez standard is unduly restrictive, I cannot adhere to it. Nothing in the Act suggests that the ADA was intended to protect the disabled only from discriminatory conditions that are so intolerable so as to halt visiting the facility altogether. Rather, the statute itself, the regulations which implement it, and the case law indicate that the Act was designed to eliminate a wide range of discriminatory practices. The “general rule” set out by the ADA is that “no individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages or accommodations of any place of public accommodation ...” 42 U.S.C. § 12182(a) (emphasis added). The statute’s findings section sets out that persons with disabilities encounter “various forms of discrimination including outright intentional exclusion, the discriminatory effects of architectural, transportation, and communication barriers ...” 42 U.S.C. § 12101(a)(5). Congress thus responded by stating that the purpose of the Act was to create a “mandate for the elimination of discrimination” not just the weakening or reduction of discrimination which is what the case would be if plaintiffs were only allowed to bring suit for barriers that absolutely denied access. 42 U.S.C. § 12101(b)(1) (emphasis added).
The ADA is a “remedial statute, which should be broadly construed to effectuate its purpose of eliminating discrimination against the disabled in our society.” Parr v. L & L Drive-In Restaurant, 96 F.Supp.2d 1065, 1081 (D.Hawai’i 2000). As to the Card discoveries, plaintiff contends that the ADA should cover all discriminatory barriers, regardless of when they are discovered. The ADA condemns discrimination against the disabled and defines such discrimination, inter alia, as a failure to remove “barriers where such removal is readily achievable.” 42 U.S.C. § 12182(b)(2)(A)(iv).
Clearly, as plaintiff argues, requiring piecemeal compliance runs the risk that an injunction will only remedy some barriers, leaving others in place for the disabled to encounter. The statute, however, provides for injunctive relief to any person who has “reasonable grounds for believing that such person is about to be subject to discrimination.” 42 U.S.C. § 12188(a)(1). The language makes plain that future threats of encountering physical barriers suffices to bring suit under the statute. Indeed, it is difficult to believe that a statute with the broad remedial purpose of ending discrimination against the disabled, should be construed as permitting discrimination to persist after its existence has been discovered. The only question then is whether Congress exceeded its power in providing for such relief.
It is established that standing doctrine should be liberally applied in civil rights cases. As the Supreme Court taught in Trafficante v. Metropolitan Life Insurance, 409 U.S. 205, 93 S.Ct. 364, 34 L.Ed.2d 415, in the case of a civil rights act, where private enforcement suits “are the primary method of obtaining compliance with the Act” and where Congress defined discrimination broadly, Article III standing should likewise be construed as broadly as possible. Id. at 366-67; see also Walker v. Carnival Cruise Lines, 107 F.Supp.2d 1135, 1143 (N.D.Cal.2000).
It seems clear that the injury-in-fact requirement of Article III standing is easi ly satisfied by liberally construing it in this context. All that is required is to recognize that the injury suffered relative to later-discovered barriers is the threat of being subjected to discrimination suffered by virtue of the existence of barriers, whether or not initially encountered.
Indeed, plaintiff, relying on Pickern v. Holiday Quality Foods, Inc., 293 F.3d 1133 (9th Cir.2002), maintains that the issue is settled in his favor in this circuit. In Pickem, plaintiff, a paraplegic, was denied access to a grocery store because of barriers that he claimed existed. Id. at 1136. The court concluded that by alleging that he was currently deterred from attempting to gain access to the store, plaintiff had “stated sufficient facts to show a concrete, particularized injury.” Id. 1138. The court went on to explain, agreeing with an Eighth Circuit opinion, that a plaintiff was not limited to challenging ADA violations which he personally encountered, since such a narrow construction of the Act would be both inefficient and impractical. Id. (citing Steger v. Franco, Inc., 228 F.3d 889 (8th Cir.2000)). The Circuit explained that a plaintiff “need not necessarily have personally encountered all the barriers that bar his access to the Paradise store in order to seek an injunction to remove those barriers.” Pic-kem, 293 F.3d at 1138. Moreover, the court explained “a plaintiff who is threatened with harm in the future because of existing or imminently threatened noncompliance with the ADA suffers ‘imminent injury.’ ” Id.
Judges Levi and Damrell concluded that Pickem is distinguishable because it was primarily addressing a statute of limitations issue, and they believe that it did not fully adopt the Steger analysis. See White v. Divine Investments, Inc., 2005 WL 2491543, *3 (finding in addition that Pic-kem was distinguishable on the ground that the Pickem plaintiff “actually encountered all of the barriers that he sought to remedy in his suit.”) ; Martinez v. Longs Drug Stores, 2005 WL 2072013; see also Harris v. Costco Wholesale Corp., 389 F.Supp.2d 1244, 1249 (S.D.Cal.2005) (finding that plaintiffs “standing to bring an ADA action must rest on the architectural barriers he contends he encountered during the visit that pre-dates the filing of the Complaint.”).
I begin by noting that nothing in Pic-kem itself supports the distinction my colleagues have made. The substantive portion of the opinion is divided into two parts, the first commencing at 293 F.3d at 1136 is entitled “II Statute of Limitations,” the second commencing at 1137 is entitled “III Standing”. With the greatest of respect, the conclusion that the case dealt primarily with the statute of limitations is not supported by the text of the opinion.
Moreover, the conclusion that the Circuit did not adopt the Eighth Circuit’s opinion seems equally to simply depart from Pickern’s text. The court wrote that “we agree with Steger v. Franco,” Pickern, 293 F.3d at 1138, and again, “we agree with the Eighth Circuit that [plaintiff] need not necessarily have personally encountered all barriers ... in order to seek an injunction to remove those barriers.” Id.
Moreover, even if the White/Martinez courts’ distinction existed, the opinion’s clear statements of principles cannot be simply ignored. As I have previously observed, “as a subordinate court my role is to the apply the law as pronounced by courts hierarchically superior, and in attempting to do so my duty is to consider those courts’ considered dicta.” Natural Resources Defense Council v. Patterson, 791 F.Supp. 1425, 1435 n. 18 (E.D.Cal.1992). The extended discussion in Pickern demonstrates that the Circuit’s view is that plaintiffs are not required to actually encounter a barrier in order to sue for its removal. Thus, respectful consideration requires that, in the absence of persuasive reasons, that conclusion should be given effect.
|
1548163-16138 | BARRETT, Circuit Judge.
These consolidated appeals arise from the criminal convictions of Lester Brown Jr., Andrew Santillanes, and William Brown for violations of 18 U.S.C. § 2031, rape, and 18 U.S.C. § 2, aiding and abetting rape.
The victim, Arleen Paul, was a 20-year old student at the Job Corps campus in Albuquerque, New Mexico. On the evening of June 9, 1984, Ms. Paul joined several fellow students in a nearby park to talk. Soon, another friend of Ms. Paul’s drove up with two men and invited several of those in the park to join them in the car and ride around. Ms. Paul accepted the invitation and got into the car. The two men already in the car were Lester Brown and Andrew Santillanes. Andrew Santillanes sat next to Arleen Paul in the back seat and started making sexual advances toward her which she rebuffed. (R., Vol. Ill, p. 151).
After driving for awhile the group entered Kirtland Air Force Base. Lester Brown resided in military housing on the base. Lester Brown’s wife was a member of the military service although she was away on maneuvers on this particular evening.
Upon arriving at Lester Brown’s house, the group encountered William Brown, Lester’s brother. A party of sorts began; several people were smoking marijuana, drinking beer, and watching television. Arleen Paul testified that she only partook of half a can of beer. During the party, Andrew Santillanes continued to pursue Ms. Paul. (Id. at p. 156).
After a time, Ms. Paul asked one of her friends if they could leave. The friend indicated that she would have to talk with another girl about leaving. Ms. Paul, Lester Brown, and Andrew Santillanes then went outside to look at Brown’s dog. When Ms. Paul reentered the house, she found that her friends had already departed. The other girls left, thinking Ms. Paul was with a third Job Corps friend who had been with them in the house. This was not the case.
Realizing that she was alone in the house with the three appellants, Arleen Paul went to the front door and attempted to leave. Lester Brown blocked her way. (Id. at p. 161.) Then Andrew Santillanes pushed Ms. Paul down the hallway to a back bedroom. He pushed her into the bedroom, closed the door, and demanded that she take off her clothes. A struggle followed and Lester and William Brown entered the room. (Id. at p. 165.) All three men were holding her down and Andrew Santillanes drew a knife and cut off Ms. Paul’s leotard. Andrew Santillanes then raped Ms. Paul after the other two men had left the room. Mr. Santillanes held Ms. Paul by the hair and slapped her about the face. Each man in turn returned to the bedroom and raped Ms. Paul. Andrew Santillanes forced Arleen Paul to engage in two additional acts of intercourse before she devised a plan of escape. Ms. Paul pled with Santillanes to let her go to the bathroom. After locking herself in the bathroom, Ms. Paul cut through the screen with a comb, climbed through the window, and ran to a neighbor’s house naked at about 5 a.m.
The military police were summoned and, after speaking with Ms. Paul who told them three men had raped her, approached Brown’s house. The officers knocked and were allowed'to enter the house. (Id. at p. 80.) The officers immediately noticed marijuana and paraphernalia in the living room. William Brown was in the living room and one of the officers asked him to get Lester, who was asleep in the back bedroom. (Id. at p. 92.) Lester was called by William but did not respond. Lester was then awakened by his brother and one of the officers. On the way down the hallway to retrieve Lester Brown, a bloody bedspread and women’s clothing were noticed in one of the bedrooms. At that point the third man had not been located.
The on-call Judge Advocate General (JAG) officer was telephoned, the situation was related to him, and the JAG officer indicated that probable cause to search existed. The base commander was then telephoned, the situation was conveyed to him by a military police officer under oath, and the commander orally authorized a search of the premises. The search was conducted and Andrew Santillanes was found hiding behind a freezer in the back room with a switchblade in his pocket. Soon thereafter, additional officers and the FBI arrived to interview witnesses and collect evidence.
The appellants were tried jointly and convicted by a jury. Each appellant raises different issues on appeal. Lester Brown challenges the search of his home and claims that the evidence seized in the search should have been excluded. Andrew Santillanes and William Brown both argue that the trial court erroneously denied their motions to sever and grant them separate trials. Andrew Santillanes also contends that the trial court erred in admitting evidence of his prior convictions. William Brown contends that the trial court's failure to sentence him under the Youth Corrections Act was error.
DISCUSSION
A.
Lester Brown challenges the search of his home and the evidence taken therefrom on the following grounds: (1) that the search should have been carried out in accordance with Fed.R.Crim.P. 41, and (2) that the search violated Lester Brown’s Fourth Amendment rights. The search was authorized and conducted in accord anee with Military Rule of Evidence 315. Lester Brown contends that because all of the suspects and the victim were civilians and participation by the FBI was involved that the requirements of Rule 41 should control rather than Military Rule of Evidence 315.
Lester Brown argues that in spite of the fact that the incident took place inside military housing on a military reservation that military procedures should not have been used. Brown has recognized that it is a base commander’s duty to maintain the order, security, and discipline necessary to military operations. Cafeteria Workers v. McElroy, 367 U.S. 886, 81 S.Ct. 1743, 6 L.Ed.2d 1230 (1961). Furthermore, the base commander is responsible for all military property located on a military installation. United States v. Stuckey, 10 M.J. 347 n. 9 (1981).
Because of the unique circumstances surrounding military bases, procedures have been adapted to fit the military system of justice, which, in a technical sense, are not identical to the procedures used in the civilian system of justice. Military Rule of Evidence 315 is the Armed Forces’ counterpart of Fed.R.Crim.P. 41. The military rule provides that if probable cause is required then “authorization to search” may be required. Authorization to search is defined as “[A]n express permission, written or oral, issued by competent military authority to search a person or an area for specified property or evidence or for a specific person and to seize such property, evidence, or person.” Mil.R.Evid. 315(b)(1). This “authorization to search” is the military equivalent of what is known in civilian parlance as a search warrant.
Military Rule of Evidence 315 includes a definition of probable cause which is substantially identical to probable cause in non-military situations. The Rule specifies who may authorize searches: various “impartial” individuals. The Rule allows search authorization to be based on hearsay evidence. Mil.R.Evid. 315(f)(2). Probable cause under the Military Rule can be based on any or all of the following:
1) Written statements communicated to the authorizing officer;
2) Oral statements communicated to the authorizing official in person, via phone, or by other appropriate means of communication; or
3) Such information as may be known by the authorizing official that would preclude the officer from acting in an impartial fashion.
Whenever feasible, the Rule requires the executing agent to notify the person whose property is being searched about the search authorization and its terms. An inventory of the items seized in the search is to be made and, when possible, furnished to the person. Mil.R.Evid. 315(h)(1) and (2).
Upon comparison, the following elements of Fed.R.Crim.P. 41 demonstrate the similarity of the two rules. Fed.R.Crim.P. 41 calls for the issuance of a search warrant by a federal magistrate after the execution of affidavits establishing probable cause. Warrants can be issued upon sworn oral testimony if the circumstances dictate. If oral testimony is communicated over a telephone or by means other than in-person, a duplicate original is to be prepared by the person requesting the warrant and is to be read verbatim to the magistrate. The magistrate is also to transcribe an original warrant. Inventories are also to be executed and given to the person whose property was taken.
Military Rule 315 and Fed.R.Crim.P. 41 are, in substance, very similar. In one respect, though, there is a divergence. The Military Rule allows one who seeks search authorization to present testimony without a simultaneous writing or transcription. The Military Rule also authorizes that permission to search may be given orally or in writing. Under the Federal Rules contemporaneous writings are necessary to facilitate a review if questions as to the propriety of a warrant should arise at a later time. If Lester Brown’s argument — that only the Federal Rules are applicable because of civilian involvement — has any merit, it is on this point alone.
In reviewing these procedures, we must determine whether their use by the military police did any violence to Brown’s Fourth Amendment rights, for it is these rights that Rule 41 was designed to protect. Brown does not draw this court’s attention to any particular Fourth Amendment rights which were allegedly violated. He does not claim that the search was unreasonable; nor that the search was not supported by probable cause. (He does make such an argument indirectly, however, by asserting that because no testimony was put in written form, nothing supports the probable cause determination.) Furthermore, Brown does not assert that the base commander who authorized the search was less than the equivalent of a neutral and detached magistrate. The facts preclude Brown from contending that the testimony of the officer requesting the warrant was not put under oath by the base commander. Lester Brown points to no procedures which were used that prejudiced him in any way.
This court has heretofore held that under military rules oral affidavits and oral authorization of search warrants without contemporaneous writings are free from any constitutional infirmity. Wallis v. O’Kier, 491 F.2d 1323, 1325 (10th Cir.), cert. denied, 419 U.S. 901, 95 S.Ct. 185, 42 L.Ed.2d 147 (1974). In Wallis the court held, “There seems to be no doubt but that an express provision of the military law that probable cause could be shown by oral statements would be valid.” Id. Also, pertinent to the resolution of this issue is a finding of the District Court for the Eastern District of Virginia, “[Tjhat as long as the military respects the rights guaranteed by the Fourth Amendment’s prohibition against unreasonable searches and seizures, the military need not be bound by all of the procedural formalities that are imposed upon civilian law enforcement agencies.” United States v. Rogers, 388 F.Supp. 298, 301 (E.D.Va.1975).
Here there was nothing unreasonable about the military’s procedure. After speaking with Arleen Paul who claimed she had been raped repeatedly by three men, the military police went to Brown’s house. When William Brown invited the military police officers into the house they immediately saw marijuana and drug paraphernalia. Inquiring about the whereabouts of the other two men, the police were told that Lester Brown was asleep in a back bedroom. The military police had William Brown try to rouse Lester. When he could not they walked down the hall to awaken him. While going down the hallway, the police observed a bloody bedspread and women’s clothing thrown askew in another room. The JAG officer on duty was called by one of the officers from Brown’s house. Under oath, the officer related to the JAG officer what he had found at the residence. The JAG officer felt that probable cause existed based on these facts: a naked, highly distraught woman was running through the street at an early hour of the morning claiming that she had been raped, the presence of the drugs, and the other incriminating information.
The JAG officer directed the military police officer to call the commander of the base and relate the facts to him. The officer called the commander, retold his findings under oath, and the commander then gave oral authorization for a search. The search authorization described the premises to be searched and items to be seized with sufficient particularity and was reduced to written form later that day. These procedures were in accord with the Military Rule of Evidence 315.
In conclusion, we hold that the procedures employed here did not violate Lester Brown’s Fourth Amendment rights. In evaluating the conduct of law enforcement officers, the standard against which that conduct is to be measured is, whether or not it comported with the Fourth Amendment. We hold that the evidence seized in the search of Lester Brown’s military housing was properly admitted.
B.
Two of the appellants, Andrew Santillanes and William Brown, contend that the trial court erred by failing to grant their motions for severance. They claim that the tremendous prejudice which resulted from trying all three men jointly could only have been cured by separate trials. Both contend that their defenses were irreconcilable, antagonistic, and mutually exclusive, mandating a severance. United States v. Crawford, 581 F.2d 489 (5th Cir.1978).
The grant of a severance is not a matter of right but is contingent upon a showing of prejudice. Fed.R.Crim.P. 14. Such a determination is within the discretion of the trial court. United States v. Espinosa, 771 F.2d 1382, 1408 (10th Cir.), cert. denied, — U.S.-, 106 S.Ct. 579, 88 L.Ed.2d 561 (1985).
When a defendant seeks reversal because of irreconcilable, mutually exclusive defenses, the defendant must demonstrate that acceptance of one party’s defenses tends to preclude the acquittal of the other. This showing requires that the guilt of one defendant tends to establish the innocence of the other. United States v. McClure, 734 F.2d, 484, 488 n. 1 (10th Cir.1984). Such a showing of definitive prejudice was not made in this ease.
At trial, Andrew Santillanes testified that each time that he had intercourse with Ms. Paul that it was consensual. Lester Brown also claimed that Ms. Paul willingly had intercourse with him. William Brown denied any sexual contact with Arleen Paul. While two appellants claimed the defense of consent, all three also acknowledged that someone must have raped Ms. Paul and, therefore, one of the other appellants must have been guilty.
However, each appellant had no knowledge about what the other appellants did to or with Ms. Paul. Each man went into one of the back bedrooms by himself to be with Ms. Paul. None of the appellants knew what transpired between Ms. Paul and the other appellants because they were not present. Accordingly, while Andrew Santillanes could, for example, testify that Arleen Paul consented to have sex with him, Santillanes could not testify as to what transpired between Arleen Paul and William Brown or Lester Brown.
The jury had to weigh the testimony of each appellant against that of the victim. Ms. Paul was the only witness to testify relative to her association with each appellant. The testimony of each of the appellants was not mutually exclusive as against that of the other appellants inasmuch as an acquittal of one appellant would not automatically require the jury to return a verdict of guilty against the other two.
If the jury had believed any of the individual appellant’s accounts it could have acquitted that appellant. The jurors would not have been required to render guilty verdicts against the other appellants if they had acquitted one. The jury could have returned verdicts of acquittal for all of the appellants if the jury had believed them. Issues of credibility existed between each appellant and Ms. Paul, not between the appellants.
|
4301368-6920 | PER CURIAM:
Angela Jest appeals from the district court’s grant of summary judgment in favor of Archbold Medical Center, Inc. (“Archbold”) on her race discrimination claim, under Title VII, 42 U.S.C. § 2000e-2, and 42 U.S.C. § 1981, and her disability discrimination claim under the Americans with Disabilities Act (“ADA”), 42 U.S.C. § 12101. First, Jest argues that the district court erred when it concluded that a witness’s statement that no other employees had the kind of misconduct that Jest did was “persuasive.” Second, Jest argues that she established a prima facie case of discrimination. She was subjected to ad verse employment actions, including a series of targeted write-ups, suspension, and termination. She demonstrated that Arch-bold treated similarly situated white and nondisabled employees more favorably, citing that: (1) she was disciplined for clocking out late but her white co-workers were not; and (2) Ashley Morris, Jane Moore, and Virginia Ponder engaged in similar conduct to Jest but were not disciplined. Third, Jest asserts that even if she could not establish the elements of a prima facie case, she presents a convincing mosaic of circumstantial evidence that creates a triable issue concerning discriminatory intent. Finally, Jest argues that Archbold’s proffered reasons for termination were pretext for discrimination.
A. Race Discrimination
We review a district court’s grant of summary judgment de novo, viewing all evidence and factual inferences in favor of the non-moving party. Rojas v. Florida, 285 F.3d 1339, 1341-42 (11th Cir.2002). We can affirm a district court’s decision on any adequate grounds. Wright v. Am-South Bancorporation, 320 F.3d 1198, 1203 fn. 3 (11th Cir.2003); see also Cuddeback v. Florida Bd. Of Educ., 381 F.3d 1230, 1235-36 (11th Cir.2004) (affirming a district court’s grant of summary judgment based on a failure to establish pretext even though the district court only addressed the issue of establishment of a prima facie case). We do not generally consider issues raised for the first time on appeal. Access Now, Inc. v. Sw. Airlines Co., 385 F.3d 1324, 1331 (11th Cir.2004).
Summary judgment is appropriate when the moving party meets its burden of production, demonstrating that no genuine issue of any material fact exists, and the non-moving party fails to present evidence showing that a reasonable jury could find in its favor. Shiver v. Chertoff, 549 F.3d 1342, 1343 (11th Cir.2008). “At the summary judgment stage the judge’s function is not himself to weigh the evidence and determine the truth of the matter.” Sammons v. Taylor, 967 F.2d 1533, 1538 (11th Cir.1992). “[M]ere conclusions and unsupported factual allegations are legally insufficient to defeat a summary judgment motion.” Ellis v. England, 432 F.3d 1321, 1326 (11th Cir.2005).
Title VII prohibits an employer from discriminating against an individual on the basis of that individual’s race. 42 U.S.C. § 2000e-2(a)(1). Section § 1981 of Chapter 42 of the United States Code states that “[a]ll persons within the jurisdiction of the United States shall have the ... full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens ... [and that] the rights protected by this section are protected against impairment by nongovernmental discrimination.” 42 U.S.C. § 1981. Where a plaintiffs Title VII claim relies on circumstantial evidence, the framework set forth in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973), is often applied. See Brooks v. Cnty. Comm’n of Jefferson Cnty., Ala., 446 F.3d 1160, 1162 (11th Cir.2006); see also Smith v. Lockheed-Martin Corp., 644 F.3d 1321, 1325 n. 14 (11th Cir.2011) (“Title VII and § 1981 have the same requirements of proof and utilize the same analytical framework.”).
Under McDonnell Douglas, in order to establish a prima facie case of race discrimination, a plaintiff shows that (1) he is a member of a racial minority; (2) he was subjected to an adverse employment action; (3) his employer treated similarly situated employees outside his classification more favorably; and (4) he was qualified for the job. Holifield v. Reno, 115 F.3d 1555, 1561-62 (11th Cir.1997). To qualify as “adverse,” an action taken must be “a serious and material change in the terms, conditions, or privileges of employment.” See Davis v. Town of Lake Park, Fla., 245 F.3d 1232, 1239 (11th Cir.2001). With respect to the third element, the plaintiff and the comparator must be “similarly situated ‘in all relevant respects.’ ” Wilson v. B/E Aerospace, Inc., 376 F.3d 1079,1091 (11th Cir.2004).
Even if the district court did improperly weigh evidence by concluding that a witness’s statement that there were no employees with a history of conduct like that of Jest, we can still affirm the district court’s decision to grant summary judgment because, as the discussion below indicates, Jest fails to meet her burden by presenting evidence of any similarly situated individuals who were treated more favorably. See Wright, 320 F.3d at 1203.
With respect to Jest’s race discrimination claim, only Jest’s suspension and termination constitute adverse employment actions. See Davis, 245 F.3d at 1239. To the extent that Jest argues that the series of targeted disciplinary write-ups constituted an adverse employment action, she raises this argument for the first time on appeal and therefore we need not address it. See Access Now Inc., 385 F.3d at 1331. Furthermore, Jest fails to establish a prima facie case of race discrimination because she cannot demonstrate that Archbold treated similarly situated white employees more favorably. See Holifield, 115 F.3d at 1561-62. With respect to Jest’s white co-workers who clocked out late, Jest fails to present evidence that they were similarly situated in all relevant aspects. See Wilson, 376 F.3d at 1091. Moore and Ponder do not constitute similarly situated individuals because Jest’s disciplinary history is far more substantial than either of theirs, her misconduct is more serious, and she has instances of misconduct in many more areas of her work. Jest and Morris are not similarly situated because there is no evidence that Archbold knew that Morris was involved in the decision to conduct a bladder scan, and therefore, treated Morris more favorably by not disciplining her for her misconduct. Finally, with respect to Jest’s argument that she presented a convincing mosaic of circumstantial evidence that would allow a jury to infer intentional discrimination by Archbold, Jest raises this issue for the first time on appeal, and therefore we need not address this argument. See Access Now Inc., 385 F.3d at 1331. Based on these considerations, we affirm the district court’s decision to grant Archbold’s motion for summary judgment on Jest’s race discrimination claim.
B. Disability Discrimination
|
12528862-9029 | CYNTHIA M. RUFE, District Judge
Plaintiff Daniel Warren, an inmate incarcerated at SCI Forest, brings this civil action pursuant to 42 U.S.C. § 1983 and Pennsylvania law against the Lehigh County Court of Common Pleas, the "Lehigh County Clerk of Judicial Courts," Andrea E. Naugle, and the Honorable Douglas G. Reichley. Warren primarily claims that the state court's failure to properly serve him with court orders and Judge Reichley's handling of a motion to proceed in forma pauperis he filed in state court violated his constitutional rights. Warren seeks to proceed in forma pauperis. For the following reasons, the Court will grant Warren leave to proceed in forma pauperis and dismiss his claims with the exception of his claims against Naugle.
I. FACTS
Warren filed a Writ of Quo Warranto in the Commonwealth Court, which was transferred to the Lehigh County Court of Common Pleas (LCCCP). The respondents named in the writ filed preliminary objections and Warren filed preliminary objections in response. The court overruled Warren's preliminary objections. Naugle, in her capacity as Clerk of Judicial Records, mailed notice of the ruling to Warren. Warren did not receive the notice and the mail was returned to the court. Naugle resent the mail to Warren, but it was again returned.
Warren learned of the court's ruling when he received a brief from the respondents in support of their preliminary objections, which discussed the ruling in connection with the procedural history of the case. Accordingly, Warren filed a notice with the court informing the court that he did not receive notice of the order. The docket reflects that Warren also filed a motion seeking to dismiss the respondents' preliminary objections. (Compl. at 22.) Thereafter, the court dismissed his case. Naugle mailed the court's dismissal order to Warren, but as with the last order, it was returned as undeliverable. Naugle re-mailed the order, but it was again returned.
After having failed to hear anything from the court, Warren requested a copy of the docket, which he received. He learned that his case had been dismissed and that he had not received the order. When he investigated, he learned from individuals in the prison mailroom that the mail from the court could not be delivered because it did not include Warren's inmate number on the envelope. According to the individuals in the mailroom, when mail is returned, the reason for the return is stamped on the envelope. Warren alleges that Naugle and the court were thus aware of the problem but failed to correct it by placing his inmate number on outgoing mail, thereby preventing him from being served with court orders. Warren also alleges that Naugle failed to comply with her duties under the relevant procedural rules by failing to serve him with court orders. See Pa. Code. § 236(a)(2).
Warren filed a motion to reopen his case based on the court's failure to serve him with court orders. He did not receive a response for approximately three months, so he filed an application to appeal nunc pro tunc seeking to appeal out of time due to the service failures. The court granted that motion because "it appear[ed] likely that there was a breakdown in the Court's operation regarding [Warren's] ability to either obtain mail or file a timely appeal." (Id. at 25.)
In the meantime, Warren initiated a civil action in the Lehigh County Court of Common Pleas against the Commonwealth of Pennsylvania, Lehigh County, the Lehigh County Clerk of Judicial Court, and Andrea E. Naugle, apparently based on the service failures raised in the instant case. (See id. at 10.) Judge Reichley, who was assigned to the case, denied Warren's motion to proceed in forma pauperis and required him to pay the $175 fee to proceed with the action. Warren moved for reconsideration, but Judge Reichley "disregarded"
the motion and ordered the clerk to enter a judgment of non pros. (Id. at 9.) Warren moved to reopen that judgment, but his filing was returned to him on the basis that if it was a new case, he was required to pay the fee or move for in forma pauperis status and, if the document should have been filed in an existing case, it required a case number. (Id. at 31.) Judge Reichley subsequently denied the motion for reconsideration of in forma pauperis status.
Based on those allegations, Warren initiated the instant civil action claiming that the Defendants violated his right to access the courts and his due process rights. He also raises claims, apparently under Pennsylvania law, for "obstruction of the administration of the law," "breach of official duty," "official oppression," negligence, and abuse of process. Warren seeks declaratory judgments stating that he has been wronged, an injunction directing the reopening of his civil action that was dismissed at the preliminary objection stage so that he may have an opportunity to respond to the dismissal order, and compensatory and punitive damages.
II. STANDARD OF REVIEW
The Court will grant Warren leave to proceed in forma pauperis because it appears that he is not capable of paying the fees to commence this civil action. Accordingly, the Complaint is subject to 28 U.S.C. § 1915(e)(2)(B), which requires the Court to dismiss the Complaint if it is frivolous, malicious, or fails to state a claim. Whether a complaint fails to state a claim under § 1915(e)(2)(B)(ii) is governed by the same standard applicable to motions to dismiss under Federal Rule of Civil Procedure 12(b)(6), see Tourscher v. McCullough , 184 F.3d 236, 240 (3d Cir. 1999), which requires the Court to determine whether the complaint contains "sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quotations omitted). "[M]ere conclusory statements do not suffice." Id. As Warren is proceeding pro se , the Court construes his allegations liberally. Higgs v. Att'y Gen. , 655 F.3d 333, 339 (3d Cir. 2011).
III. DISCUSSION
A. Claims Against the Lehigh County Court of Common Pleas
To bring suit under § 1983, a plaintiff must allege that a person acting under color of state law deprived him of his constitutional rights. See West v. Atkins , 487 U.S. 42, 48, 108 S.Ct. 2250, 101 L.Ed.2d 40 (1988). State courts in Pennsylvania are not considered "persons" for purposes of § 1983 and, in any event, are generally entitled to Eleventh Amendment immunity from suit in federal court because they are institutions of the Commonwealth. See Will v. Mich. Dep't of State Police , 491 U.S. 58, 65-66, 109 S.Ct. 2304, 105 L.Ed.2d 45 (1989) (states are entitled to Eleventh Amendment immunity from claims under 42 U.S.C. § 1983 and are not "persons" for purposes of that provision); Benn v. First Judicial Dist. of Pa. , 426 F.3d 233, 241 (3d Cir. 2005) (state courts in Pennsylvania share in the Commonwealth's Eleventh Amendment immunity); see also 42 Pa. Cons. Stat. § 8521(b) ("Nothing contained in this subchapter shall be construed to waive the immunity of the Commonwealth from suit in Federal courts guaranteed by the Eleventh Amendment to the Constitution of the United States."). Departments or divisions of the state courts are not subject to suit under § 1983 for the same reasons. See Bryant v. Cherna , 520 F. App'x 55, 57 (3d Cir. 2013) (per curiam) ("[W]e agree that both the Family Division and the Domestic Relations Section [of the Court of Common Pleas] are immune from suit.").
Based on those principles, the Court must dismiss Warren's claims against the Lehigh County Court of Common Pleas. It is not exactly clear what the "Lehigh County Clerk of Judicial Courts" refers to, but it is identified in the Complaint as "a political subdivision within the Commonwealth of Pennsylvania" with an address at the Lehigh County courthouse. (Compl. at 4.) Accordingly, it appears that this Defendant is a division of the state court that is also entitled to immunity from suit in federal court and is not a person for purposes of § 1983. The Court will therefore dismiss the claims against the "Lehigh County Clerk of Judicial Courts." Furthermore, as any damages claims against Judge Reichley and Naugle in their official capacities are essentially claims against the court and its divisions, the Court will likewise dismiss any such claims brought against the individual Defendants in their official capacities. See, e.g., J.C. v. Ford , 674 F. App'x 230, 232 (3d Cir. 2016) (per curiam) ("[T]he Philadelphia Adult Probation and Parole Department and its employees acting in their official capacity are entitled to immunity from damages suits."); Betts v. New Castle Youth Dev. Ctr. , 621 F.3d 249, 254 (3d Cir. 2010) ("Individual state employees sued in their official capacity are also entitled to Eleventh Amendment immunity because official-capacity suits generally represent only another way of pleading an action against the state." (internal quotations omitted) ).
B. Requests for Declaratory Relief
|
1620196-7182 | CANBY, Circuit Judge:
Kenneth Troise, Pedro Iguaran, Tracy Maudlin and John Jeppesen appeal their convictions, following a court trial on stipulated facts, for importation of and possession with intent to distribute a controlled substance, in violation of 21 U.S.C. §§ 952(a), 960(a), 841(a)(1). We affirm.
I. Boarding of the FLEETSPOINT by the Coast Guard
Defendants first object to the boarding and inspection by the Coast Guard of their ship, the FLEETSPOINT. The boarding and inspection were proper.
Our cases make clear that the daytime boarding of a vessel on the high seas for the purpose of conducting a document and safety inspection does not violate the fourth amendment even though the boarding was conducted without a warrant or probable cause. E.g., United States v. Cilley, 785 F.2d 651, 653 (9th Cir.1985); United States v. Humphrey, 759 F.2d 743, 746 (9th Cir.1985).
Defendants argue that the boarding here was not conducted pursuant to an administrative plan that sufficiently limited Coast Guard officers’ discretion concerning which vessels to board and inspect. They rely on our decision in United States v. Piner, 608 F.2d 358 (9th Cir.1979). Their reliance is misplaced.
First, the boarding here was conducted pursuant to an order requiring inspection of all vessels of the size of the FLEETS-POINT. Moreover, we have held that an administrative plan limiting officer discretion is no longer needed to validate a document and safety inspection by the Coast Guard. E.g., United States v. Throckmorton, 784 F.2d 1003, 1005 (9th Cir.1986); Cilley, 785 F.2d at 653. Our decision in Piner has been substantially eroded following the U.S. Supreme Court decision in United States v. Villamonte-Marquez, 462 U.S. 579, 103 S.Ct. 2573, 77 L.Ed.2d 22 (1983). See United States v. Dobson, 781 F.2d 1374, 1378 n. 5 (9th Cir.1986).
Nor was the boarding invalidated because Coast Guard officers suspected criminal activity. Since our decision in United States v. Watson, 678 F.2d 765 (9th Cir.), cert. denied, 459 U.S. 1038, 103 S.Ct. 451, 74 L.Ed.2d 605 (1982), we have consistently rejected this “pretext” argument where a stop and search had an independent administrative justification. Id. at 769-71; see also United States v. Eagon, 707 F.2d 362, 365 (9th Cir.1982), cert. denied, 464 U.S. 992, 104 S.Ct. 483, 78 L.Ed.2d 680 (1983). A documents and safety inspection by the Coast Guard furthers important governmental interests and constitutes an independent administrative justification for stops and searches on the high seas. E.g., Cilley, 785 F.2d at 645 (citing cases).
The fact that the Coast Guard and the Customs Service exchanged information that led to the initial boarding does not invalidate the Coast Guard’s action. It is generally permissible for different law enforcement agencies to cooperate to ensure obedience to the law. Our recent decision in Dobson makes clear that cooperation between the Coast Guard and Customs of the sort involved here is proper. In Dob-son, the Coast Guard boarded a vessel ladened with marijuana after a Customs advisory on the boat was issued. As in this case, the vessel in Dobson had been placed on a Category 3 lookout list by the Coast Guard. See Dobson, 781 F.2d at 1375. The record here indicates that the Coast Guard had full control of and authority over the boarding and search. The Coast Guard officers accordingly acted within their statutory authority when they boarded the FLEETSPOINT and cannot be viewed as mere agents of the Customs Service.
Finally, defendants argue that the Coast Guard actually and improperly seized their vessel, so that the fruits of the seizure must be suppressed. They point to the fact that the boarding and search lasted some 2.5 hours, during which time they were not free to leave. This is a considerably longer period of detention than the warrantless detention of luggage disapproved in United States v. Place, 462 U.S. 696, 103 S.Ct. 2637, 77 L.Ed.2d 110 (1983), upon which defendants rely.
We find Place inapposite, however. Although a 2.5-hour warrantless detention may sometimes exceed permissible limits, the district court here found that Coast Guard officers detained the FLEETS-POINT and defendants no longer than was necessary to complete their inspection. This finding is supported by the record.
Its duration being reasonable, we conclude that the boarding did not constitute a seizure for purposes of the fourth amendment. Officers never arrested the crew, transferred the crew onto the Coast Guard vessel or transferred Coast Guard personnel onto the FLEETSPOINT for the continuation of the ship’s journey. The vessel was never taken under tow. Indeed, the FLEETSPOINT proceeded to its planned destination free and unimpaired once the Coast Guard inspection was completed. The Coast Guard thus followed none of the procedures that it normally employs when it seizes a vessel. In light of all these circumstances, no seizure occurred. Radar surveillance of the FLEETSPOINT from the end of the inspection until it reached port in San Pedro is also not a seizure. The Place doctrine simply does not apply.
II. The Customs Search
Defendants next complain that the Customs’ search of their vessel at the Port of Entry at San Pedro was invalid because it was conducted without a warrant and because Coast Guard personnel assisted in it. We reject the argument.
The Customs Service has unquestioned authority to conduct a border search of any vessel or baggage; the search is “reasonable” within the meaning of the fourth amendment simply because the vessel or item is entering the country from outside. United States v. Ramsey, 431 U.S. 606, 619, 97 S.Ct. 1972, 1980, 52 L.Ed.2d 617 (1977); United States v. Most, 789 F.2d 1411, 1414 (9th Cir.1986); 19 U.S.C. § 1581. These searches need not be based on a warrant or probable cause, or even on mere suspicion. Most, 789 F.2d at 1414; United States v. Dobson, 781 F.2d 1374, 1376 (9th Cir.1986).
Nor does any warrant requirement attach merely because Customs had been informed by the Coast Guard that there was probable cause to believe the ship contained contraband. Customs often has reliable advance information that someone is bringing contraband into the country; that fact does not give rise to a requirement of a warrant for a border search.
Finally, Coast Guard assistance with the border search was proper. Just as the Coast Guard retained full control of the boarding on the high seas, so the Customs Service retained control of the operation at San Pedro harbor. Moreover, defendants did not report to the Port of Entry on their own. The Coast Guard was available to assist defendants to a Customs dock where the border search could be completed.
III. Suppression of Pre-Arrest Statements
Finally, defendants argue that statements they made during the Coast Guard and Customs searches before their arrest should be suppressed because defendants had not been advised of their Miranda rights. They concede that they were read their rights immediately upon being placed under arrest, but they argue that there was probable cause for their arrest at an earlier time, and that warnings should have been given then.
|
6123114-6609 | MEMORANDUM
CLIVE W. BARE, Bankruptcy Judge.
Plaintiff FinanceAmerica Corporation seeks judgment against the debtor, James Dean Ricker, in the amount of $5,311.74 and a determination of nondischargeability under 11 U.S.C.A. § 523(a)(6) (1979), alleging willful and malicious conversion of property.
I
FINDINGS OF FACT
1. The debtor purchased from Video Trac Systems, Inc., on July 15,1980, one (1) Mitsubishi large screen television, one (1) Mitsubishi 13" color television, one (1) Mitsubishi VHS recorder, plus remote, and certain accessories to the above-mentioned items of personal property, for the “cash selling price — including tax” of $6,532.48.
2. The debtor made a down payment of $1,132.48 and executed a Retail Installment Contract evidencing the balance owing and granted to Video Trac Systems, Inc., a security interest in the property purchased by him.
3. The Retail Installment Contract indicates the amount financed to be $5,400.00, with a finance charge of $1,735.60 added.
4. The Retail Installment Contract and security agreement were transferred for value to FinanceAmerica on July 17, 1980.
5. A financing statement (UCC-1) was filed by FinanceAmerica with the Register of Deeds for Knox County, Tennessee.
6. The large screen T.V. was sold by the debtor for $2,700.00 in May, 1981. The VHS recorder, plus remote, and accessories, along with other items of personal property in which FinanceAmerica did not have a security interest, were sold by the debtor for $1,600.00, in June 1981.
7. The items listed in paragraph six (6) were sold by the debtor with knowledge of the security interest of FinanceAmerica. The proceeds of the sales were not remitted to FinanceAmerica.
8. FinanceAmerica was not informed by the debtor of the sales of the secured property until June, 1982.
9. The debtor does not know to whom he sold the property.
10. The debtor made 13 payments to FinanceAmerica of $148.56 each. Several payments were made after the sales of the property.
11. The debtor still has possession of the Mitsubishi 13" color television, and Finance-America retains a perfected security interest in the same.
12. FinanceAmerica filed suit on July 1, 1982, against the debtor in the General Sessions Court for Knox County, Tennessee, and obtained judgment by default on July 28, 1982, in the amount of $5,311.74.
13. The judgment granted FinanceAm-erica reflects a principal balance due and owing of $4,618.91 as of the date of the filing of the action and the remaining portion of the judgment reflects a 15% attorney fee granted by the Court pursuant to the provisions of the Retail Installment Contract.
14. The contract provides that the buyer (Ricker) will not sell, dispose of, or mortgage the property without consent of the seller.
II
Conversion is “[a]ny unauthorized act which deprives an owner of his property permanently or for an indefinite time. Forbush v. San Diego Fruit & Produce Co., 46 Idaho 231, 266 P. 659, 663.” Black’s Law Dictionary 402 (4th ed.1951).
Clause (2) of section 17(a) of the Bankruptcy Act excepted from discharge debts arising from willful and malicious conversion of the property of another. This type of debt is not specified as nondischargeable in § 523(a) since “willful and malicious injury” covers a “willful and malicious conversion.” The discussion in the House Report of Code § 523(a)(6) recites in part: “Paragraph (6) excepts debts for willful and malicious injury by the debtor to another person or to the property of another person.” H.Rep. No. 595, 95th Cong., 2d Sess. 365, reprinted in 1978 U.S.Code Cong. & Ad.News, 5787, 5963, 6320.
In order to fall within the exception of § 523(a)(6), the injury must have been both willful and malicious.
Injuries within the meaning of the exception are not confined to physical damage or destruction; but an injury to intangible personal or property rights is sufficient. Thus the conversion of another’s property without his knowledge or consent, done intentionally and without justification and excuse, to the other’s injury, is a willful and malicious injury within the meaning of the exception.
3 Collier on Bankruptcy, ¶ 523.16 (15th ed. 1982).
It is true that not every claim founded on a mere technical conversion without conscious intent to violate the rights of another, and under mistake or apprehension, is nondischargeable. In Davis v. Aetna Acceptance Co., 293 U.S. 328, 55 S.Ct. 151, 79 L.Ed. 393 (1934), Justice Cardoza, writing for the court, observed “[A] willful and malicious injury does not follow as of course from every act of conversion, without reference to the circumstances. There may be a conversion which is innocent or technical, an unauthorized assumption of dominion without willfulness or malice ... [upon] an honest but mistaken belief ...” Id. at 332, 55 S.Ct. at 153.
The facts in the instant case are similar to the facts in Pioneer Bank and Trust Co. v. Scotella, 18 B.R. 975, 8 B.C.D. 1282 (Bkrtcy.N.D.Ill.1982). In that case, Land of Lakewood, Inc. (Lakewood) financed the purchase of a boat through Pioneer Bank. Scotella was the principal officer and owner of Lakewood. A chattel mortgage security agreement which Scotella personally guaranteed was executed for $17,575.00. Sometime later Scotella sold the boat for $19,-631.00 without Pioneer’s consent or knowledge. The proceeds were used for the general operating expenses of Lakewood. Sco-tella continued to make payments until both he and Lakewood filed bankruptcy petitions. At that time the balance due Pioneer was $11,646.60. The debt was held nondischargeable in that amount, the court finding that by selling the boat, Scotella, under the facts of the case, was guilty of a willful and malicious conversion of property-
The facts in the case before this court support a finding of willful and malicious conversion. The debtor bought some expensive merchandise. He gave the seller a security interest in that property to secure the unpaid balance. Within a year he sold most of the merchandise to “unknown” persons. He has forever deprived the secured party from realizing on its security. He concealed the sale of the property for many months. The debtor well knew the purpose for which a seller retains a security interest in property sold. The debtor is a businessman and a college graduate. The debtor converted the property without justification or excuse. He was encountering some financial and marital problems at the time of the sale, but the conversion was neither innocent nor technical. The debt is thus within the exception of § 523(a)(6), a willful and malicious injury to property.
|
1406591-24920 | LEVENTHAL, Circuit Judge;
This case arises on a petition for review of a Final Decision and Order of the Commissioner of Food and Drugs in which he ruled that a substance used to fabricate unbreakable beverage containers, acrylonitrile copolymer, is a “food additive” within the meaning of section 201(s) of the Federal Food, Drug, and Cosmetic Act (the Act). He further concluded that the data of record failed to provide the demonstration of safety established by section 409(c)(3)(A) of the Act as a precedent to FDA approval for use of any “food additive. The Commissioner’s Final Order amended the pertinent FDA regulations to provide: “Acrylonitrile copolymers [of the type identified in the regulations] are not authorized to be used to fabricate beverage containers.”
For the reasons set forth below, the decision of the Commissioner is affirmed in part, and in part is remanded to provide the opportunity for reconsideration.
I.
The FDA determination that acrylonitrile copolymers used in beverage containers are “food additives” within the statute is based on the finding that such containers invariably retain a residual level of acrylonitrile monomer that has failed to polymerize completely during the manufacturing process and that will migrate from the wall of the container into the beverage under the conditions of intended use. Although the administrative proceedings focused on beverage containers with a residual acrylonitrile monomer (RAN) level equal to or greater than 3.3 parts per million (ppm), the Commissioner made findings and conclusions applicable to all beverage containers manufactured with acrylonitrile, and the Final Order prohibited manufacture of such containers irrespective of their RAN levels.
FDA began to focus on acrylonitrile copolymer beverage containers in 1974, when the duPont Company submitted test results on a container fabricated from a somewhat different substance which alerted FDA to the possibility of significant migration from acrylonitrile containers. Subsequently, the Commissioner determined that, because of this putative migration, acrylonitrile copolymer was a “food additive” within the statute, and, on February 12, 1975, he published a regulation prescribing the conditions under which the chemical might be used safely in beverage containers: RAN levels in the wall of the container were limited to 80 parts per million (ppm), and acceptable migration of acrylonitrile monomer into the food was set at 300 ppb (parts per billion).
Two years later, FDA issued test results indicating that acrylonitrile caused adverse affects in laboratory animals. The Commissioner announced that he would lower the acceptable migration threshold for non-beverage containers to 50 ppb, and would withdraw approval entirely for acrylonitrile beverage containers, on the assumption that no such container could satisfy the 50 ppb migration limitation. Upon judicial review, this court held FDA’s suspension of its food additive regulation without a hearing to be invalid. The court stayed the administrative action on March 18, 1977 and ordered that the required hearing be completed within 60 days. Monsanto Co. v. Gardner (No. 77-1245, 3/18/77). Subsequently, on a joint motion of the parties, the time limitation was extended by 120 days.
At the administrative hearing, petitioners introduced results from tests on a newly developed acrylonitrile beverage container having a RAN level of approximately 3.3 ppm. Tests on the container, employing a detection method sensitive to 10 ppb, detected no migration of acrylonitrile monomer. Nevertheless, the administrative law judge found that acrylonitrile copolymer was a “food additive,” since migration had been detected from beverage containers composed of the same chemical compounds, though with higher RAN levels than those present in the “new” container. The Final Order prohibited manufacture of beverage containers containing acrylonitrile copolymer irrespective of their RAN levels.
II.
This case brings into court the second law of thermodynamics, which C. P. Snow used as a paradigm of technical information well understood by all scientists and practically no persons of the culture of humanism and letters. That law leads to a scientifically indisputable prediction that there will be some migration of any two substances which come in contact. The Commissioner’s Final Decision, which upheld the ALJ’s determination, is unclear on whether and to what extent reliance was placed on this “diffusion principle” rather than on a meaningful projection from reliable data. At one point in the Final Decision the Commissioner stated: “the migration of any amount of a substance is sufficient to make it a food additive” — a passage evocative of the diffusion principle. Elsewhere, the Commissioner stated that he was able to make a finding of migration based on a projection from actual data — on the assumption that a roughly linear relationship (as a function of time and temperature) existed between the RAN levels in a container and the concentration of acrylonitrile that would migrate into a test fluid. On this premise, though migration from the 3.3 ppm RAN container was itself below the threshold of detectability (10 ppb), it could be projected from the testing data obtained from containers with higher RAN levels.
This was a troublesome aspect of the case. As it was presented to us, the Commissioner had made a projection of migration from 3.3 ppm RAN containers without the support of any actual data showing that migration had occurred from such containers. One of petitioners’ experts put it that the relationship might not be linear at very low RAN levels; but this was dismissed by the Commissioner as “speculative.” One could not say that the expert’s contention of no migration from very low RAN containers was improbable as a concept of physical chemistry, but it was put to us that the validity of this contention could neither be demonstrated nor refuted for 3.3 ppm RAN containers because, under the conditions of intended use, migration was projected to occur in amounts below the threshold of detectability.
Our own study showed the possibility of using experimental data to check the FDA’s projection analysis. The FDA revealed that a projection of migration from low RAN containers had in fact been made for test conditions of prolonged duration and above-normal temperature. Under such conditions migration was projected in concentrations greater than 10 ppb, the threshold of detectability at the time of the Final Decision. Therefore, this court requested post-argument memoranda from the parties on whether tests had been performed, or would be feasible, to confirm by actual data the hypothesis that migration occurs from containers with a RAN level of 3.3 ppm.
The responses to our inquiry have revealed the probable existence of data unavailable to counsel during the administrative proceedings that bear importantly upon the assumptions made by the Commissioner in reaching his findings and conclusions. This discovery buttressed our earlier conclusion that the Commissioner did not have sufficient support for his decision to apply the “food additive” definition in this case.
In light of the inadequacy of the agency’s inquiry and in light of our view that the Commissioner has a greater measure of discretion in applying the statutory definitions of “food additive” than he appears to have thought, we remand this proceeding for further consideration.
Ill
The proceedings at hand are dramatic testimony to the rapid advance of scientific knowledge in our society. At the time of the administrative proceedings, the lowest concentration of acrylonitrile in a test fluid that could be detected with an acceptable degree of confidence was 10 ppb. There are now analytical techniques available that can detect acrylonitrile concentration of 0.1 ppb, an improvement of two orders of magnitude. Thus, on the issue of migration of acrylonitrile monomer it is now possible to generate “hard” data previously unobtainable.
In his post-argument testimony, Monsanto’s expert claims, on the basis of such “hard” data, that the hypothesis which the Commissioner labeled as “speculative” may accurately describe the migration characteristics of containers with very low RAN levels, to wit, that in such containers the acrylonitrile monomer is so firmly affixed within the structure of the copolymer that no migration will occur under the conditions of intended use. If these assertions can be demonstrated to the satisfaction of the Commissioner, a modification of the current regulation is a likely corollary. The actual issuance of a regulation approving the production of a beverage container with an acceptable RAN level would presumably require both a container that had been developed and the appropriate petition. How ever, the Commissioner would have latitude to issue a statement of policy based upon the results of the proceeding or remand that would specify what in his review was an acceptable RAN level. This would serve a technology-forcing objective.
FDA opposes petitioners’ post-argument motion for remand, asserting that the proffered new evidence will not affect the Commissioner’s order insofar as that order precludes manufacture of beverage containers with RAN levels equal to or greater than 3.3 ppm — the type of container already tested. FDA points out that the material submitted in response to this court’s inquiry affirmatively supports the validity of the Commissioner’s findings and conclusions. FDA contends that a petition for modification of the regulation, or a similar procedure, would be the appropriate vehicle for presentation of any new evidence indicating that migration ceases when RAN levels fall below a certain threshold.
As a general rule, courts defer to administrative agency orders closing the record and terminating proceedings. The rule has applicability in cases involving scientific matters notwithstanding the possibility that advances and experiments will yield new material data. Indeed, the importance of finality as a matter of administrative necessity may be magnified by the possibility— indeed probability — of advance in at least some areas. Procedures for rehearing or modifying orders are generally available to provide appropriate relief from any hardships or other harm.
The general rule of finality applies in the usual case because the courts trust the administrator’s ability to make a reasoned judgment that sufficient evidence has been submitted, that adequate time has been provided for rebuttal, and that the record should be closed. However, in this instance, the closing of the record did not reflect unfettered administrative judgment: FDA conducted these administrative proceedings under a time constraint dictated by an order of this court.
The Court is also concerned that the Commissioner may have reached his determination in the belief that he was constrained to apply the strictly literal terms of the statute irrespective of the public health and safety considerations. As we discuss below, there is latitude inherent in the statutory scheme to avoid literal application of the statutory definition of “food additive” in those de minimis situations that, in the informed judgment of the Commissioner, clearly present no public health or safety concerns.
In the usual case, the general doctrine of necessity and finality serves the public interest in immediate protection of the consuming public. But in this case production of acrylonitrile beverage containers was deferred voluntarily even when this court issued a stay of the FDA order, and in any event it is now prohibited pending further proceedings.
Finally, we are concerned that the record reflects a momentum toward a precipitate determination. Several factors bear on our judgment. One is the text of the decision, with its lack of precision as to basis. Another is the fact that the beverage container evaluated by the Commissioner was characterized by a migration level well below the agency’s initial limit. It was offered by petitioners in the hearing as available as a result of ongoing technology, but the time constraint imposed by judicial mandate prevented the agency from scheduling the kind of administrative consideration that would ordinarily have been provided.
IV
Pretermitting various issues that should await conclusion of the remand proceedings, we turn to certain other important questions that are presented by the record, that have been fully briefed and argued, and that are ripe for resolution.
The statute requires a demonstration of safety precedent to FDA approval of any “food additive.” The statutory definition of “food additive” which triggers that requirement contains a two part test. First, the component element of the definition states that the intended use of the substance must be reasonably expected to result in its becoming a component of any food. Second, the safety element of the definition states that the substance must be not “generally recognized [as] safe under the conditions of its intended use.”
Petitioners are concerned that the Commissioner has determined, or will determine, that the component element of the definition may be satisfied solely by that application of the second law of thermodynamics called the diffusion principle: any two substances that are in contact will tend to diffuse into each other at a rate that will be determined as a function of time, temperature, and the nature of the substances. Congress did not intend that the component requirement of a “food additive” would be satisfied by a mere recitation of the diffusion principle, a mere finding of any contact whatever with food. Petitioner’s contention on this point is sound.
For the component element of the definition to be satisfied, Congress must have intended the Commissioner to determine with a fair degree of confidence that a substance migrates into food in more than insignificant amounts. We do not suggest that the substance must be toxicologically significant; that aspect is subsumed by the safety element of the definition. Nor is it necessary that the level of migration be significant with reference to the threshold of direct detectability, so long as its presence in food can be predicted on the basis of a meaningful projection from reliable data. Congress has granted to the Commissioner a limited but important area of discretion. Although as a matter of theory the statutory net might sweep within the term “food additive” a single molecule of any substance that finds its way into food, the Commissioner is not required to determine that the component element of the definition has been satisfied by such an exiguous showing. The Commissioner has latitude under particular circumstances to find migration “insignificant” even giving full weight to the public health and welfare concerns that must inform his discretion.
Thus, the Commissioner may determine based on the evidence before him that the level of migration into food of a particular chemical is so negligible as to present no public health or safety concerns, even to assure a wide margin of safety. This authority derives from the administrative discretion, inherent in the statutory scheme, to deal appropriately with de minimis situations. However, if the Commis sioner declines to define a substance as a “food additive,” though it comes within the strictly literal terms of the statutory definition, he must state the reasons for exercising this limited exemption authority. In context, a decision to apply the literal terms of the statute, requires nothing more than a finding that the elements of the “food additive” definition have been satisfied.
In the case at hand, the Commissioner made specific rulings that the component element of the definition was satisfied with respect to acrylonitrile beverage containers having an RAN level of 3.3 ppm or more. These rulings were premised on a projection, based on an extrapolation from reliable data, of migration of acrylonitrile monomer in then-undetectable amounts. In light of the supplementary submission made in response to the post-argument inquiry of this court, we find that the determination can be made for the 3.3 ppm RAN containers with an appropriate degree of confidence, and with the support of the required quantum of evidence.
Turning to the safety element of the definition, the Commissioner determined that the scientific community had insufficient experience with acrylonitrile to form a judgment as to safety. Based on this lack of opinion, the Commissioner made a finding that acrylonitrile was not generally recognized as safe within the meaning of the statute. The Commissioner acted within his discretion in making such a finding, but we note that the underlying premise may. be affected, perhaps weakened, perhaps strengthened, with time and greater experience with acrylonitrile. This finding on the safety element will be open to reexamination on remand at the discretion of the Commissioner. He would have latitude to consider whether acrylonitrile is generally recognized as safe at concentrations below a certain threshold, even though he has determined for higher concentrations that in the view of the scientific community acrylonitrile is not generally recognized as safe.
V
Petitioners also made a claim of discriminatory treatment — that the Commissioner is applying policies in the petitioners’ case that have not been applied in other similar circumstances. However, there is no claim that the Commissioner was motivated by discriminatory intention to bring the petitioners before the agency and to focus on their product. Petitioners came before the agency in the ordinary course. Once the Commissioner undertook scrutiny, he shifted the lens of his microscope to a higher power — but that is no ground for objection, so long as the final action remains within the legitimate scope of discretion.
The decision of the Commissioner is affirmed in part, and in part is remanded to provide the opportunity for reconsideration.
So ordered.
. Acrylonitrile Copolymers Used to Fabricate Beverage Containers, Final Decision, 42 Fed. Reg. 48528-48544 (1977); J.A. at 1-17.
. Id., Conclusion of Law 11 15, 42 Fed.Reg. at 48543; J.A. at 16. Section 201 (s) of the Act, 21 U.S.C. § 321(s) (1976) provides:
(s) The term “food additive” means any substance the intended use of which results or may reasonably be expected to result, directly or indirectly, in its becoming a component or otherwise affecting the characteristics of any food (including any substance intended for use in producing, manufacturing, packing, processing, preparing, treating, packaging, transporting, or holding food; and including any source of radiation intended for any such use), if such substance is not generally recognized, among experts qualified by scientific training and experience to evaluate its safety, as having been adequately shown through scientific procedures (or, in the case as a substance used in food prior to January 1, 1958, through either scientific procedures or experience based oh common use in food) to be safe under the conditions of its intended use; except that such term does not include—
(1) a pesticide chemical in or on a raw agricultural commodity; or
(2) a pesticide chemical to the extent that it is intended for use or is used in the production, storage, or transportation of any raw agricultural commodity; or
(3) a color additive; or
(4) any substance used in accordance with a sanction or approval granted prior to September 6, 1953, pursuant to this chapter, the Poultry Products Inspection Act [21 U.S.C. 451 et seq.] or the Meat Inspection Act of March 4, 1907, as amended and extended [21 U.S.C. 601 et seq.]; or
(5) a new animal drug.
. Final Decision, note 1 supra, Conclusions of Law ¶ 16, 42 Fed.Reg. at 48543; J.A. at 16. Section 409(c), 21 U.S.C. § 348(c) (1976), provides in part:
(c) Approval or denial of petition; time for issuance of orders; evaluation of data; factors
(1) The Secretary shall—
(A) by order establish a regulation (whether or not in accord with that proposed by the petitioner) prescribing, with respect to one or more proposed uses of the food additive involved, the conditions under which such additive may be safely used (including, but not limited to, specifications as to the particular food or classes of food in or in which such additive may be used, the maximum quantity which may be used or permitted to remain in or on such food, the manner in which such additive may be added to or used in or on such food, and any directions or other labeling or packaging requirements for such additive deemed necessary by him to assure the safety of such use), and shall notify the petitioner of such order and the reasons for such action; or
(B) by order deny the petition, and shall notify the petitioner of such order and of the reasons for such action.
(2) The order required by paragraph (1)(A) or (B) of this subsection shall be issued within ninety days after the date of filing of the petition except that the Secretary may (prior to such ninetieth day), by written notice to the petitioner, extend such ninety-day period to such time (not more than one hundred and eighty days after the date of filing of the petition) as the Secretary deems necessary to enable him to study and investigate the petition.
(3) No such regulation shall issue if a fair evaluation of the data before the Secretary—
(A) fails to establish that the proposed use of the food additive, under the conditions of use to be specified in the regulation, will be safe: .
. Final Decision, note 1 supra, Final Order, 42 Fed.Reg. at 48543-44; J.A. 16-17. The provisions of the Order have been incorporated into FDA regulations at 21 C.F.R. §§ 177.1020(f), 177.1030(f), 177.1040(e), 177.1050(g) and 177.-1480(d) (1978).
. See e. g., 21 C.F.R. § 177.1040(c) (1978). This is the regulation under which petitioner Monsanto manufactures its acrylonitrile beverage container. Petitioner Vistron’s container is manufactured under 21 C.F.R. § 177.1480 (1978).
. 40 Fed.Reg. 6489 (1975); J.A. at 22.
. 42 Fed.Reg. 13540 (1977); J.A. at 139.
. Monsanto Br. at 17 states that there has been no use of the court’s stay to continue manufacture.
. Acrylonitrile Copolymers Used To Fabricate Beverage Containers, Initial Decision 35 (August 4, 1977); J.A. at 186.
. See, e. g„ 21 C.F.R. § 177.1040(c) (1978). This is the regulation under which petitioner Monsanto manufactures its acrylonitrile beverage container. Petitioner Vistron’s container is manufactured under 21 C.F.R. § 277.1480 (1978).
. See C. P. Snow, The Two Cultures and the Scientific Revolution (1959).
. Final Decision, note 1 supra, 42 Fed.Reg. at 48534; J.A. at 7. Id, 42 Fed.Reg. at 48532-33; J.A. at 5-6.
. Id, 42 Fed.Reg. at 48529-48530; J.A. at 2-3.
. The suggestion was made in the prepared testimony of Monsanto’s expert witness, Mr. Morris Salame. J.A. at 457-58. The Commissioner dismissed the hypothesis as “speculative” in his response to the exceptions of the parties. Final Decision, note 1 supra, part C(2)(a)(i), 42 Fed.Reg. at 48530-31; J.A. at 3-4.
. The chart showed the following projections of migration from a beverage container with a RAN level of 3.7 ppm:
at 150° F for 30 days —26 ppb;
at 120° F for 180 days —27 ppb;
at 120° F for 90 days —14 ppb.
J.A. at 794.
. Memorandum of Monsanto Company In Support of Motion For Remand Under Section 409(g)(4) at 4.
. Affidavit of Morris Salame, accompanying Monsanto Memorandum, note 16 supra, at ¶¶ 9, io.
. The Act does not contemplate promulgation of food additive regulations for hypothetical food additives. 21 U.S.C. §§ 321(s) & 348(c) (1976). The Commissioner must base his decision on a container actually existing and actu ally before him in the remand proceeding or any subsequent proceeding.
. The submission by Monsanto is that no migration can be expected to occur from containers with RAN levels lower than 0.1 ppm. Salame Affidavit, note 16 supra, at H 10. There is a further indication that the manufacture of beverage containers with RAN levels of less than 0.1 ppm is technologically feasible. Monsanto Memorandum, note 15 supra, at 7.
. In view of the new data generated in- response to the Court’s inquiry, petitioners no longer contest that migration does occur from Monsanto’s “Cycle-Safe” container (RAN level of 3.3 ppm) under the conditions of its intended use. See Salame Affidavit, note 16 supra; Monsanto Memorandum, note 15 supra, at 11.
. See Investment Co. Institute v. Federal Reserve System, 179 U.S.App.D.C. 311, 322, 551 F.2d 1270, 1281 (1977).
. The issues fully ripe for decision at this time include questions of statutory interpretation that will be pertinent to the proceeding on remand.
. See § 409(c)(3)(A), quoted in note 3, supra.
. See note 2 supra.
. Id.
|
1472721-17997 | JOHN R. BROWN, Circuit Judge.
The subject of this case is the proposed acquisition by Central and its principal owner and officer-director Callan of Express, a motor carrier, and two non-carrier affiliate enterprises, Cartage and W & H The sellers were Walker and Hart who owned 60% and 40%, respectively, of the capital stock of these companies. The purchase price as proposed in the 1956 contracts aggregated $2 million.
After a series of orders the Commission has granted a § 5 approval to Central and Callan for the acquisition of control of these enterprises. The sole plaintiff here is Walker, one of the two sellers. In a broad sort of way his position therefore is that the Commission may not legally approve the sale which he contracted to make. The Government and the Commission, quite understandably, attack the standing of Walker to challenge the order of the Commission approving the sale and transfer Walker proposed to make.
On the initial submission and argument to us, a very serious question arose as to just what the Commission had or had not intended. This grew out of the orders which in effect approved acquisition of Express and Cartage by Central since the acquisition (and obligation for payment) of W & H was, with Commission approval, to be made by Callan as assignee of Central. The problem then thought to be acute was whether by these orders and certain conditions imposed on Callan, the Commission in effect had simultaneously granted a § 214 approval for the issuance by Central of the promissory notes payable to Walker in part payment of the purchase price of his stock in W & H. This Court by brief opinion remanded the matter to the Commission for clarification and further orders. Walker v. United States, W.D.Tex., 1961, 204 F.Supp. 918.
The Commission, pursuant to this remand, has taken further action and has, as directed by us, now certified to us two additional separate, but simultaneous, orders and reports. Before discussing these supplemental reports or assaying their legal significance, we think it helpful to repeat here the broad latitude we afforded the Commission in its reconsideration under our interim remand:
“[1] The matter is therefore remanded to the Commission for clarification whether the approval of the § 5 application does or does not constitute appropriate authorization under § 214 for the issuance of the promissory notes to Walker (and Hart as appropriate) as called for in the initial contracts of June 30, 1956. [2] We do not undertake to prescribe the manner in which the Commission is to conduct further proceedings except that it is requested that the matter be expedited to the maximum possible extent, and that in the supplemental orders or reports, the Commission indicate with appropriate required specifications its findings, reasons and conclusions with respect to the total amount of promissory notes payable to Walker (or Hart as appropriate) which Central is authorized under § 214 to issue. [3] In the event the Commission were to approve the issuance of promissory notes payable to Walker (or Hart as appropriate) in sums less than the aggregate called for by the initial contracts of June 30, 1956, the findings, reasons and conclusions should also cover expressly the general problem of whether there may be a § 5 approval as a proposed transaction since any such limitation on the amount of securities might mean that the transaction could not be consummated in literal compliance with the terms of the private contracts.” 204 F.Supp. 921.
Insofar as the report in the so-called control case Docket MC-F-6339 is concerned, the Commission’s supplemental report reflects that as a current interpretation of a prior event, the Commission holds that its approval of the assignment to Callan of Central’s proposed purchase of W & H and the condition requiring Callan to furnish a surety bond against contingent liabilities on Central’s part did not impliedly authorize the issuance of Central’s promissory notes payable to Walker in the additional amount of $450,-000.
If the matter stood there, a considerable question might exist as to whether there was not such a marked departure from the terms of Walker’s 1956 contract with Central that it would be a wholly academic thing for the Commission (or this Court in review thereof) to go through the motions of approving such a drastically revised contract as the “proposed transaction,” § 5, 49 U.S.C.A. § 5. But it does not stand there. This is so because the Commission, simultaneously with, its consideration of the Control Case, conducted an additional proceeding under the new Finance Docket No. 21819 (see note 8, supra) and in its simultaneous order it likewise approved the issuance by Central of the additional $450,-000 promissory notes payable to Walker at times, amounts and at interest rates precisely in accord with the 1956 agreement.
This whole case — both before and subsequent to our limited remand — has been needlessly complicated by the Commission’s persisting in the fiction that the “control” and the “Finance” matters are separate. We can acknowledge, of course, that as to each, different statutory requirements and principles must be satisfied. Likewise, as a matter of administrative housekeeping, it perhaps makes for a more neat and orderly disposition to segregate them by separate docket numbers. At the same time, they are one proceeding. Each must be read in the light of the other. The express deficiency of one may be overcome by the express or implied conclusions of the other and, conversely, the express grant in one might be markedly affected by an implied condition in the other. Thus, issuance of a § 5 approval of the “proposed” transaction necessarily has to take into account the method of financing. On the other hand, approval of the issuance of securities in a § 214, 49. U.S.C.A. § 314 finance proceeding necessarily takes into account the occasion (i. e., necessity) for such financing. Each is interdependent. Each is interlocked.
And whatever might be the treatment to be accorded this segregation of dockets in the normal situation (either on a statutory review or while pending before the Commission for administrative action), the terms, of our remand to the Commission obviously contemplated that the Court was seeking guidance and direction from this expert body on whether the transaction as a whole was or was not presently approved. The language used by us in sentence [1] does speak in terms of “clarifying” whether the existing order or orders now constitute appropriate authorization. But it is plain by sentence [2] that three things were contemplated. First, it was recognized that the Commission had to hold further proceedings. As to these we disclaimed any purpose “to prescribe the manner in which the Commission is to conduct further proceedings,” 204 F.Supp. 921. Second, we recognized that its action might be in several papers as we referred to “the supplemental orders or reports” which the Commission would issue. Third, and of more importance, we expressly required that “the Commission indicate with appropriate required specifications its findings, reasons and conclusions with respect to the total amount of promissory notes payable to Walker * * * which Central is authorized under § 214 to issue.” 204 F.Supp. 921. We italicize the word “is” to emphasize that we were seeking current, contemporary determination by the Commission. We were not concerned merely with previous determinations. The issue was squarely presented to us: what notes, if any, has the Commission authorized Central to issue to Walker for W & H stock ? We needed, and we sought, determination of that precise problem by the Commission. Moreover, our order invested it with adequate authority to undertake such proceedings as in the Commission’s judgment might be required. This is made doubly clear by the terminology of sentence [3] which in terms of futurity spoke of “in the event the Commission were to approve the issuance of promissory notes * * * in sums less than the aggregate called for * * 204 F.Supp. 921.
This Court was concerned with the amount of promissory notes which the Commission authorized Central to issue to Walker for W & H stock. This Court was not concerned with the manner in which the Commission, under its procedures, felt obliged to manifest that decision. Where the Commission chooses to chop a single thing into two bits, we are not so handicapped. Rather, we interpret the simultaneous reports growing out of one transaction as a single determination. In this approach, we are able to distill from two simultaneous decisions the following: in addition to the authority to issue promissory notes payable to Walker and Hart in the amount of $750,000 in payment for stock in Express and Cartage (see note 5, supra), Central is also now formally authorized to issue a note payable to Walker in the sum of $450,000 representing the agreed deferred price for his stock in W & H (see note 6, supra). Thus an aggregate of $1,200,000 in promissory notes is now approved.
As it is specifically to be a promissory note of Central payable to Walker, this means that the Commission necessarily approves Central performing this obligation imposed on it by the terms of the 1956 agreement. In no other way could the Commission conceivably have approved the execution and issuance by Central of its note payable to Walker in any such substantial sum. Of course, it is equally plain that behind this approval is the fact that as between Central and Callan the Commission considers that Central has assigned to Callan its rights and obligations under the 1956 agreement with respect to W & H. Likewise it is equally positive that without that assignment vis-a-vis Central and Callan the Commission would not have approved either the proposed transaction or the issuance of the additional note in the sum of $450,-000. This latter is decisively demonstrated by the meticulous provisions set forth in the Finance Docket report and order, the effect of which is that while Central has an outstanding obligation to Walker (or those holding the note of which he is the payee) for $450,000 payable over a 10-year period, it actually has none. This is so because Callan is required simultaneously to “pay for” the note before issuance to Walker, and Central is then required to invest this “payment” by Callan in interest bearing securities for periodic sale to supply the funds for retirement of the note as installments fall due. As to that portion of the sales price of W & H stock payable in cash to Walker ($150,000, see note 5, supra), there was no need for this elaborate machinery since under the CentralCallan assignment, the cash would come from Callan for delivery to Walker through Central as a conduit. But so far as Commission approval is concerned, Walker has no right to complain that, either for the note given to him by Central for W & H stock, or the cash turned over to him by Central for the cash payment, it is Callan who ultimately bears the risk and, upon final consummation of the transaction it is Callan, not Central, who will end up owning W & H.
Since we regard the report in Finance Docket 21819 as a supplemental and integral part of the pending Commission proceedings under review, it follows that whatever attack Walker has made, or makes, as to the supplemental report in MC-F-6339 is available to him as to it as well. This is so even though no separate appeal has formally been taken. Walker’s contention that this supplemental order is invalid because “wholly in camera” is unfounded. Walker had notice of the application and filed a formal pleading seeking the outright dismissal of the “new” application. He was not denied the right to participate in it. Indeed, he seemed to regard it with disdain. Walker fails likewise as to the merits. There was no need for any further or new evidence since Callan is required to provide in advance the funds with which to make the cash payment and to fund the retirement of the note. Broad jurisdiction is granted to the Commission on the issuance of securities. Its jurisdiction is “exclusive and plenary.” The Commission, in approving issuance of securities, is to determine whether the issuance will be “compatible with the public interest” and whether issuance “ * * * is necessary or appropriate for or consistent with the proper performance by the carrier of service to the public * * * ” § 20a(2), 49 U.S.C.A. § 20a(2). The application has to be in writing properly verified, § 20a(4), and notice is expressly required only as to the governor of relevant states and other public agencies. § 20a(6). The necessity and type of hearings, as such, is left broadly to the Commission. “The Commission may hold hearings, if it sees fit, to enable it to determine its decision upon the application for authority.” § 20a (6). Alleghany Corp. v. Breswick & Co., 1957, 353 U.S. 151, 175, 77 S.Ct. 763, 1 L.Ed.2d 726, and see also Breswick & Co. v. United States, S.D.N.Y., 1957, 156 F.Supp. 227, 230, reversed on other grounds, 355 U.S. 415, 78 S.Ct. 421, 2 L.Ed.2d 374. And for quite understandable reasons, the statute expressly recognizes that Commission action may be complete or partial, final or conditional, and that as conditions change, it may “from time to time, for good cause shown, make such supplemental orders * * * as it may deem necessary or appropriate * * *” § 20a(3). Arrow Transportation Co. v. United States, N.D.Ala., 1959, 176 F.Supp. 411, affirmed 361 U.S. 353, 80 S.Ct. 406, 4 L.Ed.2d 362; and see cases in which the Commission has reopened proceedings pending review United States v. Chicago, Milwaukee, St. Paul & P. R. Co., 1935, 294 U.S. 499, 504, 55 S.Ct. 462, 79 L.Ed. 1023; Koppers Co., Inc. v. United States, W.D. Pa.1958, 166 F.Supp. 96; Boston & Maine R. v. United States, D.Mass., 1957, 153 F.Supp. 952.
Reading all of these Commission reports, including the two latest ones, together, practically all of the points urged so vigorously by Walker now wash out. Thus we find it unnecessary to consider specifically the subsidiary, though threshold dispute, over whether Walker has standing as such to challenge these orders. We may assume, without deciding, that he does.
But standing to challenge is quite distinct from the scope of the challenge which may then be made. Here Walker is in a unique position. He made a contract to sell all of his interest in all of these companies. Whatever rights the Texas State Court litigation may accord him in avoiding fulfillment of the contracts, he may certainly not contend before the Commission that the contract he made was illegal.
Again, assuming that as one having “standing” he may perhaps have the right to demand procedural orderliness, his appeal fails on its merits. In effect he asserts that the .Commission after first disapproving the 1956 contract because of apprehended overcapitalization, did not have the power either to change its decision or grant extensions of time for consummation of the transaction when and as approved. Especially is this true, says Walker, when this was done over his protest that the Commission should not honor any application for rehearing or relief filed by Central unless joined in by him. As to this, Walker was not the applicant for a § 5 approval. This was not a merger or two carriers seeking permission to combine. It was an application by a carrier (Central) to acquire control over another carrier (Express) and the applicant was Central (and Callan as one in control of a carrier under the Marshall Transport Doctrine. §§ 5(2) (a) (i) and (b), 212(b).
With regard to rehearing and timeliness the Commission has great latitude under the statute. §§ 5(2) (b), 16(6) and 204(a) (6), 49 U.S.C.A. §§ 5(2) (b), 16(6), 304(a) (6). See also Seatrain Lines, Inc. v. Pennsylvania R. Co., D.N.J., 1952,108 F.Supp. 113,126; Philadelphia-Detroit Lines v. United States, S.D.Fla., 1939, 31 F.Supp. 188, aff’d 308 U.S. 528, 60 S.Ct. 384, 84 L.Ed. 446; Lubetich v. United States, W.D.Wash., 1941, 39 F. Supp. 780, aff’d 315 U.S. 57, 62 S.Ct. 449, 86 L.Ed. 677; Los Angeles-Seattle Motor Express, Inc. v. United States, W.D.Wash., 1941, 39 F.Supp. 783. Additionally, with this three-ring Donnybrook proceeding before the Commission, this Court and the State Court, there was every reason why, for the protection of Walker and all others, the time for consummation was successively extended in the past, just as it must be for the future, until such time as the legal rights of the parties to the 1956 contract are judicially determined and the transaction either closed or abandoned.
The attack fares no better as to either sufficiency of evidence or the findings. As for the former, we would doubt seriously, that a seller in a contract expressly subject to Commission approval may even question the validity of the agreement or the propriety of its consummation. But assuming any such right, the Commission had an abundance of evidentiary support for its approval in principle of the sale and the transfer of control. The only doubt ever expressed by the Commission has been its apprehension as to overcapitalization of Central had the transaction been consummated without the conditions and provisions now imposed (as between Central and Callan). So far as these represent matters which Walker may challenge, the Commission reports are quite sufficient to indicate the basis for Commission action. Amarillo-Borger Express, Inc. v. United States, N.D.Tex., 1956, 138 F. Supp. 411, vacated as moot, 352 U.S. 1028, 77 S.Ct. 594, 1 L.Ed.2d 598; Dixie Carriers v. United States, S.D.Tex., 1956, 143 F.Supp. 844, vacated as moot, 355 U.S. 179, 78 S.Ct. 258, 2 L.Ed.2d 186. In dealing with the objection of over-capitalization, the Commission has adequately revealed why each of the various proposed conditions or modifications of them will satisfy the demands of and “be consistent with the public interest.” § 5.
|
3815935-18804 | SUTTON, Circuit Judge.
After a five-day trial, a jury convicted Anthony Eason of two counts of conspiring to distribute and possess with intent to distribute controlled substances (cocaine, crack cocaine and marijuana) in violation of 21 U.S.C. §§ 841(a)(1) and 846 and one count of engaging in a continuing criminal enterprise in violation of 21 U.S.C. § 848. The district court sentenced him to 40 years in prison. On appeal, he claims that the statute of limitations should have barred the government from bringing the continuing-criminal-enterprise charge, that insufficient evidence supported this aspect of the jury verdict, that the district court improperly admitted several pieces of evidence and that the court unreasonably sentenced him. Finding no merit to these claims, we affirm his conviction and sentence.
I.
In 1996, a federal grand jury indicted a group of drug dealers, including Eason, for selling drugs in Benton Harbor, Michigan. By 1997, the government had arrested and convicted all of the drug dealers involved in these charges, save Eason who managed to evade arrest for the next eight years.
On July 4, 2004, authorities finally apprehended Eason after receiving a tip from his mother that he was at her house in Chicago. When the police arrested him, Eason offered false identification and claimed to be Anthony Vega.
On August 25, 2004, a federal grand jury returned a new indictment against Eason. Counts one and two of the indictment reprised the 1996 indictments, and count three charged him with operating a continuing criminal enterprise. The jury found Eason guilty on all three counts. On June 20, 2005, the district court sentenced him to 40 years in prison and 5 years of supervised release.
II.
A.
Eason contends that the government waited too long to bring the continuing-criminal-enterprise charge against him. Noting that the last transaction identified in the enterprise charge occurred in 1996 and that the government did not charge him until 2004, he argues that the charge is time barred. “Except as otherwise expressly provided by law,” the relevant statute of limitations says, “no person shall be prosecuted, tried, or punished for any offense, not capital, unless the indictment is found or the information is instituted within five years next after such offense shall have been committed.” 18 U.S.C. § 3282(a). The government does not dispute that it brought the charge more than five years after the acts underlying the continuing-criminal-enterprise charge took place. But it points out that an “[e]xcept[ion]” to the limitations provision applies here because elsewhere in Title 18 it says that “[n]o statute of limitations shall extend to any person fleeing from justice.” Id. § 3290.
To establish that Eason was a “person fleeing from justice,” the government had to show that he “concealed himself with the intent to avoid prosecution.” United States v. Greever, 134 F.3d 777, 780 (6th Cir.1998). The government presented ample evidence to satisfy this requirement. It established that Eason frequently used aliases to “conceal[]” his true identity. See JA 144 (Eason was “adept at avoiding detection” because he “has a very solid history of using alias names. He’s been arrested by the Chicago Police numerous times using at least eight different names that don’t appear to be related to each other, names that are totally different; for example, Antonio Vega, Andrew Brown, names like that.”); JA 148 (“[S]ome of the names that he was arrested under” were “Andrew Brown; Anthony S. Eason; Anthony Eason; Anthony Easton ...; Michael Q. Jeffries; Charles Johnson; Carl Herrington; Carlos Jordan; [and] George Thomas.... ”); JA 145 (When he was arrested at his mother’s house on July 4, 2004, he produced “an Illinois driver’s license with [his] picture in the name of Antonio Vega....”).
Because intent to avoid prosecution “can be inferred from the defendant’s knowledge that he was wanted and his subsequent failure to submit to an arrest,” Greever, 134 F.3d at 780, the government also showed that Eason knew a warrant was out for his arrest. See, e.g., JA 140 (“[S]ometime around March of 1997,” about three months after the warrant for his arrest was issued, there was a “monitored telephone conversation which was taped between a cooperating individual and Mr. Eason where that individual told Mr. Eason that he in fact was wanted.”); JA 143 (In the “spring or summer of 1997,” Chicago FBI agents “tried to develop a liaison with [Eason’s] mother in an attempt to locate Mr. Eason, and during those conversations with his mother they clearly told his mother that he was wanted” and “his mother ... admitted] that Mr. Eason was aware that he was wanted.”).
In the final analysis, this charge was not time barred. Section 3290 exempts a “person fleeing from justice” from § 3282’s five-year limitations period, and the evidence in this case amply supported the district court’s finding that Eason was such a person.
B.
Eason next challenges the sufficiency of the evidence supporting his conviction for operating a continuing criminal enterprise. To convict a defendant of this crime, the government must prove: “(1) a felony violation of the federal narcotics law; (2) as part of ‘a continuing series of violations;’ (3) ‘in concert with five or more persons;’ (4) for whom the defendant is an organizer or supervisor; and (5) from which he derives substantial income.” United States v. English, 925 F.2d 154, 156 (6th Cir.1991) (quoting 21 U.S.C. § 848(c)). Eason argues that the government failed to prove the fourth element of the crime because it showed only that he was engaged in a series of buyer-seller relationships, not that he controlled or managed the conspiracies. See United States v. Long, 190 F.3d 471, 475 (6th Cir.1999) (“[M]erely proving that the individuals had a buyer-seller relationship with the defendant is not sufficient to support a conviction for engaging in a [continuing criminal enterprise].”).
The evidence presented to the jury showed that Eason did far more than buy and sell drugs with his co-conspirators. It showed that Eason controlled, gave directions to and supervised these other individuals. Maurice Isaac, for example, testified extensively that Eason mentored, trained and directed him. See JA 873-74 (Isaac “g[o]t involved in drugs” when “my man Frosty [one of Eason’s nicknames] came along, you know what I’m saying, and, you know, driving his nice cars and stuff. So, you know, he told me, you know, man, you need to start, you know what I’m saying, getting on your feet, you know what I’m saying, so he put me on my feet.... [W]e always been Mends, so he pulled me up.... He asked me do I want to, you know, get into the thing? I said yeah. Into the drug business? I said yeah.”); JA 878 (‘You know, at first, you know, I wasn’t making no money at it, you know, so he told me, You can’t sell it like that. You got to stretch it. So I got some Isotol, it’s a mixture, and I start, you know, putting a mixture on it and made a little bit, you know, more of it, so that’s when I started making a little bit more money.”); JA 898 (Eason “taught me everything about the [drug] game.”); JA 894 (Eason “coached me, you know what I’m saying? You know, he was a good dude to me, you know.”); JA 895 (When “major distributors” that Eason was “supplying” would stop by Eason’s house when Eason was out of town, Eason would tell Isaac “to take care of it for him.”); JA 896 (“So if he had somebody coming down and he won’t be around, he’s like, Hey, Jed, [“Jed Money” was Isaac’s nickname, JA 872] I got somebody coming down, you know, like somebody like Wesfley Moore, another co-conspirator,] came down a couple times and he left me with a couple of—you know, like nine ounces here and a half key here for him, you know.”); JA 912-13 (If buyers needed “to get ahold of Frosty and they couldn’t,” “they come straight over to my house and I get in touch with Frosty for ‘em .... [h]e’d call me right back if I paged him.”).
Isaac also testified about a trip that Eason arranged to California to purchase seven kilograms of cocaine. Eason recruited two female co-conspirators to courier the money and drugs and coordinated the exchange. Another witness testified that Eason ordered an individual who worked for Eason (who “was pretty much [Eason’s] flunky in Benton Harbor”) to “teach me how to cook” powder cocaine into crack cocaine. JA 754. And a variety of other witnesses also testified to Eason’s supervision of the enterprise. See JA 1194-95 (“Keith Curtis ... indicated] that Mr. Eason controlled the price, location and quantity. Demetrius Scales ... said Mr. Eason was ... ‘the big man,’ ... with a ... ‘huge reputation....’ Wesley Moore ... said the defendant had a reputation and visibility as ... ‘the supplier....’ Anthony Hill ... indicated that Mr. Eason could get crack cocaine or rock, as he called it, in any quantity whenever he, Hill, wanted it by simply calling Mr. Eason.... Virece Kazee said that Mr. Eason was a major drug supplier. Columbus Franklin ... said the defendant’s reputation was for violence and he was a ... ‘big man’ ... in drug trafficking. Ronald Edison said ... that he paged the defendant whenever he wanted powder or crack. Willie Ross ... indicated that while he, Willie Ross, was a substantial supplier of cocaine and crack in Benton Harbor, that th[e] main supplier to him for a period of two and a half to three years ... was Mr. Anthony Eason; that Mr. Eason arbitrarily determined the price and the location and very deliberately determined the means of the rendevous or location for the delivery.... Brian Amos, who was apparently a cellmate at Newaygo County jail while awaiting sentencing] in this matter, testified that Mr. Eason bragged while he was in the cell about his position as a ... ‘top dog’ ... in the drug trade.”); JA 1198 (The “testimony taken in its entirety demonstrates not only participation in the drug conspiracies ... but it also testifies to the running of the drug enterprise....”).
Viewing the evidence in the light most favorable to the government, as we must, United States v. Collins, 78 F.3d 1021, 1030 (6th Cir.1996), numerous witnesses confirmed that Eason controlled co-eonspirators, gave directions and instructions to them and made decisions about the conspiracy and its scope. Eason’s chai lenge to the sufficiency of the evidence supporting the continuing-criminal-enterprise charge therefore must fail.
C.
Eason next challenges the district court’s admission of four pieces of evidence. The “decision to admit relevant, but potentially prejudicial, evidence is committed to the sound discretion of the trial court.” United States v. Schrock, 855 F.2d 327, 333 (6th Cir.1988). And “[i]n reviewing the trial court’s decision for an abuse of discretion, the appellate court must view the evidence in the light most favorable to its proponent, giving the evidence its maximum reasonable probative force and its minimum reasonable prejudicial value.” Id. (internal quotation marks and citations omitted).
Eason argues that the court should not have permitted several witnesses to testify about threats he made to government witnesses. The court admitted evidence showing that Eason threatened the lives of the potential witnesses and their families, including their children, that he physically assaulted one witness in jail and that at trial he produced a false affidavit purportedly from one of the government’s witnesses. Eason argues that this evidence was substantially prejudicial and inflammatory and that it “may be considered improper character evidence of prior bad acts.” Eason Br. at 43.
Because “spoliation evidence, including evidence that the defendant threatened a witness, is generally admissible because it is probative of consciousness of guilt,” United States v. Maddox, 944 F.2d 1223, 1230 (6th Cir.1991), and because “threats against a witness constitute an effort by the defendant to tamper with the substance of the government’s case, and thus are probative of a defendant’s awareness that the government is likely to prevail at trial,” United States v. Copeland, 321 F.3d 582, 597 (6th Cir.2003), the court did not abuse its discretion in admitting this evidence. It is hard to imagine any intimidation evidence that would not be deeply prejudicial to the defendant. Indeed, the more deliberate and extreme the defendant’s efforts to tilt the truth-finding process the more probative—and prejudicial—the evidence. Still, even if there may be sufficiently prejudicial spoliation evidence that a district court could not admit without abusing its discretion, this evidence did not rise to that level. The “worst” evidence—that Eason targeted children—was presented with other evidence in a fairly generic manner that lacked graphic details that might risk shocking and unduly inflaming a jury. See, e.g., JA 364 (Eason “was telling me .... [wjhoever testify against him, his men gonna be in court and he gonna kill their kids who testify.”).
Eason next argues that the court should not have admitted evidence documenting a small amount of drugs that police seized from a co-conspirator in 1990 and that, in accordance with local government policies, was destroyed before Ea-son’s trial. In complaining that the government could have kept the underlying drugs because they would have remained “stable” for a long time, Eason misses the point. The question is not whether the government could have kept the drugs; the question is whether it had to. The government destroyed the drugs once Ea-son’s co-conspirator’s case had ended in accordance with a county policy designed to preserve its limited space for evidence. “[U]nless a criminal defendant can show bad faith on the part of the police, failure to preserve potentially useful evidence does not constitute a denial of due process of law.” Arizona v. Youngblood, 488 U.S. 51, 58, 109 S.Ct. 333, 102 L.Ed.2d 281 (1988). Eason has not shown governmental bad faith, and he has not shown that the evidence had exculpatory value to him. See California v. Trombetta, 467 U.S. 479, 488-89, 104 S.Ct. 2528, 81 L.Ed.2d 418 (1984) (The “duty the Constitution imposes on the States to preserve evidence ... must be limited to evidence that might be expected to play a significant role in the suspect’s defense. To meet this standard of constitutional materiality, evidence must both possess an exculpatory value that was apparent before the evidence was destroyed, and be of such a nature that the defendant would be unable to obtain comparable evidence by other reasonably available means.”) (footnote and citation omitted).
Eason also objects on hearsay grounds to the admission of his pager number. When police arrested a co-eonspirator in 1990, the individual provided them with the pager number of the person who had supplied the drugs the officers seized. Later that year, a traffic officer detained Eason and cited him for operating a vehicle without a license. The officer found a pager on Eason and determined that its number matched the one the co-conspirator had given to the police earlier. By the time of Eason’s trial, no witness could remember the pager number, but the court allowed the government to let the officer read the pager number he had recorded in his report after arresting the co-conspirator.
Eason offers no answer to the government’s response that the court properly admitted the pager number under the past-recollection-recorded exception to the hearsay rules. See Fed.R.Evid. 803(5). The introduction of the pager number satisfied the exception because the officer “(1) ... once had knowledge about the matters in the document; (2) ... [when called to testify at trial had] insufficient recollection to testify fully and accurately; and (3) the record was made at a time when the matter was fresh in the witness’ memory and reflected the witness’ knowledge correctly.” United States v. Porter, 986 F.2d 1014, 1016-17 (6th Cir.1993).
Eason next objects to the court’s admission of a statement from the officer who detained Eason in 1990 for the traffic violation discussed above. By the time of Eason’s trial, that stop had taken place 15 years earlier. The officer testified that he remembered Eason from the stop and identified him in court. To explain how he was able to remember’ Eason after all that time, he said that he remembered Eason because “at the time of [the] traffic stop, [Eason] was subject to being identified as a major drug dealer in the Benton Harbor area.” JA 556. Eason objected and requested a curative instruction to the jury (without specifying the grounds for his objection), but the court overruled the objection. The government noted that the statement was “not being offered for [its] truth,” then rephrased the question: “[W]as it because this individual became a target of your narcotic investigations [that you are able to identify Eason today]?” Id.
The government’s statement sufficiently clarified for the jury that it did not offer the officer’s statement to prove Eason’s status as a drug dealer but to explain how a traffic officer could recall an individual he had stopped a decade and a half ago. Overwhelming evidence, at any rate, established that Eason was indeed “a major drug dealer in the Benton Harbor area,” and the officer’s statement, even if it had been mistakenly offered for its truth, did not materially harm Eason.
D.
Eason, lastly, challenges his sentence. At Eason’s sentencing hearing, the district court extensively reviewed the testimony that supported the jury’s verdict and calculated Eason’s criminal history level (IV) and offense level (43). The court then noted that its “calculation under these ... guidelines is truly a guideline,” and that “while it is not binding upon this Court in a Blakely context, it is still the starting point from which the Court measures a sentence that the court might impose, the Court being free to establish” an appropriate sentence in exercising its independent judgment. JA 1199.
An appropriate sentence, the court added, “has to take into consideration the seriousness of this offense and has to take into consideration the protection that is due to the public. The defendant has not been particularly cooperative, so that has to be factored into this matter. The deterrence factor has to be weighed in because this is a community and this is a particular type of offense that seems to attract nefarious characters for whom the opportunity to make money and for whom the opportunity to forge relationships and conspiracies appears to be quite opportunistic and quite deleterious to the health of the communities, Benton Harbor being Exhibit A for that.” JA 1212. The court ultimately sentenced Eason to 40 years in prison.
|
5875155-12735 | AINSWORTH, Circuit Judge:
Appellant, Eagle Motor Lines, Inc., appeals from a judgment upholding a jury verdict awarding damages to plaintiffs, and from the denial by the Court of certain post-trial motions in this Mississippi diversity wrongful death action. Appellant contends that the verdict was contrary to the weight of evidence, that the award was excessive, and that the Court erred in giving certain jury instructions.
Appellees, the widow and two daughters of the deceased, E. J. Anderson, brought this suit for actual and punitive damages growing out of his wrongful death, alleging gross negligence of defendant. On February 9, 1968, a short time before sunrise, Anderson was driving a station wagon east on Mississippi Highway 550 when his vehicle collided with appellant’s tractor-trailer. Anderson was killed instantaneously. The only eyewitness to the accident was Warren Jones, who, moments prior to the collision, had driven the tractor-trailer across the east-west highway, blocking both lanes of traffic, while attempting to turn around. The rear wheels of the trailer were off the highway on the south shoulder of the road. The tractor was at an angle to the trailer facing almost due west and its headlights were shining in that direction. Trailer lights were not burning, but there was evidence that electric wires on the trailer had been severed at a point close to where the Anderson vehicle had hit and gone under the side of the trailer. Jones, the driver of the tractor, had been hauling a load of steel pipes and was proceeding west on the highway en route to a jobsite near Brookhaven, Mississippi. Having been misdirected as to the proper route, Jones was attempting to turn completely around by jackknifing the tractor and backing the trailer into a driveway on the south shoulder of the road. His rig was in this position when he noticed Anderson’s station wagon approaching from the west. Jones blinked the four-way warning lights, sounded his air horn, then jumped from the tractor cab and attempted unsuccessfully to flag down the approaching vehicle. According to Jones, Anderson continued at the same speed and crashed into the side of the trailer. At the scene of the accident, the width of the highway, including the north and south shoulders, is approximately forty-one and a half feet. Appellant’s tractor-trailer was sixty-one and a half feet long, exceeding by twenty feet the width of the highway and exceeding by six and a half feet the maximum allowable length under Mississippi law.
Defendant denied negligence and attempted to prove that negligence of Anderson in speeding, failing to avoid the accident, and in failing generally to use the care required of him was the sole cause of the accident. In the alternative, defendant pled that decedent Anderson was guilty of contributory negligence and that any award of damages should be proportionately reduced, as prescribed by Mississippi law. The jury returned a general verdict for plaintiffs in the sum of $162,500. We affirm.
We have examined the record and find that the evidence clearly preponderates in favor of appellees. We too are of the opinion, as was the District Court in denying appellant’s various post-trial motions, that appellant’s driver was grossly negligent in completely blocking a heavily traveled state highway, with a dangerously long rig, at a time in the early morning when visibility was limited. The District Court gave numerous instructions on negligence, comparative negligence and the duty of care required of Anderson under the circumstances, from which the jury could have and, as far as we know, may have determined that Anderson was contributorily negligent. Under Mississippi law, however, contributory negligence is no bar to recovery; instead, damages are reduced proportionately. Consequently, even if the jury accepted appellant’s version of the accident and found that Anderson was contributorily negligent in speeding or failing to slow down or to do anything to avoid the accident, there would be no inconsistency in the verdict because of the overwhelming evidence of negligence of Jones. The issues of negligence and contributory negligence are particularly susceptible of jury determination, and under the standards set by this Court in Boeing Company v. Shipman, 5 Cir., 1969, 411 F.2d 365, the Court was correct in requiring the jury to resolve these factual issues.
Appellant contends that the Court committed error in granting instructions in behalf of appellees based on Mississippi Code Annotated § 8215 (1956). This section reads in pertinent part:
“(a) Upon any highway outside of a business or residence district no person shall stop, park, or leave standing any vehicle, whether attended or unattended, upon the paved or improved or main traveled part of the highway when it is practical to stop, park, or so leave such vehicle off such part of said highway, but in every event a clear and unobstructed width of at least twenty feet of such part of the highway opposite such standing vehicle shall be left for the free passage of other vehicles and a clear view of such stopped vehicle be available from a distance of two hundred feet in each direction upon such highway.”
The Court paraphrased the statute and then instructed the jury on the application of the statute to the existing facts. Appellant argues that the Court’s instruction was tantamount to a peremptory instruction for appellees. A read ing of the charge convinces us otherwise. The jury was instructed concerning their duty to return a verdict for plaintiffs contingent upon three requisites being met: a finding that the vehicle was parked in a manner prohibited by the statute, plus a finding that such parking constituted negligence, plus a further finding that the negligence, if any, proximately caused or contributed to the collision. The instruction, allowing, as it did, the jury to make its own decision as to whether there was negligence, is vastly different from those instructions criticized by the Supreme Court of Mississippi in Teche Lines, Inc. v. Danforth, 195 Miss. 226, 12 So.2d 784 (1943), and Hankins v. Harvey, 248 Miss. 639, 160 So.2d 63 (1964), which required a finding of negligence upon a determination that the parking statute had been violated. Strict compliance with M.C.A. 8215 under all circumstances would, of course, lead to absurd results, as the Supreme Court of Mississippi has repeatedly held. The decisions understandably recognize the right of a motorist in traffic to momentarily stop on the highway without being in violation of the statute. Suffice it to say, however, that the decisions emphasize the need for common sense, practicality and reasonableness in the application and interpretation of the statute, taking into consideration the exigencies of traffic and such factors as the condition of the shoulders of the road, the time space and opportunity to remove the vehicle, and the emergency existing prior to such parking. None of these contingencies, however, exist in favor of appellant. Jones knowingly created his own emergency. The fact that there was no time later in which he could extricate himself from the dangerous position in which he deliberately placed himself cannot excuse his initial act of negligence.
Appellant also assigns as error an instruction given by the Court based on Mississippi Code Annotated § 8256, which appellant contends was inapplicable and misleading. The statute requires in pertinent part that a driver who stops on a highway between the hours of one-half hour after sunset and one-half hour before sunrise place flares one hundred feet in either direction as well as to the side of a vehicle incapable of being immediately removed. Appellant argues that compliance with such a statute would have been virtually impossible because, among other reasons, the emergency existing did not permit sufficient time for the placing of flares. Here again, the argument is not tenable, for the lack of time in which to place flares cannot excuse the original act of negligence which created the emergency. The Court left to the jury not only the determination of whether the statute was violated, but, if so, whether the violation constituted causal negligence.
Another question for decision is the propriety of the punitive damage charge given by the Court. The leading Mississippi Supreme Court decision on this subject is Teche Lines v. Pope, 175 Miss. 393, 166 So. 539 (1936), in which the Court recognized “the firmly established law * * * that punitive damages are recoverable not only for willful and intentional wrong, but for such gross and reckless negligence as is, in the eyes of the law, the equivalent of willful wrong.” 166 So. at 540. We find no error either in the Court’s granting of an instruction based on punitive damages or in the substance of the charge given. The Court gave the following instruction: “You may in your discretion award to Plaintiffs punitive damages in the event that you find from a preponderance of the evidence in this case that Defendant’s truck driver, Warren Jones, was guilty of such negligence that amounted to willfulness or gross recklessness and total disregard for the safety of others * * *." This charge conformed with and contained all of the essential elements of the instruction approved in Pope, supra, and the evidence overwhelmingly justified the charge. The evidence was uncontradicted that Mississippi Highway 550 is a well-traveled road, that the tractor-trailer completely blocked both lanes of traffic and that this occurred prior to sunrise which was at 6:50 on the morning of the accident, and that visibility was at best limited. Prudence would have required Jones to have moved his rig on to the shoulder of the road either to await full daylight or to place the necessary flares, or to have continued in his own lane until he found an appropriate intersection for completing the maneuver. Instead, Jones risked the possibility of collision against the possibility of completing the dangerous turn within the few moments when the road appeared to be clear of traffic. He exercised bad judgment under the circumstances.
The District Court denied a motion for remittitur, and we cannot say that this was error. This Court will not disturb an award unless there is a clear showing that the verdict is excessive as a matter of law. New Amsterdam Casualty Company v. Wood, 5 Cir., 1958, 253 F.2d 71, 72. We find the award reasonable and completely justified by Mississippi law. The deceased, a 40-year-old electrician, had a life expectancy of 31.7 years; his annual earnings were estimated to be between $10,500 and $14,000; decedent’s widow was financially dependent on him; and all three appellees, the widow and two children, are entitled to damages for loss of society and companionship under Mississippi law.
Appellant places much stress on the failure of the Court to order a separation of actual and punitive damages awarded by the jury, and argues that the Court thereby abused its discretion. Implicit in this argument is appellant’s incorrect assumption that punitive damages were not justified under the circumstances. Although this Court has occasionally decried the “impenetrable uncertainty” of a general verdict, finding as we do no error in the instructions, there is no need to penetrate the mystery. We find a justifiable basis for the award regardless of whether the jury included therein an amount for punitive damages. We find no abuse of the discretion clearly allowed to the Court under Fed.R.Civ.P. 49, relative to the types of verdicts which may be rendered.
We have considered all of the issues raised by appellant and find them without merit.
Affirmed.
. Section 8267 (d), Mississippi Code Annotated, as amended.
. Section 1454, Missisippi Code Annotated, provides:
“In all actions hereafter brought for personal injuries, or where such injuries have resulted in death, or for injury to property, the fact that the person injured, or the owner of the property, or person having control over the property may have been guilty of contributory negligence shall not bar a recovery, but damages shall be diminished by the jury in proportion to the amount of negligence attributable to the person injured, or the owner of the property, or the person having control over the property.”
. See Taylor v. Bair, 5 Cir., 1969, 414 F.2d 815, 817; Great American Insurance Company v. Cutrer, 5 Cir., 1962, 298 F.2d 79, 81. Mississippi law is in accord with the federal law in this respect. Section 1455 of Mississippi Code Annotated, as amended, provides that “[a]ll questions of negligence and contributory negligence shall be for the jury to determine.”
|
9092859-20815 | JOHN M. WALKER, JR., Chief Judge.
Plaintiff-appellant Mark Baisch appeals from the judgment of the United States District Court for the Eastern District of New York (William D. Wall, Magistrate Judge), (1) granting the motion for summary judgment by defendants-appellees Frank Gallina and McKinnon-Doxsee Insurance Agency, Inc., on the grounds that Baisch did not have standing under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961-68, to bring his claims against any of the defendants, and (2) declining to exercise its supplemental jurisdiction over Baisch’s state law claims.
I. BACKGROUND
A. The Racketeering Scheme
Baisch is in the business of providing construction services, including extending financing to other construction firms. The Rubinos are father and son contractors who operated Raycon Construction Company. Gallina is a shareholder, broker, and vice-president of McKinnon-Doxsee Insurance Agency, which provides or brokers insurance. Gallina and Rubino, Jr. were friends who were in regular contact. Because we are reviewing the district court’s grant of summary judgment against Baisch, the following facts are presented in a light most favorable to Baisch.
According to Baisch, the defendants defrauded him, as well as Nassau County and unnamed insurance companies, by falsifying construction documents, payroll forms, and other documents. Starting in 1990, Nassau County hired Raycon for various construction projects. One of the terms of their contract was that the workers on the projects could not be independent contractors, but had to be employed by Raycon. The contract also required Raycon to post performance bonds and to provide the County periodically with proof of workers’ compensation, disability, and general public liability insurance. Raycon had to provide the County with estimates of the number and type of workers needed for each project, along with the number of hours to be worked and the hourly rate per worker. Baisch claims that the defendants engaged in a pattern of racketeering activity by causing Raycon to submit to Nassau County fraudulent documents, including inflated estimates and falsified claim vouchers. Baisch alleges that by 1990 Gallina and McKinnon-Doxsee, who were providing insurance brokerage services to Raycon, knew that the Rubinos were engaged in racketeering activity. Gallina and McKinnon-Doxsee helped the Rubinos and Raycon obtain the insurance policies and performance bonds to enable them to continue their racketeering activities, provided them with false certificates of insurance, and fraudulently obtained replacement policies when Raycon’s policies were cancelled for nonpayment. Gallina and McKinnon-Doxsee also prepared false information to be used by the workers’ compensation and disability insurance carriers in their payroll audits of Raycon in order to reduce Raycon’s premiums.
In April 1994, Baisch alleges that Gallina asked him if he would provide a commercial loan to Raycon and the Rubinos, whom Gallina represented as reliable and creditworthy. Baiseh claims that he relied on Gallina’s representations when he made his first loan to the Rubinos that year and thereafter continued lending them money until July 1996. The Rubinos allegedly used those funds to support their fraudulent activity.
In February 1997, after Baiseh had checked Raycon’s credit, Baiseh and Rubi-no, Jr. entered into a factoring agreement, under which Baiseh would loan money to Raycon approximately equal to the amount of Raycon’s claim vouchers submitted to Nassau County. Then Baiseh would collect on each loan when Nassau County paid Raycon for its claimed work. Baiseh alleges that Gallina urged him to enter the factoring agreement and reiterated earlier misrepresentations of Raycon’s and the Rubinos’ financial reliability. Gallina conceded that he arranged for the 1994 loan from Baiseh to Raycon so that he could “procure the necessary bond for Raycon, because Raycon lacked the funds needed for collateral.”
Baiseh argues that the Rubinos used the 1997 factoring agreement “to continue the racketeering activities.” Under the factoring agreement, the Rubinos submitted forty-four vouchers to Baiseh between February 1997 and May 1999, upon which Baiseh advanced to Raycon more than $850,000. Baiseh alleges that the vouchers were fraudulent and that some of the vouchers were never even submitted to Nassau County, leading Baiseh to provide loans that, under the terms of the factoring agreement, could not be repaid. The Ru-binos failed to repay ten loans from Baiseh and only partially repaid four more, leaving $306,000 unpaid. In August 1999, at a meeting with Baiseh and Baisch’s attorney, Rubino, Jr. admitted to Baiseh that he had submitted false invoices to him in order to obtain the needed loans. Rubino, Jr. later that month signed a confession of judgment in favor of Baiseh in the amount of $357,440.21.
Supporting his allegation that Gallina and McKinnon-Doxsee knew of Rubino’s fraudulent activities, and hence were racketeering co-conspirators, Baiseh offers statements by Gallina from a videotape surreptitiously recorded in March 2000, about a year after the Rubinos began defaulting on his loans and several months after the authorities started investigating Raycon’s fraud schemes. Gallina does not deny that he made these statements. Rather, Gallina argues that his later depositions, in which he denied knowledge of the fraud, are more credible than the recordings. He also does not argue that the videotape should be inadmissible in this civil proceeding.
In the videotape, Gallina states:
You know the situation over there and the time sheets that [Rubino] was submitting with phony names on it. He was getting them signed off when he didn’t have any people there ... [Rubi-no has been engaged in these practices for] [t]en ... years at least that I know of ... [I]t’s been going on forever. He was paying off everybody that he could.
See, I thought it was a matter of okay, he gets these phony time sheets. Guys sign off on it. He pays these guys a few bucks for signing off on it. But it must have gone a lot deeper than that for the FBI to come in.
As further evidence of Gallina’s knowledge, Baiseh offers McKinnon-Doxsee’s records of Raycon’s ten cancelled insurance policies from 1994 to 1997 and internal McKinnon-Doxsee memos referring to Rubino’s “terrible [payment] history back to 1996.” Baiseh also refers to Gallina’s recorded statements on the videotape stating that he provided insurance certificates to Nassau County when he knew that Ray-eon did not have insurance, and to Galli-na’s awareness that Rayeon’s insurers repeatedly cancelled Raycon’s insurance. Nevertheless, Gallina continued to seek insurance for Raycon and falsely stated on Raycon’s insurance applications in 1994 and 1998 that Raycon’s insurance had not been cancelled.
In June 2001, Rubino, Jr. filed a bankruptcy petition in the United States Bankruptcy Court for the Eastern District of New York, and in October 2001, a discharge was granted. Also in October 2001, Rubino, Jr. was arrested and charged with defrauding Nassau County.
B. The District Court Decision
Baisch commenced this action in August 2000. His amended complaint alleges violations of § 1962(c) and (d) of RICO, as well as violations of state common law. Gallina and McKinnon-Doxsee moved for summary judgment. The motion was heard by a magistrate judge sitting as the district court upon the consent of parties, 28 U.S.C. § 636(c), and the district court determined that Baisch lacked statutory standing to bring his claims against the defendants under RICO. Baisch v. Gallina, Civ. 00-5019, at 8-11 (E.D.N.Y. August 8, 2002). The district court applied the “zone-of-interests” test to determine whether “apart from the directness of the injury, the plaintiff is within the class of persons sought to be benefitted by the provision at issue.” Id. at 9 (quoting Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258, 287-88, 112 S.Ct. 1311, 117 L.Ed.2d 532 (1992) (Scalia, J., concurring)).
The district court concluded that “the factoring agreement and the relationship between Baisch, [the Rubinos], and Gallina was too distinct from the overall County scheme to be part of it for the purpose of RICO liability” and that “[t]here is no evidence to suggest that the intent of the enterprise — as opposed to the factoring agreement — was to defraud Baisch.” Id. at 10. Relying on its reading of our decision in Abrahams v. Young & Rubicam Inc., 79 F.3d 234 (2d Cir.1996), the district court concluded that Baisch lacked standing on two independent grounds. First, in order for a plaintiff to have standing in RICO’s zone of interests, he must be “the target of the racketeering enterprise.” Id. (quoting Abrahams, 79 F.3d at 238). The district court concluded that Nassau County, not Baisch, was the target of the racketeering enterprise. Second, the plaintiffs injury must “flow from the harms that the predicate acts ... were intended to cause and the laws against them were intended to prevent.” Id. (quoting Abrahams, 79 F.3d at 238). The district court found that “Baisch’s injury was the result of [the Rubinos’] failure to repay him, not the result of the alleged RICO enterprise or its predicate acts.” Id. at 10-11. The district court characterized Baisch’s claims as a “creative effort[ ] to stretch” common law fraud into a RICO claim. Id. at 11. The district court declined to exercise its supplemental jurisdiction over Baisch’s state law claims, and also found an independent ground for dismissing the claims against Rubino, Jr. because the bankruptcy court for the Eastern District of New York had discharged Rubino, Jr.’s debts. Id. at 11. Baisch has appealed from the district court’s grant of summary judgment to the defendants.
II. DISCUSSION
A. Standard of Review
Summary judgment is appropriate only if there is no genuine issue as to any material fact, Fed.R.Civ.P. 56(c), and the moving party bears the burden of demonstrating the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). When ruling on a summary judgment motion, a court must construe the facts in the light most favorable to the non-moving party and must resolve all ambiguities and draw all reasonable inferences against the movant. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
B. RICO Standing and the “Zone-of-Interests” Test
Baisch argues on appeal that he does have standing to assert his RICO claims against the defendants. Section 1962(c) of RICO provides that it is “unlawful for any person employed by or associated with any enterprise engaged in ... interstate or foreign commerce[] to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity .... ” Section 1962(d) provides that it is “unlawful for any person to conspire to violate” subsection (c). Section 1964(c) provides that “[a]ny person injured in his business or property by reason of a violation of section 1962 ... shall recover threefold the damages he sustains.”
The Supreme Court has advised that “RICO is to be read broadly. This is the lesson not only of Congress’s self-consciously expansive language and overall approach, but also of its express admonition that RICO is to be liberally construed to effectuate its remedial purposes.” Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 497-98, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985) (citations and quotation marks omitted).
We recently clarified our approach to RICO standing in Lerner v. Fleet Bank, N.A., 318 F.3d 113, 120-24 (2d Cir.2003). We need not repeat Lerner's thorough analysis, but we will review its main points. To demonstrate standing, a plaintiff must plead, at a minimum, “(1) the defendant’s violation of [§ ]1962, (2) an injury to the plaintiffs business or property, and (3) causation of the injury by the defendant’s violation. This third requirement is satisfied if the defendant’s injurious conduct is both the factual and the proximate cause of the injury alleged.” Id. at 120 (internal quotation marks and citations omitted). The Lemer court then turned to the question of whether to apply separately the “statutory standing” or zone-of-interests test, “which seeks to determine whether, apart from the directness of the injury, the plaintiff is within the class of persons sought to be benefit-ted by the provision at issue.” Holmes, 503 U.S. at 287, 112 S.Ct. 1311 (Scalia, J., concurring). In 1992, the Supreme Court majority could have addressed this issue in Holmes, but thought it was “inopportune to resolve the issue” at that time, and instead resolved the standing question solely on proximate causation grounds. Id. at 276, 112 S.Ct. 1311. In his concurrence, Justice Scalia argued that a plaintiff has standing under RICO only if he or she fulfills the traditional elements of statutory standing of the predicate statutes on which the RICO claim is based. Holmes, 503 U.S. at 288-89, 112 S.Ct. 1311 (Scalia, J., concurring). Two of those requirements are proximate causation and the zone-of-interests test. Id. Justice O’Connor, joined by Justices White and Stevens, rejected Justice Scalia’s approach, concluding that RICO does not incorporate the standing requirements of the predicate acts. Id. at 280, 112 S.Ct. 1311 (O’Connor, J., concurring). We followed Holmes by resolving the standing issue on proximate cause grounds in Powers v. British Vita, P.L.C., 57 F.3d 176, 188 (2d Cir.1995), and later we noted that “it is unclear precisely how this test would apply under the com plex structure of the RICO statute.” Lerner, 318 F.3d at 120. In Lemer, we concluded that “if the standing issue may be resolved on proximate cause grounds, the question whether the plaintiff must also satisfy the standing requirements of the underlying statutes whose violations constitute the predicate acts ... need not be reached.” Id. at 122, 318 F.3d 113.
Nevertheless, we have incorporated the language of the zone-of-interests test into our analysis of RICO standing. In Abra-hams, we held that a RICO plaintiff must show “both that he is within the class the statute sought to protect and that the harm done was one that the statute was meant to prevent.” 79 F.3d at 237 & n. 3. In Lerner, we noted that Abrahams:
used the language of zone-of-interests, rather than proximate cause, to discuss standing requirements under the RICO statute. Yet in so doing, we were not importing an additional standing requirement; we merely sought to apply the same standing test endorsed by the Holmes Court under a more precise terminology. Our fear was that use of the proximate cause language in discussions of statutory standing could lead to confusion with its common-law counterpart. As Abrahams recognized, however, RICO proximate causation is a distinct concept — one that sometimes overlaps with zone-of-interests analysis. Both of these statutory standing principles are grounded on similar policy considerations, imposing limitations on the types of injuries that are sufficiently related to core RICO concerns as to be cognizable. Thus, the reasonably foreseeable victim of a RICO enterprise will often be, unsurprisingly, the type of victim the RICO statute seeks to protect.
318 F.3d at 121 n. 6. Thus, statutory standing is included in our proximate cause analysis. Two other circuits have applied the zone-of-interests test independently from the proximate cause analysis. See Newton v. Tyson Foods, Inc., 207 F.3d 444, 447 (8th Cir.2000); Israel Travel Advisory Serv., Inc. v. Israel Identity Tours, Inc., 61 F.3d 1250, 1258 (7th Cir.1995). We have no quarrel with that approach, but because our RICO proximate cause analysis adequately incorporates the zone-of-interests test’s concerns in most cases, we have never applied that test independently from our RICO proximate cause analysis. We now clarify that it is inappropriate to apply a zone-of-interests test independent of this circuit’s proximate cause analysis.
C. Proximate Cause
Lemer’s two-part test for proximate causation is as follows. First, the plaintiffs injury must have been “proximately caused by a pattern of racketeering activity violating [18 U.S.C. § ]1962 or by individual RICO predicate acts.” 318 F.3d at 122-23 (quoting Hecht v. Commerce Clearing House, Inc., 897 F.2d 21, 23 (2d Cir.1990)). In other words, a plaintiff does not have standing if he suffered an injury that was indirectly (and hence not proximately) caused by the racketeering activity or RICO predicate acts, even though the injury was proximately caused by some non-RICO violations committed by the defendants. In Lerner, the plaintiffs injuries were proximately caused not by the racketeering activity itself, but by the defendant’s violation of state reporting requirements, which were not RICO predicate acts under § 1961(1). Thus the plaintiffs lacked standing. Id. at 123.
Second, the plaintiff must have suffered a direct injury that was foreseeable: “Central to the notion of proximate cause [under RICO] is the idea that a person is not liable to all those who may have been injured by his conduct, but only to those with respect to whom his acts were ‘a substantial factor in the sequence of responsible causation,’ and whose injury was ‘reasonably foreseeable or anticipated as a natural consequence.’ ” Lerner, 318 F.3d at 123 (quoting First Nationwide Bank v. Gelt Funding Corp., 27 F.3d 763, 769 (2d Cir.1994)). As an elaboration of this second prong relating to the directness of the injury, Lerner noted that “the reasonably foreseeable victims of a RICO violation are the targets, competitors and intended victims of the racketeering enterprise.” Id. at 124. As the Holmes Court explained in its opening discussion of proximate cause and direct injury, “a plaintiff who complained of harm flowing merely from the misfortunes visited upon a third person by the defendant’s acts was generally said to stand at too remote a distance to recover.” 503 U.S. at 268-69, 112 S.Ct. 1311.
Applying Lerner’s first part of the test, we find that Baisch’s injury was directly caused by the Rubinos’ fraudulent factoring agreement. To determine if Baisch has RICO standing, we first ask if Baisch’s injury was proximately caused by a pattern of racketeering activity violating § 1962 or by individual RICO predicate acts. Mail fraud under 18 U.S.C. § 1341 is listed as “racketeering activity” in RICO, 18 U.S.C. § 1961(1)(B), and Baisch has sufficiently alleged that the defendants’ racketeering pattern of mail fraud proximately caused his injury.
The district court, however, “decline[d] to accept th[e] connection” between the factoring agreement and the RICO fraud against the County and viewed it as “too distinct from the overall ... scheme.” We fail to see how the district court could reach this conclusion. The mail frauds against Baisch through the factoring agreement directly promoted the fraud against Nassau County, and the fraud against Nassau County was the basis for the fraud against Baisch that led to his injury. The frauds against Baisch and those against Nassau County were not just linked; they were intertwined as coordinated parts of one racketeering enterprise, and they formed a “pattern” of racketeering. See H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 239, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989). Gallina argues that Baisch has not linked Gallina’s conduct to any mail fraud, but Baisch has in fact presented a genuine question as to Gallina’s commission of mail fraud that proximately caused Baisch’s injuries. Even if Gallina never mailed a fraudulent letter himself, Baisch has sufficiently alleged that Gallina committed mail fraud by “actfing] with knowledge that the use of the mails will follow in the ordinary course of business,” and that the use of mail could have been “reasonably foreseen.” United States v. Tocco, 135 F.3d 116, 124 (2d Cir.1998) (quoting Pereira v. United States, 347 U.S. 1, 8-9, 74 S.Ct. 358, 98 L.Ed. 435 (1954)).
The second part of Lerner’s test for analyzing proximate cause asks whether the defendants’ acts were “a substantial factor in the sequence of responsible causation,” and whether the plaintiffs injury was “reasonably foreseeable or anticipated as a natural consequence.” Lerner, 318 F.3d at 123. The district court seemed to reason that Baisch did not have standing because another party — Nassau County— sustained an injury more directly from the racketeering enterprise. However, RICO standing extends to all directly injured parties, not just the most directly injured among them. The frauds by the defendants plainly injured Baisch directly.
|
1273092-24105 | OPINION OF THE COURT
SLOVITER, Circuit Judge.
I.
Appellants Norman Carlson, Director, United States Bureau of Prisons, and Charles Fenton, Warden of the Lewisburg Penitentiary, (hereinafter “Government”) appealed from the order of the district court granting a writ of habeas corpus and directing officials of the United States Bureau of Prisons to transfer appellee prisoner to an institution at which he will be segregated from, adult offenders and receive the treatment for youth offenders prescribed by 18 U.S.C. § 5011. The Government asserts that a prisoner who is given a consecutive sentence of life imprisonment as an adult offender while he is serving a Federal Youth Corrections Act (“YCA”) sentence need not serve the remainder of the YCA sentence at a special YCA facility but may be returned to the general prison population. Because we conclude that under the circumstances of this case the YCA should not be construed to mandate completion of the YCA sentence in a YCA facility, we will reverse the order of the district court.
II.
Facts
Appellee Richard Thompson was convicted in federal court in 1974 for assault with intent to rape on a federal reservation. Thompson was seventeen years old when convicted. He received an eight year sentence pursuant to section 5010(c) of the Youth Corrections Act, 18 U.S.C. § 5010(c), and was initially committed to the Federal Correctional Institution at Ashland, Kentucky. On June 27, 1977, while he was incarcerated in the Federal Correctional Institution in Lompoc, California, Thompson was convicted of first degree murder as a result of his participation in the murder of a fellow inmate who was stabbed by several other inmates while Thompson guarded against intrusion. Thompson, who was twenty years old at the time, was sentenced in the United States District Court for the Central District of California to a consecutive adult term of life imprisonment. The sentencing judge made a specific finding that Thompson would “not derive benefit under 18 U.S.C. § 5010(b) or (c) of the Federal Youth Corrections Act as a Youth Offender.” Thereafter in July, 1977, Thompson was transferred to the United States Penitentiary in Lewisburg, Pennsylvania where he was held without segregation from adult prisoners.
Thompson’s record manifests a history of assaults and other offenses committed while he was serving his YCA sentence. In January, 1975, while at the Federal Correctional Institution, Milan, Michigan, he assaulted another inmate. He received incident reports while at Milan for, inter alia, threatening a staff member with bodily harm, assault, and disruptive conduct. In April, 1975, Thompson was transferred to the Federal Correctional Institution, El Reno, Oklahoma, “for adjustment purposes” but there received additional incident reports, including one for making a sharpened weapon. In September, 1975, while being transferred to the Federal Correctional Institution, Lompoc, California, Thompson was involved in a fight with another person. His participation in the murder of the fellow Lompoc inmate occurred in February, 1976. In May, 1977, Thompson was sentenced to a concurrent jail term of one year by a California state court for assaulting a Los Angeles County corrections officer while being processed into the Los Angeles County Jail. The officer suffered a fractured nose and concussion. Even after his transfer to Lewisburg, Thompson has received incident reports for his actions including the assault of a staff member, threatening another staff member with bodily harm, and inciting other inmates to riot.
While at Lewisburg, Thompson filed a petition for habeas corpus alleging that his confinement there was illegal because he was entitled to be segregated from adult offenders until the completion of his YCA sentence in June, 1981, when the consecutive life sentence will begin. His petition was referred to a United States Magistrate. The magistrate’s report, issued on January 19, 1979, contains the following:
The magistrate feels that there is merit to the Government’s argument that little purpose would now be served in confining petitioner in a youth institution, particularly when in the not too distant future he will be committed to a regular adult facility to serve his life sentence. The magistrate also believes that there is merit to the Government’s argument that petitioner, with the type of behavior that he has exhibited which resulted in both his YCA sentence and his consecutive life sentence, together with his sorry history of behavior while incarcerated, would not benefit from youth confinement and, indeed, petitioner could well be a disruptive influence on those who have been receptive to YCA treatment, (emphasis in original).
Nonetheless, the magistrate held that Thompson was entitled to be segregated from adult inmates because of this court’s interpretation of the YCA in United States ex rel. Dancy v. Arnold, 572 F.2d 107 (3d Cir. 1978), and the subsequent district court opinion in Micklus v. Carlson, No. 77-1070 (M.D.Pa. Mar. 14,1978), appeal dismissed as moot, 591 F.2d 1336 (3d Cir. 1979).
The district court adopted the recommendations of the magistrate. It also interpreted the Dancy decision as mandating that an individual sentenced to consecutive youth and adult terms be incarcerated in a YCA facility during service of the YCA sentence. It held that Thompson’s difficulties as a prisoner could be handled by the provision of the YCA permitting segregation of classes of committed youth offenders. 18 U.S.C. § 5011. Therefore, the district court granted the petition for a writ of habeas corpus.
On appeal, the Government argues that because there has been an intervening judicial determination that the prisoner would not derive benefit from YCA treatment during the service of his consecutive sentence, the YCA should be construed to allow the Bureau of Prisons to exercise its discretion in selecting an institution for the confinement of the prisoner during the remainder of his YCA sentence.
III.
The Federal Youth Corrections Act
The YCA has been described by the Supreme Court as “the most comprehensive federal statute concerned with sentencing.” Dorzynski v. United States, 418 U.S. 424, 432, 94 S.Ct. 3042, 3047, 41 L.Ed.2d 855 (1974). Its provisions are designed to “make available for the discretionary use of the Federal judges a system for the sentencing and treatment of persons under the age of 22 years . . . that will promote the rehabilitation of those who show promise of becoming useful citizens, and so will avoid the degenerative and needless transformation of many of these young persons into habitual criminals.” H.R.Rep.No. 2979, 81st Cong., 2d Sess. 1 (1950), reprinted in [1950] U.S.Code Cong. Service p. 3983 (hereinafter “H.R.Rep.No. 2979”).
Under the statute, a judge sentencing a youth offender, defined as “a person under the age of twenty-two years at the time of conviction,” 18 U.S.C. § 5006(d), must determine whether the youth offender will derive benefit from treatment under the YCA. 18 U.S.C. § 5010(d). In Dorzynski v. United States, supra, the Court held that the statute requires an explicit finding of “no benefit” as a condition precedent to sentencing an eligible offender as an adult, but also held that the sentencing judge need not accompany such a finding by supporting reasons. When the sentencing court does find that the youth offender could derive benefit from the YCA, the Act provides the sentencing court with options additional to those ordinarily available. 418 U.S. at 441-42, 94 S.Ct. at 3051-52. In the Dorzynski case, the Supreme Court reviewed in detail the history of the Act and described the options of treatment and probation made available to the federal sentencing court under the Act.
It noted that the purpose of the Act was “to provide a better method for treating young offenders convicted in federal courts in [the] vulnerable age bracket [between 16 and 22 years of age], to rehabilitate them and restore normal behavior patterns.” 418 U.S. at 433, 94 S.Ct. at 3048.
To accomplish this objective, federal district judges were given two new alternatives to add to the array of sentencing options previously available to them . . . first, they were enabled to commit an eligible offender to the custody of the Attorney General for treatment under the Act. 18 U.S.C. § 5010(b) and (c). Second, if they believed an offender did not need commitment, they were authorized to place him on probation under the Act. 18 U.S.C. § 5010(a). If the sentencing court chose the first alternative, the youth offender would be committed to the program of treatment created by the Act.
Id
If a youth offender has been sentenced to institutional treatment, the statute gives the Parole Commission (formerly the Parole Board) power to order conditional release at any time under supervision of federal probation officers. 18 U.S.C. §§ 5006, 5017, 5019. The Commission also has the discretion to order the unconditional discharge of committed persons before the time that their unconditional discharge is mandated by the statute. 18 U.S.C. § 5017(b). When such early discharge is effected, the conviction upon which the sentence rests is auto matically set aside. 18 U.S.C. § 5021(a). Similarly, youth offenders who receive an unconditional discharge from a sentence of probation prior to the expiration of their maximum sentence will have their convictions set aside. 18 U.S.C. § 5021(b).
The statutory section which describes the institutional treatment to which YCA offenders can be committed provides:
Committed youth offenders not conditionally released shall undergo treatment in institutions of maximum security, medium security, or minimum security types, including training schools, hospitals, farms, forestry and other camps, and other agencies that will provide the essential varieties of treatment. The Director shall from time to time designate, set aside, and adapt institutions and agencies under the control of the Department of Justice for treatment. Insofar as practical, such institutions and agencies shall be used only for treatment of committed youth offenders, and such youth offenders shall be segregated from other offenders, and classes of committed youth offenders shall be segregated according to their needs for treatment.
18 U.S.C. § 5011.
In United States ex rel. Dancy v. Arnold, 572 F.2d 107 (3d Cir. 1978), we construed that section to require that youth offenders sentenced under the YCA must be segregated from adult prisoners. We rejected the Government’s argument that the phrase “[ijnsofar as practical” required segregation of youth offenders from adult prisoners only insofar as segregation is practical. Instead we held that language referred only to the provision that institutions for the treatment of youth offenders should be used solely for that purpose. Although we recognized that the language of the statute is capable of more than one interpretation, id. at 110, we interpreted congressional intent to be “that the segregation of committed youth offenders from adult offenders was to be mandatory.” Id. at 113.
The Government contends that Dancy is inapplicable to this case because Thompson has been convicted of first degree murder and sentenced to a regular adult term, even though he was eligible for sentencing under the Youth Corrections Act, and because the sentencing court determined that he would not benefit from the treatment under the Act in serving the adult sentence. The district court rejected the Government’s distinction, and decided “that the holding of Dancy that Youth offenders cannot consistent with the Act’s rehabilitative purposes, be placed in contact with adult offenders is applicable to this action.”
IV.
Discussion
All of the parties agree that this is a case of first impression. It is also apparent that the issue presented by this factual situation was not in the contemplation of Congress when it enacted the YCA, and that, however we rule, we will be required to fill in the interstices of the statute. Although we believe the issue is not free from doubt, we hold that under the facts of this case, the Bureau of Prisons was not required to continue to hold Thompson under the conditions prescribed by the YCA for the remainder of his YCA sentence.
1. The overriding purpose of the YCA is directed to the rehabilitation of the youth offender. The Congressional history indicates that the statute was designed to provide treatment during commitment for youth offenders in preparation for their eventual release following the YCA commitment. The statute was designed for those persons who “show promise of becoming useful citizens.” H.R.Rep.No. 2979 at 1, reprinted in [1950] U.S.Code Cong. Service at 3983. Congress was concerned because “[a] large percentage of those released from our reformatories and penal institutions return to antisocial conduct and ultimately become hardened criminals.” Id. at 2, reprinted in [1950] U.S.Code Cong. Service at 3985 (emphasis added). The House Report stated:
Most of the causes which contribute to antisocial conduct of youth offenders in the period between adolescence and maturity disappear when the youth reaches full maturity. The problem is to provide a successful method and means for treatment of young men between the ages of 16 and 22 who stand convicted in our Federal courts and are not fit subjects for supervised probation — a method and means that will effect rehabilitation and restore normality, rather than develop recidivists.
Id. at 3, reprinted in [1950] U.S.Code Cong. Service, at 3985 (emphasis added). Neither the Congressional history nor the statute made any provision for the possibility that the treatment provided would be so unsuccessful that the committed YCA offender might commit a serious crime during a YCA sentence and thereby be required to serve a subsequent adult sentence.
2. The interpretation of the YCA given in the Dancy decision was predicated on a fact pattern in which there was the expectation that the youth offender would be released from commitment following completion of the YCA prescribed course of treatment. This court construed the statute to require segregation of youth offenders from the adult prisoner population in contemplation of the subsequent release of such youth offenders. We noted “the Act was designed to spare youth offenders the corruptive influence of prison life and association with adult criminals . .” 572 F.2d at 112 (emphasis added). Patently, a prisoner who is destined to serve a subsequent prolonged adult sentence will not be spared association with adult criminals.
3. The decision whether to invoke the provisions of the YCA is exclusively judicial. It is the sentencing court which must make a judgment as to whether a youth offender will derive benefit from treatment under the YCA. If the court desires additional information, it can order a study from the appropriate classification center or agency, 18 U.S.C. § 5010(e), which considers, inter alia, the offender’s personal traits, capabilities, school circumstances, family life, previous delinquency or criminal experience, and any mental or physical defect or other factor contributing to delinquency. 18 U.S.C. § 5014. Presumably, these are also the type of factors considered by the sentencing court in determining whether the youth offender can benefit from YCA treatment. Although the Bureau of Prisons is given considerable discretion under the Act, that discretion involves decisions such as whether to assign the youth offender to treatment in an institution or an agency, selection of the facility to which the offender will be committed, transfer of the offender from one institution or agency, and the conditions under which the committed youth offender should be confined or treated “best designed for the protection of the public.” 18 U.S.C. § 5015. There is no language in the act authorizing the court to delegate to the Bureau of Prisons the discretion to make the determination required under 18 U.S.C. § 5010(d) as to whether a youth offender will derive benefit from YCA treatment.
4. In this case, the Government asks us to construe the statute “so as to permit the Bureau of Prisons to exercise its informed judgment as to the institution and conditions of confinement best suited for prisoners serving YCA sentences who also have regular adult sentences yet to be served.” If we were to so construe the statute, we would expand considerably the power given to the Bureau of Prisons by vesting in it that which Congress has given exclusively to the judiciary, i. e., the determination whether the offender can benefit under the YCA. We find no statutory basis or policy reason for such a construction. Despite the control given the Bureau of Prisons over many aspects of the commitment of the youth offender, Congress has not given it either the power to invoke or the power to revoke the application of the statute to a committed youth offender. Even in the case of prisoners who have manifested serious adjustment difficulties after commitment, the Bureau of Prisons is limited to designation of an appropriate institution or, as we noted in Dancy, segregation of committed youth offenders according to their needs for treatment. 572 F.2d at 113 n.10.
5. There is only one circumstance in which the subsequent behavior of a committed youth offender can bring before the court the issue whether there is any benefit to the youth offender of continued treatment under the YCA. That arises when the youth offender, while still serving part of a YCA sentence, commits and is convicted of another crime. At the time of the second sentencing, that judge must repeat the process of determining whether the prisoner can benefit from the YCA. That judgment must then be made in light of the additional information available about the offender’s adaptation to the YCA commitment and the commission of the subsequent offense.
The second sentencing judge has the choice to impose a YCA sentence, an adult sentence to run concurrently, or an adult sentence to run consecutively. Although the Ninth Circuit has held that it would be inconsistent to impose simultaneously a YCA sentence and a consecutive adult sentence, United States v. Ortiz, 513 F.2d 198, 199 (9th Cir.), cert. denied, 423 U.S. 843, 96 S.Ct. 78, 46 L.Ed.2d 64 (1975), see also Burks v. United States, 496 F.2d 24, 25 (6th Cir. 1974), the Tenth Circuit has held that a subsequently imposed adult sentence on a YCA offender does not create a statutory or constitutional conflict. Roddy v. United States, 509 F.2d 1145 (10th Cir. 1975); Nast v. United States, 415 F.2d 338 (10th Cir. 1969). The court recognized that “the rehabilitative potential afforded by commitment to a youth corrections center might be lessened by a subsequently imposed consecutive sentence,” id. at 340, but noted that the second sentencing court was not required to give effect to the previously imposed indeterminate youth sentence. Roddy v. United States, supra at 1147. Those cases preceded the Dancy decision and therefore the opinions did not discuss the effect of the imposition of the second sentence on the terms and conditions of commitment under the original YCA sentence. However, the YCA statute itself expressly recognizes that there can be judicial reevaluation during the service of a YCA sentence. It provides that nothing in the Act “shall limit or affect the power of any court to suspend the imposition or execution of any sentence and place a youth offender on probation”, 18 U.S.C. § 5023. Also, the statute was amended in 1961 to extend the benefit of a certificate setting aside the conviction to offenders sentenced to probation under § 5010(a) when the court unconditionally discharges the offender prior to expiration of the sentence of probation imposed. See Durst v. United States, 434 U.S. 542, 548, 98 S.Ct. 849, 852, 55 L.Ed.2d 14 (1978). Thus, it would not be inconsistent with the statutory scheme to hold that a judicial reevaluation of the continued benefit of commitment as a YCA offender is permissible when such a reevaluation is triggered by the offender’s own commission of a crime.
That, of course, is the fact situation sub judice. Here, after having made a specific finding that Thompson could not benefit from YCA treatment, the second sentencing judge imposed an adult sentence to run consecutive to the YCA sentence. Imposition of a consecutive sentence is traditionally imposed as a more severe punishment than a concurrent sentence. We conclude that the judicial determination that Thompson could not benefit from the YCA, and must therefore serve the second sentence as an adult prisoner, was a finding that continued service of the original sentence under YCA conditions is no longer beneficial. Because that represented a judicial reevaluation in light of currently available information, we hold that Thompson can be returned to an adult prisoner population for the remainder of the YCA sentence.
6. We recognize that a result of this holding is to permit the transfer of Thompson to commitment under conditions of confinement which he finds substantially less favorable than those under which he was previously committed. Since that transfer followed a judicial determination made after a full due process trial which was precipitated by the offender’s commission of the crime. We do not confront the issue which faced the Court in Meachum v. Fano, 427 U.S. 215, 96 S.Ct. 2582, 49 L.Ed.2d 451 (1976) and Montanye v. Haymes, 427 U.S. 236, 96 S.Ct. 2543, 49 L.Ed.2d 466 (1976).
7. A contrary construction of the YCA, which would mandate that Thompson complete the service of his original sentence under YCA terms until its conclusion, would lead to a futile result. As noted infra, all youth offenders who are committed under the YCA and who are not unconditionally discharged before such a discharge is mandated must be conditionally discharged for at least 2 years before the end of their sentence. See 18 U.S.C. § 5017(b) and (e). That would be patently impossible in Thompson’s case because the imposition of the life sentence means that Thompson will not be eligible for release until he has served ten years of that life sentence. 18 U.S.C. § 4205(a). This provides further indication that the concern of the statute is toward those prisoners who will be released following the YCA sentence. Therefore, the purpose of the YCA treatment under segregation is inapplicable to him.
For these reasons, we will reverse the order of the district court and remand with instructions that the court deny the writ of habeas corpus.
. A YCA sentence may be given to a defendant who is over twenty-two and not yet twenty-six years of age at the time of conviction, if the sentencing court affirmatively “finds that there are reasonable grounds to believe that the defendant will benefit from the treatment provided under the Federal Youth Corrections Act.” 18 U.S.C. § 4216.
. If a youth offender is sentenced to probation under section 5010(a) the court may impose a fine as a condition of probation. Durst v. United States, 434 U.S. 542, 553, 98 S.Ct. 849, 855, 55 L.Ed.2d 14 (1978). If a youth offender is sentenced under section 5010(b) for an indefinite sentence, s/he may be released under supervision at any time, must be released under supervision within 4 years from the date of conviction, and must be unconditionally discharged within 6 years from the date of conviction, 18 U.S.C. § 5017(a) and (c). If the youth offender is sentenced under section 5010(c), s/he may be sentenced for a time longer than 6 years, but for no longer than authorized by law for the particular offense for which s/he is convicted. Youth offenders sentenced under that section may be released under supervision at any time, must be released under supervision not later than 2 years before expiration of the term imposed by the court, and must be unconditionally discharged on or before expiration of the maximum term imposed. See 18 U.S.C. § 5017(a) and (d).
|
3603803-17116 | ORDER DENYING MOVANT’S § 2255 MOTION
GARY A. FENNER, District Judge.
Movant Cardenas-Celestino pleaded guilty to a federal drug violation and was sentenced to 135 months’ imprisonment. Cardenas-Celestino appealed, unsuccessfully arguing that the district court erred in denying his motion to suppress evidence obtained as a result of a consent search. Cardenas-Celestino now has filed a § 2255 motion, in which he presents a renewed claim regarding the district court’s denial of his motion to suppress and a claim that the United States Criminal Code is not valid law and therefore the court lacked jurisdiction.
Cardenas-Celestino waived his right to file these § 2255 claims through his plea agreement. Even had Cardenas-Celestino not waived this right, the claims would be without merit. Cardenas-Celestino appealed the denial of the motion to suppress and claims which were previously raised on appeal may not be relitigated in § 2255 motions. The second claim is entirely frivolous.
On October 20, 2005, a superseding indictment was returned in the Western District of Missouri charging Cardenas-Celes-tino with conspiracy to distribute more than 50 grams of methamphetamine, Count One, in violation of 21 U.S.C. §§ 841(a)(1), (b)(1)(A) and 846; possession with intent to distribute more than 50 grams of methamphetamine, Count Two, in violation of 21 U.S.C. § 841(a)(1) and (b)(1)(A); possession of a firearm by an illegal alien, Count Three, in violation of 18 U.S.C. §§ 922(g)(5) and 924(a)(2); and criminal forfeiture pursuant to 21 U.S.C. § 853.
On December 12, 2005, Cardenas-Celes-tino filed a motion to suppress in which he challenged his voluntary consent to a search of his residence, wherein the police recovered 253 grams of methamphetamine, 230 grams of cocaine, 257 grams of marijuana, two firearms, ammunition, and various other evidence. Cardenas-Celestino argued the consent was not voluntary, but was rather the product of explicit and implicit threats by law enforcement.
On January 4, 2006, a suppression hearing was held in front of the Honorable Robert E. Larsen, United States Magistrate Judge, Western District of Missouri. On January 17, 2006, Judge Larsen issued his report and recommendation, determining that the motion to suppress should be denied. On February 17, 2006, this Court adopted the report and recommendation and Judge Larsen’s findings.
On March 14, 2006, Cardenas-Celestino pleaded guilty to Count One, pursuant to a plea agreement with the Government. Through the plea agreement, Cardenas-Celestino specifically waived his right to appeal or collaterally attack his conviction or sentence, except that Cardenas-Celesti-no retained his right to directly appeal the denial of his motion to suppress.
During the change of plea hearing, the court conducted a lengthy inquiry regarding the rights that Cardenas-Celestino would waive as a result of the guilty plea. As part of that inquiry, Cardenas-Celesti-no acknowledged that he waived his right to appeal or collaterally attack his sentence. Cardenas-Celestino was sentenced on October 31, 2006, to 135 months’ imprisonment on Count One; five years’ supervised release; and $100 mandatory special assessment.
Cardenas-Celestino appealed, unsuccessfully arguing that the district court erred in denying his motion to suppress. United States v. Cardenas-Celestino, 510 F.3d 830 (8th Cir.2008). For the first time, Cardenas-Celestino contended that the evidence from the search of the residence was the “ ‘poisonous fruit’ of an illegal traffic stop.” Cardenas-Celestino, 510 F.3d at 833. The Eighth Circuit determined that probable cause existed to stop the vehicle, and after determining that Cardenas-Celestino did not possess a driver’s license, probable cause existed to arrest him. Cardenas-Celestino, 510 F.3d at 834. The Eighth Circuit thereafter affirmed the denial of the suppression motion. Id.
Cardenas-Celestino has now filed a motion, pursuant to § 2255, seeking to vacate, correct, or set aside his conviction and sentence. In the instant motion, Cardenas- Celestino presents two claims: that the court erred in denying his motion to suppress evidence; and that 18 U.S.C. § 3231 was not validly passed in Public Law 80-772, and therefore the United States’ jurisdiction over criminal violations is nullity.
These claims are foreclosed by the valid waiver in the plea agreement, and collectively without merit under the law.
Cardenas-Celestino Waived His Post-Conviction Rights
As noted previously, through the plea agreement, Cardenas-Celestino specifically waived his right to bring post-conviction motions challenging his sentence or conviction. Cardenas-Celestino did reserve the right to appeal the denial of his motion to suppress to the Eighth Circuit. However, Cardenas-Celestino did not reserve the right to appeal any other claims. Nor did he reserve any right to collaterally attack his sentence or conviction.
The courts have recognized that criminal defendants may waive their post-conviction rights, just as they may waive their right to appeal, considering those rights synonymous. United States v. Andis, 333 F.3d 886, 887 n. 3 (8th Cir.2003) (en banc) (citing DeRoo v. United States, 223 F.3d 919, 923 (8th Cir.2000)) (“As a general rule, we see no reason to distinguish the enforceability of a waiver of direct-appeal rights from a waiver of collateral-attack rights in the plea agreement context.”). The Supreme Court has stated that “[t]o allow indiscriminate hearings in federal post-conviction proceedings, whether for federal prisoners under 28 U.S.C. § 2255 or state prisoners under 28 U.S.C. §§ 2241-2254, would eliminate the chief virtues of the plea system speed, economy, and finality.” Blackledge v. Allison, 431 U.S. 63, 71, 97 S.Ct. 1621, 52 L.Ed.2d 136 (1977).
Although there are narrow exceptions to the enforceability of such waivers, such as when the district court imposes an “illegal sentence,” i.e., a sentence in excess of the statutory maximum, or where the enforcement of such a waiver would result in “manifest injustice,” Andis, id. at 891-92, Cardenas-Celestino does not argue that the waiver is unenforceable for these or any other reasons. Cardenas-Celestino does not even mention the waiver in his motion.
Cardenas-Celestino waived his right to bring these claims. By filing the pending motion pursuant to § 2255, Cardenas-Cel-estino is violating the terms of the plea agreement. Accordingly, Cardenas-Celes-tino’s § 2255 motion is subject to dismissal.
Cardenas-Celestino’s Substantive Claims Are Without Merit
Even had Cardenas-Celestino not waived his right to prosecute his § 2255 motion, the claims are without merit.
In his first claim, Cardenas-Celestino claims that the district court erred in denying his motion to suppress the evidence arising from the traffic stop. Cardenas-Celestino argues that because he was not charged with unlawfully driving without a valid driver’s license, his detention was illegal. Cardenas-Celestino also argues that he was not timely brought before a magistrate on the charge of driving without a valid license. However, Cardenas-Celestino admits that he was arrested.
Cardenas-Celestino cannot litigate this claim because it was already raised during direct appeal. “It is well-settled that claims which were raised and decided on direct appeal cannot be relitigated on a motion to vacate pursuant to 28 U.S.C. § 2255.” United States v. Shabazz, 657 F.2d 189, 190 (8th Cir.1981); Dall v. United States, 957 F.2d 571, 572 (8th Cir.1992); Bear Stops v. United States, 339 F.3d 777, 780 (8th Cir.2003).
On appeal, Cardenas-Celestino specifically challenged the stop and arrest. The Eighth Circuit denied the claim. The law of the case doctrine does not permit the district court to overturn the Eighth Circuit finding that the arrest and detention were constitutionally sound.
In his second claim, Cardenas-Celestino argues that 18 U.S.C. § 3231 is a nullity and void ab initio. Cardenas-Celestino argues that the public law, under which § 3231 was ratified, Public Law 80-772, was not properly passed. Among other things, Cardenas-Celestino argues that a different bill was passed by the Senate than that passed by the House of Representatives; that the bill signed into law was never ratified; and that Congress was adjourned when the bill was purportedly passed.
This claim is part of a new rash of frivolous claims raised by prisoners across the country, many of whom have copied the arguments directly from Internet Websites which propound the argument and developed by a Texas firm, International Legal Services. All of these allegations concerning the supposed irregular adoption of Public Law 80-772 have been firmly denied by every court to address them. The Supreme Court denied all the petitions presented by International Legal Services and those associated with them. See In re Von Kahl, — U.S. -, 128 S.Ct. 520, 169 L.Ed.2d 369 (2007) (denying writ of habeas corpus raising these same arguments) (rehearing denied, — U.S. -, 128 S.Ct. 1113, 169 L.Ed.2d 842 (2008)); In re Miles, — U.S. -, 128 S.Ct. 689, 169 L.Ed.2d 540 (2007) (same), rehearing denied, —• U.S.-, 128 S.Ct. 1338, 170 L.Ed.2d 145 (2008).
Two federal circuit courts have recently addressed the various arguments concerning the constitutionality of the manner in which Public Law 80-772 was enacted, and both have concluded that these challenges are meritless. See United States v. Collins, 510 F.3d 697, 698 (7th Cir.2007) (argument “that Title 18-the federal criminal code — is unconstitutional because of supposed irregularities in its enactment” is “unbelievably frivolous”); United States v. Campbell, 221 Fed.Appx. 459, 461 (7th Cir.2007) (claim that Title 18 was not properly enacted is “factually incorrect”); United States v. Potts, 251 Fed.Appx. 109, 111 (3d Cir.2007) (18 U.S.C. § 3231 was “properly enacted and is binding”; arguments to the contrary are “frivolous”); Benjamin v. Miner, 256 Fed.Appx. 554, 555 (3d Cir.2007) (“there is no merit to Benjamin’s assertion that both houses of Congress did not properly enact 18 U.S.C. § 3231”); United States v. Johnson, 270 Fed.Appx. 191, 2008 WL 761109 (3d Cir.2008) ([t]he statute relied upon for jurisdiction [§ 3231] in this case was properly enacted and is binding).
Cardenas-Celestino’s frivolous claims have been routinely rejected out of hand by an extremely large number of district court, some of which have provided a thorough debunking of his particular arguments about the enactment of Public Law 80-772. See United States v. McCuiston, CR. No. C-04-676, C.A. No. C-07-I93, 2007 WL 2688502 (S.D.Tex. Sept. 12, 2007); United States v. Felipe, CR. No. 05-711-1, Civ. A. No. 07-061, 2007 WL 2207804, at *2 (E.D.Pa. July 30, 2007) (“There was no sine die recess between the votes of the House and Senate; rather, there was an inter-session adjournment between these events”); United States v. Martinez, CR No. C-04-157, C.A. No. C-05-423, 2006 WL 1293261 (S.D.Tex. May 6, 2006); Derleth v. United States, Crim. No. L-03-1745-6, Civ. No. L-05-205, 2006 WL 1804618 (S.D.Tex. June 27, 2006); Mullican v. Stine, Civ. A. No. 07-129-KKC, 2007 WL 1193534 (E.D.Ky. Apr. 23, 2007); Campbell v. Gonzalez, Civ. A. No. 07-36-GFVT, 2007 WL 1035021 (E.D.Ky. Mar. 29, 2007); Cullum v. Fox, Civ. A. No. I:06cv309, 2006 WL 3691170 (E.D.Tex. Dee. 11, 2006); Bledsoe v. Levi, Civ. A. No. 07-4543, 2007 WL 3408449 (E.D.Pa. Nov. 15, 2007); Goncalves v. Gonzales, Civ. A. No. 06-CV-275-GFVT, 2007 WL 628142 (E.D.Ky. Feb. 26, 2007); Lister v. United States, Nos. 3:06-CV-1355-N, 3:03-CR-374-N, 2006 WL 3751324 (N.D.Tex. Dec. 20, 2006); Irizarry v. United States, Crim. No. 05-44-4, Civ. A. No. 06-05333, 2007 WL 1720429 (E.D.Pa. June 11, 2007); Laroque v. United States, Crim. No. 2:04-81, Civ. No. 2:05-104, 2007 WL 1652260 (D.N.D. June 7, 2007); United States v. Castaneda, Crim. No. 04-500016-004, Civ. No. 07-5070, 2007 WL 3094377 (W.D.Ark., Oct. 19, 2007); Little v. Levi, Civ. A. No. 07-4604, 2007 WL 4255265 (E.D.Pa. Nov. 29, 2007); Goodman v. Levi Civ. A. 07-4838, 2007 WL 4241894 (E.D.Pa. Nov. 29, 2007); United States v. Ferguson, No. 1:07-CR-70, 2007 WL 2908765 (E.D.Tex. Oct. 5, 2007); United States v. Castaneda, No. 07-5070, 2007 WL 3094377 (W.DArk. Oct. 19, 2007); Charles v. Levi Civ. A. No. 07-4521, 2007 WL 3408446 (E.D.Pa. Nov. 15, 2007); United States v. Cuevas-Arredondo, No. 8:05CR325, 2008 WL 80127 (D.Neb. Jan. 4, 2008).
In Felipe, for example, the court cited many of the numerous district court cases in affirming that “[t]hese allegations are without a shred of validity.” Felipe, at *2.
There was no sine die recess between the votes of the House and Senate; rather, there was an inter-session adjournment between these event. See United States v. Martinez, CR. No. C-04-157, C.A. No. C-05-423, 2006 WL 1293261, at *5 (S.D.Tex. May 6, 2006). The House of Representatives passed Public Law 80-772 in the first session of the 80th Congress, while the Senate passed Public Law 80-772 during the second session of that Congress. Id. This recess, however, was an inter-session, not a sine die, recess. Id. Bills passed by one house before an intersession recess and by the other house after the recess are properly passed by Congress. Id.; Derleth v. United States, CR. No. L-03-1745-6, C.A. No. L-05-205, 2006 WL 1804618, at *3-4 (S.D.Tex. June 27, 2006). Thus, Public Law 80-772 was passed by both houses before a sine die recess was called and, therefore, was properly enacted. Id.; see also Lister v. United States, Nos. 3:06-CV-1355-N, 3:03-CR-374-N, 2006 WL 3751324, at *1-2 (N.D.Tex. Dec. 20, 2006); United States v. Risquet, 426 F.Supp.2d 310, 311-12 (E.D.Pa.2006); Cullum v. Fox, CA. No. 1:06-CV-3092006, 2006 WL 3691170, at *1-2 (E.D.Tex. Dec. 11, 2006); United States v. Lawrence, No. 02-CR-200, 2006 WL 250702, at *1 (N.D.Ill. Jan. 27, 2006).
Felipe, at *2.
Upon presenting its own dissection of the defendant’s argument, the Felipe court stressed that all courts have “reached the correct conclusion that this mythical story concerning the irregular adoption of Public Law Number 80-772 is utterly baseless.” Id.; see also United States v. Schultz, Nos. 093-CR-08(02)(JMR/FLN), 06-CV-5020(JMR), 2007 WL 2872387, at *2 (D.Minn. Sept. 26, 2007) (describing the claim as “one of the jailhouse lawyers’ arguments du jour,” and declaring that “[i]t has never been accepted, and will not be accepted here.”)
Moreover, in United States v. Risquet, 426 F.Supp.2d 310, 311-12 (E.D.Pa.2006), the court emphasized that even assuming, for the sake of argument, that these allegations concerning the events of June 25, 1948, were true, that would merely mean that the predecessor statute to 18 U.S.C. § 3281 was still in effect, and this predecessor statute unmistakably grants the same type of jurisdiction upon federal district courts. Accord Sainsbury v. Levi, Civ. A. No. 07-4545, 2007 WL 4104097, at *2 (E.D.Pa. Nov. 16, 2007); United States v. Lawrence, No. 02 CR 200, 2006 WL 250702, at *2 (N.D.Ill. Jan. 27, 2006).
This Court has itself denied this very argument. See Henderson v. United States, 07-00258-CV-W-GAF-P, Doc. No. 18 (W-D.Mo. Mar. 6, 2008).
Furthermore, even if CardenasCelestino’s historical arguments are correct, and, even if there had been no predecessor statute to 18 U.S.C. § 3231 that vested this Court with jurisdiction over Cardenas-Celestino’s offenses, the “enrolled bill” rule would preclude this Court from granting Cardenas-Celestino the relief he seeks. The “enrolled bill” rule, which was adopted by the Supreme Court in Marshall Field & Co. v. Clark, 143 U.S. 649, 12 S.Ct. 495, 36 L.Ed. 294 (1892), provides that once a bill has been signed by the Speaker of the House and by the President of the Senate, and then signed by the President of the United States, “its authentication as a bill that has passed Congress should be deemed complete and unimpeachable.” Accordingly, such a bill, duly attested, cannot be challenged by claims that one or both houses of Congress acted improperly in passing the bill in question. Campbell, 221 Fed.Appx. at 461.
In Campbell, the defendant contended “that 18 U.S.C. § 3231, which gives district judges jurisdiction to hear criminal prosecutions, has no legal effect because the House and Senate did not vote on it in the same session of Congress.” Id. Although stressing that “[t]his belief is factually incorrect,” the court in Campbell went on to note that the “enrolled bill” rule “prevents looking behind laws in th[at] way.” Id. See also United States v. Chillemi, Nos. CR-03-0917-PHX-PGR, CV-07-0430PHK-PGR(JI), 2007 WL 2995726, at *7 (DAriz. Oct. 12, 2007) (“Whatever the merits or lack thereof in Movant’s historical arguments, in view of “enrolled bill” rule, this Court is not free to consider a challenge to the validity of enactment of Title 18 based upon purported defects in the political process”).
Even it if were not precluded by the plea agreement, Cardenas-Celestino’s claim would fail as a frivolous and total contrivance.
Evidentiary Hearing and Certificate of Appealability Denied
|
4215765-7050 | LYNCH, Chief Judge.
Jose Ovidio Diaz Ruano petitions for review of a January 31, 2011, decision by the Board of Immigration Appeals (BIA), which affirmed the decision of an Immigration Judge (IJ) denying his application for withholding of removal and protection from removal under the Convention Against Torture (CAT).
Diaz Ruano is a native and citizen of Guatemala who unlawfully entered the United States in April 1999. On June 9, 2006, the Department of Homeland Security started removal proceedings by filing a Notice to Appear with the immigration court, charging Diaz Ruano with remova-bility as an alien present in the United States without being admitted or paroled. See 8 U.S.C. § 1182(a)(6)(A)(i). Diaz Rua-no admitted the factual allegations in the Notice to Appear, conceded removability, and requested relief from removal in the form of withholding of removal and protection under the CAT. In the alternative, Diaz Ruano requested voluntary departure.
Diaz Ruano’s merits hearing was held before the IJ on October 30, 2008. Diaz Ruano testified that in 1998 when he was still in Guatemala, members of a gang threatened him and attempted to beat him up. He did not know or recognize the gang members and did not know why they threatened to beat him. He did not go to the police because he did not believe the police would do anything to help him. This was Diaz Ruano’s only encounter with the gangs. Neither Diaz Ruano’s family nor his friends had been harassed by the gangs, but he testified that “[f]riends of [his] friends” had been harassed. He also testified that his family, which is still in Guatemala, told him that gang members had accosted the driver of a van and asked him for money, then killed him when he refused.
Diaz Ruano testified that he feared returning to Guatemala because the gangs would think that he would have money on him and would ask him for it and threaten to kidnap a family member if he did not give them the money, or they would ask him to join them. When questioned by the IJ as to whether he feared torture if he went back to Guatemala, Diaz Ruano stated that he did not know.
The IJ found that Diaz Ruano’s testimony was credible. The IJ also found that Diaz Ruano had not met his burden of showing that it was more likely than not that he would be subjected to persecution on account of his membership in any of the three purported social groups he asserted: young men targeted for recruitment by the criminal gangs in Guatemala; individuals opposed to the criminal gangs in Guatemala; and persons of perceived wealth returning from the United States.
The IJ concluded that none of the social groups asserted by Diaz Ruano have the particular characteristics of a social group as defined by the statutes, regulations, and case law and denied his application for withholding of removal. The IJ also found that Diaz Ruano had not met his burden of showing that there is a clear probability that he would be subjected to torture by any group if he was returned to Guatemala, and so rejected his claim for pro tection under the CAT. The IJ granted Diaz Ruano voluntary departure.
Diaz Ruano appealed the IJ’s decision, and the BIA, finding no error, dismissed the appeal. The BIA agreed with the IJ that the social groups Diaz Ruano identified lack the visibility and particularity required for a recognized social group. The BIA also explained that Diaz Ruano had not established past persecution or a clear probability of persecution if he was returned to Guatemala. Finally, the BIA concluded that Diaz Ruano had not demonstrated that it was likely that he would be tortured by, or with the acquiescence of, the Guatemalan authorities; so he was not eligible for relief under the CAT.
On March 2, 2011, Diaz Ruano petitioned this court for review of the BIA’s decision and unsuccessfully moved to stay removal.
We review both the BIA’s and the IJ’s opinions when, as here, the BIA adopts and affirms part of the IJ’s ruling and further justifies the IJ’s conclusions. Nako v. Holder, 611 F.3d 45, 48 (1st Cir.2010).
We decide petitions for review based on the administrative record that is the basis of the agency’s findings, 8 U.S.C. § 1252(b)(4)(A), and the “the administrative findings of fact are conclusive unless any reasonable adjudicator would be compelled to conclude to the contrary,” id. § 1252(b)(4)(B). We accept the agency’s findings of fact “that are supported by substantial evidence on the record as a whole.” Morgan v. Holder, 634 F.3d 53, 57 (1st Cir.2011). The agency’s conclusions of law we review de novo, “but with some deference to the agency’s founded interpretation of statutes and regulations that it administers.” McKenzie-Francisco v. Holder, 662 F.3d 584, 586 (1st Cir.2011).
Withholding of removal protects an otherwise removable alien from removal to a country where the alien’s “life or freedom would be threatened in that country because of the alien’s race, religion, nationality, membership in a particular social group, or political opinion.” 8 U.S.C. § 1231(b)(3)(A). The BIA has described the term “particular social group” as a group of persons sharing a common, immutable characteristic that makes the group socially visible and sufficiently particular, In re C-A-, 23 I. & N. Dec. 951, 959-60 (B.I.A.2006); see also Faye v. Holder, 580 F.3d 37, 41 (1st Cir.2009), a delineation that we have upheld as reasonable, see Mendez-Barrera v. Holder, 602 F.3d 21, 25 (1st Cir.2010).
Diaz Ruano bears the burden of showing that it is more likely than not that he will suffer persecution on account of one of the five protected grounds if removed to Guatemala. Makalo v. Holder, 612 F.3d 93, 96 (1st Cir.2010). A showing of past persecution creates a rebuttable presumption that future persecution is likely. Vilela v. Holder, 620 F.3d 25, 28 (1st Cir.2010). In addition, under the REAL ID Act of 2005, the applicant bears the burden of showing that one of the five protected grounds was or will be at least one central reason for his or her persecution. 8 U.S.C. § 1158(b)(l)(B)(i); see also id. § 1231(b)(3)(C).
Substantial evidence supports the agency’s determination that Diaz Rua-no failed to show that it is more likely than not that, if removed to Guatemala, he would suffer persecution on account of his membership in a particular social group. Our precedents foreclose Diaz Ruano’s claims that he will be subjected to persecution on account of his membership in the groups of young males targeted by the criminal gangs in Guatemala for recruitment or because of opposition to gangs and in the group of persons of perceived wealth returning from the United States.
In Larios v. Holder, 608 F.8d 105 (1st Cir.2010), we held that the putative social group of youth resistant to gang recruitment “is neither socially visible nor sufficiently particular.” Id. at 109. Diaz Rua-no’s purported social group of “young males targeted by the criminal gangs in Guatemala” is similarly insufficiently particular, and it was reasonable for the IJ and the BIA to reject it.
|
3699519-9888 | OPINION
STANLEY S. HARRIS, District Judge.
This matter is before the Court on defendants’ motion to dismiss for lack of subject matter jurisdiction. Upon consideration of the motion, plaintiffs’ opposition thereto, and the entire record herein, the Court concludes that defendants’ motion should be denied.
BACKGROUND
The following facts are taken from the complaint. On September 28, 1989, the General Services Administration (GSA) requested that plaintiffs, United States commercial airlines, refund money from airline tickets that the Government allegedly purchased and never used. With a few exceptions, the GSA did not identify or return the unused tickets to the airlines.
On May 15, 1990, GSA modified its demand, limiting the refund request to include only those tickets purportedly purchased by the Department of the Army and the Department of the Air Force during 1985. GSA sent a limited number of unused tickets to the airlines, but the tickets received represented only a small portion of the money that was demanded. Instead of returning the remainder of the tickets, GSA calculated the cost of the remaining unused tickets using a “statistical sample” and withheld future payments to the airlines to offset that amount.
Plaintiffs filed this action on June 14, 1990. They allege that the Government used all of the tickets that it purchased in 1985, other than those already returned and refunded. They maintain, therefore, that the Government illegally offset amounts owed by various federal agencies to the airline carriers.
Plaintiffs pray for a declaratory judgment that the offsets are unlawful, an injunction forbidding future use of such offsets, and return of the monies withheld. Their complaint sets forth five counts: (1) violation of the Transportation Act Regulation, 41 C.F.R. § 101-41.210-2 and § 101-41.210-3, which requires that unused tickets be “forwarded to the carrier”; (2) violation of the Federal Claims Collection Standards, 4 C.F.R. § 102.3(a), which requires that before an agency can offset any payments, those claims must be “liquidated or certain in amount”; (3) violation of the Debt Collection Act of 1982, 31 U.S.C. § 3716(a)(3), which requires the Government to produce unused airline tickets for plaintiffs’ inspection before making any offsets; (4) wrongful withholding of funds by GSA; and (5) recovery under the Prompt Payment Act, 31 U.S.C. § 3901 et seq., of interest penalties associated with the monies allegedly unlawfully withheld.
DISCUSSION
Defendants have moved to dismiss the case for lack of subject matter jurisdiction under Rule 12(b)(1) of the Federal Rules of Civil Procedure. They argue that plaintiffs’ claim exceeds $10,000 and is “founded upon” a contract with the Government, contending that therefore the Tucker Act confers exclusive jurisdiction in the United States Claims Court. Plaintiffs argue that the Administrative Procedure Act (APA), 5 U.S.C. § 701 et seq., and 28 U.S.C. § 1331, provide for subject matter jurisdiction in this court.
Plaintiffs deny that a contract exists but contend that even if one does exist, the Court still has jurisdiction because each ticket creates a separate claim and, thus, no single claim exceeds $10,000. Plaintiffs maintain that not only is this Court the appropriate forum for their claim, it is the only one that can grant adequate relief. To determine the proper forum, the Court must first examine the federal question jurisdiction statute, the APA, and the Tucker Act.
To establish that a court has jurisdiction over a suit against the United States, a plaintiff must show that the court has subject matter jurisdiction over the issues raised by the suit, that the United States has waived its immunity for suits of that kind, and that the United States has consented to be sued in that particular court. See 14 C. Wright, A. Miller & E. Cooper, Federal Practice & Procedure Jurisdiction 2d § 3654 (1985).
Under 28 U.S.C. § 1331, the District Court has original jurisdiction in all civil actions arising under the Constitution, laws, or treaties of the United States. Although § 1331 is not a general waiver of sovereign immunity, it gives the District Court subject matter jurisdiction to review agency action, providing that the suit arises under federal law and there is an express waiver of sovereign immunity by the Government. See New Mexico v. Re gan, 745 F.2d 1318, 1321 (10th Cir.1984), cert. denied, 471 U.S. 1065, 105 S.Ct. 2138, 85 L.Ed.2d 496 (1985).
Both criteria are met in this case: plaintiffs are suing a federal agency, the GSA, under federal law and are relying on the APA’s waiver of sovereign immunity. The APA provides judicial review of agency action to parties seeking nonmonetary relief. See Rowe v. United States, 633 F.2d 799, 801 (9th Cir.1980), cert. denied, 451 U.S. 970, 101 S.Ct. 2047, 68 L.Ed.2d 349 (1981). Section 702 of the APA was amended in 1976 “to remove the defense of sovereign immunity as a bar to judicial review of federal administrative action” in a federal court. B.K. Instrument, Inc. v. United States, 715 F.2d 713, 724 (2d Cir. 1983).
The APA does not create an independent grant of jurisdiction to the federal courts. See Califano v. Sanders, 430 U.S. 99, 97 S.Ct. 980, 51 L.Ed.2d 192 (1977). Nevertheless, federal jurisdiction could be grounded on 28 U.S.C. § 1331. See Committee for Full Employment v. Blumenthal, 606 F.2d 1062, 1065 n. 11 (D.C.Cir. 1979) (“Nothing in Sanders suggests that § 702 does not grant a cause of action to one suffering a legal wrong within the meaning of a relevant statute at the hands of an agency so long as there is an independent statutory basis for jurisdiction.”)
Plaintiffs maintain that they request primarily equitable relief from the Court, and therefore that the waiver of sovereign immunity within the APA, coupled with the subject matter jurisdiction derived from the federal question statute, empowers the Court to review GSA’s actions. The Tucker Act, however, limits District Court jurisdiction over APA claims. The Tucker Act is both a waiver of sovereign immunity and a grant of exclusive jurisdiction to the Claims Court to decide monetary claims, founded either upon an act of Congress or a contract with the United States, in excess of $10,000. See Bedoni v. Navajo-Hopi Indian Relocation Comm., 854 F.2d 321, 325 (9th Cir. 1988). The APA’s legislative history indicates that § 702’s waiver of sovereign immunity may not be used “to circumvent the jurisdictional and remedial limitation of the Tucker Act.” Spectrum Leasing Corp. v. United States, 764 F.2d 891, 893 (D.C.Cir.1985).
Plaintiffs argue that not only are their claims not “founded upon” a contract, but that no contract even exists between the parties, thereby permitting relief in this court under the APA without violating the Tucker Act. Whether a claim is one “founded upon” a contract for purposes of the Tucker Act “depends both on the source of the rights upon which the plaintiff bases its claim, and upon the type of relief sought (or appropriate).” Megapulse, Inc. v. Lewis, 672 F.2d 959, 968 (D.C.Cir.1982).
Plaintiffs rely on the analysis in Mega-pulse to argue that this Court has jurisdiction. In Megapulse, however, the plaintiff’s rights were prior to and independent of the contract with the Government, and any relief granted by the court would not have caused Government expenditures. See Megapulse, 672 F.2d at 969. Moreover, the court in Megapulse emphasized that a plaintiff should not be allowed to avoid Tucker Act jurisdiction by pleading under a separate statute. See id. at 967.
Plaintiffs’ ease is more analogous to Spectrum, in which the plaintiff tried to base its claim on an independent statute, the Debt Collection Act, rather than on its contract with the Government. The Court of Appeals held that the contract, not the Debt Collection Act, created any right that plaintiff had to monies from the Government. See Spectrum, 764 F.2d at 894. Likewise, plaintiffs’ claims here are grounded on the numerous individual ticket contracts between the airlines and the Government. Each ticket represents a separate contract and any rights plaintiffs have to any form of relief flow originally from the existence or non-existence of the contracts. This determination, however, does not divest this court of jurisdiction.
This court has concurrent jurisdiction with the Claims Court over Tucker Act claims, unless the claim is one for monetary damages in excess of $10,000. Claims Court jurisdiction cannot be avoided merely by framing a complaint as one seeking declaratory or injunctive relief. See Regan, 745 F.2d at 1322. The label attached to the prayer for relief contained in the pleadings is not controlling; the true nature of the relief must be determined. See Bedoni, 854 F.2d at 325 n. 5. Although plaintiffs contend that they are requesting equitable relief from the Court, they also pray for “judgment ordering GSA to return to the plaintiffs all funds wrongfully withheld.” (Complaint at 13.) Thus, regardless of what plaintiffs plead, if plaintiffs were to prevail on the merits of their claim, they would obtain monetary compensation from the Government. See, e.g., Hoopa Valley Tribe v. United States, 596 F.2d 435, 437, 219 Ct.Cl. 492 (1979) (finding no federal jurisdiction in action to obtain monies from the Treasury even though claim framed in equitable terms).
Plaintiffs also argue that the Court can assume jurisdiction even if a contract exists between the parties and even if the remedy is in the form of “money damages,” because District Court jurisdiction exists for claims of less than $10,000. Plaintiffs maintain that each ticket represents a single claim, none of which exceeds $10,000. Defendants, on the other hand, contend that the claims should be aggregated to total approximately $350,000, thereby depriving this court of jurisdiction.
|
4086053-10162 | DECISION AND ORDER
MARRERO, District Judge.
Pro se plaintiff Cy Greene (“Greene”) brought this case against defendants William Mazzuca (“Mazzuca”), Anne Cole (“Cole”), Linda Barrett (“Barrett”), Glenn Goord (“Goord”) and Allen Cave (“Cave”) (collectively, “Defendants”) pursuant to 42 U.S.C. § 1983 (“§ 1983”) alleging that he was harassed, that Barrett issued him a false misbehavior report in retaliation for his prior administrative complaints against her, and that he was denied due process at his subsequent disciplinary hearing. On April 4, 2006, Mazzuca, Cole, Goord and Cave moved to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) on the ground that it fails to state a claim upon which rebef may be granted. The motion indicates that it was not submitted on behalf of Barrett because she had not been served with process. On February 27, 2007, the Court dismissed Greene’s complaint and indicated that it would set forth the findings, reasoning and conclusions for its ruling in a subsequent decision and order. For the reasons discussed below, Defendants’ motion to dismiss Greene’s complaint is GRANTED.
I. BACKGROUND
The following facts are taken primarily from Greene’s complaint (“Compl.”), dated October 4, 2004, and Greene’s response to Defendants’ motion to dismiss, dated June 18, 2006, which the Court accepts as true for the purpose of ruling on the motions to dismiss. See Chambers v. Time Warner, Inc., 282 F.3d 147,152 (2d Cir.2002) (citing Gregory v. Daly, 243 F.3d 687, 691 (2d Cir.2001)).
In October 2001, Greene began work at the hospital of Fishkill Correctional Facility (“Fishkill”). From his arrival until his departure in February 2002, Greene had numerous altercations with Barrett, a housekeeper at the facility, during which Greene asserts he was harassed and threatened. Specifically, Greene complains that Barrett, along with other prison employees, screamed at him, spit in his face, and threatened him with solitary confinement.
On December 27, 2001, Greene was ordered to buff the floor of the hospital basement. Greene protested that he did not have adequate training to buff. Barrett retrieved a training form which indicated that Greene had been trained on how to buff. Greene instituted a grievance with the Inmate Grievance Resolution Committee (“IGRC”) asserting that the form was forged. Defendants Goord, Commissioner of the New York State Department of Correctional Services (“DOCS”), Cole, former Deputy Superintendent for Heath Services at Fishkill, and Mazzuca, former Superintendent of Fishkill, all received notice of the grievance and its contents. Cave, Correction Lieutenant at Fishkill, participated in the investigation into Greene’s claims. The IGRC responded that although the training form appeared to be filled out incorrectly, another training form dated January 3, 2002 indicated that Greene had received training on how to buff and that the form had been completed correctly. Greene appealed this decision to Mazzu-ea. On April 4, 2002, Mazzuca responded that an investigation had been conducted, and that all of the forms in question had been completed correctly. Greene appealed this decision to the Central Office Review Committee (“CORC”) noting that Mazzuca’s decision was at odds with the IGRC’s. CORC’s reply, dated May 8, 2002, noted that the first training form that Barrett produced was not completed appropriately but that the subsequent training form was. No wrongdoing by Barrett was found, and no action was taken during any level of the proceedings.
On January 25, 2002, Barrett filed a disciplinary action against Greene charging inappropriate comments. A hearing was conducted on January 29, 2002 at which Greene was found culpable and sentenced to 180 days in the security housing unit (“SHU”) and 180 days without phone privileges. Greene claims that he was humiliated at the hearing and his due process rights were violated.
II. DISCUSSION
A. STANDARD OF REVIEW
To survive dismissal, Greene “must assert a cognizable claim and allege facts that, if true, would support such a claim.” Boddie v. Schnieder, 105 F.3d 857, 860 (2d Cir.1997). In evaluating whether Greene has met these requirements, complaints prepared pro se are held “to less stringent standards than formal pleadings drafted by lawyers.” Id. (quoting Haines v. Kerner, 404 U.S. 519, 520, 92 S.Ct. 594, 30 L.Ed.2d 652 (1972)).
B. CONSTITUTIONAL CLAIMS
To state a claim under § 1983, Greene must show that while acting under color of state law, Defendants deprived him of his federal constitutional or statutory rights. See Pabon v. Wright, 459 F.3d 241, 249 (2d Cir.2006). Greene’s claims are (1) that he was harassed by Barrett, (2) that he was falsely accused of inappropriate conduct by Barrett in retaliation for a complaint he filed against her, (3) that he was deprived of due process at his disciplinary hearing, and (4) that Mazzuca, Gold, Goord, and Cave did not adequately respond to his complaints of harassment and denial of due process. (See Compl. at 7-8).
1. Harassment
Green alleges that Barrett and other prison officials harassed him by yelling at him, spitting on him, and threatening him with time in the SHU. Green also alleges that Mazzuca, Gold, Goord, and Cave knew of these incidents and did not adequately respond.
Prisoners have no constitutional right to be free from harassment. See Aziz Zarif Shabazz v. Pico, 994 F.Supp. 460, 474 (S.D.N.Y.1998). Harassment may be so drastic as to violate the Eighth Amendment’s right to be free from cruel and usual punishment, but only in the harshest of circumstances. See Boddie, 105 F.3d at 861. The alleged harassment must be objectively and sufficiently serious, denying Greene the minimal civilized measure of life’s necessities. See id. (quoting Farmer v. Brennan, 511 U.S. 825, 834, 114 S.Ct. 1970, 128 L.Ed.2d 811 (1994)). Under the rigorous objective standard, conditions that cannot be said to be cruel and unusual under contemporary standards of human decency are not unconstitutional. See Rhodes v. Chapman, 452 U.S. 337, 347,101 S.Ct. 2392, 69 L.Ed.2d 59 (1981). A prison’s conditions may be restrictive and even harsh, but, as the Supreme Court has recognized, it is part of the penalty that criminal offenders pay for their offenses. See id. In addition to the objective test, those committing the harassment must also exhibit deliberate indifference to the inmate’s significant needs of health or safety. See Farmer, 511 U.S. at 834, 114 S.Ct. 1970. Finally, Greene must show some injury or damage resulting from the alleged harassment to state a claim under § 1983. See Brown v. Croce, 967 F.Supp. 101, 104 (S.D.N.Y.1997) (citing Purcell v. Coughlin, 790 F.2d 263, 265 (2d Cir.1986)).
Greene’s claims of harassment do not rise to the level of a § 1983 claim. Accepting as true Greene’s allegations that he was yelled and spit at, and threatened with time in the SHU, none of these actions rise to the level at which prevailing doctrine sets the constitutional bar to establish cruel and usual punishment in this regard. See Sims v. Artuz, 230 F.3d 14, 22 (2d Cir.2000) (stating that not every push or shove violates a prisoner’s constitutional rights); Aziz Zarif Shabazz, 994 F.Supp. at 474 (finding no constitutional violation by even the most reprehensible verbal harassment or profanity). Additionally, Greene alleges no serious injury or damage due to the harassment. Greene thus fails to satisfy either the objective or subjective tests to obtain relief under § 1983.
Additionally, in determining Greene’s harassment claims against Mazzuca, Gold, Goord, and Cave, a finding of personal involvement by the individual defendants in an alleged constitutional deprivation is a prerequisite to an award of damages under § 1983. See Feingold v. New York, 366 F.3d 138, 159 (2d Cir.2004). Greene does not assert that Mazzuca, Cole, Goord, or Cave were directly involved in the in the alleged harassment. Instead, Greene states that he “gave all the defendants numerous opportunities to rectify this unjust matter, by letters to and from their offices.” (Compl. 7.) Greene claims that the Defendants should be held liable due to their supervisory positions.
A supervisor’s personal involvement may be shown by:
(1) actual direct participation in the constitutional violation, (2) failure to remedy a wrong after being informed through a report or appeal, (3) creation of a policy or custom that sanctioned conduct amounting to a constitutional violation or allowing such a policy or custom to continue, (4) grossly negligent supervision of subordinates who committed a violation, or (5) failure to act on information indicating that unconstitutional acts were occurring.
Hernandez v. Keane, 341 F.3d 137, 145 (2d Cir.2003). Greene’s letters fail to demonstrate any of the Hernandez factors. There is no doubt that these four defendants were informed of Greene’s belief that his rights were being violated, but such notice, by itself, is not sufficient to show knowledge or personal participation in a violation. See Rivera v. Goord, 119 F.Supp.2d 327, 344 (S.D.N.Y.2000) (citing cases holding that letters written by inmate but ignored by supervisors do not adequately establish personal involvement). The response letters written by Defendants to Greene show a reliance on the administrative complaint system in which Greene was involved. (See Letters dated January 15, January 28, and February 19, February 26, and February 28, 2002, attached as Ex. B to Declaration of Brian J. Schmidt in Support of Defendants’ Motion to Dismiss the Complaint, dated April 3, 2006 (“Schmidt Decl.”).) No subsequent action was required of Defendants to Greene’s grievances or complaints. See Thompson v. New York, 2001 WL 636432 (S.D.N.Y.2001).
Because Greene has not shown a cognizable claim by asserting harassment, and his allegations against Mazzuca, Gold, Goord, and Cave additionally fail to indicate sufficient personal involvement in the alleged constitutional deprivations, directly or through a supervisory capacity, the Court must dismiss Greene’s harassment claims against all Defendants.
2. Retaliation
|
7861232-20980 | DECISION AND ORDER
WARREN, District Judge.
Plaintiff, Boxhorn’s Big Muskego Gun Club, Inc. (“Boxhorn’.’) commenced this action on August 2, 1979, alleging violations of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2 (1976) and Section 303 of the Labor Management Relations Act, 29 U.S.C. § 187 (1976). Named as defendants were various labor unions and individuals associated therewith. On December 10, 1982, the Court dismissed Boxhorn’s Sherman Act claims and on January 25, 1983, the Court dismissed the individual defendants from this action. The remaining issues were tried to this Court on May 23-27, 1983. The following constitutes the Court’s Findings of Fact and Conclusions of Law.
I. Background
Dick and Lois Bennett purchased Box-horn in 1971. Boxhorn is a trapshooting facility and retail store providing trapshooting equipment and supplies. The facility consists of numerous trap fields, a clubhouse, a recreation area and a restaurant and tavern. Boxhorn patrons participate in recreational and competitive trapshooting throughout the year.
Boxhorn’s business rapidly grew in the seventies necessitating an expansion of facilities. On two separate occasions, in 1974 and again in 1978, the Bennetts expanded Boxhorn’s facilities to accommodate the increased business. The 1978 expansion consisted of remodeling and expanding Box-horn’s restaurant, tavern and clubhouse. To perform this project, the Bennetts employed Gerald Glancey as general contractor who performed most of the carpentry work, but who subcontracted certain other work. A portion of this subcontracted work was performed by nonunion contractors who had union contractor competitors.
Glancey and the subcontractors used their own tools and materials in performing the construction. Boxhorn paid Glancey on a lump-sum basis and these payments contained no deductions for taxes, social security or worker’s compensation. Upon receiving payment for services rendered, Glancey and the subcontractors gave lien waivers to Boxhorn. Boxhorn employees did not perform any construction work and it was not involved in hiring or firing any employees of Glancey or the subcontractors. It is clear that there was not an employer/employee relationship between Boxhorn and Glancey or between Boxhorn and any of the subcontractors.
One of the nonunion subcontractors was Durski Electrical Contractors Co., Inc. (“Durski”). In early July, 1978, Durski’s electrical work on the expanded clubhouse was nearly complete when Ralph Gondek, business agent for the International Brotherhood of Electrical Workers, Local 494, met with Mr. Bennett and requested that he use only union labor. Bennett refused this request. At that time construction work on the clubhouse was nearly completed and work had begun on the tavern-restaurant.
Subsequent to this meeting, Gondek orchestrated a public appeal by the Milwaukee County Labor Council (MCLC) and the Milwaukee Building Construction Trades Council (MBCTC) to not patronize Boxhorn. Gondek was on the MCLC Board and was a delegate to MCLC and MBCTC. This public appeal concerned the nonunion electrical work performed by Durski at the Boxhorn construction project. The apparent purpose was to force Boxhorn to cease doing business with Durski and, instead, to employ union electrical contractors. The dispute centered entirely upon Durski’s nonunion status. Thus, the dispute was between Durski and the defendant.
The defendants took other actions to force Boxhorn into using only union contractors on its expansion project. First, on July 17, 1978, MCLC prematurely ended its trapshooting league at Boxhorn. Second, on July 19, 1978, Boxhorn was indefinately placed on MCLC’s “Do Not Patronize” list which requested that union affiliated persons cease patronizing Boxhorn. Finally, MCLC sent Mr. Bennett a letter stating that none of its members would patronize Boxhorn until it complied with their re quest. These tactics failed to influence the Bennetts.
The defendants then undertook bolder methods of influence. During portions of four days in late July or early August, 1978, Gondek, along with three other persons, distributed approximately 2,000 handbills to Boxhorn patrons at the club entrance. The handbills read as follows:
PLEASE DO NOT PATRONIZE BIG MUSKEGO GUN CLUB
The Milwaukee County Labor Council has withdrawn 42 teams in protest against Mr. Bennett’s decision to use non-union construction workers.
Our request to use Union Workers was scoffed at by Mr. Bennett.
You can help by withdrawing your team from Big Muskego Gun Club.
Electricians Local Union 494 IBEW The handbill distribution process consisted of one of the above-mentioned distributors positioning himself at the Boxhorn entrance thereby forcing an incoming vehicle to slow down or to stop. The distributor would then approach the driver’s side of the vehicle holding a handbill and conveying his intention to offer it to the driver. Upon accepting or refusing the handbill, the driver could proceed through the Box-horn entrance unhindered.
The defendant published the handbill in the July-August edition of its newspaper. Furthermore, a picture of the handbill held by the defendants’ agents appeared in the August 24, 1978 edition of the AFL-CIO Milwaukee labor press. These publications reached approximately 200,000 persons.
The parties dispute whether picketing occurred in conjunction with the handbilling. At trial, plaintiff presented four disinterested witnesses who testified that they observed picketing and the posting of picket signs at the Boxhorn entrance where the aforedescribed handbilling occurred. However, defendants presented one disinterested witness who testified that he did not observe any picketing or the display of picket signs on the days when handbilling occurred. The persons who conducted the handbilling also testified that no picketing transpired.
Boxhorn alleges that it suffered substantial monetary loss directly resulting from decreased business pursuant to defendants’ successful dissuasion of Boxhorn patronization. Boxhorn alleges that this dissuasion constituted unlawful secondary activities and that defendants should be held liable for the resulting damages. Defendants assert that their activities were protected by the publicity proviso to 29 U.S.C. § 158(b)(4). For the reasons stated below, the Court finds that the defendants’ activities violated 29 U.S.C. § 158(b)(4) and were not protected by the publicity proviso.
II. Whether Boxhorn Was A Primary Or Secondary Employer
Boxhorn’s cause of action is based on 29 U.S.C. § 158(b)(4) (1976). This section restricts a labor organization and its agents from using economic pressure where an object of it is to force an employer or other person to boycott someone else. NLRB v. Denver Bldg. Council, 341 U.S. 675, 687, 71 S.Ct. 943, 950, 95 L.Ed. 1284 (1950). This proscribed tactic is labeled a “secondary boycott.” Thus, a union is prohibited from striking or boycotting, or attempting to induce or encourage such action, “against employer A for the purpose of forcing that employer to cease doing business with employer B” with whom the union is engaged in a dispute. Id. Employer A is termed the “secondary employer” and employer B is termed the “primary employer.”
In its post-trial brief, defendants imply that Boxhorn was a primary employer since non-union contractors were hired to construct its expansion project. Defendants’ failure to steadfastly pursue this contention is warranted. The holding in Denver Building, supra, compels finding that Boxhorn was a secondary employer. That case involved a dispute between a union and a subcontractor at a construction site. The union engaged in a strike to force the site’s general contractor to terminate its contract with the subcontractor. The Su preme Court found that such action was unlawful secondary activity since the general contractor was a secondary employer.
The instant case presents even stronger reasons for finding that the union conducted secondary activities. In Denver Building the subcontractor was the primary employer and the general contractor was the secondary employer. The present case similarly involves a general contraetor/subeontractor relationship and the union’s dispute is with the subcontractor. However, the object of the union’s activities is not the general contractor (Glancey), rather it is Boxhorn. Therefore, the nexus between the dispute and the union’s activities is more remote than in Denver Building. Moreover, Boxhorn lacked any supervisory control over Durski. The Court therefore finds that Boxhorn was a secondary-neutral employer and it will proceed to determine whether the defendants’ activities directed against Boxhorn were unlawful.
III. The Legality of
Defendants’ Activities
A. Whether Defendants’ Activities
Constituted Coercion
Section 8(b)(4)(ii)(B) of the National Labor Relations Act, as amended, 29 U.S.C. § 158(b)(4)(ii)(B) (1976), prohibits coercion where the purpose thereof is to force or require any person “to cease doing business with any other person.” By handbill-ing, publishing a copy of the handbill, picketing (discussed infra) and placing Box-horn on its “Do Not Patronize” list, defendants advocated a consumer boycott of Box-horn. As stated above, these activities were undertaken to force Boxhorn into terminating the use of non-union subcontractors on its expansion project. This Court finds that the defendants’ actions constituted coercion within the broad scope of 29 U.S.C. § 158. Building Trades Councel (DeBartolo Corp.), 273 N.L.R.B. 172 (1985); Edward J. DeBartolo Corp. v. NLRB, 662 F.2d 264, 271, (4th Cir.1981), rev’d on other grounds, 463 U.S. 147, 103 S.Ct. 2926, 77 L.Ed.2d 535 (1982); see, Longshoremen v. Allied International, Inc., 456 U.S. 212, 225, 102 S.Ct. 1656, 1664, 72 L.Ed.2d 21 (1981).
B. Whether Defendants Are Protected By The Publicity Proviso
Initially, the Court must resolve Box-horn’s contention that defendants are precluded from asserting the protection of the publicity proviso because they failed to plead such protection as an affirmative defense. Boxhorn relies on NLRB v. Teamsters, Local 126, 435 F.2d 288 (7th Cir.1970) wherein the Seventh Circuit found that the existence of an “ally relationship” is an affirmative defense which the unions had the burden of proving. Boxhorn cites no precedent that labels the publicity proviso an affirmative defense. Similarly, the Court is unaware of any requirement, either precedential or statutory, that a defendant must plead the protection of the publicity proviso. The Court will impose no such requirement in this case.
Defendants contend that their activities are exempted from 29 U.S.C. § 158(b)(4) pursuant to the publicity proviso contained therein. Defendants are protected by the proviso if the following factors were present.
(1) Defendants’ actions constituted publicity other than picketing;
(2) there was a producer-distributor relationship between the non-union subcontractors and Boxhorn;
(3) the publicity was truthful; and
(4) the effect of the publicity did not result in the interference with deliveries or work stoppage of any employees of any person other than those employed by the employer with whom the union has a primary dispute.
It is undisputed that the fourth factor existed. Thus, analysis of the remaining three factors must be undertaken.
1. Picketing
At trial, Boxhorn presented four witnesses who testified that they observed picketing at the Boxhorn entrance on the days when defendants’ agents were present there. From a distance, these witnesses observed individuals pacing at the Boxhorn entrance while holding picket signs approximately 18" by 20" in size. One witness testified that the signs stated “AFL-CIO, Job Action, Local 494.” These witnesses were disinterested and indeed some of them were members of unions other than the defendants. The Court considers such testimony highly credible.
The defendants presented testimony supporting their position that they did not picket. One witness, Mr. Leo Bednarski, testified that he observed no picketing at the Boxhorn entrance on the four days when defendants’ agents were handbilling. However, Mr. Bednarski did not testify that he constantly observed the defendants’ agents the entire time that they were present at the Boxhorn entrance. The Court finds Mr. Bendarski’s testimony credible. Furthermore, at trial the defendants’ handbillers testified that no picketing occurred at the Boxhorn entrance.
Analyzing conflicting credible testimony to ascertain a factual finding is an extremely difficult task. Defendants urge the Court to discredit the testimony of Box-horn’s four disinterested witnesses because of various tangential inconsistencies in their accounts. The Court is not persuaded. It is more likely that these apparent inconsistencies exist because the observations occurred at different times; persons’ perceptions and subsequent descriptive accounts thereof naturally differ as to minor details; and over time peoples’ memories of minor details become blurred.
The Court finds that the defendants did perform picketing at the Boxhorn entrance. There may not have been constant picketing during defendants’ presence at the Boxhorn entrance, however some picketing did occur.
2. Producer-Distributor Relationship
Defendants assert that there existed a producer-distributor relationship between Durski and Boxhorn. That is, the labor performed by Durski composed a portion of the final product — trapshooting—which Boxhorn distributed, thereby establishing the relationship. Defendants’ position is on firm ground. Circumstances similar to the present existed in Edward J. DeBartolo Corp. v. NLRB, 463 U.S. 147, 103 S.Ct. 2926, 77 L.Ed.2d 535 (1982). That case involved a building contractor who was retained to construct a department store in a shopping center. There, plaintiff conceded that the department store was a distributor of products produced by the contractor. However, the Supreme Court stated in dicta that “[i]ndeed, we may assume here that the [publicity] proviso’s coverage ... is broad enough to include almost any primary dispute that might result in prohibited secondary activity.” DeBartolo, 463 U.S. at 155, 103 S.Ct. at 2932. This dicta carries the strong implication that the Supreme Court would have found a producer-distributor relationship regardless of the plaintiff’s concession. Moreover, International Brotherhood of Teamsters, Local 537 (Lohman Saks Co.), 132 N.L.R.B. 901 (1961), cited by the Supreme Court in conjunction with this dicta supports this position.
The Court finds that a producer-distributor relationship existed between Durski and Boxhorn.
3. Handbills’ Truthfulness
Boxhorn alleges that the handbills distributed by defendants were untruthful within the meaning of the publicity proviso since they failed to identify Boxhorn’s true relationship to the primary dispute. Defendants contend that absent an intent to deceive or a substantial departure from fact, a handbill failing to identify the primary employer by name does not lose its publicity proviso protection.
There appears to be a dispute between the Fourth and Ninth Circuits as to whether handbills distributed at the secondary employer’s premises must state the secondary employer’s relationship to the primary dispute. The Court is aware of no Seventh Circuit pronouncement on this matter. In Edward J. DeBartolo v. NLRB, 662 F.2d 264, 268, (4th Cir.1981), rev’d on other grounds, 463 U.S. 147, 103 S.Ct. 2926, 77 L.Ed.2d 535 (1982), the Fourth Circuit held that omission in the handbill of the secondary employer’s relationship to the primary dispute is, standing alone, not evidence of the union’s intent to deceive. There must also be an intent to deceive and a substantial departure from fact. To the contrary, the Ninth Circuit in Hospital & Service Employees Union v. NLRB, 743 F.2d 1417 (9th Cir.1984) found that the publicity proviso requires that publicity advise the public of the primary dispute’s nature and the secondary employer’s relation to it. In that case, handbills solely urging consumers to not patronize the secondary employer because it was unfair to organized labor were held unprotected by the publicity proviso.
The Court believes that it can resolve the present case without necessarily violating the mandates of either the Fourth or Ninth Circuit. The defendants distributed handbills at the Boxhorn entrance which requested that the public not patronize Box-horn. Furthermore, the handbills strongly imply, if not assert, that the defendants’ dispute is with Boxhorn’s owner, Mr. Bennett. There is no mention of the non-union subcontractors with whom defendants were engaged in the primary dispute. The Court finds that these handbills violated the Ninth Circuit’s requirement that handbills advise the public of the primary dispute’s nature and the secondary employer’s relation to it.
The Court also finds that pursuant to the Fourth Circuit’s test the handbills are not protected by the publicity proviso. The defendants intended to deceive the public with the handbills. Their agents attempted to make Boxhorn’s business suffer because of its involvement with the primary employer. Towards this end, the defendants’ handbilling exploited the pro-union sympathies of Boxhorn customers by dissuading their patronization of Boxhorn. Achieving this result hinged on the customers understanding that Boxhorn was responsible for hiring the non-union construction workers. The Court refuses to accept defendants’ contention that Boxhorn patrons would know that the handbilling was secondary activity simply because Boxhorn was not a construction firm. The handbills’ clear import is that Boxhorn hired non-union workers; the public could reasonably believe that Boxhorn was capable of such a hiring decision. Therefore, there was an intent to deceive. Moreover, this deception was material since it involved erroneously identifying the secondary employer as the primary employer.
The Court finds that the defendants’ handbills were untruthful and therefore are not protected by the publicity proviso. Likewise, publishing a copy of the handbill in two separate newspapers is not protected by the publicity proviso.
The Court finds that defendants’ placement of Boxhorn on its “Do Not Patronize” list constitutes an unlawful secondary activity. This action was done for the purpose of forcing Boxhorn to cease its business relationship with the primary employer — Durski. For the reasons stated above, this activity was not protected by the publicity proviso.
C. First Amendment Protection
The defendants contend that even if their activities were not protected by the publicity proviso they were protected by the first amendment. This Court initially finds that the defendants’ picketing was not protected by the first amendment. Longshoremen v. Allied International, Inc., 456 U.S. 212, 102 S.Ct. 1656, 72 L.Ed.2d 21 (1982).
The Court finds that the handbilling and reproducing the handbill in publications were also not protected by the first amendment. As stated above, the handbills’ contents were untruthful and were therefore not protected by the publicity proviso. To find that the handbills were however protected by the first amendment the Court would have to find the “truthfulness” aspect of the publicity proviso unconstitutional. The Court will not so rule. There is no persuasive reason or authority, and indeed the defendant has offered none, which compels finding that the first amendment protects untruthful communication designed to place economic pressure on a secondary employer. In enacting the publicity proviso, Congress has balanced the competing interests at stake. The Court defers to that balancing.
D. Summary of Findings
The Court finds that Boxhorn was a secondary employer. Furthermore, the defendants’ secondary activities directed towards Boxhorn constituted coercion and thus are covered by 29 U.S.C. § 158(b)(4). The Court finds that the defendants’ picketing, handbilling, publications depicting a picture of a handbill and placement of Box-horn on its “Do Not Patronize” list are not protected by the publicity proviso to Section 158(b)(4). Likewise, the first amendment does not protect these activities. Therefore, the Court finds that the defendants violated 29 U.S.C. § 158(b)(4) and the sole remaining issue concerns damages.
IV. Damages
Boxhorn seeks compensatory damages pursuant to 29 U.S.C. § 187(b) which states in pertinent part “[wjhoever shall be injured in his business or property by reason of [Section 8(b)(4) ] ... shall recover the damages by him sustained and the cost of the suit.” In a case such as the present the injured party is not required to establish its monetary damages to a degree of absolute certainty. Moreover, defendants here bear the risk of any uncertainty. Story Parchment Co. v. Paterson Co., 282 U.S. 555, 51 S.Ct. 248, 75 L.Ed. 544 (1931).
|
3387953-9482 | ORDER
HARKINS, Senior Judge.
Pursuant to order, oral argument was heard in this case on October 8,1991, in the United States Claims Court, Washington, D.C.
The pleadings are:
Complaint, filed November 16, 1989; Answer, filed July 5, 1990; and First Amended Complaint, filed June 17, 1991.
The motion papers are as follows: Defendant’s Motion to Dismiss, filed February 15, 1990;
Plaintiff’s Response to Defendant’s Motion to Dismiss, filed March 21, 1990; Defendant’s Reply, filed April 6, 1990; Defendant’s Motion for Leave to File Supplemental Authority, filed May 23, 1990;
Plaintiff’s Response to Defendant’s Motion for Leave to File Supplemental Authority, filed May 30, 1990;
Order, dated June 4, 1990;
Defendant’s Motion to Vacate Order of June 4, 1990, and to Dismiss for Lack of Jurisdiction, filed April 12, 1991; Plaintiff’s Motion for Leave to file Amended Complaint, filed May 1, 1991; Plaintiff’s Response to Defendant’s Motion to Vacate and Dismiss, filed May 29, 1991;
Defendant’s Response to Plaintiff's Motion for Leave to File an Amended Complaint and Reply in Support of Defendant’s Motion to Dismiss, filed June 3, 1991;
Plaintiff’s Reply to Defendant’s Response, filed June 12, 1991;
Defendant’s Motion to Dismiss Amended Complaint, filed September 10, 1991; Plaintiff’s Response to Defendant’s Motion to Dismiss Amended Complaint, filed September 10, 1991;
Defendant’s Reply in Support of its Motion to Dismiss Plaintiff’s Amended Complaint, filed September 10, 1991.
A bench ruling was made at the close of argument. The reasons for the decision were stated on the record.
Tecom Industries, Inc. filed a complaint on November 16, 1989, to appeal final decisions of the contracting officer to terminate four contracts. The complaint invokes this court’s jurisdiction under the Tucker Act, 28 U.S.C. § 1491(a)(1), and the Contract Disputes Act, 41 U.S.C. § 609(a)(1).
Tecom contests the termination for default of four contracts between it and the United States Navy on the basis of failure to make progress as to endanger performance. The contracts in question, Nos. N00163-83-C-0015, N00163-85-C-0232 N00163-87-M-2339, N00163-87-C-0348, were for production of Walleye missile antennas for the Naval Avionics Center, Indianapolis, Indiana.
In a final decision dated May 2, 1989, the contracting officer terminated for default contract No. 0232. The May 2, 1989, letter found Tecom to be obligated to the United States for $72,730 in unliquidated progress payments, and requested repayment in that amount. The final decisions of the contracting officer to terminate contracts Nos. 0015, 0232 and 2339 were issued May 16, 1989.
The initial complaint in this court, filed November 16, 1989, was an appeal from the contracting officer’s decisions that terminated the contracts for default. The complaint alleged the default terminations were improper and requested a judgment treating the terminations as for the convenience of the Government, and finding a constructive change for failure to disclose superior knowledge. The complaint did not request a specific amount of money damages or a claim that money was presently due and owing. The complaint did request an award of interest on the amount of the judgment in accordance with the CDA.
By letter dated April 30, 1990, Tecom submitted to the contracting officer a claim for termination for convenience costs for contract Nos. 0232, 0348 and 2339. By letter dated May 17, 1990, the contracting officer notified Tecom that the claim was premature and would not be considered pending the appeal to the Claims Court on the merits of the default terminations.
On June 4, 1990, Tecom sought leave to amend its complaint to include a claim for termination for convenience costs. On that date, defendant’s motion to dismiss was denied, citing Moser Industrienmontage GmbH v. United States, No. 254-88C (Order dated Apr. 24, 1989). On June 5, 1990, Tecom’s motion to amend its complaint was denied as moot.
On April 11, 1991, defendant filed a second motion to dismiss predicated upon the decision of the Court of Appeals for the Federal Circuit in Overall Roofing & Construction, Inc. v. United States, 929 F.2d 687 (Fed.Cir.1991). On May 1,1991, Tecom filed a motion for leave to file an amended complaint. Defendant opposed the motion. Tecom’s motion was granted, and the amended complaint was filed on June 17, 1991.
The amended complaint is based on the certified termination claims submitted to the contracting officer on April 30, 1990, and the amounts claimed:
Contract No. 0232 — $242,175
Contract No. 0348 — $141,342.63
Contract No. 2339 — $17,824.38
Defendant’s motion to dismiss is filed under to RUSCC 12(b)(1) (lack of subject matter jurisdiction). For purposes of dismissal on the pleadings, the complaint filed November 16, 1989, states a claim within the subject matter jurisdiction of this court. 28 U.S.C. § 1491(a)(1); 41 U.S.C. § 609(a)(1); Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974); Bray v. United States, 785 F.2d 989, 992 (Fed.Cir.1986). Accordingly, defendant’s motion to dismiss on the pleadings for lack of subject matter jurisdiction is denied.
Defendant’s motion is considered as a motion under RUSCC 12(b)(4) (failure to state a claim upon which relief can be granted). Inasmuch as the motion papers include matters outside the pleadings that are not excluded by the court, defendant’s motion is treated as one for summary judgment and disposed of as provided in RUSCC 56.
There is no genuine issue as to any material fact and disposition of the claims in the initial complaint and in the amended complaint by summary judgment is appropriate.
Plaintiff’s original complaint in this court contested only the propriety of the default terminations. No claim was made for a specific amount of money owed as damages or for equitable adjustments under the contracts. Accordingly, the original complaint did not state a claim on which this court could give relief. Overall Roofing & Construction, Inc. v. United States, 929 F.2d 687 (Fed.Cir.1991).
Tecom asserts that the contracting officer’s demand for the return of progress payments in contract No. 0232 is a government claim on which it may bring an action under the CDA. When made, the contracting officer’s request for repayment of unliquidated progress payments in the May 2, 1989, decision was a claim for money. That claim, however, was extinguished on July 1, 1989, when Tecom voluntarily paid without protest. Tecom’s payment eliminated the contracting officer’s claim that money was presently due to the Government. The Government cannot bring a claim that has been satisfied by full payment. See Routed Thru-Pac, Inc. v. United States, 185 Ct.Cl. 428, 440, 401 F.2d 789 (1968).
Initially, Tecom did dispute the Government’s right to the return of the progress payments. By letter dated June 1, 1989, Tecom claimed that “the progress payment liability has been covered by actual material”; thus, “Tecom is not required to submit a check” for the progress payments. The contracting officer responded by letter dated June 2, 1989, and requested return of the progress payments, pursuant to the contract’s default clause. Tecom forwarded payment of $72,730 with $560 in interest, by check totalling $73,290. There is no indication in the correspondence, on the check or on the check stub, that Tecom was paying under protest or under any restric tion or reservation as to the payment. Te-com acquiesced in the Government’s view that Tecom was legally obligated to repay the progress payments. Without protest to the repayment, Tecom cannot now renege on the acquiescence. Herman v. United States, 229 Ct.Cl. 475, 477 (1981).
Tecom contends that the amended complaint includes claims for money that overcome any infirmity in the claim under Overall. Tecom argues that the contracting officer has constructively denied the April 30, 1990, termination for convenience claims, under the “deemed denial” provisions of the CDA. 41 U.S.C. §§ 605(c)(1) & (5).
Tecom’s contentions as to a deemed denial do not comply with the relevant provisions of the CDA. The claim as to contract No. 2339 was for less than $50,000. The contracting officer cannot be deemed to have denied that claim because Tecom did not make a “written request to the contracting officer for the decision to be rendered within 60 days.” 41 U.S.C. § 605(c)(1). Section 605(c)(1) does not provide a 60-day time frame for claims of more than $50,000. Section 605(c)(2) states that a contracting officer should issue a decision within 60 days of receipt of a submitted certified claim over $50,000 or notify the contractor of the amount of additional time needed to render a decision. According to section 605(c)(5), “any failure by the contracting officer to issue a decision on a contract claim within the period required will be deemed to be a decision ... denying the claim and will authorize the commencement of the appeal or suit ... in the event of an appeal or suit is so commenced in the absence of a prior decision of the contracting officer, the tribunal ... may stay the proceedings to obtain a decision on the claim by the contracting officer.” A suit “so commenced” pursuant to Section 605(c)(5) is one which is commenced following the passage of 60 days after the submission of the claim to a contracting officer without a decision, not a suit that is commenced before the claims are submitted to the contracting officer.
|
1773079-23616 | OAKES, Circuit Judge:
Plaintiff Willie Outley appeals from a jury verdict in favor of four individual police officers, whom he charged violated his constitutional rights on two separate occasions. Trial was held before Judge Lloyd F. MacMahon in United States District Court for the Southern District of New York. Because the trial court abused its discretion in precluding two eyewitnesses from testifying on the plaintiff’s behalf and in admitting evidence of prior lawsuits filed by the plaintiff against the City of New York and others, we reverse and remand.
Outley’s two section 1983 claims, 42 U.S. C. § 1983 (1982), (consolidated for trial, but tried seriatim) arose from two incidents of alleged police brutality by New York City police officers. The first was related to an arrest on the morning of June 9, 1981 (“the 1981 incident”), and the second to a street stop on March 11, 1984 (“the 1984 incident”). In the 1981 incident Outley claims he was improperly stopped by two police officers, taken against his will to a police station and arrested, denied any opportunity to speak with an attorney or with his wife, and held for seventeen hours in a “small filthy jail cell” before appearing before a magistrate who dismissed the matter. Outley claims that he was treated roughly throughout the detention and subjected to racial insults. He sought compensatory and punitive damages for lost property and for injury to his back.
The 1984 incident allegedly occurred while Outley was walking home from a local store at approximately 6:00 a.m. He was stopped by two police officers who called him over to their patrol car. While Outley stood alongside the passenger side window, one officer allegedly reached out of the window and searched Outley’s pockets, at one point pulling on his jacket, causing him to slip and fall down. One of the officers then allegedly warned Outley that he “would regret it” if he reported the incident to any authorities, and the patrol car sped off.
Outley testified that, after getting up, he saw two men, both previously unknown to him, standing at the store he had just left. He asked them if they had seen what had happened, and if they would be willing to testify. They agreed, and Outley then left and walked home.
After these two lawsuits were filed, Out-ley responded to the defendants’ first set of interrogatories, including, inter alia, the names of the two witnesses to the 1984 incident, Ivan Black and Thomas Young, and the fact that they lived in Queens. The plaintiff did not then know the address or telephone number of either Black or Young, and plaintiff’s counsel was unable to contact the witnesses until several weeks before trial, finally interviewing them approximately ten days before the trial began. Plaintiff’s counsel inadvertently failed to supplement the prior interrogatory response, as required by Fed.R. Civ.P. 26(e), so that the City never learned of Black’s and Young’s addresses. However, the City never contacted plaintiff’s counsel with a request for these addresses, and the record indicates no attempt by the City to contact Black or Young or any of the witnesses to the 1981 incident.
The two claims were combined into a single trial which began at 2:00 p.m. on March 3, 1987. Outley’s counsel in his opening statement told the jury that they would hear “testimony of two other witnesses to this [the 1984] incident,” neither of whom knew Outley at the time. Plaintiff’s counsel briefly described what the witnesses’ testimony would entail, noting that they would not be able to identify the officers, but that they would testify that the incident took place. On the morning of March 5, after testimony as to the 1981 incident had been completed, the City moved to preclude the testimony of Young and Black on the ground that the plaintiff’s failure to supplement his answers to the defendants’ interrogatories violated Rule 26(e). After learning that plaintiff’s counsel had discovered the addresses at least ten days and probably four or five weeks prior to trial, the court granted the City’s request and precluded the witnesses from testifying. Later that day the plaintiff moved that he be allowed to put on the two witnesses and the court, after argument from both sides, denied the motion.
The jury returned a verdict for the defendants in both cases.
Preclusion of eyewitness testimony
Undue delays in individual trials are, of course, to be avoided. The district court’s efficient control of its docket is undoubtedly among the most important tools in fighting endemic delay. We recognize also that the trial judge here involved has an enviable record of docket control. However, as we have stressed in the past, tight docket control is not an end in itself. Rather, its purpose is “assuring that justice for all litigants be neither delayed nor impaired.” Winston v. Prudential Lines, 415 F.2d 619, 621 (2d Cir.1969), cert. denied, 397 U.S. 918, 90 S.Ct. 926, 25 L.Ed.2d 99 (1970). “ ‘[A] court must not let its zeal for a tidy calendar overcome its duty to do justice.’ ” Id. (quoting Davis v. United Fruit Co., 402 F.2d 328, 331 (2d Cir.1968), cert. denied, 393 U.S. 1085, 89 S.Ct. 869, 21 L.Ed.2d 778 (1969)). See also Beary v. City of Rye, 601 F.2d 62, 63 (2d Cir.1979); Peterson v. Term Taxi Inc., 429 F.2d 888, 891 (2d Cir.1970). Unfortunately, it appears that here the district court’s sense of duty, if not overcome, was at least too strongly influenced by its desire to clear its docket.
Outley’s counsel clearly violated Fed.R.Civ.P. 26(e)(1), in failing to provide the City with the address and telephone number of each witness after he learned them. While the rule itself provides no express sanctions for a violation, the Advisory Committee note states that “[t]he duty [to supplement responses] will normally be enforced, in those limited instances where it is imposed, through sanctions imposed by the trial court, including exclusion of evidence, continuance, or other action, as the court may deem appropriate.” It is worth noting that Fed.R.Civ.P. 37, the general rule concerning sanctions against parties unjustifiably resisting discovery, does not cover the failure to supplement responses. See 8 C. Wright & A. Miller, Federal Practice and Procedure § 2050 (1970 & Supp. 1987). Rather, it is within the inherent power of the district court to impose sanctions for a violation of Rule 26(e). However, cases interpreting Rule 37 are useful in determining the proper approach to be taken by the trial court.
The district court has wide discretion in punishing failure to conform to the rules of discovery. National Hockey League v. Metropolitan Hockey Club, Inc., 427 U.S. 639, 643, 96 S.Ct. 2778, 2781, 49 L.Ed.2d 747 (1976) (per curiam) (Rule 37 sanction); Cine Forty-Second Street Theatre Corp. v. Allied Artists Pictures Corp., 602 F.2d 1062, 1066 (2d Cir.1979) (same). However, we have not hesitated to reverse when a trial court “permit[s] its zeal for clearing its calendar to overcome the right of a party to a full and fair trial on the merits.” Beary v. City of Rye, 601 F.2d at 63. The refusal to allow the plaintiff’s eyewitnesses to testify, an extreme sanction in any case, see Cine Forty-Second Street Theatre Corp., 602 F.2d at 1064, here had an excessively harsh effect.
We take guidance from the Fifth Circuit’s analysis in Murphy v. Magnolia Electric Power Association, 639 F.2d 232 (5th Cir.1981), of the proper sanctions for failure to supplement answers under Rule 26(e). The appellate court reversed and remanded where the trial judge prevented the plaintiff’s expert witness from testifying because of the plaintiff’s failure to supplement answers to interrogatories to provide defendant’s counsel with the expert’s name. After noting that exclusion of evidence is, in certain cases, a proper sanction for a violation of Rule 26(e) and referring to the considerable discretion granted to the district judge, the court identified four factors which the district court should consider, including “ ‘the explanation, if any, for the failure to name the witness [or to otherwise supplement the answer], the importance of the testimony of the witness, the need for time to prepare to meet the testimony, and the possibility of a continuance.’ ” Id. at 235 (quoting 8 C. Wright & A. Miller, Federal Practice and Procedure § 2050 at 327). See also Johnson v. H.K. Webster, Inc., 775 F.2d 1, 8 (1st Cir.1985) (“Trial and appellate courts should look to the conduct of the trial, the importance of the evidence to its proponent, and the ability of the defendant to formulate a response.”); Meyers v. Pennypack Woods Home Ownership Association, 559 F.2d 894, 904-05 (3d Cir.1977) (in sanctioning failure to list witnesses in pretrial memorandum, court should consider, inter alia, proponent’s bad faith, ability of proponent to discover witness earlier, validity of proponent’s excuse, will-fullness of violation). This analysis requires the district court to consider the importance of the testimony to the case, the prejudice to the party inconvenienced, and the administrative difficulty which the court itself would face.
Here there is no suggestion in the record that the failure of plaintiff’s counsel was anything but the good-faith oversight of an inexperienced practitioner. Counsel for the City made no request for the witnesses’ addresses and telephone numbers during the two years between the date of the incomplete answer and the time of trial, although she did offer on more than one occasion to exchange witness lists, a procedure which might have alleviated the problem. The City admits that the plaintiff’s opening statement on the afternoon of March 3 informed them that the plaintiff would be calling the two eyewitnesses, yet gives no reason why counsel waited until the morning of March 5 to move to have the witnesses precluded from testifying. The rules of discovery were not designed to encourage procedural gamesmanship, with lawyers seizing upon mistakes made by their counterparts in order to gain some advantage. The City sought the most drastic remedy, preclusion, rather than requesting a recess or continuance. See Johnson v. H.K. Webster, Inc., 775 F.2d at 8 (“Courts have looked with disfavor upon parties who claim surprise and prejudice but who do not ask for a recess_”). Plaintiff’s good faith mistake, in the absence of any prior request from the City, in no way suggests preclusion as the appropriate sanction.
The testimony of Thomas Young and Ivan Black was extremely important to Outley’s case. Plaintiff’s counsel made an offer that Young and Black would testify to witnessing the 1984 incident described by Outley. Not only would their testimony provide independent evidence in what was otherwise essentially a test of Outley’s word against the officers (who testified the incident never occurred), but their testimony would also bolster Outley’s credibility. Because the evidence of these witnesses was so important, only extreme misconduct on the part of the plaintiff or extreme prejudice suffered by the defendants would justify the extraordinary sanction of preclusion in this case.
The third factor, the need for time to prepare to meet the testimony, goes to the prejudice suffered by the opposing party. Here the testimony of Black and Young was not the technical or specialized evidence given by an expert witness; rather, it was the simple observation of a single incident. Certainly a brief interview would have allowed the City to probe the ability of the witnesses to observe, to find out why Black and Young were on the street, and to uncover weaknesses or conflicts in their testimony. The City claimed, justifiably, that, although it could quickly check on whether either witness had a criminal record, it would have a difficult time in conducting a background investigation to determine whether Young or Black had any prior connection to Outley or any interest in the case. However, there was no representation by counsel as to how quickly such an investigation could be completed, nor any specific charge of bias on the part of either witness, only the suggestion that an investigation “might turn up some very interesting material.” While the City would have been put to some inconvenience, in the absence of a more definite showing of prejudice the added burden on the City does not require preclusion.
The final factor to be considered is the possibility of a continuance. When the City brought the motion to preclude, the court allowed Outley’s counsel to respond. He stated, “We recently obtained the addresses [of Black and Young] within the last ten days. I will be happy to afford counsel an opportunity to speak with — .” At this point Judge MacMahon cut him off, stating, “That just delays the trial. I preclude you from using them. You had it ten days. There is no reason you couldn’t have given it to them so they could interview these witnesses and be prepared.”
After plaintiff’s counsel suggested that the interview might be conducted during the lunch recess that day, the judge responded,
No, we are not going to do that, everything is delay, delay, delay here. There is no excuse for it. None. The reason for those rules is so. that lawyers will come here prepared, so that juries won’t have to be sitting around, that lawyers won’t have to be rushing through things at lunch hours, so that we will have some kind of a reasonable, sensible, helpful process, not that we will be playing games, so I preclude you.
There had been no other continuances in the trial, and there is nothing in the record which suggests that the court or either party would have been unduly harmed by a continuance, or even how long a continuance would have been needed. Indeed, had counsel for the City acted after plaintiff’s opening statement they would have had at least one full day to investigate the two witnesses.
Before the extreme sanction of preclusion may be used by the district court, a judge should inquire more fully into the actual difficulties which the violation causes, and must consider less drastic responses. “Considerations of fair play may dictate that courts eschew the harshest sanctions ... where failure to comply is due to a mere oversight of counsel amounting to no more than simple negligence.” Cine Forty-Second Street Theatre Corp., 602 F.2d at 1068. Here the trial judge failed to do either. Hence we must reverse as to the 1984 incident.
Evidence of prior lawsuits
An important part of the City’s overall defense was to undermine Outley’s credibility by, inter alia, portraying him as a chronic litigant. The City contends that it made reference to previous lawsuits filed by Outley in order to impeach his credibility on the basis of prior inconsistent statements made in in forma pauperis applications filed in the two matters before the court and in four other lawsuits. This contention is less than compelling in light of the City’s opening statement, over objection, that “[t]he plaintiff in this matter, Willie Outley, is a perpetual litigant. The two cases which will be tried before you are only two of many cases brought by Mr. Outley [here plaintiffs objection was overruled] — and/or his wife against police officers, other government agencies, and other individuals.” The charge of litigiousness is a serious one, likely to result in undue prejudice against the party charged, unless the previous claims made by the party are shown to have been fraudulent. See McCormick on Evidence § 196 at 578-81 (3d ed. 1984); 3A J. Wigmore, Evidence §§ 963, 981 (Chadbourn rev. 1970). As we said in Raysor v. Port Authority, 768 F.2d 34, 40 (2d Cir.1985), cert. denied, 475 U.S. 1027, 106 S.Ct. 1227, 89 L.Ed.2d 337 (1986), “[a plaintiffs] litigiousness may have some slight probative value, but that value is outweighed by the substantial danger of jury bias against the chronic litigant. The trial court has a duty to prevent exploitation of this prejudice....” (Citation omitted.) Although Raysor dealt with questions asked of a pro se litigant, the serious impact of a charge of litigiousness, and the responsibility of the trial judge to guard against it, remain the same when the accusation is made in an opening statement or when the party is represented by counsel, see Palmeri v. Manhattan Railway Co., 133 N.Y. 261, 266-67, 30 N.E. 1001, 1002 (1892), particularly since counsel’s objection to the statement was overruled. See Nourse v. Welsh, 23 A.D.2d 618, 257 N.Y.S.2d 96, 97 (1965) (mem.).
Two Federal Rules of Evidence bear on our inquiry. The first, Rule 403, states that relevant evidence may be excluded if its probative value is substantially outweighed by, inter alia, the danger of unfair prejudice to a party. The district court is provided broad discretion in making decisions under Rule 403. Fiacco v. City of Rensselaer, 783 F.2d 319, 327-28 (2d Cir.1986), cert. denied, — U.S. -, 107 S.Ct. 1384, 94 L.Ed.2d 698 (1987); United States v. Robinson, 560 F.2d 507, 514-16 (2d Cir.1977) (en banc), cert. denied, 435 U.S. 905, 98 S.Ct. 1451, 55 L.Ed.2d 496 (1978). Also relevant is Rule 404(b) which provides that:
Evidence of other crimes, wrongs, or acts is not admissible to prove the character of a person in order to show that he acted in conformity therewith. It may, however, be admissible for other purposes, such as proof of motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident.
Rule 404(b) requires a two-part analysis; first, consideration of whether the evidence fits within the exceptions listed in the rule and, second, balancing the probative value of the evidence against the likelihood of undue prejudice, equivalent to the analysis under Rule 403. Fed.R.Evid. 404, Notes of Advisory Committee. See also United States v. Margiotta, 662 F.2d 131, 142 (2d Cir.1981), cert. denied, 461 U.S. 913, 103 S.Ct. 1891, 77 L.Ed.2d 282 (1983). When this analysis has been conducted by the district judge, “his broad discretion will not be lightly overturned.” Id. But in its absence the appellate court will scrutinize whether evidence as to the acts fits into a 404(b) exception, even while acknowledging the substantial discretion afforded the trial court in balancing the probative value against undue prejudice.
Litigiousness is the sort of character trait with which Rule 404(b) is concerned. Evidence that Outley had filed several lawsuits against the City, and in particular against police officers, would undoubtedly cause the jury to question the validity of Outley’s current claims. Although plaintiff’s counsel may have mitigated the damage to his client by pointing out that none of Outley’s prior lawsuits had been dismissed on the merits, the harm to Outley, in a case where his credibility was of particular importance, was substantial.
The City, contending that its questions about prior lawsuits were designed to impeach Outley’s credibility and to show his bias toward white police officers, reminds us that evidence admissible for one purpose is not rendered inadmissible by a separate rule which would preclude it. United States v. Abel, 469 U.S. 45, 56, 105 S.Ct. 465, 471, 83 L.Ed.2d 450 (1984). Impeachment has been recognized as one of the “other purposes” for which evidence of pri- or acts may be admissible. United States v. Stockton, 788 F.2d 210, 219 n. 15 (4th Cir.) (grand jury testimony describing threats made by defendant toward witness admitted to explain why witness changed testimony at trial), cert. denied, — U.S. -, 107 S.Ct. 147, 93 L.Ed.2d 89 (1986). However, recognizing impeachment of credibility as a Rule 404(b) “purpose” does not mean that all prior acts are admissible as impeachment evidence; rather, as the Notes of the Advisory Committee remind us, “evidence of other ... acts is not admissible to prove character as a basis for suggesting the inference that conduct on a particular occasion was in conformity with it.” Prior acts may be admitted for “another purpose,” provided that the use “does not fall within the prohibition.” Fed. R.Evid. 404(b) Advisory Committee Notes.
Our reading of the record shows that after the opening reference to Outley’s litigiousness the defense was properly permitted to impeach Outley with inconsistent statements on his August 1982 application to proceed in forma pauperis in connection with the lawsuit as to the 1981 incident. The City attorney, over objection, then asked Outley whether since 1979 he had brought four lawsuits in the Manhattan federal court, one in Brooklyn federal court, and one in state court, and whether he had filed a sworn statement in each saying that he needed to proceed as a poor person. Although this questioning might have been proper as a foundation for evidence that Outley had made misleading statements on his prior in forma pauperis applications, no such evidence was forthcoming. In effect, the City’s failure to complete its second effort at impeachment resulted in an improper commentary on Outley’s litigiousness. The error was exacerbated when Outley resumed the stand to testify in connection with the 1984 incident. On cross-examination he was asked again whether, in addition to the two cases being tried against the City and the City police department, he had brought suits against New Jersey state troopers (for incidents occurring in 1974 and 1975) and against the Department of Sanitation. Outley was even asked on both cross-examinations about lawsuits filed by his wife (one of which was evidently settled quite favorably to the wife). The total impact of the evidence was to show that Outley is “claim-minded,” and that the claims before the court were just two more in a long line of lawsuits. Excepting this type of evidence from the general rule of 404(b) would permit an exception to swallow the rule. See McCormick on Evidence § 196 at 579 n. 6 (suggesting that such an exception should require explicit statement in the rule).
The City also claims that the plaintiff’s history of bringing lawsuits against the police is admissible under 404(b) as evidence of bias, relying on United States v. Abel, 469 U.S. 45, 105 S.Ct. 465. In Abel the Supreme Court did not directly discuss Rule 404(b), but rather held that the use of evidence of bias to impeach a witness is permissible under the Federal Rules of Evidence generally. 469 U.S. at 49-52, 105 S.Ct. at 467-69. The Court rested its holding on the fact that case law before the promulgation of the Federal Rules clearly allowed such impeachment use, and that the drafters’ failure to directly address the issue makes it “unlikely that they intended to scuttle entirely the evidentiary availability of cross-examination for bias.” 469 U.S. at 50, 105 S.Ct. at 468 (also noting commentators’ approval). Specifically, the Court held that a witness’s and a party's common membership in an organization, even without proof of either’s having personally adopted the tenets of the organization, may be probative of bias. 469 U.S. at 52, 105 S.Ct. at 469.
The Court’s reasoning in Abel is not applicable here. In effect, the City argues that it introduced the evidence to show that Outley bears a grudge against white police officers and that he acted consistently with that grudge in filing the claims in issue. This strikes us as precisely the sort of use prohibited by Rule 404(b), as going to character rather than bias. This is different, of course, from a case where a party has filed a series of fraudulent lawsuits and there is substantial evidence that the prior lawsuits amounted to a fraudulent pattern, evidence lacking here.
|
11098199-11583 | BEEZER, Circuit Judge:
Van Camp & Bennion, P.S. (“the corporation”) claimed a refund of taxes and .penalties paid following an Internal Revenue Service (“IRS”) audit. The district court held that the corporation was entitled to a refund in part and remained liable for specific employment taxes and penalties. The corporation appeals. We affirm in part, reverse in part and remand.
I
In 1985, Walter R. Van Camp and Irving R. Bennion, attorneys, became shareholders of the appellant professional services corporation. Van Camp owned 60% of the stock and Bennion owned 40%. The corporation’s president was Van Camp; Bennion was the vice-president and secretary-treasurer.
Van Camp specialized in personal injury law and professionally attracted clients seeking legal services. The corporation did not provide retirement benefits or malpractice insurance for Van Camp. Salary payments were irregular because corporate income was primarily derived from contingency fee agreements. Van Camp’s personal expenses were often paid by the corporation and later charged against his salary.
The corporation’s tax returns were prepared by an accountant who had full access to the corporation’s books and records. The accountant worked closely with the corporation’s bookkeeper. Van Camp’s and Bennion’s involvement with the returns was limited to signing the tax returns prepared by the accountant.
Van Camp did not receive compensation for performing his duties as a corporate official. These duties, such as attending the required annual meeting, took only one to two hours per year. Van Camp’s other duties included hiring and firing employees on the advice of others and making all major corporate decisions.
In tax years 1990, 1991 and 1992, the corporation failed to pay employment taxes required by the Federal Insurance Contributions Act (“FICA”), I.R.C. § 3111, and Federal Unemployment Tax Act (“FUTA”), I.R.C; § 3301, for Van Camp and Bennion. The corporation asserted that Van Camp and Bennion properly should be classified as independent contractors. Upon audit, the IRS determined that employment taxes were due because Van Camp and Bennion should be classified as employees.
II
Internal Revenue Code § 3121(d)(1) states that “the term ‘employee’ means ... any officer of a corporation.” The court considered whether an exception to section 3121(d)(1) applied. See Treas. Reg. § 31.3121(d)-l(b) (exception when an officer “performs only minor services”). The court found that Bennion was an independent contractor because he had very little involvement in corporate management and that Van Camp was an employee of the corporation because he had authority over the corporation’s fundamental decisions and his management services were not minor. The district court held that neither Van Camp nor Bennion were common law employees under I.R.C. § 3121(d)(2).
The court concluded that the penalties assessed for the corporation’s failure to pay employment taxes for 1989 and 1991 quarterly periods were proper. See I.R.C. §§ 6651 (failure to file return or pay tax), 6656 (failure to deposit tax), 6662 (negligent underpayment of tax). The district court held that a taxpayer’s personal problems, financial difficulties and reliance on an accountant cannot be considered “reasonable cause” for failing to make tax payments. See Treas. Reg. § 301.6651-1(c)(1). The district court also found that the corporation’s legal position was not “reasonably debatable” and that the payment of taxes would not impose an “undue hardship.”
The judgment required the parties to calculate the proper amount of taxes and penalties. On September 11, 1996, the district court denied the corporation’s motion for amendment of judgment, new trial and admission of new evidence.
The corporation appeals the conclusion that Van Camp is an employee and asks us to set aside the assessment of penalties.
Ill
We review for clear error the question whether independent contractor status as opposed to employee status was correctly determined. Chin v. United States, 57 F.3d 722, 725 (9th Cir.1995).
An employer is required to pay both social security and unemployment taxes on wages paid to employees. See I.R.C. §§ 3301 (FUTA), 3311 (FICA). “Wages” are defined as “all remuneration for employment.” Id. §§ 3121(a), 3306(b); see also id. § 3121(b) (defining “employment” as “any service ... performed ... by an employee”). Under section 3121(d)(1), “the term ‘employee’ means ... any officer of a corporation.”
The corporation argues that Van Camp falls under an exception to this classification: “[A]n officer of a corporation who as such does not perform any services or performs only minor services and who neither receives nor is entitled to receive, directly or indirectly, any remuneration is considered not to be an employee of the corporation.” Treas. Reg. § 31.3121(d)— 1(b).
Because Van Camp performed only de minimis services as an officer, the corporation asserts that section 31.3121(d) — 1(b) applies under the “dual capacity” doctrine, which treats a corporate officer as an employee only if the officer provides substantial services in his capacity as an officer. See Idaho Ambucare Ctr., Inc. v. United States, 57 F.3d 752, 756-57 (9th Cir.1995) (describing “dual capacity” with approval, although not holding that it provides the correct interpretation of section 31.3121(d)-l(b)). This interpretation arises from the language of section 31.3121(d)-l(b): “[A]n officer ... who as such ... performs only minor services” is not an employee. (Emphasis added). The government does not challenge the application of the “dual capacity” doctrine.
We next address whether Van Camp’s services in his capacity as a corporate officer were de minimis. The district court found that Van Camp “performed more than minor services.” In particular, “Van Camp made all management decisions, including the hiring and firing of employees, the securing of bank loans, approval of bills, and signing of all corporate checks.”
The corporation has not shown clear error in the district court’s finding that Van Camp exercised sole authority to make major corporate decisions. This finding supports the conclusion that Van Camp was an employee because “fundamental decisions regarding the operation of the corporation ... are customarily made by corporate officers or other employees.” Idaho Ambucare, 57 F.3d at 756 (quoting Rev. Rul. 82-83, 1982-1 C.B. 151, 152) (alteration in original).
IV
The corporation next argues that the district court erroneously refused to abrogate the penalties for the corporation’s failure to deposit and pay employment taxes during the 1989 and 1991 tax years.
The penalties at issue arise under I.R.C. §§ 6651 (assessing up to 25% penalty for failure to pay tax) and 6656(a) (assessing up to 10% of underpayment for failure to make deposit). “Under I.R.C. §§ 6651(a) and 6656(a), a taxpayer failing to timely file, pay, and deposit employment taxes shall be assessed a penalty, ‘unless it is shown that such failures] [are] due to reasonable cause and not due to willful neglect.’ ” Conklin Bros. of Santa Rosa, Inc. v. United States, 986 F.2d 315, 317 (9th Cir.1993) (citation omitted and emphasis in original). To establish “reasonable cause,” the taxpayer must show that he exercised “ordinary business care and prudence in providing for payment of his tax liability.” See Treas. Reg. § 301.6651-1(c)(1).
If the underpayment results from negligence or intentional disregard of rules or regulations, an additional penalty of up to 10% of the underpayment is imposed under section 6662. “[T]he term ‘negligence’ includes any failure to make a reasonable attempt to comply with the provisions of this title, and the term ‘disregard’ includes any careless, reckless, or intentional disregard.” I.R.C. § 6662(c). Similar to the “reasonable cause” defense for sections 6651 and 6656, a taxpayer is negligent if it “fail[s] to make a reasonable attempt to comply” with the tax laws, fails “to exercise ordinary or reasonable care in the preparation of a tax return” or its argument “lacks a reasonable basis.” Treas. Reg. § 1.6662-3(b)(1). The IRS’s “determination of negligence is presumed to be correct.” Howard v. Commissioner, 931 F.2d 578, 582 (9th Cir.1991).
The corporation argues that no penalties are warranted because of Van Camp’s personal problems, the corporation’s financial difficulties, reliance on the corporate accountant and the complex nature of the tax law. “Whether the elements that constitute ‘reasonable cause’ are present in a given situation is a question of fact, but what elements must be present to constitute ‘reasonable cause’ is a question of law.” United States v. Boyle, 469 U.S. 241, 249 n. 8, 105 S.Ct. 687, 83 L.Ed.2d 622 (1985) (emphasis in original).
A
The corporation asserts that Van Camp’s personal problems established reasonable cause for the corporation’s failure to withhold taxes. The district court held that personal difficulties can never be a factor in a taxpayer’s attempt to show reasonable cause.
It is clear that a taxpayer’s serious illness can constitute reasonable cause under section 301.6651 — 1(c)(1). See Boyle, 469 U.S. at 243-14 n. 1, 105 S.Ct. 687 (“The [IRS] has articulated eight reasons for a late filing that it considers to constitute ‘reasonable cause.’ These reasons include ... the death or serious illness of the taxpayer or a member of his immediate family ....”) (citation omitted). Indeed, the district court noted that the IRS had established eight per se circumstances that show reasonable cause, yet the court concluded without discussion that none are applicable. This determination conflicts with the district court’s finding that Van Camp provided credible testimony about his serious personal problems, including hospitalizations for cancer and depression. The court dismissed this finding because “financial inability does not constitute reasonable cause for failure to pay employment taxes.” The failure to examine whether Van Camp’s illness was serious enough to establish reasonable cause was clearly erroneous.
B
We turn to the issue whether the corporation’s financial problems constituted reasonable cause to excuse the underpayment. The district court, following the Sixth Circuit’s opinion in Brewery, Inc. v. United States, 33 F.3d 589 (6th Cir.1994), held that financial problems do not constitute reasonable cause. Brewery’s reasoning is not persuasive here.
In Brewery, the taxpayer withheld federal employment taxes from its employees, but did not pay those taxes to the IRS. See id. at 591. The Sixth Circuit held that these taxes are not in the employer’s control because they are held in trust for the government; therefore, “financial difficulties can never constitute reasonable cause to excuse the penalties for nonpayment of withholding taxes by an employer.” Id. at 592 (citation omitted).
The consideration of financial difficulties is a question of first impression for us. The Second and Third Circuits are the only other circuit courts that have addressed this issue, and they both reject the Breioery rule:
[T]he application of such a bright line rule when a tax payment is delayed due to financial difficulties is inconsistent with Congress’ creation of a “reasonable cause” exception, as well as the Treasury Regulations which set forth the factual circumstances that must be alleged to establish reasonable cause.... Moreover, Treas. Reg. § 301.6651-1(c)(1) specifically directs the courts to examine “all the facts and circumstances of the taxpayer’s financial situation.”
|
3504056-17768 | OPINION
DAUGHERTY, District Judge.
This case was brought under the Federal Tort Claims Act, 28 U.S.C. §§ 1346(b) and 2671 et seq. (the Act). The Plaintiff is a retired military serviceman who, on August 1, 1973, was eligible under the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS) for medical services at the Defendant’s Tinker Air Force Base Hospital (Hospital). On that date, the Plaintiff was admitted into said Hospital, and a right ureteral lithotomy was performed on the Plaintiff by Dr. Donald B. Halverstadt, the surgeon of record. Dr. Halverstadt was then a Board Certified urologist and a civilian consultant to the Hospital. He was a non-military person. During the operation, Dr. Halverstadt made an incision in the Plaintiff’s right ureter and removed a “kidney stone.”
The Plaintiff alleges, and the Defendant denies, (1) that Dr. Halverstadt negligently used a length of nonabsorbable suture in the closure of the incision and that said nonabsorbable material later caused the formation of calculi in the right ureter of the Plaintiff, causing him pain and medical expense, (2) that at the time of the operation, Dr. Halverstadt was an “employee of the Government” within the meaning of that term as defined in 28 U.S.C. § 2671, and (3) that staff members of the Hospital negligently failed to object to the use of the nonabsorbable suture by Dr. Halverstadt. Defendant’s denial as to (2) above is based on the proposition that Dr. Halverstadt was not an employee of Defendant regarding said operation but was an independent contractor. Later, on May 17, 1979, a kidney stone with a length of blue monofilament nonabsorbable suture embedded in it was removed from his right ureter by Dr. Wendell M. Long at South Community Hospital in Oklahoma City. The Court has conducted a non-jury trial herein.
The Court finds and concludes as follows:
THE INDEPENDENT CONTRACTOR DEFENSE
Jurisdiction of this Court over claims brought under the Federal Tort Claims Act is based on 28 U.S.C. § 1346(b), which provides, in pertinent part:
Subject to the provisions of Chapter 171 [§ 2671 et seq.] of this title, the district courts ... shall have . .. jurisdiction of civil actions on claims against the United States, for money damages ... for injury ... caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred.
In Section 2671, the term “employee of the Government” is defined to include employees of any “federal agency,” which term is in turn defined not to include “any contractor with the United States.” Although the general rule of liability, 28 U.S.C. § 2674, is coterminous with the liability of private persons, Section 1346(b) makes it clear that this general rule of liability is subject to the provisions of Chapter 171, including the definitions in Section 2671. The Act is a limited waiver of the sovereign immunity of the United States, and as the United States can be sued only to the extent that it has waived its immunity, due regard must be given to the exceptions, including the contractor exception, to such waiver. United States v. Orleans, 425 U.S. 807, at 813— 814, 96 S.Ct. 1971, at 1975-1976, 48 L.Ed.2d 390 (1976). Further, the meaning of the term “contractor” in Section 2671 has been interpreted by the federal courts to be the same as the common law definition of “independent contractor.” Logue v. United States, 412 U.S. 521, at 527-528, 93 S.Ct. 2215, at 2219, 37 L.Ed.2d 121 (1973). However, the independent contractor defense to a claim under the Act is not subject to the common law exceptions to that defense, as the statutory limited waiver of immunity does not contemplate such exceptions. The Supreme Court stated, in this connection, in Logue, supra, 412 U.S. at 528, 93 S.Ct. at 2220;
Petitioners cite the commentary to the Restatement (Second) of Torts § 409 (1965), to the effect that the common-law distinction that shields the employer from liability or injuries caused to another by the negligent act of a contractor or his servant is subject to so many exceptions that it is the general rule “only in the sense that it is applied where no good reason is found for departing from it.” Congress, of course, could have left the determination as to whose negligence the Government should be liable for under the Federal Tort Claims Act to the law of the State involved, as it did with other aspects of liability under the Act. But it chose not to do this, and instead incorporated into the definitions of the Act the exemption from liability for injury caused by' employees of a contractor. While this Congressional choice leaves the Court free to look to the law of torts and agency to define “contractor,” it does not leave them free to abrogate the exemption that the Act provides.
The Court concludes from this discussion that if Dr. Halverstadt was an “independent contractor” at the time of the operation involved herein, then the Government is not liable for any negligence on his part or the part of his servants.
A critical element in distinguishing a federal agency from a contractor is whether the Government has the power “to control the detailed physical performance of the contractor.” United States v. Orleans, supra, 425 U.S. at 814, 96 S.Ct. at 1976; Logue v. United States, supra, 412 U.S. at 528, 93 S.Ct. at 2220. The “control” test applies even to physicians and other professionals. Wood v. Standard Products, Inc., 671 F.2d 825, at 830-832 (Fourth Cir.1982). In applying this test, the Supreme Court has refused to be persuaded that a contractor is a federal employee or agency simply because he has assumed “obligations and responsibilities virtually identical to those of a salaried Federal employee ... [and has breached] a specific statutory duty owed by the salaried employee to a specific class of persons” which includes the Plaintiff. Logue v. United States, supra, 412 U.S. at 531, 93 S.Ct. at 2221. In Craghead v. United States, 423 F.2d 664 (Tenth Cir.1970), the Plaintiff asserted that the Government had sufficient control over the work site by virtue of its duty to inspect, but the Court held that “the pertinent control [of the work site was that] which the contractors exercised over the ladder and scaffold in question here.” Id., 423 F.2d at 666. Further, in Norton v. Murphy, 661 F.2d 882 (Tenth Cir.1981), the Court indicated that there are many factors to be considered regarding this test, including (1) the intent of the parties as manifested in their agreement, (2) whether the United States retains only the right to ensure that proper results are obtained or also has the power to control the manner and method of obtaining the result, (3) whether the tools and vehicles of the United States or the contractor are used, (4) whether, under the contract, the contractor is required to provide his own liability insurance, (5) whether the contractor pays self-employment Social Security tax, or the United States withholds income tax from payments to him, (6) whether federal regulations prohibit federal employees from performing such contracts, (7) whether the contractor has the authority to subcontract work to others. 661 F.2d at 884-885. Further, the court in Norton held that, while the federal agency’s right to select a contractor and negotiate the contract with him without competitive bidding is a factor, it is but one of many tests to be considered. 661 F.2d at 885. As to physicians, the court in Wood v. Standard Products, Inc., supra, at 832, held:
We think these cases make it clear that the real test is control over the primary activity contracted for and not the peripheral, administrative acts relating to such activity.
Applying these rules, the Court finds as follows: Dr. Halverstadt, a specialist in urology at the time of his treatment of the Plaintiff, was under a contract with the Defendant for consulting urology services at the Hospital, and the parties to that contract intended that he perform said services on an independent basis. The Defendant had no such specialist on regular or military service at the Hospital. The agents of the Defendant were authorized by Air Force regulations to enter into such contract. Under these regulations, Dr. Halverstadt was required to use Air Force facilities and tools wherever possible, in order to reduce costs, but he was free where necessary to order supplemental services and materials from civilian sources at Air Force expense. There was no limitation on Dr. Halverstadt’s authority to select and employ physician assistants, and in fact he was assisted by two residents in urology who were under his supervision at the University of Oklahoma School of Medicine. These residents, being under the sole supervision of Dr. Halverstadt, could perform any duties assigned to them by him. Dr. Halverstadt billed his time to the Hospital on an agreed basis and handled his own Social Security and income tax payments. Any agreements which the residents had for working in surgery at the Hospital were entirely with Dr. Halverstadt, not with the Hospital, and any payment to said residents, pursuant to any such agreements, would have come from Dr. Halverstadt, not from the Hospital. Dr. Halverstadt had exclusive control of the pertinent work area, that is, the operating room, at the time of the operation involved herein. He had exclusive control over the manner and method in which he delivered urological services, the “primary activity contracted for,” to patients of the Hospital, and, in particular, he had sole control over the manner in which the surgery was performed on the Plaintiff. He alone made the decision to operate on and incise the ureter of the Plaintiff. Although a Hospital staff physician, Dr. Douglas M. Duncan, an orthopedic surgeon, was present in the operating room during the surgery on the Plaintiff, he had no authority to control the detailed physical performance of the surgery by Dr. Halverstadt and performed no services of any significance. The only control and supervision of Dr. Halverstadt by the Hospital related to the location of the surgery and the requirements that Hospital facilities and personnel were to be used where practical and that all urological services were to be provided by Dr. Halverstadt. In sum, the Court finds that Dr. Halverstadt was an independent contractor, not an employee, of the Hospital.
The Court finds, however, that there was a contract between the Plaintiff and the Hospital for the services which the Hospital procured for the Plaintiff through Dr. Halverstadt. This contract was not created at the time the Plaintiff presented himself to the Base Hospital for treatment but at the time the Plaintiff entered the military and thereby became eligible for all benefits provided to servicemen, including the said treatment. The Court concludes that these facts would bring the Plaintiff within an exception to the independent contractor defense by reason of said contractual duty under Oklahoma law. Minnetonka Oil Co. v. Haviland, 55 Okl. 43, 155 P. 217 (1916). Contractual duties may not be delegated to an independent contractor under the common law. Rayonier, Inc. v. Bryan, 249 F.2d 405 (Fifth Cir.1957) (following Minnetonka Oil Co., supra). This exception to the independent contractor defense under Oklahoma law, together with a long list of other exceptions, was recited in dictum by this Court in Town of Freedom v. Muskogee Bridge Co., 466 F.Supp. 75, at 79 (W.D.Okl.1978).
But this Court knows of no case, and has been cited to none, which holds that the limited waiver of sovereign immunity in the Federal Tort Claims Act extends to any of the exceptions to the independent contractor defense recognized by State law. The Act requires “clear relinquishment of sovereign immunity to give jurisdiction for tort actions.” Dalehite v. United States, 346 U.S. 15, at 31, 73 S.Ct. 956 at 965, 97 L.Ed.2d 1427 (1953). The immunity waiver does not extend to cases where the United States has a statutory duty to the Plaintiff which it has delegated to a contractor who negligently violates it. Logue v. United States, supra. It does not extend to the common law exception which holds one liable for his contractor’s negligent failure to exercise reasonable care in the course of inherently dangerous work, on a “non-delegable duty” theory. Flynn v. United States, 631 F.2d 678, at 681 (Tenth Cir. 1980). Nor may the United States be held liable on any absolute liability theory. Id. Although the Court knows of no decision on this particular issue, the Court concludes that the Oklahoma rule of non-delegability of a contractual duty is not applicable herein, as the waiver of immunity granted by the Act does not extend this far. Hence, the Court’s determination that Dr. Halverstadt was a “contractor" rather than an “employee” in 1973 ends the inquiry into the liability of the United States for his alleged negligence.
Under the Court’s findings as to the nature of the Plaintiff’s contract with the Defendant, the Court can find no factual basis for a theory of agency by estoppel or apparent authority as asserted by Plaintiff. According to the evidence, the Hospital made no representation to the Plaintiff as to whether Dr. Halverstadt was an employee or contractor, and the Plaintiff in no way relied on Dr. Halverstadt’s status as an employee. Further, the Court concludes, on the basis of the cases cited above, that the waiver of immunity does not extend to such theories where they are advanced as exceptions to the independent contractor defense.
Finally, the Plaintiff does not assert that the Hospital was negligent in contracting its urological services to Dr. Halverstadt. In 1973, Dr. Halverstadt was an eminent, Board Certified, experienced urologist.
Questions of burden of proof are substantive issues to be resolved according to State law. See, e.g., Currie v. United States, 312 F.2d 1 (Fourth Cir.1963). Under Oklahoma law, the independent contractor defense is not an affirmative defense but may be raised under a general denial. Texas Pipe Line Co. v. Willis, 172 Okl. 148, 45 P.2d 138 (1935). The Plaintiff has failed to sustain his burden to prove that Dr. Halverstadt was an “employee of the Government” under 28 U.S.C. § 1346(b) at the time he performed the allegedly negligent operation.
NEGLIGENCE OF THE HOSPITAL STAFF
As indicated above, the Court finds that if any negligence was committed during the 1973 operation at Tinker Air Force Base Hospital, it would have been committed by Dr. Halverstadt or the residents whom he brought with him. Specifically, the Court determines from the evidence presented that no acts of negligence have been shown to have been committed by Dr. Duncan or any of the operating room personnel employed by the Hospital. The Court finds that neither Dr. Duncan nor any of the other Hospital personnel in the operating room knew, or by training should have known, whether the use of a nonabsorbable suture in the closure of the ureter might cause the formation of kidney stones by reason of contact between the suture and the urine stream. Hence, none of them could have acted negligently by failing to object to Dr. Halverstadt’s alleged use of such suture in this manner in Plaintiff’s operation.
As the Court finds from the evidence that no acts of negligence were committed by Dr. Duncan or the Hospital operating room personnel, it is unnecessary to deal with the loaned servant doctrine or the common purpose doctrine discussed in Turney v. Anspaugh, 581 P.2d 1301 (Okl.1978). Moreover, as the Court finds and concludes that Dr. Halverstadt and his residents were independent contractors with reference to Plaintiff’s operation performed by Dr. Halverstadt as surgeon of record on August 1, 1973, it is also unnecessary to determine whether he or they in fact committed the act of negligence in the performance of the operation as claimed herein by Plaintiff.
Judgment should be entered herein for the Defendant.
IT IS SO ORDERED this 17th day of June, 1982.
. 32 C.F.R. § 880.12(d) directs the reader to refer to Air Force Regulation (AFR) 168-9 regarding authorized medical treatment from civilian sources for retired Air Force members. AFR No. 168-9, § 4-8(c) authorizes obtaining professional services from civilian sources, on either an inpatient or outpatient basis, to be performed in the uniformed services facility whenever feasible but, when not feasible, to be performed in civilian facilities, provided that the patients remain under the jurisdiction of the facility or station commander. 32 C.F.R., Part 880, is derived from AFR 168-10, March 31, 1980, which supersedes AFR 168-10, October 16, 1968, which appears to have been in effect at the time of the Plaintiffs surgery and which, at Section D-14(a), provides that civilian services may be obtained for retired members to be performed in an Air Force medical facility unless it is more practical to send eligible patients to civilian facilities, where they would remain under the jurisdiction of the Air Force facility; this regulation further provides:
b. Supplemental services may include but are not restricted to those of a civilian physician, surgeon, specialist consultant, ... while the individual is hospitalized in, or an out-patient of, an Air Force medical facility. Supplemental materials ordered by the attending physician which are customarily provided and charged for by the hospital, such as whole blood and blood plasma, are authorized from civilian sources at Air Force expense.
|
4125046-17210 | TINDER, Circuit Judge.
Plaintiff-Appellant Julia Hutt appeals the district court’s grant of summary judgment for Defendant-Appellee Solvay Pharmaceuticals on her Age Discrimination in Employment Act (“ADEA”) retaliation and discrimination claims, and her state law claim asserting a violation of the Indiana Wage Payment Statute. We affirm the judgment of the district court.
I
Hutt joined Solvay Pharmaceuticals as a sales representative in January 2001. She worked until 2007 with a supervisor who had recruited her to Solvay from a different company. Despite earning satisfactory ratings in most categories, the supervisor repeatedly informed Hutt that she needed to improve her punctuality and consistency in submitting internal reports. For example, her 2004 performance evaluation notes that Hutt’s “lack of organization and administration problems are becoming the major focus of [her] performance.” When her first supervisor retired, Brian Lozen was appointed the new Indianapolis sales district manager by Jeff Westfall, himself a newly-appointed regional manager. Hutt’s lawsuit concerns three years of work under Lozen and Westfall — from 2008 to 2011 — so we detail the course of her employment over those years. Because we are reviewing the grant of summary judgment against Hutt, we construe the facts in the light most favorable to her. See Andrews v. CBOCS West, Inc., 743 F.3d 230, 232 (7th Cir.2014).
A. HR Call and Informal Warning
One of Lozen’s first acts as the district manager was to ask for his employees’ dates of birth. It appears that from the early days of Lozen’s tenure, he and Hutt had friction. When several types of new software for internal accounting of expense reports and time off were introduced, Hutt requested training assistance for the software, but did not receive a response from Lozen. She did not complete those reports. On March 19, 2008 — three months into Lozen’s tenure — John, the Plaintiff-Appellant’s husband, called Solvay’s human resources department to voice his concerns about the Plaintiff-Appellant’s stress and depression. He stated that part of the problem was the way that Lozen and Westfall treated her. Two days after John’s HR call, Lozen phoned Hutt at her home and spoke at some length — 38 minutes — to strongly express his displeasure with her complaint to HR. A week after the call to HR, Lozen and Westfall placed Hutt on an Informal Warning Status and issued a Performance Improvement Plan (“PIP”). The PIP required Hutt to finish her uncompleted administrative tasks within the next five days, by March 31, when the company’s national sales meeting was scheduled to start. Lozen approved a computer trainer to help Hutt with the new software the same day Hutt was placed on warning status. Hutt completed some, but not all, of her incomplete tasks by the time the national sales meeting began.
B. 2008 National Sales Meeting and Formal Warning
By all accounts, the 2008 national sales meeting was eventful. At least twice, Lozen forcibly grabbed Hutt’s arm to stop her from leaving a room. Hutt also states that five or seven drunken male employees harassed and groped her, including one man who touched her face and leg, and burned her skirt with his cigarette, though she did not report this incident. Solvay counters that Hutt behaved inappropriately at the national sales meeting. At some point, Hutt locked a colleague out on a hotel patio as a practical joke. Two sales representatives informed Lozen that Hutt had stated that Lozen and Westfall had engaged in a homosexual relationship, that Hutt planned to get Lozen fired and sue Solvay to make money, and that she was soliciting collaboration from her colleagues to assist in her efforts. Unrelated to the national meeting, several other employees complained to Westfall and Lozen about Hutt’s unprofessional and inappropriate behavior. Lozen received emails in which a sister company’s sales representatives alleged Hutt was providing too many sam- pies to doctors, arriving late to lunches or cancelling appointments, scheduling appointments with physicians under the names of the other company’s sales representatives, and making unprofessional statements to customers.
On April 28, 2008, Westfall and Lozen placed Hutt on a Formal Record of Warning and another PIP. They stated that Hutt had still not complied with all of the requirements of the March PIP because several reports were still uncompleted, and that this highlighted her administrative deficiencies. They also cited her unprofessional conduct, her disruptive behavior at the Orlando conference, and her inappropriate behavior towards the sister company’s employees as reasons for her formal warning. The PIP required Hutt to submit her expenses and out-of-territory time on a set schedule. Sales representatives on formal or final written warning are ineligible for bonus compensation, according to Solvay’s incentive compensation general handbook.
Hutt took a medical leave one week after being placed on formal warning; she was on leave for seven weeks, through July 28. In response, Solvay extended the expiration date of Hutt’s warning to September 18, 2008, to ensure she served the full term of her formal warning.
C. Final Warning and Discipline of Craig King
When Hutt returned from leave, further trouble ensued: Solvay claims that Hutt cancelled numerous “field contacts,” during which she was to be evaluated for her sales performance. Hutt claims that her cancellations were for medical reasons, and that Lozen also cancelled on her. Ultimately, Hutt was placed on Final Warning Status in October, scheduled to last until December 19, 2008, for failing to comply with the requirements of the April PIP. The Final Warning required Hutt to complete a series of field contacts with Lozen, Westfall, and another district manager.
Craig King, a fifty-eight year old Solvay employee, was also placed on formal warning in June, about a month after Hutt had been placed on formal warning. He was the only other representative, out of the ten representatives in Indianapolis, to be placed on warning status. On the day Hutt was placed on final warning, King was also placed on final warning. The written final warnings were substantially similar, with portions of King’s warning cut and pasted into Hutt’s final warning. And both King and Hutt received overall ratings of “Does Not Meet Expectations” in every category for their 2008 performance evaluations.
In February 2009, Hutt filed a complaint with the EEOC alleging age discrimination and retaliation. In March, both King’s and Hutt’s ratings were revised to “Partially Meets Expectations” as the result of an instruction from HR to correct an administrative error in the ratings calculation. At a May 2009 sales meeting, West-fall angrily confronted Hutt about her February EEOC charges and demanded that she and her attorney fly to Atlanta to discuss the charges with him. In June 2009, King was terminated from Solvay, but Hutt’s employment continued.
In April 2010, Hutt was informed that she was retroactively being removed from final warning, effective as of December 11, 2009. By that time, she had been under a warning status for seven consecutive quarters, and had thus been ineligible for incentive pay and bonuses for those months.
D. Alleged Favoritism towards Mike Netterville
Hutt also alleges that beginning in 2010, Lozen began to show favoritism towards Mike Netterville, another sales representative in Hutt’s sales territory. He was provided with an email list of new physician prospects that was not provided to Hutt; he ended 2010 with a lower sales rank in the region than Hutt, but received public recognition and a bonus that Hutt did not, in part because Hutt’s performance evaluation by Westfall stated that her performance was unacceptable. In 2011, the company began ranking Hutt and Net-terville as if they were one sales unit, even though other sales representatives were ranked individually. The duo ended the year 2011 ranked third in the region for sales, and Netterville again earned recognition and compensation as a top sales representative, but Hutt did not. Again, the reason she did not earn the recognition is linked to her poor performance review: Lozen claims he was unable to rate Hutt’s overall performance because she cancelled on numerous field contacts with management during 2011. Hutt states that she participated in one field contact with Doug Zoeller, and that she was forced to cancel other field contacts for health reasons, the death of her mother, and because Lozen refused to provide her with samples.
E. District Court Litigation
The district court granted Solvay’s motion for summary judgment on the grounds that Hutt failed to identify a similarly-situated comparator for the purposes of establishing a prima facie case of discrimination and retaliation, and because she was ineligible for bonus payments while on warning status, leaving her with no cause of action under the Indiana Wage Payment Statute, which provides a cause of action to employees who earned wages that were subsequently withheld by the employer. Hutt timely appealed.
II
We review the district court’s grant of summary judgment de novo, construing all facts and reasonable inferences in the light most favorable to Hutt. See Wilson v. Cook Cnty., 742 F.3d 775, 779 (7th Cir.2014). We first turn to Hutt’s allegation that the district court erred in granting summary judgment on Hutt’s age discrimination claim. “A plaintiff may prove employment discrimination under the ADEA, Title VII, and § 1981[ ] using either the direct method or indirect method.” Andrews, 743 F.3d at 234 (modification in original). While it is debatable whether the two methods are sharply distinguishable, see Bass v. Joliet Pub. Sch. Dist. No. 86, 746 F.3d 835, 840 (7th Cir.2014), under the direct method, “the plaintiff must present either direct or circumstantial evidence of discrimination in her opposition to summary judgment.” Id. at 841. Whether direct or circumstantial, the “evidence [must] permit the trier of fact to find that unlawful discrimination caused the adverse job action.” Id. “Direct evidence requires an admission of discriminatory intent, i.e. ‘smoking gun’ evidence.” Alexander v. Casino Queen, Inc., 739 F.3d 972, 979 (7th Cir.2014) (internal quotation marks and citations omitted). “Circumstantial evidence,” by contrast, “typically includes (1) suspicious timing, ambiguous oral or written statements, or behavior toward or comments directed at other employees in the protected group; (2) evidence, whether or not rigorously statistical, that similarly-situated employees outside the protected class received systematically better treatment; and (3) evidence that the employee was qualified for the job in question but was passed over in favor of a person outside the protected class and the employer’s reason is a pretext for discrimination.” Id. “A party may combine these various types of evidence to present a convincing mosaic of circumstantial evidence from which a fact-finder can make a reasonable inference of discriminatory intent.” Teruggi v. CIT Grp./Capital Fin., Inc., 709 F.3d 654, 660 (7th Cir.2013) (internal quotation marks omitted).
The district court correctly concluded that Hutt’s ADEA discrimination claim fails under the direct method, as she lacks both direct and circumstantial evidence. She does not provide any “smoking gun” evidence wherein Westfall or Lozen, or any other Solvay employee, admits to discrimination against Hutt on the basis of her age. Nor does she point to circumstantial evidence from which a rational juror could infer that Solvay was discriminating against Hutt based on her age. “To be convincing, [Plaintiffs] evidence must point directly to a discriminatory reason for the employer’s action ... and be directly related to the employment decision.” Id. (citation and internal quotation marks omitted). But there is no evidence in the record that Lozen or Westfall, or any Solvay employee, made any comments relating to, or even referencing, Hutt’s age. The evidence she invokes for her age discrimination claim — Lozen’s request that the employees submit their birth dates, the duration and frequency of the warnings against her, Lozen’s and Westfall’s hostile behavior towards her, and Solvay’s warnings against Craig King — does not “point to discriminatory intent, either individually or collectively.” Id. Rather, her assembled evidence amounts to “an amorphous litany of complaints about a myriad of workplace decisions,” which cannot suffice for the purpose of establishing an age discrimination case under the direct method. Id. (citations and internal quotation marks omitted).
Hutt focuses her briefing on Solvay’s treatment of Hutt and Craig, so it deserves mention why this is not circumstantial evidence that can be used to make a case for age discrimination under the direct method. Simply, there are no facts about Solvay’s treatment of Hutt or Craig to suggest that the company’s employment actions had anything to do with their ages. Hutt wants us to extrapolate that, because Hutt and Craig were respectively 54 and 59 at the time of the employment actions— the two oldest sales representatives to be placed on warning status, and also the two sales representatives to be placed on the longest terms of warning status — Solvay must have acted with age-based discriminatory intent. But the circumstantial evidence in this case does not point directly to a discriminatory reason for the employer’s actions. No evidence is presented in support of the contention that the younger employees on warning status, or indeed other younger Solvay employees in general, are similarly-situated comparators, “directly comparable” to Hutt “in all material respects,” and with “other possible explanatory variables” eliminated, whose differential treatment from Hutt would allow an inference of age-based discrimination. See Good v. Univ. of Chi. Med. Ctr., 673 F.3d 670, 675 (7th Cir.2012); Coleman v. Donahoe, 667 F.3d 835, 841 (7th Cir.2012) (“[T]he proposed comparator must be similar enough to permit a reasonable juror to infer, in light of all the circumstances, that an impermissible animus motivated the employer’s decision.”). Instead, the theory that Hutt and Craig were singled out for worse treatment based on their age is only asserted with “reliance on speculation.” Good, 673 F.3d at 676. “[O]ne might guess or speculate that perhaps [Hutt’s age] might have made a difference in the decision, but guesswork and speculation are not enough to avoid summary judgment.” Id. at 675. For this reason, her claim fails under the direct method.
We need not analyze the record under the indirect method, because Hutt’s briefs do not raise the indirect method, and so this argument has been waived. See Jones v. City of Elkhart, Ind., 737 F.3d 1107, 1113 (7th Cir.2013). Nonetheless, we note that she could not succeed under the indirect method, either. Under the indirect method of proof, which uses the test first set out in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973), the plaintiff must establish a prima facie case of discrimination, showing that (1) she was a member of a protected class; (2) she was performing her job satisfactorily; (3) she suffered an adverse employment action; and (4) the employer treated similarly-situated employees outside of the protected class (in this case, younger employees) more favorably. Bass, 746 F.3d at 841. Here, prongs 1 and 3 are not contested: it is clear that Hutt, aged 54 at the time of the summary judgment, was part of the protected age class, and that she suffered adverse employment actions in being placed on formal and final warnings, and denied recognition and compensation for her sales performance. But as we stated in our analysis of the direct method, Hutt has not shown that similarly-situated younger employees were treated more favorably, and her failure to prove this prong is sufficient for our affirmance of the district court’s grant of summary judgment. See Chaib v. Indiana, 744 F.3d 974, 984 (7th Cir.2014) (“[W]ithout similarly situated comparators, no inference of discrimination arises and [Plaintiffs] disparate treatment claims fail under the indirect method.”).
III
Hutt’s retaliation claim does not fare any better. A retaliation claim under the ADEA may be established by either the direct or indirect method. Smith v. Lafayette Bank & Trust Co., 674 F.3d 655, 657 (7th Cir.2012). “Under the direct method of proof, a plaintiff must show: (1) she engaged in statutorily protected activity; (2) she suffered an adverse employment action; and (3) there is a causal connection between the two.” Id. Hutt claims that her protected activity was the filing of the EEOC charge in February 2009, and she is correct that the filing of an EEOC complaint is a protected activity. See id. at 658. (The district court is correct that this is the only protected activity in the record; John Hutt’s phone call in March 2008 never mentioned Hutt’s age, or any other attribute that would give the Plaintiff-Appellant membership in a protected class.)
|
4232195-14809 | MEMORANDUM OPINION
JAMES E. BOASBERG, United States District Judge
No one wants to spend twenty years in jail. Believing that such a term was improperly imposed on him in 2001, pro se Plaintiff Derrek Arrington has spent much of the intervening time seeking to overturn his sentence. As a variation on this theme, he now sues Neil Jaffee, the attorney who represented him on his direct appeal, and the Federal Public Defender, which employs Jaffee, for money damages. Arrington asserts that his counsel’s failure to contest certain provisions of his sentence — one of which is concededly illegal— constituted legal malpractice and the intentional infliction of emotional distress. As Defendants correctly point out in their Motion to Dismiss, however, Plaintiff cannot overcome assorted legal impediments here, including the doctrine of res judicata and his failure to state a claim. The Court, consequently, will grant the Motion.
I. Background
According to his Complaint, which must be presumed true for purposes of this Motion, after being convicted at trial, Ar-rington in 2001 received a “ ‘general sentence’ of 240 months for violations of 18 U.S.C. § 111(a) and (b), [assault on a police officer with a dangerous weapon,] and 18 U.S.C. §§ 922(g) and 924(a)(2), [felon in possession of a firearm,] and two three-year terms of supervised release [running] consecutively to each other and to the ‘general sentence’ of 240 months.” Compl., ¶ 8. “Neil Jaffee ... was appointed to represent the plaintiff on his direct appeal.” Id., ¶9. Although Arrington “presented ... Jaffee with questions of law concerning the nature of his ‘general sentence’ and the consecutive nature of his supervised release,” id., ¶ 11, the attorney did not raise either issue on appeal, and “plaintiffs convie[ti]on and sentence was affirmed.” Id., ¶ 16.
Plaintiff asserts that Jaffee’s appeal ignored two substantial flaws in his sentencing. First, a “general sentence” of 20 years is illegal because the two counts on which he was convicted each carry only ten-year máximums. See id., ¶ 22. (A general sentence is one in which specific terms for specific offenses are not discretely spelled out.) Second, supervised-release terms that run consecutively are also illegal. See id. Because Jaffee’s appellate briefs did not mention either of these purported errors, despite Plaintiffs prodding, Arrington contends that he is liable for both legal malpractice and intentional infliction of emotional distress. See id. at 6-7. This is particularly true because, in 2009, Jaffee acknowledged to Ar-rington in writing that “your consecutive terms of supervised release appear to violate 18 U.S.C. § 3624(e).” Id., ¶ 18.
As this Court may, in considering a motion to dismiss, take judicial notice of court records in other matters, see Hudes v. Aetna Life Ins. Co., 806 F.Supp.2d 180, 184 n. 1 (D.D.C.2011), some additional facts are worthy of mention. To begin, the docket of the original sentencing states: “Defendant sentenced to Two Hundred and Forty (240) months incarceration to run consecutively; followed by Three (3) years Supervised Release to run consecutively for a total of Six (6) years.” United States v. Arrington, No. 00-159 D.D.C. (Entry of May 1, 2001). In its statement of reasons, however, the court there explained: “Statutory maximum is 240 months.” Id., Judgment at 7. Since his direct appeal was denied in 2002, Arring-ton has repeatedly sought to amend his - sentence, see id., ECF Nos. 112-172, and he has also brought several different habe-as claims. See Mot. at 3 n.3 (listing cases). None has been successful.
During the course of these post-conviction proceedings, Judge James Robertson, who had imposed the original sentence, issued a Memorandum Order clarifying his reasoning. See No. 00-159, ECF No. 119. He explained that, although he had erroneously believed that the statutory maximum for assault on a police officer with a deadly weapon was 20 years, it was in fact 10 years at the time of Arrington’s offense. See id. at 1. “Yet,” Judge Robertson continued, “Arrington’s 240-month sentence was based on conviction for two" separate offenses, and his argument that it was unlawful to sentence him to consecutive maximum terms on these separate counts is flawed.” Id. “Arrington’s sentence was in fact driven by the Sentencing Guidelines,” which dictated a range of 210-262 months, and the 240-month sentence was both within that range and, “as the Statement of Reasons notes, the statutory maximum for consecutive sentences under the two offenses of which Arrington was convicted.” . Id. at 2. In sum, “[t]he consecutive sentencing of which Arrington now complains was thus both authorized and directed by the Guidelines.” Id. at 3. The Memorandum Order did not address the issue of consecutive terms of supervised release, which Plaintiff apparently became aware of only later on.
In further post-conviction proceedings in 2012, Judge Royce Lamberth, who had taken over the ease from the now-retired Judge Robertson, addressed the supervised-release issue, which had been raised by Arrington’s 2011 Motion to Amend the Judgment and Commitment Order. See No. 00-159, ECF No. 142. While acknowledging the potential merits of his argument, Judge Lamberth concluded that he was “without authority to correct the defendant’s sentence.” Id., ECF No. 166 (Order) at 2. He recommended that Ar-rington, after be serves one year of supervised release, petition the court under 18 U.S.C. § 3583(e)(1) for relief from his six-year term, which could lead to a reduction to the permissible three years. See id. The Court of Appeals affirmed the decision this August in United States v. Arrington, 763 F.3d 17 (D.C.Cir.2014).
Plaintiff, meanwhile, filed a civil action in 2012. He named as defendants the “United States Dept, of Justice et. al [sic]” and “Public Defenders Dept. Attorney Neil Jaffee et. al [sic].” Arrington v. U.S. Dept. of Justice, No. 12-1532 (D.D.C.), ECF No. 1 (Complaint) at 4. The docketing clerk interpreted this to mean he had sued three different defendants: DOJ, the Federal Public Defender, and Jaffee. See id., Docket Sheet. The judge to whom the case was assigned agreed: “The plaintiff is ... suing the United States Department of Justice ..., the Public Defender Department, and Public Defender Neil Jaf-fee_” Id., ECF No. 5 (Memorandum Opinion) at 1. The suit asserted claims under 42 U.S.C. § 1983 in regard to an illegal sentence and also alleged that Jaf-fee’s “incompetence and lack of knowledge ... caused Plaintiff mental anguish and loss of liberty!” Compl. at 5.
Judge Reggie B. Walton dismissed the case sua sponte in November 2012 on the ground that Arrington had failed to state a claim upon which relief could be granted. See Mem. Op. at 23. Plaintiff appealed, see id., ECF No. 9 (Notice of Appeal), but the Court of Appeals dismissed the appeal for want of prosecution on May 7, 2013. See id., ECF No. 11 (Mandate of Court of Appeals).
Plaintiff then filed this suit in the District of Columbia Superior Court in July 2014, and Defendants thereafter removed the matter here and have now moved to dismiss.
II. Legal Standard
Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of an action where a complaint fails to “state a claim upon which relief can be granted.” When the 'sufficiency of a complaint is challenged under Rule 12(b)(6), the factual allegations presented must be presumed to be true and should be construed liberally in the plaintiffs favor. Leatherman v. Tarrant Cty. Narcotics & Coordination Unit, 507 U.S. 163, 164, 113 S.Ct. 1160, 122 L.Ed.2d 517 (1993). Although notice-pleading rules are “not meant to impose a great burden on a plaintiff,” Dura Pharm., Inc. v. Broudo, 544 U.S. 336, 347, 125 S.Ct. 1627, 161 L.Ed.2d 577 (2005), and “detailed factual allegations” are not necessary to withstand a Rule 12(b)(6) motion, Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), “a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 663, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal quotation marks omitted). A plaintiff must put forth “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. Though a plaintiff may survive a 12(b)(6) motion even if “recovery is very remote and unlikely,” Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (citing Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974)), the facts alleged in the complaint “must be enough to raise a right to relief above the speculative level.” Id. at 555, 127 S.Ct. 1955.
While res judicata may be brought as “an affirmative defense that is generally pleaded in a defendant’s answer, [it] is also properly brought in a pre-an- swer Rule 12(b)(6) motion when all relevant facts are shown by the court’s own records, of which the court takes notice.” Hemphill v. Kimberly-Clark Corp., 605 F.Supp.2d 183, 186 (D.D.C.2009) (internal quotation marks and citations omitted); see also Stanton v. D.C. Court of Appeals, 127 F.3d 72, 76-77 (D.C.Cir.1997) (collecting cases allowing parties to assert res judicata on (12)(b)(6) motion). In addition, “[a] court may take judicial notice of public records from other proceedings.” Hemphill, 605 F.Supp.2d at 186 (citing Covad Comms. Co. v. Bell All. Corp., 407 F.3d 1220, 1222 (D.C.Cir.2005); Does I through III v. District of Columbia, 238 F.Supp.2d 212, 216-17 (D.D.C.2002)).
III. Analysis
In seeking dismissal here, Defendants articulate a number of rationales. The Court need only address two: res judicata and failure to state a claim.
A. Res Judicata
“Under the doctrine of res judicata, or claim preclusion, a subsequent lawsuit will be barred if there has been prior litigation (1) involving the same claims or cause of action, (2) between the same parties or their privies, and (3) there has been a final, valid judgment on the merits, (4) by a court of competent jurisdiction.” Smalls v. United States, 471 F.3d 186, 192 (D.C.Cir.2006) (citations omitted). The doctrine of res judicata “precludes the parties ... from relitigating issues that were or could have been raised in that action.” Drake v. FAA, 291 F.3d 59, 66 (D.C.Cir.2002) (quoting Allen v. McCurry, 449 U.S. 90, 94, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980)) (internal quotation marks and emphasis omitted).
There is no dispute here that the third prerequisite applies. More specifically, there was a valid and final judgment in the 2012 litigation by the district court, which was affirmed by the Court of Appeals. The questions, then, are whether that case involved the same claims as this one, whether the parties are the same, and whether the previous court was one of competent jurisdiction.
1. Same Claims?
As to the first, Arrington contends that the claims in the two suits are different since the 2012 one was “brought as a § 1983 action, whereas these [current] claims are brought under common law tort.” Opp. at 2. Yet the form of the causes of action is not dispositive. On the contrary, a “judgment bars any further claim based on the same ‘nucleus of facts, ’ for ‘it is the facts surrounding the transaction or occurrence which operate to constitute the cause of action, not the legal theory upon which a litigant relies.’ ” Page v. United States, 729 F.2d 818, 820 (D.C.Cir.1984) (quoting Expert Elec., Inc. v. Levine, 554 F.2d 1227, 1234 (2d Cir. 1977)) (emphasis added). In order to determine whether factual events are part of the same transaction, a court must “determine[ ] pragmatically ... whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties’ expectations or business understanding or usage.” Stanton v. Dist. of Columbia Ct. of Appeals, 127 F.3d 72, 78 (D.C.Cir.1997) (citing Restatement (Second) of Judgments § 24(2) comment c (1982)) (internal quotation marks omitted).
With the question teed up in that fashion, there is no denying that the two suits are based on the same nucleus of facts. In the 2012 case, Arrington alleged that Jaf-fee’s “incompetence and lack of knowledge” about the criminal statutes at play injured him. See No. 12-1532, Compl. at 5. In other words, Plaintiff alleged that he had received an illegal sentence because Jaffee either “conspirefed] with the Dept, of Justice” or was not sufficiently knowledgeable to challenge the terms of incarceration. See id. Although his current suit is framed somewhat differently — i.e., common-law claims for legal malpractice and intentional infliction of emotional distress, as opposed to constitutional claims under § 1983 — it plainly arises from the same actions and complains of the same conduct. See Apotex, Inc. v. FDA, 398 F.3d 210, 218 (D.C.Cir.2004) (The plaintiff “is simply raising a new legal theory. This is precisely what is barred by res judica-ta.”); see also Youngin’s Auto Body v. Dist. of Columbia, 775 F.Supp.2d 1, 7 (D.D.C.2011) (“[F]or the purposes of claim preclusion, the legal theory upon which the plaintiff relies is irrelevant; rather, the relevant inquiry is whether the plaintiffs claims arise out of the same common nucleus of facts.”) (internal quotation marks omitted).
In addition, Plaintiffs common-law causes of action could have been brought in his 2012 suit. See SBC Commc’ns Inc. v. FCC, 407 F.3d 1223, 1230 (D.C.Cir.2005) (claim preclusion, unlike issue preclusion, is intended “to prevent litigation of matters that should have been raised in an earlier suit”) (internal quotation marks and citations omitted); see also Capitol Hill Grp. v. Pillsbury Winthrop Shaw Pittman, LLP, 574 F.Supp.2d 143, 150 (D.D.C.2008) (“Mere failure to discover viable arguments in support of a claim during previous litigation does not preclude the application of res judicata.”) (emphasis added), aff'd, 569 F.3d 485 (D.C.Cir.2009). Plaintiffs new legal theories, consequently, do not require the Court to revisit his attorney’s conduct.
2.. Same Parties?
As to the second question, Plaintiff argues that the parties are not identical inasmuch as his 2012 suit was against DOJ and Jaffee, while the current one targets Jaffee and FPD. See Opp. at 2. That raises an interesting factual dispute about whether the earlier case named just Jaffee or FPD as well. While the complaint there is arguably susceptible of either interpretation, the court certainly viewed it as naming both parties. See No. 12-1532, Docket Sheet & Mem. Op. at 1. This Court, fortunately, need not engage in this debate because even if FPD was not a party to the 2012 suit, the judgment there protects it here.
|
4232498-24563 | BOWMAN, Circuit Judge.
The Campaign for Family Farms (“Campaign”) and several individual pork producers brought this reverse Freedom of Information Act (“FOIA”) suit against the United States Department of Agriculture (“USDA”) to prevent it from releasing a petition that calls for a referendum to terminate a federally-imposed assessment on pork sales. The petition includes the names, addresses, and phone numbers of over 19,000 pork producers who signed the petition. The District Court issued a preliminary injunction prohibiting USDA from disclosing the petition and the information it contains. Intervening defendant National Pork Producers Council (“Council”), which initiated the FOIA request at issue in this case, filed this appeal. Granting the Council’s motion calling upon us to reach the merits of the case, we hold that USDA’s determination that the petition is not exempt from disclosure under FOIA’s personal privacy exemption is contrary to law. Accordingly, we remand to the District Court for the entry of a permanent injunction.
I.
The assessments at issue in the requested referendum are imposed under the Pork Promotion, Research, and Consumer Information Act of 1985 (“Act”), 7 U.S.C. §§ 4801-4819 (1994), which Congress designed to finance a research and marketing program to increase the demand and expand the market for pork. See id. § 4801(b)(1). Under the Pork Promotion, Research, and Consumer Information Order (“Order”), 7 C.F.R. pt. 1230 (1999), which implements the terms of the Act, every pork producer and importer must pay an assessment, commonly known in the pork industry as a “checkoff,” to the National Pork Board (“Board”) on each sale or import of pork. See id. § 1230.71. The Board, in turn, pays monies generated by the checkoff to state pork producer associations and to the Council, which is the Board’s general contractor, to fund its research and marketing programs, including the well-known “Pork: The Other White Meat” advertising campaign. The checkoff, currently set at 0.45% of sales and imports, generates a substantial amount of income for the Board and the Council. For example, the Board recently approved a spending budget of $48.1 million for checkoff-funded programs in fiscal year 2000. Of that amount, $36.5 million is allocated for contracts with the Council.
Believing that the checkoff program has not served the interest of independent family farmers, the Campaign, an informal organization of family farm and community membership organizations, launched a petition drive to require USDA to call a referendum on the checkoff program. Authority for such a referendum is found in the Act, which provides that USDA shall conduct a referendum to determine whether pork producers and importers favor the termination or suspension of the order implementing the checkoff program “on the request of a number of persons equal to at least 15 percent of persons who have been producers and importers during a representative period.” 7 U.S.C. § 4812(b)(1)(A). If a majority of the producers and importers voting in the referendum favor termination, then USDA shall terminate the program within six months. See id. § 4812(b)(1)(B).
The petition forms distributed by the Campaign, which were preapproved by USDA, stated:
We, the undersigned U.S. pork producers, petition the Secretary of Agriculture to conduct a referendum to terminate (end) the mandatory Pork Promotion, Research, and Consumer Information Order and the mandatory pork check-off program that it covers. We support a voluntary check-off program.
By my signature, I certify that after January 1,1997,1 have sold one or more swine and have been assessed check-off payments. (Only one person may sign per business entity that owns and sells swine.)
Appellant’s App. at 31. The petition forms provided spaces for petitioners to write their names, signatures, addresses, telephone numbers, and the “business name swine are sold under, if any.” Id. During the petition drive, the Campaign used two types of forms: a sheet that included space for ten signatures and a postcard that included space for one signature.
In May 1999, the Campaign submitted petition forms containing over 19,000 signatures, approximately 27% more than the. 14,986 signatures that USDA advised were necessary to fulfill the 15% statutory requirement. USDA is currently in the process of verifying the petition, that is, ensuring that at least 14,986 of those who signed the petition were actually pork producers or importers during the representative period. To that end, USDA recently finished entering the information contained on the individual petition forms into an electronic database. USDA estimates that it will complete the verification process by January 1, 2000.
In the meantime, on June 17, 1999, the Council filed a request under the Freedom of Information Act, 5 U.S.C. § 552 (1994 & Supp. Ill 1997), to obtain a copy, in electronic form, of the name, address, phone number, and any related information of all persons who signed the petition. During the next two months, USDA received position letters from the Campaign, the Council, and other interested parties. On August 20, USDA made its final decision to release the petition and issued a two and one-half page opinion explaining the decision. In that opinion, USDA concluded that the petition information is subject to mandatory disclosure under FOIA because it does not qualify for any FOIA exemptions. At issue here is USDA’s determination that the information is not subject to FOIA exemption six, commonly known as the personal privacy exemption. See 5 U.S.C. § 552(b)(6) (1994).
The personal privacy exemption provides that mandatory FOIA disclosure “does not apply to matters that are ... (6) personnel and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.” Id. USDA first questioned whether the personal privacy exemption even applies to the petition information because “these individuals were acting in their business capacities as farmers who are pork producers when they signed the petitions at issue.” Appellant’s App. at 73. Nevertheless, USDA applied the balancing test that is implicit in the language of the personal privacy exemption and purported to balance the petitioners’ privacy interest against the public’s disclosure interest.
Regarding the petitioners’ privacy interest, USDA found “very little or no privacy interest” at stake in the petition information. Id. at 74. On this question, USDA determined that the only information that would be revealed by disclosure are petitioners’ home addresses, phone numbers, and business name and the fact that petitioners engage in pork production. Citing a number of district court decisions, USDA concluded that little, if any, privacy attaches to such information and that “the likely consequences of disclosure are de minimis or nonexistent” as it is probable that a number of people already know that petitioners are pork producers. Id. In addition, USDA found that the nature of petition signing in general and in this case, where petition forms have space for several names and addresses, is essentially a public act: “It is reasonable to assume that a signer will realize that others will have the petition in their hands and will be able to see the names, addresses, and telephone numbers of the persons, including themselves, who previously signed.” Id. Finally, USDA rejected the claim by the Campaign that petitioners will be subject to retaliation and intimidation as “purely speculative” because the Campaign did not refer to “any specific incidents, or any past history of such incidents.” Id. And USDA rejected any analogy to the concerns about retaliation in labor cases involving employee petitions for union authorization because those concerns “apply in a relatively closed work place, where the employer has considerable and immediate leverage over the employees.” Id.
As for the public interest in disclosure, USDA merely stated, “Assuming, for the sake of argument, that there is sufficient privacy interest to warrant weighing against any public interest in disclosure, we believe that the process involved should be open at each stage, except to the extent that the ultimate ballot is protected by statute.” Id.
On July 29, before USDA had issued its final decision, the Campaign and several individual pork producers filed the present reverse FOIA action. Asserting that disclosure of the petition would violate exemption six of FOIA, the Privacy Act, 5 U.S.C. § 552a (1994), and the First Amendment, plaintiffs sought judicial review of USDA’s decision under the Administrative Procedure Act (“APA”), 5 U.S.C. § 702 (1994), and declaratory and injunctive relief prohibiting release of the requested information. The District Court allowed the Council, as the organization that had made the FOIA request, to intervene as a defendant on August 17. The District Court granted plaintiffs’ motion for a preliminary injunction on September 20. This appeal followed.
Although commonly known as reverse FOIA actions, cases like this one actually are brought under the APA, which provides that “[a] person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action ..., is entitled to judicial review thereof.” 5 U.S.C. § 702. FOIA, as solely a disclosure statute, only provides a cause of action to compel disclosure, but not an action to prohibit disclosure. See 5 U.S.C. § 552(a)(4)(B); Chrysler Corp. v. Brown, 441 U.S. 281, 290-94, 99 S.Ct. 1705, 60 L.Ed.2d 208 (1979). Thus, success in reverse FOIA actions generally requires a showing that the agency’s decision to disclose was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A); see also Chrysler, 441 U.S. at 317-19, 99 S.Ct. 1705.
When, as here, the agency has determined that the information sought does not fall within one of FOIA’s exemptions from mandatory disclosure, it is especially difficult for plaintiffs to convince a reviewing court to permanently enjoin agency disclosure. That the information sought actually may fall within a FOIA exemption does not end the analysis, for FOIA exemptions are no more than their description implies. That is, they are exemptions from mandatory disclosure only; they do not prohibit agency disclosure. See Chrysler, 441 U.S. at 293, 99 S.Ct. 1705 (“We simply hold here that Congress did not design the FOIA exemptions to be mandatory bars to disclosure.”).
Normally, then, an agency has discretion to disclose information within a FOIA exemption, unless something independent of FOIA prohibits disclosure. See id.; 1 Burt A. Braverman & Frances J. Chetwynd, Information Law § 10-5, at 424 (1985) (“If information falls within the exemption, the agency may nonetheless disclose as a matter of discretion, unless there is another law that forbids disclosure.”). In this case, however, USDA’s discretion to release FOIA-exempt information is governed by a USDA regulation entitled “Exemptions and discretionary release”:
Except where disclosure is specifically prohibited by Executive Order, statute, or applicable regulations, an agency [of USDA] may release records exempt from mandatory disclosure under 5 U.S.C. § 552(b) whenever it determines that such disclosure would be in the public interest. Such a record is considered to be in the public interest if the benefit to the public in releasing the document outweighs any harm likely to result from disclosure.
7 C.F.R. § 1.17(b). Under this regulation, had USDA determined that the petition was subject to FOIA’s personal privacy exemption, then the agency would have proceeded to balance “the benefit to the public in releasing the document” against “any harm likely to result from disclosure” to determine whether or not to release as a matter of discretion.
This balancing test is almost exactly the same test used to determine whether the petition fell within FOIA’s personal privacy exemption in the first place. Under the personal privacy exemption, the agency must balance the privacy interest of the individual against the public interest in disclosure. See Department of Air Force v. Rose, 425 U.S. 352, 372, 96 S.Ct. 1592, 48 L.Ed.2d 11 (1976). The only difference between the two is that balancing under the personal privacy exemption is weighted far more in favor of disclosure than the discretionary release balancing test of the USDA regulation — as evidenced by the “clearly unwarranted” language of the exemption. Therefore, a determination in this case that the petition is subject to FOIA’s personal privacy exemption necessarily must also be a determination that USDA should not disclose the petition under its discretionary release regulation.
With that understanding of the legal framework in place, we turn to the issues at hand.
III.
We must first resolve the proper scope of this appeal. At oral argument, we asked whether the District Court considered consolidating the merits of the case with the preliminary injunction hearing under Rule 65. See Fed.R.Civ.P. 65(a)(2) (“Before or after the commencement of the hearing of an application for a preliminary injunction, the court may order the trial of the action on the merits to be advanced and consolidated with the hearing of the application.”). In the past, we have noted that consolidation under Rule 65 saves time and conserves judicial resources at both the trial and appellate courts. See West Pub’g Co. v. Mead Data Cent., Inc., 799 F.2d 1219, 1229-30 (8th Cir.1986), cert. denied, 479 U.S. 1070, 107 S.Ct. 962, 93 L.Ed.2d 1010 (1987). We also suggested at argument the possibility of consolidation on appeal. Subsequently, the Council filed a motion, to which USDA is unopposed, asking us to so consolidate in this appeal. The Campaign opposes the motion.
There is little question of our jurisdiction to consolidate the merits of the case with the appeal of the order granting a preliminary injunction. The relevant statutory grant of jurisdiction places no explicit limits on the scope of our review. See 28 U.S .C. § 1292(a) (1994) (“courts of appeals shall have jurisdiction of appeals from: (1) Interlocutory orders of the district courts ... granting, continuing, modifying, refusing, or dissolving injunctions”). And the statutory grant has been interpreted broadly: “Jurisdiction of the interlocutory appeal is in large measure jurisdiction to deal with all aspects of the case that have been sufficiently illuminated to enable decision by the court of appeals without further trial court development.” 16 Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 3921.1, at 28 (2d ed.1996) (discussing § 1292(a)(1)); see also Callaway v. Block, 763 F.2d 1283, 1287 n. 6 (11th Cir.1985) (stating that § 1292(a)(1) “grants the courts jurisdiction to reach the merits, at least where there are no relevant facts at issue and the matters to be decided are closely related to the interlocutory order being appealed”). Once jurisdiction is established, we have a broad statutory grant of power to dispose of the case as we deem appropriate. See 28 U.S.C. § 2106 (“The Supreme Court or any other court of appellate jurisdiction may affirm, modify, vacate, set aside or reverse any judgment, decree, or order of a court lawfully brought before it for review, and may remand the cause and direct the entry of such appropriate judgment, decree, or order, or require such further proceedings to be had as may be just under the circumstances.”); Deckert v. Independence Shares Corp., 311 U.S. 282, 286-87, 61 S.Ct. 229, 85 L.Ed. 189 (1940) (affirming power of appellate court to reach merits of case before it on interlocutory appeal and dismiss action); 15A Wright et al., supra, § 3901, at 25.
That we have the power to reach the merits does not mean necessarily that we should do so in this case. Our case law traditionally cautions against a broad scope of review on appeal of a preliminary injunction: “An appellate court, upon an appeal from an order granting or denying a temporary injunction, will ordinarily not consider the merits of a case further than is necessary to determine whether the trial court abused its discretion.” Shearman v. Missouri Pac. R.R. Co., 250 F.2d 191, 195 (8th Cir.1957) (quoting Pratt v. Stout, 85 F.2d 172, 177 (8th Cir.1936)); see also National Credit Union Admin. Bd. v. Johnson, 133 F.3d 1097, 1101 (8th Cir. 1998) (stating that court does not “pass judgment on the underlying issues” in reviewing district court’s grant of preliminary injunction); cf. Callaway, 763 F.2d at 1287 n. 6 (describing this as “a rule of orderly judicial administration only”). This is so because the district court’s findings of fact and conclusions of law on an application for a preliminary injunction are “tentative and provisional, in the sense that different findings ... might be warranted after a trial on the merits.” Independent Fed. of Flight Attendants v. Trans World Airlines, Inc., 655 F.2d 155, 159 (8th Cir.1981); see also University of Texas v. Camenisch, 451 U.S. 390, 395, 101 S.Ct. 1830, 68 L.Ed.2d 175 (1981).
But here we are faced with a purely legal issue on a fixed administrative record, namely whether, when we apply
the APA standard of review, we must sustain USDA’s decision that the petition was not subject to FOIA’s personal privacy-exemption. As we explained above, it is unnecessary for us to decide more because if the petition is within the exemption, then USDA surely cannot release it under its discretionary release regulation. And if it is not "within the exemption, then neither the Privacy Act nor the First Amendment protect it from disclosure. The considerations that caution against a broad scope of review in the usual interlocutory appeal — that is, a tentative and provisional record with conflicting material facts — • simply are not present here. This Court has recognized in the past that a district court may properly reach the merits in such a case without expressly ordering consolidation under Rule 65 and without giving the parties adequate notice. See United, States ex rel. Goldman v. Meredith, 596 F.2d 1353, 1358 (8th Cir.) (“[D]is-position on the merits may be appropriate whenever the evidence presented at the preliminary hearing indicates that there is no conflict of material fact that would justify holding the full trial on the merits.”), cert. denied, 444 U.S. 838, 100 S.Ct. 76, 62 L.Ed.2d 50 (1979). Further, several of our sister circuits have reached the merits of the ease on appeal from an order granting or denying a preliminary injunction. See Callaway, 763 F.2d at 1287 (reaching merits on appeal from denial of preliminary injunction because “both sides’ arguments go to the merits, no facts are at issue and the questions raised are purely legal ones”); United Parcel Serv., Inc. v. United States Postal Serv., 615 F.2d 102, 106-07 (3d Cir.1980) (reaching merits of underlying legal issues despite fact that preliminary injunction was moot); Hurwitz v. Directors Guild of America, Inc., 364 F.2d 67, 69-70 (2d Cir.) (issuing permanent injunction on appeal from denial of preliminary injunction in case with no triable issues of fact), cert. denied, 385 U.S. 971, 87 S.Ct. 508, 17 L.Ed.2d 435 (1966). Like the Second Circuit, we can see “no reason why the cautious exercise of such a power would be undesirable.” Hurwitz, 364 F.2d at 70. Accordingly, we exercise our discretion to reach the merits of USDA’s determination that the petition is not subject to FOIA’s personal privacy exemption.
IV.
We now consider the merits of USDA’s determination that the petition is not subject to FOIA’s personal privacy exemption — that is, we consider whether the determination was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A). To answer this question, we carefully review the administrative record to determine “whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment.” Overton Park, 401 U.S. at 416, 91 S.Ct. 814.
We need only look as far as the language of the petition itself to determine that USDA’s determination was not in accordance with law. Besides calling for a referendum on the mandatory checkoff program, those signing the petition all declared their position on the ultimate issue: “We support a voluntary checkoff program.” In so doing, petitioners all unequivocally declared that they would vote to end the mandatory program and thus return to the voluntary program.
To make public such an unequivocal statement of their position on the referendum effectively would vitiate petitioners’ privacy interest in a secret ballot. As the Supreme Court has recognized, the secret ballot is of paramount importance to our system of voting. In Burson v. Freeman, 504 U.S. 191, 206, 112 S.Ct. 1846, 119 L.Ed.2d 5 (1992), for example, the Court found a “widespread and time-tested consensus” that the secret ballot is necessary to prevent voter intimidation and election fraud. Three terms later, the Court used the tradition of the secret ballot, which it described as “the hard-won right to vote one’s conscience without fear of retaliation,” in recognizing a First Amendment interest in anonymous political advocacy. McIntyre v. Ohio Elections Comm’n, 514 U.S. 334, 343, 115 S.Ct. 1511, 131 L.Ed.2d 426 (1995); see also Buckley v. Valeo, 424 U.S. 1, 237, 96 S.Ct. 612, 46 L.Ed.2d 659 (1976) (Burger, C.J., concurring in part and dissenting in part). Relying on this strong interest in a secret ballot, the Sixth Circuit invalidated a Kentucky ballot access law that required signers of candidate petitions to declare that they desired to vote for the candidate. See Anderson v. Mills, 664 F.2d 600, 607-09 (6th Cir.1981). While we need not decide whether there is a constitutional right to a secret ballot, we do not hesitate to hold that there is a strong and clearly established privacy interest in a secret ballot and that this privacy interest is no less compelling in the context of FOIA’s personal privacy exemption than it is in other contexts. We also believe that in the circumstances of this case the pi'ivacy interest in a secret ballot is severely threatened. Releasing this petition, which contains a clear declaration of how the petitioners intend to vote in the referendum, would substantially invade that privacy interest.
Though many people signed the petition forms, each with space for ten signatures, and thus probably realized that a few individuals signing afterwards would be able to see their names, in so doing they did not waive their privacy interests under FOIA. Although an individual’s expectation of confidentiality is relevant to analysis of the privacy exemption, see 1 Braverman & Chetwynd, supra, § 10-4.2.2, at 416, here the petitioners would have no reason to be concerned that a limited number of like-minded ■ individuals may have seen their names and thus discovered their position on the referendum. After all, they knew the petition forms would be collected and submitted to USDA by the Campaign. The present concern is that the petition not become available to the general public, including those opposing a return to the voluntary checkoff program.
This type of privacy interest — one in which individuals seek to keep information from the general public while simultaneously divulging it for limited purposes to others — is not unusual. Of course, FOIA’s privacy exemption is a prime example: individuals divulge personal information to the government for limited purposes with the expectation that the information will not become available to the general public. Even information that is available to the general public in one form may pose a substantial threat to privacy if disclosed to the general public in an alternative form potentially subject to abuse. See United States Dept. of Justice v. Reporters Comm. for Freedom of Press, 489 U.S. 749, 109 S.Ct. 1468, 103 L.Ed.2d 774 (1989) (holding that “rap sheets” are protected from mandatory FOIA disclosure under exemption 7(c)’s “unwarranted invasion of personal privacy” standard although information was matter of public record). “[T]he fact that an event is not wholly ‘private’ does not mean that an individual has no interest in limiting disclosure or dissemination of the information.” Id. at 770, 109 S.Ct. 1468 (citation omitted).
|
3456744-8830 | OPINION
GORBEY, District Judge.
Defendant, Melvin Hillard Ehrenberg, was indicted in an 8 count indictment charging the making and passing of four separate United States treasury checks in violation of 18 U.S.C. §§ 471, 472. Counts 1, 3, 5 and 7 charged with respect to each of the four checks that the defendant “did falsely make an obligation and security of the United States, that is a treasury check, in that he inscribed thereon his name as payee, and the amount payable, so that the check, as falsely made, was of the following tenor and description” and directly thereunder appeared photo-copies of the front and back of the United States treasury check in question. Counts 2, 4, 6 and 8 charged with respect to each of the four cheeks that defendant “did pass and utter to [the named bank teller] of the Continental Bank and Trust Company, a falsely made obligation and security of the United States, that is a treasury cheek, with the name of the payee and the amount payable having been fraudulently made thereon by the payee, so that the check, as falsely made, was of the following tenor and description”. Directly thereunder appeared photo-copies of the front and back of the United States treasury check in question, with the following typewritten beneath the photo-copies, “and Melvin Hillard Ehrenberg then knew the said check was falsely made.”
The defendant was tried by a jury and acquitted as to counts 1, 3, 5 and 7; but found guilty as to counts 2, 4, 6 and 8. The defendant has filed motions for judgment of acquittal and a new trial as to counts 2, 4, 6 and 8.
MOTION FOR JUDGMENT OF ACQUITTAL
The first point defendant alleges in his motion for judgment of acquittal is that the opinion of one or more handwriting experts that the endorsements on the checks in question were made by defendant, in the absence of any other evidence directly connecting defendant with the endorsements, is an insufficient basis as a matter of law upon which a jury can predicate guilt beyond a reasonable doubt and to a moral certainty. The defendant bases this claim on the fact that none of the bank tellers could remember who presented the checks for cashing and that the only evidence tending to connect the defendant with the endorsements on the checks in question is the opinion of two handwriting experts based on a comparison of exemplars with the questioned endorsements. This contention is without merit and has been so held in United States v. Acosta, 369 F.2d 41 (4th Cir. 1966), cert. denied, 386 U.S. 921, 87 S.Ct. 886, 17 L.Ed.2d 792. In Acosta, a similar contention was raised after a judge sitting without a jury convicted defendant of uttering four United States savings bonds after having forged the endorsements thereon. The bank teller who cashed the bonds was unable to recall who presented the bonds to her, and said she would be unable to identify the person. The sole evidence linking the defendant with the offense was the testimony of a single document examiner who stated positively that the samples obtained from the defendant were written by the same hand that forged the endorsements on the bonds. Defendant contended that the testimony of the handwriting expert was insufficient to sustain the conviction. The court of appeals said:
“While handwriting analysis may not be as scientifically accurate as fingerprint identification, it is, on the whole, probably no less reliable than eyewitness identification which is often made after a quick glance at a human face. Naturally, when the record fails to furnish independent corroboration of guilt, the fact finder should receive the handwriting testimony with heightened caution, but it cannot be said as a matter of law that such testimony, coupled with the trial judge’s own observation of the exhibits, may in no event be found sufficiently persuasive.” 369 F.2d at 42. [Emphasis added]
See also United States v. Duck, 423 F.2d 1200 (4th Cir.).
In the present ease, two experts testified. The first one, a Mr. Fowler, testified that in his opinion, the endorsements and the handwriting appearing on the specimen cards and the signature cards were all authored by one person, and that “My opinion is certain as I could be.”. The second expert, a Mr. Spittle, made a “positive identification” of the signatures on the checks with the known handwritings. In addition, the jury had photographic illustrations so they could make their own comparisons.
Therefore, it cannot be said that, as a matter of law, such handwriting testimony is insufficient.
Defendant’s next contention is that no evidence as to the offenses charged in counts 2, 4, 6 and 8 was introduced at trial and therefore defendant is entitled to a judgment of acquittal on these counts.
On a motion for judgment of acquittal on the grounds of insufficient evidence to support the conviction, the test for the motion is whether the evidence is such that the jury could find guilt beyond a reasonable doubt. Mortensen v. United States, 322 U.S. 369, 64 S.Ct. 1037, 88 L.Ed. 1331 (1944); United States v. Allard, 240 F.2d 840 (3d Cir. 1957), cert. denied Fishman v. United States, 353 U.S. 939, 77 S.Ct. 814, 1 L.Ed.2d 761 (1957). A view of the evidence most favorable to the government must be taken when considering such motion. Glasser v. United States, 315 U.S. 60, 62 S.Ct. 457, 86 L.Ed. 680 (1942); United States v. Pratt, 429 F.2d 690 (3d Cir. 1970). Further, “Once a trier of fact has found for the government, the evidence must be viewed most favorably to it which includes, where there is, as here, circumstantial evidence, the indulgence in all permissible inferences in its favor.” United States v. Bowles, 428 F.2d 592 (1970), cert. denied, 400 U.S. 928, 91 S.Ct. 193, 27 L.Ed.2d 188 (1970). With this as a background, there is sufficient evidence on the record to sustain the conviction. A review of the transcript establishes that on July 19, 1971, Melvin Hillard Ehrenberg opened an account with the Continental Bank, 18th and Benjamin Franklin Parkway. At that time Mr. Ehrenberg filled out three signature cards; one for the Continental Bank master file in Norristown; one for the Continental branch at 18th and Benjamin Franklin Parkway; and, at Mr. Ehrenberg’s request, a third card was signed to be put on file in Continental’s Broad and Nedro office. Mr. Ehrenberg received a bank identification card on which is typed the customer’s name, the account, the date the account was opened and the office branch where the account was opened. There is nothing on the card which shows the bank branches where there are signature cards on file.
The four checks were cashed on two separate days. The first two being cashed at each of the two branches of the Continental Bank where defendant had signature cards on file with the repeat of the process several days later. Although none of the bank tellers were able to identify the defendant as a person who cashed the checks, the government established by two separate handwriting experts that the endorsements on the back of the four checks were made by the defendant, upon comparison of those signatures with known hand-writings of the defendant.
Therefore, in summation, although none of the bank tellers were able to identify the defendant as a person who cashed the checks, the fact that two handwriting experts testified that the defendant was the one who endorsed the checks together with the facts as discussed above, i. e. that the checks were cashed through defendant’s account at two separate branches of Continental Bank where he had signature cards on file; and although defendant claims to have lost his wallet and his bank identification card, the bank personnel had established that this identification card would not show on its face that there were two branches where defendant had signature cards enabling drafts to be honored; all these pieces of evidence taken together make a strong enough case to let the jury find defendant guilty beyond a reasonable doubt. See United States v. Allard, supra.
Defendant also contends that since the indictment charges that defendant did pass and utter . . . that there is complete absence of any evidence that the defendant was the person who committed the offense and there is no evidence that the defendant offered a forged instrument to anyone.
While it is true that none of the bank tellers could identify the defendant as the person who cashed the checks, the argument ignores the function of 18 U. S.C. § 2 which provides:
“(a) Whoever commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal.
“(b) Whoever willfully causes an act to be done which if directly performed by him or another would be an offense against the United States, is punishable as a principal.”
|
4145095-9751 | OPINION
MacMAHON, Chief Judge.
Defendant moves to dismiss the complaint for failure to state a claim for relief pursuant to Rule 12(b)(6), Fed.R.Civ.P. Since factual matters outside the pleadings have been presented and considered, we treat the motion as one for summary judgment pursuant to Rule 56(b), Fed.R.Civ.P.
Plaintiff brings this action pro se under 42 U.S.C. § 1983 against the superintendent of Green Haven Correctional Facility. Plaintiff alleges that the conditions of his temporary confinement at Green Haven from September 8 to September 10, 1979, while he was being transferred from another state facility to the Auburn Correctional Facility, constituted cruel and unusual punishment in violation of his Eighth Amendment rights and a deprivation of the free exercise of religion in violation of his First Amendment rights. He seeks compensatory and punitive damages as well as declaratory and injunctive relief.
Defendant, citing some seventeen cases, first contends that the allegations are vague and conclusory. But the allegations are quite specific. Plaintiff alleges that he was confined to his cell twenty-four hours daily, prohibited from participating in normal prison recreation activities, and refused access to the gymnasium, weight room, reading room, dining area, auditorium, and chapel; that he was forced to eat and care for all bodily needs in his cell, which had an open toilet; that he was not provided with towels or a change of clothes and was not allowed to shower; that the cell was cold and that he was not provided with blankets or a pillow but only two sheets; that he was forced to stand in the cold for 15 minutes during a strip search prior to his departure for Auburn; and that all of this was pursuant to institutional policies, practices and regulations. In short, we do not see how the complaint could be any more specific, and will thank counsel in the future to spend more time on analysis of the actual case and less on the compilation of a compendium of useless generalizations.
Defendant next contends that the conditions and restrictions complained of do not constitute constitutional indignity or violate plaintiff’s freedom of religion.
Although the question is close, we do not think that plaintiff’s Eighth Amendment claim should be dismissed without further factual development. The Eighth Amendment condemns conditions of punishment that are “barbarous” or “shocking” to the collective conscience of modern society. The constitutionality of a particular confinement depends upon its duration and circumstances considered in light of the legitimate penal objectives sought to be served.
Here, on the one hand, the alleged duration and circumstances of plaintiff’s confinement are not as severe as those that have been condemned by our Court of Appeals in other cases. On the other hand, they appear to be more severe than those upheld by that court. Moreover, in all the cases cited above harsh conditions were justified at least to some extent by the legitimate institutional goals of disciplining inmates who had violated prison rules and protecting other inmates from expected violence. Here, by contrast, defendant concedes that plaintiff was merely being transferred, not disciplined. An issue of fact remains as to whether segregation of plaintiff was necessary to avoid disruption of normal daily routine at Green Haven, and defendant has thus far proffered no justification at all for the alleged denial of blankets, towels, and bathing facilities.
The allegations place this case between the polar examples considered by the Court of Appeals. Further factual discovery is necessary to determine precisely where on the spectrum the case falls. For example, the alleged 2% day duration of plaintiff’s confinement at Green Haven, though relatively short, does not automatically oust his claim. The Court of Appeals has suggested that, depending upon the conditions of the confinement and the mental state of the plaintiff, even one day might violate the Eighth Amendment. Other courts have held similarly short periods unconstitutional. Plaintiff alleges that the cell was cold, but a fact issue remains as to whether the temperature in September 1979 was as uncomfortable as the subfreezing February temperatures found significant in Wright v. McMann. Plaintiff alleges that the toilet was “open,” but it remains to be seen whether the “open” toilet created the same unbearable conditions as the “Chinese” toilet condemned in LaReau v. MacDougall.
The supporting affidavit asserts that under institutional policy, transient inmates are issued blankets and toiletries and allowed to shower where feasible. The affidavit does not assert, however, that plaintiff received the benefit of this policy. Such an assertion, contradicted by the complaint and opposing affidavits, would at most create a genuine issue of material fact requiring trial. Thus plaintiff’s Eighth Amendment claim must stand.
We reach the same result on his First Amendment claim that pursuant to institutional policy he was denied access to the chapel. We start by observing that courts in this Circuit have been “especially solicitous” of the religious rights of prisoners. Restrictions on religious freedom are permissible only if they serve an important objective and are reasonably adapted to achieving it.
In LaReau v. MacDougall, the Court of Appeals held that an unruly Catholic prisoner could be excluded from Sunday mass because he was shown to be an instigator of trouble. The Court added, however, that not all prisoners in segregated confinement could be denied such access because not all are potential troublemakers; instead, prison authorities were obliged to make some discriminations among segregated inmates. In Mawhinney v. Henderson, the Court of Appeals held that plaintiff stated a claim for damages upon allegations that on two occasions, pursuant to prison policy, prison officials denied him access to chapel services simply because he was in punitive segregation without making individual determinations as to the necessity of the exclusion. Plaintiff makes essentially the same claim here, and defendant does not assert that any individual determination was made as to him. Moreover, since plaintiff was not in “punitive” but merely “transient” segregation, the likelihood of justification for the exclusion is lower than in LaReau and Mawhinney.
Defendant contends that the claim for damages should be dismissed for failure to allege personal involvement and bad faith. But plaintiff’s First and Eighth Amendment claims both allege that his mistreatment came pursuant to official policies, practices and regulations. These allegations, if true, would support an inference that defendant, as superintendent of the prison, had actual knowledge of at least the practices that gave rise to the deprivations.
As to the First Amendment claim, almost identical allegations against a prison superintendent were held sufficient to state a claim in Mawhinney. We note in addition that under New York law, prison rules and regulations are required to accommodate the rights of inmates to worship freely. Defendant may of course assert the defense that the alleged policy of excluding all transient prisoners from chapel was adopted in good faith, with a reasonable belief in its constitutionality. But this assertion would merely raise a genuine issue of material fact precluding summary judgment. In light of the fact that Mawhinney, forbidding wholesale exclusion of classes of prisoners from chapel, was decided three years prior to plaintiff’s alleged exclusion, we will be interested to see defendant prove his defense.
As to the Eighth Amendment claim, defendant is charged by New York statute with ultimate responsibility for cell conditions and treatment of inmates, a fact held significant though not dispositive in Wright v. McMann. We think that the claim for damages alleges sufficient personal involvement to escape dismissal at this time.
We reach a different result, however, with respect to the claim for declaratory and injunctive relief. Though the point was not addressed, it is plain from plaintiff’s papers that he is no longer incarcerated at Green Haven but is now at the Auburn Correctional Facility. Therefore his claim for declaratory and injunctive relief should be dismissed as moot.
A final word. Plaintiff’s pro se opposing papers are quite correct in stating that “[t]he defendant cites a lot of cases, that has no revlancy [sic], and has [sic] no bearing on the matters contained in plaintiff’s complaint.” On plaintiff’s Eighth Amendment claim challenging his conditions of confinement we found three Court of Appeals cases directly on point. On his claim alleging exclusion from chapel we found two such cases. Defendant’s twelve-page brief cited none of them. Instead, it cited voluminous authorities for certain well-known general propositions that gave us no guidance in deciding this motion. The motion is thus subject to denial for failure to comply with the requirement of General Rule 9(b) that a movant file a memorandum setting for the points and authorities relied upon for relief. Plaintiff, by contrast, commendably cited the leading Court of Appeals decision on conditions of confinement. We hope that defendant matches plaintiff’s performance henceforth.
Accordingly, defendant’s motion for dismissal of the complaint for failure to state a claim for relief pursuant to Rule 12(b)(6), Fed.R.Civ.P., treated as a motion for summary judgment pursuant to Rule 56(b), Fed.R.Civ.P., is denied. Plaintiff’s claims for declaratory and injunctive relief are dismissed as moot.
So ordered.
. See, e. g., Patton v. Dumpson, 425 F.Supp. 621, 626 (S.D.N.Y.1977).
|
4365616-14658 | ORDER
SUSAN R. BOLTON, District Judge.
The Court now considers Federal National Mortgage Association’s Motion to Dismiss (“Fannie Mae MTD”) (Doc. 13) and Defendant Federal -Housing Finance Agency’s Motion to Dismiss and Memorandum of Points and Authorities (“Conservator MTD”) (Doc. 31).
1. BACKGROUND
The case arises out of Plaintiffs’ attempt to refinance their home in 2012. (Doc. 1, Compl. ¶¶ 41-49.) Plaintiffs moved from Virginia to Arizona at some point in 2007. (See id. ¶¶ 29-32.) In the process of making that move, they listed their home in Virginia for sale in February 2007 and purchased a home in Arizona in June 2007. (Id. ¶¶ 30, 32.) In line with the national decline in real estate value that occurred at that time, the value of Plaintiffs’ Virginia home fell below the amount that remained outstanding on their mortgage loan before Plaintiffs were able to sell the property. (See id. ¶ 33; Doc. 28, Pls.’ Opp’n to Fannie Mae’s MTD (“Pls.’ FM Resp.”) at 2.) As a result, Plaintiffs’ sold the home through a short sale. (Compl. ¶¶ 36-37.)
In May 2012, Plaintiffs attempted to refinance the loan they obtained to purchase the home in Arizona. (See id. ¶ 41.) One company, NationsChoice, told Plaintiffs that they did not qualify for refinancing because “Desktop Underwriting Findings” — software Defendant Fannie Mae had developed and licensed to NationsChoice — indicated that Plaintiffs’ Virginia home had been foreclosed rather than sold through a short sale. (Id. ¶¶ 18, 42, 47, 50, 53.) Plaintiffs then sought refinancing from a second company, Amerisave, and were turned down for the same reason even after Amerisave initially “pre-approved” Plaintiffs for refinancing at a rate of 3.5%. (Id. ¶¶ 57-66, 78.) Plaintiffs eventually secured refinancing from a third company in August 2013 at a rate of 4.375%. (Id. ¶ 78.)
Another court has explained how identical software used by Fannie Mae’s sister company, Freddie Mac, works as follows:
In the mid-1990’s, Freddie Mac began using an automatic underwriting system called Loan Prospector to evaluate the credit risk of single-family mortgages. Freddie Mac currently licenses Loan Prospector to approved mortgage lenders, marketing the system as a way for lenders to determine if a loan, given a particular applicant’s credit history, would likely meet Freddie Mac’s requirements for purchase on the secondary market.
When a consumer applies for a mortgage, the lender or broker electronically submits personal and financial information provided by the applicant, as well as loan parameters, to the Loan Prospector system. Loan Prospector then obtains credit reports for the prospective borrower from the three major credit repositories, Trans Union, Equifax, and Experian. Freddie Mac, in licensing Loan Prospector, requires each lender to enter into a subscription agreement with the three repositories; Loan Prospector uses these lender-specific subscription numbers when obtaining credit reports. After obtaining the credit reports, Loan Prospector processes the information in those reports, as well as the information provided by the consumer, through a proprietary algorithmic formula. The result is a Loan Prospector Report (LP Report) which provides an evaluative summary of the applicant’s credit risk, including a credit risk assessment of “accept” or “caution.” An “accept” rating indicates that Freddie Mac would likely be willing to purchase the loan on the secondary market without additional analysis. A “caution” rating indicates that the lender, if it later wishes to sell the mortgage to Freddie Mac, must manually underwrite the mortgage according to Freddie Mac’s guidelines. Freddie Mac’s involvement in the application and evaluation process ends when the LP Report is delivered; at that point, the decision of whether to offer a mortgage or not rests with the lender.
Lenders who license Loan Prospector pay a $20 fee each time they use the system. The licensing agreement requires lenders to warrant that they will comply with all applicable laws in using Loan Prospector, that they have a permissible purpose to access the applicants credit reports, and that they will notify the applicant of any adverse action they might take in accordance with the FCRA.
Weidman v. Fed. Home Loan Mortgage Corp., 338 F.Supp.2d 571, 573 (E.D.Pa.2004).
Plaintiffs are now suing Fannie Mae and its conservator under the Fair Credit Reporting Act (“FCRA” or “the Act”) because they blame Fannie Mae for their initial inability to secure financing and the increased costs they incurred as a result of the delay. (Id. ¶¶ 93-102.) Fannie Mae moves to dismiss because it is not a “con sumer reporting agency” within the definition of the Act and therefore is not subject to its provisions. (Fannie Mae MTD at 1.) Federal National Mortgage Association argues that it is not liable for Plaintiffs’ alleged harm because Fannie Mae is not liable for the harm or, alternatively, because its role as conservator does not make it liable for Fannie Mae’s misdeeds. (Conservator MTD at 1.)
II. LEGAL STANDARDS AND ANALYSIS
A. Rule 12(b)(6) Standard
A Rule 12(b)(6) dismissal for failure to state a claim can be based on either (1) the lack of a cognizable legal theory or (2) insufficient facts to support a cognizable legal claim. Conservation Force v. Salazar, 646 F.3d 1240, 1242 (9th Cir.2011), cert. denied, Blasquez v. Salazar, — U.S. -, 132 S.Ct. 1762, 182 L.Ed.2d 532 (2012). Courts must consider all well-pleaded factual allegations as true and interpret them in the light most favorable to the plaintiff. Schlegel v. Wells Fargo Bank, NA, 720 F.3d 1204, 1207 (9th Cir.2013). “[A] well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and ‘that a recovery is very remote and unlikely.’ ” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974)). However, “for a complaint to survive a motion to dismiss, the non-conclusory ‘factual content,’ and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief.” Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir.2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)). In other words, the complaint must contain enough factual content “to raise a reasonable expectation that discovery will reveal evidence” of the claim. Twombly, 550 U.S. at 556, 127 S.Ct. 1955.
B. “Consumer Reporting Agency”
The parties agree that the only issue the Court must decide to resolve Fannie Mae’s Motion is whether Fannie Mae is a “consumer reporting agency” within the definition provided by the FCRA. (See Fannie Mae MTD at 1; Pls.’ FM Resp. at 7-8.) Plaintiffs allege that Defendants violated the Act by failing to “ ‘follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report related.’ ” (Compl. ¶ 96 (quoting 15 U.S.C. § 1681e(b)).) That reporting accuracy provision of the Act applies only to “consumer reporting agencies.” See 15 U.S.C. § 1681e.
The term “consumer reporting agency” means any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports.
15 U.S.C. § 1681a(f).
Few courts have considered whether Fannie Mae (or Freddie Mac) is a consumer reporting agency. The parties have cited a string of cases with similar, though not identical, facts from the Eastern District of Pennsylvania to the Court’s attention. See Broessel v. Triad Guar. Ins. Corp., No. Civ.A. 1:04CV-4M, 2005 WL 2260498 (E.D.Penn. Sept. 15, 2005); Barnes v. DiTech.Com, No. 03-CV-6471, 2005 WL 913090 (E.D.Penn. Apr. 19, 2005); Thomas v. Cendant Mortg., No. Civ.A. 03-1672, 2004 WL 2600772 (E.D.Penn. Nov. 15, 2004); Crane v. Am. Home Mortg., Corp., No. Civ.A.03-5784, 2004 WL 1529165 (E.D.Penn. July 7, 2004); see also Weidman v. Fed. Home Loan Mortg. Corp., 338 F.Supp.2d 571 (E.D.Penn.2004) (Freddie Mac). Not all of these cases required the court to determine whether Fannie Mae (or Freddy Mac) acted as a consumer reporting agency through its DU software. However, in the cases where the court was directly confronted with the issue, it determined that Fannie Mae and Freddie Mac were not consumer reporting agencies. In Thomas, the court explained that “Fannie Mae did not engage in any affirmative action; it merely allowed Cendant to use its automated program to determine whether a loan to Thomas would be eligible for purchase by Fannie Mae.” See Thomas, 2004 WL 2600772, at *4. It also noted that “Cendant did not base its adverse lending decision on the unfavorable purchase status accorded to Thomas’[s] application as a result of the automated system.” Id. The court in Barnes did not make a specific finding, but suggested that Fannie Mae was not a consumer reporting agency when it stated that
Fannie Mae does not provide any information bearing on an individual’s credit worthiness. The DU simply applies the Fannie Mae standard for assessing credit worthiness to credit information about an individual obtained from other sources.
Fannie Mae did not collect and evaluate Plaintiffs credit information, nor did it direct or recommend whether Defendant should approve Plaintiffs loan application. In fact, Fannie Mae did not engage in any affirmative action on Plaintiffs application for credit.
Barnes, 2005 WL 913090, at *4-5.
In Weidman, the court determined that even if Freddie Mac was a consumer reporting agency (it made no finding on the issue), it was acting as a “joint user” and therefore was not liable under the Act based on the Federal Trade Commission’s interpretation of the Act. Weidman, 338 F.Supp.2d at 574-75. The Federal Trade Commission defined “joint user” as “an entity that shares consumer reports with others who are ‘jointly involved in decisions for which there are permissible purposes to obtain the reports.’ ” Id. at 574 (quoting Appendix, FTC Commentary on the Fair Credit Reporting Act, 16 C.F.R. pt. 600, sec. 603(f)(8)). The Court noted that “Freddie Mac is not in the business of collecting and storing the population’s consumer credit information for distribution to a variety of users,” but rather acts on the lender’s request and uses the lender’s subscription information to obtain the individual’s credit scores from the “big three” credit reporting agencies. Id. at 575. It reasoned that this arrangement is more akin to the agent-principal relationship necessary to qualify as a “joint user.” Id. The Court also rejected the plaintiffs argument that Freddie Mac acted as a “reseller” because it does not purchase credit reports to potentially resell to whoever asked for them, but rather “obtains consumer reports in connection with a specific request from one contracting lender, creates a one-use LP Report [ (equivalent to Fannie Mae’s UD Report) ] associated with that particular request, and allows only the requesting lender to access the LP report.” Id. at 575-76.
At least one court has rejected the Weidman court’s discussion concerning “joint users.” See Adams v. Nat’l Eng’g Serv. Corp., 620 F.Supp.2d 319, 327-28 (D.Conn.2009). Adams did not involve either Fannie Mae or Freddie Mac, but rather two entities that performed background checks for employment purposes. Id. at 322. The court rejected the defendants attempt to argue that they were “joint users” in line with Weidman because the FTC opinion the Weidman court had' relied on was merely a “guideline” that was unpersuasive and, in its opinion, contrary to the Act’s “ambitious objective.” Id. at 327. It concluded that there was no “joint user” exception in the Act. Id.
Another court has noted that the FTC guideline on which the Weidman court relied has since been rescinded, but nevertheless agreed with the determination that Freddie Mac was not a consumer reporting agency because its actions were more akin to those of an agent acting on behalf of a principal (the lender). See Mattiaccio v. DHA Grp., Inc., 21 F.Supp.3d 15, 23-24 & n. 8 (D.D.C.2014).
The Court finds that the FTC guideline concerning “joint users” is unpersuasive because it has been rescinded due to its “staleness” and because “in some respects, the Commentary is in conflict with the law as it has been amended.” See FTC Statement of General Policy or Interpretation; Commentary on the Fair Credit Reporting Act, 76 Fed.Reg. 44462-01, 44463 (July 26, 2011). The Court also respectfully disagrees with the opinions from the Eastern District of Pennsylvania. Although those cases mentioned the statutory definition of consumer reporting agency, none of them analyzed the facts of the case in light of the clear definition.
The Court reads the statutory definition of consumer reporting agency to include five elements: (1) the company must be paid for its work or be working on a “cooperative nonprofit basis,” (2) it must be in the business of (that is to say, “regularly”) (3) “assembling or evaluating consumer credit information or other information on consumers” (4) “for the purpose of furnishing consumer reports to third parties,” and (5) must use interstate commerce to achieve these aims. See 15 U.S.C. § 1681a(f). Based on the allegations in the Complaint, Fannie Mae meets all five elements. It is paid for its work through the licensing and broker’s fees it collects from lenders that use the DU program. (Compl. ¶ 19.) . The software “assembles” and “evaluates” consumer credit information by compiling (i.e., assembling) an individual’s credit scores and other information relevant to making lending decisions (such as whether the individual has gone through foreclosure). (Id. ¶¶ 21-23.) It compiles that information for the purpose of furnishing a report to a third party (the lenders that use its software). (Id. ¶ 23.) Next, Fannie Mae “regularly” participates in this business by licensing its software to a large number of lenders. (Id. ¶¶ 17-19.) Finally, Fannie Mae uses a “means” of interstate commerce by using the internet to compile its data and transmit it across the country. (Id.) The Court therefore finds that Fannie Mae acts as a “consumer reporting agency” as the term is defined in the Act when it licenses its Desktop Underwriter software.
|
728595-24592 | MacKINNON, Circuit Judge:
The National Labor Relations Board (N.L.R.B.) found that Meat Cutters Union Local 81, Amalgamated Meat Cutters and Butcher Workmen of North America, AFL-CIO, hereinafter referred to as the Union, violated section 8(b) (1) (B) of the National Labor Relations Act, as amended, by fining, and expelling from membership, one Hall, a supervisor, for acts he had performed in the course of his management duties for Safeway Stores, Inc., hereinafter sometimes referred to as the Company or the Employer. The Labor Board decided that this imposition of Union discipline restrained and coerced the Company in the selection of its representative for the adjustment of grievances and the Union has appealed this determination. We affirm, and grant the Board’s cross-petition for enforcement of its order.
The relevant facts are not in dispute. Safeway Stores, Inc., operates a number of retail stores in the Seattle, Washington area, including one in Bothell, Washington, with which we are herein concerned, which contain meat markets in which meat products are cut, packaged, priced, displayed, and- sold-- at -retail. The Company also operates a meat products warehouse at Bellevue, Washington, where bulk meats are reduced to smaller cuts and otherwise processed, before being shipped to the Safeway stores in the Seattle area for retail sale through their respective meat departments.
The retail meat market employees of Safeway in the Seattle area have been covered by contracts between the Union (Local 81) and Allied Employers, Inc., which represents Safeway and other retail food chains in the Seattle region in negotiating and administering collective bargaining agreements. The applicable contract here covered the managers of the meat departments at area Safeway retail stores, and it required them, along with all other meat market personnel covered by the agreement, to become and remain members of the Union as a condition of continued employment. Supervisor Hall, who manages the meat market in the Employer’s Bothell store, was a full Union member, at the time he performed the tasks for which he was disciplined by the Union.
Prior to July of 1968, the processes of fine-grinding meat (for hamburger, etc.) and slicing liver in preparation for sale were performed by Union employees at the Company’s respective retail meat markets. In July of 1968, however, Safeway notified the managers of its retail meat markets,, .including Hall, all of whom possessed the authority to order meat products for the meat departments under their supervision, that, thereafter, the fine-grinding and liver-slicing operations would no longer be performed in the retail stores. The managers were directed henceforth to fill their market needs for those products by ordering them in prepared form from the Belle-vue warehouse. Subsequently, the Union notified the Company of its opposition to the new procurement policy, contending that it violated the collective bargaining agreement. The Union also informed its members, including the managers of the meat markets, of its position, and it directed them not to follow the Company’s new policy. Supervisor Hall was aware of the Union’s strong opposition to the newly instituted procurement program, but he continuously acted in accordance with his Employer’s directions by ordering sliced liver and fine-ground meat from the Bellevue warehouse.
In December of 1968, after affording him an opportunity to appear before its Executive Board to answer a charge of procuring fine-ground meat and sliced liver from the Bellevue facility, the Union fined Hall $50. Subsequently, in early April of 1969, further disciplinary proceedings were brought against Hall, due to his continued adherence in meat procurement to the Company’s policy. These proceedings resulted in Hall’s expulsion from the Union and caused him a consequent loss of his rights to the sick and death benefits appurtenant to Union membership. The President of the International Meat Cutters Union affirmed the Union’s disciplinary action regarding Hall, and the Union has since refused to accept any dues tendered by him. An 8(b) (1) (B) charge was thereafter filed with the N.L.R.B.
The Labor Board concluded that the Union’s fining and expulsion of Hall due to his performance of his managerial duty to follow the Company’s meat procurement directive, constituted an 8(b) (1) (B) violation, and it issued a cease and desist order. The Board also affirmatively ordered the Union to rescind the disciplinary action taken against Hall, to expunge all references, thereto from its records, to reinstate Hall to membership and to give retroactive effect to all sick, death, or other monetary benefits appurtenant to such membership that may have become payable since his improper expulsion.
I
Section 8(b) (1) (B) of the National Labor Relations Act, as amended (hereafter the Act), prohibits a union from restraining or coercing an employer in the selection of his representatives for the purposes of collective bargaining or the adjustment of grievances. Since Supervisor Hall concededly possessed the authority to adjust the grievances of the employees working under his direction at the time the Union imposed the complained of discipline, it is clear that he was then a representative of the Company for “the adjustment of grievances” within the meaning of section 8(b) (1) (B). Therefore, we must determine whether the fining and expulsion of Hall by the Union constituted “restraint or coercion” of his Employer in the selection of its representative.
“In enacting section 8(b) (1) (B) Congress sought to prevent . '. . union interference with an employer’s control over its own representatives.” San Francisco-Oakland Mailers Union No. 18, I.T.U., 172 NLRB No. 252, 1968-2 CCH NLRB ¶ 20,195 (1968), at p. 25,347. Congress recognized that prior to the passage of the Taft-Hartley Act amendments to the National Labor Relations Act in 1947, many unions had “taken it upon themselves to say that management should not appoint any representative who [was] too strict with the membership of the union,” and through the enactment of Section 8(b) (1) (B) it endeavored “to prescribe a remedy in order to prevent' such interferences.” While this pro,vision obviously proscribed direct restraint or coercion against an employer itself, it is clear that Congress also intended to prohibit indirect interference accomplished through the imposition of union discipline on an employer’s representantives. See San Francisco-Oakland Mailers Union No. 18, I.T.U., supra, 172 NLRB No. 252, 1968-2 CCH NLRB at p. 25,347; N.L.R.B. v. Sheet Metal Workers, Local 49, 430 F.2d 1348 (10th Cir.1970); N.L.R.B. v. Toledo Locals Nos. 15-P and 272 of the Lithographers and Photo-Engravers International Union, 437 F.2d 55 (6th Cir.1971); New Mexico District Council of Carpenters, 177 NLRB No. 76, 1969 CCH NLRB ¶ 21,037 (1969).
The Union in the instant case fined and expelled Supervisor Hall in retaliation for his performance of duties indigenous to his position as a management representative. He was disci plined as a result of his managerial decision to implement a new Company meat-procurement policy. He merely complied with a Safeway order that was directed to the managers of all of its meat markets in the Seattle area. Had Hall, as supervisor, refused to carry out these orders as directed by his Employer, he certainly would have been subject to Company discipline, and there would have been serious doubt thereafter as to whether he could represent the Company in a bona fide manner against the Union in other matters where their interests were adverse. Under these circumstances, it is obvious that the Union’s actions were impermissibly designed “to change' [the Company’s] representative from one representing the viewpoint of management to a person responsive or subservient to the Union’s viewpoint . . .” N.L.R.B. v. Sheet Metal Workers, Local 49, 430 F.2d 1348, 1350 (10th Cir.1970). See San Francisco-Oakland Mailers Union No. 18, I.T.U., supra, 172 NLRB No. 252, 1968-2 CCH NLRB at p. 25,347; New Mexico District Council of Carpenters, 177 NLRB No. 76, 1969 CCH NLRB ¶ 21,037 (1969); Dallas Mailers Union, Local 143 v. N.L.R.B., 144 U.S.App.D.C. 254, 445 F.2d 730, 735 (1971). The “conduct of the union could very well be considered as an endeavor to apply pressure on the supervisory employees of the [Company], and to interfere with the performance of the duties which the employer required them to perform . . ., and to influence them to take action which it, the employer, might deem detrimental to its best interests. This conduct of the union would further operate to make the employees reluctant in the future to take a position adverse to the union, and their usefulness to their employer would thereby be impaired.” N.L.R.B. v. Toledo Locals Nos. 15-P and 272 of the Lithographers and Photo-Engravers International Union, supra, 437 F.2d at 57. Although this decision might easily terminate at this point by affirming the decision of the Labor. Board, we shall discuss several additional contentions which have been advanced by the Union in support of its position.
II
The Union notes that in section 14(a) of the Act, Congress expressly provided that “supervisors” may become and remain union members, and it argues that this indicates an intention to subject such persons to the full control of the union in which they enjoy membership. We cannot accept this narrow reasoning. Section 14(a) must not be examined in isolation, but rather, it must be considered in concert with section 8(b) (1) (B) and the portion of section 2(3) which expressly excludes “supervisors” from the statutory definition of “employee.” It is extremely informative to examine our previous analysis of the congressional purpose in enacting the exclusionary part of section 2(3) pertaining to supervisors and the companion provision, section 14(a), in 1947:
Congress was aware of the potential conflict between the obligations of foremen as representatives of their employers, on the one hand, and as union members, on the other. Section 2(3) evidences its intent to make the obligations to the employer paramount. That provision excepts foremen from the protection of the Act. Its purpose was to give the employer a free hand to discharge foremen as a means of ensuring their undivided loyalty, in spite of any union obligations. See H.Rep.No.245, 80th Cong., 1st Sess. 14-17 (1947); S.Rep.No.105, 80th Cong., 1st Sess. 3-5 (1947); L. A. Young Spring & Wire Corp. v. National Labor Relations Board, 1947, 82 U.S.App.D.C. 327, 163 F.2d 905, certiorari denied 1948, 333 U.S. 837, 68 S.Ct. 607, 92 L.Ed. 1121 . . .
While section 14(a) permits supervisors to be union members, it is readily apparent, when all of the relevant 1947 amendments to the Act are considered in concert, that Congress did not intend thereby to allow unions to subvert the “undivided loyalty” it clearly believed such managerial personnel owe to their respective employers. A supervisor’s obligations to his union simply cannot detract from the absolute duty, evidenced by section 8(b) (1) (B), which he owes to his employer when exercising his managerial authority. To hold to the contrary would be tantamount to depriving management of the power to manage.
The Union next argues that its conduct here is protected legitimate union activity within the meaning of N. L. R. B. v. Allis-Chalmers Mfg. Co., 388 U. S. 175, 87 S.Ct. 2001, 18 L.Ed.2d 1123 (1967), and Scofield v. N. L. R. B., 394 U.S. 423, 89 S.Ct. 1154, 22 L.Ed.2d 385 (1969), but we do not believe that these cases are applicable to cases involving facts such as are present here. Those cases, unlike the present one, concerned the scope of section 8(b) (1) (A) of the Act and the Supreme Court, in finding lawful the union action involved in Al-lis-Chalmers, and subsequently in Sco-field, relied in part on the proviso to section 8(b) (1) (A), which provides that the right of a labor organization to prescribe its own rules with respect to the acquisition and retention of union membership shall not be impaired. However, the applicability of that proviso is clearly limited to section 8(b) (1) (A), which regulates the union-employee relationship. It is not a part of section 8(b) (1) (B) which basically affects only the union-employer relationship.
An additional consideration distinguishes Allis-Chalmers and Scofield from the instant case. Only legitimate internal union affairs are protected under the rationale of those decisions. The primary relationship affected in Allis-Chalmers and Scofield was the one between the unions and their members. In contrast, the relationship primarily sought to be affected in the present case, was the one between the Union and the Company, since the underlying issue was the interpretation of the collective bargaining agreement between the parties — i.e., the Union claimed that the new Company meat procurement policy violated the contract. The relationship between the Union and its member appears to have been of only secondary importance, used as a convenient, and it would seem, powerful tool to affect the Employer-Union relationship, by compelling the Company’s supervisor to adopt a pro-Union position contrary to the express position of his Employer. The purpose of the Union’s conduct literally and directly contravened the statutory policy evidenced in section 8(b) (1) (B) which sought to guarantee to the Company an unimpeded choice of representatives for collective bargaining and the settlement of employee grievances. Therefore, the Union’s disciplinary action was outside the sphere of legitimate internal union activity which the Supreme Court sanctioned in the Allis-Chalmers and Scofield decisions.
The Union finally contends that since its action had the objective of preserving bargaining unit work, it was permissible under the Act. However, while it is well recognized that the preservation of unit work is a legitimate union goal, a labor organization is clearly not free to utilize any means it chooses in order to achieve a desired result. In the instant case, the Union claimed that the new Company meat procurement policy, compliance with which led to the im position of Union discipline on Supervisor Hall, was established in violation of the collective bargaining agreement. Although that same agreement expressly provided for the resolution of such conflicts through the use of the contract’s grievance-arbitration procedures, the Union sought to enforce its interpretation upon management unilaterally through the exercise of its internal disciplinary authority upon supervisory personnel. Such action not only contravened the specific statutory policy expressed in section 8(b) (1) (B) of the Act, as we have already noted, but it also controverted the generally recognized federal labor policy favoring the peaceful, bi-party resolution of such contract disputes through resort to the arbitration process. See Boys Markets, Inc. v. Retail Clerks Union, Local 770, 398 U.S. 235, 241, 243, 252, 90 S.Ct. 1583, 26 L.Ed.2d 199 (1970); United Steelworkers of America v. American Mfg. Co., 363 U.S. 564, 80 S.Ct. 1343, 4 L.Ed.2d 1403 (1960); United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960); United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960); Textile Workers Union v. Lincoln Mills, 353 U.S. 448, 77 S.Ct. 912, 1 L.Ed.2d 972 (1957). It is therefore clear that the Union cannot vitiate the illegality of its conduct by resort to the work preservation doctrine. See Dallas Mailers Union, Local 143 v. N. L. R. B., supra, 144 U.S.App.D.C. at 259, 445 F.2d at 734-735.
We accordingly affirm the finding of the Labor Board that the Union violated section 8(b) (1) (B), and the Board’s cross-petition for enforcement of its order is hereby
Granted.
. 29 U.S.C. § 158(b) (1) (B) (1970) provides:
(b) It shall be an unfair labor practice for a labor organization or its agents—
(1) to restrain or coerce (B) an employer in the selection of his representatives for the purposes of collective bargaining or the adjustment of grievances;
. Meat Cutters Union Local 81, Amalgamated Meat Cutters and Butcher Workmen of North America, AFL-CIO, 185 NLRB No. 130, 1970 CCH NLRB ¶ 22,356 (1970).
. The Union has conceded that by agreeing to the contract provision requiring meat market managers to be Union members, Safeway did not thereby waive or lose its right to the protection of section 8(b) (1) (B) of the Act. Brief for 1he Union at 20.
. Hall had authority to prepare work schedules, assign duties, and recommend the hiring, promotion, and discharge of the half-dozen employees in the Bothell store retail meat market, and, as the Union acknowledged, he had the power to adjust and to effectively recommend the adjustment of grievances raised by the employees under his supervision. He was, therefore, in addition to being one of the Company’s representatives for the adjustment of grievances within the meaning of section 8(b) (1) (B), a “supervisor” within the meaning of section 2(11) of the N.L.R.A., 29 U.S.C. § 152(11) (1970). As such, he was excluded from “employee” status by the express language of section 2(3) of the Act, 29 U.S.C. § 152(3) (1970), which defines “employee.” See note 15, infra.
. Bellevue, Washington, is within the territorial area over which the Union asserts jurisdiction, but the employees of the Bellevue' meat products warehouse are represented by Local 186 of the same Meat Cutters International Union.
. Although the applicable collective bargaining contract provided that “[a] 11 matters pertaining to the proper application and interpretation of any and all provisions of this Agreement shall be adjusted by the accredited representative of the Union” and that in the event of a failure to reach a satisfactory adjustment within 15 days “the matter shall be referred for final adjustment to a Labor Relations Committee (selected as provid-eil for in the contract),” the Union initially chose to forego this procedure. It was only after it bad fined and expelled Supervisor Hall that the Union agreed to submit the underlying claim of contract breach to the grievance-arbitration procedures.
. It was estimated that the change in the Company’s meat procurement policy would have the effect of transferring work equivalent to that of 7 or 8 journeymen emjdoyed on the basis of a 40-hour week from the retail market personnel represented by the Union (Local 81) to employees at the Bellevue facility represented by Local 186 of the same International Meat Cutters Union.
. In March of 1969, the Union imposed an additional $10 fine on Hall due to his failure to appear, as requested, before the Union Executive’ Board to explain his continuing meat procurement conduct.
. 29 U.S.C. § 158(b) (1) (B) (1970). See note 1, supra.
. Section 8(b) (1) (B) is, to a large degree, the correlative of the Section 7 guarantee to employees of the right “to bargain collectively through representatives of their own choosing.” See 29 U.S.C. § 157 (1970).
Section 7 of the National Labor Relations Act . . . guarantees certain rights to employees, including the right . . . “to bargain collectively through representatives of their own choosing.” This right of employees and the corresponding right of employers, see section 8(b) (1) (B) of the Act, ... to choose whomever they wish to represent them in formal labor negotiations is fundamental to the statutory scheme. In general, either side can choose as it sees fit and neither can control the other’s selection . . .
General Electric Co. v. N. L. R. B., 412 F.2d 512, 516 (2nd Cir. 1969).
. II Legislative History of the Labor Management Relations Act, 1947 (N.L.R.B. 1948) [hereafter “Legislative History”], p. 1077 (comments of Senator Ellender). See S.Rep.No.105, 80th Cong., 1st Sess., p. 21, I Legislative History at 427; II Legislative History at 1524 (comments of Senator Ball).
. Although the Union asserts that the Labor Board has improperly adopted a per se approach, whereby it invalidates any and all union discipline imposed upon a member who happens to be a company “supervisor,” we believe the Union contention is erroneous at least insofar as it refers to this case. The rule here applied by the Board only affects union discipline which is imposed upon a member, who has responsibilities as a representative of his employer in administering the collective bargaining agreement or the adjustment of employee grievances, because he has performed duties as a management representative. See Meat Cutters Union Local 81, Amalgamated Meat Cutters and Butcher Workmen of North America, AFL-CIO, 185 NLRB No. 130, 1970 CCH NLRB ¶ 22,356 (1970), at p. 28,846. The N.L.R.B. has made it clear that a union may legally discipline a supervisor-member for acts which are not performed by the individual in furtherance of his obligations as the employer’s representative. See, e. g., Painters Local 453, 183 NLRB No. 24, 74 LRRM 1539 (1970).
. Even the Union has conceded that if its “primary objective was to affect the member in his status as a supervisor or representative of management, then the employer should prevail.” Brief for the Union at 21.
. 29 U.S.C. § 164(a) (1970) provides:
(a) Nothing herein shall prohibit any individual employed as a supervisor from becoming or remaining a member of a labor organization, but no employer subject to this subchapter shall be compelled to deem individuals defined herein as supervisors as employees for the purpose of any law, either national or local, relating to collective bargaining.
The term “supervisor” is defined in Section 2(11) of the N.L.R.A., 29 U.S.C. § 152(11) (1970).
. 29 U.S.C. § 152(3) (1970) provides, inter alia: “The term ‘employee’ shall include any employee . . . , but shall not include . . . any individual employed as a supervisor . . . ” See note 4, supra.
. Carpenters District Council of Milwaukee etc. v. N. L. R. B., 107 U.S.App.D.C. 55, 57, 274 F.2d 564, 566 (1959) (emphasis supplied).
During the 1947 debates, Senator Ball stated:
Foremen are an integral part of management and are so regarded now in the law. [By the Section 2(3) exclusionary provision] But the NLRB has also held that they can at the same time be subject to the discipline of the unions of employees they supervise, which just doesn’t make sense.
II Legislative History at 1524.
. 29 U.S.C. § 158(b) (1) (A) (1970) provides:
(b) It shall bo an unfair labor practice for a labor organization or its agents—
(1) to restrain or coerce (A) employees in the exercise of the rights guaranteed in section 157 of this title: Provided, That this paragraph shall not impair the right of a labor organization to prescribe its own rules with respect to tlie acquisition or retention of membership therein;
See N. L. R. B. v. Allis-Chalmers Mfg. Co., supra, 388 U.S. at 191-192, 87 S.Ct. 2001; Scofield v. N. L. R. B., supra, 394 U.S. at 428, 89 S.Ct. 1154.
. See San Francisco-Oakland Mailers Union No. 18, I.T.U., 172 NLRB No. 252, 1968-2 OCH NLRB ¶ 20,195 (1968), at p. 25,348; Price v. N. L. R. B., 373 F.2d 443, 446 (9th Cir. 1967), cert. denied, 392 U.S. 904, 88 S.Ct. 2051, 20 L.Ed.2d 1363 (1968). See also II Legislative History at 1139, 1141, 1200.
. N. L. R. B. v. Allis-Chalmers Mfg. Co., supra, 388 U.S. at 185-187, 195, 87 S.Ct. 2001; Scofield v. N. L. R. B., supra, 394 U.S. at 428, 89 S.Ct. 1154. See N. L. R. B. v. Sheet Metal Workers, Local 49, 430 F.2d 1348, 1350 (10th Cir. 1970); N. L. R. B. v. Toledo Locals Nos. 15-P and 272 of the Lithographers and Photo-Engravers International Union, AFL-CIO, 437 F.2d 55, 57 (6th Cir. 1971); New Mexico District Council of Carpenters, 177 NLRB No. 76, 1969 CCH NLRB ¶ 21,037 (1969).
. The fact that the Union’s coercive conduct did not achieve the apparent result sought — as evidenced by the fact that Supervisor Hall continued to adhere to the Company policy despite the Union’s disciplinary efforts — does not detract from its illegality under section 8(b) (1).
[I]n determining whether a § 8(a) (1) or § 8(b) (1) violation has been committed, the answer does not “turn on * * * whether the coercion succeeded or failed * * * the test is whether the employer [Union] engaged in conduct which, it may be reasonably said, tends to interfere with the free exercise of [the rights protected under the Act].” N. L. R. B. v. Illinois Tool Works, 153 F.2d 811, 814 . . .
|
8946463-21585 | Opinion for the Court filed by Circuit Judge GARLAND.
GARLAND, Circuit Judge.
Sibel Edmonds filed a Freedom of Information Act (FOIA) request for certain Federal Bureau of Investigation (FBI) records relating to the FBI’s decision to terminate her employment. She also sought expedited processing of that request. When the FBI failed to grant or deny expedition, she obtained an order from the district court, compelling expedited processing and directing the Bureau to release all nonexempt documents by a specified date. The FBI ultimately released a total of 346 pages. Concluding that Ed-monds “substantially prevailed” in her district court action, we reverse the court’s determination that she was ineligible for an award of attorney’s fees.
I
Edmonds worked as a contract linguist for the FBI between September 2001 and March 2002. She alleges that she “witnessed and reported to governmental authorities systemic quality problems and breaches in security within the FBI’s language division concerning translations relating to the FBI’s counter-terrorism and counter-intelligence operations,” and that she was terminated after her repeated “efforts to report these problems.” Appellant’s Br. at 9. By letters dated April 19 and April 29, 2002, Edmonds submitted FOIA requests for FBI documents concerning herself, her security clearance, her allegations of wrongdoing at the Bureau, and investigations of persons related to her. Although she requested expedited processing of her requests, the FBI did not release any documents or make any determination regarding whether she was entitled to expedited processing under the statute and associated regulations. Edmonds v. FBI, No. 02-1294, Order at 2, 2002 WL 32539613 (D.D.C. Dec. 3, 2002) (“December 3, 2002 Order”).
On June 27, 2002, Edmonds sued the FBI under FOIA, seeking an order to require production of the requested documents. See 5 U.S.C. § 552(a)(4)(B). On July 15, she filed an amended complaint alleging a statutory right to expedited processing of her FOIA requests and seeking an order directing expedition. Am. Compl. ¶¶ 21-22. Thereafter, Edmonds moved for partial summary judgment, ask ing the district court to order the FBI to expedite the processing of her' requests. Edmonds relied on 5 U.S.C. § 552(a)(6)(E)®, which requires agencies to promulgate regulations “providing for expedited processing of requests for records” in certain circumstances, and on § 552(a)(6)(E)(iii), which provides that “failure by an agency to respond in a timely manner” to a request for expedited processing “shall be subject to judicial review.” The FBI opposed the motion and cross-moved for a stay until April 1, 2003, under Open America v. Watergate Special Prosecution Force, 547 F.2d 605 (D.C.Cir.1976).
On December 3, 2002, the district court granted Edmonds’ motion for partial summary judgment and denied the FBI’s motion for a stay. December 3, 2002 Order at 8. The court concluded that Edmonds’ request “easily me[t] th[e] standard” set by the Department of Justice’s FOIA reg7 ulation, which provides for expedited processing in a “ ‘matter of widespread and exceptional media interest in which there exist possible questions about the government’s integrity which affect public confidence.” ’ Id. at 6 (quoting 28 C.F.R. § 16.5(d)(l)(iv)). On December 16, the court ordered the FBI to “complete the expedited processing of plaintiffs FOIA request and provide plaintiff with all documents as to which no exemption is being claimed” by January 31, 2003. Edmonds v. FBI, No. 02-1294, Order at 1 (D.D.C. Dec. 16, 2002). The court subsequently extended the deadline to February 10. See Edmonds v. FBI, 310 F.Supp.2d 55, 56-57 (D.D.C.2004).
On February 10, 2003, the FBI released 343 pagés to Edmonds, but advised the court that it was withholding another 1143 pages responsive to her FOIA request. The FBI then moved for summary judgment, contending that the withheld documents were exempt from disclosure. See 5 U.S.C. § 552(b). On July 24, the district court granted the FBI’s motion with respect to all but three of the remaining pages. As to those pages, the court asked the FBI tó pirovide additional information justifying withholding. See id. Thereafter, the FBI released the three pages without being ordered to do so. See id.
On December 12, 2003, Edmonds filed a motion for attorney’s fees relating to the December 16, 2002 order requiring expedited treatment of her FOIA request, and to the FBI’s release of the additional three pages. The district court denied Ed-monds’ fee motion, concluding that she had not “substantially prevailed” on her FOIA claim, as required for fee eligibility under the statute. See 5 U.S.C. § 552(a)(4)(E) (providing that “[t]he court may assess against the United States .reasonable attorney fees and other litigation costs reasonably incurred in any case under this section in which the complainant has substantially prevailed”). Edmonds now appeals from the denial of her motion.
II
In Buckhannon Board & Care Home, Inc. v. West Virginia Department of Health and Human Resources, 532 U.S. 598, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001), the Supreme Court considered the attorney’s fees provisions of the Fair Housing Amendments Act, 42 U.S.C. § 3601 et seq., and the Americans with Disabilities Act, 42 U.S.C. § 12101 et seq., which permit courts to award fees only to a “prevailing party.” Id. §§ 3613(c)(2), 12205. The Court rejected the plaintiffs’ contention, which it characterized as the “catalyst theory,” that “a plaintiff is a ‘prevailing party’ if it achieves the desired result because the lawsuit brought about a voluntary change in the defendant’s conduct.” Buckhannon, 532 U.S. at 601, 121 S.Ct. 1835. Rather, the Court ruled, for a litigant to be a “prevailing party,” there must have been a “judicially sanctioned change in the legal relationship of the parties.” Id. at 605, 121 S.Ct. 1835. “[E]n-forceable judgments on the merits and court-ordered consent decrees,” the Court said, suffice to create such a change. Id. at 604, 121 S.Ct. 1835.
In Oil, Chemical & Atomic Workers International Union v. Department of Energy (OCAW), this circuit extended the holding of Buckhannon to the fee-shifting provision of FOIA. 288 F.3d 452, 454-57 (D.C.Cir.2002). The OCAW court concluded that “the ‘substantially prevail’ language in FOIA [is] the functional equivalent of the ‘prevailing party’ language found in” the statutes interpreted in Buckhannon. Id. at 455-56. It “therefore h[e]ld that in order for plaintiffs in FOIA actions to become eligible for an award of attorney’s fees, they must have ‘been awarded some relief by [a] court,’ either in a judgment on the merits or in a court-ordered consent decree.” Id. at 456-57 (quoting Buckhannon, 532 U.S. at 603, 121 S.Ct. 1835).
Edmonds asserts that she satisfied the requirements of Buckhannon and OCAW by obtaining partial summary judgment on the question of expedited review, an order from the district court directing release of nonexempt documents by February 10, 2003, and the actual release of 343 pages that day. She contends that she further prevailed by ultimately obtaining the release of the three additional pages. We review the district court’s contrary determination, which rests on “an interpretation of the statutory terms that define eligibility for an award,” de novo. National Ass’n of Mfrs. v. Department of Labor, 159 F.3d 597, 599 (D.C.Cir.1998).
Ill
The district court concluded, and the government argues on appeal, that Edmonds was not a prevailing party because “a court order requiring expedited processing does not rise to the level of a ‘material alteration of the legal relationship of the parties necessary to permit an award of attorney’s fees.’ ” Edmonds, 310 F.Supp.2d at 58 (quoting Buckhannon, 532 U.S. at 604, 121 S.Ct. 1835) (internal quotation marks omitted). We disagree. Pri- or to the December 16, 2002 order, the FBI was not under judicial direction to produce any category of documents by any specified date. Once the court issued that order, the Bureau was under judicial direction to produce all nonexempt documents, first by January 31 and then by February 10, 2003. The order thus amounted to a “judicially sanctioned change in the legal relationship of the parties.” Buckhannon, 532 U.S. at 605, 121 S.Ct. 1835. Thereafter, timely production of nonexempt documents by the FBI could no longer be described as a “voluntary change in the defendant’s conduct.” Id. at 600, 121 S.Ct. 1835. To the contrary, the plaintiff then had an “enforceable judgment,” id. at 607 n. 9, 121 S.Ct. 1835, and if the defendant failed to comply, it faced the sanction of contempt.
1. The district court thought OCAW stood for the proposition that the requirements of Buckhannon could not be satisfied until there was a “judgment by the Court regarding the legality of the government’s withholding of documents.” Edmonds, 310 F.Supp.2d at 58. That is incorrect. OCAW — which did not involve FOIA’s expedited processing provision— did hold that an August 23, 1999 order in that case “requiring] that the Energy Department complete its record review in 60 days” did not materially alter the legal status of the parties. 288 F.3d at 458. But as the OCAW court described it, that order was quite different from the one issued by the district court in this case.
According to OCAW, “[bjefore August 23, the court had not ordered the Energy Department to turn over any documents; after August 23, the Energy Department still had no obligation to do so.” Id. In the instant case, by contrast, the district court’s December 16, 2002 order did not merely direct the FBI to “complete its record review.” Id. Rather, it ordered the Bureau to turn over all nonexempt documents by a date certain. After the court issued that order (and the subsequent extension), the FBI had a clear obligation to turn over such documents by February 10. And the FBI did release 343 nonexempt documents that day.
Even so, the government maintains that an order directing expedited processing “does not meaningfully alter the legal obligations between a FOIA requester and the government; it merely allows one person to push aside the prior claims of others and jump to the head of the line.” Appellee’s Br. at 10. But whether or not an expedition order changes the government’s obligations to the universe of all FOIA requesters, there is no question that it changes the government’s obligations to the plaintiff requester. Not only must the agency permit the plaintiff to “jump to the head of the line” — -a meaningful obligation in itself — it must produce the documents by the court-designated deadline.
2. Nor is it correct to argue, as the government does, that a party who obtains an expedition order has not “prevailed on the merits of at least some of [her] claims.” Buckhannon, 532 U.S. at 603, 121 S.Ct. 1835 (quoting Hanrahan v. Hampton, 446 U.S. 754, 758, 100 S.Ct. 1987, 64 L.Ed.2d 670 (1980)) (emphasis added). Unlike the OCAW order, which the court described as a “scheduling order!]” that did not award the plaintiff “judicial relief on the merits of [its] complaint,” 288 F.3d at 458-59, expedited processing of a FOIA request is a statutory right, not just a matter of court procedure. See Al-Fayed v. CIA, 254 F.3d 300, 304 (D.C.Cir.2001) (treating a plaintiffs entitlement to expedited processing as a merits question).
FOIA’s expedited-processing provision, added by the Electronic Freedom of Information Act Amendments of 1996, requires each agency to “promulgate regulations ... providing for expedited processing of requests for records — (I) in cases in which the person requesting the records demonstrates a compelling need; and (II) in other cases determined by the agency.” 5 U.S.C. § 552(a)(6)(E)®. The same amendments make the right to expedition judicially enforceable, stating that “[a]gen- cy action to deny or affirm denial of a request for expedited processing pursuant to this subparagraph, and failure by an agency to respond in a timely manner to such a request!,] shall be subject to judicial review under paragraph (4).” Id. § 552(a)(6)(E)(iii). Thus, the district court order granting Edmonds partial summary judgment and compelling production of nonexempt documents by February 10 was not, as the government suggests, a mere “procedural timing order.” Appellee’s Br. at 25. Rather, it vindicated a statutory right that Edmonds’ complaint expressly claimed, see Am. Compl. ¶ 21, and granted her relief that she specifically sought, see id. ¶ 22. In short, it provided the plaintiff with full relief “on the merits” of her claim to expedited treatment.
We reject the government’s further suggestion that whatever benefit Edmonds obtained from expedited processing was too insubstantial to entitle her to a fee award. See Oral Arg. Tape at 21:30-:40. Plainly, there is value to obtaining something earlier than one otherwise would. That is why people commonly pay — and delivery services commonly charge — a premium for next-day delivery of important documents. Cf. H.R. Rep. No. 93-876, at 6 (1974), U.S.Code Cong. & Admin.News 1974, pp. 6267, 6271 (report on the 1974 FOIA amendments) (“[I]nformation is often useful only if it is timely. Thus, excessive delay by the agency in its response is often tantamount to denial”). The 1996 FOIA amendments underlined Congress’ recognition of the value in hastening release of certain information, by creating a statutory right to expedited processing and providing for judicial review of its denial. When, pursuant to court order, the FBI finished processing Edmonds’ request two months earlier than it would have in the absence of the order, she vindicated that statutory right.
3. That the district court’s order vindicated Edmonds’ right to expedited processing midway through the proceeding, rather than at its end, is of no import. The government reads our opinion in Thomas v. National Science Foundation, 330 F.3d 486 (D.C.Cir.2003), as foreclosing the award of attorney’s fees based on a grant of partial summary judgment or a preliminary injunction. But that is a misreading. What failed to suffice in Thomas was “partial summary judgment [that] did not afford appellees any concrete relief, beyond [a] mere legal declaration”; what was necessary for a fee award, we said, was a declaration that “required] some action ... by the defendant.” Id. at 493-94 (internal quotation marks omitted). Similarly, the deficiency in the Thomas injunction was not that it was preliminary, but that it did nothing more than “preserve! ] the status quo pending final adju dication of the case,” after which it was vacated and its existence adjudged by this court to have had no consequence. Id. at 493. The case was “easily distinguishable,” we said, from those in which the “specific relief granted ... was concrete and could not be reversed.” Id.
Our recent decision in Select Milk Producers, Inc. v. Johanns, 400 F.3d 939 (D.C.Cir.2005), confirms this reading. There, we rejected the government’s suggestion that Thomas established a “per se rule that a preliminary injunction can never serve as the basis for deeming a plaintiff a ‘prevailing party’ ” under a fee-shifting statute. Id. at 946. “Rather,” we said, “Thomas held that, in the particular circumstances of that case, plaintiffs could not satisfy the ‘prevailing party’ requirement, because the preliminary injunction at issue had not changed the legal relationship between the parties.” Id. As we explained, “Thomas did not suggest that, in a dispute such as the one [in Select Milk ], where a preliminary injunction effected a substantial change in the legal relationship between the parties and provided plaintiffs with concrete and irreversible relief, plaintiffs could not be considered ‘prevailing parties.’ ” Id.
Edmonds’ eligibility for fees is consistent with Thomas and Select Milk. Here, the plaintiff received not just a declaration of her right to expedited processing, but an order that “changed the legal relationship between the parties.” Id. And unlike the preliminary injunction in Thomas, the December 16, 2002 order in this ease “re-quirted] some action ... by the defendant,” Thomas, 330 F.3d at 493-94, and “provided plaintiffs with concrete and irreversible relief,” Select Milk, 400 F.3d at 946. Indeed, this is an easier ease than Select Milk because there was nothing “preliminary” about the order requiring the FBI to release all nonexempt documents by February 10; on the contrary, the order granted Edmonds a portion of the ultimate relief she sought in her complaint. The government is thus wrong in contending that “‘[t]his type of judicial decree is not enough to warrant a fee award, because it represents not the end but the means of the litigation.’ ” Appel-lee’s Br. at 17 (quoting Thomas, 330 F.3d at 494) (internal quotation marks omitted). In this case, expedited processing was not just the means but an end sought by the plaintiff. See Role Models America, Inc. v. Brownlee, 353 F.3d 962, 966 (D.C.Cir.2004) (concluding that a plaintiff that obtained an injunction allowing it to compete for excess military property was a “prevailing party,” because the injunction “gave [the plaintiff] the precise relief it sought”).
4. Finally, the government insists that Edmonds is not a prevailing party because the December 16, 2002 order set a date for disclosure (initially January 31, subsequently extended to February 10) that was later than a deadline the FBI “had earlier agreed to meet.” Appellee’s Br. at 2. In response to Edmonds’ motion for an order compelling expedited processing, the government did send her a letter offering to “advance the release date” for responsive documents to January 20, 2003- — “in order to moot out [the] Motion.” Letter from V. Mei to D.K. Colapinto (Oct. 8, 2002). But Edmonds declined the offer, advancing a counterproposal seeking, inter alia, the government’s agreement to entry of a judicial consent decree a and payment of attorney’s fees. Letter from. Colapinto to Mei (Oct. 11, 2002).
Thereafter, the government did not voluntarily proceed to expedite the process and meet the proffered January 20 date. To the contrary, it effectively withdrew its offer, filing a motion to stay the proceedings until April 1 and representing to the court that it would take until then to pro cess Edmonds’ request. See Def.’s Opp’n to Mot. for Partial Summ. J. & Cross Mot. for Open America Stay at 3 (Oct. 23, 2002); C. Kiefer Decl. ¶¶ 45-46 (Oct. 23, 2002). Accordingly, once the court granted Edmonds’ motion and compelled production by February 10, the government’s production on that date could not be regarded as voluntary.
Still, the government sees Edmonds as having gamed the system in a way that courts should prevent. Citing a 1976 opinion by Judge Friendly, the government complains that granting attorney’s fees under these circumstances would “create perverse incentives to litigate solely for the sake of a fee award.” Appellee’s Br. at 16 (citing Vermont Low Income Advocacy Council, Inc. v. Usery, 546 F.2d 509, 513 (2d Cir.1976)). In the government’s view, “Edmonds’ rejection of the proffered January 20 date was not based on any principled reason — the avowed and only purpose of litigating the motion was an effort to obtain attorneys’ fees.” Id. Edmonds begs to differ. She insists that she declined' to accept the offer primarily because the government refused to agree to make it judicially enforceable, a proviso she thought necessary in light of what she describes as the government’s “prior failure to address her expedited processing requests ... and [its] prior misleading and inconsistent statements ... as to a possible release date.” Appellant’s Reply Br. at 5-6.
This dispute is beside the point. Indeed, it is ironic that the government presses Judge Friendly’s opinion upon us, since in OCAW it successfully urged this court to reject that same opinion — which had reasoned (inter alia) that the government should not be allowed to “abort any award of attorney fees by an eleventh hour tender of the information requested” after “developments made it apparent that the judge was about to rule for the plaintiff.” OCAW, 288 F.3d at 456 (quoting Vermont Low Income Advocacy Council, 546 F.2d at 513). Accepting the government’s view, the OCAW court read Buckhannon as holding that “policy arguments could not carry the day because the meaning of ‘prevailing party’ was clear.” Id. And in Alegria v. District of Columbia, 391 F.3d 262 (D.C.Cir.2004), we similarly recognized that Buckhannon had given “short shrift” to policy arguments about the impact its “judicially sanctioned change” requirement would have on litigation strategies. Id. at 265 (citing Buckhannon, 532 U.S. at 607-08, 121 S.Ct. 1835). For that reason, we felt ourselves likewise obliged to give short shrift to the Alegría plaintiffs’ policy argument that refusing to permit fee awards for private settlements would lead to unnecessarily protracted litigation. See id. at 269.
In Buckhannon, the Supreme Court determined that, “[g]iven the clear meaning of ‘prevailing party’ in the fee-shifting statutes, ... Congress ha[s] not extended any roving authority” to the courts to consider policy arguments in determining eligibility for attorney’s fees. 532 U.S. at 610, 121 S.Ct. 1835 (internal quotation marks omitted). There is nothing in Buckhannon or our own cases that would permit us to assume such a roving authority when the policy arguments are made by the government, rather than the plaintiff.
IV
|
2014375-9321 | EAST, District Judge.
Jurisdiction
Appellant was indicted on July 20, 1959, and was thereafter convicted by jury on two counts of income tax evasion for the tax years of 1955 and 1956, in violation of 26 U.S.C.A. § 7201. A judgment of conviction was entered and this appeal is therefrom. This Court (Title 28 U.S.C.A. § 1291) has jurisdiction.
Specification of Errors
A detailed specification of the errors relied upon are as follows:
(1) That the trial court erred in failing to grant the defendant’s Motion for Judgment of Acquittal for the charge of violation of Title 26 U.S.C.A. § 7201, Case No. C-8546, at the conclusion of the prosecution’s case.
(2) That the trial court erred in failing to grant the same motion at the end of all the testimony.
(3) That the trial court erred in failing to render a judgment of acquittal or to grant a new trial in response to the motion for new trial filed therein.
Appellant’s only argument in this appeal is that he was entitled to a judgment of acquittal under Rule 29 of the Federal Rules of Criminal Procedure, 18 U.S.C.A., on the ground that as a matter of law there was a full compromise of all tax liability, criminal and civil, prior to return date of the indictment. Title 26 U.S.C.A. § 7122 — Compromises.
Factual Situation
Appellant had been employed by the United States Government for several years preceding the indictment in a supervisory capacity as a military-installation civilian engineer near Spokane, Washington, and at the same time he was a party to an architectural contract with Walter G. Meyers & Son, engaged in government contracting, agreeing to do architectural work for the contractor at a compensation equal to 3% % of contract prices. The admitted unreported income of Appellant came from Walter G. Meyers pursuant to this contract.
Appellant was first investigated by a representative of the Internal Revenue Service during June, 1957. This interview dealt with the auditing of travel expenses and a refund on account thereof. During January of 1958, a member of the intelligence unit of the Internal Revenue Service commenced an “investigation which was continual from January, 1958, until November, 1958”.
Appellant asserts that he “believed that the agents with whom he was dealing were endeavoring to help him compute his tax so that it could be paid.”
Appellant was advised by a letter of the Internal Revenue Service, under date of December 18, 1958, that he was under investigation for willful tax evasion. A second letter of similar advice was received by Appellant “about the 4th of January, 1959,” following which Appellant visited the Seattle office on January 8, 1959. On April 17, 1959, a special agent of the Federal Bureau of Investigation took a signed statement from the Appellant, concerning itself solely with a possible violation, later dealt with in the second indictment.
It was following this interview that Appellant “for the first time obtained counsel and sought advice about his tax problems,” whereupon he was advised to and did pay the tax, per his following mailed letter: (Letter)
“June 23,1959
“Spokane, Washington
“Director of Internal Revenue
“Tacoma, Washington
“Re: Reid G. and Arlene J. Jonson
“N. 4020 Hemlock Street
“Spokane, Washington
“Dear Sir:
“Enclosed herewith are amended returns for 1955 and 1956. Also a cashier’s check for $4830.88 to cover the delinquency with interest at 6% from the date the tax was due, plus a 5% penalty for failure to pay on account of negligence. Section 6653 (a), I.R.C., 26 U.S.C.A. § 6653(a).
“As indicated by these amended returns certain monies received from Meyers Construction Company of Spokane were not reported in 1955 and 1956 on the 1040 forms. It was my belief that these amounts should have been reported after receiving the full amount from Meyers Construction Company. They still owe about $2300.00 which they have not yet paid. I have been anticipating the receipt of this money but it has not yet materialized.
“On January 15,1958, agents Clifford Rice and another agent Meldin Smith, were consulted by me. I called Mr. Rice and told him that I had some income which I believe should have been reported but was inadvertently omitted. I took my records down to him and he asked to keep the records to compute the tax.
“In October or November Mr. Mel-din Smith and Mr. Turk of the Spokane Internal Revenue Office questioned me about my earnings. Smith said that he had to send his computations in to Seattle for verification and that I would then get a bill. Since this procedure has taken considerable time and the interest meanwhile accumulating, I desire to pay the penalty and interest to date to avoid further interest charges. If there has been any error in these computations please advise.
“Since I do not have my books available, there are certain records which are unavailable to me which would entitle me to additional exemptions. I desire however to file the amended returns on the basis of the information available so that the matter may be terminated. I have been advised that the interest did not terminate by my going to the revenue agents and turning the rec ords over and indicating a desire to pay the tax. Since I have discovered that, I have a desire to get this over with. The money to pay this tax had been reserved.
“Yours very truly,
“Reid G. Jonson”
At no time prior to the trial had the Internal Revenue Service ever made any assessment for any unpaid taxes against Appellant.
The District Director at Tacoma, Washington, received the Letter, together with the enclosures mentioned, in due course, and credited the proceeds of the cashier’s cheek in the amount of $4,830.88 to the Director’s “Advance Payments.”
Developments at the Trial
The Letter, enclosed amended tax returns, and method of handling the proceeds of the cashier’s check were offered into evidence by the Appellee as part of its case in chief. Appellant testified in his own behalf and offered evidence at the trial. However, at no time did he testify that he had compromised his criminal tax liability or had attempted to do so, or that the agents of the Internal Revenue Service ever intimated or offered any suggestion of a compromise.
Appellant’s motions referred to in the specifications of error above were timely made.
Regarding the Letter, enclosed amended returns and tendered payment, the District Court instructed the jury as follows:
“You are instructed that there is a distinction between the civil liability of a defendant and the criminal liability of a defendant under the income tax laws of the United States. This is a criminal case. The defendant is charged under the law with the commission of a crime, and the fact that he has or has not settled the civil liability for the payment of taxes claimed to be due to the United States is not to be considered by you in determining the issues in this case, except as it may throw some light on the intent of the defendant.”
Appellant did not except to this instruction and did not request of the District Court any proposed instruction covering an issue of compromise settlement of criminal liability other than two requested instructions referring only to the element of “intent,” nor did he except to the District Court’s failure on its own motion to instruct the jury on any factual issue of compromise settlement of crimi,nal liability.
Conclusions
There can be no doubt but that any substantial evidence, whether adduced through the Government’s or the defendant’s case which will tend to support a defense of compromise settlement of criminal tax liability, pursuant to an enabling statute, presents a question of fact for the jury. Rau v. United States, 2 Cir., 1919, 260 F. 131, 134.
And this reviewing Court in exercising its guardianship might notice it to be a defect “affecting substantial rights,” even in absence of request for such, for a trial court to fail to instruct a jury on the issue of an alleged compromise settlement of criminal liability being a bar to prosecution if such an issue is genuinely raised by the evidence; however, such cannot be said here, as there is no such genuine issue of fact.
It is not necessary for us to determine whether as a matter of law a compromise settlement of a criminal tax liability in order to constitute a bar to a subsequent prosecution shall be in “full dress” compliance with the statute, as claimed by the -Appellee citing Botany Worsted Mills v. United States, 278 U.S. 282, 49 S.Ct. 129, 73 L.Ed. 379.
As from the facts before the District Court and the record here, there cannot be even a tongue-in-cheek suggestion of a semblance, let alone a substantial compliance by Appellant, with Title 26 U.S.C.A. § 7122. We have only
(a) Appellant’s Letter; and
(b) The retention of the proceeds of the cashier’s check by the Director
as evidence of
(a) An offer of compromise by the Appellant; and
(b) Acceptance of the offer of compromise by Appellee
upon which to build the claimed defense of compromise settlement of criminal liability on the part of Appellant. Neither of which is evidence of anything other than, as Appellant testified
(a) The late payment; and
(b) Receipt of overdue taxes and penalties—
no distortion of the English language nor counsel-envisaged mala fides on the part of the revenue agents to the contrary.
|
2146123-6471 | RICH, Judge.
This appeal is from a decision of the Patent -Office Board • of Appeals affirming the examiner’s final rejection of claims 20 and 21 in appellants’ application serial No. 258,813, filed February 15, 1963, entitled “Building Construction.” Claims 13 and 15, the only other claims in the case, have been allowed.
The invention is a building wall construction in which inner and outer skin panels of metal or other materials are held together by metal studs, the cleats of which interfit with flanges on the edges of the panels.
The panels are relatively narrow, 5" to 8", preferably made of sheet aluminum, have inwardly turned longitudinal edge flanges and are held together with coextensive generally C-shaped cleats. A pair of cleats, to connect a pair of outer panels and a pair of inner panels, are connected by a metal web which determines the spacing between the inner and outer walls, the space later being filled with some insulating material, concrete, or the like.
The crux of the invention is said to lie in the fact that the cleats extend along the entire length of the panels so that the cleats help to bear the load of the roof. Claim 20 gives an idea of the nature of the invention and reads as follows:
20. A building construction of the
type having
a foundation,
an upright wall structure
supported by said foundation, and a roof
on and supported by load bearing parts of said wall structure, said wall structure comprising a plurality of skin panels
extending the full height of the
wall,
having
reversely bent longitudinal edge portions
arranged in edgewise butting relation forming spaced inner and outer wall portions with the joints between the outer wall panels being opposite corresponding joints between inner wall panels, studs
of generally I-shaped cross-sectional configuration adapted to hold said butting panels together and to opposite corresponding butting panels, said studs including spaced inner and outer cleats each including
a medial flange interconnected with a pair of opposed channel members,
said flange and channel members extending the full wall height, said channel members interlocking said reversely bent panel edge portions extending laterally of said medial flange from one edge thereof and connected thereto, rigid web members interconnecting the medial flanges of the inner and outer cleats at opposed joints, means
between said roof structure and said walls spanning the inner and outer wall portion and extending over a plurality of studs, said last-mentioned means carrying said roof structure and bearing endwise on said walls, whereby to transfer the roof load jointly through said studs and said panels at said joints to said foundation.
The following references were relied on:
Schwartz 2,815,882
Brown (British) 414,677
Dec. 10, 1957
Aug. 7,1934
Brown discloses a wall construction generally similar to appellants’ except that the studs which support the panels are of a different design. Schwartz discloses studs made, as appellants’ are, of cleats and a web.
The examiner and board agreed that it would be obvious under 35 U.S.C. § 103 to change the design of the studs in Brown’s structure to be like those of Schwartz. Appellants do not dispute this aspect of the rejection. Appellants argue only that the structure thus created would not meet their claims. Appellants contend that the crucial facet of their invention, the extension of the cleats along the entire length of the wall panels, is lacking in Brown and, of course, not made obvious by Schwartz.
The issue before us, then, is limited to whether Brown discloses cleats which share the load-bearing with the panels, i.e., whether the Brown cleats extend the length of the panels.
The drawing in the Brown patent is unclear. The board, however, pointed to the following passages from the Brown specification to support its view that the cleats are coextensive with the panels:
According to my present invention, I construct the walls and interior partitions of the building of airtight hollow vertical panels each comprising two lengths of sheet metal forming face members flanged and internally lipped along their longer vertical edges, said face members being spaced and maintained parallel by flanged sheet metal transverse members of corresponding length.
******
A wall partition or door construction in accordance with my invention comprises sets of standardized sheet metal elements assembled to form abutting cavity panels each set comprising a pair of face members inwardly flanged along their longitudinal margins and maintained, spaced and in parallel relationship by interposed perpendicular interlocking members which carry C-shwped strips engaging with, and throughout the length of, inturned lips on the abutting flanges of contiguous face members, said interlocking connections lying wholly within said panels.
* * * * * *
Referring to the said drawings, in the' example therein illustrated, the exterior walls are constructed of vertical airtight cavity panels each comprising two lengths of sheet metal forming face members a, a the vertical edges of which are flanged at b, b and internally lipped at c, c , said face members being spaced and maintained parallel by sheet metal end members d of corresponding length, the vertical edges of which are flanged at e. * * The strips f, f serve to seal and also to connect abutting panels together being adapted to engage the lips c, c
throughout the length of the same.
* * * * -x- *
I claim * *
1. A wall, partition or door construction comprising sets of standardized sheet metal elements assembled to form abutting cavity panels each set comprising a pair of face members inwardly flanged along their longitudinal margins and maintained spaced and in parallel relationship by interposed perpendicular interlocking members which carry C-shaped strips engaging with, and throughout the length of inturned lips on the abutting flanges of contiguous face members, said interlocking connections lying wholly within said panels. [Emphasis added.]
Appellants argue, in their turn, that nothing quoted necessarily requires the conclusion reached by the board. “A corresponding length,” appellants urge, may mean no more than a fit length or a suitable length. “Flanged along their longitudinal margins,” in appellants’ view, may very well mean intermittently flanged and so drain the board’s meaning from ■ “throughout the length of * * * inturned lips in the abutting flanges.”
|
6120810-23724 | MEMORANDUM OF DECISION
ELLEN B. BURNS, District Judge.
This action is an appeal from a decision of the bankruptcy court in an adversary proceeding originally brought in the Connecticut Court of Common Pleas as an appeal from a revocation of a tax exemption by the state tax commissioner. The plaintiff, Connecticut Performing Arts Foundation (“CPAF”), filed a bankruptcy petition under Chapter 11 of the Bankruptcy Code in August, 1981. In November, 1981, CPAF removed the tax appeal to the bankruptcy court. After taking testimony and reviewing the record, the bankruptcy judge issued a decision on December 23, 1982, reversing the tax commissioner’s revocation of CPAF’s exemption and ordering the State of Connecticut to pay CPAF the amount of any funds collected from CPAF as a result of the revocation of the exemption. Because I construe the Connecticut law differently from the bankruptcy court and, in any event, disagree with the remedy, the decision of the bankruptcy court is reversed.
1. FACTS
CPAF is a nonprofit corporation organized and existing under the laws of the State of Connecticut. In 1962 CPAF applied to the Internal Revenue Service (“IRS”) for a federal income tax exemption under § 501(c)(4) of the Internal Revenue Code (“IRC”). The IRS denied the exemption, in part because it found that the operators of the Oakdale Musical Theater Company (“Oakdale”) controlled CPAF’s operations to the financial advantage of Oakdale. CPAF filed an appeal of this determination but withdrew the appeal before it was acted upon.
Sometime prior to April 27, 1971, CPAF met with representatives of the Connecticut Tax Department in order to obtain an exemption from the Connecticut tax on admissions which imposed a ten per cent tax on the sale of tickets to events such as those sponsored by CPAF, but permitted certain organizations to be exempted from
the tax. CPAF claimed to qualify for an exemption because it was “of a similar nature” to an organization eligible for an exemption under § 501(c)(3) of the IRC.
At a hearing held on April 27, 1971, CPAF set forth facts showing that it was similar to organizations exempt under § 501(c)(3) of the IRC. It also disclosed that it had been denied an exemption under § 501(c)(4). In June, 1971, a new admissions tax was adopted by the Connecticut General Assembly and CPAF renewed its exemption application. Additional hearings were held on September 17 and 29, 1971, and on or about April 5, 1972," the tax commissioner ruled that CPAF was qualified for an exemption from the 1971 act. The exemption was made retroactive to July 1, 1971.
On April 27, 1973, the tax commissioner sent CPAF a letter advising CPAF that its exemption would expire at the end of 1973 unless CPAF obtained a ruling from the IRS that it qualified for a federal tax exemption. CPAF contested the commissioner’s ruling at a hearing held on December 26, 1973. On January 25, 1974, the commissioner advised CPAF that its exemption was withdrawn because a “subsequent investigation by the department revealed that the organization was denied an exemption from federal income tax on March 9, 1962...” After a rehearing conducted on June 26, 1974, the tax commissioner ruled on December 11, 1974, that the exemption was properly revoked because of “new in-' formation”, namely the March 9, 1962, denial of CPAF’s application for a federal income tax exemption. CPAF brought its appeal to the Court of Common Pleas on January 5, 1975, and removed the action to the bankruptcy court in November, 1982.
The bankruptcy court reviewed the commissioner’s decision to revoke the exemption pursuant to Conn.Gen.Stat. § 12-554. It found that the commissioner was aware of the 1962 IRS ruling when he granted CPAF’s exemption. Therefore, since there was no “new information” to justify revoking the exemption, the bankruptcy court reversed the commissioner’s ruling and ordered a refund of all admissions taxes paid by CPAF. The state has taken a timely appeal from the bankruptcy court’s ruling.
II. JURISDICTION
The State of Connecticut argues that the bankruptcy court was without jurisdiction in this matter for two reasons. It claims, first, that the Eleventh Amendment and the doctrine of sovereign immunity bar the entry of a monetary judgment against the state and, second, that the state court proceeding was improperly removed to the bankruptcy court.
A. Eleventh Amendment
The state claims that the bankruptcy court was without jurisdiction to order it to refund taxes to CPAF by virtue of the Eleventh Amendment and the doctrine of sovereign immunity. It is true that, absent its consent, a state may not be sued in federal court. Pennhurst State School & Hospital v. Halderman, 465 U.S. 89, -, 104 S.Ct. 900, 907, 79 L.Ed.2d 67 (1984). Furthermore, a suit against a state official is not permitted when the relief sought is the payment of money by the state as compensation for “a monetary loss resulting from a past breach of a legal duty.” Edelman v. Jordan, 415 U.S. 651, 668, 94 S.Ct. 1347, 1358, 39 L.Ed.2d 662 (1974). Therefore, absent some bar to the application of the doctrine of sovereign immunity, the bankruptcy court should not have entertained this action.
Section 106(a) of the Bankruptcy Code, 11 U.S.C. § 106(a), provides that “[a] governmental unit is deemed to have waived sovereign immunity with respect to any claim against such governmental unit that is property of the estate and that arose out of the same transaction or occurrence out of which such governmental unit’s claim arose.” The state argues that this waiver is not applicable in this case because it is a waiver of “sovereign immunity,” and not a waiver of the Eleventh Amendment. However, closer analysis shows that the immunity applicable in this case is sovereign immunity, and not the Eleventh Amendment.
By its terms, the Eleventh Amendment prohibits suits in federal court “commenced or prosecuted by one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.” (emphasis supplied) The amendment does not itself prevent suits against a state by its own citizens. However, in Hans v. Louisiana, 134 U.S. 1, 10 S.Ct. 504, 33 L.Ed. 842 (1890), the Supreme Court determined that the policy behind the Eleventh Amendment, namely state sovereignty, prevented a federal court from entertaining a suit brought against a state by its own citizens. The technical distinction between Eleventh Amendment “immunity” and sovereign immunity was noted by the court in Penn-hurst:
That a State may not be sued without its consent is a fundamental rule of jurisprudence having so important a bearing upon the construction of the Constitution of the United States that it has become established by repeated decisions of this court that the entire judicial power granted by the Constitution does not embrace authority to entertain a suit brought by private parties against a state without consent given: not one brought by citizens of another State, or by citizens or subjects of a foreign State, because of the Eleventh Amendment; and not even one brought by its own citizens, because of the fundamental rule of which the Amendment is but an exemplification. Ex Parte State of New York No. 1, 256 U.S. 490, 497, 41 S.Ct. 588, 589, 65 L.Ed. 1057 (1921) (emphasis added)
465 U.S. at -, 104 S.Ct. at 907. See also, Parden v. Terminal R. Co., 377 U.S. 184, 192, 84 S.Ct. 1207, 1212, 12 L.Ed.2d 233 (1964).
Because the Eleventh Amendment is an “exemplification” of the doctrine of sovereign immunity, it is understandable that the amendment has come to be used as a shorthand expression of the principle that a state may not be sued by either its own citizens or citizens of another state. However, in determining the extent of the waiver contained in § 106(a), it is necessary to differentiate between the doctrine of sovereign immunity and the application of the Eleventh Amendment.
Because CPAF is a “citizen” of the State of Connecticut, it is the doctrine of sovereign immunity that can be asserted by the state, and not the Eleventh Amendment. Therefore, if the waiver of sovereign immunity contained in § 106(a) is ef fective as a legitimate exercise of congressional authority, and is applicable in this case, the bankruptcy court could exercise its jurisdiction over the state.
In Parden v. Terminal R. Co., 377 U.S. 184, 84 S.Ct. 1207, 12 L.Ed.2d 233 (1964), the Supreme Court was confronted with the question of whether the Federal Employee Liability Act (FELA) permitted a suit against a state in federal court. The Court noted that a state can consent to a suit in federal court and also noted that, in adopting the Constitution, the states “surrender a portion of their sovereignty when they granted Congress the power to regulate commerce.” Id. at 191, 84 S.Ct. at 1212. The court went on to note that when a state engaged in an activity subject to the commerce power, in that case operating a railroad, it necessarily consented to suits under the FELA. Id. at 192, 84 S.Ct. at 1212.
Similarly, the states have granted Congress authority under the bankruptcy clause of the Constitution. When a state engages in an activity that is subject to the bankruptcy power, it is proper for Congress to find that the state has waived its sovereign immunity. Section 106(a) provides that, when a governmental unit has made a claim against the estate, it has waived its immunity with respect to claims against the state that arose out of the same transaction. By making a claim against the estate, the state subjects itself to the bankruptcy power of the United States. The waiver of immunity provided by § 106(a) is therefore a proper exercise of congressional authority.
The state has not argued that its claim against the estate did not arise out of the same transaction as CPAF’s claim against the state. The state’s claim is a claim for admissions taxes that had not been paid by CPAF after the tax commissioner had revoked CPAF’s exemption. CPAF’s claim against the state is also for taxes paid after the commissioner revoked the exemption. Both claims arise out of the same transaction, the revocation of the exemption, and therefore, § 106(a) permits the bankruptcy court to exert jurisdiction over CPAF’s claim against the state.
B. Removal
The state argues that the bankruptcy judge erred in allowing removal of this action because Interim Rule 7004, adopted in this district as Local Rule 7004, only permits removal of a state court action within thirty days of the order for relief. Because the application for removal was filed nearly three months after the order for relief, the state asserts that removal should not have been permitted.
The bankruptcy judge conducted hearings on whether to permit removal, and was persuaded by the reasoning of In re Circle Litho, Inc., 12 B.R. 752 (Bkry.Conn.1981), which held that the thirty-day limitation of Rule 7004 was not mandatory. The Circle Litho court noted that, unlike the thirty-day removal limit of 28 U.S.C. § 1446 for cases removed to the district court, Rule 7004’s limit was not statutorily required. Section 1478, which authorizes removal of cases from state courts to the bankruptcy court, does not contain any time limit. In drafting Rule 7004 the Advisory Committee stated that the time limit was derived from § 1446. See Collier on Bankruptcy, Appendix 1, 1092 (1983). However, the fact that the committee was guided by a statutory provision does not give the rule the force of law of a statute.
Because the time limitation is contained in a rule, the Circle Litho court saw no reason why Rule 906 which generally permits enlargement or reduction of time limits set by the rules should not apply. 12 B.R. at 756. Rule 906(b)(2) permits application for an enlargement of time after the expiration of the relevant time period, where the failure to act was the result of excusable neglect. The bankruptcy court heard evidence and argument and found that enlarging the time for removal was appropriate. The state has not made any showing to this court that the bankruptcy court erred in determining that enlargement was appropriate under the facts presented.
III. STATUTORY INTERPRETATION
The State of Connecticut argues that, because CPAF was denied an exemption from IRS in 1962, the commissioner was without authority under the admissions tax statute to grant an exemption. The commissioner argues that, through inadvertence or otherwise, the 1962 denial was not drawn to his attention at the time the exemption was granted in 1972. When he learned of the denial, he acted in compliance with the law in revoking the exemption. He further claims that, in light of the IRS ruling, he was without authority to grant CPAF an exemption. If an administrative agency’s ruling is not within the authority granted by statute it is a nullity. United States v. Larionoff, 431 U.S. 864, 97 S.Ct. 2150, 53 L.Ed.2d 48 (1977). Therefore, if the commissioner exceeded the grant of authority to issue exemptions found in § 12-541(b)(2), it was proper for him to revoke the exemption, or to treat it as being without effect.
Section 12-541(b)(2) permits the commissioner, “in the absence of a ruling by the Internal Revenue Service ... ”, to grant an exemption to an organization of a “similar nature” to an organization exempt from taxation under the IRC (emphasis added). CPAF argues that this statute should be interpreted to mean that the commissioner is not precluded from granting an exemption based on any IRS ruling and that he would only be precluded if the IRS ruling were under the specific tax code section under which the applicant claims exemption by reason of a similarity to an exempt organization. Since CPAF was denied an IRS exemption under § 501(c)(4), its application for an admissions tax exemption based on its similarity to a § 501(c)(3) organization would not be precluded.
CPAF’s interpretation of the statute is a reasonable one. However, Connecticut case law is clear that laws granting tax exemptions should be strictly construed against the applicant. Caldor, Inc. v. Heffernan, 183 Conn. 566, 571, 440 A.2d 767 (1981); Connecticut Theater Foundation, Inc. v. Brown, 179 Conn. 672, 677, 427 A.2d 863 (1980). Although a court should not construe a statute in such a way as to prevent “a reasonable and rational result,” Stone v. Sullivan, 154 Conn. 498, 503, 227 A.2d 76 (1967), strict construction of an exemption statute is required if it would not contravene the “intent and purpose of the statute as expressed in the language used.” Jewett City Savings Bank v. Board of Equalization, 116 Conn. 172, 185, 164 A. 643 (1933). The legislature permitted the commissioner to grant an exemption only if the organization had qualified for an IRS exemption or if the IRS had not issued a ruling. Uncontro-verted testimony was presented to the bankruptcy court that, when originally presented to the legislature, the admissions tax act only allowed exemptions to organizations that had received IRS exemptions. The “similar nature” exemption was added to take into account smaller organizations, such as PTAs, which do not normally seek IRS exemptions. See e.g., testimony of Patrick Marangell, p. 9, October 14, 1982. The legislature could well have reasoned that organizations too small to seek an IRS determination of any sort should be allowed to avoid the IRS administrative process and apply directly to the commissioner. However, an organization that had the motivation and capability of seeking an IRS ruling would be required to have an IRS exemption before it would qualify for an exemption under the admissions tax act. It is clear from the statutory language that the legislature wanted IRS criteria to apply to the granting of an exemption. It would therefore be preferable to have the IRS make a determination of eligibility for an exemption, and only permit the commissioner to determine eligibility if the IRS has not issued any ruling at all. Once the IRS has issued any ruling, the commissioner would be bound by that determination unless the organization sought a new ruling from the IRS. In other words, the commissioner only had authority to grant an exemption if there had been either a favorable ruling by the IRS or no IRS ruling whatsoever.
The clear language of § 12-541(b)(2) only permits an exemption if the IRS has not issued a ruling. Strictly construing this statute against the party seeking an exemption, and in a manner which is rational and reasonable in light of the language used by the legislature, the commissioner was without authority to issue an admissions tax exemption in 1972. It was therefore incumbent upon the commissioner to revoke that exemption when he became aware of his error. The bankruptcy court’s order reversing the commissioner must itself be reversed.
IV. THE REMEDY
Even if the bankruptcy court had been correct in its determination that the revocation of the exemption was improper, its order for repayment to CPAF of the amount of funds collected as a result of the exemption was improper. The admissions tax is “imposed upon the person making such charge [for admission] and reimbursement for the tax shall be collected by such person from the purchaser.” Conn.Gen. Stat. § 12-541(a). Thus, rather than being a direct tax on the theater operator, the tax is a “transactional tax,” like a sales tax, imposed upon the theater’s patrons. Cf. Agricultural National Bank v. State Tax Commissioner, 392 U.S. 339, 88 S.Ct. 2173, 20 L.Ed.2d 1138 (1968) (the purchaser is the true taxpayer of a sales tax.) CPAF does not deny that it collected the ten per cent tax on each of its tickets sold during the relevant period. It now seeks a refund for a tax that it never paid, except as a conduit of the taxes paid by its customers.
In Spencer v. Consumers Oil Co., 115 Conn. 554, 162 A. 23 (1932), the Connecticut Supreme Court faced an analogous situation. A gasoline dealer had collected a sales tax from its patrons but did not pay the money collected over to the state, claiming that the gasoline tax statute was invalid. The court found that it did not need to address the defendant’s contentions regarding the validity of the statute because, by collecting the tax, the defendant had obligated itself to pay the money over to the treasurer. Id. at 559, 162 A. 23. The court stated that “the defendant has in good conscience no right to retain this money and is charged with a heavy moral obligation to make the payment.” Id. at 562, 162 A. 23.
CPAF attempts to argue that it did pay the tax by noting that it had stamped a legend on the back of its tickets, informing its patrons that it had applied for an exemption and, if the exemption was granted, the amount of tax charged would be added to the admissions charge. CPAF claims that this legend created a contract between itself and its patrons entitling CPAF to keep the tax paid if an exemption was granted.
This position is without merit for several reasons. First, CPAF made no showing that the legend appeared on the tickets after the revocation of the exemption. Second, the legend misrepresents CPAF’s position in that it states that CPAF had applied for an exemption, when in fact, during the relevant period, CPAF was appealing from a revocation of an exemption. Finally, and most significantly, CPAF has simply failed to show that the legend created an enforceable contract right.
The front of the tickets bore the admissions price, an amount denominated as tax, and the total price. Presumably, a customer paying for his ticket paid the total price, believing that he was paying for his admission and any applicable tax. It would only be after purchasing his ticket that the customer might possibly become aware of the legend on the reverse of the ticket. General principles of contract law preclude a finding that the legend became part of the contract of admission. Malone v. Santora, 135 Conn. 286, 291-92, 64 A.2d 51 (1949); Carter v. Reichlin Furriers, 34 Conn.Sup. 661, 665, 386 A.2d 647 (App. Sess.1977). See also A. Corbin, Corbin on Contracts § 107 (1963) (“meeting of the minds” required for a valid contract.) Furthermore, Connecticut’s “anti-scalping” statute, Conn.Gen.Stat. § 53-289, establishes a policy in favor of fixed ticket prices. In light of this policy, an attempt to vary the price by stamping a legend on the back of the ticket must be viewed as ineffective. Therefore CPAF had no contract right to keep any refund of taxes that might be ordered. Since the parties who would have been entitled to receive such a refund, CPAF’s customers, were not before the court, the ordering of a refund to CPAF was an improper remedy.
Conclusion
The bankruptcy court’s decision is reversed. The adversary proceeding is hereby dismissed with costs to the defendant.
SO ORDERED.
. The facts are essentially as stated in the opinion below. I realize that the state asserts that the bankruptcy court’s judgment is ineffective because the judgment was entered after the December 24, 1982, effective date of the Northern Pipeline decision, even though the decision was entered on December 23, 1982. Because I find that the opinion below must be reversed even under the facts as found by the bankruptcy court, I will not decide whether the bankruptcy court’s decision should be reviewed de novo as a "proposed judgment" under § e(2)(A)(iii) of the Emergency Rule.
. The tax in question in this suit, Conn.Gen.Stat. § 12-541, became effective on July 1, 1971. Pri- or to that date, an admissions tax law passed in 1969 was in effect. CPAF applied for exemption under both laws. It was denied an exemption under the 1969 law. That denial is not in issue at this time.
. During all relevant times Conn.Gen.Stat. § 12-541(b) provided:
No tax shall be imposed under subsection (a) of this section with respect to admission charges all the proceeds of which inure exclusively to
(1) organizations exempt from income taxes under the United States Internal Revenue Code; or
(2) in the absence of a ruling by the Internal Revenue Service organizations determined to be of a similar nature.
. Section 12-554 provides in applicable part:
Any taxpayer aggrieved because of any order, decision, determination or disallowance of the tax commissioner under the provisions of sections 12-540 to 12-556 may, within one month after service upon the taxpayer of notice of such order, decision, determination, or disallowance, take an appeal therefrom.... Said court may grant such relief as may be equitable....
The section does not define the standard of review to be applied by the reviewing court. The bankruptcy court appeared to review the commissioner’s ruling de novo, and took extensive testimony. Because I find that the bankruptcy court erred in its application of law and in the remedy granted, it is not necessary to determine the applicable standard of review under section 12-554. However, because tax appeals are explicitly exempted from the deferential review provided by the Connecticut Administrative Procedure Act, see Conn.Gen.Stat. § 4-186, it may be assumed that the Connecticut legislature intended to give the courts wider latitude in reviewing tax commissioner’s determinations.
. CPAF asserts that since its action is one for a refund of taxes wrongfully collected, it is not an action for damages but an action for return of property. This position was rejected by the Supreme Court in Ford Motor Company v. Department of Treasury, 323 U.S. 459, 65 S.Ct. 347, 89 L.Ed. 389 (1945).
. It is not now necessary to address whether Congress has authority under the bankruptcy clause to waive a state’s Eleventh Amendment immunity in suits by citizens of other states.
|
8956513-13231 | BEEZER, Circuit Judge:
Former professional football player Brent Boyd appeals the denial of football degenerative disability benefits under the Bert Bell/Pete Rozelle National Football League Player Retirement Plan (“the NFL Plan” or “Plan”). The Plan provides retirement, disability, and other benefits to eligible current and former professional football players. The district-court granted the NFL Plan’s motion' for summary judgment, holding that the Plan’s Retirement Board (“the Board”) did not abuse its discretion in denying Boyd’s claim for football degenerative disability benefits. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we AFFIRM,
I
Brent Boyd was drafted in the third round of the 1980 National Football League (“NFL”) draft by the Minnesota Vikings and was an offensive lineman for the Vikings until his retirement from the league prior to the 1987 season. After his retirement, Boyd claimed approximately $82,000 from settling-claims he asserted under California Worker’s Compensation system as a result of several injuries, but not including any specific head trauma. Boyd held various jobs until August 1999, when he was no longer able to work.
In March 1997, Boyd filed his first application for football degenerative disability benefits under the Plan. The application claimed benefits based on orthopedic joint problems that resulted from NFL injuries. In his application, Boyd told the committee that his “first and most serious NFL injury” was a knee injury that occurred in October 1981. Boyd wrote, “I know I have the mind and spirit to succeed in an occupation, but my body refuses to cooperate.” Boyd’s application neither noted nor alleged any brain injuries or head trauma, and his medical history before 2000 reveals reports and diagnoses of alcohol abuse, depression, digestive tract disorders, and hypertension, but no complaints or findings of brain disorders or injuries. Boyd’s 1997 claim was denied by the Board, based on a medical opinion that Boyd could work so long as it did not involve certain physical elements. Boyd did not appeal.
In June 2000, Boyd again applied to the NFL Plan for disability benefits, this time citing alleged organic brain problems as the result of an alleged head trauma. It is this application for benefits that is iii dispute. Boyd claims that he was knocked unconscious during a preseason game in August 1980, and that despite having temporary blindness in his right eye during the game, he continued to _ play. Other than this alleged incident in August of 1980, Boyd does not recall losing consciousness at any other time. Boyd claims that in 1980 he began experiencing constant headaches, which the Vikings personnel told him were a side effect of anti-inflammatory medication (Indocin) to treat pain and inflammation of the knees. Boyd told the NFL Retirement Board that as the headaches began, it was then that he first began using alcohol on a habitual basis. As his football career developed, Boyd claims that he noticed increasing fatigue, increased forgetfulness, and lack of focus. Boyd currently complains of “a general constant flu-like feeling, fatigue, headaches, queasiness, forgetfulness, intermittent blurred vision, difficulty reading, lack of concentration, learning difficulty, memory loss, dizziness and light-headedness.”
The NFL Plan is governed by the Employee Retirement Income Security Act (“ERISA”) and was established pursuant to collective bargaining agreements between the National Football League Players Association (“Players Association”) and the National Football League Management Council (“Management Council”). The NFL Plan is administered by a Retirement Board composed of six voting members, three of whom are appointed by the Players Association, while the other three members are selected by the Management Council. The members of the Board serve without pay. The NFL Plan grants to the Retirement Board the “full and absolute discretion, authority and power to interpret, control, implement, and manage the Plan,” including the authority to adjudicate claims for benefits.
The NFL Plan provides for monthly total and permanent disability benefits (“T & P.Benefits”) to an Active Player or Vested Inactive Player whom the Retirement Board determines to be totally and permanently disabled. In his 2000 application, Boyd applied for both Football Degenerative and -Inactive T & P Benefits, two of four categories of T & P benefits provided by the Plan: ■
[5.1](c) (Football Degenerative). The monthly total and permanent disability benefit will be no less than $4,000 if the disability (ies) arises out of League football activities, and results in total and permanent disability before the later of (1) age 45, or (2) 12 years after the end of the Player’s last Credited Season. [5.11(d) (Inactive). The monthly total and permanent disability benefit will be no less than $1,500 if (1) the total and permanent’disability arises from other than League football activities while the -player is a Vested Inactive Player, or (2) the disability(ies) arises out of League football activities, and results in total and permanent disability after the later of (i) age 45, or (ii) 12 years after the end of the Player’s last Credited Season. The minimum benefits provided under this Section 5.1(d) will be offset by any disability benefits provided by an employer other than the League or an Employer, but will not be offset by worker’s compensation.
NFL Retirement Plan at §§ 5.1(c), 5.1(d) (emphasis added).
The 1993 Collective Bargaining agreement created a new NFL Player Supplemental Disability Plan, which provides additional monetary benefits to certain former players who qualify for benefits under sections 5.1(a)-5.1(c) of the Plan.
Section 5.1 of the Plan was amended in 1998 (“1998 Amendment”), which limits the recovery of disability benefits as a result of a psychological/psychiatric disorders but provides:
[A] total and permanent disability as a result of a psychological/psychiatric disorder may be awarded under [inter alia, the Football Degenerative category] if the requirements for a total and permanent disability are otherwise met and the psychological/psychiatric disorder either (1) is caused by or relates to a head injury (or injuries) sustained by a Player arising out of League football activities (e.g., repetitive concussions)-, (2) is caused by or relates to the use of a substance prescribed by a licensed physician for an injury (or injuries) or illness sustained by a Player arising out of League football activities; or (3) is caused by an injury (or injuries) or illness that qualified the Player for total and permanent disability benefits under Section 5.1(a).
NFL Retirement Plan at § 5.1 (amended November 1,1998) (emphasis added).
In December 2000, the Retirement Board determined that Boyd was totally and permanently disabled within the meaning of the Plan and voted to grant Boyd T & P Inactive benefits of $1,550 per month, retroactive to October 1, 1999, pursuant to Plan section 5.1(d). The Board deferred consideration of Boyd’s claim for Football Degenerative benefits under section 5.1(c).
In considering whether Boyd qualifies for Football Degenerative disability benefits pursuant to Plan section 5.1(c), the Board reviewed the medical opinions of various health professionals. We turn to discuss part of that body of medical evidence.
Plan neutral physician Dr. J. Sterling Ford, a neurologist, concluded in his narrative report that “[fjrom a neurologic standpoint, [Boyd] does appear to have several problems that may arise out of head injuries suffered in the course of his NFL career. Only further testing will be able to determine the extent of those injuries.” Dr. Ford observed that Boyd’s symptoms “raise the question of possible organic brain injury.” On a standardized form that the Board asked Dr. Ford to complete, Dr. Ford checked “yes” after being asked whether the injury resulted from a football-related activity.
At Boyd’s request, Dr. Daniel Amen and Dr. Edward Spencer conducted a SPECT (single photon emission computed tomography) brain scan on Boyd, which seeks to measure brain metabolic activity. Dr. Spencer concluded. that Boyd’s scan revealed decreased brain activity, “consistent with head trauma.” Without identifying any cause, Dr. Spencer concluded that Boyd “is disabled due to his brain injury.”
The Board referred Boyd to Dr. Branko Radisavljevic, a Plan neutral psychologist. Dr. Radisavljevic concluded that Boyd was disabled as a result of “emotional liability depression due to post traumatic organic brain disorder.” Dr. Radisavljevic wrote that Boyd’s disability “appears to be the result of a fairly small brain injury that I cannot fully understand.” On the Board’s standardized “Physician’s Report” form, Dr. Radisavljevic checked “yes” when queried whether Boyd’s disability resulted from a football-related activity.
In 2001, the Board referred Boyd to Dr. Barry Gordon, the Director of Cognitive Neurology and Neuropsychology and the Memory Clinic at Johns Hopkins Hospital. Boyd was subject to nearly two days of examinations and neuropsychological testing, including a 100-minute examination by Dr. Gordon himself. Dr. Gordon concluded:
Based on the evidence available, the alleged head injury of August, 1980 could not be organically responsible for all or even a major portion of the neurologic and/or neuropsychologic problems that Mr. Boyd is experiencing now, to a reasonable degree of medical probability. (I include the allegedly abnormal SPECT scan results in this category.) This is true even allowing for the many unknowns' about this injury, including its precise severity. Many if not most or all of his complaints are more typically those attributable to depression and/or chronic pain and/or to the effects of untreated hypertension and physical deconditioning.
To reasonable degree of medical probability, the depression that Mr. Boyd is currently experiencing (by report) could not be an organic consequence of the head injury of August, 1980.
Many feel that chronic pain can be a cause of depression, and chronic pain itself has been reported to cause impairments in neuropsychologic performance (although not necessarily impairments in underlying cerebral functions[)j. Mr. Boyd has previously reported pain from musculoskeletal injuries related to his football playing. I note these possible explanations and connections, although determination of the orthopedic source(s) of his pain, his reported depression, and possible connections between the two are not within my area(s) of expertise.
In April of 2001, the Board denied Boyd’s claim for Football Degenerative disability benefits, explaining that “Mr. Boyd’s disabilities do not arise out of League football activities, and that Mr. Boyd therefore does not qualify for Football Degenerative T & P benefits.” Boyd subsequently filed this lawsuit.
On remand from the district court, in January 2003, the Board reconsidered its decision in view of the 1998 Amendment to the Plan. The Board concluded that the amendment “only limit[s], and do[es] not expand, the availability of Football Degenerative T & P benefits” and so does not give rise to a less rigorous standard than that set forth by Plan Section 5.1(c) under which Boyd could qualify for Football Degenerative disability benefits.
The district court granted summary judgment for the Board, concluding that “[t]he Board’s reliance on Dr. Gordon’s medical expertise constitutes substantial evidence upon which the decision may stand.”
II
The NFL Plan was established pursuant to collective bargaining and grants to the Retirement Board the full discretion to adjudicate claims and interpret the Plan. We review the Board’s decision to deny Boyd’s football degenerative disability benefits for an abuse of discretion. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989); Jones v. Laborers Health & Welfare Trust Fund, 906 F.2d 480, 482 (9th Cir.1990) (recognizing that we “will not upset the review process the parties have [collectively] bargained for, absent an abuse of discretion by the Board.”). An ERISA fiduciary is “obligated to guard the assets of the [Plan] from improper claims, as well as to pay legitimate claims.” Brogan v. Holland, 105 F.3d 158, 164 (4th Cir.1997) (internal quotations and ellipsis omitted). Our deferential standard of review furthers a primary goal of ERISA, which endeavors “to provide a method for workers and beneficiaries to resolve disputes over benefits inexpensively and expeditiously.” Taft v. Equitable Life Assurance Soc’y, 9 F.3d 1469, 1472 (9th Cir.1993).
“In the ERISA context, even decisions directly contrary to evidence in the record do not necessarily amount to an abuse of discretion.” Taft, 9 F.3d at 1473. An ERISA administrator abuses its discretion only if it (1) renders a decision without explanation, (2) construes provisions of the plan in a way that conflicts with the plain language of the plan, or (3) relies on clearly erroneous findings of fact. Bendixen v. Standard Ins. Co., 185 F.3d 939, 944 (9th Cir.1999); Atwood v. Newmont Gold Co., 45 F.3d 1317, 1323-24 (9th Cir.1995).
|
1453233-11557 | RONEY, Circuit Judge:
Defendant Ernest Millican was convicted after a jury trial of wilfully failing to file a federal income tax return in violation of the Internal Revenue Code, 26 U.S.C.A. § 7203, and sentenced to one year in prison. His pro se appeal argues several points.
Among other things, the defendant argues he was denied a pretrial showing of probable cause because he appeared in court in response to a summons rather than an arrest warrant, and that the court never conducted a probable cause hearing before trial, although he requested one. Although the denial of defendant’s request for a probable cause hearing was improper, it does not permit reversal of his conviction. The law appears to be clear that defects in the procedures through which defendant was brought before the court do not void his subsequent conviction. See Gerstein v. Pugh, 420 U.S. 103, 119, 95 S.Ct. 854, 43 L.Ed.2d 54 (1975) (Conviction will not be vacated on ground defendant was detained pending trial without determination of probable cause); Frisbie v. Collins, 342 U.S. 519, 72 S.Ct. 509, 96 L.Ed. 541 (1952) (Defendant alleged forcible abduction in violation of Federal Kidnapping Act); United States v. Lopez, 542 F.2d 283 (5th Cir. 1976) (Defendant returned to United States by FBI after torture and interrogation by Dominican Republic authorities, allegedly at instigation of United States); United States v. Herrera, 504 F.2d 859 (5th Cir. 1974) (Defendant alleged illegal arrest, abduction and extradition from Peru).
As a matter of practice, however, defendant should have been afforded a probable cause hearing.
In January 1978 a criminal information was filed against defendant Ernest Millican by the United States Attorney for the Northern District of Texas. The information charged defendant with wilfully failing to file a federal income tax return for tax year 1975 in violation of the Internal Revenue Code, 26 U.S.C.A. § 7203. The information was neither verified nor supported by affidavit. It contained a brief statement of the facts underlying the crime charged and was signed by the United States Attorney and an assistant United States Attorney.
Pursuant to Rule 9, Fed.R.Crim.P., the clerk of the district court issued and a United States marshal personally served a summons which directed defendant to appear before the court and answer the charge set forth in the information. The day before defendant’s scheduled arraignment he filed papers entitled “Defendant’s Special Appearance” challenging the court’s jurisdiction to hear the case and moved for a Bill of Particulars.
After the arraignment, defendant, proceeding without counsel, filed a motion to dismiss the information for lack of probable cause because it was not supported by oath attesting that a crime had been committed. Further, defendant filed a “Notice and Petition for Order to Show Cause or an Order to Dismiss for Lack of Probable Cause,” reasserting his challenge to the validity of the unsworn information and alleging that the summons failed because it was unsupported by oath or affirmation. In addition defendant filed a Motion to Dismiss for Denial of Due Process complaining of the denial of a hearing and proof of probable cause. All of defendant’s motions were denied by the district court. No application for warrant of arrest of defendant was ever sought. From the record it appears that at no time before trial did the Government ever make a sworn showing of probable cause. Defendant was never taken into custody and remains free on bail pending the outcome of this appeal.
The crime with which defendant was charged, a misdemeanor punishable by not more than one year’s imprisonment, is properly charged by information rather than indictment. United States v. Kahl, 583 F.2d 1351, 1355 (5th Cir. 1978); Fed.R.Crim.P. 7(a). The information here, as required by Rule 7(c), Fed.R.Crim.P., contained a “plain, concise and definite written statement of the essential facts constituting the offense charged” and was signed by the Government’s attorney.
The information, as originally used in Great Britain, was a formal accusation which the King could make in his courts without any evidence and against all evidence. United States v. Tureaud, 20 F. 621, 622 (5th Cir. 1884). As prosecution by information became accepted practice in this country, courts disagreed over the need for probable cause supported by oath or verification in a valid information. Compare United States v. Tureaud, 20 F. at 622; United States v. Morgan, 222 U.S. 274, 282, 32 S.Ct. 81, 56 L.Ed. 198 (1911); United States v. Kennedy, 5 F.R.D. 310, 312 (D.Colo.1946), with Weeks v. United States, 216 F. 292, 298 (2d Cir. 1914). See also Albrecht v. United States, 273 U.S. 1, 6 n. 2, 47 S.Ct. 250, 71 L.Ed. 505 (1927). This Court and others required the support of an oath or verification only where the information was made the basis for an application for an arrest warrant. Christian v. United States, 8 F.2d 732 (5th Cir. 1925); Keilman v. United States, 284 F. 845 (5th Cir. 1922). The significance of decisions that no verification was needed may have been reduced by the fact that filing of informations required leave of the court and before granting leave the court had to satisfy itself that probable cause existed for the prosecution. See Albrecht v. United States, 273 U.S. at 5, 47 S.Ct. 250; Orfield, Warrant or Summons Upon Indictment or Information in Federal Criminal Procedure, 23 Mo.L.Rev. 308, 327 (1958). Rule 7(a), Fed.R.Crim.P., now permits filing of an information without leave of court.
A probable cause determination is not a constitutional prerequisite to filing of the information itself, Gerstein v. Pugh, 420 U.S. at 125 n. 26, 95 S.Ct. 854, nor have the Federal Rules of Criminal Procedure, in effect since 1946, been construed to require probable cause in an information in order to state a prosecutable offense. See United States v. Funk, 412 F.2d 452, 455 (8th Cir. 1969); United States v. Pickard, 207 F.2d 472, 474—475 (9th Cir. 1953). A demonstration of probable cause is required by the Fourth Amendment, of course, where the information is the basis for an arrest warrant. Albrecht v. United States, 273 U.S. at 5, 47 S.Ct. 250.
Rule 9(a) Fed.R.Crim.P., provides for the process used to secure defendant’s appearance, and provides:
Upon the request of the attorney for the government the court shall issue a warrant for each defendant named in the information, it if is supported by oath, or in the indictment. The clerk shall issue a summons instead of a warrant upon the request of the attorney for the government or by direction of the court. Upon like request or direction he shall issue more than one warrant or summons for the same defendant. He shall deliver the warrant or summons to the marshal or other person authorized by law to execute or serve it. If a defendant fails to appear in response to the summons, a warrant shall issue.
Professor Wright has concluded that since a summons may issue “instead of a warrant,” and a warrant may issue only on a sworn information, then a summons may issue only on a sworn information.
The procedure for a summons is set out in the second sentence of Rule 9(a), and speaks of issuing a “summons instead of a warrant.” • The first sentence allows issuance of a warrant upon an information only “if it is supported by oath.” If the information is not supported by oath, no warrant can issue, and there would be no authorization for issuing “a summons instead of a warrant.” This conclusion is further supported by the final sentence of Rule 9(a), which provides that if a defendant fails to appear in response to the summons, a warrant “shall issue.” If a summons could be issued on an information not supported by oath, and a warrant then issued for failure to appear in response to the summons, the end result would be that defendant could be arrested on warrant though there had never been a showing under oath of probable cause. This is not permissible.
1 Wright, Federal Practice and Procedure, § 151 at 342 (1969).
The same conclusion was drawn in United States v. Greenberg, 320 F.2d 467, 471 (9th Cir. 1963), from a similar analysis of the language of Rule 4, Fed.R.Crim.P., which provides for issuance of summons and warrants upon a complaint, rather than an information. A summons on a complaint may involve a higher degree of restraint than one on an information since if a defendant appears in response to the complaint he is likely to be required to post bail or suffer arrest and detention until a decision has been made on charges pending against him. See United States v. Greenberg, 320 F.2d at 471. See also 8 Moore’s Federal Practice, 14.05(1) at 4-32 (2d ed. 1978).
In this case the Government asserts that, although the rule provides that a warrant shall issue if the defendant fails to appear under the summons, a warrant for arrest will issue only after the court satisfies itself that probable cause exists for prosecution and the necessary oath is made. We have serious reservations as to whether this happens in practice. The Government’s case support, United States v. Evans, 574 F.2d 352 (6th Cir. 1978), is inapposite because there the warrants under which the defendant was arrested were issued under a statute stating that upon disobedience of an “appearance ticket” under a complaint, the court may issue a warrant “based upon the complaint filed.” Furthermore the form signed by the judge to order the warrants stated they were to be based on the complaint as did the warrants themselves. See United States v. Greenberg, 320 F.2d at 471. Cf. Rule 4, Federal Rules of Procedure for Trial of Minor Offenses before United States Magistrates.
Even if the Government’s assertion is accurate, however, or because it is accurate, a probable cause determination should also be made on the request of a defendant who responds to a summons. The summons, although not equal in physical restraint to a Rule 9 warrant carries considerable compulsion. Most persons would feel compelled to respond to a summons, as well they should. For the defendant who is subsequently found guilty beyond a reasonable doubt, there is really no harm. It would be strange indeed if evidence sufficient to convict were found to be insufficient for probable cause. It is the defendant who is acquitted who suffers if no probable cause under oath could have been furnished by the Government if it had been required before trial. That defendant has been required to suffer a trial that should not have occurred in the first place. Such a defendant should not have to disobey a summons to trigger a probable cause hearing. It is highly desirable for the district courts to establish, where it is challenged, that the Government has probable cause supported by oath before putting any defendant to trial.
The Government argues that by appearing on the summons rather than forcing his arrest by nonappearance, defendant waived any defects of process. The defendant made persistent efforts to obtain a probable cause determination. He should have had one, or the information should have been verified. Having now been convicted beyond reasonable doubt, however, he cannot upset that conviction on the argu ment that no probable cause was shown prior thereto.
Millican attacks his conviction on a number of other grounds: improper jury instructions, failure to provide a fair trial and the use of an information to charge him with failure to file an income tax return in violation of 26 U.S.C.A. § 7203.
|
10548636-28285 | CONTIE, Senior Circuit Judge.
Johnny Ray Bagby appeals from the district court’s order dismissing Bagby’s petition for a writ of habeas corpus pursuant to 28 U.S.C. § 2254 with prejudice. For the following reasons, we affirm the district court’s judgment in part, reverse the district court’s judgment in part and remand this case to the district court with instructions to grant the writ of habeas corpus consistent with this opinion unless the Commonwealth of Kentucky grants Bagby a new trial within a reasonable time.
I.
On June 7,1983, a three-count indictment was returned by the Taylor County, Kentucky Grand Jury charging petitioner Johnny Ray Bagby with the offenses of first-degree rape and second-degree burglary, and with being a second-degree persistent felony offender in violation of Kentucky Revised Statutes §§ 510.040, 511.030, and 532.080 respectively. According to count 1, petitioner on May 11, 1983, “engaged in sexual intercourse with another person [Cindy Arnold] by forcible compulsion.” According to count 2, petitioner, also on May 11, 1983, “with intent to commit a crime knowingly entered or remained unlawfully in the house of another person [Cindy Arnold].” Finally, according to count 3, petitioner had three previous felony convictions.
On March 27-28, 1984, a jury trial was held in Washington Circuit Court. Following trial, the court ordered and adjudged that Bagby was guilty of the crime of burglary in the second degree, rape in the first degree, but same being merged into the persistent felony second degree verdict.
Bagby appealed his conviction to the Kentucky Supreme Court. The supreme court issued a memorandum opinion and order affirming Bagby’s conviction.
Subsequently, Bagby filed a pro se petition for the writ of habeas corpus in the United States District Court for the Western District of Kentucky. Bagby advanced seven grounds for relief which the district court noted were the same grounds urged for reversal in the Kentucky Supreme Court.
On February 13, 1987, the district court filed a memorandum and order which dismissed Bagby’s petition with prejudice and denied his motion for appointment of counsel.
This timely appeal followed. Counsel has been appointed by this court. Bagby raises the following issues on appeal: (1) whether petitioner’s right to due process was violated when the state court refused to instruct the jury on first-degree sexual abuse; (2) whether petitioner’s right to due process was violated when the state court permitted the prosecuting witness to refer to petitioner’s photograph in a “mug book”; and (3) whether petitioner’s privilege against self-incrimination and Kentucky Revised Statutes § 421.225(1) were violated when the state court allowed comments at trial concerning petitioner’s failure to testify-
II.
A.
Initially, Bagby argues that his right to due process was violated when the state court refused to instruct the jury on first-degree sexual abuse.
“A state prisoner is entitled to relief under 28 U.S.C. § 2254 only if he is held ‘in custody in violation of the Constitution or laws or treaties of the United States.’ ” Engle v. Isaac, 456 U.S. 107, 119, 102 S.Ct. 1558, 1567, 71 L.Ed.2d 783 (1987). The state court’s failure to instruct the jury on lesser included offenses raises a question that is cognizable on habeas corpus review. Brewer v. Overberg, 624 F.2d 51, 52 (6th Cir.1980) (per curiam), cert. denied, 449 U.S. 1085, 101 S.Ct. 873, 66 L.Ed.2d 810 (1981); Allen v. Morris, 845 F.2d 610, 617 (6th Cir.1988). This is so because in some cases, the failure to give a requested instruction could deprive the defendant of the fundamental right to a fair trial secured by the fourteenth amendment. Brewer, 624 F.2d at 52.
In Beck v. Alabama, 447 U.S. 625, 100 S.Ct. 2382, 65 L.Ed.2d 392 (1980), the Supreme Court granted certiorari to decide the following question:
‘May a sentence of death constitutionally be imposed after a jury verdict of guilt of a capital offense, when the jury was not permitted to consider a verdict of guilt of a lesser included non-capital offense, and when the evidence would have supported such a verdict?’
Id. at 627, 100 S.Ct. at 2384 (quoting 444 U.S. 897, 100 S.Ct. 204, 62 L.Ed.2d 132 (1979)). Beck involved an Alabama death penalty statute which prohibited the trial judge from giving the jury the option of convicting the defendant of a lesser included offense, i.e., it required the jury to either convict the defendant of the capital crime, in which case it was required to impose the death penalty, or acquit him. Id. 447 U.S. at 627-29, 100 S.Ct. at 2384-85. The Supreme Court held that since the refusal to instruct the jury on a lesser included offense enhanced the risk of an unwarranted conviction, the state’s failure to so instruct the jury violated the petitioner’s due process rights. Id. at 633-46, 100 S.Ct. at 2387-94.
Two years later, in Hopper v. Evans, 456 U.S. 605, 606, 102 S.Ct. 2049, 2050, 72 L.Ed.2d 367 (1982), the Supreme Court granted certiorari in a habeas case to decide the following question: “[Wjhether, after invalidation of a state law which precluded instructions on lesser included offenses in capital cases, a new trial is required in a capital case in which the defendant’s own evidence negates the possibility that such an instruction might have been warranted.” The Court reviewed prior cases and concluded:
Beck held that due process requires that a lesser included offense instruction be given when the evidence warrants such an instruction. But due process requires that a lesser included offense instruction be given only when the evidence warrants such an instruction. The jury’s discretion is thus channelled so that it may convict a defendant of any crime fairly supported by the evidence. Under Alabama law, the rule in noncapital cases is that a lesser included offense instruction should be given if ‘there is any reasonable theory from the evidence which would support the position.’ The federal rule is that a lesser included offense instruction should be given ‘if the evidence would permit a jury rationally to find [a defendant] guilty of the lesser offense and acquit him of the greater.’ The Alabama rule clearly does not offend federal constitutional standards, and no reason has been advanced why it should not apply in capital cases.
Id. at 611-12, 102 S.Ct. at 2053 (citations omitted). The Court held that the facts in Hopper did not warrant an instruction on a lesser included offense.
Although Beck and Hopper were both capital cases and their holdings are accordingly limited, this court has applied their rationale in non-capital cases. For example, in Ferrazza v. Mintzes, 735 F.2d 967, 968 (6th Cir.1984) this court applied the principle of Beck and Hopper to a non-capital case. The court, however, held as follows: “We do not find evidence in the record below which ‘warrants’ an instruction on a lesser offense. The evidence supports the conviction of the petitioner for first-degree murder and does not support the commission of the crime with less culpable intent or diminished capacity.” Id.
Similarly, in Prather v. Rees, 822 F.2d 1418, 1423 (6th Cir.1987), this court recently applied the principle of Beck and Hopper in a habeas case in which the petitioner claimed entitlement to an attempted second-degree robbery instruction because his gun was inoperable and therefore not a deadly weapon under Kentucky Revised Statutes § 515.020. This court reasoned as follows:
As a matter of Kentucky law, a defendant is entitled to a lesser-included offense instruction only if the evidence would permit a jury to reasonably find the defendant guilty of the lesser-included offense but acquit him of the greater offense. This meets the ‘warranting’ requirement under Hopper. Thus, if a reasonable jury, on the evidence presented, could have convicted Prather of attempted second-degree (unarmed) robbery and acquitted him of the attempted first-degree (armed) robbery charge, then Prather’s constitutional rights were violated when the trial court refused to give the lesser-included offense instruction and the habeas writ should issue.
Id. (citations omitted). In Prather, this court declined to order the writ, thus upholding the petitioner’s conviction of attempted first-degree robbery, because the evidence showed that Prather intended to rob the van with the shotgun if at all, and under Kentucky law an inoperable weapon is a deadly weapon if the defendant intends to convince the victim it is deadly. Id. at 1423-24.
The instant case also arises under Kentucky law. In Reed v. Commonwealth, 738 S.W.2d 818 (Ky.1987), the Supreme Court of Kentucky elaborated as follows with respect to instructions on lesser included offenses:
Our law requires the court to give instructions ‘applicable to every state of case covered by the indictment and deducible from or supported to any extent by the testimony.’ It is irrelevant that the evidence from the parties does not indicate the need for a particular instruction. The determination of what issues to submit to the jury should be made based upon the totality of the evidence. And, as we said in Trimble v. Commonwealth, Ky., 447 S.W.2d 348, 350 (1969):
When the prosecution adduces evidence warranting an inference of a finding of a lesser degree of the charged offense, the court should instruct on the lesser degree even though the defendant presents the defense of alibi.
Id. at 822-23 (some citations omitted).
In Reed, the appellant was convicted of one count of first-degree rape and sentenced to a term of twenty years in the penitentiary. He argued, among other things, that the trial court committed prejudicial error by failing to give an instruction on second-degree sexual abuse. The appellant denied any sexual contact with the victim, but she testified positively that he raped her on five occasions. The Supreme Court of Kentucky noted that “[ojrdinarily, such evidence would not suggest the need for an instruction on any lesser included offense.” Id. at 822.
In this case, however, there was other evidence from which the jury might have concluded that appellant was guilty of the lesser offense of sexual abuse in the second degree. In addition to testifying for the Commonwealth during its case in chief, Mr. Barrett was called by the defense to give additional testimony. He repeated that B.R.C. had given a statement to her social worker as well as the city police that her uncle had ‘sexually abused’ her. He also read from another report made by the social worker in which he said she made ‘allegations of two incidents of sexual molestation by her uncle who was living in the home.’ When asked whether the social worker’s use of the terms ‘sexual abuse’ and ‘sexual molestation’ would include intercourse, Mr. Barrett said:
Social workers primarily use sexual molestation in speaking of fondling of genital areas.
Normally we would not use sexual molestation to include sexual intercourse. When asked what term would be used, he said:
Sexual intercourse depending upon what actually in fact happened. However, the more severe the sexual interaction the more specifically the field worker would describe the terms.
Id. Because, while there was substantial evidence that the appellant had committed the crime of rape, there was other evidence from which the jury could have reasonably concluded that he committed a lesser offense, failure of the trial court to properly instruct the jury was prejudicial. Id. at 823. For this reason, the Supreme Court of Kentucky reversed the judgment and remanded the case for a new trial.
Although decided subsequent to the Supreme Court of Kentucky’s decision in this case, Reed did not purport to create a new rule of law in Kentucky. Therefore, there is no obstacle to its application in the instant case. Cf. Linkletter v. Walker, 381 U.S. 618, 85 S.Ct. 1731, 14 L.Ed.2d 601 (1965).
Similar to Reed, in Blankenship v. Commonwealth, 311 Ky. 338, 224 S.W.2d 152 (1949), the Kentucky Court of Appeals held that because there was a question of fact concerning penetration, the judgment of conviction for having carnal knowledge of a female under the age of fifteen years was reversed and the trial court was directed to instruct the jury on the common law misdemeanor of attempting to carnally know a female under the age of consent and to instruct the jury that, if in doubt as to the degree of the offense committed, it should convict on the lesser offense. Id. 224 S.W.2d at 153. Following is the court’s relevant analysis:
Whether such an instruction [on attempted carnal knowledge of one under the age of consent] should have been given depends on whether there was a question of fact as to penetration. Penetration must be shown to sustain a conviction for the crime with which the appellant was charged. While the prosecuting witness stated that Blankenship compelled her to have intercourse with him, both of the girls stated that upon returning to the road he remarked, ‘The little wildcat wouldn’t let me have it. She clawed my eyes out.’ Blankenship denied penetration by his defense, which was in effect an alibi, because he said he did not force the prosecuting witness to go to the bottom with him and was never alone with her. Certainly this evidence raises a doubt on the question of penetration, which was for the jury’s determination, and it follows that the principle requiring instructions upon the whole law of the case has not been complied with.
Id.
In the instant case, although petitioner did not take the stand himself, he presented an alibi defense. The victim testified on direct examination as follows with respect to the question of penetration:
Q. Had you as far as any injury that you, no, let me ask you first, was there any penetration, did he, tell what happened about the sexual act.
A. Yes, he had intercourse with me. Yes he did.
Q. Alright, now the second time on the bed was there any penetration at that time?
A. Yes, he was trying, he was drunk.
Q. Now, when you say he was trying because, was he trying for penetration or do you—
A. He was trying[.]
Q. Well did he actually insert his penis inside?
A. Yes.
Q. Is there any doubt in your mind? A. No.
On redirect examination she testified as follows:
Q. I realize the statement that you said, you know, that you were afraid, I mean, even his condition, do you know, was it a normal intercourse act or—
A. I don’t know. I haven’t had sex enough to tell you what exactly.
Q. Well, is there any doubt that he did have his penis inside of you?
A. There’s no doubt.
Dr. Shipp, the doctor who examined the victim after the incident also testified at trial. On direct examination, he stated that he could not say technically that intercourse did or did not take place. He stated that judging from a slide he made it would appear that ejaculation in the vagina had not taken place. Dr. Shipp also testified concerning the effects of alcohol on a man’s ability to perform sexually:
Q. Doctor in your medical studies, you know, in medical school and residency and also in your speciatly [sic] can you state with any degree certainity [sic] as to the affects [sic] of alcohol on a man’s ability to ejaculate if he’s under the influence?
A. Yes, it’s a well know [sic] fact that somebody, a man that’s been drinking say, or not necessarily intoxicated but just had several drinks, a it [sic] cuts down on the chances, the chances of ejaculation and also performance as far as actually achieving erection and so on. Alcohol directly affects that. It can depend on the amount that, a few drinks, a person could still perform but may or may not ejaculate. A person who is intoxicated can not perform at all.
Q. Depending on the degree of a persons [sic] ability, if they had a certain amount they might have an erection but have intercourse but have no ejaculation but then at some point and time they wouldn’t even be able to have an erection.
A. If they were intoxicated enough.
On cross-examination, Dr. Shipp testified that the victim sustained no genital trauma.
Police Officer Shirley Carter testified that the lab analyses of the rape kit and the victim’s clothes were negative.
Reed and Blankenship make it clear that Kentucky law requires petitioner in the instant case to have received a jury instruction on first-degree sexual abuse. The victim’s testimony concerning the act of penetration was equivocal. Additionally, none of the experts were able to opine that penetration had occurred. Dr. Shipp’s testimony on the effects of alcohol on a man’s ability to perform sexually and the negative results of the lab analyses raise further doubt on the question of penetration. Therefore, the state court should have given an instruction on the lesser offense of first-degree sexual abuse.
The Supreme Court’s decision in Beck and Hopper and the cases in this circuit which construe them require this court to hold that petitioner’s right to due process was violated when an instruction on first-degree sexual abuse was refused and to order the grant of the writ of habeas corpus in the instant case. Of course, this holding only pertains to petitioner’s conviction of first-degree rape. We now will consider the remaining issues raised by petitioner to determine whether the writ should be granted as to his second-degree burglary conviction.
B.
Bagby next argues that his right to due process was violated when the state court permitted the prosecuting witness to refer to petitioner’s photograph in a “mug book.” “Errors of application of state law, especially with regard to the admissibility of evidence, are usually not cognizable in federal habeas corpus actions.” Matlock v. Rose, 731 F.2d 1236, 1242 (6th Cir.1984), cert. denied, 470 U.S. 1050, 105 S.Ct. 1747, 84 L.Ed.2d 812 (1985). Erroneous eviden-tiary rulings which result in the denial of fundamental fairness, however, will support habeas relief. Walker v. Engle, 703 F.2d 959, 962 (6th Cir.), cert. denied, 464 U.S. 951, 104 S.Ct. 367, 78 L.Ed.2d 327, cert. denied, 464 U.S. 962, 104 S.Ct. 396, 78 L.Ed.2d 338 (1983).
The Kentucky Supreme Court has recognized that the introduction into evidence of mug shots can constitute error. See Eberhardt v. Bordenkircher, 605 F.2d 275 (6th Cir.1979) (noting in a habeas case that the Kentucky Supreme Court had already held that the introduction of mug shots without a cautionary instruction in the underlying state proceeding violated state law).
In Eberhardt, this court was not required to decide whether the error of admitting the mug shots in that case was of a constitutional magnitude. We noted, however, that “[t]he use of mug shots has been strongly condemned in federal trials, as effectively eliminating the presumption of innocence and replacing it with an unmistakable badge of criminality.” Id. at 280.
In the instant case, the transcript reveals that the following reference to a mug book was made by the victim:
Q. How long was it after that before you saw this defendant again?
A. The hearing.
Q. The hearing in court?
A. Yep. Well I seen a picture.
Q. Alright. Did anyone ever show you any pictures?
A. Yeah, Sammy Knopp brought a book, a mug book by my house—
Defense counsel’s objection to this testimony was sustained immediately by the trial court, but his request for a mistrial was denied. The prosecutor stated at side bar that it did not object to an admonishment to the jury concerning this matter, but the joint appendix does not reveal that one was given. However, the prosecutor inexplicably returned to this line of questioning, referring to “pictures” rather than specifically to a mug book, without further objection or admonition from the court. Nonetheless, we are unconvinced that the victim’s brief reference to a mug book, an objection to which was sustained, rendered petitioner’s trial fundamentally unfair and violated due process.
C.
Finally, Bagby argues that his privilege against self-incrimination was violated by comments at trial on his failure to testify. This court has recognized that improper comment on the failure to testify can form the basis for habeas relief. See Raper v. Mintzes, 706 F.2d 161 (6th Cir.1983). Raper also recognized a distinction between direct and indirect comments on the failure to testify:
The fifth amendment provides that ‘no person ... shall be compelled in any criminal case to be a witness against himself....’ An important corollary to that right is that neither a prosecutor nor a trial judge may comment upon a criminal defendant’s failure to testify. Griffin v. California, 380 U.S. 609, 85 S.Ct. 1229, 14 L.Ed.2d 106 (1965).
The rule set forth in Griffin applies to indirect as well as direct comments on the failure to testify. Cases involving direct comments pose little difficulty as the court must reverse unless the prosecution can demonstrate that the error was harmless beyond a reasonable doubt. Cases such as the present one, involving indirect comments on the failure to testify are more troublesome. General references to evidence as uncontradicted, while not recommended, may not reflect on the defendant’s failure to testify where witnesses other than the defendant could have contradicted the evidence. Such statements are more objectionable where the facts are such that only the defendant could have contradicted the evidence in question. However, we recently refused to adopt a per se rule that comments as to the uncontradicted nature of evidence violated Griffin even where the evidence in question could only have been contradicted by the defendant. Rather, the court must conduct a ‘probing analysis of the context of the comments,’ in order to determine ‘[w]hether the language used was manifestly intended to be or was of such a character that the jury would naturally and necessarily take it to be a comment on the failure of the accused to testify.’
Id. at 164-65 (footnote and some citations omitted).
In Spalla v. Foltz, 788 F.2d 400 (6th Cir.), cert. denied, 479 U.S. 935, 107 S.Ct. 410, 93 L.Ed.2d 362 (1986), we determined that the probing analysis referred to in Raper requires consideration of the following four factors:
1) Were the comments “manifestly intended” to reflect the accused’s silence or of such a character that the jury would “naturally and necessarily” take them as such;
2) Were the remarks isolated or extensive;
3) Was the evidence of guilt otherwise overwhelming;
4) What curative instructions were given, and when.
Id. at 404.
In the instant case, petitioner points to two comments which he argues combine to create a violation of his privilege against self-incrimination. First, the prosecuting witness testified as follows during direct examination:
Q. Did you do anything that, what did you do that might have implied permission if anything like this happen or not do?
A. I didn’t, I had never seen him before, he come barreling through the window. He knew what he was going to do before he came through that window and he did it and he admitted it. He just won’t admit it now.
Second, the prosecutor made the following comment during closing argument:
Remember, about, it’s uncontradicted that testimony about what happened there. We have to assume on what Cindy said. Mr. Goff’s [sic] and I agree on that cause all of that went uncontradict-ed about what happened in that house. You know the testimony is [sic].
Both statements constitute indirect comment on the failure to testify under Raper. Defense counsel objected to the first comment on the ground that the witness had commented on the defendant’s guilt and moved for a mistrial. The trial court overruled the objection. Defense counsel did not object to the second comment. Respondent has argued, therefore, that petitioner is barred by procedural default from challenging the prosecutor’s comment. See Raper, 706 F.2d at 163-64.
The victim’s comment that “[h]e just won’t admit it now,” can be construed as a comment on petitioner’s failure to testify. The comment could also be construed to mean that if and when petitioner did testify he would deny “it.” Particularly since the comment was made during the prosecution’s case in chief when petitioner had not yet testified, this construction of the comment is entirely reasonable. Additionally, the comment could be construed to mean that the theory of the defense at trial was that petitioner did not do “it.” This construction is also reasonable since the comment does not refer specifically to petitioner’s failure to testify.
The first factor in Spalla requires that the comment be manifestly intended to reflect the accused silence or of such a character that the jury would naturally and necessarily take it as such. The comment that “[h]e just won’t admit it now” does not satisfy the first factor in Spalla.
With respect to the second comment, we begin by noting that when a respondent maintains that a habeas claim is precluded by the petitioner’s failure to observe a state procedural rule, this court must undertake a complex analysis. Maupin v. Smith, 785 F.2d 135, 138 (6th Cir.1986). “First, the court must determine that there is a state procedural rule that is applicable to the petitioner’s claim and that the petitioner failed to comply with the rule.” Id. Failure to abide by a state’s contemporaneous objection rule will bar ha-beas relief under certain circumstances. McBee v. Grant, 763 F.2d 811, 813 (6th Cir.1985). Kentucky cases have held that an appellant’s failure to object contemporaneously can constitute a waiver of even a constitutional violation. See Jackson v. Commonwealth, 450 S.W.2d 244, 246 (Ky.1970). In the instant case, as we have indicated above, petitioner failed to object to the prosecutor’s closing argument.
Second, this court must determine whether the state courts actually enforced the state procedural sanction. Maupin, 785 F.2d at 138. Cf. McBee, 763 F.2d at 813 (stating that the cause and prejudice standard is not applied when the state court overlooks the procedural default and instead disposes of the issue on the merits). In the instant case, the Supreme Court of Kentucky’s memorandum opinion does not specifically address petitioner’s argument concerning the prosecutor’s remarks during closing argument. Instead, the final sentence reads as follows: “The other assertions of error are either without merit or not preserved for appellate review.” Thus, it is not clear whether the Kentucky Supreme Court reached the merits of petitioner’s argument.
If the basis for the state court’s decision is unclear, this court must look to the argument presented to the state court. Raper, 706 F.2d at 164. This court has applied the following rules, taken from the Second Circuit’s opinion in Martinez v. Harris, 675 F.2d 51, 54-55 (2d Cir.), cert. denied, 459 U.S. 849, 103 S.Ct. 109, 74 L.Ed.2d 97 (1982), to ascertain the basis of the state court’s decision:
(1) if the state prosecutor only argued the merits of the petitioner’s claim before the state court and failed to raise the procedural default issue the federal court may assume that the state court ruled only on the merits; (2) if the prosecutor relied solely on the procedural default the federal court may assume that that was the only basis for the state court’s decision; and (3) if the prosecutor argued in the alternative the federal court may assume that the state court did not rely solely on the merits unless it says so.
Raper, 706 F.2d at 164. In the instant case, the state argued procedural default and the merits in the alternative. Therefore, this court may assume that the state court did not rely solely on the merits of petitioner’s argument concerning the prosecutor’s closing argument.
The third step in the Maupin analysis requires this court to determine whether the state procedural forfeiture is an adequate and independent state ground on which the state can rely to foreclose review of a constitutional claim. Maupin, 785 F.2d at 138. In the instant case, petitioner does not argue that it is not.
Fourth, the petitioner must demonstrate that there was cause for him to not follow the state procedural rule and that he was actually prejudiced by the alleged constitutional error. Id. In the instant case, petitioner has given no explanation for his procedural default.
|
11750527-9269 | ORDER ON APPEAL
KOVACHEVICH, Chief Judge.
This cause is before this Court on Appellant, UNITED STATES OF AMERICA [United Statesj’s, appeal from the amended final judgment of the United States Bankruptcy Court for the Middle District of Florida in Adversary Proceeding Number 96-1199.
STANDARD OF APPELLATE REVIEW
This Court functions as an appellate court in reviewing a bankruptcy court’s decision. 28 U.S.C. § 158(a). Findings of fact by the Bankruptcy Judge shall be upheld on appeal unless found to be clearly erroneous. Fed.R.Bankr.P. 8013; In re Downtown Properties Ltd., 794 F.2d 647 (11th Cir.1986). A finding of fact is “clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.” United States v. United States Gypsum Co., 333 U.S. 364, 68 S.Ct. 525, 92 L.Ed. 746 (1948). Appellant is entitled to an independent, de novo review of all conclusions of law and the legal significance accorded to the facts. In re Owen, 86 B.R. 691 (M.D.Fla.1988).
BACKGROUND
This appeal arises out of the Chapter 11 bankruptcy proceedings involving sister corporations American Leasing and Acceptance Corporation, and American Leasing and Acceptance Corporation of Lakeland [collectively “American Leasing”], which were consolidated in the Bankruptcy Court. American Leasing purchased used cars and sold or leased them to consumers. American Leasing used the notes and leases generated by these transactions to obtain funds from private individuals it called “investors.” It marketed the “investment” it offered as the sale at a discount of the stream of income from a particular note or lease. Each transaction between American Leasing and an investor involving a lease was accompanied by the following set of transaction documents:
1.A “Specific Grant of Lease Payments” executed by American Leasing, stating that as consideration for the purchase of payments for a particular lease identified in the document, American Leasing assigned to the investor all payments under that lease. The document recites that “In the event of default, the assignee may seek payment directly from [American Leasing] without need to proceed first against lessee.”
2. A “Lease Payments Assignment” executed by American Leasing, stating that American Leasing assigned to the investor all payments due under a particular lease identified in the document. The document includes the following language:
The assignee shall not be bound to take any steps necessary to preserve any rights under the lease or this assignment or any accompanying agreements or documents against prior parties. Any such steps will be taken by [American Leasing]....
It is understood and agreed that [American Leasing] will continue to collect all lease payments and upon receiving said payments, forward same to the assignee.
In the event of default of payment of said assigned lease payments, [American Leasing] hereby agrees that within 45 days of said default to either substitute lease payments of an equal or greater amount or pay the remaining principal balance in full to the date of default....
It is understood that assignee is purchasing only the lease payments called for under the lease and that title to the vehicle shall remain with lessor.
3. An “Agreement to Purchase” executed by American Leasing and the investor stating that the investor agreed to purchase the lease payments on a particular lease identified in the document. The document further states that American Leasing “will pay for said contract in full and will service the account by collecting the monthly payments and forwarding same to purchaser. ... It is further understood that full recourse on this account is given to the purchaser by American Leasing & Acceptance Corp. via a separate agreement.”
4. The underlying lease.
5. An amortization schedule allocating the payments the investor would receive to principal and interest.
The documents relating to transactions involving notes rather than leases were essentially the same, except that they referred to installment payments, rather than lease payments.
In practice, investors paid American Leasing money up front. Lessees and purchasers sent their payments to American Leasing, and American Leasing sent checks to investors without regard to whether the purchaser or lessee had actually made a payment. In its own internal bookkeeping, American Leasing apparently treated the funds it received from investors as loans. Its balance sheets listed the notes and leases as accounts receivable and the payments owed to investors as accounts payable. However, American Leasing did not claim a deduction for interest expense on its 1991 or 1992 tax returns. It did claim an interest expense deduction on its 1993 and 1994 tax returns based on the payments it made to its investors. The bankruptcy schedules American Leasing filed listed the notes and leases as assets and the amounts due investors as accounts payable. In the bankruptcy proceedings, the investors were treated as unsecured creditors.
The trustee in bankruptcy commenced an adversary proceeding in the Bankruptcy Court, in part to object to the United States’ claim for corporate income taxes. At issue was whether American Leasing was entitled to claim deductions for interest expense on its 1991, 1992, 1993, and 1994 tax returns based on the payments it made under the transactions described above. The government argued that the under the rule of Commissioner v. Danielson, 378 F.2d 771 (3d Cir.1967), American Leasing was bound by the terms of the transaction documents, and that the transaction documents showed the transactions between American Leasing and the investors to be the sale of chattel paper. The trustee in bankruptcy contended that the transaction documents were ambiguous as to whether the transactions were sales of chattel paper or loans, but that the surrounding circumstances showed that the transactions were in substance loans, making a portion of the amount American Leasing paid to investors deductible as interest expense.
The Bankruptcy Court made the following findings of fact relevant to the issues on appeal here:
In order to obtain funds needed to purchase used cars at the car auction, the Debtors solicited funds from individuals (Investors). Although those individuals were, and still are, referred to as Investors, they did not purchase any stocks and did not acquire an equity interest in either of the Debtors. Rather the investors advanced funds to the Debtors toward the purchase of specific automobiles which were then to be sold or leased to a specific customer by the Debtors. When the automobile was sold or leased to the customer, the Debtors assigned the particular contract to the Investor.
It is without dispute that if a particular assigned contract went into default, the Debtor was required to substitute another contract of equal or greater value or to pay the contract in full, giving the Investor full recourse on the contract. Further, all contracts assigned were also guaranteed by the Debtors. Some Investors perfected a security interest in the cars for which they advanced funds in order to enable the Debtors to make the purchase, while others did not acquire title to the cars and were only purchasing a stream of payments or the note underlying a lease agreement or sale to a third party.
The Investors never dealt with the purchasers or lessees of the cars. Rather the Debtors handled all matters such as billing, collection, and repossession, with their customers and the Investors simply received monthly checks from the Debtors. Investors received their monthly checks regardless of whether the lease payments were made to the Debtors.
The order neither discussed whether the rule in Commissioner v. Danielson applies in this case nor indicated whether the Bankruptcy Court found the transaction documents ambiguous as to whether the transactions were the sales of chattel paper or loans. Nor did it address the question raised by the government of whether the transactions in questions were sales of chattel paper rather than loans. Instead, it stated that the transactions between American Leasing and the investors “were, in fact, loans and not the repayment of investments” because “Investors did not purchase stock or any other type of ownership interests in the Debtors.” On that basis, the bankruptcy court held that American Leasing was entitled to interest expense deductions for the payments it made to investors in 1991, 1992, 1993, and 1994.
ANALYSIS
The sole issue on appeal is whether American Leasing was entitled to claim an interest expense deduction based on the payments it made to investors in 1991, 1992, 1993, and 1994. The government argues that the bankruptcy court erred in not applying the rule of Commissioner v. Danielson, 378 F.2d 771 (3d Cir.1967) in this case. This rule provides that:
a party can challenge the tax consequences of his agreement as construed by the Commission only by adducing proof which in an action between the parties to the agreement would be admissible to alter that construction or show its unenforceability because of mistake, undue influence, fraud, duress, etc.
|
6745178-22959 | RAY, District Judge.
On the grounds “that the said indictment does not state facts sufficient to constitute a crime under any statute of the United States, and upon the further ground that it appears upon the face of the indictment that the matters charged against the said defendants do not constitute a crime under any statute of the United States,” and “that Congress has not constitutional power to prohibit the taking within the United States of pictures of objects beyond the border of the United States, as alleged in the said indictment, and that the statute defining the substantive offense charged in this indictment, in so far as it prohibits the acts therein described, is unconstitutional and void,” the defendants, except defendant Orkeny, who has not been apprehended, demur to an indictment found and filed April 7, 1916, charging them, first, with having conspired to commit an offense against the United States, in violation of section 37 of the Criminal Code of the United States, bv agreeing to viólate section 1 of the Act of July 31, 1912, c. 263 (37 Slat. 240, 4 U. S. Comp. St. 1913, § 10416), being an “act to. prohibit the importation and the interstate transportation of films,, or other pictorial representations of prize fights, and for other purposes,” and, second, with having actually violated that provision of the criminal laws of the United States. That section reads as follows :
“It shall be unlawful for any person to deposit or cause to be deposited in the United States mails for mailing or delivery, or to deposit or cause to be deposited with any express company or other common carrier for carriage, or to send or carry from one state or territory of the United States or the District of Columbia to any other state or territory of the United States or the District of Columbia, or to bring or to cause to be brought into the United States from' abroad, any film or other pictorial representation of any prize flglit or encounter of pugilists, under whatever name, which is designed to be used or may be used for purposes of public exhibition.”
The indictment charges in count 1 that the defendants, naming them:
“In violation of the provisions of section 37 of the Criminal Code of the United States of America, did on .and previous to the 2d day of April, 1916, unlawfully, knowingly and feloniously conspire, combine and confederate together among themselves to commit an offense against the United States of America, that is to say, to violate the provisions of section 1 of the act of Congress approved July 31, 1912, and known* as an act to prohibit the importation and the interstate transportation of film's or other pictorial representations of prize fights and for other purposes, in the manner following; that is to say: That the said James J. Johnston, Lawrence M. D. McGuire, Harold T. Edwards, Isaac W. Ullman, Harry A. Fishbock, W. V. Bryrner, and James J. Orkeny, should and would bring and cause to be brought into the United States of America, films and other pictorial representations of a prize fight, designed to he used and which might be used for the purposes of public exhibition, to wit, the Johnson-Willard prize fight, held at Havana, Cuba, April 15. 1915, by setting up and operating a camera and motion picture machine or machines and apparatus upon the international boundary between the United States of America and the Dominion of Canada, in the town of Champlain, county of Clinton and state of New York, and within the jurisdiction of this court, and the parish of Lacolle, province of Quebec, Dominion of Canada, and about one mile north of Rouses Point, New York, and containing a film and pictorial representation of a prize fight, the prize fight aforesaid; that a portion of said camera and apparatus and machine would and should be placed in the Dominion of Canada, and the other portion thereof in the United States of America at the aforesaid place, through and by means of which said camera, machine and apparatus said pictorial representations of the aforesaid prize fight were to be brought ánd caused to be brought into the United States of America by means of the mechanical operation of said camera machine ap-. paratus and the action of the atmosphere, sunlight and electric light transferring same and bringing from picture film's of the said prize fight, placed and operated in the portion of said machine which would then be in the Dominion of Canada, to the said camera placed upon the American side, for the purpose of bringing the said pictures and pictorial representations into the United States of America, intending and designing such pictorial representations of such prize fight to be used and which might be used for the purposes of public exhibition in the United States and elsewhere.
“That in pursuance to the said conspiracy and during the continuance thereof, and in execution and to effect the object of the same, the said James- J. Johnston, Lawrence M. D. McGuire, Harold T. Edwards, Isaac W. Ullman, Harry A. Fishbeck, W. Y. Brymer, and James J. Orkeny did on or about the said 2d day of April, 1916, in the Northern district of New York and within the jurisdiction of this court, unlawfully, knowingly and feloniously set up a camera motion picture machine and other apparatus upon the said international boundary line between the United States of America and the Dominion of Canada, about one mile north of Rouses Point, New York, in the Northern district of New York, for the purpose of bringing and causing to be brought into the United States, from abroad, films and other pictorial representations of a prize fight, to wit, the Johnson-Willard prize fight, held at Havana, Cuba, April 15, 1915, intended to be used, designed to be used and which might be used for the purposes of public exhibition in the United States and elsewhere; that a part of said machine, namely, the camera and other apparatus was placed in the town of Champlain-, Clinton county, in the state of New York, in the district aforesaid, and the other part thereof, containing films of and containing pictures of said fight and other apparatus was placed about one foot distant therefrom in the parish of Lacolle, province of Quebec, Dominion of Canada, and that said machine, camera and apparatus were controlled and operated on said date through means of a crank, chain, storage battery, electric lights, sunlight, air and other mechanical devices set in motion, propelled and operated by the said persons, to wit, James J. Johnston, Lawrence M. D. McGuire, Harold T. Edwards, Isaac W. Ullman, Harry A. Fishbeck, W. Y. Bry-mer, and James J. Orkeny in both the United States and the Dominion of Canada, and that on account of and by means of the operation thereof on said date, pictures, pictorial representations' and films of said prize fight were brought and caused to be brought from the Canadian side or portion of said machine and apparatus in the Dominion of Canada, into the camera and apparatus on the American side of the same, thereby bringing and causing to be brought into the United States, from abroad and from the Dominion of Canada, films and other pictorial representations of said prize fight which were intended and designed to be used and which might be used for the purpose of public exhibition in the United States and elsewhere, by means of the mechanical operation of the aforesaid machine, contrary to the form of the statute in such cases made and provided and against the peace and dignity of the United States of America.”
Count 2 charges that the defendants did on the 2d day of April, 1916:
“In the Northern district aforesaid and within the jurisdiction of this court, unlawfully, knowingly and feloniously bring and cause to be brought into the United States of America, and into the.connty of Clinton in the state of Now York, in the Northern district of said state of New York, films and other pictorial representations of a prize fight, to wit, the Johnson-Willard prize fight, held at Havana, Cuba, April 15, 1915, and which were then and there designed to be used, and were so brought in to be used, and which might be used for the purposes of public exhibition in the United States and elsewhere in the following manner: By setting up and causing to be set up and operated a cairi-era and moving picture machine and apparatus upon the international boundary line between the United States and Canada, about one mile north of Kouses Point, New York. That a part of said machine and apparatus, viz., the camera portion thereof and other apparatus was placed within the United States, to wit, in the town of Champlain, Clinton county, state of New York, Northern district of New York, and within the jurisdiction of this court, and the remaining portion of said machine or machines and apparatus connected and operated together was placed in the parish of Laeolle, province of Quebec, Dominion of Canada, which said camera and machine and apparatus were then and there operated by means of mechanical devices set in motion by James J. Johnston, Lawrence M. D. McGuire, Harold T. Edwards, Isaac W. Ullman, Harry A. Pishheck, W. Y. Brymer, and Janies J. Orkeny, and on account of and hy means of the operation thereof, films and other pictorial representations of said prize fight were taken from the films of said prize fight placed in said machine on the Canadian side thereof, and through the mechanical operation of said machine and apparatus and camera transmitted to the American side, which said mechanical operation was set in motion and propelled by the aforesaid persons, and by sucb means and by the use of air, sunlight, electric light and otherwise, said films and pictorial representations of the aforesaid prize fight were then and there brought and caused to be brought into the United States from the Dominion of Canada for-use, and by said persons were designed to be used and which might be used, for the purpose of public exhibition of the same and of said prize fight and encounter of pugilists in the United States and elsewhere, contrary to the form of the statute in such cases made and provided and against the peace and dignity of the United States of America.”
The third count is substantially the same as count 2, except it charges that the offense was committed April 3, 1916.
The main contention of the defendants is that this indictment shows on its face that no film, or physical picture, or physical pictorial representation of a prize fight was actually brought into the United States from the Dominion, of Canada, but that by an ingenious arrangement of apparatus, camera, film, etc., a picture of a prize fight was photographed on the United States side of the natural boundary from a film located on the Canadian side, and that such process and operation, even if the moving picture of the prize fight was reproduced on the United States side of the border line between the United States and Canada, does not constitute a bringing or a causing to be brought into the United States from abroad — that is, from Canada — of either a film or other pictorial representation of any prize fight, etc., within the meaning of the section quoted. The main weakness in this argument is that it assumes the indictment does not mean what it says when it charges in plain and unmistakable language that defendants—
“did on the 2d day of April, 1918, * * * bring and cause to be brought into the United States of America * * * films and other pictorial representations of a prize fight, to wit, the Johnson-Willard prize fight,” etc.
Here is a plain charge of bringing in films and other pictorial representations of such prize fight. Then follows a description of the mode and manner in which such physical objects, films, and other pictorial representations of such prize fight were actually brought into the United States. The indictment does not state and charge that a photograph was taken on the United States side of the international line of a film or picture of a prize fight located on the Canadian side, but, after describing to an extent an apparatus, etc.,, says:
■ “And on account of and by means of the operation thereof [such apparatus, etc.], films and other pictorial representations of said prize fight were taken, from the films of said prize fight placed in said machine on the Canadian side thereof, and through the mechanical operation of said machine and apparatus- and camera transmitted to the American side”
—that is, brought over and carried or forwarded ,to the American side. But, further, the indictment says:
“Which said mechanical operation was set in motion and propelled by the-wforesaid persons [the defendants], and by such means [mechanism] and by the use of air, sunlight, electric light and otherwise said films and pictorial' representations of the aforesaid prize fight were then and there brought and caused to be brought into the United States from the Dominion of Canadas for use,” etc.
Even if the indictment charges that “films and pictorial representations of said prize fight” were reproduced on the Canadian side from, the films placed there, in plain and unequivocal language it further-says that by the means and mechanism described and other means “said films and pictorial representations” were then and there brought and caused to be brought into the United States, etc. This court cannot be informed just what the evidence will show, and that is not the-question here. It may appear from the evidence that no film or pictorial representation was brought into the United States, but the indictment plainly alleges that one or more films and one or more pictorial representations of the prize fight named were brought into the United States', and into the Northern district of New York, and that same were designed to be used and .could be used and might be used" for purposes of public exhibition. It would be a waste of time to consider a case which argument states the evidence will show. It will be time enough to consider that when the evidence is before the court. It is clear that no conviction can be had if the evidence fails to show the bringing in from abroad of a film or a pictorial representation of a prize fight.
The conspiracy count plainly charges a conspiracy to commit a crime against the United States, and as plainly charges the commission of an overt act in execution of* such conspiracy. The other counts-charge- the defendants with having actually brought into the United' States from the Dominion of Canada, not only a film, but other pictorial representation of a prize fight, naming it, and that such film and pictorial representation was capable of being used and designed to- be-used and might be used for purposes of public exhibition. The times when and the place where these offenses were committed are plainly and clearly specified, and tin- defendants are also informed so far as-possible as to, the means claimed to have been used by them in bringing in such films and other pictorial representations of a prize fight.
These means, this apparatus and its workings, may have been a new mode of bringing in or transmitting films and other pictorial representations of this prize fight from Canada to the United States; but this is immaterial, provided the use and operation of the means employed did bring from the Dominion of Canada into the United S'tates films and other pictorial representations of the prize fight which were intended to be used and which could be used for purposes of public exhibition in the United States. The indictment charges that this was actually done by the operation by defendants of the instrumentalities actually employed. No court has the right to assume, or presume, or guess, or speculate, or theorize that this could not be done by the use of such means. The indictment says it was done.
Constitutionality of the Law.
The control of the importation of articles into the United States and of their transportation from state to state is within the constitutional power of Congress. It and it alone regulates interstate and foreign commerce. It has the right to say what aliens, and under what conditions such aliens, may come into the United States, and also what articles of use and commerce may come into the United States, or go from state to state. It has the right to prohibit the bringing into the United States of articles which it deems injurious to the morals and general welfare of the people of the United States, or their transportation from state to state. In Hoke v. United States, 227 U. S. 308, 322, 33 Sup. Ct. 281, 284 (57 L. Ed. 523, 43 L. R. A. [N. S.] 906, Ann. Cas. 1913E, 905), the constitutionality of the so-called “White Slave Act” (Comp. St. 1913, §§ 8812-8819) was under consideration, and Mr. Justice McKenna, in giving the opinion of the'court, said:
■‘Our dual form of government has its perplexities, state and nation having different spheres of jurisdiction, as we have said ; but it must be kept in mind that we are one people, and the powers reserved to the states and those conferred on the' nation are adapted to be exercised, whether independently or concurrently, to promote the general welfare, material and moral. This is the effect of the decisions, and surely, if the facility of interstate transportation can be taken away from the demoralization of lotteries, the debasement of obscene literature, the contagion of diseased cattle or persons, the impurity of food and drugs, the like facility can be taken away from the systematic enticement to and the enslavement in prostitution and debauchery of women, and, more insistently, of girls.”
The brutalizing and pernicious effect, especially on the young, of looking on physical encounters between human beings in the shape of actual fights, where the fight is “to the finish” and until the one or the other of the combatants is “knocked out” and rendered physically incapable of further action, offensive or defensive, are well known and recognized almost everywhere. In these clays of “movies,” or moving picture shows, it was seen that, while it was impossible for such brutal scenes to be enacted within the United States, because of state laws prohibiting them, still moving film pictures of the actual fight taking place outside the United States, showing it in all its harrowing details, might be taken and developed and brought into the United States, and the fight there reproduced in the so-called “moving picture shows” as one of the'attractions of the “movies.” Therefore Congress, remembering that “the powers reserved to the states and those conferred on the nation are adapted to be exercised, whether independently or concurrently, to promote the general welfare, material and moral,” saw fit to absolutely prohibit the bringing into the United States of any film or other pictorial representation of one of these prize fights which had taken place in some other country, and which might be used for purposes of public exhibition. Congress has determined by this legislation that, in enacting it, it was promoting tire “general welfare, material and moral.”
Congress has closed our doors against the importation of lewd and indecent pictures, the exhibition of which has a tendency to debase, degrade, and demoralize, and it has placed its ban on the importation of pictures showing a brutal prize fight capable of public exhibition. I do not think any court will have the temerity to hold that by so doing Congress has trenched on the rights and liberties of the people. In Hipolite Egg Co. v. United States, 220 U. S. 45, 31 Sup. Ct. 364, 55 L. Ed. 364, the Supreme Court denominated adulterated drugs and foods as “outlaws of commerce,” and said that their confiscation by law was appropriate to the right to bar them from interstate transportation, and completed the purpose of the law by not merely preventing their physical movement, but preventing trade in them between the states. The constitutional power of Congress over commerce extends, not only to interstate, but to foreign commerce, and what it may do with respect to the one it may do with respect to the other. It is no objection that these laws have the quality of police regulations, for, while the police power abides with the several states, still “Congress may adopt not only the necessary but the convenient means necessary to exercise its power over a subject completely within its power, and such means may have the quality of police regulations.” Hoke v. United States, 227 U. S. 308, 33 Sup. Ct. 281, 57 L Ed. 523, 43 L. R. A. (N. S.) 906, Ann. Cas. 1913E, 905; Gloucester Ferry Co. v. Pennsylvania, 114 U. S. 196, 5 Sup. Ct. 826, 29 L. Ed. 158.
Congress has provided for the rejection of the diseased and immoral, and this legislation has the quality of police regulation. There is no inherent right in the enjoyment of liberty under our Constitution to do wrong, or to possess here or bring into the United States from other countries, articles, such as pictures, which, if exhibited, only tend to debase and degrade the beholder and lower the moral standard of our people. The general policy of nearly all, if not all, the states of the Union, is shown by the several laws prohibiting prize fights with'in their borders. So each state might prohibit the exhibition, or having in possession, of a pictorial representation of a prize fight or of_a film which would reproduce one. This is for the states, but Congress can aid by prohibiting.the bringing from any other country into any state or territory of the United States, or the District of Columbia, any pictorial representation of a prize fight which took place abroad, or any film calculated to reproduce same, and which, it is well known, may be done with nearly the same vividness as though the actual fight was going on before the eyes of the beholder. Weak and puny, indeed, would that government be which is powerless to prohibit by the enactment and enforcement of appropriate laws the importation of articles which, when exhibited or put to use, degrade its people, or lower the standard of the morals of its people. Congress has not undertaken to say that such films and pictorial representations of a prize fight shall not be exhibited within a state, leaving that to the state itself; but it has said, acting under and by virtue of its constitutional right to absolutely control and regulate interstate and foreign commerce, that such films and pictorial representations shall not be brought or caused to be brought into the United States from abroad, or carried from slate to state through or by means of the mails or otherwise.
But it is useless to discuss this question further, as the constitutionality of the act has been upheld by the Supreme Court of the United States in Weber v. Freed, Collector, etc., 239 U. S. 325, 36 Sup. Ct. 131, 60 L. Ed.-, decided December 13, 1915, where the court, by Mr. Chief Justice White, said:
|
5642393-16649 | MEMORANDUM AND ORDER
VON DER HEYDT, Chief Judge.
THIS CAUSE comes before the court on cross-motions for summary judgment. Two cases have been consolidated in this proceeding. They both arise in admiralty and concern enforcement of the Fishery Conservation and Management Act of 1976 (FCMA). See generally 16 U.S.C. §§ 1801- 82 (1976). Jurisdiction therefore exists based on 16 U.S.C. § 1861(d) and 28 U.S.C. § 1333 (1976).
I. FACTS
The case involves a suit for condemnation and forfeiture of defendant vessels for alleged violations of the Fishery Conservation and Management Act. The FCMA was a Congressional response to the perceived need to conserve and manage valuable fishery resources off the coast of the United States.
The Act significantly affected both domestic and foreign fishing in American waters. United States jurisdiction was increased to 200 miles by the establishment of a fishery conservation zone 197 miles in width measured from the seaward boundary of the territorial waters. 16 U.S.C. § 1811 (1976). Exclusive authority for fishery management within the zone, and even beyond in limited circumstances, was given to the federal government. Id. § 1812. Stated legislative purposes of the FCMA reflect Congress’ desire to conserve and manage fishery resources as well as promote domestic utilization of same. Id. § 1801(b). Consistent with these goals, foreign fishing activities are subjected to comprehensive regulation. Foreign fishing is only allowed if an international fishery agreement (treaty) existed at the time of the Act or becomes effective between the United States and a foreign nation subsequent to passage of the Act. Id. § 1821. In such an event, vessels engaged in foreign fishing are still required to have a valid permit issued according to the procedure set forth in the FCMA. Id. §§ 1821(a)(3), 1824. Regulations promulgated under the Act also require, among other things, that foreign fishing vessels not engage in fishing within the boundaries of any state. 50 C.F.R. § 611.7(b)(1) (1980).
Enforcement of the Act on the water itself is delegated to the United States Coast Guard in conjunction with the National Marine Fisheries Service. Authorized personnel are given broad powers to randomly board and search those fishing vessels subject to the provisions of the.Act, and seizure of a vessel along with its contents is sanctioned in proper instances. 16 U.S.C. § 1861 (1976). In addition to the civil and criminal penalties set forth, the Act provides that fishing vessels are subject to forfeiture to the United States if used in the commission of certain acts prohibited by the FCMA. Id. § 1860(a).
This case concerns the use of Canadian vessels within the fishery conservation zone and territorial sea off the coast of Alaska. The four vessels at issue are all registered in Canada and owned by Canadian corporations. The SEAFOAM II and RIO SAN LORENZO are tugs. SEAPAC I and SEA-PAC II are their respective processing barges. The tugs were time chartered and the barges were bareboat chartered to Seapac Fisheries, Inc., a Washington corporation wholly owned by Canadian citizens. The record further reveals that the individuals in a Canadian corporation owning both barges are also stockholders in Seapac Fisheries, Inc.
All vessels passed through United States Customs Service at the Port of Ketchikan in April 1981. At that time, the vessels were declared to be of Canadian nationality. In addition to proceeding through customs, the production manager for Seapac Fisheries, Inc. allegedly qualified the corporation’s operation in Alaska herring fisheries for 1981. Licenses for the four vessels were purchased from the Alaska Department of Fish and Game, and fish tickets for purchasing herring from fishermen were acquired from the Department of Commercial Fisheries. Appropriate bonds were filed, and business licenses from the Department of Revenue were also obtained. In complying with the foregoing registration procedures, individuals acting on behalf of defendant vessels believed they had fully acquired the right to catch and process herring in Alaskan waters.
The vessels subsequently commenced operations in the waters off southwest Alaska. At all relevant times the vessels were either within the three-mile territorial sea coterminous with the Alaska coast, or within the fishery conservation zone. On May 27, 1981, a special agent of the National Marine Fisheries Service observed the vessels receiving herring in the territorial waters within Stephens Pass. The agent boarded the vessels the next day for inspection as authorized by the FCMA. See 16 U.S.C. § 1861(b) (1976). After examining the records on board, he ascertained that defendant vessels were catching herring as well as buying herring from American fishing vessels. All fish were then processed on defendant barges.
The vessels and their contents were seized on May 30, 1981 pursuant to authority granted under the FCMA. See id. § 1861(b)(1)(C), (D) and (E). Among other things, ■§ 1861 allows authorized officers to seize a vessel along with its fish and any other relevant evidence that reasonably appears to have been used in the violation of any provision of the FCMA. The alleged violations in this case include: catching and processing of fish within the territorial sea of Alaska by foreign vesséls; catching and processing of fish by foreign fishing vessels inside the fishery conservation zone without FCMA permits; conducting an unauthorized directed fishery for herring and retention of same; failure of vessels to maintain a daily cumulative catch log; and failure of vessels to adequately report their activities to the Coast Guard. Based on these violations, the government sought forfeiture of the SEAFOAM II and SEAPAC I in one suit, and the RIO SAN LORENZO and SEAPAC II in another.
The pivotal issue in this case is a question of law regarding whether any defendant vessels may be characterized as “vessels of the United States” for purposes of the FCMA. If defendants are correct in their assertion that the vessels were meant to be included within the statutory definition provided in the Act, then they had no obligation to acquire FCMA permits or comply with numerous other restrictions on foreign fishing. They would therefore have a valid defense to the violations alleged. Conversely, if the government is correct in asserting defendant vessels were not “vessels of the United States”, it follows that they were engaged in foreign fishing and processing, and subject to restrictions on such activity as set forth in the FCMA.
II. THE SUMMARY JUDGMENT MOTIONS
At this juncture, the court is asked to determine the parties’ cross-motions for summary judgment. Both parties seek a ruling on whether defendant vessels are “vessels of the United States” for purposes of the FCMA. Plaintiff’s motion is limited in that it only seeks summary judgment on Count I of the complaint. That count alleges defendants were in violation of implementing regulation 50 C.F.R. § 611.7(b)(1) (1980).
A. Documented Under the Laws of the United States
The FCMA defines a “vessel of the United States” to be “any vessel documented under the laws of the United States or registered under the laws of any State.” 16 U.S.C. § 1802(27) (Supp. III 1979). Hence, there are two ways in which a vessel may acquire the desired status.
Under the first alternative, the word “documented” is not specifically defined, by the statute. Legislative history also does not elaborate on the meaning of this term. Previously existing United States maritime laws, however, give the word a broad meaning. For example, the Ship Mortgage Act of 1920 defines documented as “registered or enrolled or licensed under the laws of the United States.” 46 U.S.C. § 911(2) (1976). This is consistent with procedures set forth in the general shipping laws. See id. §§ 11, 17, 251(a) and 252. A federal regulation promulgated pursuant to that title also defines documented to mean “registered, enrolled and licensed, or licensed under the laws of the United States.” 46 C.F.R. § 66.03-9 (1980). A Senate report accompanying an amendment to the FCMA recognizes that the Act and general shipping laws are interrelated. See S.Rep.No.96-72, 96th Cong., 1st Sess. 1, 4-6 (1979). The word documented should therefore be given the same broad meaning attributed to it in prior federal legislation.
Laws relating to documentation of vessels are currently administered and enforced by the United States Coast Guard. See 46 C.F.R. § 66.01-3 (1980). The record in this case reveals that the Coast Guard has not documented any defendant vessels under United States laws. Accordingly, the first alternative in the FCMA to determine a “vessel of the United States” does not afford defendant vessels the desired status.
B. Registered Under the Laws of Any State
The second possibility in 16 U.S.C. § 1802(27) provides “vessel of the United States” means any vessel “registered under the laws of any State.” There is disagreement between the parties concerning whether defendants’ compliance with Alaska registration requirements was the type of proceeding contemplated by Congress in this clause. Defendants maintain the latter clause of § 1802(27) was meant to include this possibility, whereas plaintiff contends the provision only addresses those smaller vessels that are not required to be documented under United States laws.
1. Legislative History
No case law exists interpreting this aspect of § 1802(27). Legislative history addressing this subsection is also nonexistent; however, reference to a prior Act of Congress and commentary on another definition in the FCMA are helpful.
The Bartlett Act was the statutory predecessor of the FCMA. See generally Pub.L.No.88-308, 78 Stat. 194 (1964). An express purpose of this Act was to prohibit fishing within the territorial waters of the United States by vessels other than United States vessels. See id. § 1. Legislative history of the statute substantiates this intent. See H.R.Rep.No.1356, 88th Cong., 2nd Sess., reprinted in [1964] U.S.Code Cong. & Ad.News 2183, 2183-87. It also made clear that a foreign-flag vessel could not be considered a vessel of the United States. See Report of the Secretary of Interior to the House Committee on Merchant Marine and Fisheries, reprinted in [1964] U.S.Code Cong. & Ad.News 2188, 2188. This intent is important because the FCMA was meant to repeal the Bartlett Act and incorporate its provisions. See Joint Explanatory Statement of the Committee of Conference, Section 307, reprinted in A Legislative History of the Fishery Conservation and Management Act of 1976, at 92 (Comm. Print 1976) [hereinafter Committee Print]. Hence, it is evident that although Congress did not elaborate on the meaning of “vessel of the United States” in the FCMA, the definition was not intended to include a foreign flag vessel.
In addition to the help provided by the nexus between the FCMA and the Bartlett Act, the second alternative in 16 U.S.C. § 1802(27) also derives meaning from legislative history regarding another definitional subsection in § 1802. A report by the Senate Commerce Committee (concerning the definition of foreign fishing at 16 U.S.C. § 1802(12)) states as follows: “ ‘Foreign fishing’ means fishing by a vessel other than a vessel of the United States. The determinant is the flag of the vessel. If the vessel flies the flag of, i.e., is registered in, a foreign nation, it is included in the term.” S.Rep.No.94-416, 94th Cong., 1st Sess. 20 (1975) , reprinted in Committee Print, supra, at 676. As the first sentence of this passage suggests, foreign fishing and fishing by a vessel of the United States are mutually exclusive. In this case, all four defendant vessels are Canadian flag vessels. They are all of Canadian registry and defendants concede the characterization of their nationality. Tracking the intent of the Senate Commerce Committee, it follows that defendant vessels are not vessels of the United States for purposes of the FCMA. In addition to the preceding consideration, a quick perusal of the stated purposes for the FCMA makes inconceivable the notion that Congress would allow virtually any foreign vessel to attain the desirable status of § 1802(27) by registering with a state. Such a possibility would emasculate the goals of the Act. See 16 U.S.C. § 1801(b) (1976) .
2. 50 C.F.R. § 611.2(gg)
Defendants also are not within the scope of § 1802(27) in light of a regulation promulgated by the Secretary of Commerce pursuant to the Act. This regulation defines “vessel of United States” as either a vessel documented or numbered by the Coast Guard under United States law, or a vessel, under five net tons, which is registered under the laws of any state. 50 C.F.R. § 611.2(gg) (1980). The regulation further clarifies the intent of Congress concerning the meaning of the second alternative in § 1802(27).
The under five tons criterion is a reference to certain vessels registered pursuant to the Federal Boat Safety Act of 1971. See 46 U.S.C. §§ 1451-89 (1976). A provision of that Act states: “An undocumented vessel equipped with propulsion machinery of any type shall have a number issued by the proper issuing authority in the State in which the vessel is principally used.” Id. § 1466 (emphasis added). “Undocumented vessel’'’ is further defined as “a vessel which does not have and is not required to have a valid marine document as a vessel of the United States.” Id. § 1452(3). Pursuant to federal documentation requirements, a fishing vessel over twenty net tons must be either registered, or enrolled and licensed. Vessels of five net tons or more but less than twenty net tons have an option also and may be licensed or registered. See 46 C.F.R. § 67.01-l(a) (1980). An explicit exemption from federal documentation requirements is given to vessels weighing less than five net tons. Id. § 67.01-11. Consequently, under the Federal Boat Safety Act, vessels under five net tons are specifically provided for. Such vessels need not be documented under United States law, but they are required to have a number issued by the appropriate state. Based on 50 C.F.R. § 611.2(gg), it appears Congress was referring to these vessels in the latter clause of 16 U.S.C. § 1802(27).
In essence, the words “registered under the laws of any State” as used in 16 U.S.C. § 1802(27) are given further meaning by 50 C.F.R. § 611.2(gg). This implementing regulation provides that only vessels under five net tons which are registered (numbered) under the laws of a state may acquire the desired status of a vessel of the United States for purposes of the FCMA. None of the four vessels listed as party defendants in this case weigh less than five net tons. They therefore do not qualify as vessels of the United States based on the state registration procedure mentioned, in 16 U.S.C. § 1802(27).
3. Jurisdiction to Challenge the Regulation
Anticipating the adverse effect the weight restriction in 50 C.F.R. § 611.2(gg) would have on them, defendants have challenged the validity of that regulation. They contend the regulation goes beyond statutory parameters, thus infringing on state jurisdiction. The court initially notes that regardless of the validity of this regulation, Congress has made clear that it did not intend to allow foreign flag vessels to qualify as vessels of the United States for purposes of the FCMA. Before scrutinizing the regulation, however, it is first necessary to resolve whether the court has jurisdiction to hear defendants’ challenge.
The FCMA provides that regulations promulgated by the Secretary of Commerce pursuant to the Act are subject to judicial review if a petition for review is filed within thirty days after the date on which the regulations are promulgated. 16 U.S.C. § 1855(d) (1976). In this case the regulation in question was promulgated over three years prior to defendants’ challenge. Nonetheless, defendants are not precluded from challenging the regulation. The time limitation in § 1855(d) for challenging regulations clearly applies to direct challenges of the regulations. See National Food Processors Association v. Klutznick, 507 F.Supp. 76, 77-78 (D. D. C. 1981); Hanson v. Klutznick, 506 F.Supp. 582, 585-86 (D. Alaska 1981). It is not so clear, however, whether the limitation applies to a collateral attack on a regulation as a defense in an enforcement proceeding. See generally Comment, Judicial Review of Fishery Man agement Regulations Under the Fishery Conservation and Management Act of 1976, 52 Wash.L.Rev. 599, 606-07 (1977). Such is the situation in this case.
|
4340527-4024 | SUMMARY ORDER
Petitioner Xiao Ling Lian, a native and citizen of the People’s Republic of China, seeks review of a June 26,2014, decision of the BIA affirming a May 8, 2013, decision of an Immigration Judge (“IJ”) denying Lian’s application for asylum, withholding of removal, and relief under the Convention Against Torture (“CAT”). In re Xiao Ling Lian, No. [ AXXX XXX XXX ] (B.I.A. June 26, 2014), aff'g No. [ AXXX XXX XXX ] (Immig. Ct. N.Y. City May 8, 2013). We assume the parties’ familiarity with the underlying facts and procedural history in this case.
Under the circumstances of this case, we have reviewed both the IJ’s and the BIA’s opinions “for the sake of completeness.” Wangchuck v. Dep’t of Homeland Sec., 448 F.3d 524, 528 (2d Cir.2006). The applicable standards of review are well established. 8 U.S.C. § 1252(b)(4)(B); see also Su Chun Hu v. Holder, 579 F.3d 155, 158 (2d Cir.2009).
Past Persecution: Adverse Credibility Determination
The agency may, “[considering the totality of the circumstances,” base a credibility finding on, inter alia, an asylum applicant’s demeanor, the plausibility of his account, and inconsistencies in his statements and other record evidence “without regard to whether” they go “to the heart of the applicant’s claim.” 8 U.S.C. § 1158(b)(1)(B)(iii); Xiu Xia Lin v. Mukasey, 534 F.3d 162, 163-64 (2d Cir.2008). Substantial evidence supports the agency’s determination that Lian was not credible.
The IJ reasonably relied on an inconsistency between Lian’s hearing testimony and her airport interview in finding her not credible. See Ramsameachire v. Ashcroft, 357 F.3d 169, 179-80 (2d Cir.2004). As an initial matter, the BIA did not impermissibly assess the reliability of Lian’s airport interview in the first instance, but simply agreed with the IJ’s findings and explained its reasons. See 8 C.F.R. § 1003.1(d)(3)(i) (“The Board will not engage in de novo review of findings of fact determined by an immigration judge. Facts determined by the immigration judge, .,. shall be reviewed only to determine whether [they] ... are clearly erroneous.”). Moreover, the agency did not err in finding reliable the record of Lian’s interview, which was transcribed verbatim in question and answer format, signed by Lian on each page, and conducted with an interpreter. See Ming Zhang v. Holder, 585 F.3d 715, 721-22 (2d Cir.2009).
At her interview, Lian stated that she had never been arrested in China. However, in her asylum application and at her hearing, she inconsistently stated that she had been arrested and beaten in China on account of her religious practice. The agency was not compelled to accept Lian’s explanation that she was nervous. See Majidi v. Gonzales, 430 F.3d 77, 80 (2d Cir.2005); see also Yun-Zui Guan v. Gonzales, 432 F.3d 391, 397 n. 6 (2d Cir.2005).
Having questioned Lian’s credibility, the agency reasonably relied further on her failure to rehabilitate her testimony or independently satisfy her burden of proof with reliable evidence corroborating her claim of past persecution. See Biao Yang v. Gonzales, 496 F.3d 268, 273 (2d Cir.2007). Given the inconsistency and lack of corroboration findings, substantial evidence supports the agency’s determination that Lian was not credible as to her claim of past persecution. See Xiu Xia Lin, 534 F.3d at 165-66.
Well-Founded Fear of Persecution: Burden
Absent past persecution, an alien may establish eligibility for asylum by demonstrating a well-founded fear of future persecution, 8 C.F.R. § 1208.13(b)(2), which must be both subjectively, credible and objectively reasonable, Ramsameachire, 357 F.3d at 178. To establish a well-founded fear, an applicant must show either that he would be singled out for persecution or that the country of removal has a pattern or practice of persecuting those similarly situated to him. 8 C.F.R. § 1208.13(b)(2)(iii). The agency was not compelled to find that Lian established a well-founded fear of persecution in China on account of her practice of Christianity.
|
11547262-20149 | HANSEN, Circuit Judge.
Appellants, vested members of the Iowa statewide fire and police retirement system (statewide plan), sought injunctive and declaratory relief as well as money damages against the appellee cities, which are participating employers in the statewide plan. The appellant members claim that the cities violated their federal and state constitutional rights by using statewide plan assets to offset the cities’ future contributions to the statewide plan. The district court granted summary judgment in favor of the cities on the members’ constitutional claims and on their pendent state law claims. The members appeal, and we affirm.
I.
Prior to 1992, Iowa cities maintained their own local pension plans for police and fire employees. Each of the separate municipal plans in question was a defined benefit plan. The employees contributed a set percentage of their compensation, while the city’s contribution varied to meet the funding requirements of the plan. A “defined benefit plan” predetermines the amount of a participating member’s retirement benefits, generally based on a percentage of the member’s compensation. See, e.g., Iowa Code § 411.6(2)(c) (1997) (paying up to sixty, percent of the member’s average final compensation). The employer bears the risk of market fluctuation in a defined benefit plan. The employer must fund the plan to meet the actuarially-determined pension liability of covered members regardless of the market performance of the fund. If the fund performs poorly, the employer must make up the deficiency by contributing more to the fund; if the market performs well, the employer reaps the benefit in lower contributions. The employee is entitled to the predetermined benefit regardless of the amount of contributions made to fund the plan. In contrast, “a defined contribution” plan entitles the member to the amount in his individual account at the time of his retirement, which equals the contributions made to the account plus or minus the investment’s market fluctuations. See generally, 2 MARK A. Rothstein Et Al., Employment Law § 11.2, at 431-33 (1994).
Effective January 1, 1992, the Iowa legislature revised Iowa Code chapter 411 and created a centralized statewide pension plan to replace the local municipal plans. See Iowa Code § 411.2. All of the local police and firefighter municipal plans merged into the statewide plan. The new statewide plan is also a defined benefit plan. See Iowa Code § 411.6. At the time of the conversion to the statewide plan, the plan’s actuary determined that each of the appellee cities’ plans was over-funded. Chapter 411 allowed each city to use the excess funds to offset either the employees’ and city’s future contributions to the statewide plan or only the city’s future contributions to the plan. See id. § 411.38(4). Each appellee city chose to use its excess to fund only the city’s future contributions. If the actuary had determined that any separate municipal plan was under-funded, at the time it was transferred to the statewide plan, the statute required that city to pay additional amounts to properly fund its share of the statewide plan. See id. § 411.38(l)(b).
The plaintiff members brought their claim against the cities under 42 U.S.C. § 1983, alleging. that the cities’ decisions under section 411.38(4) to use the excess funds to reduce only the cities’ future contributions (as opposed to reducing both the cities’ and the members’ future contributions) violated their federal and state constitutional rights. They argue that the cities (1) impaired their constitutional right to contract; and (2) unconstitutionally deprived them of their property interest in the funds without due process of law. The cities’ use of the excess funds allegedly reduced the value of the members’ benefits under the plan, compromised the soundness of the plan, and violated the plan requirement that the funds be used for the exclusive benefit of the members. The members also brought state law claims of breach of statutory and common law trust duties, seeking equitable remedies in the form of a constructive trust. The district court granted the cities’ motion for summary judgment, finding that the statute was constitutional and did not violate state trust laws. The members appeal.
II.
We review de novo the district court’s grant of summary judgment and apply the same standards applied by the district court. See Dulany v. Carnahan, 132 F.3d 1234, 1237 (8th Cir.1997). Because the facts in this case are undisputed, we limit our inquiry to whether the cities are entitled to judgment as a matter of law. See American Family Mut. Ins. Co. v. Van Gerpen, 151 F.3d 886, 887 (8th Cir.1998).
A. Contract Clause
The United States Constitution provides that “[n]o State shall ... pass any ... Law impairing the Obligation of Contracts .... ” U.S. Const. art. I, § 10, cl. 1. When reviewing the members’ contention that section 411.38(4) (permitting the cities to choose how to allocate excess funds) impermissibly impairs their constitutional right to contract, we must focus on “whether the change in state law has ‘operated as a substantial impairment of a contractual relationship.’ ” General Motors Corp. v. Romein, 503 U.S. 181, 186, 112 S.Ct. 1105, 117 L.Ed.2d 328 (1992) (quoting Allied Structural Steel Co. v. Spannaus, 438 U.S. 234, 244, 98 S.Ct. 2716, 57 L.Ed.2d 727 (1978)). The modern Contract Clause analysis involves three components: “(1) Does a contractual relationship exist, (2) does the change in the law impair that contractual relationship, and if so, (3) is the impairment substantial?” Honeywell, Inc. v. Minnesota Life and Health Ins. Guar. Assoc., 110 F.3d 547, 551 (8th Cir.) (en banc) (citing Romein, 503 U.S. at 186, 112 S.Ct. 1105), cert. denied, — U.S. -, 118 S.Ct. 156, 139 L.Ed.2d 102 (1997). If a substantial impairment of a contractual relationship exists, the legislation nonetheless survives a constitutional attack if the “impairment is ... justified as ‘reasonable and necessary to serve an important public purpose.’ ” Parella v. Retirement Bd. of the R.I. Employees’ Retirement Sys., 173 F.3d 46, 59 (1st Cir.1999) (quoting United States Trust Co. v. New Jersey, 431 U.S. 1, 25, 97 S.Ct. 1505, 52 L.Ed.2d 92 (1977)). See also, Honeywell, 110 F.3d at 551.
A statutory enactment is generally presumed not to create “contractual or vested rights but merely declares a policy to be pursued until the legislature shall ordain otherwise.” National R.R. Passenger Corp. v. Atchison, Topeka & Santa Fe Ry., 470 U.S. 451, 456-66, 105 S.Ct. 1441, 84 L.Ed.2d 432 (1985) (quotations omitted). See also Honeywell, 110 F.3d at 552. The language and circumstances of the statute must evince a clear intent by the legislature to create contractual rights so as to bind the state. See Honeywell, 110 F.3d at 557 (Loken, J., concurring) (finding the use of the word “guarantee” in the statute at issue to evince such an intent); see also Parella, 173 F.3d at 60 (“[S]tate statutory enactments do not of their own force create a contract with those whom the statute benefits.”) (internal quotations omitted).
Chapter 411’s stated purpose “is to promote economy and efficiency in the municipal public safety service by providing an orderly means for police officers and fire fighters to have a retirement system which will provide for the payment of pensions.” Iowa Code § 411.1A. Nowhere in the statute is the word “contract” mentioned. Once a participating member becomes vested in the retirement system, his benefits cannot be taken away. See id. § 411.6(l)(b) (“Any member who has been a member of the retirement system four or more years ... shall upon attaining retirement age, receive a service retirement award ....”) (emphasis added). See also Lage v. City of Marshalltown, 212 Iowa 53, 235 N.W. 761, 763 (1931) (“It is settled in this ... jurisdiction! ], ... that upon the happening of the event which entitles a police officer or fireman to a pension, his right thereto then becomes immediately vested and may not be taken away”)- Despite the plan’s vesting mechanism, the Supreme Court of Iowa has determined that the police officers’ and fire fighters’ rights under the retirement system are statutory rather than contractual. See Lage, 235 N.W. at 768 (“[T]he duty to provide a fund with which to pay the pensions due is purely statutory and not contractual.”); see also Grandia v. City of Oskaloosa, 405 N.W.2d 849, 852 (Iowa 1987) (characterizing Lage as “holding that a statute providing for a pension may be modified or even repealed by the legislature”). Other circuit courts have found that statutorily-created state pension plans are not contractual in nature for purposes of the federal Contract Clause because the statutes lacked a clear indication that the legislature intended to create contractual rights. See, e.g., National Educ. Ass’n-R.I. v. Retirement Bd. of the Retirement Sys., 172 F.3d 22, 26, 28 (1st Cir.1999) (differentiating between vested rights and contractual rights and finding no contractual right in the Rhode Island state pension plan because the statute did not use the term “contract” and did not have an anti-retroactivity clause regarding future benefit changes); Parker v. Wakelin, 123 F.3d 1, 7-9 (1st Cir.1997) (finding no contractual right in Maine’s public pension plan and noting the need for a close scrutiny of individual state plans due to the vast differences in public pension plans from state to state), cert. denied, — U.S. -, 118 S.Ct. 1675, 140 L.Ed.2d 813 (1998).
The question of whether a state statute creates a contract for purposes of the Contract Clause under the U.S. Constitution is a federal question, and as such, we are not bound by a state court’s assessment of the issue, though we do accord it “ ‘respectful consideration and great weight.’ ” Honeywell, 110 F.3d at 552 (quoting Romein, 503 U.S. at 187, 112 S.Ct. 1105). We choose not to answer this complex constitutional question, however, as we conclude that even if Chapter 411 created a contractual relationship, section 411.38(4) does not substantially impair it.
The Supreme Court has looked at various factors to determine whether an alleged contractual impairment was substantial, including whether the impaired term is central to the contract, whether the impairment disrupts the parties’ settled expectations, and whether the parties reasonably relied on the impaired right. See Honeywell, 110 F.3d at 558 (Loken, J., concurring). Generally, the more heavily regulated the industry, the less reasonable it is to expect that contractual relationships will not be altered by legislation. See id.
The members allege that section 411.38(4) impairs their contractual rights by allowing the cities to use the excess funds to the cities’ benefit, contrary to the plan provision that requires all plan funds to be used for the exclusive benefit of the members. However, a defined benefit plan entitles the members to a predetermined distribution upon retirement and to an actuarially sound plan to ensure that the plan is adequately funded to meet those distribution requirements. It does not entitle them to any use of the contributions other than to ensure the above entitlements are met. Using the excess funds to offset future city contributions' is hot inconsistent with the requirement of using the plan assets for the exclusive benefit of the members., Cf. Claypool v. Wilson, 4 Cal.App.4th 646, 6 Cal.Rptr.2d 77, 93 (1992) (finding that the legislative repeal of cost of living adjustment (COLA) programs and the subsequent use of the prior COLA funds to offset employer contributions to the state pension plan did not divert the funds from,the system and actually maintained the funds for the exclusive benefit of the plan’s members), cert. denied, 506 U.S. 1034, 113 S.Ct. 812, 121 L.Ed.2d 685 (1992).
The members also allege that this use of the excess funds reduced the value of their benefits under the plan and compromised the soundness of the plan. Again, we note that this is a defined benefit plan; the members are entitled to a predetermined benefit, not to the contributions made on their behalf. The statute required the plan’s actuary to first determine that the assets transferred from each separate plan to the statewide plan were more than adequate to meet that plan’s accrued liabilities before allowing the city to offset its future contributions. See Iowa Code §§ 411.38(2), (4). Thus, the statute does not infringe on the members’ rights to receive predefined benefits upon retirement and provides measures to ensure that the statejvide fund remains sound. Cf. Valdes v. Cory, 139 Cal.App.3d 773, 189 Cal.Rptr. 212, 223 (1983) (“Absent actuarial input from the Board ... legislative action randomly and unilaterally cancelling or decreasing otherwise continuously appropriated, periodic employer contributions clearly interferes with vested contractual rights of PERS members.”) (emphasis added); Claypool, 6 Cal.Rptr.2d at 92-93 (finding no impairment of contracts and distinguishing Valdes on the basis that before acting, the legislature first determined that the use of the prior COLA funds to offset future employer contributions would not jeopardize the soundness of the state pension fund). If there is any impairment to the members’ alleged contractual rights, we conclude that it is not central to the claimed contract because it does not diminish the value of the members’ benefits or compromise the soundness of the plan.
We likewise conclude that if indeed there is an impairment, it does not affect the parties’ expectations or reliance interests. Under the former municipal plans, each city’s contribution varied while the members’ contributions remained constant. Each city made up any shortfalls in the actuarial soundness of its plan by contributing more to the plan in any given year that the plan’s actuary determined the plan to be under-funded. Likewise, each city contributed less in years that the actuary determined the plan to be over-funded. All the while, the members’ contributions remained constant. Thus, the members had and could have no reasonable expectation that this aspect of the plan will change and have no reasonable expectation that any excess funds will be used to offset their own future contributions. The members make no showing that they relied on the ability to use the excess funds in this manner. If in fact the change in legislation impaired the members’ asserted contract rights, any impairment was not substantial.
B. Due Process
Substantive due process claims regarding economic legislation face a highly deferential rational basis test. See Parrish v. Mallinger, 133 F.3d 612, 614-15 (8th Cir.1998); Honeywell, 110 F.3d at 554-55. “It is by now well established that legislative Acts adjusting the burdens and benefits of economic life come to the Court with a presumption of constitutionality, and that the burden is on the one complaining of a due process violation to establish that the legislature has acted in an arbitrary and irrational way.” Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 15, 96 S.Ct. 2882, 49 L.Ed.2d 752 (1976). The Supreme Court recently confirmed its reluctance to use the vague contours of the Due Process Clause to invalidate economic legislation. See Eastern Enter., 524 U.S. at -, 118 S.Ct. at 2153 (plurality opinion) (of the five justices finding the Coal Industry Retiree Health Benefit Act unconstitutional, four justices relied on the Takings Clause and only Justice Kennedy found the legislation unconstitutional under the Due Process Clause); id. at 524 U.S. at -, 118 S.Ct. at 2159 (Kennedy, J., concurring in the judgment and dissenting in part) (“Statutes may be invalidated on due process grounds only under the most egregious circumstances.”); id. at 524 U.S. at-, 118 S.Ct. at 2164 (Breyer, J., dissenting) (the Due Process Clause protects only against fundamentally unfair applications of law).
The members complain that section 411.38(4) allows the cities to take the members’ property interests in' the pension plan without due process of law. Initially, we reiterate that the members’ interests in the plan aré limited to their predefined benefits and the assurance of a sound plan. Presuming that these interests are “property” for purposes of our due process analysis, see Honeywell, 110 F.3d at 554 (indicating that vested rights are treated similar to contractual rights for purposes of the Due Process clause), the members fail ’to show how their interests were adversely affected, or “taken.” Though the members allege that the cities’ actions reduced the value of their benefits, they provide no support for such a contention. They are still entitled to their predetermined benefits upon retirement. Additionally, they fail to provide evidence that the soundness of the plan is compromised by using the excess funds from the separate plans to offset only ’the cities’ future contributions. As explained above, the statute provided a mechanism to ensure the continued soundness of the plan.
We point out that the cities are not free to use the excess funds for just any purpose-the funds must be used only to offset future contributions, and thus are still dedicated to preserving the soundness of the members’ pension plan. The Iowa legislature sought to avoid allowing one over-funded municipal plan to subsidize another underfunded municipal plan upon consolidation into the statewide plan. See Iowa Code § 411.38(2). This scheme is not only rational, it may have been necessary to sustain the same trust provisions that the members claim are being violated. See Municipality of Anchorage v. Gallion, 944 P.2d 436, 444 (Alaska 1997) (finding that the use of overfunding in one state pension plan to augment a separate underfunded state plan violated the state constitution, which requires public pension plan funds to be used for the exclusive benefit of its beneficiaries). Due to the nature of a defined benefit plan, each city bore the risk and reaped the benefit of market fluctuations, which in turn created any excess funding that existed at the time of the consolidation. For municipal plans that the actuary determined to be underfunded, the statute required the responsible city alone to make up the difference. See Iowa Code § 411.38(l)(b). We conclude that the Iowa legislature acted rationally in allowing each city to choose to use the excess funds to offset only its own future contributions, and that the members suffered no fundamental unfairness.
C. State Remedies
Our constitutional holdings allow us to easily dispose of the members’ state law claims seeking imposition of a constructive trust based on unjust enrichment. A constructive trust in Iowa is an equitable remedy and is appropriate in three instances: actual fraud, constructive fraud, or equitable principles other than fraud. See In re Estate of Peck, 497 N.W.2d 889, 890 (Iowa 1993). The members must prove their entitlement to a constructive trust by “clear, convincing, and satisfactory evidence.” Neimann v. Butterfield, 551 N.W.2d 652, 654 (Iowa Ct.App.1996).
The members agree that the cities have not engaged in either actual or constructive fraud. {See Appellants’ Br. at 29.) They also concede that the cities’ actions are facially valid under the statute. We end with the underlying contention with which we started. The statewide plan is a defined benefit plan. As such, it entitles the members to predetermined benefits at retirement and to a sound plan to ensure receipt of those benefits. Because the cities bear the risk of market fluctuations, and because their use of the excess funds does not compromise the soundness of the plan, the cities’ use of the excess funds to offset only their own future contributions does not unjustly enrich the cities at the expense of the members. The district court correctly granted summary judgment in favor of the cities.
III.
For the foregoing reasons, we affirm the judgment of the district court.
. The Honorable Charles R. Wolle, then Chief Judge, United States District Court for the Southern District of Iowa.
|
6550802-7208 | ORDER
MARGARET A. MAHONEY, Bankruptcy Judge.
This matter is before the Court on the motion of the Debtor to reconsider and/or amend an earlier Order of this Court dated April 25, 1984, which found certain transfers to not be preferences under 11 U.S.C. § 547(b). Based on the arguments and affidavits of counsel and the writings contained in the file, the Court hereby makes the following:
Findings of Fact
1. Defendants Oredson and Jensen obtained orders for judgment against Debtor Zachman via summary judgment in Henne-pin County District Court on November 1, 1983. Judgments in favor of both Oredson and Jensen were docketed in Hennepin County on November 1, 1983. This Debtor filed for Chapter 11 relief on November 2, 1983.
2. The Hennepin County District Court judgment in favor of Jensen was for an amount of $8,700.00, which represented past due rent owed Jensen by Zachman. The judgment in favor of Oredson was for $5,855.00 arising from rent owed to Ored-son by Zachman.
3. At the time the State Court judgments were docketed in Hennepin County, the Debtor owned property in Hennepin County in which the Debtor had at least $1,000.00 in equity.
4. Had the State Court judgments not been docketed by Oredson and Jensen, they would have held at best unsecured claims against the estate of the Debtor.
5. This Court entered an Order on April 25, 1984, following a trial pursuant to 11 U.S.C. § 547. The April 25 Order determined that no preferential transfer had taken place through the docketing of the State Court judgments.
Discussion
This case presents one narrow issue for consideration by the Court. That issue is the application of 11 U.S.C. § 547(b)(5) to the facts arising in this case. That subsection states that any transfer is an avoidable transfer if such transfer “enables” the creditor who received the transfer to receive more than such creditor would receive if:
(A) the case were a case under Chapter 7 of this Title;
(B) the transfer had not been made; and
(C) such creditor received payment of such debt to the extent provided by the provisions of this Title.
Section 547(b)(5) mandates the Court to make a balancing or a comparison between what the creditor would receive had the preferential transfers never been made, the Debtors filed a Chapter 7 liquidation, and the creditors received payments pursuant to the Chapter 7 distribution compared with what the creditors received via the preferential transfer.
Upon docketing in Hennepin County, the judgments obtained by Oredson and Jensen became liens against the real property of the Debtor in Hennepin County pursuant to M.S.A. § 548.09. They thus constitute “transfers” for purposes of § 547. The transfers, if preferential transfers, were so only to the extent of equity in the real property in the county where the judgments were docketed. Attachment of the judgment liens to the debtor’s Hennepin County real property gives these creditors a secured claim at least to the extent of the equity in the property. In this case that means Oredson and Jensen received a transfer, allegedly preferential, to the extent of $1,000.00. As such, the originally entirely unsecured claims of Oredson and Jensen become, in effect, bifurcated claims in that Oredson and Jensen now have secured claims of $500.00 each and unsecured claims for the remainder of the judgment debt exceeding the amount of equity in Hennepin County property owned by the Debtor.
The evidence presented at the earlier trial on this matter indicated that the Debtor had, at the time its petition was filed in bankruptcy, liabilities exceeding its assets in an amount of between $300,000 and $800,000. Such evidence clearly indicates that these creditors, as unsecured creditors, would receive less than 100 percent on the value of their unsecured claims had this matter been originally filed as a Chapter 7 petition and they had received payment pursuant to Chapter 7 distribution.
Against this as yet unknown value received on the claims must be compared another value. That value is what these creditors received through the preferential transfers. Section 547(b)(5) does not clearly indicate what the “enables” language of that subsection requires the Court to compare against this Chapter 7 distribution amount. A review of the legislative history of that section and the reported cases concerning that section convinces me that the proper value to be compared against the Chapter 7 distribution value in this case is the value determined by adding the secured amount of the claim, made secure by the preferential transfer, to the pro-rata amount which would have been paid on the unsecured portion of the creditors’ claims had the Debtor filed for Chapter 7 liquidation on the day the petition in chapter 11 was filed. Palmer Clay Products Co. v. Brown, 297 U.S. 227, 56 S.Ct. 450, 80 L.Ed. 655 (1936); In re Abramson, 715 F.2d 934 (5th Cir.1983).
Palmer Clay Products, supra, is instructive for present purposes. There, in determining whether a preferential transfer took place under the Bankruptcy Act, the Court stated:
“Whether a creditor has received a preference is to be determined, not by what the situation would have been if the debt- or’s assets had been liquidated and distributed among his creditors at the time the alleged preferential payment was made, but by the actual effect of the payment as determined when bankruptcy results. The payment on account of say 10% within the four months will necessarily result in such creditor receiving a greater percentage than other creditors, if the distribution in bankruptcy is less than 100%. For where the creditor’s claim is $10,000, the payment on account $1000, and the distribution in bankruptcy 50%, the creditor to whom the payment on account is made receives $5500, while another creditor to whom the same amount was owing and no payment on account was made will receive only $5000. A payment which enables the creditor ‘to obtain a greater percentage of his debt than any other of such creditors of the same class’ is a preference.” 297 U.S. at 229, 56 S.Ct. at 451.
Applying the Court’s analysis to be present case, the following becomes clear:
1. Payment to unsecured creditors on a Chapter 7 liquidation would be less than 100%.
2. At any level of hypothetical payment of less than 100%, these creditors were preferred to the extent that they received, through the transfers, the hypothetical liquidation payment plus $500. For example, using a 50% payout on Jensen’s unsecured claim would entitle him to $4350 (plus the miniscule percentage increase caused by the addition of $1000 to unsecured creditors’ pot). With the preference left intact, he would receive $4,100 on his unsecured claim plus $500 on the secured portion for a total payment of $4600. The same holds for Oredson at this level of payout and holds for both at any level of payout of less than 100%.
3. Therefore, the docketing of the state court judgments “enabled” these creditors to receive more than they would have received on a Chapter 7 liquidation had the transfers not taken place. See also, In re Tonyan Const. Co., 28 B.R. 714 (B.C.N.D.Ill.1983); In re Fulghum Const. Co., 7 B.R. 629 (B.C.M.D.Tenn.1980).
|
4169885-24149 | ORDER
DAVID S. DOTY, District Judge.
This matter is before the court upon the motion for partial summary judgment by plaintiff Esther Ruth Brown and motion for summary judgment by defendants Michael Chiappetta and City of Minneapolis. The court heard oral argument on May 27, 2011. Based on a review of the file, record and proceedings herein, and for the following reasons, the court grants defendants’ motion.
BACKGROUND
This civil rights dispute arises out of the arrest and detention of Brown following an alleged drive-by shooting in Minneapolis, Minnesota in August 2009.
I. Initial Investigation and Reports
On August 27, 2009, at 4:46 p.m. Derrick Charleston called 911 and reported that Brown had fired three shots at him from the passenger seat of a green Pontiac near the corner of 36th Avenue North and Penn Avenue North. Minutes later Minneapolis Police Officer Anna Hedberg arrived and questioned Charleston. Charleston stated that he knew Brown because he had lived with her and she recently kicked him out after an argument concerning his girlfriend, Drucilla Pickens. Chiappetta Aff. Ex. 1, at 8; see Brown Dep. 8:22-10:3. Charleston said that Brown fired three shots at him from the passenger seat of a dark green car with twenty-inch silver rims. Chiappetta Aff. Ex. 1, at 8. He said that the vehicle belonged to Brown. Id. An independent witness, Patricia Knapp, approached Hedberg and said that she heard three shots fired írom a dark green vehicle, but that she could not see the shooter because the vehicle had tinted windows. Id. Hedberg searched the area and found three spent 9-mm shell casings. Id.
Hedberg recognized Charleston as a suspect in the burglary of Brown’s home on August 26, 2009, during which a 9-mm Taurus handgun was allegedly stolen. Id. Hedberg handcuffed Charleston and placed him in her squad car. Id. Charleston told Hedberg that he had neither burglarized Brown’s house nor stolen a handgun. Id. Rather, Charleston said that he had returned only to recover his property. Id. Hedberg released Charleston, and instructed him to contact the precinct the next day. Id.
Meanwhile, Officers Kasso and Griffin saw Brown and two of her friends, Yenestra Shockency and Derriea Randle in a green GMC Jimmy near Brown’s house. Id. at 10-11. Griffin stopped the vehicle and arrested Brown. Id. Kasso reported that she heard Shockency say, “[t]his must be because of the shooting” and “[t]his must be because of the gun.” Id. at 11.
Chiappetta was assigned to investigate the incident. Officers Hedberg, Griffin and Yasso each wrote supplemental reports on August 27. Chiappetta wrote a supplemental report on August 28. Chiappetta’s report noted largely the same information as the reports of Hedberg, Griffin and Yasso, but added that Shockency had been contacted “but would not confirm that she was present during the time of the shooting” and that Randle “also stated that she was with Brown from 3 [p.m.] to the time of her arrest but denied a shooting had taken place.” Id. at 13. Chiappetta stated that “[b]oth known witnesses that had been contacted are believed to be providing false information at this time.” Id.
II. Criminal Complaint
On August 28, 2009, an assistant county attorney filed a complaint against Brown in Minnesota state court. The complaint stated:
Complainant, Sgt. Michael Chiappetta, of the Minneapolis Police Department, has investigated the facts and circumstances of this offense and believes that the following establishes probable cause:
On August 27, 2009, at about 4:49 p.m., police spoke with [Derrick Charleston], a 19 year old male. He stated that he had been at 36th Street and Penn Ave. North in Minneapolis, Hennepin County, when a green Buick [sic] Grand Prix with 20" silver rim tires approached. A woman he recognized as ESTHER RUTH BROWN, the Defendant herein, reached out the right passenger window and fired a handgun three times in his direction.
Officer Hedberg, who spoke with [Charleston], was also approached by a woman, [Knapp], who stated that she heard three shots coming from a dark green vehicle which had dark tinted windows. Officer Hedberg searched the area where the car had reportedly been when the shots were fired. The officer located three 9-mm shell casings on the north side of 36th, just north of Penn Ave. These were photographed and recovered.
Officer Griffin reports that on August 27, 2009, at about 5:48 p.m., he and Officer Kasso located a vehicle matching the description given by the witnesses. Officer Kasso reports that the driver appeared to attempt to evade the squad. The defendant BROWN was seated in the front passenger seat. The car contained two other women. One of them, [Shockency] stated “This must be because of the shooting.” [Shockency] later stated, “This must be because of the gun.”
Officer Hedberg reports that the day before this drive-by shooting the defendant BROWN had made a police report claiming that her “godson,” [Charleston], had re-entered her home without consent and had taken items, including her 9-mm Taurus semi-automatic handgun.
Williams Decl. Ex. C, at 1, ECF No. 30-1, at 27.
The judge found probable cause and set bail at $100,000. Id. at 3. Brown remained in pretrial detention until Shockency and two others posted a $3,000 bond on September 26, 2009. Brown was released. The case proceeded to trial in April 2010. A week or two before trial, Brown’s defense attorney failed to show up for a meeting with the prosecutor and Chiappetta to discuss disclosures. Chiappetta Aff. Ex. 4, at 88:19-89:9, 95:4-96:16. On the morning of trial a discovery dispute arose, and Brown argued that the City had failed to disclose exculpatory evidence. The judge held a pretrial hearing.
III. Pretrial Hearing
Chiappetta was the only person who testified at the hearing. Brown’s defense counsel and the assistant county attorney questioned Chiappetta.
A.Shockency and Randle
Chiappetta said that he spoke to Shock-ency on August 28, and that she “denied making the statement” about the gun at the time Kasso and Griffin stopped the car. Chiappetta Aff. Ex. 4, at 11:5-8. Chiappetta said that he told the prosecutor about the conversation, but could not recall the exact date or time. Id. at 16:14-18. Chiappetta also confirmed that he spoke to Randle on August 28, and that Randle told him that she had been with Brown since 3:00 p.m. on August 27. Id. at 27:25-28:4. Randle also confirmed several other facts, none of which were relevant. Id. at 38:21-25.
B. Pickens and Charleston
Chiappetta talked to Pickens about her relationship with Charleston and Brown, and confirmed Charleston’s story that there was no burglary on August 26. Id. at 45:16-18, 46:2-11. Chiappetta did not discuss the shooting with Pickens. Id. at 45:22-46:1. He talked to Charleston before taking his recorded statement. Chiappetta also talked to Charleston after the statement to confirm some facts about the alleged burglary and handgun. Id. at 62:11-25.
C. Kris Brown
Chiappetta also spoke with Kris Brown, who cares for Brown’s adult son. Kris Brown told Chiappetta that she had been with Brown when she bought the 9-mm handgun. Id. at 69:4-17. Detective Brian McKague also spoke with Kris Brown in November 2009. Trelstad Ex. 7, at 1. Kris Brown told McKague that “she has seen Esther [Brown] driving by the house and on one occasion Esther [Brown] parked in front of the house and pointed a gun at Kris through the window.” Id. at 2.
D. Firearm Evidence
Chiappetta also said that the same gun was used in a separate shooting in October 2009. Id. at 75:10-18; Pl.’s Mem. Supp. 6. Chiappetta told the prosecutor about the second shooting a week before trial. Chiappetta Ex. 4, at 75:13-19. Chiappetta stated that he did not see bullet holes at the scene of the alleged shooting.
At the end of the hearing Brown moved to dismiss the charges. The state court dismissed the complaint as a sanction for the City’s failure to disclose.
On June 25, 2010, Brown sued defendants under 42 U.S.C. § 1983, claiming that they deprived her of Fourth and Fourteenth Amendment rights to liberty and due process. Brown also claims numerous state statutory and common law violations, including intentional infliction of emotional distress and negligent infliction of emotional distress. Brown moves for partial summary judgment as to liability under § 1983 and defendants move for summary judgment on all claims.
DISCUSSION
I. State Criminal Proceeding
Brown bases much of her argument on the order of the state court judge dismissing the criminal case. The dismissal is significant to the instant action, however the issues in the criminal case are distinct from this action. For example, Chiappetta had no interest in the outcome of the criminal proceeding. Moreover, the decision of the judge to dismiss the criminal complaint bears only on the acts of the prosecutor, and Chiappetta appeared as an uninterested witness, not an adversary. Therefore, the outcome of the state criminal proceeding does not establish § 1983 liability for Chiappetta, and the reasons for sanctions are of little analytical value here.
II. Qualified Immunity
“The doctrine of qualified immunity protects [police] officers from personal liability under § 1983 ‘insofar as their conduct does not violate clearly established constitutional rights of which a reasonable person would have known.’” Baribeau v. City of Minneapolis, 596 F.3d 465, 473 (8th Cir.2010) (quoting Pearson v. Callahan, 555 U.S. 223, 129 S.Ct. 808, 815, 172 L.Ed.2d 565 (2009)). The court applies the doctrine of qualified immunity in a manner that “gives ample room for mistaken judgments by protecting all but the plainly incompetent or those who knowingly violate the law.” Walker v. City of Pine Bluff, 414 F.3d 989, 992 (8th Cir.2005) (quoting Hunter v. Bryant, 502 U.S. 224, 229, 112 S.Ct. 534, 116 L.Ed.2d 589 (1991)). “The party asserting immunity always has the burden to establish the relevant predicate facts, and at the summary judgment stage, the nonmoving party is given the benefit of all reasonable inferences.” White v. McKinley, 519 F.3d 806, 813 (8th Cir.2008) (citation omitted).
To determine whether an official is entitled to qualified immunity the court views the facts in the light most favorable to the plaintiff and considers (1) whether the alleged facts demonstrate that the official’s conduct violated a constitutional right and (2) whether the right claimed was clearly established at the time of the alleged injury. See id. “If the answer to either question is no, then [the official] is entitled to qualified immunity.” Doe v. Flaherty, 623 F.3d 577, 583 (8th Cir.2010); see Callahan, 129 S.Ct. at 818.
III.Fourth Amendment
“The standard for arrest is probable cause, defined in terms of facts and circumstances ‘sufficient to warrant a prudent man in believing that the (suspect) had committed or was committing an offense.’” Gerstein v. Pugh, 420 U.S. 103, 111, 95 S.Ct. 854, 43 L.Ed.2d 54 (1975) (quoting Beck v. Ohio, 379 U.S. 89, 91, 85 5.Ct. 223, 13 L.Ed.2d 142 (1964)). Police officers may act on “facts leading sensibly to their conclusions of probability.” Id. at 112, 95 S.Ct. 854. “Requiring more would unduly hamper law enforcement. To allow less would be to leave law-abiding citizens at the mercy of the officers’ whim or caprice.” Id. (citation omitted).
In the present case the City presented substantial evidence in support of probable cause: a victim’s statement identifying Brown as the shooter, an independent witness report corroborating the victim’s statement and shell casings found at the scene consistent with the statement. A judge found probable cause. The alleged omissions would not change that outcome. The inclusion of Shockency’s denial or Randle’s statement that she was with Brown the day of the shooting at best would create a question of credibility. Given the totality of the evidence, these statements do not seriously call into question the existence of probable cause. Therefore, Brown’s claim that her arrest and detention violated the Fourth Amendment fails, and summary judgment is warranted. See Fisher v. Wal-Mart Stores, Inc., 619 F.3d 811, 818 (8th Cir.2010) (“If the officers had probable cause, the arrests did not violate the Fourth Amendment and the officers are not liable.” (citation omitted)).
IV. Fourteenth Amendment
A. Brady v. Maryland
Due process requires prosecutors to disclose favorable evidence that is material to the guilt or punishment of a defendant. See Brady v. Maryland, 373 U.S. 83, 87, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963). “Brady’s protections also extend to actions of other law enforcement officers such as investigating officers.” White, 519 F.3d at 814.
The Eighth Circuit has never extended Brady beyond trial. See United States v. Tyndall, 521 F.3d 877, 881 (8th Cir.2008) (“The evidence is not material and no prejudice can be shown unless there is a reasonable probability that the verdict would have been different if the evidence had not been suppressed.” (emphasis added)); White, 519 F.3d at 814 (“[T]he recovery of § 1983 damages requires proof that a law enforcement officer other than the prosecutor intended to deprive the defendant of a fair trial.” (emphasis added) (quoting Villasana v. Wilhoit 368 F.3d 976, 980 (8th Cir.2004)); Evans v. Janing, 489 F.2d 470, 474 (8th Cir.1973) (“Unlike the exclusionary rule of Mapp and Miranda, the duty of disclosure enunciated in Brady v. Maryland is designed to assure the fundamental right to a fair trial rather than penalize law enforcement officers for conduct encroaching upon an accused’s constitutional rights.”) (emphasis added)). Indeed, the Eighth Circuit recently confirmed that “Brady does not require pretrial disclosure, and due process is satisfied if the information is furnished before it is too late for the defendant to use it at trial.” U.S. v. Jeanpierre, 636 F.3d 416, 422 (6th Cir.2011) (emphasis added) (citation omitted).
Other courts of appeals agree. See United States v. Moussaoui, 591 F.3d 263, 285 (4th Cir.2010) (“The Brady right, however, is a trial right.”); Jean v. Collins, 221 F.3d 656, 663 (4th Cir.2000) (en banc) (“A Brady violation that resulted in the overturning of the § 1983 plaintiffs conviction is a necessary, but not a sufficient, condition for § 1983 liability on the part of the police.”); Morgan v. Gertz, 166 F.3d 1307, 1310 (10th Cir.1999) (“Regardless of any misconduct by government agents before or during trial, a defendant who is acquitted cannot be said to have been deprived of the right to a fair trial.”); Flores v. Satz, 137 F.3d 1275, 1278 (11th Cir.1998) (finding no Brady violation due to acquittal); McCune v. City of Grand Rapids, 842 F.2d 903, 907 (6th Cir.1988) (finding civil plaintiff in month-long pretrial detention could not bring disclosure claim due to lack of criminal trial).
Brown argues that the court should expand Brody into the probable-cause and release-determination phase of an investigation. A probable cause hearing and pretrial detention are not the same as a trial and conviction. Arrest probable cause requires only facts and circumstances that support the reasonable belief that a suspect committed an offense. See Gerstein, 420 U.S. at 111, 95 S.Ct. 854. Conviction requires proof beyond a reasonable doubt. “That difference, together with uncertainties in what the evidence will show, implies that some innocent persons will be prosecuted.” Buckley v. Fitzsimmons, 919 F.2d 1230, 1233 (7th Cir.1990), rev’d on other grounds, 502 U.S. 801, 112 S.Ct. 40, 116 L.Ed.2d 19 (1991).
As a result, “[p]ersons may be detained on evidence less than necessary to prove guilt beyond a reasonable doubt ‘(b)ecause many situations which confront officers in the course of executing their duties are more or less ambiguous’ and ‘room must be allowed for some mistakes on their part.’ ” Campbell v. McGruder, 580 F.2d 521, 529 n. 14 (D.C.Cir.1978) (alteration in original) (quoting Brinegar v. United States, 338 U.S. 160, 176, 69 S.Ct. 1302, 93 L.Ed. 1879 (1949)); see Mays v. City of Dayton, 134 F.3d 809, 816 (6th Cir.1998) (finding disclosure less compelling at probable cause stage than trial due to less-severe consequences). The court does not suggest that pretrial detention, further investigation and the threat of prosecution are de minimis. The consequences are significant. But they do not carry the same opprobrium and stigma of a criminal conviction. Reno v. Am. Civil Liberties Union, 521 U.S. 844, 872, 117 S.Ct. 2329, 138 L.Ed.2d 874 (1997).
In the present case, there was no trial. All charges against Brown were dismissed. This case presents no reason to expand the trial rights of Brady into the early phases of an investigation. Therefore, the facts fail to show that Chiappetta violated Brown’s due process rights, and summary judgment is warranted.
Even if the Brady disclosure right were unconnected to trial and applied at the probable-cause stage, police officers have no absolute duty to disclose. “[T]he Constitution is not violated every time the government fails or chooses not to disclose evidence that might prove helpful to the defense.” Kyles v. Whitley, 514 U.S. 419, 436-37, 115 S.Ct. 1555, 131 L.Ed.2d 490 (1995) (citation omitted). The Due Process Clause does not “demand[] an open file policy” and the government retains a “degree of discretion.” Id. at 437, 115 S.Ct. 1555. However, an investigating officer violates the duty to disclose when he acts in bad faith. White, 519 F.3d at 814; accord Jones v. City of Chicago, 856 F.2d 985, 990, 995 (7th Cir.1988). The bad-faith requirement serves to avoid “imposing on the police an undifferentiated and absolute duty to retain and to preserve all material that might be of conceivable evidentiary significance in a particular prosecution.” Arizona v. Youngblood, 488 U.S. 51, 58, 109 S.Ct. 333, 102 L.Ed.2d 281 (1988). Thus to show a due process violation for failure to disclose, Brown would need to show that (1) Chiappetta failed to disclose evidence favorable to Brown, (2) the evidence was material and (3) Chiappetta acted in bad faith. Cf. Jeanpierre, 636 F.3d at 422; White, 519 F.3d at 814. Evidence is material when it “might have affected the outcome of the trial.” United States v. Bagley, 473 U.S. 667, 674-75, 105 S.Ct. 3375, 87 L.Ed.2d 481 (1985) (quoting United States v. Agurs, 427 U.S. 97, 104, 96 S.Ct. 2392, 49 L.Ed.2d 342 (1976)).
Chiappetta first argues that Brown has not shown that he failed to disclose favorable evidence or that the evidence was material. The court agrees. The evidence that the same gun used in the August 27 incident was used again after Brown was released from detention is, if anything, inculpatory. There is no evidence that any of Chiappetta’s discussions with Pickens or unrecorded discussions with Charleston involved any exculpatory evidence. If anything, their statements could show that Brown filed the burglary complaint out of anger towards Charleston. Chiappetta’s failure to observe bullet holes is not evidence of anything, especially in light of the witness statements and shell casings.
The only possibly exculpatory evidence is Shockency’s denial of the spontaneous utterance and Randle’s denial of the shooting. Chiappetta disclosed Randle’s denial and, at best, Shockency’s denial created an issue of credibility between Shockency and the arresting officers. Even resolving such credibility dispute in favor of Brown, the victim’s statement, his identification of Brown, the corroborating statement by an independent witness and the presence of shell casings are substantial evidence to support probable cause. Additional disclosure would not have changed the probable-cause determination. Therefore, Brown fails to show that the undisclosed evidence was material at the probable cause stage.
Moreover, a determination that probable cause existed to believe that Brown committed assault does not inform the custody determination. A judge setting terms of release “must consider” numerous factors:
(a) the nature and circumstances of the offense charged; (b) the weight of the evidence; (c) family ties; (d) employment; (e) financial resources; (f) character and mental condition; (g) length of residence in the community; (h) criminal convictions; (i) prior history of appearing in court; (j) prior flight to avoid prosecution; (k) the victim’s safety; (l) any other person’s safety; (m) the community’s safety.
Minn. R. Cr. P. 6.02 subdiv. 2. The weight of the evidence is only one of many factors the judge must consider. Nothing in the record supports an inference that the judge set bail based on the complaint or that the additional facts would have led to a different outcome. Therefore, Brown also fails to show that the undisclosed evidence was material to the judge’s determination of the amount of bail.
Chiappetta next argues that his actions were not in bad faith. Courts have found bad faith when investigating officers have an interest in the investigation, lie or manufacture evidence. See White, 519 F.3d at 811, 814 (investigating officer lied about ongoing romantic relationship with accuser’s mother, violated department rules regarding victim contact and failed to preserve victim’s diary that called accused “a good father” who she “wanted to spend more time bonding with at the family’s lake house”); Livers v. Schenck, No. 08-107, 2011 WL 1197464, at *3, *7-8 (D.Neb. Mar. 28, 2011) (investigating officers fabricated evidence, prepared, false reports, tampered with evidence, coerced confession and suppressed recanted confession by developmentally disabled plaintiff accused of capital murder); accord Jones, 856 F.2d at 990, 995 (investigating officers manufactured false identification, falsified witness statements and victim identification of another person as assailant, suppressed report by another investigator and used clandestine files of exculpatory information leading to “railroading” of accused). Chiappetta’s failure to record largely immaterial, neutral facts stands in stark contrast to those cases involving bad faith.
An investigating officer need not assiduously record every word of every conversation in the early stages of an investigation. See Youngblood, 488 U.S. 51, 58, 109 S.Ct. 333 (1988); California v. Trombetta, 467 U.S. 479, 488-89 & 489 n. 8, 104 S.Ct. 2528, 81 L.Ed.2d 413 (1984); Jones, 856 F.2d at 995. Instead, due process requires police to preserve and disclose evidence that could exonerate a defendant. See Youngblood, 488 U.S. at 58, 109 S.Ct. 333. Chiappetta’s initial suspicion that Shockency was lying to him was reasonable and formed the basis for further investigation. His report noted that he had spoken with Shockency. Her denial does not exonerate Brown. Chiappetta disclosed the statement of Randle that she had been with Brown and. denied that Brown was involved in the shooting. Therefore, Brown does not show that Chiappetta acted, in bad faith, and summary judgment is warranted.
In short, Brown fails to show that Chiappetta violated her due process right to disclosure because she never stood trial. Moreover, Chiappetta’s acts were not in bad faith and Brown does not show that the disputed evidence is favorable or material under Brady. Therefore, for each of these reasons, Chiappetta is entitled to qualified immunity under § 1983.
Qualified immunity is also warranted because the right to disclosure, as interpreted by Brown, was not clearly established at the time. A right is clearly established if “it would be clear to a reasonable officer that his conduct was unlawful in the situation he confronted.” White, 519 F.3d at 813. The Eighth Circuit has never extended Brady beyond trial. The parties do not present any case in which a court of appeals extended Brady beyond trial. A reasonable officer could not have known that disclosing Shockency’s inconsistent statement to the prosecutor before trial but not during the initial investigation would violate Brown’s due process rights. For this additional reason, Chiappetta is entitled to qualified immunity.
B. Malicious Prosecution and Reckless Investigation
|
1309984-19149 | W. EUGENE DAVIS, Circuit Judge:
Three of the four appellants were participants in a large organization that imported and distributed cocaine in the Dallas area. The fourth appellant, Kurt Thomas Chase, was charged with participation in the organization but convicted only of simple possession of cocaine. Originally tried with three other defendants, the four appellants appeal their convictions on various counts of possession, distribution, and conspiracy to possess with intent to distribute cocaine. For the reasons discussed below, we affirm all four convictions.
I.
Because the appellants present numerous and distinct arguments of errors in the trial, we give only an outline of the background facts at this time and will discuss the facts in more detail later as needed to understand the individual assignments of error.
The common figure linking all of the appellants is A1 Litton, a cooperating co-conspirator who was the government’s star witness. Litton moved to Florida in 1980 and in October 1981 he met Adriana Morales, a Colombian visiting in the United States. They were later married. Adriana’s father was allegedly one of Colombia’s largest cocaine suppliers. Beginning in September 1982, Al and Adriana Litton began smuggling cocaine into the United States. They supplied a number of wholesalers in the Dallas area, including nightclub owner James Ragland.
While A1 Litton was in Colombia visiting Adriana’s parents in December 1983, Bernardo Mesa, Adriana’s brother-in-law, began furnishing cocaine to Litton, who in turn sold it to Ragland and others. When Litton collected the purchase price for the cocaine from Ragland or Ragland’s agent, Vincent Collette, he remitted the money to Bernardo. Collette flew to Miami every two or three weeks from February through November 1984 and obtained cocaine from Al and Adriana Litton, which they in turn had obtained from Bernardo Mesa. In the spring of 1984, Al and Adriana Litton moved to Dallas but the deliveries to Rag-land’s agent Collette in Miami continued. During this time Omar Mesa and Adriana’s sister, Doris Moreno, began supplying cocaine to Ragland.
Critical to the prosecution of Omar Mesa was a transaction in late September 1984. During that transaction, Omar and a Colombian, known only as Diego, delivered six kilograms of cocaine to an apartment in Miami being used by Doris and Vidal Moreno. Collette purchased the six kilograms of cocaine from Omar Mesa and Diego for $110,000.
The other appellants are below Omar Mesa and Bernardo Mesa in the distribution chain. Billy Ray Nelson first began buying cocaine from Ragland in late 1983 or early 1984. Nelson usually bought about four ounces from Ragland when Ragland received a new shipment.
Kurt Chase worked at a Taco Inn for one of Ragland’s partners, Ramsey. Chase bought cocaine on numerous occasions from Ramsey, but always in small quantities. Chase was an admitted weekly user of cocaine; the evidence was conflicting as to whether he ever sold the drug.
With this background, we turn to the issues presented by each appellant.
II.
A. KURT CHASE
Chase was charged with conspiracy to possess cocaine with intent to distribute (Count 1) and two counts of possession of cocaine with intent to distribute, once in October 1984 (Count 24) and again in February 1985 (Count 29). He was acquitted on Counts 1 and 29, but the jury found him guilty of simple possession of cocaine as a responsive verdict to the larger offense charged in Count 24.
Chase’s principal argument is that the district court erred in allowing the jury to consider his guilt of simple possession of cocaine as a responsive verdict to possession with intent to distribute charged in Count 24. Chase contends that the government is not entitled to a verdict on the lesser included offense of possession because the government’s evidence and argument in this case — that Chase sold cocaine — is fundamentally inconsistent with simple possession of the drug.
The government undoubtedly sought to prove that Chase not only purchased cocaine but also sold it. Joy Fife, Ramsey’s girlfriend, testified that during 1984 she “fronted” (or delivered on consignment) one-quarter ounce of cocaine to Chase. Ramsey testified to similar transactions on fifteen to twenty occasions but gave no time frame for those deliveries. Steve Perkins testified that he bought small quantities of cocaine from Chase approximately six times between 1982 and 1985. Both Ramsey and Perkins testified that ordinarily the fronting or consignment arrangement was one they had with dealers who paid for the cocaine after they sold it. However, the government’s evidence that Chase distributed cocaine was not unequivocal. Steve Perkins, working as a government informant, attempted to make a controlled purchase of cocaine from Chase but was never able to do it. Fife at one point in her testimony admitted that one-quarter ounce of cocaine can be consumed in one evening at a party. Several of the government’s witnesses testified they had used cocaine with Chase but never saw him sell any of the drug. Grimes saw him sell cocaine before 1981 but not after that date.
Chase’s defense was predicated almost entirely on his contention that, though he used cocaine weekly, he did not sell or distribute it in any fashion. Although Chase denied possessing one-quarter ounce of cocaine on the date charged, he admitted receiving cocaine from Ragland, Larry Ramsey, and Vincent Collette on a number of occasions. Chase also admitted using cocaine with Steve Perkins and Joy Fife. Ron Stoneseiffer, a former Dallas policeman, testified for the defense that he knew Chase used cocaine but Chase did not sell it. Thus, the battlelines in Chase’s case were drawn not over whether he possessed cocaine but whether he sold or distributed it.
It is undisputed that simple possession of cocaine is lesser than and wholly included within the crime of possession with intent to distribute. See United States v. Garcia-Duarte, 718 F.2d 42, 47 (2nd Cir.1983). To establish the crime charged, the government was required to prove two distinct elements: that Chase possessed cocaine on or about the date charged in the indictment and that he intended to distribute it. The government’s evidence in this case on proof of Chase’s intent to distribute was not incompatible with its proof of his simple possession of cocaine. Chase's reliance on United States v. Payne, 805 F.2d 1062 (D.C.Cir.1986) and United States v. Pirolli, 742 F.2d 1382 (11th Cir.1984), cert. denied sub. nom. 471 U.S. 1067, 105 S.Ct. 2143, 85 L.Ed.2d 500 (1985) is misplaced. In both cases the prosecution was predicated on evidence that the accused had large quantities of drugs in his possession. In Payne, the government’s evidence revealed that the accused had forty pounds of marijuana and associated paraphernalia in his apartment and Payne was observed throwing a large amount of marijuana out of his window. The court properly held that this evidence was inconsistent with guilt of simple possession. In Pirolli, the accused possessed a pound of cocaine, an amount the court considered too large to attribute to personal consumption. Both of these cases are readily distinguishable from the instant case. The government did not contend that Chase possessed a large quantity of cocaine in October 1984; the government’s evidence established that Joy Fife delivered one-quarter ounce of cocaine to Chase on or about the date charged.
The court in Payne stated the rule that governs the instant case: “[E]ven where the defendant presents a totally exculpatory defense, the [lesser included offense] the prosecution’s evidence provides a ‘rational basis’ for the jury’s finding the defendant guilty of a lesser offense.” Payne 805 F.2d at 1067. A rational jury was entitled to find from the evidence that Chase intended to consume the one-quarter ounce of cocaine he obtained from Joy Fife rather than distribute it. The district court did not err in instructing the jury to consider simple possession of cocaine as a lesser included offense and the jury had a rational basis for finding Chase guilty of this lesser included offense.
Chase argues next that the trial court erred in refusing to give the jury an adequate instruction to guide the jury’s consideration of “extrinsic” evidence of his use of cocaine at times other than October 1984, the period covered by Count 24 of the indictment. The court gave the following instruction in its final charge:
The defendants are on trial here for the offenses set forth in the indictment. In order for you to find defendants guilty of the crimes alleged, the government must prove each of the elements of the crime beyond a reasonable doubt. The government has offered testimony and exhibits regarding matters not charged in the indictment as crimes or offenses. This evidence, even if you find it to be believable, in whole or in part, is not evidence that defendants committed the crimes charged in this case but is only background information to assist you in determining matters such as the defendants’ motive, opportunity, intent, preparation, plan, knowledge, or identity. The defendants are on trial only for the charges in the indictment. Do not convict them if the government has failed to prove these charges beyond a reasonable doubt.
Chase contends that the district court should have connected its cautionary instruction to the testimony of each witness who testified to Chase’s cocaine use. Assuming without deciding that the testimony about Chase’s drug use outside the indictment period is “extrinsic” evidence of other crimes within the meaning of Rule 404(b) of the Federal Rule of Evidence, the court’s charge was adequate.
B. BERNARDO MESA
Bernardo Mesa was convicted of conspiracy (Count 1); three counts of aiding and abetting the possession of cocaine with intent to distribute on February 17, 1984 (Count 3), on March 29,1984 (Count 5), and on April 28, 1984 (Count 7); and three counts of aiding and abetting travel in interstate commerce with intent to distribute the proceeds of an unlawful activity, in violation of 18 U.S.C. § 1952 (Counts 4, 6, 8).
Bernardo Mesa complains first that the trial court erred in admitting evidence of his participation in two drug transactions that were not the subject of a specific substantive charge in the indictment, though the transaction took place during the conspiracy period charged in Count 1. As with Chase’s argument on this point, see supra Note 2, this evidence was not “extrinsic” as to the conspiracy count and we do not address whether the evidence is “extrinsic” as to the substantive counts within the meaning of Federal Rule of Evidence 404(b). Assuming without deciding that it is extrinsic, the district court’s cautionary instruction quoted above was adequate.
Although he made no contemporaneous objection, Bernardo Mesa also complains that the trial court erred in admitting the transcript of a tape recorded conversation among A1 Litton, Adriana Litton, and Bernardo Mesa without properly authenticating the transcript. He further argues that the court should have instructed the jury to disregard any portion of the transcript where the jury found the actual recording to be inaudible or unintelligible.
This contention is entirely meritless. A1 Litton testified to the accuracy of the recording, identified the voices, and verified the correctness of the transcript. The court allowed the transcript to be used solely to assist the jury in following the recording. It was not admitted into evidence. The trial court gave a full instruction to the jury on how it should use the transcript. The trial court did not abuse its discretion in the manner in which it handled the transcripts.
C. OMAR MESA
Omar Mesa was convicted on the conspiracy count (Count 1) and for aiding and abetting the possession of six kilograms of cocaine with intent to distribute on September 19, 1984 (Count 23).
Omar Mesa complains that the trial court erred by admitting coconspirators hearsay statements because the government failed to produce sufficient independent evidence of the existence of the conspiracy to justify their admission.
The only alleged hearsay coconspirators’ testimony that Omar Mesa points to is Doris Moreno’s statement to A1 Litton that Omar was her source for cocaine. No objection was made to this testimony. Omar Mesa thus failed to preserve this error for appeal. United States v. Hamilton, 694 F.2d 398, 401 (5th Cir.1982). Furthermore, evidence of Omar’s participation in the conspiracy was overwhelming.
Al and Adriana Litton testified that Omar Mesa was their source for cocaine from May to September 1984. The Littons testified in detail about one particular six-kilogram transaction in September 1984. According to these witnesses, Omar and two companions delivered the cocaine to Doris and Vidal Moreno’s apartment in Bar Harbor, Florida. Litton then allegedly delivered Ragland’s money to Omar in one bedroom of Doris’ apartment; Litton then delivered Omar's cocaine to Ragland’s courier who was in the other bedroom.
Although the offered co-conspirator’s statement can be “considered along with the other evidence in determining whether the hearsay declarant was the defendant’s co-conspirator,” United States v. Perez, 823 F.2d 854, 855 (5th Cir.1987); Bourjaily v. United States, - U.S. -, 107 S.Ct. 2775, 97 L.Ed.2d 144 (1987), independent, nonhearsay testimony was ample in this case to establish Omar’s participation in the conspiracy. The trial court’s findings that a conspiracy existed and that the defendant was a participant in it were not clearly erroneous.
Omar Mesa also argues that the evidence was insufficient to sustain his conviction, and the court erred in failing to grant his motion for a judgment of acquittal. The evidence summarized above is sufficient to support Omar Mesa’s conviction, and the district court did not abuse its discretion in denying his motion for judgment of acquittal.
Omar Mesa also complains of prosecuto-rial misconduct during closing arguments in this case. He specifically objects to four improper arguments: (1) the prosecutor improperly bolstered the credibility of A1 Litton by arguing that Litton’s initial story to the DEA was the same as his version at trial; (2) the prosecutor improperly insinuated that Adriana Litton was afraid of Omar Mesa and that she was fearful for her family in Colombia; (3) the prosecutor leveled an ethnic slur at the Mesa family when he referred to them as representative of “Columbians [sic] with their cautiousness”; and (4) the prosecutor attacked the integrity of all the defendants by inviting the jury to determine “who had been candid with them.”
To warrant reversal of a conviction on grounds of a prosecutor’s improper jury argument, a court must find that the prosecutor’s remarks were both inappropriate and harmful. United States v. Young, 470 U.S. 1, 11, 105 S.Ct. 1038, 1044, 84 L.Ed.2d 1 (1985). “A criminal conviction is not to be lightly overturned on the basis of a prosecutor’s comments standing alone.” Young, 470 U.S. at 9-10, 105 S.Ct. at 1043-44. The closing argument must be analyzed in the context of the entire case to determine whether it affected substantial rights of the accused. In making this determination, the court should consider the strength of the government’s case and the trial court’s instructions to the jury. United States v. Cardenas, 778 F.2d 1127, 1132 (5th Cir.1985); United States v. Grubbs, 776 F.2d 1281 (5th Cir.1985).
The prosecutor argued that the substance of Litton’s statement, when he first came forward to assist the DEA, was the same as his testimony. This was not improper argument. The prosecutor was responding to attacks by all defendants on Litton’s credibility. Litton in his testimony on redirect examination testified that he initially told the agents about all the trans actions in which he had been involved. The argument was neither outside the record, United States v. Garcia, 693 F.2d 412 (5th Cir.1982), nor advanced as the prosecutor’s personal opinion, United States v. Herrera, 531 F.2d 788 (5th Cir.1976). The district court did not abuse its discretion in overruling the objection to this argument.
The prosecutor’s suggestion that Adriana Litton was afraid of Omar Mesa was also not improper because Omar Mesa’s counsel opened up the subject of Adriana Litton’s fear of Omar Mesa in his cross-examination of Adriana. On cross-examination of Adriana Litton, counsel for Omar Mesa asked Adriana in detail about her fear of Omar Mesa and whether her testimony was colored by such fears. Although Adriana denied any fear of Omar, the prosecutor was entitled to comment on that testimony so the jury could evaluate not only her statements but her hesitant manner of testifying. Such an argument did not advance a personal opinion by the prosecutor and was a fair comment on the evidence. The district court did not abuse its discretion in overruling Omar’s objection.
Omar’s next allegation of improper jury argument concerns the prosecutor’s invitation to the jury to consider which side had been more “candid” with the jury in their questioning, presentation of evidence, and summation. Because Omar failed to object to this argument at trial, he did not preserve this point for appeal.
We do not interpret the prosecutor’s statement about the “Columbians [sic] with their cautiousness” as an ethnic slur. The prosecutor was rebutting Omar’s argument that he was visiting his sister Doris at her apartment, while a large drug sale was being consummated. We interpret the prosecutor’s reference to the Colombians as a reference to members of the Mesa family who had grown up in the cocaine business and were much too careful to visit or receive visitors in an apartment where drugs were being sold. Even if the remark were inappropriate, this single comment did not reach the level of harmful error. Young, 470 U.S. at 11, 105 S.Ct. at 1044; United States v. Williams, 809 F.2d 1072 (5th Cir.), cert. denied, - U.S. -, 108 S.Ct. 259, 98 L.Ed.2d 216 (1987).
Omar Mesa next complains about the severity of his sentence. Omar, who was convicted on Count 1 (conspiracy) and Count 23 (distribution of six kilograms of cocaine), was sentenced to thirty-five years imprisonment and a $25,000 fine. This sentence was within the maximum permitted by the statutes. Omar’s primary complaint with respect to his sentence is that his codefendants, who entered guilty pleas and cooperated with the government, received lesser sentences. However, a code-fendant’s sentence is immaterial to the propriety of a sentence imposed on a defendant. United States v. Nichols, 695 F.2d 86, 93 (5th Cir.1982). Indeed, “the government is permitted to encourage guilty pleas by offering substantial benefits to a defendant, and [the appellant] having rejected the offer of a plea bargain, cannot complain that his codefendants received the benefit of a lighter sentence.” United States v. Johnson, 679 F.2d 54, 58 (5th Cir.1982); see also Corbitt v. New Jersey, 439 U.S. 212, 223-24, 99 S.Ct. 492, 499-500, 58 L.Ed.2d 466 (1978).
|
317296-10703 | PER CURIAM:
The district court dismissed this diversity case under the doctrine of forum non conveniens. The plaintiffs appeal, claiming that the Erie doctrine required the court to apply the state forum non conveniens rule which would have precluded the dismissal. We affirm.
I.
The plaintiffs are fifty-eight Costa Rican agricultural workers. They claim to have been sterilized as a result of their exposure in Costa Rica to pesticides manufactured by either Dow Chemical Company or Shell Oil Company. In May 1983, they sued these companies in Florida state court, seeking damages under product liability theories of negligence, strict liability in tort and implied warranty. The Florida court had personal jurisdiction over the defendants because they were qualified to transact business in the State of Florida. Fla. Stat. § 48.091 (1983).
The defendants removed the case to the U.S. District Court for the Southern District of Florida, pursuant to 28 U.S.C. § 1332(a)(2) (1982), and, thereafter, moved to dismiss the action on the ground of forum non conveniens. They argued that the plaintiffs should prosecute their claims in the courts of Costa Rica: the plaintiffs are Costa Rican citizens; they were injured in Costa Rica; and substantially all of the evidence and witnesses are in Costa Rica. Furthermore, Florida’s choice of law rule would require the district court to apply the substantive law of Costa Rica.
The plaintiffs, in response, argued that the Erie doctrine requires a federal district court, sitting in a diversity case, to apply the state forum non conveniens rule rather than the federal rule. Florida precludes the dismissal of an action under the doctrine, where one of the parties is a resident, Seaboard Coastline Railroad v. Swain, 362 So.2d 17, 18 (Fla.1978); Houston v. Caldwell, 359 So.2d 858, 861 (Fla. 1978); Waite v. Summit Leasing & Capital International Corp., 441 So.2d 185, 185 (Fla.Dist.Ct.App.1983); therefore, the plaintiffs continued, the district court transgressed the Erie rule in dismissing the action.
The district court, after weighing the traditional forum non conveniens factors, concluded that the convenience of the parties, the witnesses and the court, and the interests of justice, dictated that the case be dismissed, and it granted the defendants’ motion. In appealing, the plaintiffs do not dispute the district court’s interpretation of the doctrine, as it has been applied in the federal courts, and they do not dispute the court’s weighing of the relevant factors. They also do not dispute that this case presents a paradigm for the invocation of the doctrine. Their argument is, purely, that Erie requires the application of the state rule because this is a diversity case.
II.
The doctrine of forum non conveniens authorizes a trial court to decline to exercise its jurisdiction, even though the court has venue, where it appears that the convenience of the parties and the court, and the interests of justice indicate that the action should be tried in another forum. The doctrine derives from the court’s inherent power, under article III of the Constitution, to control the administration of the litigation before it and to prevent its process from becoming an instrument of abuse, injustice and oppression. As the Supreme Court observed nearly 100 years ago, “the equitable powers of courts of law over their own process, to prevent abuses, oppression, and injustice, are inherent and equally extensive and efficient.” Gumbel v. Pitkin, 124 U.S. 131, 144, 8 S.Ct. 379, 383, 31 L.Ed. 374 (1888). See also Pueblo De Taos v. Archuleta, 64 F.2d 807, 813 (10th Cir.1933); 1 J. Moore, J. Lucas, H. Fink, D. Weckstein, & J. Wicker, Moore’s Federal Practice 110.60[6] (2d ed. 1984). Cf. Ownbey v. Morgan, 256 U.S. 94, 110, 41 S.Ct. 433, 438, 65 L.Ed. 837 (1921) (inherent power of state court).
The doctrine of forum non conveniens is but one manifestation of that inherent power. The doctrine addresses “whether the actions brought are vexatious or oppressive or whether the interests of justice require that the trial be had in a more appropriate forum.” Koster v. Lumbermens Mutual Casualty Co., 330 U.S. 518, 530, 67 S.Ct. 828, 834-35, 91 L.Ed. 1067 (1947); see Williams v. Green Bay & W.R. Co., 326 U.S. 549, 555-56, 66 S.Ct. 284, 287, 90 L.Ed. 311 (1946). Under the federal standard, “dismissal will ordinarily be appropriate where trial in the plaintiff’s chosen forum imposes a heavy burden on the defendant or the court, and where the plaintiff is unable to offer any specific reasons of convenience supporting his choice.” Piper Aircraft Co. v. Reyno, 454 U.S. 235, 249, 102 S.Ct. 252, 262, 70 L.Ed.2d 419 (1981).
The court’s inherent power to protect the integrity of its process through forum non conveniens is similar to the court’s inherent power to punish contempt. Of the latter, the Supreme Court has written:
It is essential to the administration of justice. The courts of the United States, when called into existence and vested with jurisdiction over any subject, at once become possessed of the power. So far as the inferior federal courts are concerned, however, it is not beyond the authority of Congress; but the attributes which inhere in that power and are inseparable from it can neither be abrogated nor rendered practically inoperative. That it may be regulated within limits not precisely defined may not be doubted.
Michaelson v. United States, 266 U.S. 42, 65-66, 45 S.Ct. 18, 20, 69 L.Ed. 162 (1924). We think this statement applies with equal force to the authority of a federal district court to dismiss an action for want of an appropriate forum.
The Court’s interest in controlling its crowded docket also provides a basis for the Court’s inherent power to dismiss on grounds of forum non conveniens: “the ‘chosen forum [is] inappropriate because of considerations affecting the court’s own administrative and legal problems.’ ” Piper Aircraft Co. v. Reyno, 454 U.S. at 241, 102 S.Ct. at 258 (quoting Roster v. Lumbermens Mutual Casualty Co., 330 U.S. at 524, 67 S.Ct. at 831-32). “Administrative difficulties follow for courts when litigation 'is piled up in congested centers instead of being handled at its origin. Jury duty is a burden that ought not to be imposed upon the people of a community which has no relation to the litigation.” Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508-09, 67 S.Ct. 839, 843, 91 L.Ed. 1055 (1947). The forum non conveniens doctrine is “designed in part to help courts avoid conducting complex exercises in comparative law,” Piper Aircraft Co., 454 U.S. at 251, 102 S.Ct. at 263, an exercise the court below would have to undertake if it litigated this ease on the merits.
The plaintiffs acknowledge, as they must, the court’s inherent power to dismiss a case for the purposes expressed in the doctrine. They insist, however, that Erie precludes a court from invoking this power if its invocation would control the “outcome” of the parties’ controversy.
The Erie rule holds that neither Congress nor the courts have the constitutional authority to promulgate the substantive rule of law that controls the controversy in a diversity case:
There is no federal general common law. Congress has no power to declare substantive rules of common law applicable in a state whether they be local in their nature or “general,” be they commercial law or a part of the law of torts. And no clause in the Constitution purports to confer such a power upon the federal courts.
Erie Railroad v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 822, 82 L.Ed. 1188 (1938). See also Bernhardt v. Polygraphic Company of America, 350 U.S. 198, 202, 76 5. Ct. 273, 275, 100 L.Ed. 199 (1956). It is obvious that the district court here, in deciding the merits of the .defendants’ motions to dismiss, did not explicitly promulgate a state common law rule.' The question thus becomes whether the court did so by implication. We think not.
We recognize that the application of the federal, rather than the state, forum non conveniens rule alters the outcome of this case. Under Florida law, the plaintiffs would litigate their claims to a conclusion on the merits; under federal law, they are precluded from reaching the merits. They are, in effect, consigned to the Costa Rican courts for trial. This does not mean, however, that, in dismissing their case, the federal court fashioned a state substantive rule in violation of Erie.
The forum non conveniens doctrine is a rule of venue, not a rule of decision. The doctrine provides “simply that a court may resist imposition upon its jurisdiction even when jurisdiction is authorized by the letter of [the law].” Gulf Oil Corp. v. Gilbert, 330 U.S. at 507, 67 S.Ct. at 842. In contrast, “rules of decision” are the “substantive” law of the state, the “legal rules [which] determine the outcome of a litigation.” Guaranty Trust Co. v. York, 326 U.S. 99, 109, 65 S.Ct. 1464, 1470, 89 L.Ed. 2079 (1945). It is true that a judge-made rule may qualify as a rule of decision if it substantially affects the “character or result of a litigation.” Hanna v. Plumer, 380 U.S. 460, 467, 85 S.Ct. 1136, 1141, 14 L.Ed.2d 8 (1965). But the trial court’s decision, under the circumstances presented here, whether to exercise its jurisdiction and decide the case was not a decision going to the character and result of the controversy. Rather, it was a decision that occurred before, and completely apart from, any. application of state substantive law. A trial court only reaches the state rule of decision, relating to the character and result of the litigation, once it has decided to try the case and determine whether the plaintiff has a valid claim for relief. We hold, accordingly, that the district court’s application of the doctrine of forum non conveniens in this ease did not operate as a state substantive rule of law and thus transgress Erie’s constitutional prohibition. The judgment of the district court is therefore
AFFIRMED.
. See Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938).
. Dow Chemical Company and Shell Oil Company are major international corporations. They are subject to jurisdiction over their persons in the courts of every state and several foreign countries, including Costa Rica. The plaintiffs chose to sue them in Florida.
. The other states of the Union would, apparently, apply the doctrine and dismiss the case under the circumstances presented here. See, e.g., Alcoa Steamship Co. v. M/V Nordic Regent, 654 F.2d 147, 155 n. 10 (2d Cir.1980) (“Apparently the only state where the court of last resort has continued to reject the doctrine [of forum non conveniens ] as a matter of law is Florida”).
|
10514029-23179 | Opinion by Judge D.W. NELSON.
D.W. NELSON, Circuit Judge:
OVERVIEW
Citadel Holding Corporation (“Citadel”) appeals the district court’s grant of summary judgment in favor of Alfred Roven (“Roven”) and American Underwriters, Inc. (“American”) in an action filed by Citadel under § 16(b) of the Securities Exchange Act of 1934 (“the Act”). 15 U.S.C. § 78p(b) (1988). Citadel seeks disgorgement of profits allegedly realized by Roven through short-term transactions with private brokerage houses in options referencing Citadel stock. We have jurisdiction pursuant to 15 U.S.C. § 78aa. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Citadel is a savings and loan holding company incorporated under the laws of the State of Delaware, with its principal place of business in Glendale, California. Its common stock is listed and traded on the American Stock Exchange. Alfred Roven (“Roven”) is the Chairman of the Board of Directors and the sole shareholder of American Underwriters, Inc. (“American”), a securities and real estate investment company. At the time that Roven, through American, entered into the private option contracts at issue here, he was a director of Citadel, and therefore was a statutory “insider” within the meaning of § 16(b) of the Act.
There were two legal restrictions against any shareholder or prospective shareholder acquiring more than 10% of Citadel’s common stock during the 1985-87 time period. First, no person could own more than 10% of a savings and loan’s common stock without approval from the Federal Home Loan Bank Board (“Bank Board”). See 12 U.S.C. §§ 1730a, 1730(q) (1988). Second, Article 8 of Citadel’s Certifícate of Incorporation expressly prohibited any person “significantly engaged” in an “unrelated business activity” from owning more than 10% of the Citadel stock (the “Article 8 restriction”). At all relevant times, Roven held 313,000 shares of Citadel’s common stock, approximately 9.8% of all the company’s outstanding shares.
On October 8,1985, Roven negotiated with Bear Stearns & Co. (“Bear Stearns”) to purchase call options on behalf of American. In exchange for an initial payment of $750,000, Roven received the right to purchase, at a pre-determined price, 150,000 shares of Citadel stock (the “Bear Steams option”). Ro-ven’s rights under the contract were nontransferable, and his option to purchase the 150,000 shares was exercisable only in its entirety. The agreement provided for an initial exercise period of only thirty days, but Roven had the right to extend the agreement for subsequent thirty-day periods so as to maintain his option position. Although Ro-ven could not sell his option on the open market, he was free at any time to sell the option back to Bear Stearns at a price linked to the market price of the underlying securities.
The Bear Stearns option gave Roven no voting rights with respect to the underlying Citadel stock, and there is no evidence that Roven directly or indirectly obtained added leverage over the management of Citadel as a result of the agreement. Roven had a right to receive dividends on the underlying Citadel stock, although no such payments were made during the time that he maintained the option position.
Roven renewed the Bear Stearns option over two years, maintaining his option on precisely 150,000 shares irrespective of changes in the price of the underlying stock and irrespective of whether the extensions represented a net profit or loss. The extensions were accomplished through a series of “rollovers” that occurred either immediately prior to the scheduled expiration date or when the price of the Citadel stock referenced in the agreement hit a specified “trigger” price. Each extension resulted in a new exercise price and a new purchase price.
From May 21, 1986 through August 14, 1987, Roven withdrew cash from his Bear Stearns account on at least nine separate occasions. These withdrawals were conditional receipts of funds that Roven was required to repay if and when the securities declined in value. From the time the Bear Stearns option was originated in October 1985, through October 1, 1987, Roven paid a total of $5,288,720 to extend the position and withdrew a total of $5,289,569 from the account. No money was withdrawn until more than seven months after the agreement was initiated, and when the stock market crashed in October, 1987, the contract expired worthless. Roven never exercised the Bear Stearns option.
In April 1986, Roven negotiated, through American, three call option contracts referencing Citadel stock with another broker, Prudential Bache Securities, Inc. (“Prudential Bache”). In exchange for $286,875, $284,700, and $277,625, respectively, Roven received the right under each of the three contracts to purchase 25,000 shares of Citadel common stock, for a total of 75,000 shares. The Bache options worked much as did the Bear Stearns option, except that the Bache options had an initial term of thirty to forty-five days. American paid a total of $1,068,335 with respect to the acquisition and extension of the first and third Bache options. American, however, neither withdrew nor was paid any money with respect to these two options, and never closed them out. Roven extended the second Bache option by a series of payments in the aggregate amount of $490,700. On October 29, 1986, Roven closed out the option and, as a result, received funds from Prudential Bache in the amount of $559,650. Roven received these funds six months and seven days after he acquired the option. Roven never exercised any of the three Bache options.
Roven made no effort to disguise the transactions. Roven and American timely filed amendments to their Schedule 13D publicly disclosing the acquisition of the Bear Stearns and Bache options, and appended copies of the trade confirmations and other descriptive material. Roven also disclosed the options in filling out Citadel’s annual directors’ and officers’ questionnaires. Despite these disclosures, Roven concluded that, because the options were not “presently exercisable,” he had no obligation separately to report the transactions pursuant to § 16(a).
Citadel’s 1986 annual proxy statement, which was filed with the SEC and distributed to shareholders, stated with respect to the Bear Stearns option (the Bache options not yet having been acquired) as follows:
American has acquired an option giving it the right to purchase from a third party 150,000 shares of Citadel common stock, which option by its terms cannot be exercised until all required filings have been made with, and all required approvals have been obtained from, the appropriate regulatory authorities.
On or about May 29, 1987, Citadel filed with the SEC, and transmitted to its shareholders, a copy of its 1987 annual proxy materials. Once again, Citadel made reference to the options, this time implicating both the Bear Steams and Bache agreements. Citadel noted that Roven’s ownership of Citadel stock “[did] not include options with respect to 200,000 shares constituting approximately 5.77% of the issued and outstanding shares ... that cannot be lawfully exercised until certain required filings have been made with, and certain required approvals have been obtained from, the Federal Home Loan Bank Board.” Citadel’s 1987 proxy statement also discussed the Article 8 restriction.
Citadel filed this action on October 9,1987, in the District Court for the Central District of California, seeking disgorgement of profits allegedly realized by Roven through his purchase and sale of the options. Roven emphasizes that he was prohibited by law from purchasing additional Citadel stock without prior federal and corporation approval, and maintains that he purchased the options so as to be able to increase his ownership of Citadel were he to obtain the necessary approvals. Citadel, however, claims that Roven was able to use the options to speculate in Citadel stock in violation of § 16(b). Pursuant to the terms of § 16(b), Citadel was required to show that Roven (1) realized a profit, (2) from a purchase and sale or sale and purchase within a period of less than six months, (3) of an equity security of Citadel, (4) in a transaction that was not exempt by the rules and regulations of the Securities and Exchange Commission (“SEC”).
In November, 1988, Roven moved for summary judgment on the ground that the options were not equity securities of Citadel within the meaning of § 16(b), and on the alternative ground that the options were not “presently exercisable” and thus exempted by SEC Rules 16a-6 and 16a-10. The motion for summary judgment was denied, and on November 3,1990, Roven made a renewed motion for summary judgment. While the matter was under submission, the case was transferred to Judge Pfaelzer.
On June 16, 1992, Judge Pfaelzer filed an order granting Roven’s renewed motion for summary judgment, finding that Citadel had failed to raise a genuine issue of material fact with respect to three issues. The district court held that: (1) as a matter of law and fact, there was no “purchase and sale” or “sale and purchase” within a period of less than six months; (2) Citadel failed to raise a genuine issue of material fact concerning whether any profits arising from the option transactions were “realized” within less than six months; and (3) the option transactions were exempt from liability under § 16(b) because they were not “presently exercisable.”
STANDARD OF REVIEW
We review de novo a district court’s grant of summary judgment. See Colan v. Mesa Petroleum Co., 951 F.2d 1512, 1518 (9th Cir.1991), cert denied, — U.S.-, 112 S.Ct. 1943, 118 L.Ed.2d 548 (1992). Where a claim requires proof of multiple elements, as does the § 16(b) claim here, Fed.R.Civ.P. 56(c) mandates the entry of summary judgment against a party who fails to make a showing sufficient to establish the existence of an element essential to that party’s ease, and on which that party will bear the burden of proof at trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986).
ANALYSIS
We agree with the district court that Ro-ven’s option transactions were exempt from § 16(b) liability because the options were not “presently exercisable.” Because this conclusion alone is sufficient to support the district court’s grant of summary judgment, we do not reach any of the other contentions raised by the parties.
As a preliminary matter, we note that when the SEC effected its first comprehensive revision of the Section 16 regulatory scheme in 1991, it rewrote its rules governing reporting of, and liability for, transactions in derivative securities. The SEC explained the reason for the change as follows:
The former Commission Section 16 rules and case law, by failing to recognize the functional equivalence of derivative securities and the underlying securities, and by therefore focusing on the exercise, rather than the acquisition, of the derivative security, have left open a significant potential for short-swing abuse in trading derivative securities.
Ownership Reports and Trading by Officers, Directors and Principal Security Holders, Exchange Act Release 28869 [1990-91 Transfer Binder] Fed.Sec.L.Rep. (CCH) ¶ 84,709 at 81,261 (February 8, 1991). In its new regulatory scheme, the SEC thus “reversed” its prior approach, “realigning the Section 16(b) focus from the exercise of the derivative securities to the acquisition of the derivative securities,” id., and rewrote its rules interpreting § 16(a) in order to make “the acquisition of a derivative security as a reportable event, whether or not the security is presently exercisable,” id. at 81,264.
Although the new regulations, if applicable, clearly would have a significant impact on our analysis, we are obligated to evaluate this case according to the SEC rules operative at the time of the disputed transactions, as long as those rules were not inconsistent with the dictates of § 16 of the Act. See 15 U.S.C. § 78w(a)(l) (1992) (Section 23(a)(1) of the Act) (“[n]o provision of this chapter imposing any liability shall apply to any act done or omitted in good faith in conformity with any rule, regulation, or order of the [Securities and Exchange] Commis sion”). See also, Greene v. Dietz, 247 F.2d 689, 694-95 (2d Cir.1957) (holding that § 23(a) serves to immunize from § 16(b) liability those corporate insiders who structure their option transactions in good faith reliance on existing SEC rules and regulations); Colema Realty Corp. v. Bibow, 555 F.Supp. 1030, 1040 (D.Conn.1983) (same). Roven had a right to rely on SEC rules and regulations as they existed at the time of the transactions in question, arid, whatever results might obtain under the new regulatory framework, our task is to apply the statute as interpreted through those former SEC regulations.
Section 16 of the Securities Exchange Act of 1934 contains two separate provisions. Section 16(a) requires that all officers, directors, and large shareholders report to the SEC any changes in their “beneficial ownership” of equity securities of their corporations. Section 16(b) imposes liability on such “insiders” for short-swing transactions in such securities. The reporting requirements in § 16(a) serve to provide a record of acquisitions and dispositions of securities so that, when a challenge is brought under § 16(b), the SEC readily can determine whether the insider has violated the terms of the statute. Although § 16(b) is a relatively arbitrary, “flat rule,” Reliance Elec. Co. v. Emerson Elec. Co., 404 U.S. 418, 422, 92 S.Ct. 596, 599, 30 L.Ed.2d 575 (1972), aimed at prohibiting all classes of transactions that fall within its scope regardless of the motives of the insider, the statute expressly provides that liability shall not attach to “any transaction or transactions which the Commission by rules and regulations may exempt.” 15 U.S.C. § 78p(b) (1988). Pursuant to this provision, the SEC promulgated Rule 16a-10, .which establishes that where the SEC does not require reporting under § 16(a), there can be no liability under § 16(b). 17 C.F.R. § 240.-16a-10 (1989) (“Any transaction which has been or shall be exempted by the Commission from the requirements of § 16(a) shall, insofar as it is otherwise subject to the provisions of § 16(b), be likewise exempted from § 16(b).”); see also Reliance Elec. Co., 404 U.S. at 426, 92 S.Ct. at 601 (noting the effect of Rule 16a-10).
Although there is no mention of options in the text of § 16 of the Act, and although, prior to the SEC’s rule changes in 1991, there was considerable controversy concerning whether options should qualify as “equity securities of [the] issuer” within the meaning of § 16(b), the SEC had issued a rule that established unambiguously that, for § 16(a) reporting purposes, options would be considered to confer rights of beneficial ownership as. long as they were “presently exercisable.” 17 C.F.R. § 240.16a-6 (1988). SEC Rule 16a-6(a), as it existed at all times relevant here, provided as follows:
■The granting, acquisition, or disposition of any presently exercisable put, call, option or other right or obligation to buy ... or sell securities ... shall be deemed to effect such a change in the beneficial ownership of the securities ... as to require the filing of a statement pursuant to section 16(a) of the Act reflecting such change in beneficial ownership.
NOTES: 1. If any such right or obligation is not initially exercisable, the granting or acquisition thereof shall be reported in a statement filed for the month in which it became exercisable....
17 C.F.R. § 240.16a-6 (1989). Forms 3 and 4 promulgated by the SEC for filings by insiders under § 16(a) expressly stated: “Options exempt under Rule 16a-6 need not be reported.” Together then, Rules 16a-10 and 16a-6(a) operated to exempt from § 16(b) liability options that were not “presently exercisable.”
Roven claims that his options were not “presently exercisable” because there were two conditions precedent to exercise of the options. During the time that he held the Bear Stearns and Bache options, Roven held approximately 9.8% of Citadel’s outstanding shares. Because each set of options referenced more than 0.2% of Citadel’s outstanding shares, and because the options were exercisable only in their entirety, Roven would have come into possession of more than 10% of Citadel’s shares had he exercised any of the options.
At the time of the transactions, the Article 8 restriction in Citadel’s Certificate of Incorporation provided:
No person who is significantly engaged in an unrelated business activity shall be permitted, either directly or indirectly through an affiliate, to acquire control of the association.... [T]he term “control”, in relationship to the percentage ownership of stock, shall mean the ownership of more than 10 percent of the outstanding voting securities of the association.
Second, by statute, insiders of institutions such as Citadel could not own, directly or indirectly, more than 10% of the common stock of the institution without first obtaining the approval of the Federal Home Loan Bank Board (“Bank Board”). See 12 U.S.C. §§ 1730a, 1730(q) (1988). Roven claims that these two restrictions acted as conditions precedent to his exercise of the nontransferable Bear Stearns and Bache options, rendering them not “presently exercisable” within the meaning of Rule 16a-6(a).
Citadel counters Roven’s Rule 16a-6(a) exemption claim with two arguments. Citadel first emphasizes that nothing on the face of the options indicated that they were not presently exercisable. It argues that the SEC looks only to the express contractual terms of option contracts in determining whether an option is presently exercisable. Citadel’s second argument is that the options directly conferred on Roven “beneficial ownership” of the underlying securities such that, regardless of the terms of Rule 16a-6(a) and any implied condition precedent to exercise, Roven had to report his acquisition of the options pursuant to the express terms of § 16(a). We consider Citadel’s arguments in separate sections below.
A. Were the Options Presently Exercisable?
We begin with the proposition, relied on by the district court, that all laws and regulations in force at the time an agreement is entered into become a part of that agreement, regardless of whether specific mention is made of those laws and regulations in the agreement. See, e.g., Norfolk & W. Ry. Co. v. American Train Dispatchers Ass’n, 499 U.S. 117, 130, 111 S.Ct. 1156, 1164, 113 L.Ed.2d 95 (1991). Thus, even putting aside the Article 8 restriction, it is clear that, as a matter of law, Roven’s exercise of the nontransferable Bear Stearns and Bache options was conditioned on Roven’s receipt of Bank Board approval. Citadel concedes that Bank Board approval can be thought of as an implied condition precedent to Roven’s exercise of the options, but contends that Rule 16a-6(a) only exempts options that by their express terms are exercisable only after a certain date or upon a specified occurrence. Citadel, however, offers no supporting authority for such a distinction.
To our knowledge, there are no cases or SEC publications addressing whether an implied condition precedent can render an option not “presently exercisable” within the meaning of Rule 16a-6(a), and the parties have not directed us to, nor have we discovered independently, any authoritative discussion of the term. By limiting the scope of the § 16(a) reporting requirement in the derivative securities area to “presently exercisable” options, however, the SEC clearly was operating on the understanding that § 16(b) liability does not attach to transactions in options per se. Instead, the evident premise is that only the exercise of an option can trigger § 16(b) liability, and that, accordingly, the only options of concern for reporting purposes are those which give the holder the right, at any time the holder desires, to take possession of the underlying securities. Viewed in this light, the proper question in determining whether an option is “presently exercisable” is not whether the restriction on exercise is present on the face of the option, but whether acquisition of the option gives the holder a “present” right to control the disposition of the underlying security.
Neither Roven nor anyone else could have exercised the Bear Stearns or Bache options during the time period in question. Roven himself legally could not exercise the options unless he first had received the necessary Bank Board approval or had sold off a sufficient quantity of his Citadel holdings that he could exercise the options without implicating the 10% ceiling. It is uncontested that Roven at all times held approximately 9.8% of Citadel’s outstanding shares, and that he never obtained Bank Board approval to increase his holdings. Because the options were not transferable, moreover, Roven was prohibited from selling the options on the market to an individual not affected by the 10% ownership restriction. Accordingly, we hold that the Bear Stearns and Bache options were not “presently exercisable” within the meaning of Rule 16a-6(a).
B. Beneficial Ownership — Exception to the Exception.
Citadel’s second argument is that even if the options were not “presently exercisable,” Roven still had an obligation under § 16(a) to report them. Citadel attempts to get around the Rule 16a-6(a) exemption by arguing that, because the option agreements gave Roven the opportunity to profit on the options as the market price of Citadel stock rose and fell, Roven effectively had “beneficial ownership” of Citadel securities, thus bringing the agreements directly within the purview of § 16(a). In support of this argument, Citadel emphasizes that courts have held that if the essential rights of ownership of the underlying stock are passed on through the transaction, the purchaser will be deemed a “beneficial owner” of the stock regardless of the form of the transaction. As the Seventh Circuit put it, “[t]he commercial substance of the transaction rather than its form must be considered, and courts should guard against sham transactions by which an insider disguises the effective transfer of stock.” Bershad v. McDonough, 428 F.2d 693, 697 (7th Cir.1970), cert. denied, 400 U.S. 992, 91 S.Ct. 458, 27 L.Ed.2d 440 (1971).
The “sham transaction” principle identified by Citadel is well-established, and' we would not be constrained by Rule 16a-6(a) if we were convinced that Roven’s acquisition of the options gave him “beneficial ownership” of the underlying Citadel stock within the meaning of § 16(a) of the Act. Under the SEC’s regulatory framework as it existed at the time of the transactions, however, neither the SEC nor any court had held that the opportunity to profit on options alone would render ownership of options a form of “beneficial ownership” of the underlying securities. Significantly, Roven’s agreements with Bear Stearns and Prudential Bache gave him neither the power to control the disposition of any Citadel securities nor any added leverage over Citadel management.
|
515861-9769 | HUTCHESON, Chief Judge.
This is another case like O’Donnell v. Elgin, J. & E. Ry. Co., 338 U.S. 384, 70 S.Ct. 200, 94 L.Ed. 187; Carter v. Atlanta & St. A. B. Ry. Co., 338 U.S. 430, 70 S.Ct. 226, 94 L.Ed. 236, and Affolder v. New York, Chicago & St. Louis R. Co., 339 U.S. 96, 70 S.Ct. 509, 94 L.Ed. 683, in which a claimant, for injury resulting from defects in a railroad car, invokes both the absolute liability imposed by the Safety Appliance Acts, 45 U.S.C.A. §§ 1 to 46, and the qualified liability arising out of negligence. In those cases it was negligence under the Federal Employers Liability Act, 45 U.S.C.A. §§ 51 to 60. Here it is negligence at common law.
In those cases, particularly in the O’Donnell case, the Supreme Court points to the wide spread confusion attending the anomalous procedure employed in prosecuting such claims. The same difficulties have made themselves felt here with the result that on the appeal of the Atlantic Coast Line Railroad Company, the judgment must be reversed and the cause remanded.
The matter stands differently, however, on the appeal of plaintiff from the judgment upon a directed verdict as to the Southern Railway Company. For the reasons hereafter stated, as to it this judgment must be affirmed.
Brought against the Atlantic Coast Line Railroad Company, as the delivering, the Southern Railway Company, as the originating, carrier, the suit was for damages for personal injuries received by plaintiff, an independent contractor and invitee, as the result of the breaking when he stepped upon it of a dome step on a tank car which he had been engaged to unload.
Complying with the admonition of the court in the O’Donnell case, supra, the. complaint was in two counts. Count One charged that the dome step was a safety appliance, and that its breaking was a violation of the Appliance Acts. Count Two charged that the defendants negligently furnished and tendered, for the unloading of the gasoline therein, a defective tank car.
In addition to a general denial, the Atlantic Coast Line alleged as to the first count, (1) that the dome step was not a safety appliance within the meaning of the act, and (2) that if it was, plaintiff, not being a railroad employee, was not entitled to the benefits of the act.
As to the second count, the charge of common law negligence, it alleged: that the board which gave way had been newly painted; that the defect in it was not a patent but a hidden defect, which could not have been discovered by the use of ordinary care; and that the Atlantic Coast Line, as a delivering carrier, was not as matter of law, and could not be found, guilty of negligence in handling the car.
The Southern Railway alleged: that the Alabama Statute of Limitations of One Year had barred the cause of action as to it, and (2) that it was not the originating carrier, and that it had never had the car in its possession.
On the issues thus joined, the cause was tried to a jury on evidence which included uncontradicted evidence: that the New Orleans and Northeastern Railroad Company was the initial carrier of the ear; that the Southern Railway Company had at no time had anything to do with its handling; and that, though the stock of the New Orleans and Northeastern Railroad Company was solely owned by it, Southern Railway Company was an absolutely separate corporation; that it did not operate its subsidiary; and that it had never handled the ear.
The district judge, therefore, instructed a verdict for the Southern Railway and submitted the cause to the jury as to the Atlantic Coast Line on both counts and on a general charge.
There followed a general verdict and judgment for $7500.00 against Atlantic Coast Line from which that defendant has appealed, while plaintiff has appealed from the judgment in favor of the Southern Railway Company.
Here the Atlantic Coast Line insists that it should have had an instructed verdict on both counts, and that the judgment must be reversed and rendered for it. As to the first count, it claims: (1) that the dome step or platform was not a safety appliance; and (2) that if it was, plaintiff may not invoke the benefit of the act. As to the second count, its claim is that the evidence establishes as matter of law: that the defect in the board was not patent but latent; and that defendant had made the usual careful inspection of the car and the defect complained of was not discoverable upon such an inspection.
In the alternative, it urges upon us that if it was not entitled to an instructed verdict throughout, it was certainly entitled to an instruction as to Count One, and, finally, that if it was not entitled to an instructed verdict at all, there were errors in the charge and in the refusal of its requested instructions which require a reversal.
We find ourselves in complete agreement with the position taken and the reasons given for that position in the appellant’s brief with respect to the first count. This is that when a railroad company has complied with the regulations prescribed by the Interstate Commerce Commission, pursuant to the authority delegated to it in 45 U.S.C.A. § 11 et seq., it “* * * has discharged .its full duty so far as the ladder [or any other safety device] requirement of the Safety Appliance Act is concerned. The judgment of the trial court and jury cannot be substituted for that of the commission.” Atchison, T. & S. F. R. Co. v. Scarlett, 300 U.S. 471, 57 S.Ct. 541, 543, 81 L.Ed. 748; Apache Ey. Co. v. Shumway, 62 Ariz. 359, 158 P.2d 142, 159 A.L.R. 857.
We agree with the appellant that the dome step is not, within the classification of the I.C.C., a running board, and that, in assuming, without any basis in law for the assumption, that it was a safety appliance, the court erred. He ■did correctly declare in his charge: that whether it was or was not a safety appliance was to be determined as matter of law; and that he did not and would not consider the testimony of any of the witnesses as to whether it was or was not. Without, however, any basis in the statute or in any order or regulation of the Commission for so holding, he did determine as matter of law that it was a safety appliance. So determining, he advised the jury that it was not for it to determine whether it was or was not such, but only whether it was safe, and thus imposed upon the defendant, as to the dome step, the absolute obligation imposed by the statute only with respect to safety appliances. In doing this, he erred.
As appellant correctly points out in the discussion in its brief, a chaotic condition would be produced if the question of compliance with the Safety Appliance Act and the specifications governing the number, location, dimension and manner of appliances should be left to the varying notions of judges or the inexperienced laymen who comprise petit juries. For it is not every device with which a car might be equipped which comes under, and is governed by, the Safety Appliance Act or the regulations adopted by the Interstate Commerce Commission pursuant thereto. Only those are safety appliances which are officially determined by law or regulation to be such. Central Vermont R. Co. v. Perry, 1 Cir., 10 F.2d 132; Fleming v. Richardson, 237 Iowa 808, 24 N.W. 2d 280; Davis v. Manry, 266 U.S. 401, 45 S.Ct. 163, 69 L.Ed. 350; Hill v. Minneapolis, St. P. & S. S. M. R. Co., 160 Minn. 484, 200 N.W. 485.
Nowhere in the regulations adopted by the Interstate Commerce Commission relating to tank cars, as set forth in Secs. 131.8 and 131.9, Title 49 (Transportation) Code of Federal Regulations, or elsewhere, will there be found any reference to a dome step board, by whatever name that device might be labeled.
By its very failure to prescribe any regulation governing such a device, the Interstate Commerce Commission has demonstrated its administrative determination that dome step boards do not fall within the scope of the Act.
A verdict should have been instructed on the first count.
In view of our agreement with appellant that the step is not a safety appliance, it is unnecessary for us to consider and decide whether defendant is right in its second position, that plaintiff, not being a railroad worker, is not entitled to the protection of the Act. It is sufficient to refer to cases pro and con. Patton v. Baltimore & O. R. Co., 3 Cir., 197 F. 732; Risberg v. Duluth, Missabe & Iron Range Ry. Co., 233 Minn. 396, 47 N.W.2d 113; Fairport, P. & E. R. Co. v. Meredith, 292 U.S. 589, 54 S.Ct. 826, 78 L.Ed. 1446; Brady v. Terminal R. Ass’n of St. Louis, 303 U.S. 10, 58 S.Ct. 426, 82 L.Ed. 614; Jacob v. Illinois Cent. R. Co., 133 La. 735, 63 So. 306.
As to the second count, we agree with Atlantic’s view that if the defect in the board was not discoverable in the exercise of reasonable care, it could not, as delivering carrier, be held negligent for not discovering the un-discoverable.
We cannot agree with it, though, that the evidence established as matter of law that, in the exercise of due care, the defect was undiscoverable. On the contrary, we think there was sufficient evidence to take the second count to the jury.
Because, however, of the submission of the two counts for a general verdict, and because of the errors in the giving and refusal of charges, the judgment may not be affirmed as to Atlantic on the second count.
As to plaintiff’s appeal from the judgment for Southern Railway, Southern meets it first with a motion to dismiss because the appeal was not timely. The point made is that, instead of being taken within the time limited from the entry of the judgment in Southern’s favor, it was not taken until after the motion of Atlantic for a judgment notwithstanding the verdict and, in the alternative, for a new trial, had been acted upon.
|
9396920-10323 | ORDER
MOORE, District Judge.
Before the Court is Government’s Motion for Sentence Reduction Pursuant to Fed.R.Crim.P. 35(b). (Doc. 33). For the following reasons, the Government’s motion to reduce sentence is DENIED.
BACKGROUND
Pursuant to a plea agreement, Defendant pled guilty on August 23, 2000, to charges of possession of a firearm by a convicted felon and possession with intent to distribute marijuana. Defendant was sentenced on October 24, 2000, to 74 months for possession of a firearm, and 60 months for possession with intent to distribute marijuana, to be served concurrently.
After sentencing, Defendant assisted the Government by “making a public service TV spot to assist with the Project Ceasefire Program.” On December 13, 2001, the Government filed a motion to reduce Defendant’s sentence pursuant to Fed.R.Crim.P. 35(b). The Government contends that Defendant’s assistance in making the TV spot constitutes substantial assistance to the cause of law enforcement, warranting a reduction under Rule 35(b).
On December 14, 2001, the Court ordered the Government to submit a brief “which cites additional authority, explaining to the Court how it has power under Rule 35(b) to reduce sentence in this case.” On January 3, 2002, the Court received the Government’s brief. In addition, a response to the Government’s motion to reduce sentence was filed by Defendant on January 7, 2002.
ANALYSIS
Federal Rule of Criminal Procedure 35(b) provides in part:
REDUCTION OF SENTENCE FOR CHANGED CIRCUMSTANCES. If the Government so moves within one year after the sentence is imposed, the court may reduce a sentence to reflect a defendant’s subsequent substantial assistance in investigating or prosecuting another person, in accordance with the guidelines and policy statements issued by the Sentencing Commission under 28 U.S.C. § 994.
Fed.R.Crim.P. 35(b). Under the terms of the Rule, a reduction in sentence is only allowed if the defendant’s substantial assistance relates to either the investigation of another person or the prosecution of another person. Indeed, the Eleventh Circuit has acknowledged that Rule 35(b) reductions are allowed only in such cases. See United States v. Chavarria-Herrara, 15 F.3d 1033, 1037 (11th Cir.1994) (citing United States v. Valle, 929 F.2d 629, 633 n. 4 (11th Cir.1991)). Therefore, it is important to understand the meaning of the terms investigation and prosecution.
An investigation exists when the authorities are engaged in a systematic inquiry into the criminal activity of a subject. See Black’s Law DICTIONARY 830 (7th ed.1999). An investigation, by definition, always entails a target, and if Rule 35(b) is to apply, the target must be another person. For example, Rule 35(b) would apply if the authorities were investigating a suspected drug dealer, and Defendant provided information regarding the time and place of drug sales by that individual.
A prosecution, on the other hand, is a “criminal proceeding in which an accused person is tried” for crimes they allegedly committed. Black’s Law Dictionary 1237 (7th ed.1999). Like an investigation, a prosecution necessarily entails a target, which under the terms of Rule 35(b) must be another person. Building on the previous example, Rule 35(b) would apply if the authorities prosecuted the suspected drug dealer, and Defendant testified on behalf of the authorities at trial.
Here, Defendant has failed to satisfy either prong of Rule 35(b). First, there is no evidence that Defendant’s assistance in producing the TV spot substantially assisted the Government in an investigation. In other words, the TV spot did not assist the Government in a systematic inquiry into the criminal activity of another person. In fact, there is no indication that the TV spot was in any way related to an investigation. Therefore, the investigation prong of Rule 35(b) is not satisfied.
Second, there is no evidence that Defendant’s actions substantially assisted the Government in criminal proceedings against another person. Again, there is no evidence that the TV spot was in any way related to a criminal prosecution. Therefore, the prosecution prong of Rule 35(b) has not been satisfied either.
This Court acknowledges the possible benefit of the production of a TV spot to assist in the Project Ceasefire Program. Too often, the Court is faced with the task of sentencing individuals convicted of being a felon in possession of a weapon. Inevitably, these individuals receive a sentence of several years imprisonment. The Court is encouraged by this attempt to increase community awareness and reduce the carrying of weapons by convicted felons.
The Court also finds Defendant’s willingness to assist in the production of the TV spot to be commendable. By taking part in the TV spot, Defendant is giving publicity to the fact that he is a convicted felon in order to help society correct a serious problem. The unique nature of this assistance has not gone unnoticed by the Court.
However, despite the value of Defendant’s actions, aiding in the production of the TV spot does not constitute substantial assistance in the investigation or prosecution of another person. Therefore, the requirements set forth in Rule 35(b) have not been satisfied. As a result, this Court cannot reduce Defendant’s sentence pursuant to Rule 35(b).
Both the Government and Defendant state that they can find no case law supporting the proposition that Rule 35(b) can be applied in this case. Nonetheless, the Government and Defendant still request that the Court grant a reduction in Defendant’s sentence pursuant to Rule 35(b). Both sides present arguments for the Court’s application of Rule 35(b). As the following paragraphs indicate, the Court is not persuaded by these arguments.
In support of its motion, the Government cites § 5K1.1 of the Sentencing Guidelines. Section 5K1.1 addresses departures from the Sentencing Guidelines based on a defendant’s substantial assistance to authorities. The Government focuses on Application Note 3, which states that “[substantial weight should be given to the government’s evaluation of the extent of the defendant’s assistance, particularly where the extent and value of the assistance are difficult to ascertain.” U.S.S.G. § 5K1.1, cmt. n. 3 (1999). Here, the Government contends that the extent and value of Defendant’s assistance is difficult to ascertain. Therefore, the Government argues that substantial weight should be given to the Government’s determination that the Defendant has rendered substantial assistance, and the request for reduction of sentence under Rule 35(b) should be granted.
The Government’s argument is not persuasive for two reasons. First, § 5K1.1 of the Sentencing Guidelines is not applicable at this stage in Defendant’s case. “Section 5K1.1 is used at sentencing to reflect substantial assistance rendered wp until that moment.” United States v. Alvarez, 115 F.3d 839, 842 (11th Cir.1997) (emphasis in original) (citing United States v. Howard, 902 F.2d 894, 896 (11th Cir.1990)). In contrast, “Rule 35(b) is used after sentencing to reflect substantial assistance after sentencing.” Id. (emphasis in original) (citation omitted). Therefore, § 5K1.1 is inapplicable in this case, where Defendant’s assistance was rendered after sentencing.
Second, like Rule 35(b), § 5K1.1 also requires that the substantial assistance provided by a defendant relate to the prosecution or investigation of another person. Section 5K1.1 states that “[u]pon motion of the government stating that the defendant has provided substantial assistance in the investigation or prosecution of another person who has committed an offense, the court may depart from the guidelines.” U.S.S.G. § 5K1.1. Therefore, even if § 5K1.1 were applicable in this case, a reduction would be inappropriate because Defendant’s assistance does not relate to the investigation or prosecution of another person.
In support of the Government’s motion to reduce sentence, Defendant asserts that a reduction should be granted because both sides have agreed to a reduction, leaving no party to appeal this Court’s reduction of Defendant’s sentence. The Court finds Defendant’s argument to be offensive. The parties propose that the Court violate the clear terms of Rule 35(b) because neither the Government nor the Defendant will object to such action, leaving no avenue for appeal of the Court’s decision. However, it is the duty of the Court to apply the law to the cases brought before it, regardless of any agreements made by the parties. See Empire Life Ins. Co. of America v. Valdak Corp., 468 F.2d 330, 334 (5th Cir.1972) (holding that agreement by parties cannot force court to abdicate duty to “enunciate law on record facts.”). This Court will not abandon that duty simply because no one will be able to appeal its decision.
Defendant also argues that the Government’s motion for reduction of sentence under Rule 35(b) should be granted because the “unspoken consideration is that the traditional methods of fighting criminal activity and world terrorism have not generally worked and with the change in the world environment, different assistance’s [sic] are going to be needed to meet the new challenges that were neither contem plated by nor specifically drafted in any criminal codes.” Ultimately, Defendant claims that the criminal laws and the Sentencing Guidelines, as they exist today, are ineffective and in need of change. Based on this claim, Defendant argues that the Court should grant the Government’s motion to reduce sentence, essentially rewriting Rule 35(b).
Defendant’s argument conflicts with one of the most fundamental aspects of our system of government, namely separation of powers. See Mistretta v. United States, 488 U.S. 861, 380, 109 S.Ct. 647, 659, 102 L.Ed.2d 714 (“the separation of powers into three coordinate Branches is essential to the preservation of liberty.”). The principle of separation of powers is codified in the United States Constitution, which vests the legislative power in the Congress, the executive power in the President, and the judicial power in the Courts. See U.S. Const. art I — III. Based on “unspoken considerations,” Defendant now requests that the Court subvert this fundamental principle of the Constitution and act as the legislature.
|
193719-24406 | MERRILL, Circuit Judge.
This case concerns the right of the Federal Power Commission to regulate the rates at which Southern California Edison Company sells power at wholesale to the City of Colton, California. The commission asserts its right under § 201 of the Federal Power Act, 16 U.S.C. § 824, the pertinent portions of which are set forth in the margin.
The City of Colton is a community of approximately eighteen thousand persons located near San Bernardino in Southern California. Colton’s municipal electric utility system purchases all of its energy from Edison under a contract dated October 1, 1945. The contract was filed with the California Public Utilities Commission and the state commission has exercised jurisdiction over all of Edison’s sales to Colton since that time. In the exercise of its jurisdiction, the state commission has, over the protest of Colton, authorized increases in Edison’s charges.
On May 9, 1958, Colton filed a petition requesting the Federal Power Commission to assert jurisdiction over the rates charged by Edison. The basis of the petition was that interstate energy was sold to Colton at wholesale and that the rates were therefore subject to Federal Power Commission control under § 201(b) of the Federal Power Act. The petition was opposed by Edison and by the California Public Utilities Commission.
Following hearings before the Federal Power Commission, that commission concluded that it had jurisdiction to regulate the rates in question and entered its order requiring Edison, among other matters, to file its rate schedules and to account for all moneys collected in excess of its July, 1954, rates. Edison has petitioned this court to review and set aside the commission’s order. The California commission has joined in that petition.
Edison markets electric energy in central and southern California. It markets no energy outside of the state. It owns and operates a number of steam and hydroelectric generating stations within the state.
Edison also purchases energy generated out-of-state at Hoover, Davis and Parker Dams on the Colorado River. Part of this energy was allocated to Edison by the United States Bureau of Reclamation from Hoover Dam generators in Arizona. In 1958 this source accounted for six per cent of the total electric energy handled by Edison, but none of it was traced to the City of Colton. The remainder of Edison’s out-of-state energy supply comes from the Metropolitan Water District of California pursuant to a contract entered into in 1945 to which the United States, acting through the Secretary of the Interior, was a party. Under that contract Edison agreed to take a portion of the district’s unused firm energy at specified rates to be paid to the United States for the credit of the district. A collateral contract to which the United States was not a party provided, among other things, for the transmission of this energy over the district’s lines to the district’s Camino switching station in California and thence by connection to Edison’s 220 kv transmission system at Hayfield in California. It is some of this energy that the commission determined reaches the City of Colton, passing from Hayfield to Edison’s Highgrove substation to Col-ton.
It is apparent that authority over the initial sale to Edison in Nevada is not in issue, for the United States controls the allocation of the supply and, as a party to the resale contract, can oversee the rates. The controversy is confined to the conflicting claims of authority to regulate the wholesale rate to Colton asserted by California and the Federal Power Commission.
Federal Power Commission contends that under § 201(b) it has exclusive authority to regulate rates of all wholesale sales of interstate power. Edison contends that the extension of federal regulation to the rate to Colton would en croach upon subject matter specifically left to regulation by the states under § 201(a) and (b) as read together in the light of Public Utilities Commission v. Attleboro Steam & Electric Co., 1927, 273 U.S. 83, 47 S.Ct. 294, 71 L.Ed. 549. These opposing contentions present the issue before us.
Legislative and judicial histories seem to us to make clear the intent and purpose of § 201(a) and (b). It was intended that states should continue to regulate where such regulation is constitutionally permissible under the commerce clause.
Passage of § 201(a) and (b) was necessitated by the decision in the Attleboro case in 1927. A regulatory void was created by that decision which it was necessary that Congress fill. That case concerned the attempt of the Rhode Island Commission to regulate the rate at which a local producing company sold power at the Rhode Island border to the Attleboro Company for resale in Massachusetts. The court recognized that, although both Rhode Island and Massachusetts had an interest in the rate charged, their interests were essentially in conflict. In this situation the court held that neither Rhode Island nor Massachusetts could regulate the rate in question without violating the commerce clause; that regulation could only be attained through congressional action. Since Congress had not acted, a regulatory void or gap resulted.
That § 201(a) and (b) was intended to go no further than to fill the “Attle-boro gap” is clear from legislative history. Senate Report No. 621, 74th Congress, First Session, p. 48, states in part:
“Subsection (a) * * * declares the policy of Congress to extend that regulation to those matters which cannot be regulated by the States and to assist the States in the exercise of their regulatory powers, but not to impair or diminish the powers of any State commission.”
That report also provides at page 48:
“The revision has also removed every encroachment upon the authority of the states. The revised bill would impower federal regulation only over those matters which cannot effectively be controlled by the states. The limitation on the Federal Power Commission’s jurisdiction in this regard has been inserted in each section in an effort to prevent the expansion of federal authority over state matters.
*****
“The rate-making powers of the Commission are confined to those wholesale transactions which the Supreme Court held in Public Utilities Commission v. Attleboro Steam & Electric Co. (273 U.S. 83 [47 S.Ct. 294, 71 L.Ed. 549]) to be beyond the reach of the states.”
The Supreme Court also has recognized that § 201(a) and (b) has such limited application. In Connecticut Light and Power Company v. Federal Power Commission, 1945, 324 U.S. 515, at 524, 65 S.Ct. 749, at 753, 89 L.Ed. 1150, the court refers to its earlier decision in Jersey Central Power and Light Company v. Federal Power Commission, 1943, 319 U.S. 61, 63 S.Ct. 953, 87 L.Ed. 1258, in this language:
“We held that the ‘primary purpose’ of the 1935 amendments to the Power Act was to give the Power Commission control of sales of energy across state lines which had been held to be beyond the control of the state of export in Public Utilities Commission v. Attleboro Steam & Electric Co., 273 U.S. 83 [47 S.Ct. 294, 71 L.Ed. 549].”
In determining the extent of the regulatory void created by Attleboro, however, (and the consequent scope of federal authority) we must take the holding as- Congress would have understood it as- of that date. In Phillips Petroleum Company v. Wisconsin, 1954, 347 U.S. 672, 684, 74 S.Ct. 794, 800, 98 L.Ed. 1035, the Supreme Court stated, dealing with a similar problem under the Natural Gas Act:
“But it is well settled that the gap referred to is that thought to exist at the time the Natural Gas Act was passed, and the jurisdiction of the Commission is not affected by subsequent decisions of this Court which have somewhat loosened the constitutional restrictions on state activities affecting interstate commerce, in the absence of conflicting federal regulation.”
Federal Power Commission contends that the Attleboro holding was founded upon the distinction between wholesale and retail sales of interstate power; that under that holding any state regulation of interstate power at wholesale must fall as in violation of the commerce clause.
While the court did lay emphasis upon this distinction, the issue is not so simple in its solution. The question may be posed thus: Under Attleboro can it be said that in absence of federal regulation this sale to Colton would have to go unregulated by California merely because it was wholesale; and in the face of the fact that California is the only state having any concern with it? Or it may be asked: Under Attleboro can a determination be attributed to Congress, through its failure to regulate this sale, that such sale should go unregulated?
The references to wholesale and retail in Attleboro must be read in context. In that case, one side relied upon Pennsylvania Gas Company v. Public Service Commission, 252 U.S. 23, 40 S.Ct. 279, 64 L.Ed. 434; the other relied upon State of Missouri ex rel. Barrett v. Kansas Natural Gas Company, 265 U.S. 298, 44 S.Ct. 544, 68 L.Ed. 1027. The court in Attleboro stated, 273 U.S. at page 87, 47 S.Ct. at 295 :
“ * * * the controlling question presented is whether the present case comes within the rule of the Pennsylvania Gas Co. case or that of the Kansas Gas Co. case upon which the Attleboro Company relies.”
In both those eases, as in Attleboro, there was continuous transmission of power across a state line with the selling company doing business with customers on both sides of that line. The regulation which the sending (Attleboro) or receiving (Pennsylvania Gas) state or both (Kansas Gas) sought to impose could bear upon the ability of the selling company to serve its customers in the other state. The interstate conflict of interest was actual in Kansas Gas while only potential in Pennsylvania Gas and Attleboro, but in all three a multi-state concern with a particular transaction was essential to the factual setting of the case.
In Pennsylvania Gas the sales were retail sales by the transmitting company. In Kansas Gas the sales were at wholesale to distributing companies in the receiving state.
In Pennsylvania Gas it was held that in absence of federal regulation the rates at which the transmitting company sold at retail were subject to regulation by the consuming state, since such retail sales, amounting to local distribution, were essentially local in character.
In Kansas Gas the court held the regulation by both states to be a direct burden on interstate commerce and that the sale and delivery to the distributing com- pañíes was “an inseparable part of a transaction in interstate commerce— not local but essentially national in character * *
In those two cases, as in Attleboro, there being a multi-state concern with the regulation in question and conflicting state interests in the rate charged, the regulation upon its face would appear to be essentially national. If it was to escape the commerce clause, it was necessary to show that notwithstanding the national interest, the local character should prevail. It was under these circumstances that the determining factor upon the local or national dichotomy became the question of whether the interstate sales were at wholesale or retail.
In the case at bar, however, the sale from which the interstate transmission •springs is already under federal control through federal sale of the power to the Metropolitan Water District and direct federal participation in the resale to Edi•■son. Any conceivable conflict of interest among Arizona, Nevada and California with respect to the operation of Colorado River plants and the allocation of energy from them is thus totally subject to federal regulation through the United •States’ position as lessor of the generators at Hoover, Parker and Davis. The only other possibility of multi-state concern with the Edison-Colton sale would seem to rest upon Nevada’s desire to protect Edison’s customers in that state through securing for them the rate benefit which a profitable rate to Colton would permit. This possibility is nullified by the fact that Edison’s sales are all within California. Nevada has no resident customers to protect. While this situation might be subject to change were Edison to begin to operate as a public utility in Nevada, Edison has never so operated in the past and has no present plans to expand its sales beyond the borders of the southern portion of California. It would be pure speculation to predict that it will serve Nevada in the future.
The lack, in this case, of any interstate conflict of interest not already subject to federal regulation is, we feel, decisive. It is one thing to say that where more than one state will feel the impact of a regulation of interstate energy, the states may regulate only sales at retail, since sales at wholesale under these circumstances remain essentially national rather than local. It is quite another thing to say, as does the Federal Power Commission, that all sales at wholesale are essentially national, irrespective of a complete lack of interest on the part of any other state.
Attleboro, as we read it, does not say this. The multi-state impact of the regulation there in question is clearly pointed out. The court states, at page 90, 47 S.Ct. at page 296:
“Furthermore, if Rhode Island could place a direct burden upon the interstate business of the Narragansett Company because this would result in indirect benefit to the customers of the Narragansett Company in Rhode Island, Massachusetts could, by parity of reasoning, reduce the rates on such interstate business in order to benefit the customers of the Attleboro Company in that State, who would have, in the aggregate, an interest in the interstate rate correlative to that of the customers of the Narragansett Company in Rhode Island. Plainly, however, the paramount interest in the interstate business carried on between the two companies is not local to either State, but is essentially national in character. The rate is therefore not subject to regulation by either of the two States in the guise of protection to their respective local interests; but, if such regulation is required it can only be attained by the exercise of the power vested in Congress.”
Attleboro does not stand in isolation upon this problem of state power to regulate interstate commerce. When it was handed down, it was but the last in a long series of cases bearing upon the problem.
Prior to Attleboro, commencing with Cooley v. Board of Wardens of Port of Philadelphia, 1851, 53 U.S. (12 How.) 299, 13 L.Ed. 996 the Supreme Court had dealt with the matter of state regulation from a very practical point of view. Regulation which might at first blush clearly appear to have a very direct impact on what was concededly interstate commerce had been held in absence of federal regulation to be within the regulatory power of the state, for the reason that although some regulation was clearly required Congress had failed to act. These were cases in which the concern was local, the need for regulation was due to local conditions and the service was not such as to demand uniformity of regulation among the states, but was, rather, such as to permit of a diversity of regulation. Under these circumstances, the burden upon commerce which the state regulation constituted was held to be an indirect one and within the area in which state power to regulate existed concurrently with federal power until such time as Congress occupied the field.
This is illustrated, for example, by language in The Minnesota Rate Cases
(Simpson v. Shepard), 1912, 230 U.S. 352, 33 S.Ct. 729, 57 L.Ed. 1511. On page 396, on page 739 of 33 S.Ct., the court points out the distinction between the impact of a direct and an indirect burden:
“If a state enactment imposes a direct burden upon interstate commerce, it must fall regardless of Federal legislation. The point of such an objection is not that Congress has acted, but that the State has directly restrained that which in the absence of Federal regulation should be free.”
The court goes on to state, at page 399, at page 740 on 33 S.Ct.:
“The grant in the Constitution of its own force, that is, without action by Congress, established the essential immunity of interstate commercial intercourse from the direct control of the States with respect to those subjects embraced within the grant which are of such a nature as to demand that, if regulated at all, their regulation should be prescribed by a single authority. It has repeatedly been declared by this court that as to those subjects which require a general system or uniformity of regulation the power of Congress is exclusive. In other matters, admitting of diversity of treatment according to the special requirements of local conditions, the States may act within their respective jurisdictions until Congress sees fit to act; and, when Congress does act, the exercise of its authority overrides all conflicting state legislation.”
and further, at pages 402-403, at page 741 of 33 S.Ct.:
“But within these limitations there necessarily remains to the States, until Congress acts, a wide range for the permissible exercise of power appropriate to their territorial jurisdiction although interstate commerce may be affected. It extends, to those matters of a local nature as to which it is impossible to derive from the constitutional grant, an intention that they should go uncontrolled pending Federal intervention. Thus, there are certain subjects having the most obvious and direct relation to interestate commerce, which nevertheless, with the acquiscence of Congress, have been controlled by state legislation from the foundation of the Government because of the necessity that they should not remain unregulated and that their regulation should be' adapted to varying local exigencies; hence the absence of regulation by Congress in such matters has not imported that there should be no restriction but rather that the States, should continue to supply the needed! rules until Congress should decide to supersede them. * * * Where the subject is peculiarly one of local concern, and from its nature belongs to the class with which the State appropriately deals in making reasonable provision for local needs, it cannot be regarded as left to the unrestrained will of individuals because Congress has not acted, although it may have such a relation to interstate commerce as to be within the reach of the Federal power. In such case, Congress must be the judge of the necessity of Federal action.”
Can it be said that this prior judicial concern with the local need for regulation of interstate commerce has been laid to rest in Attleboro; and that by that opinion there is substituted for all the considerations theretofore regarded as relevant and irrespective of any multi-state concern (in the power area, at least) the simple mechanical test of wholesale- or-retail? Can it be said that Congress would have so construed Attleboro? We think not.
The cases relied upon by the Federal Power Commission to sustain their jurisdiction are distinguishable because they all involved a possible conflict of interest among two or more states without any federal regulatory authority in a position to resolve such conflicts by controlling the equitable distribution of either the power supply or the power charges among the states concerned. Illinois Natural Gas Company v. Central Illinois Public Service Co., 1942, 314 U.S. 498, 62 S.Ct. 384, 86 L.Ed. 371 was a case in which the local gas company, which claimed exemption from state public utilities commission jurisdiction, was a wholly owned subsidiary of an interstate pipeline company. Its function in this interstate system was to receive the gas at the state border, reduce its pressure and transport it to local distributors. In issue was an order of the state commission requiring the local wholesaler to construct facilities to serve a local distributing company not presently supplied by it with natural gas. The state commission was held to be without power to issue such an order because "the proposed extension of appellant’s facilities is so intimately associated with the commerce, and would so- affect its volume moving into the state and distribution among the states, as to be within the Congressional power to regulate those matters which materially affect interstate commerce, as well as the commerce itself.” 314 U.S. 498, 509, 62 S. Ct. 384, 388.
In Federal Power Commission v. East Ohio Gas Company, 1950, 338 U.S. 464, 70 S.Ct. 266, 94 L.Ed. 268, the company ' which the Federal Power Commission sought to subject to its jurisdiction was also, as in Illinois Gas, a subsidiary of an interstate pipeline company distributing gas wholly within one state. Jurisdiction over wholesale rates was not in issue since East Ohio sold gas direct to consumers. Although retail sales only were at stake, Federal Power Commission authority to require East Ohio to keep accounts and submit reports was upheld by finding that East Ohio’s facilities were not entitled to the exemption granted facilities used for local distribution since they were part of an interstate chain of large high-pressure lines which had to be nationally controlled in order to preserve “ ‘equality of opportunity and treatment among the various communities and States concerned.’ ” 338 U.S. 464, 471, 70 S.Ct. 266, 270, quoting Kansas Gas, supra, 265 U.S. 298, 310, 44 S.Ct. 544.
Finally, in United States v. Public Utilities Commission of California, 1953, 345 U.S. 295, 73 S.Ct. 706, 97 L.Ed. 1020 the court fused Part I, § 20, of the Power Act with § 201 by deciding that states were forbidden to regulate sales of hydroelectric power for resale in interstate commerce, even if the source of some portion of the power sold originated in federally licensed hydroelectric projects. The sweeping statements by the court that § 201 left no authority in the states-over interstate- sales for resale must be read within the factual framework of the case. The dispute was between the state public utilities commission and the Federal Power Commission over the right to control the rates at which a California electric company marketing most of its power in that state sold power to the Navy Department and a Nevada county for use in Nevada. Once again a multistate concern was present since both Nevada and California regulatory agencies were interested in protecting their own citizens. Similarly, the federal government was concerned in keeping the rates at the lowest possible level for Navy use. Indeed, the dispute arose precisely because the company attempted to require the Navy and the Nevada county to adhere to a new schedule of increased rates granted by the California commission.
If the court’s broad declarations (that the entire field of interstate wholesale transactions of electric energy was placed under the Federal Power Commission’s jurisdiction) are to be held controlling apart from their factual context, federal regulation would govern the rates of sales between two com- pañíes wholly engaged in intrastate business and of concern to no state other than the one in which they occur. For ■example, in this case, were Colton to have some unused energy which it desired to sell to a nearby community such as San Bernardino for distribution to local consumers, the Federal Power Commission could intervene to set the rate of that sale regardless of the fact that only the two communities would be affected Tby the rate. Subsequent resales by San Bernardino to Riverside and by Riverside to Pomona would be equally subject to federal regulation although any interstate interest would be lacking. No case has yet presented such a set of circumstances to the court. We do not feel that it would go so far as to extend the language of Public Utilities Commission of •California to the circumstances described above, especially in the light of its opinion in Connecticut Light & Power ■Co., discussed infra.
Thus, in each of these cases, as well as in the Attleboro triad, an interstate conflict of interest was prominent on the facts. When this conflict, which was the •essence of the national character of the regulation at stake, was coupled with the lack of any federal supervision of the •conflict, the need for federal intervention, spelled out by § 201, was clear.
|
6045807-18698 | OPINION
MARTHA CRAIG DAUGHTREY, Circuit Judge.
The defendant, Andre Hython, appeals his conviction for possession of crack cocaine with the intent to distribute, in violation of 21 U.S.C. § 841(a)(1) and (b)(l)(B)(iii), following his guilty plea to the first count of a three-count indictment. Hython’s plea was conditional, permitting him to challenge the district court’s order denying his motion to suppress, in which he contended that police had seized the evidence used to convict him during a search of his home pursuant to a defective search warrant. The district court agreed that the warrant was deficient but denied Hython’s suppression motion on the basis that the officers were reasonable in their reliance on the warrant and, therefore, that the Leon good-faith exception applied. Because we find, to the contrary, that no reasonably objective police officer could have concluded that the warrant was supported by probable cause, we hold that Leon is inapplicable in this case and that the motion to suppress should have been granted.
FACTUAL AND PROCEDURAL BACKGROUND
The warrant in question was issued by a municipal judge and directed' officers to a two-story brick residence located at 241 South Fifth Street in Steubenville, Ohio. It authorized the search of “all persons present at the time of officer entry” and the seizure of all property related to the sale of controlled substances. The judge issued the warrant on the basis of an affidavit sworn by Detective Jason Hanlin of the Steubenville Police Department Narcotics Division, which stated:
Narcotics Officers from the Steubenville Police Department, Toronto Police and Jefferson County Sheriffs Office in a joint investigation conducted a controlled buy of crack cocaine from 241 South Fifth Street in the city of Steu-benville.
A reliable confidential informant advised officers that he was able to purchase crack cocaine from a female in Toronto. The female had advised the informant in the past that her source of crack cocaine is subject in the city of Steubenville. Officers provided the informant with one hundred and fifty dollars in marked U.S. currency for a transaction. Officers conducted surveillance and were able to follow the informant to the known drug location in Toronto where the informant met with the female suspect. Officers were able to hear conversation via an audio transmitter. During the conversation the female received the currency from the informant and advised that she would travel to Steubenville to obtain the crack cocaine. Officers were then able to follow the female to 241 South Fifth Street in the City of Steubenville. The female entered the residence and exited within two minutes. Officers were then able to follow the female back to Toronto where she met with the informant and provided him with a baggie containing crack cocaine.
Due to the above transaction with the residence, officers believe the[re] to be further crack cocaine within the residence.
Detective Hanlin and other officers executed the “no-knock” warrant later that same day. After entering the house with drawn weapons, the officers found five people in the house, including defendant Hython. Hython was in the living room with two other men; there were two females in the kitchen. Hython and the two others in the living room were handcuffed and read their Miranda rights. In response to a question from Detective Han-lin, Hython indicated that he had contraband in the right front pocket of his pants. A search of this pocket yielded two baggies containing crack cocaine. Detective Hanlin found a large wad of cash in Hy-thon’s left pocket, and currency was strewn on the floor in the area near where Hython had been standing at the time of the officers’ entry. Hython told Detective Hanlin that he had been counting the currency that was found on the floor, which was later identified as the pre-recorded buy money.
Following indictment on charges growing out of the execution of the warrant, Hython filed separate motions to suppress his confession and all physical evidence seized from both his house and person. The district court found that the affidavit contained sufficient information from which the issuing judge could have concluded that the informant was reliable and that there was probable cause to believe that crack cocaine was being supplied from the residence at 241 South Fifth Street. The court also found, however, that the warrant was void for staleness because neither the affidavit nor the warrant specified the date on which the transaction at the defendant’s house took place. Nevertheless, the district court held that apart from this defect, the affidavit was not so lacking in indicia of probable cause as to render official belief in its existence entirely unreasonable and, therefore, that application of the good faith exception was warranted.
Next, the court addressed Hython’s contention that the warrant was invalid because it authorized a search of all persons found within the residence. The judge found that the warrant contained insufficient probable cause to believe that every person in the two-story residence would be involved in the drug activity and, further, that no well-trained officer would have reasonably believed otherwise, militating against the application of the good faith exception to the warrant requirement. However, the judge observed that the search of Hython’s person could be justified on different grounds: given the smell of marijuana in the house, Hython could have been arrested and the contraband inevitably discovered as the result of a search incident to that arrest. A ruling on this aspect of Hython’s motion was deferred in order to hear testimony regarding the execution of the search warrant.
Following the evidentiary hearing, the district court denied Hython’s motion to suppress his statements and held that the search of Hython’s person was justified under the plain view rationale set forth in the earlier order. Hython subsequently pleaded guilty to a single count of the indictment, reserving the right to appeal the district court’s rulings on his motions to suppress.
DISCUSSION
The government does not contest the district court’s legal conclusion that the warrant was invalid due to staleness. Therefore, the sole issue on appeal is whether the district court properly applied the good-faith exception to the search, a question that we review de novo as a conclusion of law. See United States v. Frazier, 423 F.3d 526, 533 (6th Cir.2005) (the district court’s application of the good-faith exception is a legal conclusion reviewed de novo).
United States v. Leon modified the exclusionary rule so as not to bar from admission evidence “seized in reasonable, good-faith reliance on a search warrant that is subsequently held to be defective.” 468 U.S. 897, 905, 104 S.Ct. 3405, 82 L.Ed.2d 677 (1984). Where an officer’s reliance on a warrant is objectively reasonable, the Supreme Court held, no additional deterrent effect will be achieved through the exclusion from evidence of the fruits of that search. See id. at 922, 104 S.Ct. 3405. However, the good-faith exception is inapposite in four situations: (1) where the issuing magistrate was misled by information in an affidavit that the affiant knew was false or would have known was false except for his reckless disregard for the truth; (2) where the issuing magistrate wholly abandoned his judicial role and failed to act in a neutral and detached fashion, serving merely as a rubber stamp for the police; (3) where the affidavit was nothing more than a “bare bones” affidavit that did not provide the magistrate with a substantial basis for determining the existence of probable cause, or where the affidavit was so lacking in indicia of probable cause as to render official belief in its existence entirely unreasonable; and (4) where the officer’s reliance on the warrant was not in good faith or objectively reasonable, such as where the warrant is facially deficient. See id. at 923, 104 S.Ct. 3405.
The record contains no indication that Detective Hanlin presented false or reckless statements to the magistrate; nor is there any indication that the magistrate acted merely as a rubber stamp or that the warrant was facially deficient. The question, therefore, is whether the affidavit supporting the warrant was so lacking in indicia of probable cause as to render official belief in its existence entirely unreasonable. The showing required to establish that reliance was “objectively reasonable” is less than the “substantial basis” showing required to establish probable cause. See United States v. Carpenter, 360 F.3d 591, 595 (6th Cir.2004) (en banc). “[I]t is entirely possible that an affidavit could be insufficient for probable cause but sufficient for good-faith reliance.” United States v. Washington, 380 F.3d 236, 241 (6th Cir. 2004).
The parameters of “objective reasonableness” in the good-faith context have been explored primarily in relation to whether an affidavit established a sufficient nexus between illegal activity and a place to be searched. See Carpenter, 360 F.3d at 594 (affidavit describing marijuana field near residence “fall[s] short of establishing required nexus” between criminal activity and residence); United States v. Laughton, 409 F.3d 744, 751 (6th Cir.2005) (no modicum of evidence connected defen dant, criminal activity, and address to be searched); United States v. Helton, 314 F.3d 812, 821-23 (6th Cir.2003) (outgoing calls from house to known drug dealer did not create substantial basis to believe evidence could be found in house); United States v. Van Shutters, 163 F.3d 331, 337 (6th Cir.1998) (affidavit did not establish any connection between target of investigation and home to be searched); United States v. Weaver, 99 F.3d 1372, 1378-79 (6th Cir.1998) (boilerplate language in affidavit failed to provide particularized facts regarding alleged crime occurring on premises to be searched); United States v. Leake, 998 F.2d 1359, 1365 (6th Cir.1993) (minimal surveillance did not corroborate anonymous tip that narcotics could be found in basement of specific house); see also United States v. Washington, 380 F.3d at 248 (Moore, J., dissenting) (affidavit created only sparse and speculative connection between drug supplier and place to be searched). Although no bright-line rule dictates its outer limit, the zone in which the good-faith exception may be applied is bound on one end by the requirements of probable cause — once that standard is met, application of the exception is unnecessary. Therefore, the relationship between staleness and probable cause is a reasonable place to begin this analysis.
A. Staleness and Probable Cause
The probable cause inquiry gauges the likelihood that evidence of a crime may presently be found at a certain location. A warrant must be supported by “facts so closely related to the time of the issue of the warrant as to justify a finding of probable cause at that time.” Sgro v. United States, 187 U.S. 206, 210, 53 S.Ct. 138, 77 L.Ed. 260 (1932) (emphasis added). The expiration of probable cause is determined by the circumstances of each case, see id. at 210-11, 53 S.Ct. 138, and depends on the inherent nature of the crime. See United States v. Henson, 848 F.2d 1374, 1382 (6th Cir.1988). Relevant variables include “the character of the crime (chance encounter in the night or regenerating conspiracy?), the criminal (nomadic or entrenched?), the thing to be seized (perishable and easily transferable or of enduring utility to its holder?) the place to be searched (mere criminal forum of convenience or secure operational base?).” United States v. Spikes, 158 F.3d 913, 923 (6th Cir.1998) (internal citation omitted). The passage of time becomes less significant when the crime at issue is ongoing or continuous and the place to be searched is a secure operational base for the crime. See Henson, 848 F.2d at 1382; United States v. Greene, 250 F.3d 471, 481 (6th Cir.2001).
The crime at issue in this case — the sale of drugs out of a residence — is not inherently ongoing. Rather, it exists upon a continuum ranging from an individual who effectuates the occasional sale from his or her personal holdings of drugs to known acquaintances, to an organized group operating an established and notorious drug den. The inclusion of outdated information has been insufficient to render an entire affidavit stale when the affidavit as a whole establishes that the criminal activity in question is ongoing and continuous, or closer to the “drug den” end of the continuum. In Greene, a search was upheld despite the fact that the last of 12 controlled buys took place 23 months prior to the issuance of the warrant. See id. The number of controlled buys, in combination with ongoing observation of the comings and goings at the residence, established probable cause to believe that the residence continued to be an operational base for a drug ring. See id. In Spikes, although some evidence in the affidavit was over four years old, 158 F.3d at 923, very recent information, coupled with surveillance over a span of years, established probable cause that the home to be searched was the primary source of crack cocaine in the town and that crack was regularly being manufactured on the premises. See id.
Unlike those detailed above, the affidavit in this case did not establish that 241 South Fifth Street was the secure operational base for an ongoing drug enterprise. Rather, the investigation consisted solely of one modified controlled buy, in which a confidential informant gave pre-recorded buy money to an unidentified female, who was followed to the address in question, observed entering and leaving, and who later delivered a baggie of crack cocaine to the confidential informant. The only other possible suggestion that the house in question was an operational base for a continuing enterprise is that the unidentified female “advised the informant in the past that her source of crack cocaine is subject in the city of Steubenville.” Although this ambiguous language suggests that she had purchased crack more than once from someone in Steubenville, or perhaps even from someone residing at the South Fifth Street address, it does not eliminate the possibility that the criminal activity in question is very close to the opposite end of the continuum, where an individual occasionally sells drugs to acquaintances out of his or her personal holdings. The fact that the confidential informant himself did not purchase the crack, but rather used the female as an intermediary, not only calls into question the degree of control involved in this “controlled buy,” but it also militates against the conclusion that the premises at 241 South Fifth Street constituted an established and notorious drug den. The single transaction is not supported by any further police investigation — the affidavit includes no observation of deliveries to the address, no monitoring of the frequency or volume of visitors to the house, no second controlled buy, no further surveillance whatsoever.
More importantly, the affidavit offers no clue as to when this single controlled buy took place. Because probable cause has a durational aspect, at least some temporal reference point is necessary to ascertain its existence. See, e.g., United States v. Harris, 403 U.S. 573, 578 n. *, 91 S.Ct. 2075, 29 L.Ed.2d 723 (1971) (affidavit not stale or lacking in specificity when informant reported purchasing illegal items from defendant “within the past two weeks” as part of a regular pattern over a two year period); United States v. McKeever, 5 F.3d 863, 866 (5th Cir.1993) (although affidavit provided no date for on-site surveillance, probable cause existed because affidavit indicated a 21-month time frame for illegal activity, and evidence was of durable nature). Even had the affidavit stated that from time out of mind, 241 South Fifth Street had been a notorious drug den, some recent information would be necessary to eliminate the possibility that a transfer in ownership or a cessation of illegal activity had not taken place. In this instance, without a date or even a reference to “recent activity,” etc., there is absolutely no way to begin measuring the continued existence of probable cause. See United States v. Williams, 480 F.2d 1204, 1205 (6th Cir.1973) (although affidavit did not allege date of informant’s information, affidavit in its entirety “clearly rebuts any information or lack of speci- fícity”). This deficiency alone is sufficient to render the warrant invalid, without considering any of the affidavit’s other weaknesses. Thus, we agree with the district court’s finding that the warrant was invalid on staleness grounds.
B. Objectively Reasonable Reliance
In the district court, Hython argued that the third exception to the Leon good-faith rule ought to apply in this case, namely that the affidavit was so lacking in indicia of probable cause as to render official belief in its existence entirely unreasonable. The district judge disagreed:
In this case, the defendant is charged with offenses which occurred on April 20, 2004, the same date the search warrant was issued. Although it is not stated in the affidavit, the affiant officer was aware of the fact that the purchase of crack cocaine described in the affidavit occurred- on the same day that he applied for the search warrant. In light of this information, the officer could reasonably have believed that the warrant was not an invalid warrant based on stale information.
:fs * * * *
Since search warrants are frequently obtained immediately after controlled purchases from a residence, it would not be totally unreasonable for an experienced officer to believe that this language implicitly indicated that the investigation was recent and ongoing rather than something which occurred in the distant past.
This analysis relies on information not contained in the affidavit, and as such, violates the rule of this circuit set out in United States v. Laughton, 409 F.3d at 751, in which we held that “a determination of good-faith reliance, like a determination of probable cause, must be bound by the four corners of the affidavit.” Laughton instructs that “the relevant question is whether the officer reasonably believed that the warrant was properly issued, not whether probable cause existed in fact.” Id. at 752 (quoting Carpenter, 360 F.3d at 598 (Gilman, J., concurring)). This bright-line rule is in harmony with the objective nature of the good-faith test and prevents reviewing courts from delving into an analysis of the subjective knowledge of affiants. See id.
|
3774104-24341 | MEMORANDUM AND ORDER ON DEFENDANT LOUIS W. SULLIVAN’S MOTION TO DISMISS
ALLEN SHARP, Chief Judge.
This cause is now before the court on the defendant Louis W. Sullivan’s (hereinafter “Secretary”) Motion to Dismiss filed together with his Answer on December 6, 1990. The Secretary filed this Memorandum of Law in Support of his Motion to Dismiss and in Opposition to Plaintiff's Motion for Partial Summary Judgment on April 17, 1991. The court heard oral argument regarding this matter on January 10, 1992 and ordered supplemental briefing at that time. On February 14, 1992 the plaintiffs filed their Memorandum of Law Addressing Jurisdiction of the Court Over and Propriety of Their Claim Against the Secretary of the United States Department of Health and Human Services. The Secretary submitted Supplemental Points and Authorities Regarding Lack of Subject Matter Jurisdiction Under §§ 1331 and 1361 on March 2, 1992 to which the plaintiffs filed a reply on March 10, 1992. On April 7, 1992 the plaintiffs submitted Supplemental Authority Addressing Jurisdiction of the Court Over and Propriety of Their Claim Against the Secretary of the United States Department of Health and Human Services. The Secretary, again, submitted additional authority on April 14, 1992.
The Secretary argues that this court lacks both federal question jurisdiction pursuant to 28 U.S.C. § 1331 and mandamus jurisdiction pursuant to 28 U.S.C. § 1361. The court having fully informed itself on the issues presented now GRANTS the Secretary’s Motion to Dismiss ; the plaintiff’s Motion for Summary Judgment against the Secretary is DENIED.
I. Dismissal
Dismissal of a complaint is appropriate only if it appears beyond doubt that the plaintiff can prove no set of facts in support of his claims which would entitle him to relief. Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232, 81 L.Ed.2d 59 (1984) (citing Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957)). See also, Dresser Industries v. Pyrrhus AG, 936 F.2d 921, 933 (7th Cir.1991). When the court of appeals for this circuit reviews the granting of a, motion to dismiss, the well-pleaded factual allegations of the complaint are taken as true. See Rothner v. City of Chicago, 929 F.2d 297, 302 (7th Cir.1991); Janowsky v. United States, 913 F.2d 393, 395 (7th Cir.1990). Further, when the court of appeals reviews the complaint, it is required to accept only-factual allegations; “it is not required to accept legal conclusions that may be alleged or that may be drawn from the pleaded facts.” Milwaukee v. Saxbe, 546 F.2d 693, 704 (7th Cir.1976); see also, Reichenberger v. Pritchard, 660 F.2d 280, 282 (7th Cir.1981).
If a motion to dismiss is filed pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure (Fed.R.Civ.P.) and materials outside the motion to dismiss are presented to and not excluded by the court, then the motion to dismiss may be treated as a motion for summary judgment pursuant to Rule 56, Fed.R.Civ.P. See, First Interstate Bank, N.A. v. Chapman & Cutler, 837 F.2d 775, 776-777 (7th Cir.1988); Cange & Stotler and Co., Inc., 826 F.2d 581, 583 (7th Cir.1987); and Winslow v. Walters, 815 F.2d 1114, 1116 (7th Cir.1987). Thus, if a party moves for dismissal upon the pleadings alone, it will be considered a Rule 12(b)(6) motion for dismissal. However, if a party files a Rule 12(b)(6) motion for dismissal and the court relies on materials outside the pleadings, it will be considered a Rule 56 motion for summary judgment.
In this case the Secretary has premised at least a portion of his argument for dismissal upon this court’s Order on Motion for Partial Summary Judgment entered July 22, 1991 which permanently enjoined the State defendant from reducing the hours.of home-based services to Medicaid recipients without providing legally sufficient notice and an opportunity to be heard in accordance with the regulations at 42 C.F.R. • §§ 431.206, 431.210, and 431.230. The Secretary, noted in his arguments supporting his motion for dismissal that with the entry of permanent injunction, the plaintiffs have obtained all relief sought. {See, The Federal. Defendant’s Submission of Supplemental Points and Authorities Regarding Lack of Subject Matter Jurisdiction Under §§ 1331 and 1361 filed March 2, 1992 at p. 1.) As this causes the court to look outside the pleadings alone in deciding this motion, the court will regard the motion as one for Summary Judgment pursuant to Fed.R.Civ.P. 56.
II. Summary Judgment
Summary judgment is proper if the pleadings, depositions, answers to interrogatories and admissions on file, together with any affidavits, show that there exist no genuine issue as to any material fact arid that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56; accord Juarez v. Ameritech Mobile Communications, 957 F.2d 317, 320 (7th Cir.1992). A material question of fact is a question which will be outcome-determinative of an issue in that case. Wainwright Bank v. Railroadmens Federal Sav., 806 F.2d 146 (7th Cir.1986).
The most recent, thorough discussions of Rule 56 by the Supreme Court of the United States can be found in a trilogy of cases decided in 1986. See Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; and Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Celotex addressed the initial burdens of the parties under Rule 56, and Anderson addressed the standards under which the record is to be analyzed within the structure of Rule 56.
After Celotex, it is clear that a non-moving party may not rest on its pleadings to avoid summary judgment. Celotex, 477 U.S. at 325-26, 106 S.Ct. at 2553-54. See also Lujan v. National Wildlife Federation, 497 U.S. 871, 110 S.Ct. 3177, 111 L.Ed.2d 695 (1990); and Zayre Corp. v. S.M. & R. Co., 882 F.2d 1145 (7th Cir.1989). “The days are gone, if they ever existed, when the nonmoving party could sit back and simply poke holes in the moving party’s summary judgment motion.'’ Fitzpatrick v. Catholic Bishop of Chicago, 916 F.2d 1254, 1256 (7th Cir.1990). The initial burden is on the moving party to demonstrate “with or without supporting affidavits” the absence of a genuine issue of material fact, and that judgment as a matter of law should be granted in the moving party’s favor. Celotex, 477 U.S. at 324, 106 S.Ct. at 2552 (quoting Rule 56). Once the moving party has met the initial burden, the opposing party must “go beyond the pleadings” and “designate ‘specific facts showing that there is a genuine [material] issue for trial.’ ” Id. Furthermore, in Anderson, the Court held that what facts are material in a specific case shall be determined by the substantive law controlling that case or issue. Anderson, 477 U.S. at 248, 106 S.Ct. at 2510. In addition, the court went on to interpret Rule 56 as requiring that the courts analyze summary judgment motions utilizing the standard of proof relevant to that case or issue. Id. at 252-55, 106 S.Ct. at 2512-14.
For academic insight into Celotex and Anderson, see Childress, A New Era for Summary Judgments: Recent. Shifts at the Supreme Court, 116 F.R.D. 183, 194 (1987), where the author states:
[t]he recent Supreme Court cases likely require that summary judgment be moré readily granted____ This emerging trend signals a new era for summary judgment, one in which the old presumptions are giving way to a policy of balancing and efficiency, and the mechanism is more appropriate to double as a sufficiency motion — allowing some sort of trial itself on the paper record.
More recently Childress has written that Celotex and Anderson clarify that Rule 56 motions
should not be hesitantly granted when appropriate____ Any litigant dealing with summary judgment must be aware of this new trend, the Court's cases, their application in each circuit, and the direction they portend. Pretrial practice is a new ballgame.
Childress, A Standards of Review Primer: Federal Civil Appeals, 125 F.R.D. 319, 343 (1989).
Recent object lessons applying these ideas are found in Karazanos v. Navistar Intern. Transp. Corp., 948 F.2d 332, 335 (7th Cir.1991); Old Republic Ins. Co. v. Federal Crop Ins. Corp., 947 F.2d 269, 273-274 (7th Cir.1991); and Un. Ass’n of Black Landscapers v. City of Milwaukee, 916 F.2d 1261, 1265 (7th Cir.1990).
III. The Medicaid Program — Statutory and Regulatory Scheme
The Medicaid program is codified as Title XIX of the Social Security Act (“Title XIX”). 42 U.S.C. § 1396, et seq. The federal government and participating states jointly finance the Medicaid program. See, 42 U.S.C. §§ 1396 and 1396a. Participation by a state is voluntary, but to receive federal funds states must submit and follow a plan which complies with Title XIX and the federal regulations. Wilder v. Virginia Hosp. Ass’n, 496 U.S. 498, 498, 110 S.Ct. 2510, 2513, 110 L.Ed.2d 455 (1990); Lett v. Magnant, 965 F.2d 251, 252 (7th Cir.1992). The plan must be approved by the Secretary. 42 U.S.C. § 1396. Upon approval of its State plan, a State becomes entitled to reimbursement by the Federal government for a portion of its payments to providers of medical assistance to Medicaid recipients. 42 U.S.C. § 1396b(a).
If thé Secretary later finds that a State is not in compliance with its plan, the Secretary may take steps as outlined in 42 U.S.C. § 1396c to alleviate any such failure to comply. However, before taking any compliance action, the Secretary must provide the State “reasonable notice and op portunity for hearing____” 42 U.S.C. § 1396c.
In its plan, a State must provide an individual with an opportunity to be heard if a “claim for medical assistance under the plan is denied or is not acted upon with reasonable promptness.” 42 U.S.C. § 1396a(a)(3). The federal regulations specify that an applicant must be notified of his right to a hearing “(1) [a]t the time that the individual applies for Medicaid; and (2) [a]t the time of any action affecting his claim.” 42 C.F.R. §§ 431.206(b) and 431.206(c). Notices with respect to actions affecting a claim must include a reason for the “intended action” and explain the individual’s right to request a hearing. 42 C.R.F. §§ 431.210(b) and 431.210(d). Individuals must be notified at least ten days prior to any adverse action unless there is reason to believe the recipient has acted fraudulently. 42 C.F.R. §§ 431.211 and 431.214. Further, if “the recipient requests a hearing before the date of action, the agency may not terminate or reduce services until a decision is rendered____” 42 C.F.R. § 431.230(a). The plaintiffs alleged that the original notice forms used by the state of Indiana violated these rules. As noted previously, the court ordered the State defendant to comply with the above-described notice provisions in its July 22, 1991 order. To that extent, the plaintiffs have achieved relief on this particular part of their claim.
The plaintiffs have also attacked Indiana’s Medicaid spend down liability determination provision as violative of federal law. Paragraph 31 of the plaintiff’s original Verified Complaint alleged that the State. defendant had “determined Mrs. Steele’s spenddown liability by considering only those expenses which she incurred on a monthly basis and does not consider all medical expenses for which she is currently liable.” The Secretary admitted this allegation in the corresponding paragraph of his Answer filed December 6, 1990. The State defendant admitted this allegation in paragraph 21 of her Answer filed October 25, 1990.
The issue currently before the court boils down to whether the Secretary’s failing to force Indiana to comply with notice provisions and 42 U.S.C, §§ 1396a(a), (f), 1396a(a)(17), and 1396a(f) when calculating a recipient’s spend down is sufficient to give this court either 28 U.S.C. §§ 1331 or 1361 jurisdiction over the Secretary.
IV. The Court’s Subject Matter Jurisdiction Under § 1331
The court first addresses whether it has jurisdiction pursuant to 28 U.S.C. § 1331. The Federal defendant filed its Motion to Dismiss against the plaintiffs alleging that the plaintiffs had failed to state a claim against the Federal defendant. The plaintiff’s sole claim against the Secretary is that he “has violated the statutes and rules cited in the previous claims, as well as the due process clause of the Fifth Amendment to the Constitution of the United States, in that he has failed to require Defendant Magnant [the State Defendant] to comply with the legal provisions set forth.” Complaint p. 14, ¶ 49.
In its Statement of Material Facts as to Which There is No Genuine Issue (“Statement”) filed by the plaintiffs on March 28, 1991, none of the proposed findings of fact mentions any alleged action or omission of the Secretary. Paragraph 2 of the Statement alleges a basis for subject matter jurisdiction which is disputed by the Secretary. The only other reference to the Secretary comes in ¶ 6 which reads as follows:
Plaintiffs sue the Administrator of the Indiana Department of Public Welfare (DPW), who has responsibility for implementation and supervision of the Medicaid program in that state. They also sue the Secretary of the United States Department of Health and Human Services, who is responsible for implementation of those provisions of the Social Security establishing Medicaid benefits, 42 U.S.C. 1396 et seq.
The balance of the Statement relates to the plaintiffs and their interaction with the State defendant.
The Secretary also argues that the plaintiffs lack standing to bring this action against the Secretary. Article III of the Constitution limits the judicial power of the United States to the resolution of cases and controversies. Valley Forge Christian College v. Americans United for Separation of Church & State, 454 U.S. 464, 471, 102 S.Ct. 752, 757, 70 L.Ed.2d 700 (1982). Embedded within the “case or controversy” concept is the doctrine of standing. To meet Article Ill’s standing requirements, a party must show, “at an irreducible minimum,” (1) some “actual or threatened” injury; (2) that can fairly be traced to the challenged action of the defendant; and (3) is likely to be redressed if the relief sought is granted. Valley Forge, 454 U.S. at 472, 102 S.Ct. at 758; Peoples Gas, Light & Coke Co. v. United States Postal Serv., 658 F.2d 1182, 1194 (7th Cir.1981). The Supreme Court explained in Duke Power Co. v. Carolina Environmental Study Group, 438 U.S. 59, 72, 98 S.Ct. 2620, 2630, 57 L.Ed.2d 595 (1978) that
[t]he essence of the standing inquiry is whether the parties seeking to invoke the court’s jurisdiction have ‘alleged such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the court so largely depends for illumination of difficult constitutional questions.’ As refined by subsequent reformulation, this requirement of a ‘personal stake’ has come to be understood to require not only a ‘distinct and palpable injury,’ to the plaintiff, but also a ‘fairly traceable’ causal connection between the claimed injury and the challenged conduct.
In this case the Secretary argues that the plaintiffs fail to satisfy the second and third elements of Article III standing. While the Secretary admits that the plaintiffs have suffered injury, the Secretary cites Simon v. Eastern Kentucky Welfare Rights Org., 426 U.S. 26, 41, 96 S.Ct. 1917, 1925, 48 L.Ed.2d 450 (1976) for the proposition that injury alone does not give the plaintiffs standing to sue. The Secretary reiterates that the plaintiffs have alleged no facts sufficient to warrant a finding that they have suffered any injury fairly traceable to any action the Secretary has or has not taken. And, as the Secretary argues, if nothing is fairly traceable to actions taken by the Secretary, it follows that the third element of the standing doctrine cannot be satisfied, because a ruling against the Secretary would not correct the purported injury. The court is persuaded by this argument. However, the court also notes that even if the plaintiffs satisfy Article III standing requirements, the court’s jurisdiction to review the Secretary’s decision in this case would be dubious at best.
To explain, this court will now address its ability, if any, to review an agency’s decision not to enforce compliance. The law this court must follow has been articulated by the Supreme Court of the United States in an opinion written by Chief Justice Rehnquist. Specifically, he wrote:
[t]his Court has recognized on several occasions over many years that an agency’s decision not to prosecute or enforce, whether through civil or criminal process, is a decision generally committed to an agency’s absolute discretion. This recognition of the existence of discretion is attributable in no small part to the general unsuitability for judicial re view of agency decisions to refuse enforcement.
Heckler v. Chaney, 470 U.S. 821, 831, 105 S.Ct. 1649, 1655, 84 L.Ed.2d 714 (1985) (citations omitted). The reasons for the Supreme Court’s decision in Chaney are as true today as in 1985. As the Supreme Court stated then:
an agency decision not to enforce often involves a complicated balancing of a number of factors which are peculiarly within its expertise. Thus, the agency must not only assess whether a violation has occurred, but whether agency resources are best spent on this violation or another, whether the agency is likely to succeed if it acts, whether the particular enforcement action requested best fits the agency’s overall policies, and, indeed, whether the agency has enough resources to undertake the action at all. An agency generally cannot act against each technical violation of the statute it is charged with enforcing. The agency is far better equipped than the courts to deal with the many variables involved in the proper ordering of its priorities. Similar concerns animate the principles of administrative law that courts generally will defer to an agency’s construction of the statute it is charged with implementing, and to the procedures it adopts for implementing that statute.
Id., 470 U.S. at 831-832, 105 S.Ct. at 1655-56. The Supreme Court’s opinion went on to emphasize that an agency decision not to take enforcement action “is only presumptively unreviewable; the presumption may be rebutted where the substantive statute has provided guidelines for the agency to follow in exercising its enforcement powers.” Id., 470 U.S. at 832-833, 105 S.Ct. at 1656-57.
The plaintiffs argue that this court has jurisdiction to hear their claim against the Secretary, because the state has violated the requirements of 42 U.S.C. § 1396a, et seq., and the Secretary has failed to take action against the state to enforce compliance with the mandates of § 1396a pursuant to 42 U.S.C. § 1396c. The plaintiffs assert that while § 1396c provides for the Secretary to use his discretion in deciding what action to take against the State, the statute requires that the Secretary take some action. In other words, taking action is mandatory; only the decision as to what action to take is left to the Secretary’s discretion.
Defendant Secretary disagrees with this interpretation of the statute arguing that the decision of whether to take action is also left to the Secretary’s discretion and not mandated by the statute.
In resolving this dispute, the language of § 1396c is critical to this court’s analysis. Section 1396c provides in pertinent part:
If the Secretary, after reasonable notice and opportunity for hearing to the State agency administering or supervising the administration of the State plan approved under this subchapter, finds—
(1) that the plan has been so changed that it no longer complies with the provisions of section 1396a of this title; or
(2) that in the administration of the plan there is a failure to comply substantially with any such provision;
the Secretary shall notify such State agency that further payments will not be made to the State (or, in his discretion, that payments will be limited to categories under or parts of the State plan not affected by such failure), until the Secretary is satisfied that there will no longer be any such failure to comply. Until he is so satisfied he shall make no further payments to such State (or shall limit payments to categories under or parts of the State plan not affected by such failure).
42 U.S.C.A. § 1396c.
In settling the argument between the plaintiffs and Secretary, the question for this court becomes whether this statute substantively provides for the Secretary to enforce § 1396a. If it does not, then the Chaney, presumption of unreviewability controls. However, if the language does set forth guidelines for the agency to follow then this is just the exception to the presumption of unreviewability that the Chaney court alluded to.
At least one court has held that the Secretary’s discretion extends only to the ex tent of the sanction to apply. However, assuming a finding of noncompliance, the Secretary must take some action. Robinson v. Pratt, 497 F.Supp. 116, 121 (D.Mass.1980). While this may resolve the dispute as stated between the plaintiffs and Secretary, the court finds that this entire analysis needs to be backed, up at least one step.
In light of the Supreme Court’s reasoning in Chaney, the first question which should have been posed in this analysis is whether the Secretary was required to proceed against the state for noncompliance. It is within the Secretary’s discretion to decide whether violations have occurred and whether to spend its resources on a particular violation. Chaney, 470 U.S. at 831, 105 S.Ct. at 1655. Thus, in this case, the decision to go forward with an action for noncompliance on the part of the State and to allow an opportunity for hearing is within the Secretary's discretion. To this court's knowledge no such decision to act or hold a hearing was made by the Secretary. There is authority for finding that such compliance hearings are within the Secretary’s discretion. See, e.g., Arthur C. Logan Mem. Hosp. v. Toia, 441 F.Supp. 26, 27 (S.D.N.Y.1977) and Phoenix Baptist Hosp. and Medical Center v. U.S., 937 F.2d 452, 453 (9th Cir.1991). In its reasoning in the Phoenix Baptist Hosp., the Ninth Circuit relied upon United States v. Gaubert, — U.S. —, 111 S.Ct. 1267, 1274-75, 113 L.Ed.2d 335 (1991) to “presume that the decision regarding whether to hold a compliance hearing is grounded in matters of policy.” Based upon these authorities, this court concludes that the Secretary’s discretionary decision not to go forth with a compliance hearing falls within the Chaney presumption of unreviewability. Thus, this court finds that even if the plaintiffs have standing, this court would still be prevented from reviewing the Secretary’s decision. However, this does not conclude the court’s findings as the plaintiffs also argue that this court has mandamus jurisdiction.
V. Mandamus Jurisdiction
This court now addresses whether it has mandamus jurisdiction over the Secretary and, thus, subject matter jurisdiction pursuant to 28 U.S.C. § 1361. The Secretary claims that the plaintiffs do not state a cause of action in mandamus and, thus, do not invoke this court’s subject matter jurisdiction pursuant to 28 U.S.C. § 1361. For the reasons that follow, this court must agree with the Secretary’s position.
The Supreme Court has declared that “[t]he common-law writ of mandamus, as codified in 28 U.S.C. § 1361, is intended to provide a remedy for a plaintiff only if he has exhausted all other avenues of relief and only if the defendant owes him a clear nondiscretionary duty.” Heckler v. Ringer, 466 U.S. 602, 616, 104 S.Ct. 2013, 2022, 80 L.Ed.2d 622 (1984) (emphasis added). The Seventh Circuit, recognizing that the mandamus remedy is only available “under exceptional circumstances of clear illegality,” has subdivided these requirements into three elements necessary for an action in mandamus:
(1) a clear right in the plaintiff to the relief sought;
(2) a plainly defined and peremptory duty on the part of the defendant to do the act in question;
(3) no other adequate remedy available.
|
7413823-26380 | ESCHBACH, Circuit Judge.
Steve DeBiasio was seriously injured while in the employment of the Illinois Central Railroad (“IC”). DeBiasio brought this action against IC alleging violations of the Federal Employers’ Liability Act (“FELA”), 45 U.S.C. §§ 51-60, and the Federal Safety Appliance Act (“FSAA”), 45 U.S.C. §§ 1-43. The jury found IC liable under both Acts and awarded DeBiasio $4,201,000 in damages. IC appeals the finding of liability and the award of damages. As to the issue of liability, IC challenges the sufficiency of the evidence and certain evidentiary rulings of the trial court. We have concluded that the evidence was sufficient and, while the trial court erred in a significant evidentiary ruling, such error was harmless. We affirm.
I.
Railroads connect individual freight cars together through a coupling mechanism located at either end of each ear. The coupling mechanism consists of a drawbar and a knuckle that connects with an adjacent car. A pin inside the coupler knuckle locks the knuckle in a closed position. Using a “pin lifter” or uncoupling lever, the pin can be removed and the knuckle can be opened without having to step between the rails. As long as the couplers on both cars are set properly so that the drawbar, which rests on a pivot to allow the car to round curves without derailing, is aligned and at least one of the knuckles is open, two cars will connect automatically upon impact.
In a classification or switching yard, the railroad is able to separate freight cars which are currently coupled together and reassemble them with other cars having common destinations. The yard normally consists of “lead” tracks, where inbound trains come in and wait to be switched, and a number of individual tracks where the reassembled cars are placed. During a “flat switching” operation, an engineer begins to back up a set of ears toward a designated track. The switch list indicates in what order cars are going to be switched into each track. A switchman then uncouples a group or “cut” of cars by pulling the pin lifter attached to the front coupling mechanism on the following car. When the pin is lifted, the engine stops and its momentum sends the now unattached cars into the bowl-shaped area of the yard. The descending cars are directed into the appropriate track according to the switch list where they are automatically coupled upon impact with the ears presently sitting in that track.
In the early hours of the morning on February 6, 1992, DeBiasio was performing his duties as a switchman for IC at its Glenn Yard in Chicago. DeBiasio was then 33 years old and had worked for IC for 13 years. His crew included John Smith, the engineer operating the switching engine, Tony Manestar, the conductor in charge of the crew, and, Johnny Wilson, the utility switchman who at the time was lifting the pins to release cars to one of the Yard’s twenty tracks. DeBiasio was the field switchman responsible for opening and closing the switches so that the cars would roll into the proper tracks, and checking to see if the cars coupled on impact with the cars already standing on those tracks.
DeBiasio’s shift had started at 10:30 pm. After the crew ate “lunch” at around 2:00 in the morning, Manestar distributed the switch list for the rest of the shift’s operations. Smith lined a cut of 22 cars onto the switching lead for tracks 1-10. In the second movement of cars after lunch, three ears were sent, or “kicked,” onto track 8. Wilson testified that he was able to pull the pin on the coupler connecting the last car to remain with the train with the three cars to be released, and the momentum of the three cars’ release opened up the knuckle on IC car 388423 which remained and became the lead car for the next cut of cars. Thus, on the subsequent movement, when six cars were released for track 3, the lead car’s coupler was in the open position, ready for coupling. After DeBiasio flipped the switch for track 3 in preparation for this movement, he informed Manestar by radio that there was insufficient room in track 3 for the scheduled six cars. When this happens, a cut of cars may “foul” the lead track, so that the cars do not go completely onto the designated track and thus block the lead track. DeBiasio thus returned to track 3 to check on the progress of the six cars which had already been released. As DeBiasio was walking along the lead to track 3, he heard the 6 cars make contact with the cars already on that track. Listening to his radio, DeBia-sio heard that the fourth movement of cars had also taken place and they were now planning on sending 2 additional cars to track 3. When he heard the impact of these two cars on the six other ears presently on track 3, he assumed that track 3 was no longer a “live” track and the other switch movements would not affect his ability to inspect the six cars on track 3.
DeBiasio discovered that there was a gap of 20-25 feet between car 388423 and the standing cars on track 3. He noticed that the knuckle on car 388423’s coupling mechanism was now closed when it previously had been open. Thus, he believed the cars had failed to couple automatically upon impact. DeBiasio then proceeded to attempt to open the knuckle on car 388423 with the pin lifter so as to prepare the cars for a second attempt at automatic coupling. After several failed attempts with the pin lifter, DeBiasio had to place one foot inside the rail and between the ears in order to try to manually open the knuckle. At this point, DeBiasio heard a loud impact against the cars on track 3 and was pushed over by the oncoming cut of cars. His left arm was caught under the wheels of one of the cars, resulting in its amputation at the shoulder.
On April 3, 1992, DeBiasio brought this action against IC alleging negligence in violation of FELA, and the failure to maintain couplers which couple automatically upon impact, in violation of FSAA. The ease went to trial before a jury on May 18, 1994. The jury returned a verdict in favor of DeBiasio and awarded $4,201,000 in damages. The district court denied IC’s motions for judgment as a matter of law, or, in the alternative, for a new trial on all issues, or in the alternative for a new trial on damages or a remittitur. A timely motion of appeal was filed.
II.
IC claims three grounds for reversal of all or part of the jury’s verdict: (1) insufficiency of the evidence as a matter of law; (2) errors in the admission and exclusion of certain evidence; and (3) excessiveness of the verdict and a failure to mitigate damages. We will address each issue in turn.
A. Judgment as a Matter of Law and Motion for a New Trial
DeBiasio’s claim rests on alleged violations of FSAA and FELA. At the conclusion of the presentation of the evidence, IC moved for judgment as a matter of law on these claims. We review de novo the district court’s denial of a motion for judgment as a matter of law. Frazier v. Norfolk & Western Ry. Co., 996 F.2d 922, 924 (7th Cir.1993). Our inquiry is limited to whether the evidence, when viewed in the light most favorable to the nonmoving party and drawing all reasonable inferences therefrom, is sufficient to support the jury’s verdict. Id. (quoting Siddiqi v. Leak, 880 F.2d 904, 908 (7th Cir.1989)). After the jury’s verdict, IC also moved for a new trial, contending that the verdict was against the manifest weight of the evidence. We will reverse the district court’s decision to deny IC’s motion for a new trial only if an abuse of discretion is demonstrated. M.T. Bonk Co. v. Milton Bradley Co., 945 F.2d 1404, 1407 (7th Cir.1991).
1. FSAA
The FSAA imposes certain absolute duties upon railroads to outfit their ears with safe equipment. “[A] failure of equipment to perform as required by the Safety Appliance Act [FSAA] is in itself an actionable wrong, in no way dependent upon negligence and for the proximate results of which there is liability — a liability that cannot be escaped by proof of care or diligence.” O’Donnell v. Elgin J. & E. Ry. Co., 338 U.S. 384, 390, 70 S.Ct. 200, 204, 94 L.Ed. 187 (1949). “Once the violation is established, only causal relation is in issue.” Carter v. Atlanta & St. Andrews Bay Ry. Co., 338 U.S. 430, 434, 70 S.Ct. 226, 229, 94 L.Ed. 236 (1949). Although the FSAA does not itself create a private right of action, employees alleging injury resulting from a violation of the FSAA may sue under FELA, 45 U.S.C. § 51. See Crane v. Cedar Rapids & Iowa City Ry. Co., 395 U.S. 164, 166, 89 S.Ct. 1706, 1708, 23 L.Ed.2d 176 (1969).
DeBiasio claims that IC has violated § 2 of the FSAA, which provides as follows:
It shall be unlawful for any railroad to haul or permit to be hauled or used on its line any car not equipped with couplers coupling automatically by impact, and which can be uncoupled without the necessity of men going between the ends of the cars.
45 U.S.C. § 2. Congress enacted this provision in 1893 in an effort to reduce the number of injuries which occurred when railroad workers were forced to stand between the cars as they moved, sometimes at speeds reaching 12 miles per hour, during the coupling process. Lisek v. Norfolk & Western Ry. Co., 30 F.3d 823, 826 (7th Cir.1994), cert. denied, — U.S. -, 115 S.Ct. 904, 130 L.Ed.2d 787 (1995) (citing United Transp. Union v. Lewis, 711 F.2d 233, 247 n. 34 (D.C.Cir.1983)). Although the statutory language itself only speaks to the risk of requiring railroad workers to go between the ends of two cars to uncouple them, the Supreme Court has long held that this language applies to coupling as well as to uncoupling. Johnson v. S. Pacific Co., 196 U.S. 1, 18-19, 25 S.Ct. 158, 161-62, 49 L.Ed. 363 (1904).
The courts have enunciated two manners in which a plaintiff can establish the railroad’s liability for an accident involving a coupling mechanism. The first avenue for establishing liability is to provide evidence that two cars failed to couple automatically upon impact. “[I]t is the failure to couple that triggers the railroad’s absolute liability under section 2.” Lisek, 30 F.3d at 829. In Affolder v. New York C. & St. L.R. Co., 339 U.S. 96, 98, 70 S.Ct. 509, 510, 94 L.Ed. 683 (1950), the Court held that the plaintiff could meet his burden under § 2 by showing a failure to couple automatically upon impact. The railroad’s duty to have couplers which couple automatically upon impact “is an absolute one requiring performance ‘on the occasion in question.’ ” Id. The plaintiff is not, therefore, required “to show a ‘bad condition’ of the coupler.” Affolder, 339 U.S. at 99, 70 S.Ct. at 510-11; accord Reed v. Philadelphia, Bethlehem & New England R.R. Co., 939 F.2d 128, 130 (3d Cir.1991) (“Because equipment failure itself suffices to fasten liability upon the railroad, an injured railworker need not show a defect in the coupler to recover for his injuries.”). “In other words, the Act requires automatic coupling equipment and the failure to couple creates the nearly irrebuttable presumption that the Act has been violated.” Lisek, 30 F.3d at 829.
The second method of establishing a violation of the FSAA is to show a defect in the coupling equipment. Although a plaintiff is not required to prove that the equipment was defective, see Affolder, 339 U.S. at 99, 70 S.Ct. at 510-11, evidence that an employee was forced to step in between the lines because of defective equipment can establish liability in “the absence of a failed coupling attempt.” Lisek, 30 F.3d at 831. Furthermore, direct evidence of a defect obviates the need to determine whether the Act was violated by a failure to couple on the occasion in question. In San Antonio & Aransas Pass Ry. Co. v. Wagner, 241 U.S. 476, 483-84, 36 S.Ct. 626, 629-30, 60 L.Ed. 1110 (1916), “evidence of bad repair in the equipment” was sufficient to establish liability and thus, the Court stated, “[w]e need not in this case determine ... that the failure of a coupler to work at any time sustains a charge that the Act has been violated.”
The railroad, however, “cannot be liable when it utilizes equipment that complies with the statutory mandate [and thus couples automatically upon impact] and is not defective.” Lisek, 30 F.3d at 830. Therefore, two narrow defenses have emerged which, if properly proven by the railroad, may allow it to avoid liability. Both defenses address a situation where the coupler was not “set properly.” Kavorkian v. CSX Transp., Inc., 33 F.3d 570, 573 (6th Cir.1994). Liability under § 2 “assumes that the coupler was placed in a position to operate on impact.” Affolder, 339 U.S. at 99, 70 S.Ct. at 511. The first defense, which was recognized by the Court in Affolder, is the failure of railroad workers to ensure that at least one of the couplers was in the open position before impact. Id. If both couplers’ knuckles are closed, the failure of the couplers to couple automatically upon impact is not that of the device. The second defense is a misaligned drawbar. Since “it is normal for nondefective automatic couplers to become misaligned, as a part of ordinary railroad operations, then it is simply not reasonable to hold that such misalignment amounts to a violation of the Act.” Lisek, 30 F.3d at 830-31. In both instances, though, “the defendant railroad has the burden of proving that the couplers were not set properly at the time that they failed to couple automatically.” Kavorkian, 33 F.3d at 573; accord Maldonado v. Missouri Pac. Ry. Co., 798 F.2d 764, 768 (5th Cir.1986), cert. denied 480 U.S. 932, 107 S.Ct. 1571, 94 L.Ed.2d 762 (1987). “In other words, the defendant has to establish a separate cause for failure to couple, other than equipment failure.” Reed, 939 F.2d at 132.
DeBiasio introduced evidence in support of both methods of establishing liability under the FSAA. Although no witness actually saw ear 388423 fail to couple automatically upon impact, undisputed circumstantial evidence existed to support this conclusion. Wilson testified that the knuckle on car 388423 opened when he released the previous cut of three cars and Manestar confirmed that nothing unusual had occurred when those cars were released. Both DeBiasio and Manestar testified that they heard the cut of 6 cars make impact with the ears already standing on track 3. DeBiasio further testified that when he arrived at track 3 and discovered the gap, car 388423’s coupler was closed. According to DeBiasio, based on his thirteen years of experience, this indicated that the cars had made impact but failed to couple automatically. The jury was entitled to conclude from this evidence that the couplers had failed to couple automatically upon impact and a § 2 violation had occurred. See Clark v. Kentucky & Indiana Terminal R.R., 728 F.2d 307, 310-11 (6th Cir.1984) (upholding the use of circumstantial evidence to establish the failure of a coupler to couple automatically upon impact).
DeBiasio also provided evidence that the coupling mechanism on car 388423 was defective. DeBiasio himself testified that the pin lifter malfunctioned when he tried to open the coupler. An IC videotape taken soon after the accident, which depicted an employee attempting to open the coupler with the pin lifter and having to resort to opening it manually, further supports evidence of a defect. Finally, DeBiasio introduced two expert witnesses, Rufus Dipprey and Frank Appelt, who opined that the knuckle thrower DeBiasio attempted to open at the time of the accident was broken. While IC fiercely contested these conclusions, the jury was entitled to credit the testimony offered by DeBiasio.
IC cannot avail itself of either of the two defenses to liability under § 2. Other than asking a few hypothetical and conjectural cross-examination questions of DeBiasio and his witnesses, IC introduced no evidence to support a misaligned drawbar or closed coupler defense. To the contrary, the evidence indicated no support for such defenses existed. Wilson testified that car 388423’s coupler was open when it was released, foreclosing an Affolder closed knuckle defense. DeBiasio further testified that he did not notice that either draw bar on either car was misaligned. Since a misalignment sufficient to prevent a coupling would be noticeable, DeBiasio concluded that there was no misa lignment. Given that it was IC’s burden to establish such defenses, the jury was entitled to conclude that there was no evidence of a misaligned drawbar or closed coupler in this case.
2. FELA
FELA provides a “broad remedial framework for railroad workers” who suffer injuries during their employment. Lisek, 30 F.3d at 831. Under 45 U.S.C. § 51, railroads engaging in interstate commerce
shall be liable in damages to any person suffering injury while he is employed by such carrier in such commerce ... for such injury or death resulting in whole or in part from the negligence of any of the officers, agents, or employees of such carrier, or by reason of any defect or insufficiency, due to its negligence, in its ears, engines, appliances, machinery, track, roadbed, works, boats, wharves, or other equipment.
Under FELA, the plaintiffs burden is significantly lighter than in an ordinary negligence case. Lisek, 30 F.3d at 832. The railroad is hable if “the proofs justify with reason the conclusion that employer negligence played any part, even the slightest, in producing the injury_” Harbin v. Burlington Northern R.R. Co., 921 F.2d 129, 131 (7th Cir.1990) (quoting Rogers v. Missouri Pac. R.R. Co., 352 U.S. 500, 506, 77 S.Ct. 443, 448, 1 L.Ed.2d 493 (1957)). A jury verdict in a FELA case can be set aside only when there is a complete absence of probative facts to support the conclusion reached. Frazier, 996 F.2d at 924.
DeBiasio introduced sufficient evidence of negligence for the jury to conclude that the “slightest evidence of negligence” test had been satisfied. Rule 103(c) of the Illinois Central Operating Rules states that “[w]hen coupling, shoving, or switching cars, care must be taken to prevent damage and to avoid fouling other tracks. There must be sufficient room on the track to hold the cars.” DeBiasio testified that he informed Manestar that there was insufficient room on track 3 for the cut of 6 cars and, after impact with the cars already standing on track 3, they were indeed fouling the tracks. Dipprey, one of DeBiasio’s expert witnesses, also testified that the tracks had been fouled in violation of Rule 103(c) when the cut of 6 cars was sent to track 3. Furthermore, there was evidence presented that IC had violated Operating Rule 833 by not maintaining “continuous radio contact” with DeBiasio so that he was informed of the next movement of cars, and it failed to maintain working lights at the area of the Yard where DeBiasio was injured. While the testimony was disputed on all of these points, the jury was entitled to credit DeBiasio’s presentation of the evidence and hold IC hable, especially in light of FELA’s low threshold for negligence.
B. Evidentiary Rulings
The trial judge’s evidentiary rulings are reviewed for abuse of discretion. Trytko v. Hubbell, Inc., 28 F.3d 715, 725 (7th Cir.1994). The determination that an error was made does not end our inquiry, though, for not all errors warrant reversal of the verdict below. Holmes v. Elgin, Joliet & Eastern Ry. Co., 18 F.3d 1393, 1397 (7th Cir.1994). “[H]armless error with respect to the admission or exclusion of evidence is not cause for reversal.” Cook v. Navistar Int’l Transp. Corp., 940 F.2d 207, 212 (7th Cir.1991) (quoting Oriental Health Spa v. City of Fort Wayne, 864 F.2d 486, 491 (7th Cir.1988)). An erroneous evidentiary ruling is harmless and “does not affect substantial rights unless there is a significant chance that it has affected the result of the trial.” Walton v. United Consumers Club, Inc., 786 F.2d 303, 313 (7th Cir.1986); see Fed. R.Civ.P. 61; Fed.R.Evid. 103(a).
1. Authentication of Exhibit 33
One of DeBiasio’s expert witnesses, Frank Appelt, testified to the specific manner in which he believed car 388423’s knuckle thrower was broken. Although he had not examined the actual knuckle thrower, he reasoned that “[t]he tail end of it off the fore end of it was broke off because it wouldn’t contact the tail of the knuckle and push it open.” (R. 411). IC sought to impeach this testimony by introducing exhibit 33, which IC claimed to be the actual knuckle thrower off the coupling mechanism in car 388423. The trial judge initially refused to allow IC to introduce exhibit 33, on the grounds that it had not been properly authenticated as the knuckle thrower in question, although he did permit IC’s counsel to secure an admission from Appelt that exhibit 33 was not broken. During IC’s presentation of its case, it introduced testimony from David Hall, the IC employee in charge of investigating the accident, that he had directed M.O. Jones to retrieve the coupler off of car 388423 and bring it to him. He also testified that the knuckle thrower Jones brought to him was now labeled exhibit 33. At this point, the jury knew that exhibit 33 was not broken, but it did not know whether exhibit 33 was the actual knuckle thrower DeBiasio’s expert had claimed to be broken. When IC called Jones to testify that he did indeed retrieve the knuckle thrower from the proper car and handed it to Hall, DeBiasio objected on the grounds that IC had not, under Fed.R.Civ.P. 26(a)(2) or Local Rule 5.00, disclosed Jones as an expert or the exhibits upon which he was going to rely upon in his testimony. IC countered that, at least insofar as he would authenticate exhibit 33 as car 388423’s coupler, Jones was an impeachment witness not testifying as an expert at all. Moreover, his status as an expert had been revealed during deposition. Although he was allowed to testify as an expert, the trial judge ruled, that Jones could not testify as to his actions in retrieving exhibit 33 from car 388423 because this testimony was not disclosed before trial.
The trial judge does appear to have abused his discretion in excluding Jones’ testimony. Exhibit 33, if properly authenticated, was impeachment evidence for Appelt’s testimony that the knuckle thrower had to be broken in a particular manner. The evidence was not offered to prove that the coupler could not be defective. It was offered only to establish that it could not have been defective in the manner described by Appelt. Rule 26(a)(3) of the Federal Rules of Civil Procedure does not require pretrial disclosure of evidence used “solely for impeachment purposes,” and Local Rule 5.00 does not require nondemonstrative exhibits to be listed on the pretrial order unless they will be “offered in evidence.” Nor can Jones’ testimony be excluded as undisclosed expert testimony. IC’s counsel made clear to the trial judge that Jones’ testimony regarding his handling of the coupler for car 388423 was separable from his testimony as an expert. A witness is not an expert to the extent he testifies as to matters within his personal knowledge. Richardson v. Consolidated Rail Corp., 17 F.3d 213, 218 (7th Cir.1994). The bases of his opinions need not be disclosed before trial. Id. Thus, it was error for the trial judge to exclude the testimony which would connect up the coupler presented to Appelt with the coupler in car 388423.
Despite the error, we cannot say that it was reversible error. The authentication of exhibit 33 would have only addressed whether the coupling mechanism on car 388423 was defective. DeBiasio, however, presented undisputed evidence that the couplers had failed to couple automatically upon impact. This is sufficient to establish a violation of FSAA even if DeBiasio had never presented any evidence of a defect. See Affolder, 339 U.S. at 98-99, 70 S.Ct. at 510-11. Since IC failed to provide any evidence to support a misaligned drawbar or closed knuckle defense, no reasonable jury could have failed to find such a violation. Thus, the error could not have affected the result of the trial. Walton, 786 F.2d at 313.
2. Day in the Life Video
DeBiasio offered into evidence a video depicting him in his daily routine since the amputation. IC objected that the video, which included frequent shots of him interacting with his family, would prompt the jury to award damages to him for his family’s loss instead of solely as compensation for DeBiasio’s injuries. See New York C. & Hudson River R.R. Co. v. Tonsellito, 244 U.S. 360, 37 S.Ct. 620, 61 L.Ed. 1194 (1917) (jury not entitled to consider damages for non-railroad employees). The trial judge viewed the video in its entirety outside the presence of the jury. When the video was displayed before the jury, the trial judge explicitly instructed the jury that they were not to consider the accident’s harm to his family. Finally, De-Biasio was both present in the courtroom and subject to cross-examination. “The possibility that a film will be prejudicial is significantly reduced when the subject of that film can be cross-examined at trial.” Bannister v. Town of Noble, OK, 812 F.2d 1265, 1270 (10th Cir.1987) (discussing “Day in the Life” video). Thus, we do not find that the trial judge abused his discretion in admitting the video into evidence.
C. Damages
The jury returned a verdict of $4,201,000 in favor of DeBiasio. $1,500,000 was apportioned for disability, $1,500,000 for pain and suffering experienced and reasonably expected to be experienced in the future, $51,000 for past lost earnings, and $1,150,000 for the value of lost future earnings reduced to present value. IC argues that the damage award is excessive in general, and in particular, the award for loss future earnings bears no rational connection to the evidence.
A trial judge may vacate a jury’s verdict for excessiveness only when the award was “monstrously excessive” or the award has “no rational connection to the evidence.” Holmes, 18 F.3d at 1395; Frazier, 996 F.2d at 925. When making this determination, “[t]he trial court may take into account whether the award is out of line when compared to other awards in similar cases.” Holmes, 18 F.3d at 1396. We review the district court’s decision not to order a remittitur or a new trial on damages under “the extremely limited abuse of discretion standard.” Frazier, 996 F.2d at 925 (quoting Joan W. v. City of Chicago, 771 F.2d 1020, 1023 (7th Cir.1985)).
1. Rational Connection Between Evi-. dence and Award
|
1615553-16983 | FLAUM, Circuit Judge.
Marcos Salgado-Oeampo was indicted on one count each of illegal re-entry into the United States after a previous deportation, violating 8 U.S.C. § 1326(a) (“count one”) and being an illegal alien in possession of a firearm, violating 18 U.S.C. § 922(g)(5) (“count two”). Judge Curran sentenced Sal-gado-Ocampo to concurrent prison terms of twenty-four months on count one, and thirty-eight months on count two. The defendant appeals, alleging that the district court improperly denied his motion to withdraw his guilty plea on count two, and that the court erred in not grouping the offenses for sentencing purposes under the United States Sentencing Guidelines. We affirm the district court’s judgment on both issues.
FACTS
In early 1997, the defendant lived in Milwaukee, Wisconsin. He is a Mexican citizen who was previously deported from the United States in 1996 for being an undocumented immigrant. Sometime between April 30, 1996 and late 1996, he illegally re-entered the United States.
On January 17, 1997, the defendant had an altercation with a co-tenant in his wife’s home. According to Salgado-Oeampo, his wife’s co-tenant and her boyfriend were engaged in sexual activities which were clearly audible to his young children, so he told the boyfriend to leave. Shortly thereafter, the boyfriend and another individual telephoned Salgado-Oeampo and told him they were going to come back to the house and shoot him. The defendant then called a neighbor and borrowed a .380 caliber semiautomatic pistol. Under 18 U.S.C. § 922(g)(5), it is unlawful for an illegal alien to possess a firearm. When the two men came back to Salgado-Ocampo’s building some time later, the defendant brandished the borrowed pistol in a successful effort to scare them away. After a neighbor called the police, Salgado-Oeampo was arrested. While in custody, he admitted to being an illegal alien.
On June 10, 1997, Salgado-Oeampo was indicted on the two charges noted above, and on August 28, 1997 he pled guilty to both. The record reflects that Judge Curran examined the defendant in open court in a Rule 11 hearing, and found that the defendant knowingly and willingly pled guilty after consultation with his attorney. At this Rule 11 hearing, Salgado-Ocampo’s attorney noted for the record that he had discussed the facts of the case with his client, and that in the attorney’s opinion, they did not provide the defendant with a justification defense.
On January 14, 1998, one day prior to the sentencing hearing date, Salgado-Oeampo filed a notice of intent to withdraw his guilty plea, and his counsel made a formal motion to withdraw as counsel. The counsel’s motion was granted. At the January 15 sentencing hearing, Salgado-Oeampo read into the record (through an interpreter) a pro se Rule 32(e) motion to withdraw his guilty plea based on double jeopardy grounds and that the .380 pistol had not traveled in interstate commerce. Judge Curran found the motion groundless, denied it and sentenced the defendant.
ANALYSIS
I.
Federal Rule of Criminal Procedure 32(e) permits a defendant to withdraw a guilty plea on a showing of “any fair and just reason.” United States v. Schilling, 142 F.3d 388, 398 (7th Cir.1998). However, this does not grant a defendant absolute freedom to withdraw a guilty plea. United States v. Caban, 962 F.2d 646, 649 (7th Cir.1992). When, as here, a defendant wishes to withdraw his plea after he states at a Rule 11 hearing that it was given freely and knowingly, “he faces an uphill battle in persuading the judge that his purported reason ... is ‘fair and just.’ ” Schilling, 142 F.3d at 398, citing United States v. Messino, 55 F.3d 1241, 1248 (7th Cir.1995). The determination as to whether “fair and just” reasons exist will be upheld unless it is clearly erroneous. Schilling, 142 F.3d at 398. The ultimate decision concerning the defendant’s right to withdraw his plea will be disturbed only upon a showing of abuse of discretion. Lee v. United States, 113 F.3d 73, 76 (7th Cir.1997).
A.
Salgado-Ocampo does not maintain that the district court erred in denying his motion on the grounds he proffered in his January 14 pro se Rule 32(e) motion. Instead, he argues that the district court erred in refusing to grant his motion because he could have maintained a justification defense to the illegal possession of a firearm charge. The defendant contends that this defense provides him with the requisite “fair and just” reason to withdraw his plea.
Although the government notes that Salga-do-Ocampo never raised this argument in his pro se Rule 32(e) motion, he discussed the facts constituting the now-claimed justification defense at his Rule 11 hearing. At that hearing, the defendant told the court: “it’s true I pulled a gun. But I no do it to kill somebody. The reason I pulled the gun is because ... he [his neighbor’s boyfriend] said he gonna shoot me .... My intention is only to get [him] away from the house and tell him to leave.” After hearing his client relay these facts, Salgado-Ocampo’s attorney stated for the record that he did not believe they constituted a justification defense. Subsequent to his attorney’s withdrawal, the defendant filed his pro se Rule 32(e) motion to withdraw his guilty plea.
The government argues that Salgado-Ocampo’s failure to raise the justification defense in his Rule 32(e) motion constitutes total forfeiture of that argument. This is inconsistent with our jurisprudence, however. Even if the defendant raised the issue for the first time on appeal, it would not be foreclosed. We have previously held that where a defendant completely bypasses the district court and first raises his Rule 32(e) motion in this Court, we treat his claim as waived rather than forfeited, and review it for plain error. United States v. Akinsola, 105 F.3d 331, 333 (7th Cir.1997). Moreover, in this case, the facts which putatively support a justification defense appear in the record. Cf. United States v. Gray, 611 F.2d 194, 197 (7th Cir.1979) (holding that defendant forfeits review of issues not presented to district court where there is no factual basis for the claim in record before district court).
Salgado-Ocampo contends that by raising the issue at his Rule 11 hearing, he preserved it for appeal under our normal standard of review. He suggests that United States v. Groll, 992 F.2d 755 (7th Cir.1993) provides support. In Groll, we reversed the district court’s ruling that failure to raise a factual issue in a Rule 11 hearing meant that the defendant could not raise those issues as the legal basis supporting a motion to withdraw a guilty plea. 992 F.2d at 757. The defendant infers from this that whether an issue is raised at a Rule 11 hearing or in a Rule 32(e) motion is irrelevant; according to him, so long as an issue appears in the record, it was properly before the district court, and thus preserved for appeal.
This inference is mistaken. The Groll panel found error in the district court’s refusal to consider a motion to withdraw that contained an articulated defense which had factual support in the record. Id. at 758. That is a far cry from the situation we face here, where the district court was never offered an opportunity to decide on the issue. As we noted in Akinsola, defendants should make motions first to the trial court because even when motions are denied, the appellate court is aided by a reviewable trial court record. 105 F.3d at 333. If an issue is not raised in the Rule 32(e) motion but was discussed in a Rule 11 hearing, it is waived rather than forfeited, and thus reviewed for plain error.
B.
Whether we review under the ordinary standard for denial of a 32(e) motion or plain eiTor, the result is the same—Salgado-Ocampo is not permitted to withdraw his guilty plea. The defendant contends that he was entitled to withdrawal because he is legally innocent of the charges. It is axiomatic that legal innocence is a fair and just reason to withdraw a guilty plea. See United States v. Groll, 992 F.2d at 758. However, “claims of innocence alone do not mandate permission to withdraw a plea.” Id. citing United States v. Buckles, 843 F.2d 469 (11th Cir.1988). Assertions of innocence must be buttressed by facts in the record which support a claimed defense. Groll, 992 F.2d at 758. See also United States v. Caban, 962 F.2d 646, 649 (7th Cir.1992).
Salgado-Ocampo claims the justification defense. To establish that defense, he must satisfy the four-pronged test we laid out in United States v. Wheeler, 800 F.2d 100, 107 (7th Cir.1986) overruled on other grounds by United States v. Sblendorio, 830 F.2d 1382 (7th Cir.1987), citing United States v. Gant, 691 F.2d 1159, 1162-63 (5th Cir.1982). In Wheeler we held that a defendant claiming justification must show that he:
(1) was under unlawful or present threat of death or serious bodily injury; (2) did not recklessly place himself in a situation where he would be forced to engage in criminal conduct; (3) had no reasonable legal alternative (to both the criminal act and the avoidance of the threatened harm); and (4) there was a direct causal relationship between the criminal action and the avoidance of the threatened harm.
800 F.2d at 107.
In choosing this defense, Salgado-Ocampo has selected a tough row to hoe. As Chief Judge Posner noted in United States v. Perez, 86 F.3d 735 (7th Cir.1996), “only in the most extraordinary circumstances ... will th[is] defense entitle the [person prohibited from possessing a weapon] to arm himself in advance of a crisis merely because he fears, however sincerely and reasonably, that he is in serious danger of deadly harm.” Id. at 737. Although rarely does not mean never, see United States v. Panter, 688 F.2d 268, 271-72 (5th Cir.1982), this is not one of those extraordinary cases.
First we examine whether the defendant was under imminent fear of death or bodily harm. Salgado-Ocampo’s claimed defense is that his actions were justified because he had a fear of imminent death or bodily harm when the two men called him to say they planned to return to his wife’s home and shoot him. It is important to note that the defendant is charged with illegal possession of a firearm, not illegal use of a firearm. The relevant inquiry is thus whether he was justified at the moment he borrowed the .380 pistol from his neighbor, not when he brandished the weapon at his wife’s neighbor’s boyfriend.
As the Fourth Circuit has stated, “it has been only on the rarest of occasions that our sister circuits have found defendants to be in the type of imminent danger that would warrant the application of a justification defense.” United States v. Perrin, 45 F.3d 869, 874 (4th Cir.1995). A single threat conveyed over a telephone, while serious, generally does not contain the necessary imminence required to make out a justification defense. Cf. United States v. Gomez, 92 F.3d 770, 775 (9th Cir.1996) (repeated phone threats from individual with “demonstrated willingness to Mil” sufficient to establish imminent danger). In the phone call to Salgado-Ocampo, it was not at all clear the threat would ever be carried out, much less imminently. By the defendant’s own account, the threat was received at approximately 7:30 p.m., and the men did not arrive until later that evening. However, as this Court has noted, “later” and “imminent” are opposites. United States v. Haynes, 143 F.3d 1089, 1090 (7th Cir.1998). In Haynes, we held that a prison inmate was not in imminent danger permitting him to use force when another inmate threatened to harm him “later in the afternoon.” Id. As in Haynes, the telephoned threats here were insufficiently imminent and Salgado-Oeampo is not privileged to arm himself in violation of the federal statute.
The appellant also encounters difficulty with the third Wheeler prong—that he had no reasonable legal alternative to both the criminal act and the avoidance of the threatened harm. “A defendant may not resort to criminal activity to protect himself or another if he has a legal means of averting the harm.” United States v. Perez, 86 F.3d 735, 737 (7th Cir.1996); see also United States v. Talbott, 78 F.3d 1183, 1187-88 (7th Cir.1996).
The Supreme Court’s decision in United States v. Bailey is instructive. 444 U.S. 394, 100 S.Ct. 624, 62 L.Ed.2d 575 (1980). There, the defendants, four men charged with escaping from a federal prison and remaining at large, argued that they were entitled to a duress defense, because they feared being beaten by guards had they remained in prison. 444 U.S. at 398-99, 100 S.Ct. at 628-29. Rejecting this defense, the Supreme Court held that so long as there is “a chance both to refuse to do the criminal act and also to avoid the threatened harm, ‘the defense will fail.’” 444 U.S. at 410, 100 S.Ct. at 634 (citations omitted). This Court recently pointed out that in Bailey, “even the option of escape followed by immediate surrender to the FBI was enough to foreclose a duress defense.” United States v. Haynes, 143 F.3d 1089, 1091 (7th Cir.1998). In Haynes, we held that fear of being sent to administrative segregation, and of the consequences of reprisals from other prisoners, did not excuse an inmate’s failure to seek protection from guards rather than taking matters into his own hands. Id.
Salgado-Oeampo claims that he could not call the police because he feared it might lead to his immigration status being uncovered. However, in light of Bailey and Haynes, this fear does not excuse his failure to notify law enforcement of the threat against him. Moreover, calling the police himself was not the defendant’s only method of avoiding the threatened harm. The appellant’s wife could have called the police while he vacated the residence until the matter was resolved. Even if he wanted no contact with the police at all he could have taken his wife and children with him and left the house. Instead, after receiving the telephone call, Salgado-Oeampo took the time to borrow a weapon from a neighbor, remained at his wife’s residence, and waited for the two men. The defendant made a conscious effort to illegally arm himself and did nothing to avoid the confrontation. These actions are plainly incompatible with the third prong of Wheeler.
Given the defendant’s failure to meet the Wheeler test, the district court’s judgment to deny him leave to withdraw his guilty plea was correct.
II.
Salgado-Ocampo’s second argument is that the district court erred in refusing to group counts one and two for sentencing purposes pursuant to U.S.S.G. § 3D1.2. If the offenses were grouped, he would have been sentenced at Level 12 rather than at Level 14. Under a grouped sentence, his term would be 30-37 months rather than the 38 months imposed by the district court.
We review a district court’s interpretation of the scope of the guidelines de novo and its factual findings for clear error. United States v. Yoon, 128 F.3d 515, 528 (7th Cir.1997). According to § 3D1.2, multiple counts are to be grouped when they involve substantially the same harm. This occurs when “one of the counts embodies conduct that is treated as a specific offense characteristic in, or other adjustment to, the guideline applicable to another of the counts.” § 3D1.2(c).
Salgado-Ocampo argues that 18 U.S.C. § 922(g)(5) (the firearms charge) is actually part of the immigration laws because it forbids all illegal aliens from lawfully possessing firearms. Because of this, he claims, § 922(g)(5) furthers the same interests as 8 U.S.C. § 1326, which prevents previously deported aliens from reentering the United States without permission from the Attorney General. Accordingly, the two violations have the same offense characteristics (they both involve illegal aliens) and thus must be grouped together.
Although this is a case of first impression in the Seventh Circuit, the Ninth Circuit has squarely addressed, and rejected, this argument in United States v. Barron-Rivera, 922 F.2d 549 (9th Cir.1991). That court held that grouping together § 922(g)(5) and § 1326 would distort the aim of grouping, because it would combine dissimilar offenses to reduce punishment. Id. at 554. It explained that a specific offense characteristic is not the status of a defendant, but rather the type of misconduct that occurs in the course of an event. Id. (citations omitted). It concluded that illegally reentering the country after deportation and illegally possessing a firearm share no common offense characteristics. Id. We agree — the types of misconduct committed in each of these crimes are in no way similar.
Salgado-Ocampo also obliquely suggests in his brief that the district court erred in failing to group the offenses under U.S.S.G. § 3D1.2(a), which provides for grouping when counts involve “substantially the same harm.” Because this claim was not raised in the district court, we review it only for plain error. United States v. Rivero, 993 F.2d 620, 623 (7th Cir.1993).
|
5883693-10451 | PER CURIAM:
Thomas Paul Ramirez and Cheryl Kay Brown were jointly tried and convicted, by a jury, for conspiring to possess, steal, or receive stolen mail matter in violation of 18 U.S.C. § 371, and were each sentenced to five years’ imprisonment. On appeal, Ramirez challenges his conviction and sentence, and Brown challenges her conviction. For the following reasons, we AFFIRM the judgment of conviction and sentence for each defendant.
I. BACKGROUND
Ramirez and Brown, along with fourteen coconspirators, were charged in a ten-count indictment, which alleged that they were participants in a conspiracy to steal mail. The Government alleged that the coconspirators would use stolen financial and personal information from the mail to purchase merchandise and gift cards, which they would later trade for drugs, typically methamphetamine, or cash. As one coconspirator succinctly summarized at trial, the coconspirators were united by “mail, meth, and theft.” Ramirez and Brown were each charged with one count of conspiracy to possess, steal, or receive stolen mail matter in violation of 18 U.S.C. § 371, and Brown was further charged with three counts of possession, theft, or receipt of stolen mail matter in violation of 18 U.S.C. § 1708. Both Ramirez and Brown pleaded not guilty to these charges and proceeded to trial.
During the joint trial, several coconspir-ators testified regarding the conspiracy's objectives and operation. Regarding Ramirez, the testimony indicated that he had stolen mail, transported stolen mail, sorted through stolen mail, purchased items using credit cards stolen from the mail, and passed fraudulent checks using information and documents obtained from the mail. Concerning Brown, the Government presented evidence showing that, on the night of her arrest, she and three other coconspirators had been stealing mail and were driving a pickup truck containing two trash bags of mail. Further, the Government offered testimony that Brown had sorted stolen mail both at her house and at a game room that she managed.
At both the close of the Government’s case and the close of all evidence, Ramirez and Brown moved for judgments of acquittal, which the district court denied. The case was submitted to the jury, which found Ramirez and Brown guilty on the conspiracy charge, but found Brown not guilty on the possession of stolen mail charges. A Presentence Investigation Report (PSR) was prepared for each defendant, calculating a 151-188 month United States Sentencing Guidelines (the “Guidelines”) range for Ramirez and a 78-97 month Guidelines range for Brown. However, because the statutory maximum term of imprisonment for the defendants’ convictions was five years, the recommended Guidelines ranges were reduced to 60 months. The district court sentenced each defendant to 60 months’ imprisonment and three years of supervised release. Each defendant timely appealed.
II. DISCUSSION
A. Thomas Ramirez
On appeal, Ramirez argues that (1) the district court erred in denying his motion to suppress certain statements he made to investigators, (2) the evidence presented at trial was insufficient to support his conviction, and (3) the district court applied the wrong burden of proof at sentencing. We address each in turn.
1. Whether the district court erred in denying Ramirez’s motion to suppress.
While Ramirez was being transported to court for his initial hearing, he initiated a conversation with postal inspectors, waived his Miranda rights, and made a number of self-incriminating statements. Before trial, Ramirez moved to suppress these statements, arguing that his waiver of Miranda rights had not been “voluntary” because he was “not cogent” at the time due to back pain and medication for that pain. At the suppression hearing, Ramirez’s theory changed somewhat: specifically, it was the lack of pain medication, and the resulting pain, that rendered his waiver involuntary. Following the suppression hearing, the district court, adopting the recommendation of the magistrate judge, denied Ramirez’s motion, finding that Ramirez made a knowing and voluntary waiver of his Miranda rights and that he was not coerced in waiving those rights.
On appeal, Ramirez argues that, at the time he made the statements, he was handcuffed in an uncomfortable position, the inspectors knew that he was in pain, and the inspectors knew that an attorney would shortly be present at his initial hearing to assist him. As such, Ramirez urges that his waiver of Miranda rights was involuntary and that the district court erred in failing to suppress his statements. We disagree.
“[A] district court’s determination regarding the validity of a defendant’s waiver of his Miranda rights is a question of law reviewed de novo, but this court accepts the factual conclusions underlying the district court’s legal determination unless they are clearly erroneous.” United States v. Cardenas, 410 F.3d 287, 292 (5th Cir.2005) (quotation marks omitted).
The inquiry whether a valid waiver has occurred has two distinct dimensions. First, the relinquishment of the right must have been voluntary in the sense that it was the product of a free and deliberate choice rather than intimidation, coercion, or deception. Second, the waiver must have been made with a full awareness of both the nature of the i-ight being abandoned and the consequences of the decision to abandon it.
Id. at 293 (quotation marks omitted). “The voluntariness determination is made on a case-by-case basis and is viewed under the totality of the circumstances surrounding the interrogation.” Id.
The record here provides ample support for the district court’s conclusion that Ramirez voluntarily waived his Miranda rights without coercion and with knowledge of his rights. Inspectors transporting Ramirez testified that he was cognizant of, and understood, what the agents were saying; was not babbling; initiated conversation with the agents; and specifically understood his Miranda rights. Further, the minutes of Ramirez’s initial appearance indicate that he was “physically and mentally able, ready [to proceed]”; he testified under oath, admitting that he understood what was going on; and his counsel thought that “he appear[ed] to understand what’s going on and ... that he [wa]s competent.” Moreover, Ramirez does not point to any evidence that investigators in any way coerced his waiver of Miranda rights. Instead, the record indicates that, though Ramirez told the inspectors he was in some pain, the inspectors did nothing to cause or aggravate this pain; standard transportation and custody procedures were followed; and Ramirez first initiated discussion with the inspectors concerning his activities. See id. at 295 (indicating that handcuffing suspects is standard police procedure which is not coercive). In sum, given the circumstances here, we find no error in the district court’s conclusion that Ramirez’s waiver of his Miranda rights was knowing, voluntary, and uncoerced. See id. at 297. The district court properly denied Ramirez’s motion to suppress.
2. Whether sufficient evidence supports Ramirez’s conviction.
Ramirez next argues that the only evidence presented linking him to the conspiracy was the testimony of his coconspirators and that this testimony “was so consistently unreliable” so as to be insufficient to support his conviction. We are unpersuaded.
Because Ramirez moved for acquittal, we ask “whether the evidence is sufficient by viewing the evidence and the inferences that may be drawn from it in the light most favorable to the verdict and determining whether a rational jury could have found the essential elements of the offenses beyond a reasonable doubt.” United States v. Valdez, 453 F.3d 252, 256 (5th Cir.2006) (quotation marks omitted). “It is not necessary that the evidence exclude every rational hypothesis of innocence or be wholly inconsistent with every conclusion except guilt, provided a reasonable trier of fact could find the evidence establishes guilt beyond a reasonable doubt.” Id. (quotation marks omitted).
Ramirez’s arguments challenging the credibility and weight of the coconspira-tors’ testimony are unpersuasive. The sufficiency of the evidence standard gives “full play to the responsibility of the trier of fact fairly to resolve conflicts in the testimony, to weigh the evidence, and to draw reasonable inferences from basic facts to ultimate facts.” Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979); accord United States v. Casilla, 20 F.3d 600, 602 (5th Cir.1994) (“The jury is solely responsible for determining the weight and credibility of the evidence; this court will not substitute its own determination of credibility for that of the jury.”)- Further, Ramirez’s argument that little direct evidence implicates his involvement in the conspiracy also fails to persuade. See United States v. Garcia Abrego, 141 F.3d 142, 155 (5th Cir.1998) (“Circumstantial evidence may establish the existence of a conspiracy, as well as an individual’s voluntary participation in it, and circumstances altogether inconclusive, if separately considered, may, by their number and joint operation ... be sufficient to constitute conclusive proof.” (quotation marks and alteration omitted)). Here, as Ramirez admits, the Government did present evidence that linked him to the conspiracy. Sufficient evidence supports the jury’s conviction, and we find no error on this issue.
3. Whether the district court erred at sentencing.
Finally, Ramirez argues that the district court “should have used a higher burden of proof at sentencing ... because the weak evidence of intended loss resulted in a drastically disproportionate effect on his sentence.” Specifically, Ramirez argues that his offense level should not have been increased because only a fraction of the actual and intended loss to victims were attributable to him. Again, we are unpersuaded.
“[A] district court’s interpretation or application of the ... Guidelines is reviewed de novo, and its factual findings are reviewed for clear error. There is no clear error if the district court’s finding is plausible in light of the record as a whole.” United States v. Cisneros-Gutierrez, 517 F.3d 751, 764 (5th Cir.2008) (alteration omitted). If the sentencing decision is procedurally sound, we consider the substantive reasonableness of the sentence imposed under an abuse-of-discretion standard. Id.
|
470173-11359 | GARZA, Circuit Judge:
On June 20,1978, the Grand Jury charged the Appellant, Felipe Gonzalez Alanis, with conspiracy to unlawfully transport a stolen motor vehicle in interstate commerce, knowing the vehicle to be stolen, in violation of 18 U.S.C. §§ 371 and 2312, and with disposing of a motor vehicle, which was part of interstate or foreign commerce, knowing the vehicle to have been stolen, in violation of 18 U.S.C. § 2313. Alanis now appeals from a conviction on the second count. We affirm.
The evidence, taken in the light most favorable to the jury’s verdict, Giasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 86 L.Ed. 680 (1942), came predominantly from the testimony of FBI Special Agent Rudolph Valadez. According to Agent Valadez, during the time in question he was engaged in an undercover operation along the Texas-Mexico Border. His task was to develop intelligence concerning the transporting of stolen property to Mexico. Pursuant to his mission, Agent Valadez assumed the role of a buyer and seller of stolen property. In this role, he became acquainted with a “major fence” of stolen property, Jesus Pedro Proa. Valadez testified that prior to the instant transaction, he had purchased several items of stolen property from Proa. During the nine month period during which Agent Valadez operated undercover, he spent a total of $11,000 to purchase stolen property which had a retail value of $2.2 million.
The transaction involved in this appeal occurred on October 24, 1977. Proa had informed Valadez that he had a stolen rental car for sale. Valadez met Proa at the latter’s store in McAllen, Texas. Parked nearby was a 1977 Chrysler Cordoba, which had recently been stolen from a Hertz Rental lot in Denver, Colorado. Valadez then drove Proa in the former’s car to a drug store in McAllen after being told by Proa that two other individuals were waiting there. When Valadez and Proa arrived, the two individuals waiting at the drug store sat in the back seat of Valadez’ car. One of the men, who introduced himself as “Felipe,” told Valadez that Proa wanted $800 for the Cordoba. Valadez then told the three men that he was a buyer and seller of stolen property and that he operated in Mexico. He told them that he was only interested in large scale operations. The man named Felipe told Valadez that they had connections in Houston who could provide stolen property. Specifically, Felipe told Valadez about a shipment of stereo equipment which had been stolen from the dock in Houston.
Following Felipe’s • statement that he would take the money, Valadez handed him eight hundred dollar bills. Proa gave Valadez the keys to the Cordoba. Valadez then drove them back to Proa’s store. Felipe and the other individual then departed in a pickup truck driven by Felipe. A license check of the pickup revealed that the owner was Felipe Gonzalez Alanis, the Appellant in this case. Additionally, Agent Valadez identified the Appellant in open court as the same “Felipe” whom he met in his car.
The Appellant did take the stand in his own defense and stated that a man named Berto gave him a ride in a white Cordoba. The Appellant, however, denied that he had driven the car, that he had received any money and that he knew Proa.
During the initial stage of the trial, the District Judge conducted a hearing outside of the presence of the jury to determine the existence of a conspiracy pursuant to this court’s ruling in United States v. James, 576 F.2d 1121 (5th Cir. 1978), modified en banc, 590 F.2d 575 (5th Cir. 1979). The trial court, while expressing reservations on the conspiracy count, held that a preponderance of the evidence indicated the existence of a conspiracy sufficient to allow the conspiracy testimony to be brought before the jury. Following the presentation of the Government’s case in chief, defense counsel moved for a Judgment of Acquittal on both counts. The Trial Court granted defense counsel’s Motion as to the conspiracy count but denied it as to the substantive count. In closing argument, the prosecutor asked the jury whether Valadez or Alanis had more to lose by not being truthful. The prosecutor also stated that in his personal belief he could not accept the testimony of Alanis. In the District Judge’s charge to the jury, he intentionally deleted any reference to the conspiracy count without objection by either side. The jury then returned a guilty verdict on the only remaining count. The Defendant was sentenced to three years in the custody of the Attorney General.
The Appellant now raises three points of error. No objection was tendered to any of these points during the trial. Because there was no contemporaneous objection, reversal must be based upon plain error. See United States v. Cook, 592 F.2d 877, 879 (5th Cir. 1979). As his first point of error, the Appellant contends that the testimony of Agent Valadez regarding Proa severely prejudiced his rights to a fair trial. The Appellant also contends that this testimony amounted to the use of extrinsic evidence to prove bad character in violation of Rules 404(a) and (b) of the Federal Rules of Evidence. Second, the Appellant claims that the prosecutor’s remarks, in closing argument were prejudicial. Third, the Appellant asserts that the trial judge’s failure to instruct the jury to disregard co-conspirator hearsay statements introduced against the Defendant amounted to plain error in light of the court’s dismissal of the conspiracy count.
I. The Testimony of Agent Valadez
Alanis contends that the testimony of Agent Valadez concerning the latter’s undercover mission, his duty to identify major fences and his dealings with Proa was inadmissable as being highly prejudicial as well as amounting to use of extrinsic evidence introduced to prove bad character in violation of Rules 404(a) and (b) of the Federal Rules of Evidence. Alanis attempts to analogize the case law dealing with the introduction of evidence of a co-defendant’s guilty plea with the instant circumstances. Alanis is correct in his assertion that the introduction of evidence of a co-defendant’s guilty plea is plain error and reversible even in the absence of an objection at the trial court. See United States v. Miranda, 593 F.2d 590, 595-96 (5th Cir. 1979); United States v. Handly, 591 F.2d 1125, 1128 (5th Cir. 1979). This doctrine, however, is of no avail to the Appellant in the present case. No evidence was introduced as to any judicial determination of Proa’s guilt. Additionally, the Government had a right to question Agent Valadez on his reasons for being in South Texas at the time. The agent’s introductory testimony concerning Proa’s extensive involvement with stolen property in no way implicated the Appellant in any activities other than the one for which he was indicted and convicted. The discussion concerning Proa’s operations may have caused some prejudice to the Appellant’s case, but it was not so basic nor so prejudicial as to amount to plain error. Rule 404 of the Federal, Rules of Evidence has no relevance to the present set of facts, and, thus, the Appellant’s challenge on that ground is wholly without merit.
II. Prosecutorial Remarks
The Appellant’s next challenge concerns the prosecutor’s final argument. Basically, the Government argued to the jury that Alanis had more to lose than the agent by not lying. The Government also told the jury that “I don’t believe the Defendant. . . . ” To satisfy the requirements of reversal, the prosecutorial misconduct must be “so pronounced and persistent that it permeates the entire atmosphere of the trial.” United States v. Blevins, 555 F.2d 1236, 1240 (5th Cir. 1977), cert. denied, 434 U.S. 1016, 98 S.Ct. 733, 54 L.Ed.2d 761 (1978). Clearly, an attorney may not ex press his personal opinion as to the credibility of witnesses or his own belief regarding a defendant’s guilt. See United States v. Morris, 568 F.2d 396, 401 (5th Cir. 1978). This is even more true when it involves a public position of trust and integrity such as that of a government prosecutor. Nonetheless, such prosecutorial comment can often be rendered harmless by a curative instruction if requested by the defense. The defense in this case failed to make such a request. Although the comments by the prosecutor were error, they did not amount to plain error. Since, upon an examination of the entire record, the Defendant did not suffer substantial prejudice, the error must be considered harmless. See United States v. Morris, 568 F.2d at 402.
III. The Co-Conspirator’s Statements
The Appellant’s final challenge concerns the admission of hearsay statements of an alleged co-conspirator following the trial court’s dismissal of the conspiracy count. The only hearsay statements which were elicited at trial concerned Pedro Proa’s offer to Agent Valadez to purchase a stolen rental car, Proa’s comments concerning the Cordoba and Proa’s remark that two individuals were waiting at a drug store in McAllen. The remainder of Agent Valadez’ testimony concerned his direct contact and conversations with the Appellant. No objection was made to the introduction of the hearsay statements, no request for cautionary instructions was tendered, and no motion to strike the statements was ever made. Additionally, after dismissing the conspiracy count, the trial judge specifically informed counsel for both sides, outside of the presence of the jury, that he would not charge the jury on conspiracy. Again, no objection was. made nor any request made to exclude the statements.
Under the prior case law, before hearsay declarations of a co-conspirator could finally go before the jury, the Government was required to introduce sufficient independent evidence to establish a prima facie case of the existence of a conspiracy and of the individual defendant’s participation therein. See United States v. Oliva, 497 F.2d 130, 132-33 (5th Cir. 1974). The trial court had the discretion in determining the order of admission of proof, but there was a minimum obligation upon the court to give a cautionary instruction on the limited uses of hearsay testimony. See United States v. Apollo, 476 F.2d 156, 163 (5th Cir. 1973). Such instructions should have been given at the time of the introduction of the evidence as well as during the final charge.
In complete fairness to the Trial Judge, matters became complicated for reasons beyond his control. First, the trial in this case commenced on September 21, 1978, only two months after the panel decision of July 20, 1978, in United States v. James, 576 F.2d 1121 (5th Cir. 1978), modified en banc, 590 F.2d 575 (5th Cir. 1979), which overruled Apollo. Thus, on what the Judge presumably had before him it would have been error to give the Apollo instructions. Apparently, counsel were of like mind. In the meantime, this Court on August 7,1978, granted rehearing en banc in the James case. Whether the Judge or counsel knew of this event or its possible consequences is not reflected. It was not until October 20, 1978, that this Court’s amended Rule 17 became effective. It was still later when this Court affirmed its long-standing practice in such situations in an opinion on September 13, 1979. United States v. Gutierrez-Barron, 602 F.2d 722 (5th Cir. 1979). Technically, therefore, Apollo was the law of the Circuit at the time of the instant trial.
|
4307231-19690 | MEMORANDUM OPINION
ELLEN SEGAL HUVELLE, District Judge.
Plaintiff Steven Jean-Pierre brings this action under the Freedom of Information Act (“FOIA”), 5 U.S.C. §§ 552, et seq. against defendant Federal Bureau of Prisons (“BOP”). Before the Court is defendant’s motion to dismiss or, in the alternative, for summary judgment. Having considered the entire record in this case, the Court will grant defendant’s motion to dismiss.
BACKGROUND
Plaintiff is a federal prisoner currently incarcerated at the Federal Correctional Institution (FCI) in White Deer, Pennsylvania. (Deck of Donna Johnson ¶ 2, May 11, 2012 (“Johnson Deck”); Compl. ¶ 3.) In a two-page letter dated March 17, 2011, plaintiff submitted a request for information, titled “Freedom of Information/Privacy Act Request,” to the Executive Office for United States Attorneys (“EOUSA”), a component of the United States Depart ment of Justice (“DOJ”). (Johnson Decl. ¶ 3, Ex. A; Compl. ¶¶ 1, 4; Def.’s Statement of Material Facts ¶¶ 1, 3, May 11, 2012 (“Def.’s Facts”); Pl.’s Statement of Material Facts ¶ 1, May 21, 2012 (“PL’s Facts”).) Plaintiff wrote, in pertinent part:
I, the undersign, identified as above, respectfully request the following information (1) who did give the Order to take me out of Schuykill Federal Camp and locked me up in FCI Schuykill (SHU) from the date of April-10/2010.?
(2). What was the reason for taking me out of Schuykill Federal Camp and placing me I FCI Schuykill (SHU) Special Hosuing Unit.?
(3) On what day did Schuykill Administration called (Agent Walter C. Riggs) from (ICE/Homeland Security) and informed him to come see me at the FCI Schuykill SHU. ?
(Johnson Decl. Ex. A (errors in original); see also id. ¶¶ 7-8, 11.) This letter was signed, dated, and captioned, and included the plaintiffs name, register number, and address, but did not include plaintiffs date and place of birth, and was not notarized or submitted with a 28 U.S.C. § 1746 statement that the declaration was made under penalty of perjury. (Johnson Decl. Ex. A; see also Def.’s Reply at 4; Def.’s Mem. at 5-6,10.)
The EOUSA designated plaintiffs letter as request number 2011-956 and by undated letter forwarded it to the BOP, also a component of the DOJ, for processing and response. (Johnson Decl. ¶ 7 & Ex. A; Def.’s Facts ¶ 3; PL’s Facts ¶ 2.) The EOUSA informed the BOP that plaintiff had been notified of this action. (Johnson Decl. ¶ 7 & Ex. A; Def.’s Facts ¶ 3; Compl. Ex. 5). The BOP received plaintiffs letter on April 11, 2011, designated it as request number 2011-6289, and assigned it to its Northeast Regional Office for processing on April 25, 2011. (Def.’s Facts ¶¶ 4-7; Johnson Decl. ¶¶ 8-9.)
By letter dated May 4, 2011, plaintiff submitted an appeal to the DOJ Office of Information Policy (“OIP”), in which he stated that 30 days had passed since his request had been forwarded to the BOP with no response. (Decl. of Priscilla A. Jones (“Jones Decl.”) ¶ 2 & Ex. A; Compl. Ex. A; Def.’s Facts ¶ 8.) Plaintiff asked the OIP to “consider this request as a resubmission” of request number 2011-956. (Id.) The OIP’s Administrative Section, which oversees the logging of administrative appeals from all denials of FOIA requests from all DOJ components (Jones Decl. ¶ 1), received plaintiffs appeal on May 20, 2011. (Jones Decl. ¶ 2 & Ex. A.) By letter dated May 31, 2011, the OIP acknowledged receipt of the appeal, which it designated appeal number AP-2011-01977, and informed plaintiff that he would be notified of a decision at a future date. (Jones Deck ¶ 3 & Ex. B; Def.’s Facts ¶ 9.) On July 12, 2011, plaintiff sent a second letter to the OIP, which he styled a “2nd and Final Notice to administrative review of the FOIA request,” inquiring about the status of his appeal. (Jones Decl. ¶ 4 & Ex. C; Compl. ¶ 5 & Ex. A; Pl.’s Facts ¶ 3.)
By letter dated August 24, 2011, the OIP responded to plaintiffs May 4, 2011 letter and affirmed the EOUSA’s action on the request, finding that the EOUSA’s action in referring the request to the BOP was proper, since the BOP was “most likely to maintain responsive records.” (Jones Decl. ¶ 5 & Ex. D; Compl. ¶ 5 & Ex. 1; Def.’s Facts ¶ 10; PL’s Facts ¶ 4.) The OIP advised plaintiff that requests for updates on the status of his request were best directed to the BOP and that plaintiff would be able to appeal any future adverse decision by the BOP. (Jones Decl. ¶ 5 & Ex. D; Def.’s Facts ¶ 10.)
By letter dated December 15, 2011, the BOP denied plaintiffs request on the ground that it was not a request cognizable under the FOIA because it was a series of questions concerning his move to a special housing unit rather than a request for access to records. (See Johnson Decl. & Ex. D; see also id. at ¶¶ 12-13; Def.’s Facts ¶ 12; PL’s Facts ¶ 10). The BOP explained:
In response to your request, the Freedom of Information Act was not designed to answer specific questions. The Freedom of Information Act was designed to provide documents that are maintained by an agency. Please resubmit your request in proper form and it will be processed.
(Johnson Decl. Ex. D.) The BOP advised plaintiff that he had the right to administratively appeal its determination to the Attorney General and provided information about how to do so. (Def.’s Facts ¶¶ 16-17; Johnson Decl. ¶ 13 & Ex. D.) Plaintiff neither appealed nor resubmitted his request. (Jones Decl. ¶ 6; Johnson Decl. ¶ 6.)
Plaintiff commenced this FOIA action against the BOP on January 19, 2012, filing a complaint for declaratory and injunctive relief that seeks to compel “the production of agency records previously requested by plaintiff ... which requests have either been ignored or denied by the defendant agency.” (Compl. ¶ 1.) The BOP filed an answer on March 12, 2012, and then, on May 11, 2012, filed a motion to dismiss for failure to state a claim, Fed.R.Civ.P. 12(b)(6), or, in the alternative, for summary judgment, Fed.R.Civ.P. 56. On May 21, 2012, plaintiff filed an opposition, and on June 11, 2012, defendant filed its reply.
ANALYSIS
Defendant argues that plaintiffs complaint should be dismissed for failure to state a claim because (1) the BOP is not a proper party defendant; or (2) plaintiff failed to exhaust his administrative remedies either because he never made a valid FOIA request or because he failed to appeal the BOP’s December 15, 2011 decision. As explained herein, defendant’s motion will be granted.
I. STANDARD OF REVIEW
To survive a motion to dismiss for failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief, in order to give the defendant fair notice of what the ... claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (internal quotation marks and citations omitted); Browning v. Clinton, 292 F.3d 235, 242 (D.C.Cir.2002). When ruling on a motion to dismiss, the Court will ordinarily “accept as true all of the factual allegations contained in the complaint,” Atherton v. Dist. of Columbia Office of the Mayor, 567 F.3d 672, 681 (D.C.Cir.2009), and liberally construe it in plaintiffs favor. Porter v. CIA, 778 F.Supp.2d 60, 65 (D.D.C.2011). However, “[t]he tenet that a court must accept as true all the allegations contained in a complaint is inapplicable to legal conclusions” or “[tjhreadbare recitals of the elements of a cause of action, supported by mere conelusory statements.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (citing Twombly, 550 U.S. at 555, 127 S.Ct. 1955).
A pro se plaintiffs complaint will be “held to less stringent standards than formal pleadings drafted by lawyers,” Erickson v. Pardus, 551 U.S. 89, 94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007); see Koch v. Schapiro, 699 F.Supp.2d 3, 7 (D.D.C.2010), but the Supreme Court has made clear that “while ... some procedural rules must give way because of the unique circumstance of incarceration,” there is no requirement “that procedural rules in ordinary civil litigation should be interpreted so as to excuse mistakes by those who proceed without counsel.” McNeil v. United States, 508 U.S. 106, 113, 113 S.Ct. 1980, 124 L.Ed.2d 21 (1993) (internal citations omitted).
II. PROPER PARTY DEFENDANT
Defendant contends that the BOP is “not a proper party defendant” to this action because only the DOJ is a federal agency subject to FOIA, and DOJ subcomponents, such as the BOP, are not subject to suit in their own name. {See Def.’s Reply at 1 n. 1; Def.’s Answer (second and third defenses)). For FOIA purposes, the term “agency” includes “any executive department ... or other establishment in the Executive Branch of the Government ... or any independent regulatory agency.” 5 U.S.C. § 552(f)(1). If an improper party defendant is named, the court may dismiss the action against those defendants, as is typically done when state agencies or individuals, who are not covered by FOIA, are sued, see, e.g. Lasko v. U.S. Dep’t of Justice, 684 F.Supp.2d 120, 125 n. 1 (D.D.C. 2010), or may (even sua sponte) substitute the proper defendant. See, e.g., Kone v. Dist. of Columbia, 2011 WL 666886, at *1 (D.D.C. Feb. 14, 2011); Di Leila v. Univ. of Dist. of Columbia David A Clarke Sch. of Law, 2009 WL 3206709, at *1 (D.D.C. Sept. 30, 2009).
“There is some disagreement in this Circuit about whether the FBI, and like agency components, are subject to FOIA in their own names.” Ginarte v. Mueller, 534 F.Supp.2d 135, 137 n. 4 (D.D.C.2008); Prison Legal News v. Lappin, 436 F.Supp.2d 17, 21 (D.D.C.2006), Mingo v. U.S. Dep’t of Justice, 793 F.Supp.2d 447, 451 (D.D.C.2011). Although a small number of decisions hold that only the DOJ, and not its subcomponents, may be sued under FOIA, see, e.g., Holt v. U.S. Dep’t of Justice, 734 F.Supp.2d 28, 33 n. 1 (D.D.C.2010), Benavides v. Bureau of Prisons, 774 F.Supp.2d 141, 143 n. 1 (D.D.C.2011), the weight of authority is that subcomponents of federal executive departments may, at least in some cases, be properly named as FOIA defendants. See, e.g., Prison Legal News, 436 F.Supp.2d at 22; Peralta v. U.S. Atb’y’s Office, 136 F.3d 169, 173-74 (D.C.Cir.1998) (“we suspect that the FBI is subject to the FOIA in its own name”); McGehee v. CIA 697 F.2d 1095, 1108 (D.C.Cir.1983) (“the organs of government that first compiled the records” are “clearly are covered by the Act”). Accordingly, the Court will not dismiss the FOIA claim against the BOP on the grounds that it is not a proper party defendant.
III. EXHAUSTION OF ADMINISTRATIVE REMEDIES
In the alternative, the BOP argues that the complaint should be dismissed because plaintiff has failed to exhaust administrative remedies in three, independent ways: (1) plaintiffs FOIA request failed to comply with BOP and DOJ regulations, (2) plaintiffs FOIA request failed to reasonably describe “records” maintained by BOP; and (3) plaintiff failed to administratively appeal the BOP’s December 15, 2011 decision.
A. Plaintiff’s Request Failed to Comply with BOP and DOJ Regulations
Defendant argues that plaintiffs March 17, 2011 letter was not a request cognizable under the FOIA because plaintiff failed to comply with published BOP and DOJ regulations for submitting FOIA requests.
Under the FOIA, an agency is required to release documents upon receipt of “any request for records which (i) reasonably describes such records and (ii) is made in accordance with published rules stating the time, place, fees (if any), and procedure to be followed.” 5 U.S.C. § 552(a)(3)(A). Caselaw establishes that “[a] party requesting agency records under the FOIA must comply with the procedures set forth in the regulations promulgated by that agency,” and “where a FOIA request is not made in accordance with the published regulations, the FOIA claim is subject to dismissal for failure to exhaust administrative remedies.” Calhoun v. U.S. Dep’t of Justice, 693 F.Supp.2d 89, 91 (D.D.C.2010) (citing West v. Jackson, 448 F.Supp.2d 207, 211 (D.D.C.2006)); see also Tyree v. Hope Village, Inc., 677 F.Supp.2d 109, 111 (D.D.C.2009) (“Where the plaintiff did not comply with the applicable DOJ FOIA regulations ... the FOIA claim cannot be maintained even against a proper defendant because it has not been exhausted; it has not even been initiated.”).
Both the DOJ and the BOP have published rules. In relevant part, the DOJ’s rules provide:
When you make a request for access to records about yourself, you must verify your identity. You must state your full name, current address, and date and place of birth. You must sign your request and your signature must either be notarized or submitted by you under 28 U.S.C. § 171*6, a law that permits statements to be made under penalty of perjury as a substitute for notarization.
28 C.F.R. § 16.41(d) (emphasis added). The BOP has additional rules for FOIA requests to the BOP from federal inmates, which provide:
The inmate requester shall clearly mark on the face of the letter and on the envelope “FREEDOM OF INFORMATION ACT REQUEST”, and shall clearly describe the records sought, including the approximate dates covered by the record. An inmate making such a request must provide his or her full name, current address, date and place of birth.
28 C.F.R. § 513.61(c) (emphasis added).
Defendant correctly notes that “it is apparent from the face of plaintiffs [March 17, 2011 request] letter that it does not comply with the Department of Justice’s published regulations” and that plaintiff has not “alleged in any of his filings that he provided his date and place of birth [or] ... that his letter was notarized or submitted under 28 U.S.C. § 1746.” (Def.’s Mem. at 5-6, 10 (citing Johnson Decl. ¶ 3, Ex. A); Defs Reply at 4 (citing Pl.’s Opp’n).)
Even small failures to comply with FOIA regulations can mean the attempted request is improper. “An agency is only charged with responding to FOIA requests that comply with applicable procedural regulations.” Astley v. Lawson, 1991 WL 7162, at *2 (D.D.G. Jan. 11, 1991); see Lee v. U.S. Dep’t of Justice, 235 F.R.D. 274, 285-86 (W.D.Pa.2006) (omission of middle name and place of birth means request was improperly made, even when request- or provided date of birth and Social Security number); Stephenson v. FBI, 2010 WL 2024704, at *2 (D.Utah Mar. 26, 2010) (complaint dismissed where plaintiff “entirely failed to provide either his date or place of birth”); Brown, v. U.S. Dep’t of Justice, 169 Fed.Appx. 537, 540-41 (11th Cir.2006) (failure to comply with requirement that request be notarized or include an acknowledgement of submission under penalty of perjury means request was improperly made); Montgomery v. Scott, 802 F.Supp. 930, 937 (W.D.N.Y.1992) (same). But see Latham v. U.S. Dep’t of Justice, 658 F.Supp.2d 155, 159-60 (D.D.C.2009) (where FOIA requestor complied with every § 16.41(d) requirement except that of providing date of birth, de minimis error was insufficient to “outright reject his FOIA request”).
Since the uncontroverted record indicates that plaintiff did not comply with all requirements of 28 C.F.R. §§ 16.41(d) and 513.61(c), he never properly initiated a FOIA request and his FOIA complaint is subject to dismissal.
B. Plaintiffs Request Did Not Reasonably Describe “Records”
Even if plaintiffs request had complied with the DOJ’s and the BOP’s published rules, or his failure were excused, defendants assert that plaintiff never made a valid FOIA request, and that the government therefore had no FOIA obligation, because plaintiffs March 17, 2011 letter did not “reasonably describe” the “records” requested. (Def.’s Mem. at 5 (citing 5 U.S.C. § 652(a)(3)(A)©).) Plaintiff disagrees. (See Pl.’s Opp’n at 4 (“plaintiff assert that defendant’s is trying to ‘circumvent’ his request by attempting to construe it into mere ‘questions’ ” (errors in original)).)
DOJ regulations instruct FOIA requestors that:
You must describe the records that you seek in enough detail to enable Department personnel to locate them with a reasonable amount of effort. Whenever possible, your request should include specific information about each record sought, such as the date, title or name, author, recipient, and subject matter of the record....
28 C.F.R. § 16.3(b). The BOP informed plaintiff in its December 15, 2011 letter:
In response to your request, the Freedom of Information Act was not designed to answer specific questions. The Freedom of Information Act was designed to provide documents that are maintained by an agency. Please resubmit your request in proper form and in will be processed.
(Johnson Deck Ex. D; see also id. ¶¶ 12-13; Def.’s Facts ¶ 12; PL’s Facts ¶ 10).
Although “an agency ... has a duty to construe a FOIA request liberally,” Nation Magazine, Washington Bureau v. U.S. Customs Service, 71 F.3d 885, 890 (D.C.Cir.1995) (internal quotations, citations, and alterations omitted), when determining whether a request “reasonably describes” records, “[t]he linchpin inquiry is whether the agency is able to determine precisely what records (are) being requested.” Yeager v. DEA, 678 F.2d 315, 326 (D.C.Cir.1982) (internal quotations omitted). In addition, it is well-established that the FOIA “does not obligate agencies to create or retain documents; it only obligates them to provide access to those which it in fact has created and retained.” Kissinger v. Reporters Comm, for Freedom of the Press, 445 U.S. 136, 142 & n. 7, 100 S.Ct. 960, 63 L.Ed.2d 267 (1980); Canning v. U.S. Dep’t of Defense, 499 F.Supp.2d 14, 23-24 (D.D.C.2007). Thus, “[t]o the extent that [a] plaintiffs FOIA requests [a]re questions or requests for explanations of policies or procedures, the[y] are not proper FOIA requests.” Thomas v. Comptroller of Currency, 684 F.Supp.2d 29, 33 (D.D.C.2010); accord Anderson v. U.S. Dep’t of Justice, 518 F.Supp.2d 1, 11-12 (D.D.C.2007); Zemansky v. EPA, 767 F.2d 569, 573-74 (9th Cir.1985); see also Astley, 1991 WL 7162, at *2 (agency need not respond to “questions disguised as FOIA requests”). Accordingly, a request for an explanation is not covered by the FOIA because it does not reasonably describe an actual record.
Of the three questions submitted by plaintiff in his March 17, 2011 letter, the second question — asking “what was the reason” for plaintiffs transfer from one federal prison to another federal prison’s special housing unit — is most clearly a request that, because it seeks a rationale or explanation, rather than records, is not within FOIA’s scope. Questions one and three, although they request more objective pieces of information — “who gave the order” to transfer plaintiff, and “on what day” did prison officials call a particular federal agent to come see him — are also not cognizable under FOIA, because they ask questions calling for specific pieces of information rather than records. See Adams v. FBI, 572 F.Supp.2d 65, 66-68 (D.D.C.2008) (agency has no obligation under FOIA to answer question as to whether particular FBI laboratory technician had been involved in the examination of DNA evidence in his case); DiViaio v. Kelley, 571 F.2d 538, 542^3 (10th Cir. 1978) (plaintiffs request for copies of any photographs taken of him by an agency, and request for information regarding whether, if such photographs had been taken, whether any had been disseminated outside of the agency, are “clearly demands not countenanced by the scope and reach” of FOIA). Applying these authorities, the Court concludes that plaintiffs pure requests for information do not constitute “records” under FOIA.
C. Plaintiff Failed to Appeal the BOP’s Decision
|
10545979-10141 | RADER, Circuit Judge.
Mattel, Inc. (Mattel) appeals from the judgment of the United States Court of International Trade. Mattel, Inc. v. United States, 733 F.Supp. 1503 (Ct. Int’l Trade 1990). The trial court interpreted “unit” in Item 912.20 Tariff Schedules of the United States (TSUS) to mean “retail package.” This court reverses.
BACKGROUND
Mattel imported plastic toy figures and Barbie doll accessories into the United States in retail packages. Each M.U.S.C.L. E.S. package included 4, 10, or 28 figures. The Barbie accessories came as part of larger toy sets. The parties stipulated that no single toy or accessory had a value of more than five cents.
Under the TSUS, the United States Customs Service (Customs) appraised and classified each separate toy and accessory. Customs classified the M.U.S.C.L.E.S. figures under either Item 737.40 as “toy figures of animate objects” or Item 737.49 as “toy figures of inanimate objects.” The doll accessories fell under Item 737.95 as “toys not specially provided for.” Each of these three Items carried a duty of 9.6% ad valorem.
Mattel protested the classification, arguing that Customs should classify these imports under Item 912.20 TSUS. Item 912.-20 exempts from duty certain small toys valued at not over five cents per unit. Item 912.20 TSUS covers:
[AJrticles provided for in parts 5D and 5E of schedule 7 (except balloons, marbles, dice and diecast vehicles), valued not over five cents per unit.... replaced by the Harmonized Tariff Schedule of 1988, Pub.L. No. 100-418, 102 Stat. 1148 (codified at 19 U.S.C. prec. § 1202 note (1988)).
(Emphasis added.)
Customs denied Mattel’s challenge to its classification, determining that the value of each retail package of toys exceeded five cents. By viewing each package as the “unit,” Customs denied Mattel classification under TSUS Item 912.20. Mattel appealed Custom’s classification decision to the Court of International Trade.
In lieu of a trial, the parties presented stipulated facts. On the basis of these stipulations, the Court of International Trade affirmed Customs’s classification of the toys and ruled that Customs correetly interpreted the word “unit” in Item 912.20. Mattel, 733 F.Supp. 1503.
DISCUSSION
This court must determine the meaning of the term “unit” in Item 912.20 TSUS in order to ascertain its applicability to this case. Mattel argues that the term “unit” means each separate toy. The Government contends that the term refers to the entire retail package.
The meaning of a tariff term is a question of law. Digital Equip. Corp. v. United States, 889 F.2d 267, 268 (Fed.Cir.1989). Therefore, we review de novo the legal findings of the Court of International Trade. Based on that review, we conclude that “unit” in Item 912.20 TSUS means each separate article or individual toy. The language, context, and history of the statute support this reading. In addition, Customs’s appraisement and classification of each toy and accessory is consistent with this interpretation.
Item 912.20 TSUS suspends duties on toy “articles ... (except balloons, marbles, dice and diecast vehicles) valued not over five cents per unit.” The term "unit” in this phrase refers to the earlier word “articles.” Read in conjunction with this earlier term, “per unit” emphasizes that each separate article must fall within Item 912.20’s five-cent maximum value.
Thus, Item 912.20 TSUS first focuses on individual “articles.” To underscore the emphasis on each separate toy, however, the item specifies that the tariff exemption applies to each article on a “per unit” basis.
The five-cent cut off also clarifies the meaning of the exemption. By setting the ceiling at articles worth a nickel or less, Item 912.20 strictly limits the application of the exemption. Very few single toys are worth a nickel or less. It is especially hard to imagine a retail package of several toys worth a nickel or less. The low five-cent ceiling in conjunction with the terms “articles” and “per unit” limits Item 912.20 to inexpensive single toys, not retail packages containing several toys.
Dictionaries also enlighten the meaning of “unit.” As a primary definition of “unit,” dictionaries often list “a single thing.” Black’s Law Dictionary, Revised Sixth Edition, 1990, p. 1533; Webster’s New Collegiate Dictionary, 1975, p. 1279; Webster’s Third New International Dictionary of the English Language, Unabridged, 1976, p. 2500. In the context of the toys and accessories at issue here, each plastic figure and each Barbie accessory is a “single thing.” Dictionaries also refer to an “isolable member of some more inclusive whole,” id., or “[o]ne of the separate parts or members of which a complex whole or aggregate is composed.... ” Shorter Oxford English Dictionary, Revised Third Edition, 1959, p. 2303. Each plastic figure and each Barbie accessory is an isolable or separate part. The statutory language refers to each separate article— in this case, a toy or accessory.
While we find support in the dictionary for defining “unit” as a single item, we need not rely on lexicographic analysis alone. When Congress intends to apply a duty to a retail package or unit, it says so. For example, Item 734.15 TSUS refers to board games “packaged together as a unit in immediate containers of a type used in retail sales.” Additionally, Headnote 2(a), Schedule 7, Part 5, Subpart D, TSUS refers to table tennis equipment “packaged together as a unit in immediate containers of a type used in retail stores.” In other provisions, Congress has used “unit” to mean a retail package. In this case, however, Congress used “unit” to refer to each inexpensive article.
Item 912.20 TSUS does not use the “packaged together” language nor any other language indicating an intent to impose a duty on the retail unit. Instead, TSUS Item 912.20 exempts from duty articles valued at no more than five cents per unit. Elsewhere, Schedule 7 uses the word “unit” to mean a single article. See, e.g., Schedule 7, Part 2, Subpart E, Headnote 6(d)(i) — 6(h)(ii)(II) (Watches, Clocks, and Timing Apparatus). Thus, Congress’s use of “unit” in other tariff provisions supports its use in Item 912.20 as referring to each separate toy or accessory.
The legislative history of Item 912.20 TSUS supports the “single article” definition of unit. The 1982 Senate Report explained that this provision “would affect low price, low quality items sold primarily in bulk vending machines.” S.Rep. No. 564, 97th Cong., 2d Sess., reprinted in 1982 U.S.Code Cong. & Admin.News 4078, 4084 (emphasis added). This report acknowledged that Item 912.20 would extend beyond articles sold in bulk vending machines. When Congress renewed Item 912.20 TSUS in 1988, the Conference Committee underscored this understanding:
[Tjhe scope of this provision is not limited to toys for bulk vending machines and that the subject articles consist of a variety of small items....
H.R. Conf. Rep. No. 576, 100th Cong., 2d Sess., reprinted in 1988 U.S.Code Cong. & Admin.News 1547,1785,1786. The individual plastic figures and Barbie accessories are low price, low quality items. This case arises only because appellant imports these items in packages of several toys. Yet neither the tariff language nor its legislative history puts restrictions on how these small toys are packaged or sold. Indeed, the parties have agreed that neither the binding statutory language nor the informative legislative history limits Item 912.20 solely to vending machine toys. In any event, the legislative record does not support the Government’s construction of the statute.
Finally, Customs’s treatment of the articles also supports interpreting “unit” to apply to each item. Customs separately appraised and classified each M.U.S.C.L. E.S. toy upon entry. It classified some individual figures as “animate,” and others as “inanimate.” Customs also found that each figure had a dutiable value of less than five cents. In addition, Customs appraised and classified each Barbie accessory. Again, it identified these separate articles as valued at less than five cents. After disregarding packaging in classifying the individual toys upon entry, Customs now argues that packaging should determine the duty. Customs’s actions speak more eloquently than its words.
CONCLUSION
The Court of International Trade incorrectly defined “unit” in Item 912.20 TSUS to mean “retail package.” Because these articles satisfied the terms of Item 912.20 TSUS, they qualify for duty-free classification. This court, therefore, reverses the trial court’s judgment.
REVERSED
. The TSUS, which was in effect at the time the classification at issue here was made, was later
. The plastic toy figures — M.U.S.C.L.E.S. ("Millions of Unusual Small Creatures Lurking Everywhere”) — apparently depict professional wrestlers, some human and others non-human. Based on this distinction, the United States Customs Service broke the hundreds of figures into two classes — "animate” and "inanimate.”
The Barbie toys at issue include:
1)a small plastic brush and comb from the "Barbie Fashion Add-On” set;
2) a play towel and three small toys from the "Barbie Play Pak”; and
3) a comb, brush, calendar, and toys from the "Peaches 'n Cream Barbie" set.
. One invoice in an appendix showed M.U.S.C.L. E.S. figures imported in a carton valued at $23.76. This import carton apparently included nearly 500 figures. According to the parties' stipulations, however, Mattel sold these toys to consumers in retail packages of 4, 10, or 28 separate plastic creatures.
. Congress in enacting TSUS Item 912.20 did not in any fashion refer to protections for domestic packagers. Although the dissent professes concern about the domestic packaging industry, neither party alluded to any evidence of harm or benefit to packagers. Such a concern, in any event, should properly be directed to Congress.
. Mattel made the following claims in its Complaint and the Government admitted them in its Answer.
8. The statutory provision in Item 912.20, TSUS, by its terms, is not limited to items sold in bulk vending machines.
Complaint and Answer, ¶ 8 (emphasis added).
|
4271956-6606 | WARLICK, District Judge.
This is a patent case in which infringement is alleged. Defendant denies liability for infringement, alleges that the patent is void for want of invention on its face and further for that the patent in suit is void because of prior public use of the alleged invention, disclosed therein, more than one year prior to October 1, 1940, the date on which the application for the patent was filed. The matter originally came on for hearing on defendant’s motion for summary judgment but was heard and is being determined on the actual trial of the matter before the court. The following facts are disclosed by the evidence:
Plaintiff is a citizen of Glenside, Montgomery County, Pennsylvania, and the defendant is a resident of Maiden, Catawba County, North Carolina. Plaintiff is the owner of letters patent, No. 2,322,-350, granted to him by the Patent Office of the United States on June 22, 1943, for a “process for reconditioning yarn cones”. The plaintiff and defendant are both engaged in the business of reconditioning cones used for winding and rewinding yarn as is practiced in the textile trade, — plaintiff having a plant in the City of Philadelphia and defendant’s plant being located in Maiden, North Carolina.
In the textile industry cones are very extensively and widely used for the pur-: pose of winding and unwinding of yarn. Cones as such are almost invariably made of fiber board and are hollow on the inside. In order to determine the type, character and number of the yarn that is wound on the cone, the textile industry ordinarily follows a fixed scheme of attaching a label by means of an adhesive substance to the portion of the interior wall of the cone, which label contains all necessary information relating to the substance wound thereon. After the yarn has been spun onto the cone and removed therefrom by the user, thecone then is ready for reconditioning and this primarily involves the removal of the label from the inside of the cone so that it may be used again for either the same or another type of .yarn. This service is that which both plaintiff and defendant perform. The used cones are ac quired from various textile mills, many by direct purchase, but the greater bulk thereof by the service performed by both plaintiff and defendant in their plants on request of the textile mills, and after the label has been removed from the interior of said cone, the cone is thereupon either sold or a direct charge is made for the service performed to the cone. The sole work done by either plaintiff or defendant is the removal of the label so that a new one can be affixed and this removal is wholly brought about through the use of steam.
Plaintiff’s patent relates entirely to the introduction of steam into the interior of the hollow cone, thereby loosening the adhesive bond by which the label is affixed to the inside of the cone, which obviously facilitates its removal. The patent lays no claim to any particular mechanical apparatus for introducing steam into the interior of the cone but is concerned only with the method of the use of steam. Five claims, numbered one through five, inclusive, are made, and each adds up to the same conclusion. I see little need for incorporating all five, and since the full intent of each is embraced in number four, I select that and set it out in these findings.
“4. A method of removing an adhesively-held label from the interior of a hollow yarn cone which consists in restricting communication of the atmosphere with the interior of said cones, introducing water vapor into and partially confining it within said cone to weaken the adhesive bond of said label, and then manipulating said label to remove the same.”
Since steam was first brought into commercial use a hundred years or more ago, it has been used for loosening adhesive bonds of all kinds, and the idea is, to say the least, notoriously old and has been widely used wherever deemed expedient for the purpose of.removing stamps, labels, stickers, wallpaper, letter opening, and numerous .other ways and means which are hardly .necessary for restating. A check of the history of the patent in the Patent Office reveals that the plaintiff, as patentee, was fully aware of a widespread use of steam for loosening such adhesive bonds and others as is set out.
When application for this patent was filed on October 1, 1940, the evidence heard in this case established that the method as claimed in the patent was and had been in public use for a considerable time in excess of one year prior to the date of the filing of the application. This evidence which came from the testimony heard by the Court indicated such a prior public use and was of such a nature as to amount to a statutory bar to its patentability; the evidence indicated that as early as 1937 steam as generated in various methods and applied in any number of ways and means, was successfully used in removing labels adhesively attached to cones used in the textile trade. Evidently this evidence is credible and is so received by the Court for it seems in no wise to have been disputed. This testimony revealed that one William Stone of Rossville, Georgia had successfully developed means in several various ways for introducing steam into the interior of hollow yarn cones and thereupon reconditioning them to the extent that the labels adhesively attached were easily susceptible of removal and that he had successfully practiced the art and had acquired quite a business through such means, beginning as early as 1937. From his evidence and that of his attorney and some three or more workers engaged in his several places of work, there can be little if any question but that he had brought about a commercial success from the work done and had gradually effected many changes in his methods, — improving in each instance oh his former means of creating steam as'needed and effecting mechanical ways of convenience and speed.
In addition thereto Stone, sensing that he had brought into being a good idea and one which would make for less work and. more speed, employed an attorney, practicing in the State of Georgia, and made an independent and honest effort to secure a patent on the method of introducing steam through the several means he employed, but that he was not successful for that a reputable patent attorney located in Washington, D. C. advised him that there was not sufficient possibility of obtaining a patent to warrant the filing of an application, — for that it lacked inventive genius and added nothing to that not already known and used when needed.
|
3773282-13465 | MEMORANDUM OPINION
JARVIS, Chief Judge.
This is an action for alleged negligence in failing to implement a federal regulation and for breach of contract in refusing to arbitrate a dispute under a collective bargaining agreement. Currently pending is the plaintiffs’ motion for partial summary judgment [Court File # 5] and defendant’s motion for summary judgment on all issues [Court File # 13]. For the reasons that follow, plaintiffs’ motion will be denied and defendant’s motion will be granted.
I.
Facts
The relevant facts are not in dispute. Defendant Martin Marietta Energy Systems, Inc. (Martin Marietta) manages, operates, and maintains the Government-owned Y-12 Plant and Oak Ridge National Laboratory (ORNL) in Oak Ridge, Tennessee, pursuant to contract with the United States Department of Energy (DOE). The work at the Y-12 Plant includes the fabrication and assembly of components of nuclear weapons and related services. ORNL is a major research and development center conducting research on energy-related technologies including nuclear research and development. Because of the nature of the work performed, both institutions are provided with a high degree of physical security. This security is supplied in part by the presence of armed security inspectors provided by private contractors such as Martin Marietta.
Pursuant to its statutory authority under the Atomic Energy Act, DOE has issued extensive regulations and orders dealing with the security of these facilities. By the terms of its contract with DOE, Martin Marietta is expressly required “to conform to all security regulations and requirements of DOE.”
The plaintiffs in this case are former security inspectors employed by Martin Marietta who have been demoted to the position of guard. Plaintiffs’ local union is a party to a collective bargaining agreement with Martin Marietta. The collective bargaining agreement defines grievances as “complaints, disputes, or misunderstandings involving questions of interpretation or application of any clause of this Contract.” Collective Bargaining Agreement, Article XV, Section 3. The agreement fur ther limits arbitration to three types of grievances, those involving either the “discharge or suspension of an employee, or the interpretation of provisions of this Contract, or an alleged violation of the Contract.” Collective Bargaining Agreement, Article XVI, Section 1. The collective bargaining agreement also contains “Administrative Understanding No. 3”, which deals specifically with the contractual rights of “employees who fail to qualify as Security Inspectors because of a failure to meet necessary standards (physical fitness, medical, firearm) ...” under 10 C.F.R. Part 1046. Paragraph 5 of this Understanding states that “the DOE standards referred to in this Understanding [10 C.F.R. Part 1046] ... are not subject to the grievance procedure or arbitration.”
As early as January 31, 1978, DOE published physical fitness requirements for both security inspectors (armed protective force personnel) and guards (unarmed protective force personnel). These initial standards were withdrawn in March, 1980. DOE subsequently retained Professional Management Associates (PMA) to develop and validate physical fitness qualifications for security inspectors. On September 30, 1982, PMA submitted the results of its study to DOE. On May 14, 1984, DOE issued a notice of proposed rulemaking (49 Fed.Reg. 20436) setting forth proposed physical fitness standards for contractor-employed protective force personnel. During the rulemaking process, DOE held hearings in four cities, including Oak Ridge, and accepted written comments until June 13, 1984. During the process, DOE solicited comments from union officials representing the plaintiffs.
On November 23, 1984, DOE published final regulations adopting medical and physical fitness standards. 10 C.F.R. Part 1046. The regulations “require incumbent and applicant protective force personnel at Government-owned facilities to meet certain medical and physical fitness standards, including professionally developed and validated physical fitness standards for persons authorized to carry firearms pursuant to 42 U.S.C. § 2201(k) ...” (49 Fed.Reg. 46097). The regulations further provide that DOE contractors, including Martin Marietta, “shall not employ as protective force personnel any individual who fails to meet the applicable medical and physical fitness qualification standards ...” contained therein “twelve months from the effective date of regulation.” See 10 C.F.R. § 1046.11(a) and (b). In addition, 10 C.F.R. § 1046.12 provides for the creation of physical fitness training programs for incumbent security inspectors as follows:
(a) Beginning January 24, 1985, each incumbent security inspector, who has not met the applicable physical fitness qualification standard, shall participate in a DOE approved physical fitness training program. Once an incumbent security inspector has begun a physical fitness training program, it must be completed before the security inspector may take the applicable physical fitness qualification standards test. Once a physical fitness training program is completed, an incumbent security inspector has thirty (30) days to meet the applicable physical fitness qualification standards.
Effective December 24, 1985, the DOE regulations prohibited Martin Marietta from employing anyone as a security inspector who had not met the following standard:
Offensive Combative Standard: One mile run in 8 and xk minutes or less and forty yard prone-to-running dash in eight seconds or less.
Defensive Combative Standard: .5 mile run with a maximum qualifying time of 4 minutes 40 seconds; a forty yard prone-to-running dash in 8.5 seconds or less.
10 C.F.R. Part 1046, Appendix A to Sub-part B, Section F(l)(2). Plaintiffs in this case were “Defensive Combative” personnel and were therefore subject to the less stringent requirements. These physical fitness standards were applicable to all security inspectors regardless of age, sex or any other classification such as handicap status.
As required by its contract with DOE, Martin Marietta put these standards into effect at the Y-12 Plant and at ORNL. Martin Marietta first advised plaintiffs’ union of the DOE regulation in a meeting conducted on December 12, 1984. Later, Martin Marietta officials notified plaintiffs that security inspectors who failed to pass the running test by December 24, 1985 would be demoted to a position of guard. No one was permitted to participate in the physical fitness training program until approved by Martin Marietta’s Medical Department as physically able to do so. Martin Marietta’s training program was not implemented until June, 1985.
During the remainder of 1985, many of the plaintiffs participated in the fitness training program. Martin Marietta subsequently removed all individuals who had not passed the physical fitness test as of December 24, 1985. Those individuals were demoted to guard on December 24, 1985. Those demoted either failed to pass the test or were unable to take the test because of physical impairments.
The complaint in this action was filed on May 29, 1986.
II.
The Allegations of the Parties
The plaintiffs allege that Martin Marietta was negligent in failing to timely follow 10 C.F.R. Part 1046.12 and implement a fitness training program. They contend that as a result of that failure they failed to pass the appropriate fitness tests and were demoted from security inspectors to guards. The defendant contends that no private right of action exists under 10 C.F.R. Part 1046.12, and plaintiffs’ attempt to characterize such a private right of action as a tort negligence action fails to state a claim upon which relief can be granted.
Plaintiffs also contend that Martin Marietta breached the collective bargaining agreement between it and plaintiffs’ union by refusing to arbitrate the issue of defendant's failure to timely implement a training program under 10 C.F.R. Part 1046.12. Defendant contends that this issue is not arbitrable under the collective bargaining agreement and that, in fact, federal regulations bar the arbitration of nuclear safety issues affecting DOE.
III.
The Negligence Action
Plaintiffs contend that Martin Marietta was negligent in failing to timely implement the training program required by 10 C.F.R. Part 1046.12. Plaintiffs assert that Part 1046.12 requires the program to have been implemented in January, 1985, but defendant did not begin its program until June, 1985. Plaintiffs allege that as a result of this negligence they were unable to pass the fitness tests by December, 1985.
The essence of the tort of negligence is the existence of some legal duty owed by the defendant to the plaintiff; and, in the absence of such a duty, there can be no liability for negligence. AFG Industries, Inc. v. Holston Electric Coop, 556 F.Supp. 33, 34 (E.D.Tenn.1982).
Plaintiffs’ negligence theory appears to be an attempt to create a private right of action under 10 C.F.R. Part 1046.-12. Ordinary tort principals cannot be used to create such a private right of action under a federal statute. Touche Ross & Company v. Redington, 442 U.S. 560, 568, 99 S.Ct. 2479, 2485, 61 L.Ed.2d 82 (1979).
Only if a private right of action has been created by Part 1046.12 can plaintiffs have a cause of action for defendant’s failure to comply with that regulation. In Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975), the Supreme Court listed four factors for consideration in determining whether Congress intended to create an implied private right of action in a statute where one was not expressly provided for. Those factors are: (1) whether the plaintiff is a member of a “class for whose especial benefit the statute was enacted,”; (2) whether there is “any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one,”; (3) whether implying the existence of a private cause of action is consistent with the object and legislative scheme of a statute; and (4) whether the cause of action is “traditional ly relegated to state law, in an area basically the concern of the states, so that it would be inappropriate to infer a cause of action based solely on federal law.” Id. at 78, 95 S.Ct. at 2088. The ultimate question in such cases is simply whether Congress intended to create the private remedy. Northwest Airlines, Inc. v. Transport Workers Union, 451 U.S. 77, 101 S.Ct. 1571, 67 L.Ed.2d 750 (1981).
The court has considered congressional intent as expressed in the Atomic Energy Act of 1954 and finds no evidence of any intent to permit the creation of a private right of action through 10 C.F.R. Part 1046.12. In 42 U.S.C. § 2011, it is declared to be the policy of the United States that
(a) The development, use, and control of atomic energy shall be directed so as to make the maximum contribution to the general welfare, subject at all times to the paramount objective of making the maximum contribution to the common defense and security;
In § 2012, Congress points out that “the development, utilization, and control of atomic energy for military and for all other purposes are vital to the common defense and security.” In addition, in § 2013, Congress provided for the creation of:
(c) A program for Government control of the possession, use, and production of atomic energy, of special nuclear material, whether owned by the Government or others, so directed as to make a maximum contribution to the common defense and security and the national welfare, and to provide continued assurance of the Government’s ability to enter into and enforce agreements with nations or groups of nations for the control of special nuclear materials and atomic weapons.
To achieve the above goals, Congress authorized DOE to “prescribe such regulations or orders as it may deem necessary ... to guard against the loss or diversion of any special nuclear material ... ”, 42 U.S.C. § 2201(i), and to allow employees of DOE contractors to carry firearms to the extent “it deems necessary in the interest of the common defense and security.” 42 U.S.C. § 2201(k). It was pursuant to these statutory provisions that 10 C.F.R. Part 1046 was promulgated.
The court has considered the factors enumerated in Cork It is evident from the Act and the regulation in question that this statute and regulation were not intended for the “especial benefit” of privately employed protective force personnel at nuclear facilities. There is no evidence that Congress intended any private right of action to be created on their behalf. Rather, the purpose of the Act appears to have been to protect the common defense and security of the country, as well as the health and safety of the public, against the misuse of atomic energy.
The court concludes that no right of action is either expressed or implied for the benefit of the plaintiffs in either the relevant statutes or regulations. Nor can such an action be created by plaintiffs’ attempt to characterize its action as one for negligence. Touche Ross, 442 U.S. at 568, 99 S.Ct. at 2485.
Accordingly, plaintiffs’ negligence claim fails to state a claim upon which relief can be granted.
IV.
The Refusal to Arbitrate the Dispute
The plaintiffs contend that the defendant should be ordered to arbitrate the dispute over whether the company properly administered the program required by 10 C.F.R. Part 1046.12.
|
4079727-19025 | ORDER DENYING DEFENDANT’S MOTION TO DISMISS OR IN THE ALTERNATIVE FOR SUMMARY JUDGMENT
FONG, Chief Judge.
INTRODUCTION
Defendant United States of America (the “government”) brings this motion to dismiss or in the alternative for summary judgment on plaintiffs claim under the Hawaii wrongful death statute. Haw.Rev. Stat. § 663-3 (1988). Plaintiffs oppose this motion. Defendant’s motion came on for hearing on August 6, 1990. The court, having reviewed the motion and the memo-randa in support thereof and in opposition thereto, having heard the oral arguments of counsel, and being fully advised as to the premises herein, finds as follows:
Plaintiffs Larry and Vicky Wade bring this action under the Federal Tort Claims Act, 28 U.S.C. § 1346 (1982 & Supp.1986), in their individual capacities and in their capacity as special administrators of the estates of Sheila llene Wade and Cecelia Ann Wade, twins who were stillborn on May 9, 1986. Plaintiffs allege that the stillbirth occurred solely as a result of the medical malpractice of physicians at Tripler Army Hospital (the “hospital”), an entity of the United States. Plaintiffs’ complaint further alleges that physicians at the hospital were negligent in failing to place a cerclage on plaintiff Vicky Wade’s allegedly incompetent cervix and in failing to
discuss with her the advantages and disadvantages of using this device. Finally, plaintiffs assert that the twins would not have been stillborn if the cerclage had been used.
Defendant’s argument on this motion is relatively simple; the government contends that plaintiffs have no cause of action under the Hawaii wrongful death statute for the wrongful termination of a fetus which was never born. In the alternative, the government moves for summary judgment on plaintiffs’ claims under the wrongful death statute. Recognizing that a number of states have allowed plaintiffs to bring wrongful death actions for the death (using that term loosely) of a viable fetus, the government asserts that there is no genuine factual dispute that the Wade twins were not yet viable at the time of the stillbirth and that, for that reason, no action under the wrongful death action may lie in this case.
Plaintiff urges the court that defendant’s motion should be properly characterized as a motion for partial dismissal and in the alternative for partial summary judgment. Defendant’s motion attacks only those claims asserted under the Hawaii wrongful death statute as applied through the Federal Tort Claims Act. Plaintiffs assert that claim but also assert another claim for their “injury, pain, suffering, mental and emotional distress” as a result of the hospital’s negligence. Complaint, p. 5. Because that suit is independent of the termination of the fetuses and those injuries are not among the types recoverable under the wrongful death statute, plaintiffs assert a cause of action outside that statute. Thus defendant’s motion is properly characterized as one for partial dismissal and for partial summary judgment.
DISCUSSION
DEFENDANT’S MOTION TO DISMISS
The federal defendants have brought their motion to dismiss pursuant to Fed.R. Civ.P. 12(b)(6). Rule 12(b) of the Federal Rules of Civil Procedure provides as follows:
Every defense, in law or fact, to a claim for relief in any pleading, whether a claim, counterclaim, cross-claim, or third-party claim, shall be asserted in the responsive pleading thereto, except that the following defenses may at the option of the pleader be made by motion: ... (6) failure to state a claim upon which relief can be granted....
In considering a 12(b)(6) motion to dismiss, the general rule is that a complaint should not be dismissed on the pleadings “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957); Gillespie v. Civiletti, 629 F.2d 637 (9th Cir.1980); California ex rel. Younger v. Mead, 618 F.2d 618, 620 (9th Cir.1980).
In evaluating a complaint, any doubts should be construed in favor of the pleader. Ernest W. Hahn, Inc. v. Codding, 615 F.2d 830, 834-36 (9th Cir.1980). The complaint must be liberally construed, giving the plaintiff the benefit of all proper inferences. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974).
The Federal Tort Claims Act incorporates the law of the jurisdiction in which the allegedly tortious act occurred as the law to be applied in claims under it. The Act reads, in pertinent part:
[T]he district courts ... shall have exclusive jurisdiction of civil actions on claims against the United States, for money damages ... for injury or loss of property, or personal injury or death caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred. 28 U.S.C. § 1346(b) (1982) (emphasis added).
The law of the State of Hawaii under which plaintiffs seek recovery is the state’s Wrongful Death Statute, codified at Haw. Rev.Stat. § 663-3 (1988). That statute provides in pertinent part that,
When the death of a person is caused by the wrongful act, neglect, or default of any person, the deceased’s legal representative, or any of the persons hereinafter enumerated, may maintain an action against the person causing the death or against the person responsible for the death. The action shall be maintained on behalf of the persons hereinafter enumerated, except that the legal representative may recover on behalf of the estate the reasonable expenses of the deceased’s last illness and burial....
Plaintiffs bring this suit in dual capacities. They sue in their individual capacities as parents of the twin fetuses. The Hawaii wrongful death statute delineates the types of people who may maintain a cause of action under it, and it includes parents of the deceased as one of those types. The statute allows a wrongful death action to be brought “... by the surviving spouse, children, father, mother, and by any person wholly or partly dependent upon the deceased person.” Haw.Rev. Stat. § 663-3 (1988) (emphasis added). Thus plaintiffs may properly bring a wrongful death action in their individual capacities.
Plaintiffs also bring this suit in their capacity as special administrators of the estates of the twin fetuses. While the deceased’s estate is not one of the entities enumerated in the above quoted statutory passage, a prior passage of the wrongful death statute provides that “... the deceased’s legal representative, or any.of the persons hereinafter enumerated, may maintain an action ...” under the statute. However, the statute clearly and severely narrows the scope of damages recoverable by the deceased’s legal representative when it provides that, “[t]he action shall be maintained on behalf of the persons hereinafter enumerated, except that the legal representative may recover on behalf of the estate the reasonable expenses of the deceased’s last illness and burial.” Haw.Rev. Stat. § 663-3 (1988). Thus the plaintiffs, in their capacity as special administrators of the estates of the twins, can only sue under the Act for the costs associated with the fetuses last illness and burial. Plaintiffs’ complaint, however, advances no such claim for those expenses, so plaintiffs cannot maintain this action on behalf of the estates.
The central issue presented by this motion is whether a plaintiff may bring a suit under the Hawaii wrongful death statute for the death of a fetus which never sustained life outside its mother’s womb. As all causes of action predicated upon the death of someone other than the plaintiff are entirely creations of statute, this motion presents an issue of statutory construction. The Hawaii statute allows an action for the death of a “person,” but this case does not call for the court to make any moral, philosophical, or theological determination of what constitutes a person or a life. Such an approach would turn this case into an exercise in semantics when there is no indication that the Hawaii legislature placed some special significance in the word “person.”
Rather this case merely calls for this court to determine whether the Hawaii legislature would extend recovery to proper plaintiffs under this statute for the death of a fetus. Both parties agree and research reveals that the Hawaii legislature never considered this issue and that nothing in the legislative history associated with this statute touches upon it. Similarly, it is equally clear that no court of the state of Hawaii has addressed this issue or any issue approximating it.
This claim arises under the Federal Tort Claims Act, which contains its own grant of jurisdiction to the federal courts. 28 U.S.C. § 1346 (1982 & Supp.1986). Nevertheless, the case turns upon a determination of Hawaii law, so the court is faced with a situation analogous to one in which it sits in diversity. In absence of controlling state law, a “federal court sitting in diversity must use its own best judgment in predicting how the state’s highest court would decide the case.” Takahashi v. Loomis Armored Car Serv., 625 F.2d 314, 316 (9th Cir.1980). In reaching its decision, the federal court may seek guidance from case law in other jurisdictions. In making its prediction, however, the federal court should be reluctant to create any new causes of action. Wolk v. Saks Fifth Avenue, Inc., 728 F.2d 221, 223 (3d Cir.1984).
While no authority from the state of Hawaii exists on this point, courts of many other jurisdictions have addressed it. Courts of other states are not in agreement on the issue, but a clear majority allow a plaintiff to bring a wrongful death action based on the death of a viable fetus. A survey of American jurisdictions reveals that the courts of thirty-three states that have addressed this issue allow such a suit. See generally Annotation, Right to Maintain Action or to Recover Damages for Death of Unborn Child, 84 A.L.R.3d 411, 422-25, §§ 3[a]-3[b] (1978 & Supp. 1989). By contrast, that same survey reveals that the courts of only ten jurisdictions addressing the issue will not allow one to maintain a cause of action for wrongful death based on the demise of a fetus. These jurisdictions include Alaska, California, Florida, Iowa, Nebraska, New Jersey, New York, Tennessee, Texas, and Virginia. In addition, the survey reveals a clear recent trend toward recognizing this cause of action under wrongful death statutes. Id.
Courts refusing to allow actions for the wrongful death of a viable fetus chiefly rely upon a dissection of the statutory word “person.” The Supreme Court of California dissected that term by comparing its use in other state statutes. See Justus v. Atchison, 19 Cal.3d 564, 565 P.2d 122, 139 Cal.Rptr. 97 (1977). For example, the California legislature extended its murder statute to redefine the term “human being” to include a fetus by establishing that murder is the unlawful or malicious killing of “a human being, or a fetus.” Because the legislature failed to so specifically include a fetus within the term “person” in the state’s wrongful death statute, the court concluded that “when the Legislature speaks generally of a ‘person,’ as in [the wrongful death statute], it impliedly but plainly excludes such fetuses.” Justus, 19 Cal.3d at 579, 565 P.2d at 132, 139 Cal.Rptr. at 107.
The highest court of the state of New York, the New York Court of Appeals, on the other hand, placed less emphasis on statutory construction of the word “person” and instead engaged in a more policy-oriented discussion in denying a cause of action for the wrongful death of a fetus. Upon noting that the courts had only recently overruled long-standing authority by deciding that “a child viable but in útero, if injured by tort, should, when born, be allowed to sue,” Endresz v. Friedberg, 24 N.Y.2d 478, 483, 248 N.E.2d 901, 903, 301 N.Y.S.2d 65, 68 (1969), quoting Woods v. Lancet, 303 N.Y. 349, 353, 102 N.E.2d 691, 693 (1951), the court then distinguished that situation from the instant one in which the viable fetuses were injured in útero but were not born alive. The court found that the reasons supporting suits by injured fetuses born alive did not support suits by injured fetuses never born. First it opined that “the fact that the injured child ‘is born alive tends to effectively permit a just result, and reduces materially the inherent complex problems incident to causation and the pecuniary loss suffered. * * * On the other hand, if the fetus is stillborn, speculation as to causation and particularly loss suffered is unreasonably increased.’ ” Endresz, 248 N.E.2d at 904, 301 N.Y.S.2d at 69, quoting Carroll v. Skloff, 415 Pa. 47, 49, 202 A.2d 9, 11 (1964) overruled Amadio v. Levin, 509 Pa. 199, 501 A.2d 1085 (1985). The court also noted that live infants could sue for prenatal injuries because “ ‘[t]he hardship of many of the decisions denying relief [in prenatal cases] lay in the fact that they required an infant to go through life * * * bearing the seal of another’s fault. There is no such justification in the wrongful death situation.’ ” Endresz, 24 N.Y.2d at 484, 248 N.E.2d at 904, 301 N.Y.S.2d at 69, quoting Gordon, The Unborn Plaintiff, 63 Mich.L. Rev. 579, 594-95.
In ironic contrast, however, many of the courts that allow a cause of action for the wrongful death of a stillborn viable fetus have also drawn logical support for their conclusion from the fact that a fetus born alive may sue for prenatal injuries. They have reasoned that it is “arbitrary, illogical, and unjust to make the right to maintain an action for a child’s death depend on whether the child is born alive.” Annotation, Right to Maintain Action or to Recover Damages for Death of Unborn Child, 84 A.L.R.3d 411, 417 (1978 & Supp. 1989). As stated by the Court of Appeals for the Fourth Circuit in interpreting South Carolina’s wrongful death statute,
To balance the right of action upon whether the child, fatally injured by the negligence of another, is born dead or alive seems not only an artificial demarcation but unjust as well. To illustrate, if the trauma is severe enough to kill the child, then there could be no recovery; but if less serious, allowing the child to survive, there might be recovery. Again, if the fatality was immediate, the suit could not prevail, but if the death was protracted by a few hours, even minutes, beyond birth, the claim would succeed. Practically, it would mean that the graver the harm the better the chance of immunity. Moreover, it allows the act of the tortfeasor to foreclose his own liability — the life of the action would be in his hands. Todd v. Sandidge Constr. Co., 341 F.2d 75, 76-77 (4th Cir.1964).
Numerous other courts have employed similar reasoning in allowing suit for wrongful death of a viable fetus. See Eich v. Gulf Shores, 293 Ala. 95, 300 So.2d 354 (1974) (denying cause of action would only serve the tortfeasor by rewarding him for his severity in injuring the fetus and would immunize the greater harm); Chrisafogeorgis v. Brandenberg, 55 Ill.2d 368, 304 N.E.2d 88 (1973) (illogical to deny cause of action in light of the fact that a child born alive may sue for prenatal injuries because liability would attach upon injuring fetus but not upon killing it); State use of Odham v. Sherman, 234 Md. 179, 198 A.2d 71 (1964) (no reason to cut off cause of action because child born dead while allowing cause of action if child born alive); Stidam v. Ashmore, 109 Ohio App. 431, 11 Ohio Ops.2d 383, 167 N.E.2d 106 (1959) (if viable twin fetuses suffered same simultaneous prenatal injury but only one was born alive, it would be illogical to allow one to recover and not the other).
Early courts refusing to recognize a cause of action for the wrongful death of a viable fetus often pointed to the problems of proof associated with such a claim and determined that these problems suggested that no such claim should be allowed to lie. Modern courts have eroded this line of reasoning because advances in medical science have provided a better understanding of the viability of fetuses, of the means of their termination, and of the proper measure of damages to be awarded. See, e.g., Chrisafogeorgis v. Brandenberg, 55 Ill.2d 368, 304 N.E.2d 88 (1973). In addition, problems of proving certain injuries should not impact heavily upon the central issue of whether a cause of action lies in the first place. Mitchell v. Couch, 285 S.W.2d 901 (Ky.1955).
The majority position, allowing a cause of action for the wrongful death of a viable fetus who could have sustained life outside the womb, represents the more logical and thoughtful holding. Therefore the court, in its best estimation, predicts that the Supreme Court of Hawaii would reach this same conclusion. This conclusion comports with principles of fairness and justice in light of the fact that a live-born child may sue for injuries suffered as a fetus. To deny a wrongful death action in the event that the injury kills the fetus makes little sense. Such a denial would only immunize the more severe tort and would allow the tortfeasor to eliminate his own liability by increasing rather than by mitigating the impact of his wrongs. To avoid such an anomaly, the court construes the Hawaii wrongful death statute to allow parents of a stillborn viable fetus to sue for its wrongful death.
Each court which recognizes this cause of action for wrongful death has limited it to actions predicated on the death of a viable fetus with the lone exception of the court of Rhode Island, which allows such a suit to find its premise in the termination of a nonviable fetus. Presley v. Newport Hospital, 117 R.I. 177, 365 A.2d 748 (1976). In this court’s best estimate, the Hawaii Supreme Court would also limit the cause of action to wrongful death of a viable fetus only. Defendant’s motion to dismiss plaintiffs’ wrongful death action is DENIED.
DEFENDANT’S MOTION FOR PARTIAL SUMMARY JUDGMENT
In the alternative, defendant moves for summary judgment, arguing that the undisputed facts show that neither of the twin fetuses involved in this case were viable at the time of their termination. Since an action for wrongful death of a fetus can only lie if the fetuses had achieved viability by the time of injury, summary judgment would be appropriate if there is no genuine dispute that the twin fetuses were not viable.
Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment shall be entered when:
... the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
|
1699788-16883 | CLARK, Chief Judge:
We are to decide in this case whether a United States District Court sitting in the Beaumont Division of the Eastern District of Texas has jurisdiction over the subject matter of a lawsuit disputing the title to real property located in the State of Colorado. The district court in Texas held that it had subject matter jurisdiction over this Colorado dispute. The defendant Gulf Oil Corporation (Gulf) contends that the plaintiffs lawsuit, which alleges that title to an oil and gas leasehold had reverted to the plaintiff by operation of law, is a “local action,” which can only be brought in the state in which the real property at issue is located. Plaintiff Lloyd Hayes questions the current viability of the local action rule and contends that, at most, the assertion of the local action doctrine merits a change of venue which can be and was waived by Gulf. Because we agree with Gulf that the local action doctrine remains a vital part of the fabric of the law, we reverse the district court’s decision that it had subject matter jurisdiction and remand the case with directions to that court to dismiss the action or to transfer it to the district court in Colorado pursuant to 28 U.S.C. § 1631.
I. The Underlying Dispute
The underlying dispute in this case concerns the title to an oil and gas lease which was issued by the Bureau of Land Management of the United States Department of the Interior to the plaintiff Hayes for a ten-year term, effective August 1, 1975. This lease covered lands located in Montezuma County, Colorado. Hayes agreed to assign Gulf his interest in the lease in October 1977 for a five-year primary term, with an automatic extension if “actual drilling operations have been commenced on lands of another lease with which this lease is committed to an approved co-operative or unit plan.”
Hayes and Gulf disagree as to whether this has occurred. Hayes approved the inclusion of the lease in the Yellow Jacket Unit Agreement in 1977, but the Yellow Jacket Unit was terminated as of April 2, 1983. However, all the acreage in the Yellow Jacket Unit, including this lease, was combined with the acreage in six other units to form the McElmo Dome Unit. The McElmo Dome Unit was compulsorily unitized pursuant to a Colorado statute. Hayes never ratified the McElmo Dome Unit or consented to the inclusion of his lease therein. He thus claims that all interests in the federal lease reverted to him when the Yellow Jacket Unit was terminated. Gulf responds that Hayes’ refusal to ratify the McElmo Dome Unit is irrelevant, since the unit was compulsorily unitized under state law.
Hayes filed suit against Gulf and Shell Oil Company (Shell) in the United States District Court for the Eastern District of Texas, claiming title and seeking a declaration that all interests under the lease belonged to him. After an amended complaint was filed, Gulf and Shell filed a joint motion to dismiss for lack of subject matter jurisdiction for two reasons: 1) Shell, with its principal place of business in Houston, Texas, was a non-diverse party; and 2) a federal district court sitting in Texas had no subject matter jurisdiction over a dispute about title to a Colorado leasehold. Hayes voluntarily dismissed Shell and again amended his complaint. Gulf then renewed its motion to transfer this action due to a want of jurisdiction pursuant to 28 U.S.C. § 1631.
The district court held that it had subject matter jurisdiction to adjudicate the question of leasehold title in lands located wholly in Colorado and denied Gulf’s motion. The district court certified this issue for interlocutory appeal, 28 U.S.C. § 1292(b), and this court granted Gulf permission to appeal.
II. The Local Action Doctrine
The questions presented are: whether Hayes’ action is indeed local, whether the local action doctrine remains good law, and whether the rule affects only the venue of the court and may be waived.
A local action involving real property can only be brought within the territorial boundaries of the state where the land is located. See Ellenwood v. Marietta Chair Co., 158 U.S. 105, 107, 15 S.Ct. 771, 771, 39 L.Ed. 913 (1895); see also 15 Wright, Miller, & Cooper, Federal Practice and Procedure: Jurisdiction and Related Matters 2d § 3822, at 202-04 (1980). Chief Justice Marshall recognized the common law concept of the local action doctrine while sitting as a Circuit Justice in Livingston v. Jefferson, 15 F.Cas. 660 (C.C.D.Va.1811) (No. 8411). In that case, Edward Livingston sued former president Thomas Jefferson in a federal court in Virginia for an alleged trespass to land in Louisiana. The court dismissed the action, since an action for trespass to land in Louisiana was local and could not be heard in a Virginia court.
Following Livingston, the Supreme Court has consistently recognized that a local action must be brought within the state where the land is located. See, e.g., Louisville & N.R.R. v. Western Union Telegraph Co., 234 U.S. 369, 34 S.Ct. 810, 58 L.Ed. 1356 (1914); Ellenwood, 155 U.S. at 107, 15 S.Ct. at 771; Casey v. Adams, 102 U.S. (12 Otto) 66, 67-68, 26 L.Ed. 52 (1880). This court has held that a local action must be brought in the state where the real property is located. See, e.g., Iselin v. Meng, 269 F.2d 345, 347 (5th Cir.), cert. denied, 361 U.S. 913, 80 S.Ct. 257, 4 L.Ed. 183 (1959); Shell Petroleum Corp. v. Moore, 46 F.2d 959, 961 (5th Cir.1931). Other federal courts have recognized and applied the rule. See, e.g., Humble Oil & Refining Co. v. Copeland, 398 F.2d 364, 367 & n. 5 (4th Cir.1968); Still v. Rossville Crushed Stone Co., 370 F.2d 324, 325 (6th Cir.1966), cert. denied, 387 U.S. 918, 87 S.Ct. 2030, 18 L.Ed.2d 970 (1967); Minichiello Realty Associates, Inc. v. Britt, 460 F.Supp. 896, 897-99 (D.N.J.1978), aff'd without opinion, 605 F.2d 1196 (3d Cir. 1979); Central Transport, Inc. v. Theurer, Inc., 430 F.Supp. 1076, 1078-79 (E.D.Mich. 1977). State courts, including those of Texas and Colorado, refuse to entertain actions involving land located outside state boundaries. See, e.g., Miller v. Miller, 715 S.W.2d 786, 788 (Tex.Ct.App.1986) (citing Holt v. Guerguin, 106 Tex. 185, 163 S.W. 10 (1914)); Flader v. Campbell, 120 Colo. 66, 207 P.2d 1188 (1949). The local action rule is so fundamental that state courts are not obligated to give full faith and credit to judgments from either federal or state courts sitting outside the local state’s territorial boundaries. See Iselin, 269 F.2d at 347 (Louisiana federal court’s judgment involving land situated in Mississippi is void and not res judicata in courts in Mississippi); Humble Oil, 398 F.2d at 367 (Texas courts have exclusive jurisdiction to determine title to realty in Texas; a South Carolina court decision would receive no full faith and credit in Texas courts). See also Clarke v. Clarke, 178 U.S. 186, 190, 20 S.Ct. 873, 876, 44 L.Ed. 1028 (1900) (Connecticut courts are not required to give full faith and credit to a judgment of the South Carolina Supreme Court concerning the construction of a will which affected the passing of title to land situated in Connecticut). What is explicit or implicit in all of these decisions is that federal and state courts lack jurisdiction over the subject matter of claims to land located outside the state in which the court sits.
A. Local or Transitory?
The local action doctrine is so ingrained in our jurisprudence that a claimant does not normally challenge the rule’s existence, but is more likely to argue that a particular cause of action is transitory in nature and not local. Chief Justice Marshall discussed this distinction between local and transitory actions in Livingston and concluded that the common law restrained the court to hold that an action for trespass to land, although an in personam action seeking monetary relief, was nevertheless local in nature because it could only take place in Louisiana. 15 F.Cas. at 664.
Chief Justice Marshall stated that the question whether an action was local or transitory should be controlled by federal law. Id. at 665. See also Wright, Miller & Cooper § 3822, at 207-08. However, the Supreme Court near the end of the century stated in dictum that the question whether an action is local depends on the law of the forum state, see Huntington v. Attrill, 146 U.S. 657, 669-70, 13 S.Ct. 224, 228, 36 L.Ed. 1123 (1892), and lower federal courts, including this court, have applied state law to determine whether an action is local or transitory. See Chateau Lafayette Apartments, Inc. v. Meadow Brook National Bank, 416 F.2d 301, 304 n. 7 (5th Cir.1969). See generally Wright, Miller & Cooper § 3822, at 208-09 (“Fortunately the difference is not of great practical importance for in most instances state law has developed in accordance with the federal decisions.”) (citing federal court decisions).
Plaintiff Hayes does not make a serious effort to contest the characterization of this lawsuit as local. Counsel at oral argument did suggest that what is really involved here is a contract dispute between Hayes and Gulf which just happens to involve the title to real property. We need not belabor this issue. Under Texas law it is clear that an interest in land under an oil and gas lease constitutes real estate, and that Hayes’ action to terminate Gulf’s interest is an action to try title to real property located in Colorado. See Howell v. Union Producing Co., 392 F.2d 95, 111 (5th Cir.1968) (“under Texas law an oil and gas lease creates a determinable fee vesting property interests in the lessors and lessees”); Roach v. Chevron U.S.A., Inc., 574 S.W.2d 200, 203 (Tex.Civ.App. 1978) (“rights to the surface are incident to the ownership of ... interests in land”). Hayes does not dispute the fact that he is asserting a legal right of title to real property interests situated in Colorado.
B. The Effect of Shaffer v. Heitner
Despite the overwhelming authority supporting the doctrine that local actions may only be brought within the territorial boundaries of the state where the land is situated, Hayes maintains that the local action rule is no longer a viable concept. We read Hayes’ argument as making two interrelated propositions. First, that Shaffer v. Heitner, 433 U.S. 186, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977), overruled the local action rule. Second, that a United States district court in Texas can constitutionally exercise in personam jurisdiction over Gulf because it has subject matter jurisdiction by virtue of the grant of diversity jurisdiction under 28 U.S.C. § 1332.
Hayes asserts that the district court’s diversity jurisdiction depends on whether a Texas state court could exercise jurisdiction. Hayes submits that Texas law provides that state court jurisdiction is now co-extensive with that allowed by the United States Constitution. See, e.g., Hall v. Helicopteros Nacionales de Colombia, S.A. 638 S.W.2d 870 (Tex.1982), rev’d on other grounds, 466 U.S. 408, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984). Hayes contends that after Shaffer, the Constitution only requires that “all assertions of state-court jurisdiction ... be evaluated according to the standards set forth in International Shoe ánd its progeny.” 433 U.S. at 212, 97 S.Ct. at 2584 (footnote omitted). See International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945).
More fundamentally, Hayes suggests that the local action doctrine is inconsistent with the underlying rationale of Shaffer which indicates that the sovereignty and the territoriality of the states are no longer the significant, controlling factors in determining the constitutionality of a state court’s exercise of jurisdiction. Hayes concludes that, as long as a court has jurisdiction over the parties to a dispute, it has jurisdiction to adjudicate the parties’ rights regardless of whether the dispute involves land located in another state.
Hayes has apparently abandoned the federal question basis as a jurisdictional ground on appeal, and indeed does not dispute Gulfs position that this case should be decided exclusively on the basis of state law. Since Hayes dismissed Shell as a party defendant, Gulf concedes that complete diversity exists.
Hayes assigns much significance to Supreme Court language in Shaffer which overrules the case of Pennoyer v. Neff, 95 U.S. (5 Otto) 714, 24 L.Ed. 565 (1878), and cases which followed the Pennoyer rationale. See Shaffer, 433 U.S. at 212 & n. 39, 97 S.Ct. at 2584 & n. 39. In Pennoyer, the Court held that a state court could assert jurisdiction over a potential defendant under three circumstances: 1) where the defendant consents to the court’s jurisdiction; 2) where the defendant is personally served within the boundaries of the state where the court sits; or 3) where the defendant owns property located in the state. The first two bases of jurisdiction involved in personam jurisdiction. The third basis for state court jurisdiction was grounded on the court’s power over property within its territory. The effect of a judgment under this category was limited to the property located in the state supporting the jurisdiction. This category included both in rem and quasi in rem actions. An action in rem directly affected the property at issue. Jurisdiction was based on the presence of property in the state, which property was the subject of the dispute. An action asserting quasi in rem jurisdiction, on the other hand, was one based on the existence of property of a party located within the state in which the court sits, which property was not the subject of the dispute. Cf. Hanson v. Denckla, 357 U.S. 235, 246 n. 12, 78 S.Ct. 1228, 1235 n. 12, 2 L.Ed.2d 1283 (1958).
In International Shoe Co., 326 U.S. 310, 66 S.Ct. 154, the Supreme Court shifted the focus with respect to in personam jurisdiction from the defendant’s presence in the state, premised on the state’s power over the person, to the defendant’s “minimum contacts” with the forum state. Id. at 316, 66 S.Ct. at 158. The Supreme Court in Shaffer extended that “minimum contacts” analysis to all assertions of state court jurisdiction, including actions in which jurisdiction was based solely on the presence of a party’s property within the state.
In Shaffer, the plaintiff shareholder of Greyhound Corporation stock filed a shareholder derivative suit in a Delaware court against Greyhound, a Greyhound subsidiary, and present and former officers and directors of both' corporations. Their assertion of jurisdiction in the courts of Delaware over all defendants was based on a sequestration of shares of the corporation’s stock which were statutorily located in Delaware. The shareholder suit concerned corporate management decisions and did not involve Greyhound stock in the State of Delaware. The Supreme Court held this quasi in rem assertion of jurisdiction was no longer sufficient in light of the International Shoe “minimum contacts” test. The statutory presence of the defendant’s stock in Delaware, unrelated to the underlying cause of action, could not create minimum contacts which would confer jurisdiction.
Hayes’ basic reading of Shaffer is that assertions of jurisdiction must now satisfy the International Shoe “minimum contacts” standard. The Shaffer opinion, however, is relevant to today’s case only in determining whether the Texas federal district court can assert personal jurisdiction over the defendant Gulf. In view of Gulf’s more than minimum contacts with Texas, it clearly has the power to do so. Indeed, Gulf does not contest the power of the court to assert personal jurisdiction over it.
Whether that same district court may exercise jurisdiction over the subject matter of this lawsuit is an entirely different question. The Supreme Court in Shaffer did not purport to address that question. It is true the Court stated that cases which relied on the Pennoyer principles of state court power were overruled to the extent they were inconsistent with the “minimum contacts” standard. See Shaffer, 433 U.S. at 212 n. 39, 97 S.Ct. at 2584 n. 39 (“It would not be fruitful for us to re-examine the facts of cases decided on the rationale[ ] of Pennoyer____ To the extent that prior decisions are inconsistent with this standard, they are overruled.”). But Hayes’ position that the local action doctrine cases fall within that category of overruled cases is incorrect. The Court was referring to past decisions which had discussed the constitutionality of state court assertions of personal jurisdiction over non-resident defendants on the basis of the Pennoyer standard. Shaffer cannot be properly read to condemn all federal and state court precedents which define the limits of state sovereignty and territorial boundaries. We instead adhere to clear Supreme Court and Fifth Circuit precedents which have never questioned the vitality of the local action doctrine.
|
3820039-27071 | MEMORANDUM OPINION
BRITT, Chief Judge.
This action was brought under § 505 (citizens’ suit provision) of the Clean Water Act (CWA) to challenge a determination by the United States Army Corps of Engineers (Corps) that a particular tract of land in eastern North Carolina was not a “wetland” under § 404 of the CWA and, therefore, not subject to the regulatory authority of the Corps. 33 U.S.C. § 1365 and § 1344. Plaintiffs are National Wildlife Federation, Environmental Policy Institute, North Carolina Wildlife Federation, Pungo River Association, Stumpy Point Civic Club, the Pamlico-Tar River Foundation, Conservation Council of North Carolina, Inc., and North Carolina Fisheries Association, Inc. Defendants are Colonel Wayne A. Hanson, in his official capacity as Wilmington District Engineer; John 0. Marsh, in his official capacity as Secretary of the United States Department of the Army; William R. Gianelli, in his official capacity as Assistant Secretary of the United States Department of the Army; Lieutenant General Joseph K. Bratton, in his official capacity as the Chief of Engineers of the United States Army Corps of Engineers; William D. Ruckelshaus, in his official capacity as Administrator of the United States Environmental Protection Agency; and Charles R. Jeter, in his official capacity as Regional Administrator of the United States Environmental Protection Agency (federal defendants). First Colony Farms, Inc. (FCF), the owner of the land in question, and Peat Methanol Associates (PMA), having an interest in developing it, were allowed to intervene as defendants (private defendants). Currently before the court are motions for summary judgment filed by plaintiffs and the federal and private defendants. Oral argument having been held, they are now ripe for disposition.
I—FACTS AND PRIOR PROCEEDINGS
The allegations of Count I of the amended complaint concern a tract of land containing approximately 32,750 acres located in Tyrell, Hyde and Washington Counties in North Carolina (Tract I). Tract I is a part of a large expanse of land lying in a peninsula formed by Albemarle Sound, Pamlico Sound and the Alligator River. These large sounds—bodies of water separated from the Atlantic Ocean by the thin finger of land known as North Carolina’s famous “Outer Banks”—provide drainage for Tract I and other similar lands in the eastern part of the state.
Tract I itself lies south of Phelps Lake and east of New Lake. Historically, the area was considered a forested swamp, useful solely for timber production. Periodic efforts have been made over the years—beginning as early as 1787—to utilize the property for other purposes, such as cattle and row-crop farming. These ef forts have centered around the use of drainage canals to lower the natural water table. New Lake Canal and Pungo Lake Canal were completed in 1843, but most of the canals now in place were apparently constructed after 1970. Just how successful these previous farming ventures were is uncertain. It does appear, however, that when those efforts were abandoned the property quickly reverted to its former character.
Tract I is owned by FCF. PMA is a general partnership organized for the primary purpose of constructing and operating a peat-to-methanol synthetic fuel plant on Tract I. Peat for this process will be provided from the large deposits appearing on Tract I. Although FCF originally sought to mine peat from the entire tract, a permit issued by the North Carolina Department of Natural and Economic Resources on 21 February 1980 only allows FCF to mine peat on a 15,000-acre site on Tract I.
In order to mine peat on Tract I, excess water from the property must be drained through the construction of further drainage ditches and the use of pumps. In order to accomplish this task, PMA has' applied for a state permit to pump three million gallons of ground water per day from the mining site. Once the soil is adequately drained, the vegetation will be removed and the surface tilled and sloped, to facilitate further drainage. The peat will then be removed through the use of sod machines and squeezed through a tube to create long cylindrical shapes. The peat, when formed into these cylindrical shapes, will be laid on the land surface to dry until ready for use in the peat-to-methanol plant to be built on Tract I.
The Corps consulted with FCF about its peat mining operations in late 1974, when FCF’s plans were still confined to an upland area, not the subject of this litigation. In 1976, and again in April of 1978, the Corps advised FCF that expansion of its operations into new areas would necessitate a permit under § 404 since the proposed areas were probably wetlands within the Corps’ jurisdiction.
During the spring of 1979, FCF began to solidify its plans to expand its peat mining into Tract I. In April of 1979, a member of the Corps inspected the proposed site on Tract I and advised FCF that some parts of its operations would “definitely” require a § 404 permit while a determination as to whether the whole operation would necessitate a permit required “further in-depth study” of the mining operations and “aerial photography possibly of the vegetation currently existing.” FCF was further advised to request in writing a wetlands determination and to provide the Corps with further information about its operations.
On 3 July 1979, FCF formally asked the Corps to determine whether a § 404 permit was required for its proposed expanded operations. Following this request, the Corps visited Tract I on 15 July 1979, observed a small mining operation in progress, and took a “cross-country tour” of the proposed mining site. The actual extent of this tour is unclear. The document memoralizing this visit notes that the vegetation included “shrubs” typically “pocosin” on the easternmost portion and that the large drainage ditches which bisect the area indicate “that the ground water level is considerably below the surface.”
On 15 August 1979, the Corps again visited the proposed mining site on Tract I and took another cross-country tour of uncertain detail. The Corps concluded that “vegetation typically found on a bog or pocosin area was prevalent and dominant throughout the majority of the mining area.” Nevertheless, the Corps determined that the vegetation alone was not a “sufficient indicator of wetlands that would fall under the Corps’ jurisdiction” since the drainage network “most likely” had lowered the water table and dried the upper layers of soil. The Corps further stated:
[t]his determination that the area is a non-404 wetland carries one stipulation— that the site should be revisited during the late winter or early spring after a significant rainfall to determine then if the soils were saturated to the point of possibly reclassifying the area. It should be stressed that in an area with similar vegetation but without the extensive drainage that this area exhibits would be a very good candidate for inclusion under the Corps’ jurisdiction.
The Corps did not appear to be fully satisfied with this preliminary conclusion, however. On 15 August 1980, Colonel Robert K. Hughes, then District Engineer of the Corps’ Wilmington District, wrote a memorandum to Corps Headquarters in Washington, D.C., discussing problems the Corps was having in determining which areas of FCF’s landholdings were “wetlands” under § 404. Colonel Hughes gave particular emphasis to the difficulties involved in making these determinations because of the extensive canals present on the property. He noted that the Wilmington office had requested the Division Engineer and the Regional Administrator of EPA to initiate a joint technical review board pursuant to “Memorandum of Understanding: Geographical Jurisdiction of the § 404 Program.” 45 Fed.Reg. 45,-018 (1980).
Subsequently, on 26 August 1980, a meeting was held in Washington, D.C., at which time a decision was made not to convene a technical review board since there was apparently “not (sic) Corps/EPA technical disagreement.” Further, a decision was made that the Corps would send a letter to FCF advising it that Tract I did not constitute “wetlands” under the § 404 permit program. This letter was sent to FCF on 15 September 1980.
Although the record is sketchy, it appears that the Corps made at least two visits to Tract I following this wetlands determination. On 13 March 1982, a Corps staff member visited the property primarily to determine whether a methanol pipeline could be constructed on Tract I under an applicable nationwide permit. During May of 1983, a Corps member also visited the site for an undisclosed purpose. No notes or memoranda were prepared on this visit.
Sometime after the Corp’s determination, in a letter dated 2 August 1983, the United States Fish and Wildlife Service requested the Corps to reconsider its position and exercise jurisdiction over Tract I. The Fish and Wildlife Service based this request, in part, upon the high water table on Tract I and the presence of wetland vegetation. It also contended that the drainage system had not caused Tract I to lose its wetland characteristics based upon the fact that PMA was required to obtain a state permit to allow it to pump three million gallons of water a day off the property. The Corps replied on 26 August 1983 stating, in essence, that it could not give a full response to the Fish and Wildlife Service’s request since it had already received plaintiffs’ statutory notice of their intention to sue over the matter.
After proper notice, this action was filed by plaintiffs challenging the wetlands determination. The private defendants filed a motion for summary judgment based upon the six-volume administrative record collected by the Corps and purporting to contain all materials relevant to the Corps’ determination. The plaintiffs filed a cross-motion for summary judgment, and the federal defendants subsequently filed their own motion for summary judgment. The plaintiffs requested, and were granted by the court, permission to file supplemental materials designated as Volumes 7 through 10 in further support of their motion. All parties were given an opportunity to respond to these additional materials.
II—CWA AND WETLANDS RESPONSIBILITY
Wetlands, in a non-legal sense, are areas characterized by vegetation growing in soils that are periodically or normally saturated with water. Council on Environmental Quality, Our Nation’s Wetlands, an Interagency Task Force Report (1978) (OurNation’s Wetlands), pp. 5-7. Marshes, swamps, and bogs are typical types of wetlands. Wetlands occur between upland areas and deep water areas, such as oceans, bays, rivers or lakes. Water levels in wetlands rise and recede in part according to rainfall, so that at times they may be quite dry. Id., see also Avoyelles Sportsmen’s League, Inc. v. Marsh, 715 F.2d 897, 913 (5th Cir.1983).
Wetlands are believed to perform important and unique ecological functions. For example, wetlands purify water by holding nutrients and recycling pollutants; they provide flood protection by retarding surface runoff from rainwater and shielding upland areas from storm damage; and they provide vital food resources and habitat for fish and wildlife. United States v. Riverside Bayview Homes,—U.S.-,-, 106 S.Ct. 455, 463, 88 L.Ed.2d 419 (1985), reversing 729 F.2d 391 (6th Cir.1984); 33 C.F.R. § 320.4(b)(2)(iv), (v) and (vii) (1985); Our Nation’s Wetlands, 19-27. This is true even when the source of the moisture creating the wetlands is from ground or rain water, and not from the adjacent bodies of water. United States v. Riverside Bayview Homes, supra at-, 106 S.Ct. at 463.
The CWA is a comprehensive statute designed to “restore and maintain the chemical, physical and biological integrity of the Nation’s waters.” 33 U.S.C. § 1251(a). Section 301(a) of the CWA contains an absolute prohibition against the discharge of pollutants into the Nation’s waters, except those discharges made in compliance with standards promulgated or permits issued under the Act. 33 U.S.C. § 1311(a). The Administrator of EPA and the Secretary of the Army, acting through the Chief of Engineers of the Army Corps of Engineers, share responsibility for issuance of permits under the CWA and enforcement of their terms. 33 U.S.C. § 1342 and § 1344.
Under § 404 the Corps is responsible for the administration of a permit program for the discharge of dredged and fill materials into “navigable waters.” 33 U.S.C. § 1344(a). The EPA continues to carry ultimate responsibility for the overall concerns of the CWA, including determinations of what constitutes “navigable waters” for purposes of § 404. See Avoyelles Sportsmen’s League, Inc. v. Marsh, supra at 903 n. 12; 43 Op. Att’y Gen. No. 15 (September 5, 1979). “Navigable waters” are defined as “waters of the United States including the territorial seas.” 33 U.S.C. § 1362(7). Although at one time the Corps adopted the traditional, but narrow view of “navigable waters,” its 1977 regulations substantially broadened the definition. Navigable waters are now specifically defined to include “all waters of the United States,” which are further defined to include “wetlands.” 33 C.F.R. § 323.2(a) and (b). For purposes of the § 404 permit program, “wetlands” are:
those areas that are inundated or saturated by surface or ground water at a frequency and duration sufficient to support, and that under normal circumstances do support, a prevalence of vegetation typically adapted for life in saturated soil conditions. Wetlands generally include swamps, marshes, bogs and similar areas.
33 C.F.R. § 323.2(c).
Congress recognized the importance of protecting wetlands in order to achieve its statutory goal of restoring the chemical and biological integrity of our Nation’s waters. As expressed by Congress at the time of the 1977 amendments to the CWA:
... The wetlands and bays, estuaries and deltas are the Nation’s most biologically active areas. They represent a principal source of food supply. They are the spawning grounds for much of the fish and shellfish which populate the oceans, and they are passages for numerous upland game fish. They also provide nesting areas for a myriad of species of birds and wildlife.
The unregulated destruction of these areas is a matter which needs to be corrected and which implementation of section 404 has attempted to achieve.
1977 U.S.Code Cong. & Ad.News 4326, 4336.
There seems to be no serious dispute that the proposed peat mining efforts and construction of the peat-to-methanol plant are “[dredge] and fill” activities within the meaning of § 404. Thus, if Tract I is considered to be “wetlands,” as defined in 33 C.F.R. § 323.2(c), a § 404 permit is required to proceed with these development plans.
Ill—CONTENTIONS OF THE PARTIES
The plaintiffs contend, in essence, that the Corps abdicated its mandatory duty under § 404 to regulate dredge and fill activities on wetlands by declaring Tract I not to be “wetlands” within the meaning of the CWA. They also assert that the EPA violated the CWA by failing to prevent the Corps from so abdicating its duties and by failing to take appropriate action to prohibit PMA from discharging pollutants without a § 404 permit. Plaintiffs request the court to find that Tract I constitutes a “wetland” within the meaning of § 404, to require the private defendants to obtain a permit to continue their peat mining activities, and to issue other appropriate injunctive relief. In the alternative, they argue that the Corps’ determination is arbitrary and capricious, and that the court should set it aside and remand the matter to the Corps for a wetlands redetermination.
The federal and private defendants contend that the court must defer to the Corps’ determination unless it finds it to be arbitrary and capricious under the Administrative Procedure Act (APA), 5 U.S.C. §§ 701 et seq. (1977). As might be expected, all defendants assert that the Corps’ determination was not arbitrary and capricious, but entirely appropriate based upon the six-volume administrative record. Specifically, they contend the Corps made numerous visual inspections of Tract I and correctly concluded that the drainage canals had altered the hydrology of the land so that Tract I could no longer be considered to be “wetlands” within the meaning of § 404. The defendants contend that the Corps’ administrative record is adequate to support its determination and urge the court not to rely upon the supplemental materials filed by the plaintiffs.
IV—STANDARD OF REVIEW
Judicial review of the Corps’ decision is governed by the APA. The APA provides in relevant part that a court shall set aside agency “findings, conclusions, and actions” that are “arbitrary, capricious, or an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A). In Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 415, 91 S.Ct. 814, 823, 28 L.Ed.2d 136 (1971), the Supreme Court made clear that this standard of review is highly deferential and that final agency action is “entitled to a presumption of regularity.” But, although the “ultimate standard of review is a narrow one,” the Supreme Court also made clear that the reviewing court must carefully “consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error in judgment.” Id. at 416, 91 S.Ct. at 823. The reviewing court is not “empowered to substitute its judgment for that of the agency.” Id. Rather, a reviewing court’s duty is to hold the agency to “certain minimal standards of rationality” and not to inject its opinion in place of that of the agency who, because of its particular expertise, has been entrusted with the decisionmaking power. Ethyl Corp. v. EPA, 541 F.2d 1, 36 (D.C.Cir.), cert. denied, 426 U.S. 941, 96 S.Ct. 2662, 49 L.Ed.2d 394 (1976).
This review is also limited in scope to the materials before the agency at the time it made this decision, and a court must view critically any “post hoc rationalizations.” Citizens to Preserve Overton Park v. Volpe, supra, 401 U.S. at 419-20, 91 S.Ct. at 825-26. If the agency’s determination cannot be sustained based upon the record, then it must be remanded for further consideration. Camp v. Pitts, 411 U.S. 138, 143, 93 S.Ct. 1241, 1244, 36 L.Ed.2d 106 (1973). The court may, however, under limited circumstances, consider matters outside of the record for background information. See, e.g., Asarco, Inc. v. EPA, 616 F.2d 1153, 1160 (9th Cir.1980).
The plaintiffs contend, in essence, that the court should substitute its judgment in this case for that of the Corps. In Avoyelles Sportsmen’s League, Inc. v. Marsh, supra, the Fifth Circuit was similarly asked to substitute its judgment for that of the Corps and EPA on the ground that a wetlands determination involves a question of the Corps’ basic jurisdiction. In rejecting that contention the court noted that jurisdictional decisions often require the use of a particular agency’s expertise, and the wetlands determination is no exception. Id. The wetlands determination “which requires analysis of the types of vegetation, soil and water conditions that would indicate the existence of wetlands, is the kind of scientific decision normally accorded significant deference by the courts.” Avoyelles Sportsmen’s League, Inc. v. Marsh, supra at 906; see also FPC v. Transcontinental Gas Pipe Line, 423 U.S. 326, 331, 96 S.Ct. 579, 582, 46 L.Ed.2d 533 (1976) (noting that agency was required to make decision concerning the factual predicates necessary to assert its statutory authority); Deltona Corp. v. Alexander, 682 F.2d 888, 893-94 (11th Cir.1982) (holding that Corps itself must first make determination on jurisdiction under § 404). Although a few courts have not applied this deferential standard to wetlands determinations, they have done so without discussing what is the appropriate standard of review and are, therefore, unpersuasive. See, e.g., Bayou Des Families Dev. v. United States Corps of Engineers, 541 F.Supp. 1025 (E.D.La.1982) (upholding Corps wetlands determination); United States v. Lee Wood Contracting, Inc., 529 F.Supp. 119 (E.D.Mich.1981) (enforcement action holding that land is “neighboring wetlands” within Corps’ jurisdiction); Parkview Corp. v. Dept. of Army Corps of Engineers, 469 F.Supp. 217 (E.D.Wis.1979) (granting Corps’ summary judgment motion that the land is a wetland under 1974 definition within Corps’ jurisdiction); P.F.Z. Properties, Inc. v. Train, 393 F.Supp. 1370 (D.D.C.1975) (holding that Corps had jurisdiction over proposed site). Thus, the Corps’ wetland determination will be subject to the same limited judicial review employed to review other agency decisions.
Y—METHODOLOGY
The language of the Corps’ 1977 regulations makes clear that aquatic vegetation is a primary indicator of wetlands, although its presence or absence will not always be determinative. As explained in the preamble to the regulations, an area is a wetland within the Corps’ statutory jurisdiction if it is:
inundated or saturated by water at a frequency and duration sufficient to support aquatic vegetation. This inundation or saturation may be caused by either surface water, ground water, or a combination of both.
42 Fed.Reg. 37,122, 37,128 (1977). Thus, in addition to vegetation, the Corps must consider the water conditions (hydrology) and soils in order to make a wetlands determination. Avoyelles Sportsmen’s League, Inc. v. Marsh, supra at 906.
Neither the CWA nor the enabling regulations specify the precise methodology to be used by the Corps in analyzing the vegetation, hydrology, and soils. The defendants argue that the Corps was able to adequately consider these factors by visually inspecting Tract I prior to its determination, and that it was unnecessary to perform any more in-depth studies or tests. The plaintiffs contend, on the other hand, that failing to more thoroughly study the soils, hydrology and vegetation amounted, in essence, to a failure to meaningfully consider these factors. The issue in this case is, then, whether the methods employed by the Corps meet the minimal degree of rationality necessary to uphold its decision under the APA.
Certainly there will be cases where the Corps will be able to determine the character of an area from one or two visual inspections. In obvious wetland areas, it will be abundantly clear that aquatic vegetation is prevalent and that the necessary inundation and saturation is present. In other cases, the complete absence of these characteristics will be readily apparent and no further visits, tests, or studies will be required. To require more in-depth investigation under these circumstances will unnecessarily burden the Corps with meaningless tasks.
In a third class of cases, however, the peculiar environmental characteristics of a particular tract of land may make it much more difficult for the Corps to determine whether wetlands are present. The Corps must then use its scientific expertise to analyze the nature of the land to determine what methods are reasonably necessary to make an accurate decision. Under these circumstances the burden necessarily will be greater on the Corps to study the property in order to make a jurisdictional determination. See, e.g., City Fed. Sav. & Loan Ass’n v. Fed. Home Loan Bank Board, 600 F.2d 681, 689 (7th Cir.1979) (holding that agency must provide more in-depth explanation for issues subject to vigorous controversy).
Because its environmental character is not readily apparent, Tract I falls into this third class of cases. Although the Corps recognized that Tract I may have been a wetland at one time, it ultimately concluded that the drainage system had altered its character. The preamble to the 1977 regulations makes clear that lawful development may, in fact, change an area’s character. 42 Fed.Reg. 37,122, 37,128. But whether development has progressed that far in any given case may present a difficult question. This is especially true in this case since the Corps seems to acknowledge that one main wetland indicator— aquatic vegetation—remains present on the property. Moreover, in spite of the questions concerning the altered conditions, the Corps failed to conduct an in-depth investigation to determine exactly when the canals were constructed and the vegetation removed. There is nothing in the record, then, which indicates whether the Corps believes that the canals were built and the vegetation removed before or after enactment of the CWA.
Although the Corps initially leaned towards a finding that Tract I was, at least in part, a wetland, it ultimately seemed quite uncertain over its proper characterization. As early as 1976, a Corps investigator indicated his belief that Tract I contained at least some wetlands. Later, in 1979, this belief was affirmed preliminarily, but the investigator recommended “aerial photography possibly” of the vegetation. During August of 1979, a Corps investigator noted that Tract I contained a prevalence of “vegetation typically found in a bog or pocosin (types of wetlands).” For the first time, however, the Corps investigator noted that Tract I might not be a wetland because of a “likely” change in the water table as a result of the drainage network. This tentative conclusion was explicitly conditioned on at least one further visit to the property in late winter or early spring after a significant rainfall. This trip was never made. The Corps’ failure to make this trip is particularly significant since the regulatory definition of wetlands makes clear that wetlands are not limited to areas that are permanently inundated. Avoyelles Sportsmen’s League, Inc. v. Marsh, supra at 913. Thus, the level of inundation may not be apparent from one or two visits during a single season of the year.
Moreover, just one month before the Corps finally resolved the jurisdictional is sue, the then District Engineer for the Wilmington District wrote to Corps Headquarters in Washington, D.C., to discuss the difficulties the Corps was experiencing in making a final jurisdictional determination on Tract I as a result of, in part, the effects of the drainage system. The District Engineer noted that the Corps had requested EPA to convene a joint technical review board pursuant to a “Memorandum of Understanding: Geographical Jurisdiction of the § 404 Program.” 45 Fed.Reg. 45,018. This board, had it been convened, would have consisted of experts from relevant fields who would have assisted the Corps in making its final decision. In spite of the obvious difficulties with the characterization of Tract I, a mere week and a half after the District Engineer sent the letter to Corps Headquarters, the Corps withdrew its request for a technical review board and determined that Tract I was not a wetland under its jurisdiction. The Corps arrived at this final decision without performing any further studies or tests, including the aerial photography or the revisit recommended by its own staff.
|
1133707-7169 | MEMORANDUM OPINION AND ORDER
GETTLEMAN, District Judge.
Plaintiff Doreen Ford has sued her former employer, Lumbermens Mutual Casualty Company, a/k/a Kemper Insurance Companies (“Kemper”), and Joyce Swiatek, her former supervisor, alleging violations of the Americans with Disabilities Act, 42 U.S.C. § 12101 (“ADA”), and the Family Medical Leave Act of 1993, 29 U.S.C. § 2615 et seq. (“FMLA”). Specifically, plaintiff alleges that Kemper failed to reasonably accommodate her disability (depression) and that Kemper and Swiatek retaliated against and then terminated her for attempting to assert her ADA and FMLA rights. Defendants claim that plaintiff was fired because she improperly accessed and copied confidential company files.
As has become the norm in employment discrimination cases, defendants have moved for summary judgment pursuant to Fed. R.Civ.P. 56. As required by this court’s Local Rule 56.1(a)(3), defendants filed a statement of material facts to which they contend there is no genuine issue and that entitle them to judgment as a matter of law. Incredibly, defendants’ 31 page statement lists 239 “undisputed” material facts. It is difficult for the court to imagine a case actually ripe for disposition by way of summary judgment requiring a proper 56.1(a)(3) statement containing so many “undisputed” material facts. It is possible, of course, for such a case to exist; but this fairly typical discrimination case, in which many core issues are hotly contested, is not it.
Defendants’ counsel obviously fail to understand the purpose of the factual statements required by the local rule. Contrary to what has apparently become common belief, Local Rule 56.1 statements are not intended to be substitutes for a statement of facts section of a memorandum of law or a brief. Nor are they merely superfluous abstracts of all the evidence that might be presented at trial. Instead, the purpose is to assist the court in identifying the material facts that entitle the movant to judgment as a matter of law, and determining whether those material facts are in dispute. To that end, the rule requires the parties to point the court to the specific undisputed evidence in the record that supports the party’s position on each of these questions. “They are, in short, road maps, and without them the court should not have to proceed further, regardless of how readily it might be able to distill the relevant information from the record on its own.” Waldridge v. American Hoechst Corp., 24 F.3d 918, 923 (7th Cir.1994).
Defendants’ 31 page, 239 paragraph statement fails utterly in this purpose. It is so replete with immaterial facts that any truly undisputed material facts are lost in the morass. Lest anyone think the court is being overly critical, footnote one, on page one of defendants’ 56.1(a)(3) statement, states: “Moreover, certain material is incorporated herein as background. Disputes over these issues would not create a triable fact question warranting denial of Defendant’s motion.” Defendants’ admitted inclusion of immaterial facts is a clear violation of the specific dictates of the rule, and alone justifies striking defendants’ Local Rule 56.1(a)(3) statement and denying the motion for summary judgment. .
Even more disturbing than the intentional inclusion of immaterial facts, defendants have included obviously contested facts which, once recognized as contested, effectively eliminate any hope of summary judgment. Although there are numerous examples, two will suffice to demonstrate the point. Paragraph 6 of defendants’ 56.1(a)(3) statement lists as undisputed that “Kemper’s General Counsel John Conway terminated Ford’s employment on March 16,1988. The reason for the termination was improper accessing of and photocopying of confidential company files.” Obviously, plaintiff contests the reason for her firing. Her complaint is grounded on her claim that she was fired for taking FMLA leave based on her disability. The cited reference to plaintiffs deposition as support for defendants’ statement in no way indicates that plaintiff agrees with the reason or even admits that she photocopied the files in question.
Even more egregious is paragraph 71. In the immediately preceding paragraph (70), defendant lists as an uncontested fact that “before [plaintiff] ever considered taking FMLA leave, she claims [defendant] Swiatek told her, ‘John and I don’t want secretaries around here who take medical leaves.’ ” Defendant lists plaintiffs deposition at pages 192 through 197 as support for this statement. Incredibly, in the very next paragraph (71), defendant lists as an uncontested fact that “Swiatek never made any such statement,” listing Swiatek’s affidavit as support. Taken together, paragraphs 70 and 71 very clearly demonstrate that whether Swiatek made the statement is both material to the case and disputed, requiring denial of defendants’ motion for summary judgment. Indeed, the two paragraphs illustrate clearly what defendants’ experienced counsel should have seen from the start, “that this case comes down to a swearing contest that would necessarily doom any Rule 56 motion.” Grace v. Ansul, Inc., 61 F.Supp.2d 788, 794 (N.D.Ill.1999).
The court’s criticism is not restricted just to defendants. If defendants’ inclusion of such obviously inappropriate material was intended simply to bait plaintiff, plaintiff swallowed that bait, along with the hook, the line, the sinker, and the entire pole. Plaintiffs 57 page Rule 56.1(b)(3) response is argumentative and, more often than not, non-responsive. Rather than simply admitting or denying each paragraph, plaintiff rewrites each assertion in her own terms, whether or not her assertions contradict defendants’ assertion in any material way. In most instances, plaintiffs responses make factual assertions and legal arguments that in no way contradict defendants’ statement of fact. Although the instances are far too numerous to list, plaintiffs response to paragraph 123 of defendants’ Rule 56.1(a)(3) statement is illustrative:
123. On December 2, 1997, Dr. Green-berg noted that Ford reported to her that “this year [Joyce] didn’t pick on her before her vacation as she did the previous six years that she picked on her friend Jackie instead.”
Response: Unfortunately, that was a short-lived statement from Ford to Dr. Greenberg. As stated previously, when Ford returned from her vacation in December 1997, one of Ford’s attorneys had left the company. Immediately upon Ford’s return from vacation, Swiatek assigns Ford one of secretary Sandy Thirtle’s attorneys, Stacy Schwartz. Therefore, Ford remained with three attorneys, while Thirtle’s work was reduced to two attorneys. Swiatek should have given Ford the option of having the lighter duty work load. [Citations omitted.]
So much of plaintiffs statement is comprised of such non-responsive argumentative balderdash that it reads more like an additional brief (and a poor one at that) than a response to a statement of “undisputed” facts. As a result, defendants have filed a motion to strike plaintiffs response which, absent defendants’ own failures, the court would be inclined to grant.
|
306154-5712 | GOODRICH, Circuit Judge.
The Philadelphia Transportation Co., the taxpayer here, was formed on January 1, 1940 as the culmination of reorganization proceedings involving 65 corporations concerned in Philadelphia’s public transportation system. In accordance with the reorganization plan, the taxpayer issued, in Janu'ary, 1940, mortgage bonds dated January 1, 1939 and bearing interest from that date. The interest coupons for 1939 and 1940 were redeemed by the taxpayer in 1940, as required by the reorganization plan.
The taxpayer computes its tax liability on an accrual basis. In its income tax return for 1940, it claimed a deduction for the 1939 and 1940 coupons as “interest accrued” in 1940.
These basic facts raise the -crucial question, the answer to which will dispose of the case. Was the interest allocated as-1939 interest properly deducted from the taxpayer’s 1940 income as interest accrued in 1940? The Tax Court held that it was. In this appeal, the Commissioner seeks reversal on three principal grounds. He -argues, first, that the amount deducted was-not interest. It was not interest, he says, because interest is compensation for the use of money, and the taxpayer held no-money, borrowed or otherwise, in 1939. The Commissioner looks for support on. this po-int to the -statutory language which refers to “interest accrued on indebtedness.” He -concludes tha-t without indebtedness in 1939, there could have been no-interest. And there was no indebtedness in 1939, he says, because the taxpayer had n-o-corporate existence then.
The Commissioner’s second point is-that the taxpayer really -took over the obligation to pay 1939 interest as a part of the cost of the assets acquired in the reorganization. 'We discuss this point below.1' And finally the Commissioner argues that even' if the amount in question be treated as interest, a deduction of interest for more than the current year may not be made from that year’s income.
The point last stated is easily answered. No provision of the Internal Revenue Code prohibits such a deduction. Section 43 of the Code, 26 U.S.C.A. § 43, provides that the liabilities of one year cannot be used to reduce the income of a subsequent year. It is upon this provision that the Commissioner relies. But the issue is whether the item in question here is a liability of the year 1940. If it accrued in 1940, it is deductible in 1940 and in no other year, whether or n'ot it is based on transactions allocated for other purposes to other periods. One decision specifically supports the deduction of 2 years’ interest in one year in a proper case, and three other decisions, incu'ding one from this Court, support the proposition in principle.
We turn; then, to the Commissioner’s first two ¡arguments. We think that the fog surrounding the no debt-no interest contention is best cleared by a simple hypothetical illustration. A corporation is formed in 1940. It is brand new and without corporate forebears. ít issues in 1940 a series of 20-year coupon bonds. For reasons best known to the management, it is decided to date the bonds as of January 1, 1939 to mature January 1, 1959, and to redeem the first two interest coupons in 1940. The corporation pays its taxes on an accrual basis. Can there he any doubt that the interest accrued on the two coupons in 1940 and was properly deductible in that year? We think that in the hypothetical case the situation is the same as if the 1940 interest coupons were just double the later ones in amount. There was indebtedness in 1940, interest accrued on that indebtedness in 1940, and we think it is chargeable for tax purposes, as well as bookkeeping purposes, for that year.
We think the present case is similar to the hypothetical one in all respects except that the taxpayer was the product of a reorganization and came into existence with the obligation to pay fixed and variable interest on the bonds it was to issue to the shareholders of its corporate predecessors. These added 'factors do not, in our judgment, alter the result. The taxpayer, as a new corporation, created its own new indebtedness. It did not assume existing liabilities on which interest had already accrued against predecessor companies. If it had, there would be merit in the Commissioner’s point that the obligation was part of the cost of the assets acquired by the taxpayer.
But that is not the fact. ' No obligation was owed by the predecessor companies to their shareholders except insofar as assets might have remained for distribution to them when corporate affair-s were wound up. Moreover, neither the present taxpayer nor any of its predecessors was in a position to take advantage of a 1939 deduction for the interest payments in question-.. As -our brethren in the Ninth Circuit said in Commissioner v. Columbia River Paper Mills, 1942, 126 F.2d 1009, 1010: “The arrangement was a logical one under the circumstances, * * *. It is not suggested that there was any purpose of tax avoidance * * We conclude, therefore, as we did in Pressed Steel Car Co. v. Commissioner, 3 Cir., 1946, 152 F. 2d 280, that the Tax Court correctly decided that the amount in dispute represented accrued interest within the meaning of Section 23(b) of the Internal Revenue Code.
The decision of the Tax Court will be affirmed.
The applicable section of the Internal Revenue Code, § 23(b), provides:
Ҥ 23. Deductions from gross income. In computing net income there shall be allowed as deductions: * * *
(b) Interest. All interest paid or accrued within the taxable year on indebtedness * * *.” 26 U.S.C.A. § 23(b).
Oregon Pulp & Paper Co. v. Commissioner, 1942, 47 B.T.A. 722, petition for review dismissed, C.C.A. 9, November 2, 1943.
|
910653-23900 | T.G. NELSON, Circuit Judge:
ORDER
The Opinion filed June 4, 1997, slip op. 6439, is hereby WITHDRAWN.
OPINION
Southern California District Council of Carpenters (“the Union”) appeals the district court’s issuance of a preliminary injunction restricting the manner in which the Union had displayed a banner purporting to publicize its labor dispute with Best Interiors, a subcontractor engaged in a construction project at San Antonio Community Hospital (“the Hospital”). The district court conclud ed that the Hospital had met the strict requirements for a preliminary injunction set forth in the Norris-LaGuardia Act (“NLA”), 28 U.S.C. §§ 101-115. We have jurisdiction under 28 U.S.C. § 1292(a). We affirm.
I. FACTS
The Union is currently engaged in an ongoing labor dispute with Best Interiors, a construction company, over Best Interiors’ failure to pay its employees prevailing wages and benefits. Best Interiors is a subcontractor in an expansion project at the Hospital. There is no contract between Best Interiors and the Hospital. The Union concedes that it does not now have, and has never had, a labor dispute with the Hospital.
On June 21, 1996, the Union began displaying a banner near the Hospital’s construction site and the entrance to the Hospital’s maternity ward that was visible by passersby driving on San Bernardino Road in front of the Hospital and patients entering the maternity ward. The banner is displayed during the morning hours and is held by three retired members of the Union. In twelve-inch red capital letters on two lines, the banner reads: “THIS MEDICAL FACILITY IS FULL OF RATS.” Below those lines, in five-inch red capital letters on two lines that appear just above the feet of the banner’s holders, it reads: “CARPENTERS L.U. 1506 HAS A DISPUTE WITH [_] FOR FAILING TO PAY PREVAILING WAGES TO ITS WORKERS.” In the blank space, in two-inch black handwritten letters, the banner reads: “Best Int.”
On June 25, 1996, the Hospital filed unfair labor practice charges against the Union with the National Labor Relations Board (“NLRB”). During the NLRB investigation, there were several attempts to reach a negotiated agreement between the Union and the Hospital. After completing its investigation, the NLRB Regional Office determined that evidence could not support the Hospital’s allegations, and the Hospital withdrew its charges.
On July 11, 1996, the Hospital filed this lawsuit in the district court, including various state tort claims and a federal claim for an unlawful secondary boycott under 29 U.S.C. § 187. On July 17,1996, the Hospital filed a motion for a temporary restraining order which the district court denied on July 22, 1996, because the Hospital had failed to satisfy the requirements of the NLA
On August 9, 1996, the district court held an evidentiary hearing on the Hospital’s request for a preliminary injunction. After hearing the testimony of witnesses from both sides, the district court ruled that the Hospital had met the requirements for a preliminary injunction set forth in the NLA. The district court ordered that the Union’s members “are hereby preliminarily enjoined from using the term, ‘Rats,’ as they currently have in their banner which they display in front of plaintiff San Antonio Community Hospital.” This timely appeal followed.
II. DISCUSSION
Generally, the grant or denial of a preliminary injunction will be reversed only where the district court abused its discretion or based its decision on an erroneous legal standard or on clearly erroneous findings of fact. Does 1-5 v. Chandler, 83 F.3d 1150, 1152 (9th Cir.1996). See also Donnelly Garment Co. v. Dubinsky, 154 F.2d 38, 45 (8th Cir.1946) (“Since we conclude that the trial courts’ findings against the appellants in this ease on issues necessary to its power and jurisdiction to enjoin the appellees [under the NLA] are not clearly erroneous, the decree appealed from is affirmed.”); International Ass’n of Bridge, Structural & Ornamental Iran Workers v. Pauly Jail Bldg. Co., 118 F.2d 615 (8th Cir.1941). However, when a case involves free expression, “[w]e must make an independent examination of the whole record so as to assure ourselves that the judgment does not constitute a forbidden intrusion on the field of free expression.” Old Dominion Branch No. 496, Nat’l Ass’n of Letter Carriers v. Austin, 418 U.S. 264, 282, 94 S.Ct. 2770, 2780, 41 L.Ed.2d 745 (1974) (citations omitted). “While this duty has been most often recognized in the context of claims that the expression involved was entitled to First Amendment protection, the same obligation exists in cases involving-speech claimed to be protected under federal labor laws.” Id. We review issues of law underlying the district court’s grant of a preliminary injunction de novo. Chandler, 83 F.3d at 1152.
A. Injunctions and the Norris-LaGuardia Act
Under traditional legal standards, a moving party may become eligible to obtain a preliminary injunction by demonstrating “a combination of probable success on the merits and the possibility of irreparable injury.” United States v. Odessa Union Warehouse Co-op, 833 F.2d 172, 174 (9th Cir.1987). At the very least, “it must be shown as an irreducible minimum that there is a fair chance of success on the merits.” Stanley v. University of S. Cal., 13 F.3d 1313, 1319 (9th Cir.1994).
The NLA is an anti-injunction statute that prevents district courts from issuing “any restraining order or temporary or permanent injunction in a case involving or growing out of a labor dispute, except in a strict conformity with the provisions of this Act.” 29 U.S.C. § 101. The NLA denies jurisdiction to district courts to issue preliminary injunctions that would prevent union members from “[gjiving publicity to the existence of, or the facts involved in, any labor dispute, whether by advertising, speaking, patrolling, or by any other method not involving fraud or violence.” 29 U.S.C. § 104(e) (emphasis added).
Therefore, in addition to satisfying the traditional requirements for a preliminary injunction and providing evidence of fraud or violence, the Hospital, as proponent of the preliminary injunction, was required to prove the following additional elements:
1) That unlawful acts have been threatened and will be committed unless restrained (29 U.S.C. § 107(a));
2) That substantial and irreparable injury to the Hospital’s property will follow (29 U.S.C. § 107(b));
3) That greater injury will be inflicted upon the Hospital by the denial of relief than will be inflicted upon the Union by the granting of relief (29 U.S.C. § 107(c));
4) That the Hospital has no adequate remedy at law (29 U.S.C. § 107(d));
5) That the public officers charged with the duty to protect the Hospital’s property are unable or unwilling to furnish adequate protection (29 U.S.C. § 107(e)); and
6) That the Hospital has made every reasonable effort to settle the dispute (29 U.S.C. § 108).
Because the Union challenges the district court’s conclusions with regard to all of these elements, we will address each element in turn.
1. Fraud and Unlawful Acts
In addition to satisfying the strict requirements of the NLA, the Hospital must demonstrate “a fair chance of success on the merits.” On the merits of what? Of one of the Hospital’s substantive claims. The Hospital’s complaint contained six damages claims: libel, trade libel, intentional interfer ence with prospective economic advantage, negligent interference with prospective economic advantage, interference with contractual rights, and secondary boycott under section 303 of the Labor Management Relations Act (“LMRA”) (29 U.S.C. § 187). Four of the six claims cannot form the basis for injunctive relief. The interference with prospective economic advantage and contractual rights claims are preempted by section 303 of the LMRA. Local 20, Teamsters v. Morton, 377 U.S. 252, 260-61, 84 S.Ct. 1253, 1258-59, 12 L.Ed.2d 280 (1964). And an employer cannot seek injunctive relief from a secondary boycott under section 303; only damages are available. Burlington Northern R.R. v. Brotherhood of Maintenance of Way Employes, 481 U.S. 429, 448, 107 S.Ct. 1841, 1852-53, 95 L.Ed.2d 381 (1987) (because the NLRB has exclusive authority to seek injunctions under the National Labor Relations Act, “employers are not permitted to obtain injunctions of secondary activity.”); California Ass’n of Employers v. Building and Constr. Trades Council of Reno, 178 F.2d 175, 178 (9th Cir.1949) (“The [LMRA] did not give private litigants the right to obtain injunctive relief even in those situations where a suit for damages was allowed.”). That leaves the Hospital’s defamation claims as the only possible basis for the preliminary injunction.
Because the injunction must be predicated on the Hospital’s defamation claims, the Supreme Court’s decisions in Linn v. United Plant Guard Workers of Am., 383 U.S. 53, 86 S.Ct. 657, 15 L.Ed.2d 582 (1966), and Old Dominion Branch No. 496, Nat’l Ass’n of Letter Carriers v. Austin, 418 U.S. 264, 283, 94 S.Ct. 2770, 2780-81, 41 L.Ed.2d 745 (1974), come into play. These cases stand for the general proposition that “libel actions under state law [are] pre-empted by the federal labor laws to the extent that the State [seeks] to make actionable defamatory statements in labor disputes which were published without knowledge of their falsity or reckless disregard for the truth.” Letter Carriers, 418 U.S. at 273, 94 S.Ct. at 2775. We thus must decide whether the Hospital satisfactorily demonstrated a reasonable chance of meeting this standard at trial, commonly known as the New York Times “actual malice” standard. See New York Times Co. v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964). We hold that it did.
The Union disputes the district court’s finding that the language contained on the banner is fraudulent. The Union argues that the term “rat” has deep historical meaning in the context of labor disputes and should not be subject to injunction. The Union contends that it was merely publicizing the facts of its labor dispute and its opinion that Best Interiors was a “rat contractor” for failing to pay its workers the prevailing wage. The district court concluded, however, that the manner in which the term “rat” was used on the banner was deceptive and misled “all persons exposed” to the banner “into believing that the banner is stating that plaintiff Hospital has a rodent problem.”
The Union is correct that the NLA allows unions a great deal of latitude in their choice of language in the context of a labor dispute. The Supreme Court has noted that “labor and management often speak bluntly and recklessly, embellishing their respective positions with imprecatory language.” Linn, 383 U.S. at 58, 86 S.Ct. at 661 (citation omitted). The Court has also noted that “federal law gives a union-license to use intemperate, abusive, or insulting language without fear of restraint or penalty if it believes such rhetoric to be an effective means to make its point.” Letter Carriers, 418 U.S. at 283, 94 S.Ct. at 2781. The license to use inflammatory rhetoric during a labor dispute, however, is not unbridled under the NLA. Where, as here, a union’s fraudulent language is directed at an entity with which no labor dispute exists, the NLA does not prevent a district court from exercising jurisdiction to issue an injunction prohibiting the fraudulent activity. See Donnelly, 154 F.2d at 45 (“[N]othing in the Norris-LaGuardia Act denies to the Federal courts the power to issue an injunction in an action growing out of a labor dispute where the evidence clearly establishes the requisite jurisdictional findings. Fraud and violence are as unlawful and as reprehensible in a labor controversy as elsewhere.”).
The most natural reading of the Union’s statement “THIS MEDICAL FACILITY IS FULL OF RATS” is that the Hospital has a rodent problem. This, the Union concedes, is not true, nor has the Union ever believed it to be true. The Union argues, however, that the term “rat” has deep historical meaning in the context of labor disputes. Most dictionaries, the Union points out, define “rat” not only as a type of rodent, but also as an employer who fails to pay prevailing wages or a worker who works for substandard wages. Because Best Interiors was not paying its workers prevailing wages, the Union argues that its statement was both “literally and factually” true-the Hospital was “full of rats.”
The Union relies heavily on the Supreme Court’s conclusion in Letter Carriers regarding a union’s use of the word “scab.” There, the Court explained:
It should be clear that the newsletter’s use of the epithet “scab” was protected under federal law and cannot be the basis of a state libel judgment. Rather than being a reckless or knowing falsehood, naming the appellees as scabs was literally and factually true. One of the generally accepted definitions of “scab” is “one who refuses to join a union,” Webster’s Third New International Dictionary (unabridged ed.1961), and it is undisputed that the appellees had in fact refused to join the Branch.
Letter Carriers, 418 U.S. at 282-83, 94 S.Ct. at 2780. But the distinction between the union’s use of the word “scab” in Letter Carriers and the Union’s use of the phrase “THIS MEDICAL FACILITY IS FULL OF RATS” in this case is patent. Nobody would have understood the union in Letter Carriers to be referring to the non-union workers as “crust[s] of hardened blood and serum over a wound,” or “scabies of domestic animals.” See Webster’s New Collegiate Dictionary 1021 (defining “scab”). By contrast, the manner in which the Union used the term “rat” on its banner could cause most-if not all-readers to be misled into believing that the banner meant that the Hospital had a rodent problem. This is not true.
The same distinction can be drawn with regard to the other cases cited by the Union. In Beverly Hills Foodland, Inc. v. United Food & Commercial Worker’s Union, 840 F.Supp. 697, 705 (E.D.Mo.1993), aff'd, 39 F.3d 191 (8th Cir.1994), the court ruled that a union handbill entitled “Don’t Help Feed the Rat” identifying Foodland as a “rat employer” was protected by federal labor law because the handbill’s use of the word “rat” could not be construed as a misrepresentation of fact. “No one could read the handbill,” the court explained, “and believe that the owner/manager of Foodland was actually a rodent animal.” Id. at 705.
Likewise, in BE&K Constr. Co. v. NLRB, 23 F.3d 1459 (8th Cir.1994), cert. denied, 513 U.S. 1076, 115 S.Ct. 721, 130 L.Ed.2d 627 (1995), the court noted that it was not improper for a trade union publication to urge “solidarity” against BE & K and describe the company as a “ ‘rat’ contractor.” Id. at 1463. Again, in this context, the use of the term “rat” to describe the management side of the labor dispute was not deceptive or designed to mislead members of the general public. No reasonable reader would have believed, based on the newsletter, that the contractor was actually a four-legged rat. The same cannot be said in this case.
The problem with the use of the term “rats” in this case was not the mere use of the term, but the manner in which it was used. The district court found a high probability that members of the public would be and actually were deceived by the Union’s use of the phrase “THIS MEDICAL FACILITY IS FULL OF RATS” in the banner. Based on our independent review of the record, we agree. The banner states in prominent lettering “THIS MEDICAL FACILITY IS FULL OF RATS.” At no place in that phrase or in the entire banner does the Union identify Best Interiors as the “rat contractor.” The term “rats” is directed at the Hospital, not the contractor with whom the Union has the labor dispute. The allegedly explanatory language on the banner is in letters less than half the size of the first statement and is located at the bottom of the banner just above the feet of the individuals holding it. The words “Best Int.” identifying the disputed contractor are smaller still, handwritten, and, as a result, difficult to read at best by drivers passing on San Bernardino Road. The cases cited by the Union do not undercut the district court’s conclusion that the manner in which that term was used in the chosen context was fraudulent, deceptive, and intended to mislead members of the general public into believing that the Hospital suffered from a sanitation problem.
We agree that “[e]xpressions of opinion, though inaccurate and even misrepresentative in character, obviously cannot be permitted to be made the basis ordinarily for injunctive process in a labor dispute.” International Ass’n of Bridge, Structural & Ornamental Iron Workers v. Pauly Jail Bldg. Co., 118 F.2d 615, 616 (8th Cir.1941). We also agree that “[accusations of unfairness against an employer normally will fall within this category” of opinion. Id. But in this case, the phrase “THIS MEDICAL FACILITY IS FULL OF RATS” cannot be construed as an opinion. It certainly is designed to grab the reader’s attention, but only because it purports to be an expression of fact which, if true, would deter reasonable people from seeking medical care at the Hospital. The NLA was intended
to leave the federal courts free to enjoin those permeative acts, falling within the term “fraud or violence,” which an unsluggish public conscience and a healthy social order cannot soundly tolerate, even at the risk of thereby enabling one of the parties to tip the scales of the fundamental dispute.
Id. at 617. The language on the Union’s banner crossed the line separating protected rhetorical hyperbole from unprotected fraudulent misrepresentations of fact. See Mercy Health Servs. v. 1199 Health and Human Serv. Employees Union, 888 F.Supp. 828 (W.D.Mich.1995) (holding television commercials “defamatory because they attempt to frighten Michigan residents into believing that [Mercy’s hospitals] cannot deliver adequate care and comfort”). As in Peel v. Attorney Registration and Disciplinary Comm’n of Ill., 496 U.S. 91, 107 n. 14, 110 S.Ct. 2281, 2291 n. 14, 110 L.Ed.2d 83 (1990), the “legal question” in this case “is whether a statement of ... fact is nonetheless so misleading that it falls beyond the First Amendment’s protections.” The Union’s assertion that the Hospital was full of rats is such a statement. On this evidentiary record, the Union’s banner is fraudulent, there is a reasonable probability that the Hospital can successfully prove “actual malice,” and the NLA did not deprive the district court of jurisdiction to enjoin the banner’s display.
2. Irreparable Injury and No Adequate Legal Remedy
The district court heard evidence from several of the Hospital’s employees that they spent a portion of their time explaining to patients and other employees that the Hospital was not actually infested with rodents. Though there is no indication that patients and Hospital employees remained confused and misled after they were told that the Hospital was not actually suffering from sanitation problems, the time spent by Hospital employees explaining the nature of the labor dispute and reassuring patients was time taken away from their ordinary administrative and medical care duties.
The Hospital also introduced evidence that its reputation and, consequently, its fund-raising ability had been impaired since the Union began displaying the fraudulent banner. Potential contributors were less likely to donate funds to the Hospital if they believed the facility was actually infested with vermin and maintained unsanitary conditions. As another court recently noted: “The reputation of a hospital is difficult to restore once it has been tainted.” Mercy Health Servs., 888 F.Supp. at 838. We agree.
Finally, it is impossible to measure the number of potential patients who were deterred from seeking medical care at the Hospital due to their misunderstanding of the Union’s banner because they are not available to be counted. Because the banner was located directly in front of the entrance to the Hospital’s maternity ward, however, evidence from employees who worked in that area provided one reasonable measurement of the deterrence caused by the Union’s conduct, demonstrating a statistically significant drop in maternity patients. Cathy Knittle, an Assistant Director of Business Services at the Hospital and the person in charge of the department responsible for admissions to the Hospital, testified that maternity preadmissions, a method of early registration for expectant mothers, had dropped by 200 patients per month since the Union began displaying the banner. This drop in maternity preadmissions is not insignificant. The district court concluded that the Hospital suffered irreparable injury as a result of the Union’s fraudulent activity and had no adequate legal remedy to redress the harm caused. Based on our review of the record, we agree.
3.Balancing the Hardships
The Hospital provided substantial evidence regarding the injury it sustained as a result of the Union’s fraudulent conduct. The burden to the Union of clarifying its banner, however, is slight in light of the narrowness of the district court’s injunction. Shortly after the district court issued its injunction in this case, the Union began displaying a second banner with twelve-inch red capital lettering alongside the first banner which reads: “BEST INTERIORS IS THE RAT CONTRACTOR.” The Hospital filed an ex parte application to the district court, asking for a contempt citation, but the district court ruled that the injunction had not been violated because the Union had clarified the misleading nature of the term “rats.” Due to the narrow scope of the district court’s injunction and the ease with which the Union complied with its requirements, the Union has been burdened only slightly at best as a result of the issuance of the injunction.
4. Local Police
The Hospital introduced evidence that administrators at the Hospital had contacted the local police department and were told that the police were unable to do anything about the banner. The Union contends that this testimony was hearsay and therefore inadmissible. The district court did not sustain the Union’s objection, however, which was not raised until the end of the witness’s direct examination. Therefore, the evidence was properly admitted and the untimely objection was waived.
5. Efforts to Settle the Dispute
The Union argues in a footnote near the end of its opening brief that the Hospital introduced insufficient evidence “to establish that it engaged in all reasonable efforts to settle the matter before seeking injunctive relief.” At the evidentiary hearing, however, the Hospital introduced evidence that it had engaged the Union on a number of occasions in an effort to resolve this dispute before seeking an injunction. There is sufficient evidence in the record to support the district court’s conclusion that the Hospital satisfied this element.
We emphasize the narrowness of our decision. The Union displayed a banner in front of the Hospital that included a prominent declaratory statement of fact which was so misleading as to be fraudulent. The NLA generally prohibits federal courts from issuing injunctions in labor disputes, but when a union engages in fraudulent activity, the Act does not deprive a court of the power to enjoin it. The district court in this case carefully crafted a narrow injunction that prohibited the fraudulent manner in which the Union used the term “rats,” but did not prohibit the use of the term itself. The Hospital presented evidence to the district court that has convinced us that the strict requirements of the NLA are satisfied. As a result, the district court did not err in issuing a narrowly tailored preliminary injunction to prevent the Union from using the term “rats” in a fraudulent manner.
B. Prior Restraint
|
4315059-29452 | ENTRY AND ORDER OVERRULING MONROE’S OBJECTIONS (Doc. # 15) TO THE MAGISTRATE JUDGE’S REPORT AND RECOMMENDATIONS; ADOPTING THE MAGISTRATE JUDGE’S REPORT AND RECOMMENDATIONS (Doc. #13) IN ITS ENTIRETY; AFFIRMING THE COMMISSIONER’S FINAL NON-DISABILITY DETERMINATION AND TERMINATING THIS CASE
THOMAS M. ROSE, District Judge.
Mindy Monroe (“Monroe”) brought this action pursuant to 42 U.S.C. § 405(g) for judicial review of the decision of the Defendant Commissioner of Social Security (the “Commissioner”) that she is not disabled and, therefore, not entitled to Social Security disability benefits. On May 24, 2013, United States Magistrate Judge Michael J. Newman entered a Report and Recommendations (doc. # 13) recommending that the Commissioner’s Decision be affirmed. Monroe subsequently filed Objections (doc. # 15) and the time has run and the Commissioner has not responded to Monroe’s Objections. This matter is, therefore, ripe for decision.
Monroe sought financial assistance from the Social Security Administration by applying for Disability Insurance Benefits in January of 2008. Monroe claimed that she had been disabled since July 1, 2006, due to Crohn’s disease, rheumatoid arthritis, anemia, bursitis, fatigue, osteoporosis and tendonitis..
The Commissioner denied Monroe’s application initially and on reconsideration. Administrative Law Judge (“ALJ”) Thomas McNichols, II (“McNichols”) held a hearing following which he determined that Monroe is not disabled. The Appeals Council denied Monroe’s request for review and ALJ McNichols’ decision became the Commissioner’s final decision. Monroe then appealed to this Court pursuant to 42 U.S.C. § 405(g).
As required by 28 U.S.C. § 636(b) and Federal Rules of Civil Procedure Rule 72(b), the District Judge has made a de novo review of the record in this case. Based upon the reasoning and citations of authority set forth in the Magistrate Judge’s Report and Recommendations (doc. # 13) and in Monroe’s Objections (doc. # 15), as well as upon a thorough de novo review of this Court’s file and a thorough review of the applicable law, this Court adopts the aforesaid Report and Recommendations in its entirety and, in so doing affirms the Commissioner’s decision that Monroe is not disabled in accordance with Social Security regulations.
This Court’s function is to determine whether the record as a whole contains substantial evidence to support the ALJ’s decision. Bowen v. Commissioner of Social Security, 478 F.3d 742, 745-46 (6th Cir.2007). This Court must also determine whether the ALJ applied the correct legal criteria. Id.
Regarding the substantial evidence requirement, the ALJ’s findings must be affirmed if they are supported by “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Richardson v. Perales, 402 U.S. 389, 401, 91 S.Ct. 1420, 28 L.Ed.2d 842 (1971) (citing Consolidated Edison Company v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938)); Landsaw v. Secretary of Health and Human Services, 803 F.2d 211, 213 (6th Cir.1986). Substantial evidence means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Richardson, supra, at 401, 91 S.Ct. 1420; Ellis v. Schweicker, 739 F.2d 245, 248 (6th Cir.1984). Substantial evidence is more than a mere scintilla, but only so much as would be required to prevent a directed verdict (now judgment as a matter of law) against the ALJ/Commissioner if this case were being tried to a jury. Foster v. Bowen, 853 F.2d 483, 486 (6th Cir.1988); NLRB v. Columbian Enameling and Stamping Company, 306 U.S. 292, 300, 59 S.Ct. 501, 83 L.Ed. 660 (1939).
The second judicial inquiry-reviewing the ALJ’s legal criteria-may result in reversal even if the record contains substantial evidence supporting the ALJ’s factual findings. See Bowen, 478 F.3d at 746. A reversal based on the ALJ’s legal criteria may occur, for example, when the ALJ has failed to follow the Commissioner’s “own regulations and where that error prejudices a claimant on the merits or deprives the claimant of a substantial right.” Bowen, 478 F.3d at 746 (citing in part Wilson v. Commissioner of Social Security, 378 F.3d 541, 546-47 (6th Cir.2004)).
In this case, the ALJ’s decision is supported by substantial evidence and the ALJ applied the correct legal criteria. WHEREFORE, Monroe’s Objections to the Magistrate Judge’s Report and Recommendations are OVERRULED, and this Court adopts the Report and Recommendations of the United States Magistrate Judge in its entirety. The Commissioner’s decision that Monroe is not disabled in accordance with Social Security regulations is affirmed. Finally, the captioned cause is hereby ordered terminated upon the docket records of the United States District Court for the Southern District of Ohio, Western Division, at Dayton.
REPORT AND RECOMMENDATION THAT: (1) THE ALJ’S NON-DISABILITY FINDING BE FOUND SUPPORTED BY SUBSTANTIAL EVIDENCE, AND AFFIRMED; AND (2) THIS CASE BE CLOSED
MICHAEL J. NEWMAN, United States Magistrate Judge.
This is a Social Security disability benefits appeal. At issue is whether the Administrative Law Judge (“ALJ”) erred in finding Plaintiff not “disabled” and therefore unentitled to Disability Insurance Benefits (“DIB”). This case is before the Court upon Plaintiffs Statement of Errors (doc. 9), the Commissioner’s Memorandum in Opposition (doc. 11), Plaintiffs Reply (doc. 12), the administrative record (doc. 6) , and the record as a whole.
I. BACKGROUND
A. Procedural History
Plaintiff filed her application for DIB on January 31, 2008, asserting that she has been under a “disability” since July 1, 2006. PagelD 180-85. Plaintiff claims she is disabled due to Crohn’s disease, rheumatoid arthritis, anemia, bursitis, fatigue, osteoporosis, and tendonitis. Pa-gelD 201.
Following initial administrative denials of her application, Plaintiff received a hearing before ALJ Thomas McNichols, II on October 13, 2010. PagelD 76-124. On October 21, 2010, ALJ McNichols issued a written decision, concluding — at Step Five of the five-step sequential disability analysis, see infra — that Plaintiff could perform a limited range of light work and was thus not disabled. PagelD 50-65. Specifically, the ALJ’s findings, which represent the rationale of his decision, were as follows:
1. The claimant meets the insured status reqxiirements of the Social Security Act through June 30, 2011;
2. The claimant has not engaged in substantial gainful activity since July 1, 2006, the alleged onset date (20 C.F.R. § 404.1571 et seq.);
3. The claimant has the following severe impairments: chronic abdominal pain, attributed to Crohn’s disease; a history of rheumatoid arthritis; depression; and anxiety (20 C.F.R. § 404.1520(c));
4. The claimant does not have an impairment or combination of impairments that meets or medically equals one of the listed impairments in 20 C.F.R. Part 404, Sub-part P, Appendix 1 (20 C.F.R. §§ 404.1520(d), 404.1525 and 404.1526);
5. After careful consideration of the entire record, the [ALJ] finds that the claimant has the residual functional capacity (“RFC”) to perform light work as defined in 20 C.F.R. 404.1567(b) except that she must be free to alternate positions between sitting and standing at 30-minute periods throughout the workday. She can never climb ladders, ropes, or scaffolds, and she can never push and/or pull with arms fully extended. She can perform work above shoulder level on no more than an occasional basis, and she must avoid all exposure to hazards and vibrations. She can perform no repetitive bending or twisting at the waist, due to abdominal pain, and she requires ready access to restroom facilities (defined as no work with the general public and no assembly line work). She must not be required to maintain concen tration on a single task for longer than 15 minutes at a time;
6. The claimant is unable to perform any past relevant work (20 C.F.R. § 404.1565);
7. The claimant was born [in] 1978 and was 27 years old, which is defined as a “younger individual age 18^49,” on the alleged disability onset date. (20 C.F.R. § 404.1563);
8. The claimant has at least a high school education and is able to communicate in English (20 C.F.R. § 404.1564);
9. Transferability of job skills is not ■ material to the determination of disability because using the Medical-Vocational Rules as a framework supports a finding that the claimant is “not disabled,” whether or not the claimant has transferable job skills (See SSR 82-41 and 20 C.F.R. Part 404, Subpart P, Appendix 2);
10. Considering her age, education, work experience, and [RFC], there are jobs that exist in significant numbers in the national economy that the claimant can perform (20 C.F.R. §§ 404.1569 and 404.1569(a)); [and]
11. The claimant has not been under a disability, as defined in the Social Security Act, from July 1, 2006, through the date of this decision (20 C.F.R. § 404.1520(g)).
PagelD 52-64.
Thereafter, the Appeals Council denied Plaintiffs request for review, making the ALJ’s non-disability finding the final administrative decision of the Commissioner. PagelD 41-44. See Casey v. Sec’y of H.H.S., 987 F.2d 1230, 1233 (6th Cir.1993). Plaintiff then timely filed this appeal on April 13, 2012. Doc. 2.
B. Plaintiffs Hearing Testimony
At the time of the administrative hearing, Plaintiff was 31 years old. PagelD 79. Plaintiff testified that she lives at her boyfriend’s house with her three minor children (ages ten, four and two). PagelD 79-80. She has a driver’s license, and drove regularly up until three months pri- or to the hearing. PagelD 81.
Plaintiff testified that her Crohn’s disease has been in remission for the past eight years. PagelD 84, 97. She experiences flare-ups once every two to three months. PagelD 83-84, 87. Plaintiff takes no medication for Crohn’s, but testified she experiences daily abdominal pain. Id. In addition, she suffers from rheumatoid arthritis in her shoulders, spine, and hips. PagelD 85, 88, 90. She is unable to lift her arms over her head, but is able to use her hands. Id. She has not gone to a specialist for treatment of her arthritis; rather, she relies upon medication prescribed by her pain management physician. PagelD 87.
Plaintiff testified that she also suffers from depression and anxiety, which cause her fatigue and hinder her ability to concentrate. PagelD 90. She stated that she had not received any mental health treatment in the three months prior to the hearing, primarily due to the cost. Pa-gelD 91. Her pain management physician prescribes her medication for anxiety and panic attacks. PagelD 93.
Plaintiff estimates she has the ability to: walk one block; stand no more than 15 minutes at a time; sit no more than 30 minutes at a time; and lift no more than a gallon of milk. PagelD 100-03. She cares for her three children, prepares meals, washes dishes, and does laundry. PagelD 104. She also smokes one-half pack of cigarettes daily. PagelD 107.
C. Vocational Expert Testimony
Suman Srinivasan, a vocational expert (“VE”), also testified at the administrative hearing. PagelD 113-22. The VE classified Plaintiffs past work as a “nurse’s assistant” at the medium, semi-skilled level. PagelD 115. Based on Plaintiffs age, education, work experience and RFC, the VE testified that Plaintiff would be unable to perform her past relevant work; nevertheless, she could perform, within the regional economy, 12,000 jobs at the light exertional level, and 3,000 jobs at the sedentary exertional level. PagelD 118.
II. APPLICABLE LAW
A. Substantial Evidence Standard
The Court’s inquiry on a Social Security appeal is to determine (1) whether the ALJ’s non-disability finding is supported by substantial evidence, and (2) whether the ALJ employed the correct legal criteria. 42 U.S.C. § 405(g); Bowen v. Comm’r of Soc. Sec., 478 F.3d 742, 745-46 (6th Cir.2007). In performing this review, the Court must consider the record as a whole. Hephner v. Mathews, 574 F.2d 359, 362 (6th Cir.1978).
Substantial evidence is “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Richardson v. Perales, 402 U.S. 389, 401, 91 S.Ct. 1420, 28 L.Ed.2d 842 (1971). When substantial evidence supports the ALJ’s denial of benefits, that finding must be affirmed, even if substantial evidence also exists in the record upon which the ALJ could have found the claimant disabled. Buxton v. Halter, 246 F.3d 762, 772 (6th Cir.2001). Thus, the ALJ has a “ ‘zone of choice’ within which he can act without the fear of court interference.” Id. at 773.
The second judicial inquiry—reviewing the correctness of the ALJ’s legal analysis—may result in reversal even if the ALJ’s decision is supported by substantial evidence in the record. Rabbers v. Comm’r of Soc. Sec., 582 F.3d 647, 651 (6th Cir.2009). Thus, “a decision of the Commissioner will not be upheld where the SSA fails to follow its own regulations and where that error prejudices a claimant on the merits or deprives the claimant of a substantial right.” Bowen, 478 F.3d at 746.
B. “Disability” Defined
To qualify for disability benefits, a claimant must suffer from a medically determinable physical or mental impairment that can be expected to result in death or that has lasted or can be expected to last for a continuous period of not less than 12 months. The impairment must render the claimant unable to engage in the work previously performed or in any other substantial gainful employment that exists in the national economy. 42 U.S.C. § 423(d)(2).
Administrative regulations require a five-step sequential evaluation for disability determinations. 20 C.F.R. § 404.1520(a)(4). Although a dispositive finding at any step ends the ALJ’s review, see Colvin v. Barnhart, 475 F.3d 727, 730 (6th Cir.2007), the complete sequential review poses five questions:
1. Has the claimant engaged in substantial gainful activity?
2. Does the claimant suffer from one or more severe impairments?
3. Do the claimant’s severe impairments, alone or in combination, meet or equal the criteria of an impairment set forth in the Commissioner’s Listing of Impairments (the Listings), 20 C.F.R. Subpart P, Appendix 1?
4. Considering the claimant’s RFC, can he or she perform his or her past relevant work?
5. Assuming the claimant can no longer perform his or her past relevant work — and also considering the claimant’s age, education, past work experience, and RFC — do significant numbers of other jobs exist in the national economy which the claimant can perform?
20 C.F.R. § 404.1520(a)(4); Miller v. Comm’r of Soc. Sec., 181 F.Supp.2d 816, 818 (S.D.Ohio 2001). A claimant bears the ultimate burden of establishing that he or she is “disabled” under the Social Security Act’s definition. Key v. Callahan, 109 F.3d 270, 274 (6th Cir.1997).
III. OPINION AND ANALYSIS
On appeal, Plaintiff argues that the ALJ erred by: (1) giving less than controlling weight to the opinion of her treating pain management physician, Lita Mathai, M.D.; and (2) failing to consider the combined effects of her impairments. Doc. 9 at Pa-gelD 922-26. For the reasons that follow, the Court finds neither argument to be meritorious.
A. Dr. Mathai’s Opinion
Plaintiffs first assignment of error is premised upon an October 2010 report submitted by Dr. Mathai, in which she opined that Plaintiff has the ability to: carry no more than five pounds; occasionally lift and carry zero pounds; frequently lift and carry zero pounds; stand and walk no more than two or three hours; and sit no more than four hours in an eight-hour day. PagelD 902-03. Additionally, Dr. Mathai reported that Plaintiff is completely unable to climb, balance, stoop, crouch, kneel, crawl, reach, pull, or handle. Id. Dr. Mathai stated that Plaintiff “has too many problems and limitations and severe pain that limit her ability to do any substantial work.” PagelD 904.
Plaintiff argues that, as a treating physician, Dr. Mathai’s opinion is entitled to controlling weight. Doc. 9 at PagelD 922. Rather, the ALJ accorded “little weight,” reasoning:
Dr. Mathai’s opinion is not entitled to controlling or deferential weight under the Regulations. The undersigned gives little weight to her assessment, as it appears she relied quite heavily on the subjective report of symptoms and limitations provided by the claimant and seemed to uncritically accept as true most, if not all, of what the claimant reported. Yet, as explained elsewhere in the decision, good reasons exist for questioning the reliability of the claimant’s subjective complaints. The totality of the medical evidence clearly supports that the claimant is not as severely limited as assessed by this doctor. For example, Dr. Mathai indicated that she based her opinion on MRI reports of the back and shoulders, as well as arthritis in the SI joints and facet joints (Exhibit B41F, pages 2-5). However, as discussed above, these reports showed only minimal findings, and her assessment is unsupported by objective testing or examination findings. Dr. Mathai’s opinion is also inconsistent with the relatively full range of daily activities described by the claimant (see discussion above).
PagelD 61. The Court finds the ALJ’s consideration of Dr. Mathai’s opinion to be well supported by substantial evidence.
The opinions of treating physicians are typically entitled to controlling weight. Cruse v. Comm’r of Soc. Sec., 502 F.3d 532, 540 (6th Cir.2007). To that end, under the “treating physician rule,” the ALJ is required to “generally give greater deference to the opinions of treating physicians than to the opinions of non-treating physicians because: ‘these sources are likely to be the medical professionals most able to provide a detailed, longitudinal picture of [the claimant’s] medical impairment(s) and may bring a unique perspective to the medical evidence that cannot be obtained from the objective medical findings alone or from reports of individual examinations, such as consultative examinations or brief hospitalizations.’ ” Blakley v. Comm’r of Soc. Sec., 581 F.3d 399, 406 (6th Cir.2009) (quoting 20 C.F.R. § 404.1527(d)(2)).
Nevertheless, a treating physician’s opinion is to be given controlling weight only if it is well-supported by medically acceptable clinical and laboratory techniques, and is not inconsistent with the other evidence of record. Id.; Walters v. Comm’r of Soc. Sec., 127 F.3d 525, 530 (6th Cir.1997). Accordingly, an ALJ may properly reject a treating physician’s opinion that does not meet these standards. See 20 C.F.R. § 404.1527(d)(2).
When the ALJ declines to give controlling weight to a treating physician’s assessment, “the ALJ must still determine how much weight is appropriate by considering a number of factors, including the length of treatment relationship and the frequency of examination, the nature and extent of the treatment relationship, supportability of the opinion, consistency of the opinion with the record as a whole, and any specialization of the treating physician.” Blakley, 581 F.3d at 406. In accordance with this rule, the ALJ must give “good reasons” for the ultimate weight afforded the treating physician’s opinion, based on the evidence in the record, and these reasons must be sufficiently specific to enable meaningful review of the ALJ’s decision. Id. (citing 20 C.F.R. § 404.1527(d)(2); Social Security Ruling 96-2p, 1996 SSR LEXIS 9, at *5). The ALJ’s failure to adequately explain the reasons for the weight given to a treating physician’s opinion “denotes a lack of substantial evidence, even where the conclusion of- the ALJ may be justified based upon the record.” Id. at 407.
Furthermore, a treating source’s opinion as to a claimant’s employability is a legal conclusion, and not a “medical source opinion,” as defined by Social Security regulations, which the ALJ must accept. See 20 C.F.R. §§ 404.1527(c)-(d). Social Security regulations mandate that the question — of whether or not a claimant is disabled — is an administrative issue reserved solely to the province of the Commissioner. Id.; see also Warner v. Comm’r of Soc. Sec., 375 F.3d 387, 390 (6th Cir.2004) (“The determination of disability is ultimately the prerogative of the Commissioner, not the treating physician”). Thus, the ALJ need not give either controlling or deferential weight to an opinion that a claimant is “disabled.” See 20 C.F.R. § 404.1527(e)(1) (“A statement by a medical source that you are ‘disabled’ or ‘unable to work’ does not mean that we will find that you are disabled”); see also Soc. Sec. Ruling 96-5p, 1996 SSR LEXIS 2, at *2 (“Whether an individual is ‘disabled’ under the Act. The regulations provide that the final responsibility for deciding issues such as these is reserved to the Commissioner”).
Here, the ALJ adequately weighed Dr'. Mathai’s opinion with the other medical evidence of record, and clearly articulated “good reasons” for his conclusion. See 20 C.F.R. § 404.1527(d)(2). For example, Dr. Mathai purportedly based her opinion on MRIs and x-rays of Plaintiffs back and shoulder. See PagelD 900-01. The ALJ appropriately determined, however, that those imaging reports showed only minimal findings, and did not support Plaintiffs allegations of total disability. PagelD 56-57, 61. In December 2005, x-rays of Plaintiffs lumbar spine showed osteophytosis of the vertebral bodies, but were otherwise unremarkable. Id.; PagelD 293. A January 2008 x-ray taken of Plaintiffs right shoulder showed “no significant abnormalities.” PagelD 56, 352. X-rays taken of her sacroiliac joints in January 2009 showed evidence of a prior joint fusion, but no other abnormalities. PagelD 56, 601. Similarly, x-rays of Plaintiffs hips, also taken in January 2009, were normal, and showed no bone, joint or soft tissue abnormalities. PagelD 56, 602. An MRI of Plaintiffs lumbar spine taken in May 2009 revealed partial fusion of the sacroiliac joints and mild spondylosis, but showed no evidence of focal disc extrusion or significant lumbar stenosis. PagelD 56-57, 615. In addition, the ALJ properly considered the objective findings of five other physicians of record, all of whom reported Plaintiff to have a full or slightly limited range of motion in her back and extremities — not the extreme level of limitation reported by Dr. Mathai. PagelD 57.
Furthermore, substantial evidence supports the ALJ’s finding that Dr. Mathai’s opinion is inconsistent with Plaintiffs reported daily activities. Notably, since the alleged onset date of disability, Plaintiff has given birth to two children, in addition to caring for and raising a third child. PagelD 59-60, 424. In May 2008, Plaintiff reported that, on a daily basis, she takes care of her children; prepares meals for herself and children; get her oldest child ready for school; watches television; loads the dishwasher; gathers laundry; changes diapers; attends her son’s baseball games; drives; visits with family members; and occasionally watches movies. PagelD 427-28. See also PagelD 217-23.
Substantial evidence also supports the ALJ’s decision to give significant weight to the shared opinion of medical consultants Charles Derrow, M.D., and Gary Hinzman, M.D.-ie. that Plaintiff has the RFC to occasionally lift up to 50 pounds; frequently lift up to 25 pounds; stand and/or walk for a total of about 6 hours in an 8-hour workday; and sit 6 or so hours in an 8-hour workday, see PagelD 451-57, 593-as that opinion is consistent with the medical findings of record, and not rebutted by other substantial evidence. As noted above, the record strongly suggests that Plaintiff can perform a wide range of activities and is not disabled. See supra. As such, substantial evidence supports the ALJ’s finding that Plaintiffs impairments, whether viewed singly or in combination, do not demonstrate disability. Id.
It is not the Court’s role to sift through the facts and make a de novo determination of whether a claimant is disabled. The ALJ, not the Court, is the finder of fact. Siterlet v. Sec’y of H.H.S., 823 F.2d 918, 920 (6th Cir.1987). The ALJ reasonably undertook that role here. Id. So long as the Commissioner’s decision is supported by substantial evidence, it must be affirmed. 42 U.S.C. § 405(g); Richardson, 402 U.S. at 401, 91 S.Ct. 1420. Where, as here, there is substantial evidence supporting the ALJ’s resolution of the disputed facts, the Court must affirm the ALJ even if the Court might have resolved those disputed facts in Plaintiffs favor had it been the trier of fact. Nunn v. Bowen, 828 F.2d 1140, 1144 (6th Cir.1987).
B. Combination of Impairments
Plaintiff also argues that the ALJ “did not even address the disabling effect of the combination of [my] physical and mental impairments.” Doc 9 at PagelD 926. In support of this assertion, Plaintiff relies upon the Sixth Circuit’s decision in Walker v. Sec’y of H.H.S., 980 F.2d 1066 (6th Cir.1992). In Walker, the Court re versed the Commissioner’s non-disability finding because the medical evidence indicated that the combined effect of the claimant’s impairments warranted a finding of disability. Id. at 1071. The Court found that the ALJ erred because he “looked at each impairment in a vacuum and made two separate determination[s] as to whether each one, separately, would qualify [the claimant] for disability.” Id.
However, the record in the present case reflects that the ALJ considered the combined effect of all of Plaintiffs impairments, including her history of Crohn’s disease, chronic abdominal pain, rheumatoid arthritis, anxiety and depression. Pa-gelD 53-55. The ALJ considered Listings §§. 1.02 (major dysfunction of a joint) and 1.04 (disorders of the spine) in consideration of Plaintiffs history of rheumatoid arthritis. He found that the evidence does not show an inability to ambulate effectively for 12 months or more, as required by Listings §§ 1.02(A) or 1.04(C). Id. (citing to PagelD 579, 622 and 646). Furthermore, the ALJ found no evidence of nerve root compression characterized by neuroanatomic distribution of pain, limitation of motion of the spine, motor loss (atrophy with associated muscle weakness or muscle weakness) accompanied by sensory or reflex loss or positive straight-leg raising test (sitting and supine), as required by Listing § 1.04(A). Id. (citing to, PagelD 263, 508, 578, 622 and 646).
The ALJ also determined that, “the claimant’s Crohn’s disease does not produce the signs arid findings needed to meet the criteria of any listing in section 5.00 of the Listing of Impairments, as the record contains no evidence of gastrointestinal hemorrhage, stricture, obstruction, or ulceration, chronic liver disease, or nutritional compromise.” PagelD 54. Notably, Plaintiff testified that her Crohn’s disease has been in remission for eight years, and she does not regularly take any prescribed medication for it. PagelD 83-84.
The ALJ discussed Plaintiffs mental impairments of depression and anxiety under Listings §§ 12.04 and 12.06, but found that the evidence establishes only “mild” limitations in her activities of daily living and social functioning, and “moderate” limitations in concentration, persistence and pace — not “marked” or “extreme” levels required to meet or equal either Listing. Id. The ALJ noted that Plaintiff has never been hospitalized due to any mental condition. PagelD 59. He additionally found that, although Plaintiff complained of panic attacks, depression and anxiety, she did not begin mental health treatment until February 2010 — more than three and, half years after her alleged onset date. Pa-gelD 59-60.
Further, in posing various hypothetical questions to the VE, the ALJ incorporated the combined effect of all the limitations associated with Plaintiffs impairments, including her exertional limitations, mental limitations, and need for immediate access to restroom facilities. PagelD 115-19. The VE testified that a significant number of jobs exist in the national economy that Plaintiff could nevertheless perform with all of the limitations identified by the ALJ. PagelD 118.
Pursuant to 20 C.F.R. § 404.1523, the ALJ is required to consider the “combined effect” of all a claimant’s impairments in determining whether a medically severe combination of impairments exists. However, if the ALJ determines that a claimant does not have a medically severe combination of impairments, the Social Security Act and regulations mandate a determination that the claimant is not disabled. See 20 C.F.R. § 404.1523 (“If we do not find that you have a medically severe combination of impairments, we will determine that you are not disabled”).
Here, the ALJ thoroughly considered the combined effects, of Plaintiffs impairments in his decision, as well as in his hypotheticals to the VE. Although Plaintiff suffers from a variety of impairments, substantial evidence supports the ALJ’s conclusion that the combination of those impairments is not medically severe, does not meet or equal any of the - listed impairments, and does not support a finding of disability.
IV. RECOMMENDATION
For the foregoing reasons, the Court finds Plaintiffs the ALJ’s non-disability finding supported by substantial evidence.
IT IS THEREFORE RECOMMENDED THAT:
1. The Commissioner’s non-disability finding be found supported by substantial evidence, and AFFIRMED; and
2. This case be CLOSED.
May 24, 2013.
NOTICE REGARDING OBJECTIONS
|
1213262-13923 | GODBOLD, Chief Judge:
We consider in this diversity case whether an order authorizing a pre-judgment sale of collateral was a final order from which an appeal could have been taken, and we conclude that it was. We also find that the district court had jurisdiction to enter the order of sale and that the later order confirming the sale was not an abuse of discretion.
Appellee Citibank brought this action in federal court in Florida to foreclose its security interest in 870,000 shares of stock in Miami National Bank (approximately 80% of the total outstanding shares) owned by appellant Data Lease. The district court granted Citibank’s motion for pre-judgment sale of the collateral based upon these determinations: that the Bank was in a seriously unsound financial condition and was drastically in need of an immediate infusion of capital; that a sale of the collateral was inevitable; that an immediate sale was in the best interests of all concerned; and that the rights of both Citibank and Data Lease were adequately protected by the order of sale. No appeal was taken from this order. A sale was held at which Citibank, the only bidder, purchased the stock for $3,000,-000. The district court confirmed the sale. Data Lease pursued this appeal from the order confirming the sale, contending that the district court erred in directing sale of the collateral prior to final judgment and that the court was without power to order a sale of at least some of the stock (which Data Lease had previously been directed by a state court to convey to a third party). Citibank contends that the order directing the sale was a final, appealable order and that Data Lease cannot now challenge the propriety of that order. Alternatively Citibank argues that the order of sale was proper.
After this case was argued in this court, Citibank filed a motion to dismiss the appeal as moot on the ground that the stock has been sold to a third party. Citibank argues that because Data Lease failed to obtain a stay or supersedeas of the district court’s sale and confirmation orders, Citibank was entitled to and did rely on those orders as final in selling the stock. Relying on American Grain Association v. Lee-Vac, Ltd., 630 F.2d 245 (5th Cir. 1980), it asserts that the intervening rights of the third party purchaser preclude this court from granting substantial relief to Data Lease and that the appeal is therefore moot. We disagree.
Citibank’s reliance on Lee-Vac is misplaced. That case was an appeal from an order in a bankruptcy proceeding governed by Rule 805 of the Rules of Bankruptcy Procedure, which provides in pertinent part that “[ujnless an order approving a sale of property ... is stayed pending appeal, the sale to a good faith purchaser ... shall not be affected by the reversal or modification of such order on appeal, whether or not the purchaser ... knows of the pendency of the appeal.” By contrast the instant case is a diversity action, and the nature of the rights created by the orders of sale and confirmation is determined by the law of Florida. Erie R. R. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). It is to that law we must turn to determine whether the subsequent sale vested the third party purchaser with rights that would not be affected by a reversal of either the sale or the confirmation order.
Under the law of Florida a good faith purchaser at a judicial sale who is not a party to the proceedings leading up to the sale is not affected by a subsequent reversal of the order of sale on non-jurisdictional grounds. Garvin v. Watkins, 29 Fla. 151, 10 So. 818 (1892). A reversal of the order-of sale on jurisdictional grounds will defeat the title of even such a purchaser, however. Id. A party or his privy who purchases at a judicial sale, on the other hand, is charged With notice of any defects in the proceedings, and his title will thus be defeated by a reversal on any ground. Johnson, v. McKinnon, 54 Fla. 221, 45 So. 23 (1907). The effect of reversal on the title of a grantee of a party purchaser is somewhat less clear. A reversal on jurisdictional grounds defeats the grantee’s title at least where the jurisdictional defect is apparent from the record or where the grantee has notice of the facts giving rise to the defect. Klinger v. Milton Holding Co., 136 Fla. 50, 186 So. 526 (1939); Smetal Corp. v. West Lake Investment Co., 126 Fla. 595, 172 So. 58 (1937). We have found no Florida authority indicating the effect of a reversal on non-jurisdictional grounds on the title of a party purchaser’s grantee. Turning to cases from other jurisdictions, however, the clear weight of authority is that in the absence of a statute to the contrary the reversal on appeal of an order directing a sale of property defeats the title of one who obtained the property from a party who purchased it at the judicial sale, regardless of the ground for reversal. This rule is based upon the general principle that one ordinarily cannot convey a better title than he himself has. Because the party purchaser’s title is defeasible his grantee’s title is also defeasible. See DiNola v. Allison, 143 Cal. 106, 76 P. 976 (1904); Marks v. Cowles, 61 Ala. 299 (1878); and cases discussed therein. Because a reversal by this court of either of the district court’s orders would defeat Citibank’s purchaser’s title and entitle Data Lease to possession of the stock, no aspect of this appeal is moot.
An order confirming a judicial sale of property is a final order from which an appeal may be taken pursuant to 28 U.S.C. § 1291. Sage v. Central R. R., 96 U.S. 712, 24 L.Ed. 641 (1878); Godchaux v. Morris, 121 F. 482 (5th Cir. 1903). Cf. U. S. v. “A” Manufacturing Co., 541 F.2d 504 (5th Cir. 1976). Citibank argues that the order of sale was itself a final order and that Data Lease waived its right to challenge that order by failing to appeal from it. We directed the parties to submit supplemental briefs on this issue, and we now conclude that Citibank is correct and that we are limited to a review of the order confirming the sale and a determination whether the district court had jurisdiction to order the sale.'
Data Lease contends that the order of sale was not a final order from which an immediate appeal could be taken and that the order of sale and the confirmation order, taken together, constitute a mandatory preliminary injunction appealable under 28 U.S.C. § 1292(a)(1). Data Lease appears to argue in the alternative that each of the orders was a preliminary injunction appeal-able under § 1292(a), and it relies on the principle that a party’s failure to appeal from an interlocutory order appealable as of right under § 1292(a) does not prevent review of that order upon a later appeal. See Caradelis v. Refineria Panama, S. A., 384 F.2d 589 (5th Cir. 1967); Gloria Steamship Co. v. Smith, 376 F.2d 46 (5th Cir. 1967); Victor Talking Machine Co. v. George, 105 F.2d 697 (3d Cir.), cert. denied 308 U.S. 611, 60 S.Ct. 176, 84 L.Ed. 511 (1939).
In Ray v. Law, 7 U.S. (3 Cranch) 179, 179-80, 2 L.Ed. 404, 404 (1805), Chief Justice Marshall stated that
[t]he act of Congress points out the mode in which we are to exercise our appellate jurisdiction, and only authorizes an appeal or writ of error on a final judgment or decree.... The Court, however, is of opinion, that a decree for a sale under a mortgage is such a final decree as may be appealed from.
Not all orders contemplating a judicial sale are final and appealable. An immediate appeal may not be taken from an order determining that, if a debt is not paid, a party has a right to sale of specified property if the order neither determined the amount of the debt nor ordered a sale, Burlington, C. R. & N. Ry. v. Simmons, 123 U.S. 52, 8 S.Ct. 58, 31 L.Ed. 73 (1887); from an order directing transfer of property to a receiver but not directing an immediate sale, Grant v. Phoenix Mutual Life Ins. Co., 106 U.S. (16 Otto) 429, 1 S.Ct. 414, 27 L.Ed. 237 (1882); or from an order directing a sale of property but not determining the amount of an unliquidated claim or the specific property to be sold, North Carolina R. R. v. Swasey, 90 U.S. (23 Wall.) 405, 23 L.Ed. 136 (1875). But an order in a foreclosure proceeding that directs the immediate sale of specified property is in all respects a final order for purposes of appeal. First National Bank v. Shedd, 121 U.S. 74, 7 S.Ct. 807, 30 L.Ed. 877 (1887); Sage v. Central R. R, 93 U.S. 412, 23 L.Ed. 933 (1876); Bronson v. LaCrosse & M. R. R., 67 U.S. (2 Black) 524, 17 L.Ed. 359 (1863); Whiting v. Bank of the United States, 38 U.S. (13 Pet.) 6, 10 L.Ed. 33 (1839).
In Whiting heirs of the defendant in a foreclosure action brought a bill of review challenging the order of foreclosure and sale. The bill was timely if measured from the date of the confirmation order but untimely if measured from the date of the order of sale. The Court ruled that the bill could not raise asserted errors in the foreclosure proceedings because the order of foreclosure and sale was final and could be reviewed only upon an appeal from the order or by a bill of review that was timely with respect to the sale order. Later cases have consistently recognized that review of an order directing a sale of property may be had only upon an appeal taken from the order of sale and not upon an appeal from the subsequent confirmation. See, e. g., Leadville Coal Co. v. McCreery, 141 U.S. 475, 12 S.Ct. 28, 35 L.Ed. 824 (1891) (separate appeals taken from both orders); Sage v. Central R. R, 96 U.S. 712, 24 L.Ed. 641 (1878) (separate appeals taken from both orders); Central Trust Co. v. Peoria, D. & E. Ry., 118 F. 30 (7th Cir. 1902) (no appeal taken from sale order); Chase v. Driver, 92 F. 780 (8th Cir. 1899) (no appeal taken from either order). Cf. U. S. v. Heasley, 283 F.2d 422 (8th Cir. 1960) (dictum to same effect in case of sale by receiver). Data Lease cites U. S. v. “A” Manufacturing Co., supra, as involving review of an order of sale upon appeal from the confirmation order where no appeal was taken from the sale order, but in that case appeals were taken from both an order denying a motion to suspend the sale and the confirmation order. Moreover, “A” Manufacturing involved two appeals from orders in a receivership proceeding, which are governed by 28 U.S.C. § 1292(a)(2), and as we have indicated, the general view is that failure to appeal an order under § 1292 does not preclude later review. Because Data Lease failed to appeal from the order of sale, which was a final order appealable under § 1291, our review is limited to determining whether the district court had jurisdiction to order a sale of the stock and whether the district judge abused his discretion in confirming the sale.
An order directing a judicial sale of property may be attacked at any time, even years after confirmation and in a separate proceeding, on the ground that the court was without jurisdiction to order the sale. Mellen v. Moline Malleable Iron Works, 131 U.S. 352, 9 S.Ct. 781, 33 L.Ed. 178 (1889); Galpin v. Page, 85 U.S. (18 Wall.) 350, 21 L.Ed. 959 (1874); Mitchell v. St. Maxent, 71 U.S. (4 Wall.) 237, 18 L.Ed. 326 (1866); Milwaukee & M. R. R. v. Soutter, 69 U.S. (2 Wall.) 609, 17 L.Ed. 886 (1865). Data Lease contends that the district court was without jurisdiction to order sale of the stock because when this action commenced Data Lease was subject to an order of a Florida state court directing specific performance of a contract to convey 217,500 of the shares to a third party, Blackhawk Heating & Plumbing Co. We reject this contention.
Where a state court has actual or constructive possession of property, whether in an action in rem or quasi in rem or in an action (such as a receivership or the administration of a trust) that necessarily involves direct exercise of the court’s power over the property, a federal court as a matter of comity cannot exercise in rem jurisdiction over the same property. Kline v. Burke Construction Co., 260 U.S. 226, 229, 43 S.Ct. 79, 81, 67 L.Ed. 226, 230 (1922). But where the state court action is in personam, there is no objection to the federal court’s exercise of either in rem or in personam jurisdiction over an action involving the same property. Id. Although an action for specific performance of a contract to convey property partakes of both in rem and in personam elements, “a suit in equity to compel the specific performance of a contract is essentially still a suit in person-am and not an action in rem, even though the suit is brought to compel the specific performance of a contract to convey real property.” 29A Fla.Jur., Specific Performance § 122. At the hearing on Citibank’s motion for an immediate sale of the stock, counsel for Data Lease conceded that the state court proceeding was not an in rem action. (Tr. at 9). Moreover, nothing in any of the published opinions of the state courts in that action indicates that it was an in rem action. See Blackhawk Heating & Plumbing Co. v. Data Lease Financial Corp., 328 So.2d 825 (Fla.1975); 302 So.2d 404 (Fla.1974); 325 So.2d 475 (Fla.App. 1975); 287 So.2d 118 (Fla.App.1973). While Data Lease might conceivably be in violation of the state court’s order for failure to deliver the stock to Blackhawk, this would not deprive the federal court of jurisdiction in this essentially in rem proceeding.
Data Lease also challenges the confirmation of the sale on the ground of inadequacy of price. Citibank was the only bidder at the sale, and it purchased the stock for $3,000,000, the lowest price that the district court had indicated it would accept. In the specific performance action brought by Blackhawk in Florida state court, the court set the price for 217,500 shares at $2,600,000 less certain “cash flow benefits” that have not yet been determined. Data Lease argues that this indicates that Citibank’s bid was unreasonably low.
|
3639512-24633 | PER CURIAM:
Frankie and Patsy Sims (the Simses) appeal the dismissal of their complaint against Carrington Mortgage Services, L.L.C. (CMS), as well as the district court’s refusal to allow the Simses to amend their complaint to add additional legal theories and its denial of their motion for reconsideration. We affirm the district court’s denial of leave to amend and its denial of the motion for reconsideration. Because the remaining issues in this case raise important and determinative questions of Texas law as to which there are no controlling Supreme Court of Texas precedents, we certify those unresolved questions to the Supreme Court of Texas.
We first address the Simses’ motion for leave to amend and their motion for reconsideration. The relevant facts are as follows. The Simses filed a class action lawsuit against CMS in federal district court, alleging that during the course of modifying their home equity loan, CMS violated several provisions of section 50 of Article XVI of the Texas Constitution. CMS filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), arguing that the Simses had not stated a claim. After CMS filed its motion to dismiss, the Simses filed a response that included a request for leave to amend their complaint; they did not file a proposed amended complaint as required under the local rules. The Sims-es later filed a motion for leave to file a sur-reply to argue new legal theories or, in the alternative, for leave to amend their complaint; that motion set forth the Sims-es’ new theory—namely, that CMS had capitalized not only past-due interest but also past-due property taxes and insurance premiums. In its response, CMS pointed out that the Simses’ complaint already contemplated that property taxes and insurance premiums were capitalized along with past-due interest and that CMS’s motion to dismiss addressed those claims. Noting that it had “considered all of the parties’ filings, as well as the applicable legal au-
thorities,” the district court granted the motion and dismissed the Simses’ claims with prejudice. The Simses moved for reconsideration, arguing that the district court had not considered their new legal arguments; the district court denied that motion.
The Simses contend that the district court erred in (1) dismissing the case without allowing them to amend their complaint to add additional theories of liability, and (2) refusing to reconsider the dismissal. We hold that the district court did not abuse its discretion in denying the Simses leave to amend or in refusing to reconsider the dismissal.
“We review the district court’s denial of a leave to amend for abuse of discretion.” The district court never expressly ruled on the Simses’ motion to amend; however, we have held that “[t]he denial of a motion by the district court, although not formally expressed, may be implied by the entry of a final judgment or of an order inconsistent with the granting of the relief sought by the motion.” Here, the district court’s dismissal of the Simses’ claims with prejudice was sufficiently inconsistent with the Simses’ motion to amend that it constituted an implicit denial of that motion.
Although Federal Rule of Civil Procedure 15(a) “requires a trial court to grant leave to amend freely, and the language of this rule evinces a bias in favor of granting leave to amend,” we have emphasized that whether to grant or deny a motion to amend is “entrusted to the sound discretion of the district court.” Because the district court did not formally deny the motion to amend, it did not provide any reasoning. A district court, however, may properly deny a motion to amend when the amendment would be futile. As CMS points out, the Simses’ first amended complaint expressly contemplated that other fees and costs may have been capitalized in addition to past-due interest. Additionally, CMS discussed these fees and costs in its brief supporting its motion to dismiss. Therefore, the Simses’ allegedly “new” legal theory was already before the district court. The Simses have failed to establish that the district court abused its discretion in denying their motion for leave to amend.
Similarly, we review a district court’s denial of a motion to reconsider for abuse of discretion. The Simses argue that the district court should have granted their motion to reconsider for essentially the same reasons that they argue that the court should have granted their motion to amend. For the reasons we have already stated, the district court did not abuse its discretion.
The remaining issues in this case implicate important and determinative, but unresolved, questions of Texas law; we therefore certify those questions to the Supreme Court of Texas.
CERTIFICATION FROM THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT TO THE SUPREME COURT OF TEXAS, PURSUANT TO ARTICLE 5, SECTION 3-C OF THE TEXAS CONSTITUTION AND RULE 58 OF THE TEXAS RULES OF APPELLATE PROCEDURE.
TO THE SUPREME COURT OF TEXAS AND THE HONORABLE JUSTICES THEREOF:
I. STYLE OF THE CASE
The style of the case is Frankie Sims, on behalf of himself and all others similarly situated, Patsy Sims, on behalf of herself and all others similarly situated, Plaintiffs-Appellants v. Carrington Mortgage Services, L.L.C., Defendant-Appellee, Case No. 12-10978, in the United States Court of Appeals for the Fifth Circuit, on appeal from the judgment of the United States District Court for the Northern District of Texas, Fort Worth Division. Federal jurisdiction is based on diversity of citizenship.
II. STATEMENT OF THE CASE
As we have already noted, this case involves a class action filed by the Simses against CMS, in which the Simses contend that CMS violated various provisions of section 50 of Article XVI of the Texas Constitution. The facts alleged by the Simses are as follows. In 2003, the Simses obtained a home equity loan from CMS for $76,000. In 2009, the Simses were behind on their payments and entered into an agreement (the 2009 Agreement) with CMS which added approximately $2,200 of past-due interest and other charges, including fees and unpaid property taxes and insurance premiums, to the principal of the loan, leading to a new balance of $74,345.50. At that time, the Simses’ property was appraised for $72,300. The 2009 Agreement was entitled “Loan Modification Agreement,” purported to be a modification, and contained the following condition:
All covenants, agreements, stipulations, and conditions in your Note and Mortgage will remain in full force and effect, except as modified herein, and none of your obligations or liabilities under your Note and Mortgage will be diminished or released by any provisions hereof, nor will this Agreement in any way impair, diminish, or affect [the] rights under or remedies on your Note and Mortgage.
In 2011, the Simses again fell behind in their payments, and CMS filed an expedited foreclosure proceeding in state court. The Simses filed for a continuance of the foreclosure proceeding, claiming that the 2009 Agreement violated section 50. The Simses and CMS subsequently entered into another agreement (the 2011 Agreement and, collectively with the 2009 Agreement, the Agreements), which again added approximately $7,368.44 of past-due interest, fees, property taxes, and insurance premiums to the principal of the loan, resulting in a new principal balance of $80,023.95. At the time of the 2011 Agreement, CMS estimated that the value of the Simses’ property was $76,100, and the property was appraised at $73,000. Similar to the 2009 Agreement, the 2011 Agreement was entitled “Loan Modification Agreement,” purported to modify the existing loan, and-contained the following condition:
[A]ll terms and provisions of the Loan Documents, except as expressly modified by this Agreement, remain in full force and effect; nothing in this Agreement shall be understood or construed to be a satisfaction or release in whole or in part of the obligations contained in the Loan Documents; and [ ] except as otherwise specifically provided in, and expressly modified by, this Agreement, the Lender and you will be bound by, and will comply with, all of the terms and conditions of the Loan Documents.
In 2012, the Simses filed this lawsuit against CMS alleging that the Agreements violated section 50 and that CMS had committed similar violations with respect to other debtors. CMS filed a Federal Rule of Civil Procedure 12(b)(6) motion to dismiss for failure to state a claim. The district court granted the motion to dismiss, holding that (1) the Agreements were modifications rather than refinances of the loan; (2) capitalizing past-due interest and adding it to the principal does not constitute an “advance of additional funds” under Texas law; (3) section 50(a)(6)(B)’s requirement that a home equity loan not exceed 80% of the value of the home applies only as of the date the original extension of credit was made and not to any subsequent modifications; and (4) the Agreements did not create an open-end account. Accordingly, the district court held that the Simses had not stated a claim and dismissed their claims with prejudice. This appeal followed.
III. LEGAL ISSUES
This case involves issues of first impression regarding restrictions placed on home equity lending under article XVI, section 50 of the Texas Constitution. In 1997, Texas became the last state in the nation to permit home equity loans when it passed an amendment to section 50 allowing home equity loans secured by a mortgage on the homestead. “The amendment’s purpose was to expand the types of liens for loans that a lender, with the homeowner’s consent, could place against a homestead. The amendment allows homeowners who have either entirely repaid their home loans or who have accumulated equity in their homestead over and above existing liens to apply for a loan against that equity.” “Although home-equity lending is now constitutionally permissible, [section 50(a)(6) ] still places a number of limitations on such lending.” “[F]or lenders, section 50 prescribe^] a Draconian consequence of noncompliance, whether intentional or inadvertent: not merely the loss of the right of forced sale of the homestead, but forfeiture of all principal and interest.” The constitution, however, does allow lenders to cure violations within 60 days of notice of the violation. It also contains a safe harbor provision, which provides that “[a]n act or omission does not violate” section 50 if it “conforms to an interpretation of the provision” that was “in effect at the time of the act or omission” and was “made by a state agency to which the power of interpretation is delegated ... or by an appellate court of this state or the United States.”
Two Texas agencies, the Finance Commission of Texas and the Credit Union Commission of Texas (the Commissions), have interpretative authority over the home equity provisions in the constitution and have promulgated regulations (the Regulations) pursuant to that authority. Recently, in Finance Commission of Texas v. Norwood, the Supreme Court of Texas held that the Regulations are owed the same amount of deference as decisions of Texas courts of appeals. That is, the Supreme Court of Texas reviews the Regulations de novo, while this court would defer to the Regulations “unless convinced by other persuasive data that the [Supreme Court of Texas] would decide otherwise.”
Given the Supreme Court of Texas’s de novo review of the Regulations at issue, the novel questions of Texas constitutional law presented, the importance traditionally placed on the homestead in Texas law, and the harsh penalties imposed for violations of section 50, we conclude that the remaining questions in this case are best addressed by the Supreme Court of Texas.
A
The first issue is whether the Agreements constituted modifications or refinances of the Simses’ loan. The district court held that the plain language of the Agreements “show[ed] no intention by the parties to satisfy and replace the note,” and therefore that the Agreements were modifications rather than refinances. The Simses argue that this interpretation elevates form over substance because “the modification [was] in substance a new note even if the parties tried to agree it was not.” They point out that both agreements recite “a new increased principal, a term of years, and an interest rate,” and that they “consume! ] more home equity as collateral.”
Section 50 requires a refinance to independently comply with all of the provisions of subsection (a)(6). Modifications, on the other hand, are a creation of the Regulations, and the Regulations provide that “[t]he home equity requirements of Section 50(a)(6) will be applied to the original loan and the subsequent modification as a single transaction.”
Despite the important implications of classifying a transaction as a modification or a refinance, the distinction between the two is not clear under Texas law. The Regulations define a modification as a transaction in which “one or more terms of an existing equity loan is modified, but the note is not satisfied and replaced.” Neither the constitution nor the Regulations clearly define “refinance.” In commentary to proposed rules, the Commissions have opined that “[a] refinance creates a new loan whereas a modification amends the original loan” and that “in a refinance, the lien relates back to the original loan, [but] [i]n a modification, the original lien remains.” The Supreme Court of Texas has not defined “refinance” in the context of section 50, although it has noted, albeit in a different context, that an “ordinary refinance transaction [ ]” is one “in which an indebtedness is truly being renewed, modified, and extended.”
These sources suggest that when the original note is not satisfied and replaced, as in this case, the transaction is a modification rather than a refinance. But they do not address the limits of such modifications, that is, whether a modification can change the principal amount of the loan without being required to comply with the provisions applicable to refinances. We therefore certify this question to the Supreme Court of Texas.
B
If the Agreements were in fact refinances, the inquiry ends: there is no dispute that the Agreements did not independently comply with subsection (a)(6) as is required for refinances. However, assuming that the Agreements were modifications rather than refinances, additional questions arise.
The first of these questions is whether the capitalization of past due interest, fees, property taxes, or insurance premiums is an “advance of additional funds” under the Regulations. The Regulations provide that “[t]he advance of additional funds to a borrower is not permitted by modification of an equity loan.” The district court held that “a common-sense reading of the term ‘additional funds’ would appear to contemplate money provided by the lender to the borrower ... that the borrower could use for other purposes at his or her discretion.”
The Simses argue that the district court erred because the capitalized interest was not an “amount already loaned” to the Simses. Under this view, when CMS capitalized the past-due interest, it effectively loaned the Simses an additional sum to pay that interest. According to the Simses, this was an extension of credit not contemplated by the original loan—an “advance of additional funds.” CMS counters that capitalization of the past-due interest cannot constitute an advance of additional funds because it was money already owed to CMS under the “existing, pre-modification home equity loan.”
The only case that CMS cites in support of its position, Meador v. EMC Mortgage Corp, is not on point. In Meador, debtors who wanted to obtain an unsecured loan from a lender were required to refinance their home mortgage as a condition of obtaining the unsecured loan; however, it was “undisputed that the two loans were independent of one another” and that the homestead lien on the mortgage loan did not cover repayment of the unsecured loan. The debtors later brought suit, contending that the loan violated section 50(e), which provides that the advance of additional funds cannot be secured by a lien against the homestead unless certain conditions are met. The court rejected the debtors’ position, holding that “ ‘additional funds’ are monies obtained in excess of the pre-existing debt being refinanced” and that “the phrase ‘advance of additional funds’ contemplates additional funds the repayment of which is secured through a [section 50] lien.”
Even assuming that “advance of additional funds” has the same meaning in section 50(e) and in the Regulations, it appears that the present case is distinguishable from Meador. The alleged “additional funds” in Meador were the proceeds of an unsecured loan. In this case, the payment of the “additional funds” at issue—that is the capitalized past-due interest—was secured by a section 50 lien.
Whether past-due property taxes or insurance premiums can be capitalized into loan principal presents an additional issue under Texas law. As the Simses point out, such sums were not part of the “undifferentiated ‘debt’ owed to CMS.” Instead, the property taxes and insurance premiums were owed to third-parties by the Simses. CMS argues that the Simses’ Security Instrument expressly contemplated capitalization of property taxes and insurance and that if such capitalization were prohibited under section 50, there would be “a monumental change in lending practices.”
The Security Instrument provided that in addition to principal and interest payments each month, the Simses would pay a sum for “Escrow Items,” including property taxes and insurance premiums. The Security Instrument allowed, but did not obligate, CMS to pay past-due escrow items and to charge the Simses interest on such payments. These sums were thus not actually owed to CMS until CMS paid the past-due property taxes and insurance premiums to third parties. This potentially distinguishes both past-due property taxes and insurance premiums from past-due interest. Whether the Security Instrument expressly provides for the capitalization that the Simses allege occurred in this case is disputed. The Simses maintain that capitalization of these costs is not permitted under section 50.
The parties have not cited, nor have we found, additional precedent interpreting the phrase “advance of additional funds”; we therefore certify this unresolved issue of Texas law to the Supreme Court of Texas.
C
The next issue is whether all of the requirements in section 50(a)(6)(A)-(Q) are triggered by a loan modification in which the principal of the loan is increased. The Simses contend that they are and primarily allege that the Agreements violated section 50(a)(6)(B). That subsection requires a home equity loan to be “of a principal amount that when added to the aggregate total of the outstanding principal balances of all other indebtedness secured by valid encumbrances of record against the homestead does not exceed 80 percent of the fair market value of the homestead on the date the extension of credit is made.” In other words, it provides that the loan-to-value ratio (LTV ratio) cannot exceed 80%. CMS does not dispute that the LTV ratio of the Simses’ loan exceeded 80% after each agreement but contends that the subsection (B) does not apply to the Agreements in the first instance.
The district court held that because the Agreements were modifications rather than refinances, CMS was not required to comply with section 50(a)(6)(B) each time it offered the Simses a modification. The court focused on the language “on the date the extension of credit is made,” which is defined in the Regulations as the date on which the home equity loan closes, and concluded that this language indicated that the LTV ratio need only be measured at the closing of the initial home equity loan and not after any subsequent modification. However, the district court’s reading of subsection (B) is not compelled by its plain text because it is unclear from that text whether the phrase “on the date the extension of credit is made” modifies the entire provision including the “principal amount” of the loan or whether it simply modifies the “fair market value of the homestead.” Under the latter interpretation, the fair market value of the home would always be measured as of the closing date of the original home equity loan for purposes of the LTV ratio but the principal amount of the loan would not. Thus, a loan that initially complied with subsection (B) might no longer comply after a modification in which the principal amount of the loan increased.
Neither section 50 nor the Regulations resolves this ambiguity. On one hand, as the district court noted, other provisions of the constitution, including the disclosures mandated by § 50(g), suggest that the LTV ratio is only measured at the inception of the original loan. On the other hand, there are also indications that the LTV ratio should be re-measured if the principal of the loan increases. For example, under the Regulations, “[a] modification of an equity loan may not provide for new terms that would not have been permitted by applicable law at the date of closing of the extension of credit,” which suggests that a modification that causes the LTV ratio to exceed 80% is not permissible. Additionally, as the Simses point out, the district court’s reading undermines subsection (B), at least in some cases, because so long as a lender and borrower satisfy it at the inception of the loan, they may subsequently enter into a loan modification that renders the LTV ratio well over 80%. Accordingly, we also certify this question.
D
The final question presented in this appeal is whether the Agreements converted the Simses’ loan into an open-end account that was required to comply with section 50(t). The district court rejected this argument, holding that the Simses had not alleged “any facts that could possibly be construed as alleging that the modifications of plaintiffs’ home equity loan created any form of open-end account” and that “the loan modification documents clearly contemplate^] a fixed schedule of payments, for a defined period of time, with a decreasing principal balance following each month’s payment.”
Section 50(a)(6)(F) prohibits a home equity loan from taking the form of an open-end account unless it qualifies as a home equity line of credit (HELOC). Section 50(t) sets forth requirements for HELOCs, and it is undisputed that the transactions in this case did not meet those requirements. Thus, the only question is whether the transactions created an open-end account that was required to comply with section 50(t). As “open-end account” is not defined by section 50 or by the Regulations, we certify this issue to the Supreme Court of Texas as well.
IV. QUESTIONS CERTIFIED
We accordingly certify the following four determinative questions of law to the Supreme Court of Texas:
1. After an initial extension of credit, if a home equity lender enters into a new agreement with the borrower that capitalizes past-due interest, fees, property taxes, or insurance premiums into the principal of the loan but neither satisfies nor replaces the original note, is the transaction a modification or a refinance for purposes of section 50 of Article XVI of the Texas Constitution?
If the transaction is a modification rather than a refinance, the following questions also arise:
2. Does the capitalization of past-due interest, fees, property taxes, or insurance premiums constitute an impermissible “advance of additional funds” under section 153.14(2)(B) of the Texas Administrative Code?
3. Must such a modification comply with the requirements of section 50(a)(6), including subsection (B), which mandates that a home equity loan have a maximum loan-to-value ratio of 80%?
4. Do repeated modifications like those in this case convert a home equity loan into an open-end account that must comply with section 50(t)?
We disclaim any intention or desire that the Supreme Court of Texas confine its reply to the precise form or scope of the questions certified.
AFFIRMED IN PART and QUESTIONS CERTIFIED.
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.
. N. Dist. Tex. Civ. R. 15.1.
. Jones v. Robinson Prop. Grp., 427 F.3d 987, 992 (5th Cir.2005) (citing Schiller v. Physicians Res. Grp. Inc., 342 F.3d 563, 566 (5th Cir.2003)).
|
1669512-5779 | HOUGH, Circuit Judge
(after stating the facts as above). There was a good deal said at bar about fraud and wrongdoing, which we lay entirely aside. The reason for France’s assumption of Gold Medal in 1905 was pardonable pride in his prize; there was no intent on Ms part to trade on Wash-burn’s fame, nor is there any evidence that he ever did so trade.
We likewise lay aside all arguments based on, registration of marks; these litigants must both stand on what are usually (and not very accurately) called their “common-law” rights, aided by such equities derived from conduct and lapse of time as may serve them.
Franee and Washburn, now that the latter has gone into the business of selling prepared flours, are competitors, something they never were before 1924. It may be true that a competent cook can mix Washburn’s Gold Medal flour with corn meal, leaven and appetizing flavors, and make perhaps the best “pancakes”; but the parties hereto do not make nor sell cakes — they sell the cook something out of which she can evolve the edible product without thought or much labor. This something Washburn neither made nor sold before 1924; France did and had for 20 years.
Thus at the time this suit began the situation in one view was exactly “the ordinary case of parties competing under the same mark, [and] it is correct to say that prior appropriation settles the question” between them. Hanover, etc., Co. v. Metcalf, 240 U. S. 403, 36 S. Ct. 357, 60 L. Ed. 713.
This ruling by Pitney, J., may be amplified by inquiring whether the parties at bar are now competing under the same mark in the same goods. They evidently are— in “pancake flour”; wherefore the next and vital inquiry is whether “straight” wheat flour, and “prepared flours” are the same goods or the same “class of commodities.”
This is a question of fact; there is no rule of law applicable except that legal principle which underlies both the allied doctrines of trade-marks and unfair competition, viz.: that any honest man is entitled to have the good will of Ms business protected, by protecting the means whereby the public has come to distinguish and recognize the complainant’s product.
It follows that, if one a,sks whether in 3.923 Washburn had any business in pancake or buckwheat flours to be protected, the answer is “No,” while it is emphatically “Yes,” if the query be put as to France.
If then so many years of building up trade in “straight” wheat Gold Medal flour, had produced no business in prepared flours, how can it be said that the two articles belong to the same class of commodities? Classification of any commercial article depends far more on commercial "custom than upon the inherent nature of the product. Dog biscuit and pilot bread are closely allied in physical origin, and so are guncotton and calico, but in commercial classification they are poles apart. The difference between “straight” and prepared flours is not so great as in the illustration given, but that as commercial commodities they are different is in our opinion plainly shown by the exhibition of business methods given by the affidavits; and that such was Wash-burn’s own opinion in 3.923 we have pointed out above.
To take another view of the matter, the degree or exclusiveness of appropriation accorded to the originator of a trade-name often varies with the kind of name he originates. If the name or mark be truly arbitrary, strange, and fanciful, it is more specially and peculiarly significant and suggestive of one man’s goods, than when it is frequently used by many and in many differing kinds of business. Of this “Kodak” is a famous example, and the English courts have prevented one from- putting forth Kodak bicycles, at the suit of the originator of the name for a totally different article. Eastman v. Kodak Cycle Co., 15 R. P. C. 105; cf. Re Dunn’s Trade-Mark, 7 R. P. C. 311, and Dunlop v. Dunlop, 16 R. P. C. 12. In this court the same influence is seen in Aunt Jemima Mills Co. v. Rigney, 247 F. 407, 159 C. C. A. 461, L. R. A. 1918C, 1039, where the above line of cases is quoted and relied on.
The, phrase “Gold-Medal” is distinctly not in the same class of original, arbitrary, or fanciful words as “Kodak” and “Aunt Jemima.” It is a laudatory phrase, suggestive of merit, recognized by some organization of authority awarding a prize. It is only allied to some particular business or person by insistent, persistent advertising. Wash-burn’s flour has been so advertised, and the proof is ample that publicity efforts have borne fruit, so that Gold Medal flour means among purchasers Washburn’s flour. Yet it must always be remembered that there is nothing original about the name per se; it is exactly like the phrase “Blue Ribbon,” and has been as extensively and variously applied. One who devises a new, strange, “catching” word to describe his wares may and often has by timely suit prevented oth-. ers from taking his word or set of words to gild the repute of- even wholly different goods (eases supra); but one who takes a phrase which is the commonplace of self-praise like “Blue Ribbon” or “Gold Medal” must be content with that special field which he labels with so undistinctive a name. Of this Pabst, etc., Co. v. Decatur, etc., Co. (C. C. A.) 284 F. 110, and Anheuser, etc., Co. v. Budweiser, etc., Co. (C. C. A.) 295 F. 306, constitute a perfect illustration. In the first decision Blue Ribbon was restricted to the single product with which plaintiff had associated -if, while in the second Budweiser was given a wider sphere of influence. In the present ease Washburn has made known by advertising Gold Medal not a line of products, nor any product of a varied business, but one separate, well-known commodity, pure wheat flour, and with that he must be content.
|
1465212-24281 | OPINION
FUTEY, Judge.
This case comes before the court on defendant’s motion to dismiss for lack of subject matter jurisdiction. The parties frame the questions presented in the following manner. Defendant maintains that plaintiffs are belatedly seeking just compensation for an alleged taking. Defendant contends that plaintiffs’ claim is barred by the court’s six-year statute of limitations found in 28 U.S.C. § 2501. Defendant also asserts that the court is without jurisdiction to issue a declaratory judgment in the context of this case. Plaintiffs, on the other hand, refute defendant’s assertion that their action is an “original” takings claim. Rather, plaintiffs contend that they are seeking enforcement of an 1843 United States Supreme Court (Supreme Court) order. Plaintiffs aver that statutes of limitations are inapplicable to consent decrees or court orders. Plaintiffs also assert that there is no time limitation under 28 U.S.C. § 2415(c) to establish “title to, or right of possession of, real ... property.”
During oral argument, however, plaintiffs deviated from the causes of action in their complaint and sought to advance new legal theories to place their claim within the court’s jurisdiction. The court was receptive to plaintiffs’ position and, per plaintiffs’ suggestion, accorded plaintiffs an opportunity to submit another brief on the matter. Plaintiffs’ argument, as gleaned from their brief, now invokes three additional sections of the Tucker Act. Plaintiffs maintain that their cause of action is founded on “an Act of Congress.” Plaintiffs also contend that the court possesses jurisdiction under either an express or an implied contract theory. In particular, plaintiffs assert that the “Constitution is a solemn contract ... [and] the United States breached this ‘Constitutional Contract’ by not following the Supreme Court’s directive promulgated pursuant to the Acosta Order.” Plaintiffs also aver that the “Acosta Order clearly constitutes an implied in fact contract between the parties.”
Factual Background
Plaintiffs, the heirs of Domingo Pedro Acosta, assert that they are the rightful owners of approximately 8,000 acres of land located in the vicinity of Jacksonville, Florida. Mr. Acosta, at some point prior to May 2, 1816, had been engaged by, and performed services for, the Spanish crown. Because Mr. Acosta had not received compensation for his services, he petitioned the Spanish Governor of Florida on May 2, 1816, for a grant of land. On May 20, 1816, Mr. Acosta’s petition was granted and “the Surveyor General [was ordered] to survey and separate from the public domain the [property in question] with full ownership thereof to be vested in Mr. Acosta.”
Pursuant to the Treaty of 1819, between the United States and Spain, “land grants from the King of Spain and Florida would be treated by the United States with the same deference and full respect as would be acknowledged by the King of Spain.” The United States, however, took issue with Mr. Acosta’s ownership of the property. To resolve the matter, the parties resorted to judicial intervention, which culminated with a holding from the Supreme Court that Mr. Acosta possessed valid title to the property in question pursuant to the Treaty of 1819. See United States v. Acosta, 42 U.S. 24, 1 How. 24,11 L.Ed. 33 (1843). At an unspecified time after the Supreme Court issued its opinion in 1843, according to plaintiffs, “the United States prevented and precluded Mr. Acosta from taking possession of the Property and subsequently took the Property without just compensation to Mr. Acosta.”
The facts recited by plaintiffs do not go any further. Plaintiffs’ complaint is limited to actions which were taken in the mid-nineteenth century, and the record is devoid of reference to events which transpired over the century and a half that followed. The silence was broken, however, on November 26, 2003, the date plaintiffs filed suit in this court. Defendant, the United States, filed a motion to dismiss for lack of subject matter jurisdiction on February 25, 2004. After being granted an extension of time, plaintiffs filed their opposition on April 22, 2004. Defendant replied on March 6, 2004. Pursuant to plaintiffs’ request, the court held oral argument on July 13, 2004. Plaintiffs filed a post-argument brief on August 5, 2004, and defendant responded on August 26, 2004. Plaintiffs also submitted a reply brief, which was filed by leave of the undersigned judge on September 3, 2004.
Discussion
In ruling on a motion to dismiss for lack of jurisdiction under RCFC 12(b)(1), the court accepts as true the complaint’s undisputed factual allegations and construes the facts in the light most favorable to plaintiffs. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 5. Ct. 1683, 40 L.Ed.2d 90 (1974); see also Hamlet v. United States, 873 F.2d 1414, 1416 (Fed.Cir.1989); Farmers Grain Co. of Esmond v. United States, 29 Fed.Cl. 684, 686 (1993). Plaintiffs must make only a prima facie showing of jurisdictional facts through the submitted material in order to defeat a motion to dismiss. Raymark Indus., Inc. v. United States, 15 Cl.Ct. 334, 338 (1988) (cit ing Data Disc, Inc. v. Sys. Tech. Assocs., Inc., 557 F.2d 1280, 1285 (9th Cir.1977)). If the undisputed facts reveal any possible basis on which the non-moving party might prevail, the court must deny the motion. Scheuer, 416 U.S. at 236, 94 S.Ct. 1683; see also Lewis v. United States, 32 Fed.Cl. 59, 62 (1994). If, however, the motion challenges the truth of the jurisdictional facts alleged in the complaint, the court may consider relevant evidence in order to resolve the factual dispute. Rocovich v. United States, 933 F.2d 991, 994 (Fed.Cir.1991); see also Lewis, 32 Fed.Cl. at 62.
It is well-established that this court is one of specific and defined jurisdiction. United States v. Testan, 424 U.S. 392, 397-98, 96 S.Ct. 948, 47 L.Ed.2d 114 (1976); United States v. King, 395 U.S. 1, 3, 89 S.Ct. 1501, 23 L.Ed.2d 52 (1969); Dynalectron Corp. v. United States, 4 Cl.Ct. 424, 428, aff'd, 758 F.2d 665 (Fed.Cir.1984). The court’s jurisdiction to entertain claims and to grant relief extends only so far as the United States has waived its sovereign immunity from suit. Testan, 424 U.S. at 399, 96 S.Ct. 948 (citing United States v. Sherwood, 312 U.S. 584, 586, 61 S.Ct. 767, 85 L.Ed. 1058 (1941)); Booth v. United States, 990 F.2d 617, 619 (Fed.Cir.1993). The waiver of sovereign immunity must be expressed unequivocally and cannot be implied. United States v. Mitchell, 445 U.S. 535, 538, 100 S.Ct. 1349, 63 L.Ed.2d 607 (1980); Testan, 424 U.S. at 399, 96 S.Ct. 948; Zumerling v. Marsh, 783 F.2d 1032, 1034 (Fed.Cir.1986). Any grant of jurisdiction to this court must be strictly construed. Mitchell, 445 U.S. at 538, 100 S.Ct. 1349; Cosmic Constr. Co. v. United States, 697 F.2d 1389, 1390 (Fed.Cir.1982).
Pursuant to the Tucker Act, this court has:
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 eases not sounding in tort.
28 U.S.C. § 1491(a)(1) (1994). The Tucker Act, however, is “only a jurisdictional statute; it does not create any substantive right enforceable against the United States for money damages.” Testan, 424 U.S. at 398, 96 S.Ct. 948. The provisions plaintiffs rely upon must contain language which could fairly be interpreted as mandating recovery of compensation from the government. Cummings v. United States, 17 Cl.Ct. 475, 479 (1989), aff'd, 904 F.2d 45 (Fed.Cir.1990) (citations omitted).
Plaintiffs characterize their suit, in their Complaint For Declaratory Judgment, as “an action for declaratory judgment and/or relief brought pursuant to 28 USCA Section 1491 and for enforcement of a previous ruling of the United States Supreme Court.” The court will conceptually construe plaintiffs’ complaint as advancing two causes of action. First, plaintiffs ask the court to “[i]ssue a declaratory judgment declaring and adjudicating that [p]laintiffs have right, title, and ownership in the Property, and be awarded same ____” Second, in the alternative, plaintiffs ask the court to award them the reasonable value of the land.
The parties devote significant attention to the issue of whether plaintiffs’ claim falls within the court’s six-year statute of limitations. Although defendant ultimately raised the question of the court’s power to grant the relief requested, the sole argument advanced by defendant in its motion to dismiss focused on the statute of limitations. The court is not, however, confined to the arguments raised in the parties’ briefs. While the parties’ arguments are forceful, they are nevertheless incomplete. The court believes in this instance it is necessary to look beyond defendant’s arguments to fully ventilate the jurisdictional issues implicated by plaintiffs’ complaint. The authority to conduct such an inquiry cannot be disputed. Neither the court nor the parties may waive subject matter jurisdiction. United States v. Cotton, 535 U.S. 625, 122 S.Ct. 1781, 1785, 152 L.Ed.2d 860 (2002). The court’s jurisdiction over the subject matter may be raised at any point in the proceeding by the court sua sponte or by prompting from the parties. Hambsch v. United States, 857 F.2d 763, 764 (Fed.Cir.1988); Arctic Corner, Inc. v. United States, 845 F.2d 999, 1000 (Fed.Cir.1988); Bayship Mgmt., Inc. v. United States, 43 Fed.Cl. 535, 536 (1999) (citing Nickerson v. United States, 35 Fed.Cl. 581, 585 (1996)); RCFC 12(h)(3).
At the outset, it is important to recognize the character of plaintiffs’ causes of action. Plaintiffs not only seek a declaration that they are the rightful owners of the property, but they also ask the court to award them the land. Such relief is a form of equitable relief. See, e.g., Bowen v. Massachusetts, 487 U.S. 879, 893, 108 S.Ct. 2722, 101 L.Ed.2d 749 (1988); Crocker v. United States, 125 F.3d 1475, 1477 (Fed.Cir.1997); Froudi v. United States, 22 Cl.Ct. 290, 293 n. 4, 294-95 (1991). The court proceeds with a full understanding that “an action that is equitable in nature [is] sharply distinguishable from an action at law for damages.” Crocker, 125 F.3d at 1477.
Beginning with plaintiffs’ request for a declaratory judgment that they possess “right, title and ownership” of the property in light of the Supreme Court’s 1843 order, the court does not have independent authority to issue a declaratory judgment in the absence of an express grant of jurisdiction from Congress. King, 395 U.S. at 4-5, 89 S.Ct. 1501; Brown v. United States, 105 F.3d 621, 624 (Fed.Cir.1997); White Buffalo Constr., Inc. v. United States, 52 Fed.Cl. 1, 5 n. 9 (2002); First Atlas Funding Corp. v. United States, 23 Cl.Ct. 137,139 (1991). For example, Congress has provided that to afford relief in bid protest cases “the courts may award any relief that the court considers proper, including declaratory and injunctive relief ....” 28 U.S.C. § 1491(b)(2). Congress has also provided that this court “shall have jurisdiction to hear any suit for and issue a declaratory judgment under section 7428 of the Internal Revenue Code of 1986.” Id. § 1507. Noticeably lacking from plaintiffs’ complaint is a citation to any provision which confers upon the court the authority to grant a declaratory judgment here. The court is, therefore, without jurisdiction to independently entertain plaintiffs’ request for a declaratory judgment.
Plaintiffs’ alternative ground for relief seeking the reasonable value of the land in lieu of possession of the property does nothing to detract from the above analysis. This court has recognized that a “party’s request for money damages in the alternative to equitable relief does not alone alter the equitable character of the relief requested.” Froudi, 22 Cl.Ct. at 293 n. 4 (quoting Marshall Leasing, Inc. v. United States, 893 F.2d 1096, 1099 (9th Cir.1990)). The court will, however, examine plaintiffs’ alternative monetary claim at a later point in this opinion.
Although plaintiffs proceed under the auspices of enforcing a court order, the substance of the underlying cause of action can only be construed as one to quiet title. Plaintiffs’ claim resonates with verbiage and substance that has been exhaustively litigated and cast aside as not within the jurisdiction of the court. Plainly stated, the court is without jurisdiction to entertain a stand alone claim to quiet title. Sioux Tribe of Indians v. United States, 3 Cl.Ct. 536, 538 (1983) (“This court has the authority to issue money judgments only; it does not have the authority to decide questions of title to land.”); Baskett v. United States, 2 Cl.Ct. 356, 363 (1983) (“This court has no jurisdiction to quiet title to land and thus, if plaintiffs seek to quiet title to the properties in question they are in the wrong court.”). The case law is replete with instances where it has been recognized that a cause of action seeking possession of property falls outside of the court’s jurisdiction. Oak Forest, Inc. v. United States, 23 Cl.Ct. 90, 94-96 (1991); Gila Gin Co. v. United States, 231 Ct.Cl. 1001, 1003, 1982 WL 25831 (1982); Yaist v. United States, 228 Ct.Cl. 281, 285-87, 656 F.2d 616 (1981); Bourgeois v. United States, 212 Ct.Cl. 32, 36 n. 1, 545 F.2d 727 (1976). The court declines to depart from this line of precedent.
In the above-cited cases, however, a distinction has been drawn between claims for possession of property and traditional takings claims seeking just compensation. The distinction derives from Congress’ stated intent in the Quiet Title Act (QTA) that jurisdiction for claims involving declaration of title rest with the district courts. 28.U.S.C. § 2409a; First Atlas Funding Corp. v. United States, 23 Cl.Ct. 137, 139 (1991); see also Oak Forest, 23 Cl.Ct. at 98. On the other hand, there is no doubt this court has jurisdiction to entertain takings claims. 28 U.S.C. § 1491(a)(1) (explaining that this court “shall have jurisdiction to render judgment upon any claim against the United States founded ... upon the Constitution ____”); Malone v. Bowdoin, 369 U.S. 643, 648 n. 8, 82 S.Ct. 980, 8 L.Ed.2d 168 (1962); United States v. Causby, 328 U.S. 256, 267, 66 S.Ct. 1062, 90 L.Ed. 1206 (1946). After the passage of the QTA, however, the government frequently argued that the court was divested of jurisdiction to adjudicate takings claims where resolution of a title dispute was subsumed in the determination. That argument, however, has been firmly laid to rest. It is now well-established that the court has jurisdiction to make independent factual determinations of a claimant’s specific property interest as a matter of course in adjudicating takings claims. Mannatt v. United States, 48 Fed.Cl. 148, 152 (2000); Chevy Chase Land Co. of Montgomery County v. United States, 37 Fed.Cl. 545, 564 (1997); Oak Forest, 23 Cl.Ct. at 96; Yaist, 228 Ct.Cl. at 285-86, 656 F.2d 616.
In a similar respect, the court possesses “authority to issue a declaratory judgment where ‘it is tied and subordinate to a monetary award.’” Ellis v. United States, 222 Ct.Cl. 65, 69, 610 F.2d 760 (1979) (quoting Austin v. United States, 206 Ct.Cl. 719, 723, 1975 WL 22844 (1975)); see also Bobula v. United States Dep’t of Justice, 970 F.2d 854, 859 (Fed.Cir.1992) (citing 28 U.S.C. § 1491(a)(2)) (“While limited equitable relief is sometimes available in Tucker Act suits, the equitable relief must be incidental to and collateral to a claim for money damages.”). It is, therefore, incumbent on plaintiffs to demonstrate that their claim could ultimately lead to a recovery of “actual, presently due money damages.” Testan, 424 U.S. at 397-98, 96 S.Ct. 948. Plaintiffs could make such a showing and establish the necessary jurisdictional prerequisite by advancing a takings claim for just compensation. Froudi 22 Cl.Ct. at 296 n. 11 (explaining that a claim for just compensation is a claim for money damages). Against this backdrop, plaintiffs nevertheless would need to proffer a takings claim that itself falls within the court’s jurisdiction. United States v. John C. Grimberg Co., Inc., 702 F.2d 1362, 1366 (Fed.Cir.1983); Oak Forest, 23 Cl.Ct. at 96 (“[T]he mere fact that title must be determined as part of [a takings claim] does not oust the court of jurisdiction, assuming it otherwise exists.” (emphasis added)).
As an initial matter, the court notes that plaintiffs expressly disavow that they are “pursuing an ‘original’ action for a ‘taking.’ ” Nevertheless, because a takings claim would be a prerequisite to invoking this court’s jurisdiction in this context, the court will proceed assuming arguendo that an action for just compensation arises. The Takings Clause of the Fifth Amendment provides that “private property [shall not be] taken for public use, without just compensation.” U.S. Const, amend. V. Plaintiffs do present a colorable claim in their complaint that “[d]espite the Supreme Court’s ruling in Acosta, the United States prevented and precluded Mr. Acosta from taking possession of the Property and subsequently took the Property without just compensation to Mr. Acosta.” Further, as an alternative basis for relief, plaintiffs seek an award equivalent to the “reasonable value of the Property ____” At this juncture, it would appear that plaintiffs could state a claim within the court’s jurisdiction.
Actions brought under the Tucker Act are time-barred, however, if they are not filed within six years of the date the causes of action accrued. 28 U.S.C. § 2501; see also Figueroa v. United States, 57 Fed.Cl. 488, 493 (2003); Japanese War Notes Claimants Ass’n v. United States, 178 Ct.Cl. 630, 632, 373 F.2d 356 (1967). The court’s six-year statute of limitations is a jurisdictional requirement, which must be strictly construed. Cmty. Bank & Trust v. United States, 54 Fed.Cl. 352, 355 (2002); see also Bear Claw Tribe, Inc. v. United States, 36 Fed.Cl. 181, 187 (1996) (citing Hopland Band of Pomo Indians v. United States, 855 F.2d 1573, 1577 (Fed.Cir.1988)). The plaintiff bears the burden of proving by a preponderance of the evidence that the action was timely filed. Mason v. United States, 27 Fed.Cl. 832, 836 (1993). The court may not waive the statute of limitations. Laughlin v. United States, 22 Cl.Ct. 85, 99 (1990), aff'd mem., 975 F.2d 869 (Fed.Cir.1992). In sum, a plaintiffs failure to comply with the statute of limitations “places the claim beyond the court’s power to hear and decide.” Catellus Dev. Corp. v. United States, 31 Fed.Cl. 399, 404 (1994); see also Hair v. United States, 350 F.3d 1253, 1256 (Fed.Cir.2003) (noting that claims not brought within six-years from the date the cause of action accrued are “forever barred”).
The United States Court of Appeals for the Federal Circuit (Federal Circuit) held in Hair that “[a] constitutional claim can become time-barred just as any other claim can. Nothing in the Constitution requires otherwise.” Hair, 350 F.3d at 1260 (quoting Block v. North Dakota, 461 U.S. 273, 292, 103 S.Ct. 1811, 75 L.Ed.2d 840 (1983)). The Federal Circuit reached the same conclusion in Stone Container Corp. v. United States, 229 F.3d 1345, 1350 (Fed.Cir.2000): “Both the Supreme Court and this court have repeatedly held that the federal government may apply statutes of limitations to just compensation claims.” See also Alliance of Descendants of Texas Land Grants v. United States, 37 F.3d 1478, 1481-82 (Fed.Cir.1994) (holding that a takings claim was barred by the statute of limitations).
With this in mind, the impending statute of limitations conflict looms large on the horizon. As mentioned above, the Supreme Court and Federal Circuit have made it clear that actions for an alleged taking should be initiated within six years of their accrual date. The Supreme Court’s order in Acosta was dated January 1843. While the exact date of accrual is unknown, plaintiffs’ complaint reveals that the cause of action must have accrued during Mr. Acosta’s lifetime. The court, however, recognizes that for nearly one hundred years after the adoption of the Constitution there was no judicial tribunal to resolve takings claims. Texas State Bank v. United States, 60 Fed.Cl. 815, 822 (2004) (citing Lion Raisins, Inc. v. United States, 57 Fed.Cl. 435, 437-38 (2003)). It would not have been until March 3,1887, that a true just compensation takings claim could have been brought in the Court of Claims. Lion Raisins, 57 Fed.Cl. at 438 n. 1.
Rather than focusing on the fora or avenues of relief available to aggrieved property holders in the mid-nineteenth century, see id. at 437-39, the court’s inquiry focuses on whether plaintiffs “identif[ied] an event that directly affects the rights asserted in its suit that took place within six years prior to filing a complaint in this court.” Alliance of Descendants of Texas Land Grants v. United States, 27 Fed.Cl. 837, 842 (1993) (citing Japanese War Notes Claimants, 178 Ct.Cl. at 632, 373 F.2d 356). Stated another way, the court counts backwards six years from November 26, 2003, the date on which plaintiffs filed their complaint, rather than counting forward from the date the cause of action allegedly accrued. As plaintiffs have failed to comply with the mandates of Alliance of Descendants of Texas Land Grants and Japanese War Notes Claimants, plaintiffs’ claim is barred by the statute of limitations. Accordingly, plaintiffs’ takings claim would not be timely, and the court is without jurisdiction to resolve the underlying title dispute. Likewise, without a valid takings claim, equitable relief would be inappropriate as it would not be “ ‘tied and subordinate to a monetary award.’” Ellis, 222 Ct.Cl. at 69, 610 F.2d 760 (quoting Austin, 206 Ct.Cl. at 723).
The court reaches the same conclusion for the additional legal theories set forth in plaintiffs’ post-argument brief. The court acknowledges that “the invocation of the implied contract theory is sufficient ... to set forth a basis for subject matter jurisdiction ____” See Cincinnati v. United States, 153 F.3d 1375, 1377 (Fed.Cir.1998); see also United Int’l Investigative Servs. v. United States, 26 Cl.Ct. 892, 900 (1992). It is also not subject to dispute that the court possesses jurisdiction over a dispute involving “any Act of Congress” as well as “any express ... contract.” 28 U.S.C. § 1491(a)(1). In this case, the court can safely assume, without any comment or decision whatsoever on the merits of plaintiffs’ new allegations, that plaintiffs have properly invoked all three theories. The court can make this assumption because these claims, just as plaintiffs’ takings claim, are not immune from the court’s statute of limitations. Any cause of action arising from an express or implied contract, or an Act of Congress, did not arise within the six-year period preceding the date on which plaintiffs filed their complaint. See 28 U.S.C. § 2501. Plaintiffs’ additional causes of action are, therefore, likewise time-barred.
Lastly, plaintiffs maintain, in the alternative, that should the court “somehow deter-minen the Heirs’ action to enforce the Supreme Court’s Acosta Order is.an ‘original’ action, it still would not be subject to a defense based on any statute of limitations.” Specifically, plaintiffs rely on 28 U.S.C. § 2415(e). Section 2415, however, deals only with “[tjime for commencing actions brought by the United States.” The action before the court is not an action brought by the United States, rather it is an action brought against the United States. Plaintiffs’ argument is, therefore, misplaced. In this regard, the court notes in passing and without elaboration that it is the QTA, 28 U.S.C. § 2409a, which governs “[rjeal property quiet title actions.” As was discussed above, § 2409a provides that actions to quiet title against the United States be brought in the district courts. Further, it is noteworthy that section 2409a contains a statute of limitations which provides that actions to quiet title “shall be barred unless ... commenced within twelve years of the date upon which it accrued.” 28 U.S.C. § 2409a(g).
|
908522-7208 | HATFIELD, Associate Judge.
This is an appeal from the decision of the Board of Appeals of the United States Patent Office affirming the decision of the Primary Examiner rejecting claim 14, the only one in appellant’s application for a patent for an alleged invention relating to improvements in rubber eraser attachments for lead pencils.
The appealed claim reads as follows: “An article of manufacture consisting of an integrally formed ferrule whose wall is approximately concentric throughout to a eomtmon axis arid^ which ' comprises an annular shoulder at the middle portion thereof, a pencil receiving portion of relatively small diameter extending from said shoulder in one direction and an eraser receiving portion of substantially larger diameter extending from said shoulder in the opposite direction; a pencil one extremity of which fits within said pencil receiving portion of said ferrule, being closely embraced by the wall thereof and permanently and immovably secured therein; and an eraser of substantially larger diameter than said pencil secured within and closely embraced by the wall of said eraser receiving portion of said ferrule and extending substantially beyond the outer extremity thereof.”
The references are:
Brauns, 814,899, March 13, 1906.
Handly, 897,530, Sepember 1, 1908.
Tregoning, 977,762, December 6, 1910.
Antler, 1,248,988, December 4, 1917.
The appealed claim defines appellant’s ferrule as being integrally formed, with walls approximately concentric throughout to a common axis, and comprising “a.n annular shoulder at the middle portion thereof, a pencil receiving portion of relatively small diameter extending from said shoulder in one direction and an eraser receiving portion of substantially larger diameter extending from said shoulder in the opposite direction.” One end of the pencil fits into the receiving portion of the ferrule, where it is permanently and immovably secured. The eraser, secured in the eraser-receiving portion of the ferrule and extending substantially beyond its outer end, is substantially larger in diameter than the pencil.
The patent to Brauns discloses a lead pencil having a ferrule, which consists, generally, of a nonrotatable cap securely and permanently attached to the pencil. The outer end of the cap is closed and enlarged to form an annular head or shoulder. Mounted upon the nonrotatable cap is a rotatable sleeve, provided with an annular shoulder at approximately its middle portion which abuts against the shoulder formed by the head of the nonrotatable cap. A rubber eraser, which, from the drawings, appears to be of slightly greater diameter than the pencil, is screwed into the outer end of the rotatable sleeve.
The patent to Handly discloses a pencil of the ordinary type, having a ferrule permanently and immovably secured to the pencil, and an eraser of the same diameter as that of the pencil.
The patents to Tregoning and Antler were cited in the decision of the Primary Examiner, because, he said, they disclosed erasers substantially larger than the pencils to which they were attached. They were not referred to by the Board of Appeals.
The patent to Tregoning relates to eraser tips for pencils and means for securing them in position. It appears from his specification that the purpose of the patentee was to so construct tlie eraser, and the device by which it was secured to the pencil, that, when the eraser became worn, it might be removed, “reversed to present another portion (for use) and again secured in place.” In order to carry out the object of the invention, the patentee provided an eraser “having a lateral collar or projection intermediate its ends, confined within and upon the upper end of a resilient socket adapted to be secured in place upon the end of a pencil, and a hollow flanged ring or ferrule secured removably upon the upper end of the socket and adapted to confine the collar or lateral projection on the rubber body between it and the upper extremity of tho socket.”
It is evident from the patentee’s specification that his purpose was to- provide an eraser that would last approximately as long as tho pencil to which it was attached, and, in order to accomplish this purpose, he provided a rather complicated structure.
The patent to Antler discloses an adjustable eraser holder for pencils, so constructed that, as the eraser becomes worn, it may he adjusted, and, when necessary, replaced. It was designed to be detachably connected to a pencil so that when desired, a new pencil could he substituted. The patent discloses tho end of the eraser inserted in the holder to be rectangular in shape, the outer or erasing end being beveled or wedge shaped, and of larger diameter than the pencil. The purpose of the patentee was to provide an eraser holder of longer,life than either an eraser or a pencil.
The Primary Examiner stated that, in view of the references, the enlargement of the eraser receiving end of the ferrule, in order to permit the attachment of an eraser of substantially larger diameter than the pencil, was only a change in proportion or degree “not productive of a different result,” and not involving invention. He further stated that the annular shoulder of the ferrule, between the portions of large and small diameters, was nothing more than an ordinary “reducing coupling, well known in pipes and tubing.”
The Board of Appeals, Pierce, Examiner in Chief, dissenting, affirmed the decision of the Primary Examiner holding: First, that all applicant had done was to “mount the sleeve * * * of Brauns’ device upon the pencil in the manner suggested by Handly;” and, second, that the enlargement of the eraser receiving end of the ferrule disclosed in the patent to Handly, in order that a larger eraser might be used, was devoid of invention.
It appears from the evidence of record that the problem confronting those engaged in the business of manufacturing and selling pencils, and it appears from appellant’s specification that the problem confronting him, was to provide an eraser “adapted to furnish a maximum surface for erasing written or other matter with a minimum effort,” and of such form and proportions that its maximum wear would approximate that of the pencil, and, for the accommodation of such eraser, a nonadjustable ferrule, simple in construction, producible at low cost, and in such form that it would not interfere with the proper use of the pencil to which it was permanently attached.
The trade had been offered complicated structures.- It demanded a simple one. Appellant met that demand with a device—non.adjustable, integrally formed, simple in construction, producible at low cost, commercially practicable, and adapted to accommodate an eraser of such form and size that its wear will approximate the maximum wear of the pencil to which it is attached—which, by virtue of its own merits, has become so popular that many qf the largest producers of lead pencils in the United States have adopted it. It appears, therefore, that appellant’s device is not only novel, useful, and commercially successful, but is of such character as to command the respect of the purchasing public and of appellant’s competitors as well.
|
10532532-5409 | WHIPPLE, District Judge.
Appellant, Edward Little, appeals from an order of the United States District Court for the Eastern District of Arkansas adopting a magistrate’s recommendation to deny a petition for a writ of habeas corpus. Appellant raises three points on appeal, asserting (1) ineffective assistance of counsel at trial, (2) that he did not knowingly and voluntarily dismiss his prior appeal, and (3) a minor has no capacity to waive an appeal. For the reasons set forth below, the decision of the district court will be affirmed.
Appellant was convicted in Pulaski County, Arkansas, Circuit Court of capital murder and was sentenced to life without parole. After filing his notice of appeal with the trial court, appellant signed an affidavit allowing his attorney to file a motion dismissing his appeal. On January 22, 1985, appellant filed a petition for a writ of habe-as corpus in United States District Court. In the petition, appellant alleged he was not informed of the consequences of his waiver and, therefore, the waiver was not made knowingly and intelligently. He also alleged ineffective assistance of counsel.
In a hearing on March 5,1987, before the magistrate, appellant raised the issue of whether a minor has the legal capacity to waive his constitutional right to an appeal. The magistrate submitted proposed findings of fact and conclusions of law on September 8, 1987. The magistrate found (1) the ineffective-assistance claim had no merit, (2) the appeal dismissal was knowing and voluntary, and (3) there was no rule that a minor is legally incapable of waiving appeal. The district court judge adopted the proposed findings of fact, conclusions of law, and recommendation in an order entered by the district judge on February 18, 1988.
Regarding ineffective assistance of counsel, appellant contends he dropped his appeal to the Arkansas Supreme Court because his attorney advised him to dismiss the appeal. Appellant contends his attorney told him that if he prevailed on the appeal and got a new trial, he could be facing the death penalty again. Appellant also contends this attorney advised him that the attorney would pursue the appeal through federal court. Testimony of three inmates at the magistrate’s hearing supported appellant.
However, other testimony was contrary to appellant’s contention. His trial counsel testified that he did not urge appellant to drop the appeal, or that he could face a worse penalty. Trial counsel also testified that the notice of appeal was filed over appellant’s objections because the attorneys hoped he would change his mind and agree to an appeal. One trial áttorney further testified that the decision to dismiss the appeal was against his advice. An affidavit signed by appellant, and accompanying the motion to dismiss the appeal, said the appeal had been filed over his objection and was being dismissed at his request.
The magistrate made a credibility determination in resolving the conflict between the inmates’ testimony and the lawyers’ testimony. The magistrate chose to believe the lawyers. The district court adopted that finding. Credibility determinations are to be upheld unless they are clearly erroneous. See Anderson v. City of Bessemer City, 470 U.S. 564, 574-575, 105 S.Ct. 1504, 1511-1512, 84 L.Ed.2d 518 (1985). A reviewing court is to afford great deference to a trial judge’s findings of fact because of the trial judge’s ability to assess demeanor and tone of voice of the witness. Id., 470 U.S. at 574-575, 105 S.Ct. at 1511-1512.
Considering the conflicting evidence, and the need to make credibility determinations, we cannot say the district court was clearly erroneous in adopting the magistrate’s proposed findings of fact and the recommendation. The district court will be affirmed in regard to the claim of ineffective assistance of counsel.
In regard to the voluntariness issue, appellant relies upon his youth to assert his dismissal of appeal was not voluntary. Appellant was sixteen years old when the appeal was dismissed. The evidence conflicted somewhat on how well or poorly appellant could read. Appellant claimed he could read only at a second-grade or third-grade level. His trial counsel testified that they provided books to appellant at his request, and that they talked with appellant about the books — leading the trial attorneys to conclude he could read.
There was evidence that, in an independent evaluation on behalf of the defense, appellant was competent to stand trial. There was further evidence that appellant had resisted an appeal, even though his rights had been explained to him. A totality-of-the-circumstances approach was applied in Fare v. Michael C., 442 U.S. 707, 725, 99 S.Ct. 2560, 2572, 61 L.Ed.2d 197 (1979) to determine whether a juvenile has waived his rights. The evaluation includes the juvenile’s age, experience, education, background, intelligence, and whether he has the capacity to understand the warnings given to him, the nature of the rights and the consequences of waiving. Id.
Upon a review of the record, there appears to be ample credible evidence to support the finding that the decision to withdraw was made voluntarily and knowingly. The totality of the circumstances reveals that the decision was made with intelligence, knowledge and voluntariness. We cannot say that the district court was clearly erroneous in adopting that finding.
|
4057700-13197 | ORDER
BUA, District Judge.
This is a civil rights action brought under 42 U.S.C. § 1983 and the Fourteenth Amendment, alleging false arrest, arrest under an ordinance violative of the First Amendment, and use of excessive force. Named as defendants are D. Zajac and John Dough, the Chicago Police officers who made the arrest in issue, James Rochford, then-Superintendent of the Chicago Police Department, and the City of Chicago. Before the court are the city’s motion to dismiss and the motion of defendant Rochford for summary judgment.
The complaint alleges that on June 5, 1976, plaintiff was operating his automobile on a street in the city of Chicago. His progress was blocked by two other vehicles parked ahead of him. The occupants of these vehicles were Chicago police officers. After waiting about five minutes, plaintiff sounded his horn. Officer Zajac exited one of the parked cars, approached plaintiff, and informed him that he was under arrest. Zajac threatened to beat plaintiff, and handcuffed him so tightly as to cause injury to his wrists. Officers Zajac and Dough drove plaintiff in their vehicle to a point near Lake Michigan, where plaintiff was again threatened. The officers then had plaintiff taken to a Chicago police station and charged him with “unlawful use of horn” in violation of a city ordinance. Plaintiff remained handcuffed at the police station for approximately one hour. Although defendant Zajac appeared in court and testified “falsely” against plaintiff, the charges were dropped.
Count I of the complaint is directed toward Zajac, Dough, and the city. It asserts that Zajac and Dough, acting in the course of their duties as Chicago police officers and exercising their authority as such, arrested plaintiff without a valid arrest warrant, without probable cause to believe that plaintiff had committed a crime, and pursu-' ant to a city ordinance which violates the First Amendment. Count II is direetecl against the same defendants. Rather than focusing on the arrest and detention itself, however, it concerns the physical and mental suffering inflicted upon plaintiff. Count III, brought against Zajac and Dough only, alleges that the wrongful conduct asserted in Counts I and II was malicious and intentional. Finally, Count IV charges James Rochford with liability in connection with the misconduct of Zajac and Dough. (See part II., infra).
I. THE CITY’S MOTION TO DISMISS.
The city has filed a motion to dismiss. This motion raised four arguments: (1) that it is not a “person” within th'e meaning of 42 U.S.C. § 1983; (2) that in any case it cannot be held liable because it is sued solely on a respondeat superior basis; (3) that the complaint “fails to state a claim” against the city; and (4) that the city ordinance attacked by plaintiff is constitutional.
A. The City Is a “Person”.
In support of its assertion that it is not a “person” for purposes of § 1983, the city relies on Monroe v. Pape, 365 U.S. 167, 81 S.Ct. 473, 5 L.Ed.2d 492 (1961) and cases following Monroe. Plaintiff responds that he is not seeking to hold the city liable under § 1983, but rather is suing directly under the Fourteenth Amendment, with 28 U.S.C. § 1331 as a jurisdictional basis. See e. g. McDonald v. State of Illinois, 557 F.2d 596 (7th Cir. 1977). However, since the filing of briefs on this motion, the Supreme Court has reversed Monroe, holding that a municipality is a “person” under § 1983. Monell v. New York City Department of Social Services, 436 U.S. 658, 98 S.Ct. 2018, 56 L.Ed.2d 611 (1978). This holding should be applied retroactively to pending cases. See Cale v. City of Covington, 586 F.2d 311 (4th Cir. 1978); Kurek v. Pleasure Driveway, 583 F.2d 378 (7th Cir. 1978), vacated on other grounds, 435 U.S. 992, 98 S.Ct. 1642, 56 L.Ed.2d 81; Stirling v. Village of Maywood, 579 F.2d 1350 (7th Cir. 1978). In the wake of Monell, courts no longer need imply a cause of action for damages against municipalities based directly on the Fourteenth Amendment, see Turpin v. Mailet, 591 F.2d 426, (2nd Cir. 1979), (en banc), on remand from - U.S. -, 99 S.Ct. 554, 58 L.Ed.2d - (1978), vacating for reconsideration in light of Monell, 579 F.2d 152 (2nd Cir. 1978) (en banc); Owen v. City of Independence, 589 F.2d 335 (8th Cir. 1978); Cale v. City of Covington, supra; Leite v. City of Providence, 463 F.Supp. 585, (D.R.I. 1978); Kedra v. City of Philadelphia, 454 F.Supp. 652 (E.D.Pa.1978); see also Monell, supra, 436 U.S. at 713, 98 S.Ct. 2018 (Powell, J., concurring), since Monell clearly establishes that a municipality must be viewed as a “person” under § 1983.
B. Respondeat Superior.
Regarding the respondeat superior issue, it is true that vicarious liability will not be imposed under § 1983. See Monell, supra. See also Rizzo v. Goode, 423 U.S. 362, 96 S.Ct. 598, 46 L.Ed.2d 561 (1976). Thus, insofar as plaintiff seeks to hold the city liable for the alleged excessive use of force or unreasonable conduct of Officers Zajac and Dough, his allegations are insufficient. The complaint draws no connection between the city and such alleged misconduct other than the fact that Zajac and Dough were at relevant times acting as agents of the city. Plaintiff does not, however, rely solely on a respondeat superior theory against the city. Instead, he also"* alleges that his arrest and prosecution reflected the application of an officially adopted ordinance. To the extent that he has alleged a violation of his constitutional rights resulting directly from the implementation of an official policy or practice of the city, plaintiff has stated a claim against the city under § 1983. Monell, supra.
C. Failure to State a Cause of Action— Mere Negligence.
The city’s third argument, as indicated, is simply that plaintiff has failed to state a cause of action against it. In its briefs, the city has not developed this point, at least as a matter distinct from or going beyond the respondeat superior issue. Nevertheless, its assertion is sufficient to call for a general examination of the sufficiency of plaintiff’s allegations. Such an examination reveals a serious deficiency. Hence, the city’s motion will be granted.
In its present form, the complaint does“* not allege any form of fault on the part of the city in enacting and maintaining the disputed ordinance. Nor does it contain facts which would support the inference of fault. Therefore, denial of the city’s motion to dismiss would indicate that a munic ipality can be held strictly liable in damages for arrests made pursuant to an ordinance not yet declared to be unconstitutional. This court will not enforce such a strict liability theory. No precedent supports the notion of strict liability under § 1983. Indeed, the Seventh Circuit, joined by most other circuits, has held that in order to prevail oh a claim under § 1983 a plaintiff must prove malicious or reckless conduct, and that negligence alone is insufficient. Jamison v. McCurrie, 565 F.2d 483 (7th Cir. 1977); McDonald v. State of Illinois, supra; Little v. Walker, 552 F.2d 193 (7th Cir. 1977); Bonner v. Coughlin, 545 F.2d 565, 568 (7th Cir. 1976) (collecting cases); see also Procunier v. Navarette, 434 U.S. 555, 98 S.Ct. 855, 863, 55 L.Ed.2d 24 (Burner, C. J., dissenting).
While these cases involved actions against individual defendants, there would appear to be no basis on which to distinguish postMonell actions against municipalities. In positing the requirement of malicious or reckless conduct, the Seventh Circuit has relied on the notion that § 1983 is apparently limited in its essential purpose to the redress of intentional — defined as malicious or objectively reckless — violations of constitutional rights inflicted through the exercise of official authority. In Bonner v. Coughlin, supra, the court observed:
The dissenting Justices in Paul [v. Davis, 424 U.S. 693,96 S.Ct. 1155,47 L.Ed.2d 405 (1976)] were of the view that ‘intentional conduct’ infringing a person’s liberty or property interests without due process of law is within the reach of § 1983 [citation omitted]. They went no further, nor need we. If Section 1983 is to be extended to cover claims based on mere negligence, the Supreme Court should lead the way. 545 F.2d at 567.
See also Paul v. Davis, supra, 424 U.S. at 717, 96 S.Ct. 1155. Such a view does not readily lend itself to exceptions based on the type of defendant involved. Further, the application of an intent requirement to actions against municipalities will not create serious conceptual difficulties, since the recklessness standard is an objective one. See Little v. Walker, supra, 552 F.2d at 198, n.8.
Plaintiff’s failure to set forth facts sufficient to support a claim that the city acted in an objectively reckless manner in enacting and maintaining the disputed ordinance is fatal to his claims against the city. The city’s motion to dismiss is therefore granted. Plaintiff is hereby given leave to file an amended complaint on or before March 9, 1979.
II. ROCHFORD’S MOTION FOR SUMMARY JUDGMENT.
Count IV of the complaint is directed toward defendant James Rochford, the Superintendent of the Chicago Police Department at the times in question. Count IV charges that prior to the time of plaintiff’s arrest, defendant Zajac “had been the subject of several complaints of abusive conduct toward or maltreatment of citizens and otherwise had compiled an employment history indicating that he was likely to engage in abusive conduct toward or maltreatment of citizens”, that “despite having notice of Zajac’s complaint records and employment history, Rochford failed to assign him to duties in which he would not have the opportunity to mistreat citizens, to suspend him, to seek his discharge, or otherwise to prevent Zajac from engaging in abusive conduct towards citizens”, and that these “acts and omissions of defendant Rochford were a proximate cause of plaintiff’s injuries . ..”
It is not entirely clear from the complaint itself whether plaintiff seeks to charge defendant Rochford with negligence in the exercise of his supervisory authority or with some more culpable mental state. Neither negligence, recklessness, or wilful or malicious conduct is in terms alleged. However, plaintiff’s arguments in opposition to Rochford’s motion characterize the complaint as sounding solely in negligence. Further, it is nowhere asserted that Rochford had personal knowledge of Zajac’s employment records, or that any of the alleged complaints against Zajac had been found to be meritorious upon investigation. Therefore, the court will treat the complaint as simply alleging negligence on defendant Rochford’s part.
Rochford argues that this failure to allege more than negligent supervision renders the plaintiff’s allegations against him legally insufficient. This court agrees. In order to establish the liability under § 1983 of supervisory officials for deprivations of constitutional rights through the acts of their subordinates, an affirmative link must be proven between their own acts or omissions and the actions directly causing the alleged violation, so that they can be said to have encouraged, approved of, or acquiesced in the violation. See Rizzo v. Goode, 423 U.S. 362, 96 S.Ct. 598, 46 L.Ed.2d 561 (1976); Jamison v. McCurrie, supra, 565 F.2d at 485, n.1; see also Monell, supra. Such an affirmative link requires more than mere negligent supervision of those over whom a defendant has authority and control. As the Seventh Circuit stated in McDonald v. State of Illinois, supra, 557 F.2d at 601-602:
We find the law to be clear that for plaintiff to state a cognizable claim, he must allege more than mere negligence on the part of these [individual supervisory and non-supervisory] defendants [citations omitted] Indeed, in the case of supervisory officials, he must allege some personal involvement in the deprivation. See Adams v. Pate, 445 F.2d 105 (7th Cir. 1971).
See also Bonner v. Coughlin, supra, 545 F.2d at 569 (allegations of “mere negligent supervision” insufficient to state a claim under § 1983); West v. Rowe, 448 F.Supp. 58 (N.D.Ill.1978); Jones v. McElroy, 429 F.Supp. 848 (E.D.Pa.1977).
Accordingly, defendant Rochford’s motion for summary judgment, treated as a motion to dismiss, will be granted.
. The city ordinance in question is § 27-264(b) of the Municipal Code of the City of Chicago, which provides:
The sounding of any horn or signal device on any automobile, motorcycle, bus, or other vehicle while stationary, except as a danger signal when an approaching vehicle is apparently out of control, or, if in motion, only as a danger signal after or as brakes are being applied and deceleration of the vehicle is intended, or the creation by means of any such signal device of any unreasonably loud or harsh sound or the sounding of any such device for an unnecessary and unreasonable period of time, is hereby prohibited.
. As yet, the Supreme Court has not seen fit to make such an extension of liability under § 1983. See Procunier v. Navarette, supra, 434 U.S. at 565, 98 S.Ct. at 862, n.14; see also McCollan v. Baker, 575 F.2d 509 (5th Cir. 1978), cert, granted-U.S.-, 99 S.Ct. 1015, 59 L.Ed.2d 71.
|
3537125-18908 | MEMORANDUM DECISION
PENCE, Chief Judge.
The central issue in this case is whether the recent Supreme Court decision of Argersinger v. Hamlin, 407 U.S. 25, 92 S.Ct. 2006, 32 L.Ed.2d 530 applies to summary courts-martial proceedings conducted under 10 U.S.C. § 820.
It does.
Statement of Facts
Both first plaintiffs, Daigle and Crosby, were members of the U. S. Marine Corps stationed in Hawaii at the Kaneohe Marine Base. On June 28, 1972, Daigle appeared before a summary court-martial for alleged failure to obey a lawful order and possessing two I.D. cards. At that time, Daigle pled guilty to both charges and was sentenced to 20 days “at hard labor”, i. e., imprisonment. On July 6, 1972, Crosby appeared at a summary court-martial to answer charges involving failure to obey a lawful order, failure to be at an appointed duty station and breaking a restriction. He pled guilty only to the first charge, but was acquitted of the remaining allegations. He was sentenced to 30 days Marine imprisonment.
On July 14, 1972, plaintiffs petitioned this court for a writ of habeas corpus pursuant to 28 U.S.C. § 2241 et seq. They further requested that a class action be established (Rule 23, F.R.Civ.P.) and also sought a temporary restraining order and preliminary injunction (Rule 65(b) and (c), F.R.Civ.P.), prohibiting the defendants from conducting any summary courts-martial without affording Marine servicemen the Argersinger protections. Intermingled with the above prayers for relief was plaintiffs’ request that this court declare 10 U.S.C. § 820 unconstitutional unless the Argersinger protections were applied to it (pursuant to 28 U.S.C. §§ 2201, 2202). This court issued an Order to Show Cause, with hearing set for July 20, 1972.
At that hearing, after testimony by both plaintiffs, various officers of the Marine Corps testified concerning both the particular summary courts-martial here in issue as well as the general policy of the Navy and Marine Corps, vis-a-vis this type of proceedings. This court then held: (1) The protections of Argersinger apply to summary courts-martial proceedings. (2) Plaintiff Daigle had been offered counsel at his court-martial and had knowingly and voluntarily waived it. (3) Plaintiff Crosby had not been offered counsel and had not validly waived his rights. Crosby’s petition for a writ of habeas corpus was granted. (4) A class action determination was then inapproriate. A temporary restraining order, preliminary injunction and declaratory judgment were also denied. The court suggested that the military authorities “read the . writing on the wall” and begin to provide attorneys or some legally reasonable substitute in implementing summary courts-martial.
On July 24, plaintiffs moved this court to reopen and reconsider their motion for a class action. This motion was based on an affidavit of Captain Willcox, Judge Advocate, U. S. M. C., which indicated that the military authorities at both Kaneohe and Pearl Harbor were not only refusing to provide counsel in post-July 20 summary courts-martial, but also denied the Captain access to those prisoners who had already been convicted post Argersinger but without its protections, who might be unaware of this court’s July 20 ruling.
On July 27, a motion to intervene under Rule 24(a)(2), F.R.Civ.P., was filed by two sailors, Michael E. Chadwick and Warren T. Robinson. Accompanying this motion was an affidavit of their attorney, Stanley Levin (who also represented Daigle and Crosby), stating that during the week of July 24-28, visiting Judge Peckham had suggested that he go to Pearl Harbor to interview various prisoners who he (Levin) believed were being incarcerated pursuant to summary courts-martial proceedings conducted in violation of Argersinger, ***Upon inter view, Chadwick informed Levin that he had been charged on July 7, 1972, for assault on a fellow Marine; although he had previously expressed a desire to have an attorney at his court-martial, he could not afford one himself and was never offered one; at his court-martial he pled guilty and, among other punishments, was sentenced to 30 days imprisonment. Although varying in factual detail, Robinson’s story as told to Levin was essentially the same, i. e., he wanted counsel at his court-martial, but could not afford it himself and one was never provided nor offered to him.
On July 28, defendants moved (1) for a new hearing under Rule 59(a) (2), F.R. Civ.P., and (2) to set aside the judgment and order of July 20 for want of personal service upon certain named defendants under Rule 60(b)(4), F.R.Civ.P.
On July 31, another motion to intervene and proceed in forma pauperis was filed by two other Marines, Jack Nazimek and Robert Johnson. Again an affidavit by Attorney Levin was included, stating in substance that both Nazimek and Johnson (1) were charged with offenses after June 12; (2) they had voiced their desires for counsel prior to their courts-martial; (3) they could not afford counsel themselves; (4) at the time of their summary courts-martial they were neither offered nor provided with counsel; and (5) they pled guilty and each was sentenced to some term of imprisonment. The affidavit further stated that both had told Attorney Levin that this court’s earlier decision of July 20 was not being recognized by the military authorities.
On August 3, a hearing was held to decide all these post-July 20 matters. After this court denied the government’s motions and granted the two motions to intervene and proceed in forma pauperis, the defendants raised a question as to whether the proper military authorities had been served, such as would permit the court to consider the requested writs of habeas corpus. Although there was a profusion of military personnel of officer rank in the courtroom, none would admit he was authorized to represent the named parties defendant. Even the two judge advocates assisting the U. S. Attorney were unable to identify whom they represented. Because there was some genuine question concerning proper service, this court confined itself to the case of intervenor Robinson, the only one of the intervenors who was still incarcerated. The government stipulated that Robinson had not been provided with nor offered counsel at his summary court-martial and that his custodian was present in the courtroom. This court then granted the writ.
At an in-chambers session the court requested that the parties themselves try to work out the problems of service of process. The court also requested that the two judge advocates determine what policy position the Department of the Navy was going to take in these cases and whether the court’s July 20 ruling would be followed voluntarily by the Navy and Marine Corps. A hearing was set for August 17 in order to assure that proper service might be accomplished and to allow the Navy further time to determine its position. In the meantime, plaintiffs’ motion for reconsideration of the court’s denial of a class action was denied without prejudice.
At the August 17 hearing, the government moved to disjniss for lack of jurisdiction and improper service of process. The government’s motions were denied. After hearing evidence and evaluating all that had occurred since July 20, this court then granted plaintiffs’ renewed motion for a class action pursuant to 23 (b)(3) and (e). The class was defined as all those persons who are members of the U. S. Navy and Marine Corps and who (1) were or are now or will be required after June 12, 1972 to stand trial by summary courts-martial held within this federal district; (2) were not or are not advised of their right to assistance of counsel during their summary courts-martial proceedings, and if indigent, advised that counsel must be provided without cost; and (3) had not made a knowing and intelligent waiver. Then pursuant to 28 U.S.C. § 1361, this court ordered defendants Warner, Zumwalt and Cushman (they having been served properly) and their agents to issue orders to insure that no summary courts-martial proceedings be commenced by the Navy or Marine Corps within this district unless the requirements of Argersinger are satisfied.
By that order then, specifically, these three defendants must order that no commanding officer or officer-in-charge of a Navy or Marine Corps command or activity within this district shall refer any charge to a summary court-martial without an instruction that confinement at hard labor may not be ordered thereunder unless the accused is (1) advised of his right to counsel, (2) afforded an opportunity for assistance of counsel both prior to and during the summary court-martial proceeding, (3) advised that if indigent, counsel must be provided without cost, and (4) after the above three requirements are satisfied, the accused may make a knowing and intelligent waiver of his right to counsel. While retaining jurisdiction, this court, pursuant to Rule 23(d), F.R.Civ.P., ordered the three respondents to assure that the members of plaintiffs’ class be informed of their rights. Finally, the findings of guilt and sentences for Nazimek, Johnson, Chadwick and Robinson were vacated, subject, however, to retrial. Upon representations by the defendants that Navy regulations did not permit such retrial, the judgments were ordered expunged from all military records of plaintiffs.
Legal Analysis
It is beyond dispute that habeas corpus review in civil courts is available to military persons under certain circumstances. Although there has been some disagreement on whether the scope of review with respect to constitutional issues is inherently more limited in the military context than in comparable civilian cases, all courts agree that the military authorities must at a minimum deal “fully and fairly” with a military prisoner’s constitutional contentions. While this standard has itself been subject to different interpretations, the underlying rationale is that review should be afforded when the petitioner has allegedly been denied a basic constitutional right, the absence of which materially affected his rights to a fair hearing.
In deciding in Argersinger “that absent a knowing and intelligent waiver, no person may be imprisoned for any offense . . . unless he was represented by counsel at his trial”, 92 S.Ct. at 2012, the Court quoted Gideon v. Wainwright, 372 U.S. 335, 83 S.Ct. 792, 9 L. Ed.2d 799 (1963):
“The right of one charged with crime to counsel may not be deemed funda mental and essential to fair trials in some countries, but it is in ours. From the very beginning, our state and national constitutions and laws have laid great emphasis on procedural and substantive safeguards designed to assure fair trial before impartial tribunals in which every defendant stands equal before the law.” 372 U.S. at 344, 83 S.Ct. at 796.
The Court then continued:
“The requirement of counsel may well be necessary for a fair trial even in a petty offense prosecution. We are by no means convinced that legal and constitutional questions involved in a case that actually leads to imprisonment even for a brief period are any less complex than when a person can be sent off for six months or more.” 92 S.Ct. at 2010.
In his concurring opinion Mr. Justice Powell echoed this idea:
“I am in accord with the Court that an indigent accused’s need for the assistance of counsel does not mysteriously evaporate when he is charged with an offense punishable by six months or less. In Powell v. Alabama [287 U.S. 45, 53 S.Ct. 55, 77 L.Ed. 158] and Gideon, both of which involved felony prosecutions, this Court noted that few laymen can present adequately their own cases, much less identify and argue relevant legal questions. Many petty offenses will also present complex legal and factual issues that may not be fairly tried if the defendant is not assisted by counsel. Even in relatively simple cases, some defendants, because of ignorance or some other handicap, will be incapable of defending themselves.” 92 S.Ct. at 2017, 2018.
The need and importance of providing counsel in the military is reflected by 10 U.S.C. § 827. In essence, this section provides that for general courts-martial (proceedings having jurisdiction to impose sentences of confinement greater than six months), the defense counsel who must be provided must be (1) a judge advocate and (2) a graduate of an accredited law school or a member of the bar of a federal court or of the highest court of a state. It is also permissible that defense counsel, while not being a judge advocate, be a member of the bar of a federal court or the highest court of a state. For special courts-martial (proceedings having jurisdiction to impose sentences of confinement up to- six months), the required defense counsel must, if possible, have the same qualifications as counsel provided in general courts-martial. If physical conditions or military exigencies do not so- permit, then these qualifications are not required. However, trial and defense counsel must always be similarly qualified.
This recognition of the importance of counsel must be contrasted with what occurs at summary courts-martial. In these proceedings, where it is possible to receive punishment for one month or less (10 U.S.C. § 820), no counsel is provided. The summary court officer essentially acts as judge, prosecutor and defense counsel. Yet, as the majority and Mr. Justice Powell pointed out in Argersinger, the need for counsel exists whenever a charge, no matter how petty, can lead to any period of imprisonment. This need, then, is the same regardless of what type of court-martial might be involved. This is made readily apparent by the fact that a person can never be tried by a summary court-martial if he objects thereto, 10 U.S.C. § 820. By objecting, he then invokes the jurisdiction of the special or general courts-martial, with the attendant right to counsel which 10 U.S.C. § 827 provides. If there is such objection to- a summary court, since the offense is the same, the proof demanded before the special or general court-martial is also the same. It follows that the need for counsel is the same. However, prior to- Argersinger, it is only in the special or general courts-martial that this need has been satisfied.
This court is not persuaded by the government’s argument that because petitioner could have objected to the summary court-martial, and thereby received the protections provided by a general or summary court, his constitutional rights were not violated. Leaving aside the difficulty of equating waiver with the lack of objection, the stickler is that by objecting to the summary court procedure (and thereby invoking the constitutional protections specifically secured him under 10 U.S.C. § 827), the accused is forced to run the risk of receiving the greater punishments sanctioned by the general and special courts-martial. Qne cannot be “punished” for the exercise of his constitutional rights, United States v. Jackson, 390 U.S. 570, 88 S.Ct. 1209, 20 L.Ed.2d 138 (1968).
The government’s primary argument is that the peculiar needs of the military demand that the Argersinger requirements not be applied to summary courts-martial. This court recognizes
“That a system of specialized military courts, proceeding by practices different from those obtaining in the regular courts and in general less favorable to defendants is necessary to an effective national defense establishment, few would deny.” O’Callahan v. Parker, 395 U.S. 258, 265, 89 S.Ct. 1683, 1687, 23 L.Ed.2d 291.
However, as noted above, these special attributes of military justice cannot justify denial of basic constitutional rights, when both these rights and the needs of the military can be successfully accommodated. By applying Argersinger to summary courts-martial, this court is not burdening the military with an inflexible and impossible requirement. Whether considered in terms of due process or the Sixth Amendment right to counsel, this court holds that the type and quality of representation which must be provided under Argersinger to summary courts-martial perforce may vary with the context of each particular case.
On Oahu are two large military bases with no apparent lack of qualified lawyers to undertake the Argersinger requirements. With this type of representation available, it would be a violation of Argersinger to provide something less to servicemen tried at those bases. The “ship-at-sea” hypothetical which the government has so often cited presents a very different situation. Whenever, due to the exigencies of service operations, qualified lawyers are not present, the Navy and Marine Corps are mandated by Argersinger only to provide the best counseling then available. Conclusion
The requirements of 10 U.S.C. § 827 regarding special courts-martial indicate the basic guidelines for implementing this decision. In holding that Argersinger applies to' summary courts-martial, this court, like The Court, focuses on the need and importance of counsel in even petty criminal proceedings where liberty may be imperiled. While the services must make a good-faith effort to provide trained lawyers in all cases, this court reemphasizes that due to the special operative requirements facing the armed services, the type and quality of representation must perforce vary with the circumstances of each case. It is only in this way that rational and constitutional accommodation of any conflicting interest can be made.
. Plaintiffs also moved for permission to proceed in forma pauperis, 28 U.S.C. § 2250. This was later granted.
. Because the Assistant U. S. Attorney had only been given the case at 4:30 the prior afternoon, the government bad filed no written memorandum. The record, however, indicates that the U. S. Attorney’s office had notice of this case as early as July 6, but apparently did nothing about it. It’s motion on July 20 for a continuance was denied rather rapidly.
. Both also moved to proceed in forma pauperis.
. Judge Pence was absent from Hawaii from July 23-August 1. During this period, Judge Peckham was understandably reluctant to rule on this matter and properly held it advisable that the August hearings await his return. However, on more than one occasion, Judge Peckham was forced to instruct the mili tary authorities and U. S. Attorney’s office to assure that interested attorneys could visit and interview their incarcerated clients.
. Mr. Nazimek told Levin that when he (Nazimek) inquired about the Crosby ruling he was told by a Warrant Officer Hopkins that Nazimek and other “prisoners did not have any constitutional rights.”
. For the appropriateness of the mandamus and class action devices under these type of circumstances, see Mead v. Parker, 464 F.2d 1108 (9 Cir. 1972).
. See, e. g., Burns v. Wilson, 346 U.S. 137, 73 S.Ct. 1045, 97 L.Ed. 1508 (1953) ; Mitchell v. Swope, 224 F.2d 365 (9 Cir. 1955).
|
7396721-9770 | OPINION AND ORDER
PIERAS, District Judge.
Plaintiff Victor M. Candelario brings this action for back pay, damages, declaratory relief, and injunctive relief pursuant to 42 U.S.C. § 1983. He alleges political discrimination in that he was dismissed from his position as Assistant Secretary II, a trust position in the Office of the Secretary of the Agriculture and reinstated to his previous career position.
The discrimination alleged is that this dismissal was premised on Candelario’s political affiliation. Plaintiff contends that the rationale for his firing violated his first amendment rights to freedom of speech and association, and that the manner in which the firing was carried out violated his fifth and fourteenth amendment rights to be free from deprivation of property without due process of law.
The Court has before it defendants’ motion for partial summary judgment as to any damages claim on the basis of qualified immunity.
I.Standard for Summary Judgment Federal Rule of Civil Procedure 56(c) provides that summary judgment shall be granted
“if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.”
The Court must examine the record “in the light most favorable to ... the party opposing the motion.” Poller v. Columbia Broadcasting System, 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1972).
Similarly the court must indulge all inferences favorable to the party opposing the motion. These rules must be applied with recognition of the fact that it is the function of summary judgment “to pierce formal allegations of facts in the pleadings ... ”, and to determine whether further exploration of facts is necessary. The language of Rule 56(c) sets forth a bifurcated standard which the party opposing summary judgment must meet to defeat the motion. He must establish the existence of an issue of fact which is both “genuine” and “material.” A material issue is one which affects the outcome of the litigation.
Hahn v. Sargent, 523 F.2d 461, 464 (1st Cir.1975) (citations omitted), cert. denied, 425 U.S. 904, 96 S.Ct. 1495, 47 L.Ed.2d 754 (1976).
As the Supreme Court has recently amplified, the existence of some alleged factual dispute will not defeat a summary judgment motion; “the requirement is that there be no genuine issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986) (emphasis in original). Materiality is defined by the substantive law governing the case. Id. 106 S.Ct. at 2510.
II. Factual Background
The record reveals the following undisputed and material facts.
1. Candelario began his service as Assistant Secretary II in the Department of Agriculture, on February 1, 1983. This position is classified in the “trust” wing of the Puerto Rico civil service as defined in 3 L.P.R.A. § 1350.
2. The Department of Agriculture of Puerto Rico is a cabinet-level department of the government of Puerto Rico. The Secretary of Agriculture is charged with the promotion and development of agriculture, horticulture, silviculture, cattle raising, and related agricultural industries in Puerto Rico. 3 L.P.R.A. § 354.
3. At the time of Candelario’s dismissal, defendant Antonio González Chapel was the Secretary of Agriculture.
4. Governor Rafael Hernández Colón, the standard bearer of the Popular Democratic Party (PDP) ticket, appointed González Secretary of Agriculture after the rival New Progressive Party (NPP) was removed from the executive branch of government after the 1984 general election in Puerto Rico.
5. Candelario is a member of the NPP.
6. The duties inherent in the position of Assistant Secretary II in the Department of Agriculture, garnered from the position description form covering the post follow:
The incumbent of this position performs duties that are highly executive and complex, under the supervision of the Secretary and/or the Undersecretary of Agriculture. He collaborates in the making of administrative public policy of the department and its agencies.
1. This official has ample discretion in the performance of his duties and in the establishing of the procedures used in the area of administration of personnel, finances, purchases, supplies, administration of records, general services and other areas of the agency.
2. Counsels the Secretary, the Undersecretary and the directors of those agencies that are attached to the depart ment, in aspects dealing with public norms and policy regarding personnel, finances, purchases and conservation of equipment and regulation of property and norms as to the use of all government services, such as the mail, vigilance, maintenance, disposition of documents, etc.
3. Makes long and short-term planning regarding the utilization and development of human resources, the control of fiscal matters of the department and all of the support or back-up systems of the farming projects.
4. Supervises the five administrative branches of the agency: Personnel, General Services, Finances, Administration of Records, Purchases and Supplies.
5. Writes up for the Secretary and/or Undersecretary documents of the highest degree of complexity and confidentiality regarding aspects under his supervision.
6. Evaluates the administrative systems of the department & its agencies for purposes of suggesting to the Secretary any changes he deems necessary in order to achieve the department’s goals.
7. Coordinates, along with the department’s executive staff and its agencies, any special assignments that the Secretary or Undersecretary assign to him.
8. Upon express delegation by the Secretary and/or Undersecretary, he makes decisions concerning appointments, promotions, dismissals, destitutions, lease service contracts, accounts & other matters connected to all aspects of management.
7. On February 22, 1985, González wrote a letter to Candelario, dismissing Candelario from the post of Assistant Secretary II, effective February 26. The letter noted Candelario’s right to an administrative appeal and his right to reinstatement in the last position Candelario held in the career civil service.
In actions brought under 42 U.S.C. § 1983, a defense of qualified immunity from liability for damages is available to state executive officers performing discretionary functions, “insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known.” Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S.Ct. 2727, 2738, 73 L.Ed.2d 396 (1982). On a motion for summary judgment, it is appropriate for a trial court to determine whether the law was clearly established at the time of the conduct at issue. De Abadia v. Izquierdo Mora, 792 F.2d 1187 (1st Cir.1986). At the time of plaintiff’s demotion, the law was clearly established that public employees are protected by the First Amendment guarantees of freedom of speech and association from being discharged or demoted solely because of political affiliation, unless political affiliation is an appropriate requirement for the effective performance of the office involved. Branti v. Finkel, 445 U.S. 507, 518, 100 S.Ct. 1287, 1294, 63 L.Ed.2d 574 (1980); Elrod v. Burns, 427 U.S. 347, 367-68, 96 S.Ct. 2673, 2686-87, 49 L.Ed.2d 547 (1976). In Branti and Elrod, the Supreme Court recognized that in certain positions of government employment, where an employee’s private political beliefs would interfere with the performance of his public duties, his first amendment rights could be required to yield to the state’s vital interest in maintaining governmental effectiveness and efficiency. Branti, 445 U.S. at 517, 100 S.Ct. at 1294; Elrod, 427 U.S. at 366, 96 S.Ct. at 2686. The issue we must decide is whether, under an objective analysis, the defendant was reasonable in believing party affiliation was an appropriate requirement for plaintiff’s position. De Abadía, supra, 792 F.2d at 1191.
Under the Branti-Elrod analysis, the threshold inquiry is to determine whether the position at issue relate to partisan political interests or concerns. Jiménez Fuentes v. Torres Gaztambide, 807 F.2d 236, 241 (1st Cir.1986), cert. denied, — U.S. -, 107 S.Ct. 1888, 95 L.Ed.2d 496 (1987); see also Collazo Rivera v. Torres Gaztambide, 812 F.2d 258, 260 (1st Cir.1987). If that issue is satisfied, then we must determine whether the inherent responsibilities of the position are such that party affiliation is an appropriate requirement for the job. Jiménez Fuentes, 807 F.2d at 242; Collazo Rivera, 812 F.2d at 261.
The First Circuit has further expanded the threshold inquiry by addressing whether the agency involved “handled matters potentially subject to political differences and to focus upon how the plaintiff's position influenced the resolution of such matters.” Mendez-Palou v. Rohena Betancourt, 813 F.2d 1255, 1258 (1st Cir.1987). This inquiry is designed to eliminate from further consideration those positions involving “strictly technical or professional” functions. Mendez-Palou, 813 F.2d at 1258.
The Court holds that the Department of Agriculture of Puerto Rico is an agency that handles matters potentially subject to political differences. The promotion and development of agriculture and its related industries can have a great effect on the economy of this island. The state of the economy is never far from the minds of the voters. Candelario’s position, in turn, directly affects the provision of promotional and developmental services. Eg., Román Melendez v. Inclán, 826 F.2d 130, 133-34 (1st Cir.1987), citing Tomczak v. City of Chicago, 765 F.2d 633 (7th Cir.1985).
|
3871780-11583 | ORDER
DAVID S. DOTY, District Judge.
This matter is before the court on plaintiffs’ motion for a preliminary injunction. Based upon a review of the file, record and proceedings herein, and for the following reasons, the court grants plaintiffs’ motion.
BACKGROUND
On September 20, 1991, plaintiff John Doe was convicted of one count of a lewd act upon a child under the age of fourteen in violation of California Penal Code § 288(a). Doe was placed on probation for five years and, under California law, subjected to lifetime predatory offender registration. After the incident, in May of 1992, Doe and his family moved from California to Owatonna, Minnesota. Pursuant to Minnesota Statutes § 243.166, plaintiffs lifetime registration requirement followed him to Minnesota. Therefore, in compliance with Minnesota law, Doe initially registered as a predatory offender by providing the Minnesota Bureau of Criminal Apprehension (“BCA”) with his fingerprints, a photograph and information regarding his whereabouts, residences, places of employment and vehicle make and model. At that time, the Minnesota Department of Public Safety and the BCA determined that Doe’s risk level was “not assigned.” (Goetz Aff. Ex. 1.) After the initial registration, Doe completed annual BCA address verification forms as required by Minnesota law.
In December of 2004, defendant Shaun E. LaDue became chief of the Owatonna police department (“OPD”). Under La-Due’s leadership, the OPD instituted a proactive compliance or verification approach in monitoring registered predatory offenders. The proactive approach, as advocated in the BCA predatory offender training manual, recommends that local police departments conduct quarterly visits to the last known address of every predatory offender in their jurisdiction. (Hiveley Aff. Ex. A.) During such visits, conducted on a random basis four times per year, OPD officers seek face-to-face contact with the registered offender to verify the BCA’s identification and registration information. Additionally, once a year on a random basis, OPD officers visit an offender’s home to photograph the offender and his or her vehicles.
Doe claims that these visits, often made by officers in marked squad cars who demand to meet with Doe personally and return to his home until he meets their demands, have injured him and his family. Doe argues that he was threatened with arrest and prosecution for violating his registration requirements if he did not ful ly comply with the officers’ requests. He claims that the visits have subjected him and his family to a negative social stigma and resulted in de facto community notification of his past criminal wrongdoing. Further, he asserts that the officers have, without any reasonable or articulable suspicion of wrongdoing, seized him and entered his house at all hours of the day and night, thereby interrupting the quiet enjoyment of his home.
On May 4, 2007, Doe and his wife, plaintiff Jane Doe, filed this action against LaDue, the City of Owatonna and OPD officers. Doe argues that the OPD’s proactive enforcement practices extend beyond the measures authorized by Minnesota Statutes §§ 243.166 and 244.052 and violate his Fourth Amendment right to be free from unreasonable search and seizure and his Fourteenth Amendment rights of due process and equal protection. Doe also asserts claims against LaDue and other OPD officers individually under 42 U.S.C. § 1983. Plaintiffs now move the court for a preliminary injunction to halt the OPD’s use of the proactive approach to predatory offender monitoring.
DISCUSSION
The court examines four factors when considering whether to grant preliminary injunctive relief. See Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109, 112-14 (8th Cir.1981). Those factors are (1) the threat of irreparable harm to the movant in the absence of relief, (2) the balance between that harm and the harm that the relief would cause to the other litigants, (3) the likelihood of the movant’s ultimate success on the merits and (4) the public interest. See id. at 112-14. The court balances the four factors to determine whether injunctive relief is warranted. See Northland Ins. Cos. v. Blaylock, 115 F.Supp.2d 1108, 1116 (D.Minn.2000). The movant bears the burden of proof concerning each factor. See Gelco v. Coni-ston Partners, 811 F.2d 414, 418 (8th Cir.1987). The likelihood of success on the merits is not, alone, determinative. See Dataphase, 640 F.2d at 113. Instead, the court considers the particular circumstances of each case, remembering that the primary question is whether the “balance of equities so favors the movant that justice requires the court to intervene to preserve the status quo until the merits are determined.” Id. If the threat of irreparable harm to the movant is slight when compared to likely injury to the other party, the movant carries a particularly heavy burden of showing a likelihood of success on the merits. See ASICS Corp. v. Target Corp., 282 F.Supp.2d 1020, 1025 (D.Minn.2003).
I. Threat of Irreparable Harm
Plaintiffs must first establish that irreparable harm will result without injunctive relief and that such harm will not be compensable by money damages. See Blaylock, 115 F.Supp.2d at 1116. Possible or speculative harm is not enough. See Graham Webb Int’l v. Helene Curtis, Inc., 17 F.Supp.2d 919, 924 (D.Minn.1998). Rather, the party seeking the injunctive relief must show a significant risk of harm exists. Johnson v. Bd. of Police Comm’rs, 351 F.Supp.2d 929, 945 (E.D.Mo.2004). The absence of such a showing alone is sufficient to deny a preliminary injunction. See Gelco, 811 F.2d at 420.
The court finds that the threat of irreparable harm to plaintiffs weighs in favor of granting a preliminary injunction. It is undisputed that OPD officers have subjected Doe to searches and seizures of his person. Doe contends that the OPD has carried out these searches and seizures without probable cause or reasonable suspicion of wrongdoing. Defendants argue that the BCA training manual advocates such practices and that Minnesota Statutes § 243.166 does not prohibit them. A state agency’s training manual, however, does not override the Supreme Court’s directive that government officials cannot undertake a “search or seizure absent individualized suspicion.” See Chandler v. Miller, 520 U.S. 305, 308, 117 S.Ct. 1295, 137 L.Ed.2d 513 (1997). Nor does a state law’s failure to prohibit a constitutionally violative practice make it tenable. Doe has complied with his annual registration without incident for thirteen years and carries the lowest risk level possible — “not assigned.” Further, defendants have offered no evidence of probable cause or reasonable suspicion that exists to justify the searches and seizures of Doe and the accompanying disruption of his family. Therefore, based on the evidence currently before it, the court finds that the OPD’s methods have violated Doe’s Fourth Amendment rights in the past and threaten to cause him future harm. Accordingly, this factor weighs in favor of injunctive relief for plaintiffs.
II. Balance of Harms
Under the second factor, the court considers whether the irreparable harm to the movant outweighs any potential harm to the nonmovants should the injunction issue. See Dataphase, 640 F.2d at 114. Defendants argue that plaintiff is not harmed because his 1991 conviction mandated registration and he is merely objecting to the impact of that requirement. The court finds that the OPD’s practices have gone beyond the registration requirement and caused plaintiffs considerable harm. Defendants, meanwhile, have not suggested how a preliminary injunction would harm them. Further, enjoining the proactive methods does not keep defendants from monitoring Doe. The BCA advocates a reactive approach — the method the OPD used before LaDue’s tenure— that enables law enforcement to monitor predatory offenders through annual registration. (See Hiveley Aff. Ex. A.) Accordingly, this factor also supports the issuance of an injunction.
III. Likelihood of Success on the Merits
The third factor questions whether the movant will likely prevail on the merits. While not overriding the other factors, the likelihood of success on the merits is preeminent. See Halikas v. Univ. of Minn., 856 F.Supp. 1331, 1335 (D.Minn.1994). Defendants argue that plaintiffs have not demonstrated a likelihood of success on the merits because LaDue, the OPD officers, and the City of Owatonna are entitled to qualified immunity. Plaintiffs allege that the OPD’s proactive monitoring approach violated Doe’s clearly established Fourth Amendment right to be free from unreasonable search and seizure and that defendants are not entitled to qualified immunity.
The applicability of qualified immunity is a question of law analyzed in two parts. Saucier v. Katz, 533 U.S. 194, 201, 121 S.Ct. 2151, 150 L.Ed.2d 272 (2001). The court first determines whether the facts alleged are adequate to show a constitutional violation, and, if so, whether the law regarding the right allegedly violated was clearly established. See id.; Get Away Club, Inc. v. Coleman, 969 F.2d 664, 666-67 (8th Cir.1992). If a plaintiff has failed to establish a violation of a constitutional right, no additional inquiry is necessary. Saucier, 533 U.S. at 201, 121 S.Ct. 2151.
A. Constitutional Violation
The Fourth Amendment protects the “right of people to be secure in their persons, houses, papers and effects, against unreasonable searches and seizures ... [without] probable cause.” U.S. Const. amend IV. As discussed above, it is undisputed that OPD officers subjected Doe to searches and seizures of his person and that they did so without probable cause or reasonable suspicion of wrongdoing. Accordingly, for purposes of this motion, the court finds that the OPD’s proactive monitoring policy violated Doe’s Fourth Amendment right to be free from unreasonable search and seizure. Plaintiffs must next demonstrate that this right was clearly established at the time of violation.
B. Clearly Established Constitutional Right
Police officers performing discretionary functions are shielded from liability for civil damages to the extent their conduct does not violate “clearly established statutory or constitutional rights” of which a “reasonable person” would have known. Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S.Ct. 2727, 73 L.Ed.2d 396 (1982). For a law to be clearly established, it is only necessary that the unlawfulness of the officers’ actions be apparent in light of preexisting law. See Anderson v. Creighton, 483 U.S. 635, 640, 107 S.Ct. 3034, 97 L.Ed.2d 523 (1987). To determine whether qualified immunity applies, the court considers the “objective legal reasonableness” of an official’s conduct in light of the information he or she possessed at the time of the alleged violation. See Craighead v. Lee, 399 F.3d 954 (8th Cir.2001). An official will be immune if it is objectively obvious that a reasonably competent official could have concluded that the disputed action was proper. See Malley v. Briggs, 475 U.S. 335, 341, 106 S.Ct. 1092, 89 L.Ed.2d 271 (1986). Municipalities cannot be held liable for constitutional violations on a respondeat superior theory. See Monell v. Dep’t of Soc. Servs., 436 U.S. 658, 691, 98 S.Ct. 2018, 56 L.Ed.2d 611 (1978). Rather, they may be liable only if the execution of their policies or customs resulted in the deprivation of a constitutional right. See id. at 694, 98 S.Ct. 2018; Yellow Horse v. Pennington County, 225 F.3d 923, 928 (8th Cir.2000).
|
2907529-25410 | MEMORANDUM DECISION AND ORDER
ROBINSON, District Judge.
In this action, James Aikman (the “Plaintiff’) brings suit against the County of Westchester (“Westchester”) and several members of the Westchester County Police Department (“Police Defendants”). This suit stems from an incident where Plaintiff, who is African-American, was pulled over for a traffic violation, detained, and searched. Plaintiff, who brings this action pursuant to 42 U.S.C. §§ 1983 and 1985(3), alleges six causes of action, claiming deprivations of his constitutional rights. This opinion addresses Defendants’ motions to dismiss pursuant to Fed. R.Civ.P. 12(b)(6).
I. Background
On December 1, 2003, while Plaintiff was driving in Yonkers, New York, Police Defendants stopped Plaintiffs car. Plaintiff was driving with a broken side-view mirror in violation of New York State law. Police Defendants subsequently held Plaintiff at the scene while they searched his car. Plaintiff alleges that Police Defendants conducted surveillance on him before the traffic stop, used the broken mirror as a pretext to pull him over, and stopped him because he is African-American. (Am. Compl.f 28.) Plaintiff further alleges that Police Defendants, inter alia, held him against his will, assaulted, humiliated, and selectively enforced the laws against him. (Am.Compl^ 44.) Plaintiff contends that Westchester engages in a pattern, policy, or practice of racial profiling, selective enforcement, and unreasonable searches and seizures. (Am.Compl.1ffl 58, 62.)
II. Analysis
A. Well-Pleaded Complaint Rule
Under the Federal Rules of Civil Procedure, a complaint “shall contain ... a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). “The statement should be plain because the principal function of pleadings under the Federal Rules is to give the adverse party fair notice of the claim asserted so as to enable him to answer and prepare for trial.” Salahuddin v. Cuomo, 861 F.2d 40, 41-42 (2d Cir.1988).
B. Standard of Review
In evaluating a motion to dismiss, a court “must view all allegations raised in the complaint in the light most favorable to the non-moving party ... and ‘must accept as true all factual allegations in the complaint.’ ” Newman & Schwartz v. Asplundh Tree Expert Co., Inc., 102 F.3d 660, 662 (2d Cir.1996) (quoting Leatherman v. Tarrant County Narcotics Unit, 507 U.S. 163, 164, 113 S.Ct. 1160, 122 L.Ed.2d 517 (1993)). In doing so, a court is “not to weigh the evidence that might be presented at a trial but merely to determine whether the complaint itself is legally sufficient.” Goldman v. Belden, 754 F.2d 1059, 1067 (2d Cir.1985). The court’s consideration is limited to the factual allegations in plaintiffs’ complaints, documents attached to the complaint as exhibits or incorporated into the complaint by reference, matters of which judicial notice may be taken, and “documents either in plaintiffs’ possession or of which plaintiffs had knowledge and relied on in bringing suit.” Brass v. American Film Techs., Inc., 987 F.2d 142, 150 (2d Cir.1993) (citing Cortee Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 47-48 (2d Cir.1991)).
A court must deny a motion to dismiss “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Stewart v. Jackson & Nash, 976 F.2d 86, 87 (2d Cir.1992) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). Because the complaint must merely allege facts which confer a cognizable right of action, “ ‘[t]he issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims.’ ” York v. Ass’n of the Bar, 286 F.3d 122, 125 (2d Cir.2002) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974)). “Dismissal ... is usually reserved for those cases in which the complaint is so confused, ambiguous, vague, or otherwise unintelligible that its true substance, if any, is well disguised.” Salahuddin, 861 F.2d at 42.
The Second Circuit has stressed that “ ‘[t]his standard is applied with particular strictness when the plaintiff complains of a civil rights violation,’ ” Shechter v. Comptroller of City of New York, 79 F.3d 265, 270 (2d Cir.1996) (quoting Branum v. Clark, 927 F.2d 698, 705 (2d Cir.1991)), and it is clear that notice pleading is sufficient to allege such a § 1983 violation. Leatherman, 507 U.S. at 168, 113 S.Ct. 1160; see also Chance v. Armstrong, 143 F.3d 698, 701 (2d Cir.1998); Hernandez v. Coughlin, 18 F.3d 133, 136 (2d Cir.1994). Thus, “[a] claim for relief under 42 U.S.C. § 1983 only need allege that some person acting under color of stale law deprived the claimant of a federal right.” Green v. Maraio, 722 F.2d 1013, 1016 (2d Cir.1983).
C. Defendant County of Westchester
Plaintiff has alleged that Westchester violated his Fourth and Fourteenth Amendment rights by subjecting him to an unreasonable search and seizure, and deprived him of equal protection under the Fourteenth Amendment through racial profiling and selective enforcement. For the reasons set forth below, Defendant Westchester’s motion to dismiss is denied.
To make a claim under § 1983, a “plaintiff must [first] allege that some person has deprived him of a federal right. Second, he must allege that the person who has deprived him of that right acted under color of state or territorial law.” Gomez v. Toledo, 446 U.S. 635, 640, 100 S.Ct. 1920, 64 L.Ed.2d 572 (1980).
A municipality “can be sued directly under § 1983 for monetary, declaratory, or injunctive relief where ... the action that is alleged to be unconstitutional implements or executes a policy statement, ordinance, regulation, or decision officially adopted and promulgated by that body’s officers.” Monell v. Dep’t of Soc. Servs., 436 U.S. 658, 690, 98 S.Ct. 2018, 56 L.Ed.2d 611 (1978).
Plaintiffs allegations against Westches-ter are contained in the fifth and sixth causes of action in the amended complaint, both brought pursuant to § 1983. The fifth cause of action alleges that the officers’ conduct was “derived from an official policy, pattern, and/or practice of the County of Westchester ... to conduct traffic stops” that violated Plaintiffs right to be free of unreasonable searches and seizures pursuant to the Fourth and Fourteenth Amendments. (Am.Compl.1ffl 57-58.) The sixth cause of action alleges that the officers violated Plaintiffs Fourteenth Amendment rights to equal protection by selectively enforcing laws based on race. (Am.Compl.1ffl 61-62.)
Plaintiffs allegations that West-chester has a pattern or practice of depriving certain people of their constitutional rights satisfies Leatherman’s notice pleading requirement.
D. Defendant Police Officers
Plaintiffs claims against Police Defendants are contained in the first through fourth causes of action. (Am.Compl.1ffl 19-55.) The first and second causes of action are brought pursuant to § 1983 and allege that Police Defendants violated Plaintiffs Fourth and Fourteenth Amendment rights by, inter alia, subjecting him to an excessive and unreasonable search and seizure and excessive force. The third cause of action is brought pursuant to § 1985(3) and alleges an unreasonable search and seizure under the Fourth and Fourteenth Amendments. The fourth cause of action is also brought pursuant to § 1985(3) and alleges Police Defendants deprived Plaintiff of his rights to equal protection.
As Plaintiffs amended complaint does not specify in which capacity Police Defendants are being sued, this Court will analyze the complaint as if it was made against the Police Defendants in both their individual and official capacities
1. Defendant Luciano’s Deputization as a DEA Officer
First, we will consider if Defendant James Luciano, who was both a Westchester County police officer and deputized as an officer with the Federal Drug Enforcement Agency (“DEA”) pursuant to 21 U.S.C. § 878, was properly served. To properly serve a federal government employee who was sued in his individual capacity, a plaintiff must serve both the employee and the government. Fed R. Civ. P. 4(i)(2)(B); Armstrong v. Sears, 33 F.3d 182, 183 (2d Cir.1994) (explaining that “service upon the United States is not required in actions against federal agents in their individual capacities”). Defendant Luciano argues that his status as a DEA deputy makes him an employee of the federal government and the claims against him must be dismissed because the government was never served.
Law enforcement officers deputized under § 878 are “federal employees” only if they fall under certain “narrow” exceptions detailed in 5 U.S.C. § 3374(c). See Felix v. N.Y.C. Police Dep’t, 89 Civ. 2410, 1991 WL 251660, *1, 1991 U.S. Dist. LEXIS 16549 at *2 (S.D.N.Y. Nov. 15, 1991). The § 3374(c) exception relevant here provides that “a State or local government employee on detail to a Federal agency” is considered to be an agency employee “for the purpose of any ... Federal tort liability statute....” 5 U.S.C. § 3374(c). Thus, if a law enforcement officer deputized under § 878 is sued under a “Federal tort liability statute,” he is a “federal employee” for Federal Rule of Civil Procedure 4(i)(2)(B) purposes, and the government must also be served.
Plaintiff brought this action pursuant to 42 U.S.C. §§ 1983 and 1983(3). Defendant Luciano argues that these are Federal tort liability statutes as defined under § 3374(c) and, as a result, he is a “federal employee.” Although the sections are part of the federal code, they provide causes of action against state, not federal, officers and entities. See Dotson v. Griesa, 398 F.3d 156, 162 (2d Cir.2005). Sections 1983 and 1985(3) are therefore not “Federal tort liability statutes” as that term is defined by § 3374(c). For the purposes of this lawsuit, then, Defendant Luciano was not a “federal employee” and he has been properly served.
Defendant Luciano also contends that he is not suable in his official capacity because “suits against officers of the United States acting in their official capacities are considered suits against the United States,” Robinson v. Overseas Military Sales Corp., 21 F.3d 502, 510 (2d Cir.1994), and the United States, as a sovereign, is immune from lawsuits. See United States v. Mitchell, 445 U.S. 535, 538, 100 S.Ct. 1349, 63 L.Ed.2d 607 (1980). Since he is not a “federal employee” for the purposes of this suit, Defendant Luciano cannot claim sovereign immunity. As a result, Defendant Luciano’s motion to dismiss the official capacity claims against him based on his status as a deputized DEA agent is denied. His remaining arguments based upon his status as a Police Defendant will be considered concurrently with the other Police Defendants.
2. Section 1983 Claims
a) Capacity in Which Defendant Police Officers Are Being Sued
Plaintiffs § 1983 claims against Defendant Police officers are contained in the first and second claims, and mimic the fifth and sixth causes of action, which were brought against Westchester. As noted above, this Court will consider Plaintiffs claims to have been brought against the Police Defendants in both their official and individual capacities.
(1) Official Capacity
“Suits against [municipal] officials sued in their official capacity ... should be treated as suits against the [municipality].” Hafer v. Melo, 502 U.S. 21, 25, 112 S.Ct. 358, 116 L.Ed.2d 301 (1991). The official capacity claims against the Police Defendants are thus treated the same as the equivalent claims against Defendant West-chester County. As Plaintiffs claims against Westchester survived Defendant’s motion to dismiss the Defendants’ motion to dismiss Plaintiffs § 1983 claims against the Police Defendants is likewise denied.
(2) Individual Capacity
Individual capacity suits “seek to impose individual liability upon a government officer for actions taken under color of state law.” Melo, 502 U.S. at 25, 112 S.Ct. 358. “[T]o establish personal liability in a § 1983 action, it is enough to show that the official, acting under color of state law, caused the deprivation of a federal right.” Kentucky v. Graham, 473 U.S. 159, 166, 105 S.Ct. 3099, 87 L.Ed.2d 114 (1985). Plaintiff alleges Police Defendants unreasonably stopped him, violated his right to be free of unreasonable searches, engaged in an excessive use of force against him, and violated his rights to equal protection by selectively enforcing the law.
(a) Unwarranted Traffic Stop
This Court first considers whether Police Defendant’s stop of Plaintiff s vehicle violated Plaintiffs Fourth Amendment rights. The Supreme Court has held that “the decision to stop an automobile is reasonable where the police have probable cause to believe that a traffic violation has occurred.” Whren v. United States, 517 U.S. 806, 810, 116 S.Ct. 1769, 135 L.Ed.2d 89 (1996). If the police have probable cause to stop an automobile, their “[s]ub-jeetive intentions play no role” in the analysis. Id. at 813, 116 S.Ct. 1769; see also Scott v. United States, 436 U.S. 128, 138, 98 S.Ct. 1717, 56 L.Ed.2d 168 (1978) (“The fact that the officer does not have the state of mind which is hypothecated by the reasons which provide the legal justification for the officer’s action does not invalidate the action taken as long as circumstances, viewed objectively, justify that action.”).
In this case, Plaintiff was driving with a broken side-view mirror in violation of New York State motor vehicle laws. Plaintiff was convicted of the moving violation. Since the Police Defendants clearly had probable cause to believe Plaintiff violated New York traffic laws, their decision to stop him was reasonable. Whren, 517 U.S. at 810, 116 S.Ct. 1769. Police Defendants’ subjective motivations are not relevant here; since Plaintiff violated New York State motor vehicle laws, the officers’ actions, under the “circumstances, viewed objectively, justify that action.” Scott, 436 U.S. at 138, 98 S.Ct. 1717. Thus, to the extent that Plaintiffs first claim alleges that his Fourth Amendment rights were violated by the unwarranted traffic stop, it is dismissed.
(b) Unreasonable Search and Seizure
Plaintiff claims he was subjected to an unreasonable search and seizure by Defendant Police. While this Court has found that the traffic stop itself was constitutional, the issue of whether the ensuing search of the vehicle was reasonable and constitutional is a separate analysis. See Knowles v. Iowa, 525 U.S. 113, 117-118, 119 S.Ct. 484,142 L.Ed.2d 492 (1998) (holding that if one is pulled over for a legitimate traffic stop and the officer has no reasonable reason to search, then a full search of the vehicle is unreasonable). The Supreme Court has held that officers may “exercise their discretion to require a driver who commits a traffic violation to exit the vehicle even though they lack any particularized reason for believing the driver possesses a weapon.” New York v. Class, 475 U.S. 106, 115, 106 S.Ct. 960, 89 L.Ed.2d 81 (1986) (citing Pennsylvania v. Mimms, 434 U.S. 106, 108-111, 98 S.Ct. 330, 54 L.Ed.2d 331 (1977)). However, someone who has been stopped for a moving violation and is removed from his vehicle by a police officer may have a cause of action if the subsequent detention by the police “unreasonably infringes interests protected by the Constitution.” Illinois v. Caballes, 543 U.S. 405, 407, 125 S.Ct. 834, 160 L.Ed.2d 842 (2005).
The Supreme Court has “long held that the touchstone of the Fourth Amendment is reasonableness. Reasonableness, in turn, is measured in objective terms by examining the totality of the circumstances.” Ohio v. Robinette, 519 U.S. 33, 39, 117 S.Ct. 417, 136 L.Ed.2d 347 (1996). Further, “in justifying the particular intrusion the police officer must be able to point to specific and articulable facts which, taken together with rational inferences from those facts, justifiably warrant that intrusion.” Terry v. Ohio, 392 U.S. 1, 21, 88 S.Ct. 1868, 20 L.Ed.2d 889 (1968). While an “individual's ... expectation of privacy in an automobile [is reduced], owing to its pervasive regulation,” Pennsylvania v. Labron, 518 U.S. 938, 940, 116 S.Ct. 2485, 135 L.Ed.2d 1031 (1996) (citing California v. Carney, 471 U.S. 386, 391-92, 105 S.Ct. 2066, 85 L.Ed.2d 406 (1985)), motorists nonetheless have a reasonable expectation of privacy in their cars and cannot be subject to searches for no particularized purpose. See generally City of Indianapolis v. Edmond, 531 U.S. 32, 121 S.Ct. 447, 148 L.Ed.2d 333 (2000).
Here, Plaintiff sets forth evidence that he was detained for an hour and a half while the police searched his car, even though he was ostensibly stopped for a cracked side mirror. Whether police have violated a citizen’s Fourth Amendment rights is determined by examining whether they “unreasonably infringe[d] interests protected by the Constitution.” Caballes, 543 U.S. at 407, 125 S.Ct. 834. At this stage of the litigation, this Court cannot rule as a matter of law that Police Defendants did not violate Plaintiffs rights. See, e.g., Knowles, 525 U.S. at 117-118, 119 S.Ct. 484. Furthermore, it is impossible to “examin[e] the totality of the circumstances” without further discovery. Robinette, 519 U.S. at 39, 117 S.Ct. 417. This Court finds that Plaintiffs allegations set forth a prima facie claim that Defendants violated his rights by subjecting him to an unreasonable search and seizure.
(c) Excessive Use of Force
Plaintiff also brought an excessive use of force claim. Claims of excessive use of force are also analyzed under the Fourth Amendment’s reasonableness standard. Soldal v. Cook County, 506 U.S. 56, 70, 113 S.Ct. 538, 121 L.Ed.2d 450 (1992); see also Graham v. Connor, 490 U.S. 386, 394, 109 S.Ct. 1865, 104 L.Ed.2d 443 (1989) (holding that an excessive force claim that arises in the context of an arrest or investigatory stop is properly characterized as invoking the protections of the Fourth Amendment).
Plaintiff alleges that Police Defendants assaulted him. Such a claim does not need to be pled with heightened particularity to survive a motion to dismiss. See Leatherman, 507 U.S. at 164, 113 S.Ct. 1160. At this stage of the litigation, this Court cannot find that the force Police Defendants used was “reasonable.” Soldal, 506 U.S. at 70, 113 S.Ct. 538. This Court finds that Plaintiffs allegations set forth a prima fa-cie claim that Defendants violated his rights by subjecting him to an excessive use of force.
(d) Equal Protection
Plaintiffs second clause of action alleges that Defendants deprived him of his rights to equal protection. To prove this claim, a plaintiff must show “that the government’s discriminatory selection of him [was] ... based upon such impermissible considerations as race, religion, or the desire to prevent his exercise of constitutional rights,” United States v. Berrios, 501 F.2d 1207, 1211 (2d Cir.1974), and “that similarly situated individuals of a different race were not prosecuted.” United States v. Armstrong, 517 U.S. 456, 465, 116 S.Ct. 1480, 134 L.Ed.2d 687 (1996); Brown v. City of Oneonta, New York, 221 F.3d 329, 337 (2d Cir.2000). While the Second Circuit held that “[mjerely ‘conscious exercise of some selectivity in enforcement is not in itself a federal constitutional violation,’ ” Berrios, 501 F.2d at 1211 (quoting Oyler v. Boles, 368 U.S. 448, 456, 82 S.Ct. 501, 506, 7 L.Ed.2d 446 (1962)), it recently “clarified” that “a plaintiff who ... alleges that a facially neutral law or policy has been applied in an intentionally discriminatory race-based manner ... is not obligated to show a better treated, similarly situated group of individuals of a different race in order to establish a claim of denial of equal protection.” Pyke v. Cuomo, 258 F.3d 107, 110 (2d Cir.2001).
Here, Plaintiff has alleged that his rights were infringed and he was harmed because of his race. He has alleged that a “facially neutral law” — the New York Vehicle and Traffic Code — “has been applied in an intentionally discriminatory race-based manner.” Pyke, 258 F.3d at 110. At this stage, this is all he is obligated to do. Id. Plaintiffs second cause of action against Police Defendants in their individual capacities states a claim.
3. Section 1985(3) Claims
Plaintiffs third and fourth causes of action are conspiratorial § 1985(3) claims. A plaintiff seeking to recover under § 1985(3):
must allege and prove four elements: (1) a conspiracy; (2) for the purpose of depriving, either directly or indirectly, any person or class of persons of the equal protection of the laws, or of equal privileges and immunities under the laws; and (3) an act in furtherance of the conspiracy; (4) whereby a person is either injured in his person or property or deprived of any right or privilege of a citizen of the United States.
United Bhd. of Carpenters & Joiners, Local 610 v. Scott, 463 U.S. 825, 829-30, 103 S.Ct. 3352, 77 L.Ed.2d 1049 (1983). A claim of a conspiracy to violate civil rights requires a detailed fact pleading to withstand a motion to dismiss. Angola v. Civiletti 666 F.2d 1, 4 (2d Cir.1981). Further, “complaints containing only conclusory, vague, or general allegations that the defendants have engaged in a conspiracy to deprive the plaintiff of his constitutional rights are properly dismissed; diffuse and expansive allegations are insufficient ...” to defeat a motion to dismiss. Dwares v. New York, 985 F.2d 94, 100 (2d Cir.1993) (internal quotations and citations omitted).
Here, Plaintiff merely repeatedly alleges that Defendants conspired to target their conduct at Plaintiff because of his race. Plaintiff has therefore failed to allege fact;; sufficient to survive a motion to dismiss. Thus, Plaintiffs third and fourth causes of action are dismissed.
4. Qualified Immunity
This Court now considers Police Defendants’ claims of qualified immunity.
To evaluate a claim of qualified immunity, a Court must first determine if the plaintiff has alleged that the government official violated his constitutional rights. If the facts a plaintiff alleges do not show the official’s conduct violated a constitutional right, the inquiry ends. Saucier v. Katz, 533 U.S. 194, 201, 121 S.Ct. 2151, 150 L.Ed.2d 272 (2001); see also Hope v. Pelzer, 536 U.S. 730, 760, 122 S.Ct. 2508, 153 L.Ed.2d 666 (2002). If, however, a plaintiff successfully alleges a constitutional violation, the court must then determine if the “constitutional right was clearly established at the time of the constitutional violation.” Cowan ex rel. Estate of Cooper v. Breen, 352 F.3d 756, 761 (2d Cir.2003). The court focuses on “whether it would be clear to a reasonable officer that his conduct was unlawful in the situation he confronted.” Saucier, 533 U.S. at 202, 121 S.Ct. 2151. This is purely a legal question as it turns upon whether established law put the officer on notice that his conduct was clearly unlawful. Id.; Stephenson v. Doe, 332 F.3d 68, 80-81 (2d Cir.2003) (“We have said that the ultimate legal determination of whether qualified immunity attaches to a law enforcement agent’s action is a ‘question of law better left for the court to decide.’ ”) (quoting Warren v. Dwyer, 906 F.2d 70, 76 (2d Cir.1990)).
Finally, as “reasonable mistakes can be made as to the legal constraints on particular police conduct” without stripping qualified immunity, Saucier, 533 U.S. at 205, 121 S.Ct. 2151, “all but the plainly incompetent or those who knowingly violate the law” are protected from suit. Malley v. Briggs, 475 U.S. 335, 341, 106 S.Ct. 1092, 89 L.Ed.2d 271 (1986). However, if an officer’s belief in the lawfulness of the actions was not objectively reasonable, “qualified immunity offers him no solace and the plaintiffs claims must be allowed to proceed.” Loria v. Gorman, 306 F.3d 1271, 1282 (2d Cir.2002) (citing Harlow, 457 U.S. at 818-19,102 S.Ct. 2727).
This Court thus considers if Police Defendants may avail themselves of the qualified immunity defense for their first and second causes of action.
a) Unreasonable Searches and Excessive Force
Plaintiffs complaint sets forth a violation of his constitutional right to be free of unreasonable searches and excessive force. Thus, this Court must consider if the constitutional right was clearly established at the time of the incident, see Cowan, 352 F.3d at 761, and “whether it would be clear to a reasonable officer that his conduct was lawful in the situation he confronted.” Saucier, 533 U.S. at 202, 121 S.Ct. 2151.
First, Plaintiff has claimed that Police Defendants subjected him to an unreasonable search. “It is well established that a warrantless search is per se unreasonable under the Fourth Amendment — subject only to a few specifically established and well-delineated exceptions.” McCardle v. Haddad, 131 F.3d 43, 48 (2d Cir.1997). “If it is established that the place or object subjected to the warrantless search is one in which the plaintiff has a reasonable expectation of privacy, the defendant has the burden of showing that the search was valid because it fell within one of the exceptions ....” Id. While an individual’s expectation of privacy in his automobile is reduced, see, e.g., Labron, 518 U.S. at 940, 116 S.Ct. 2485, motorists nevertheless cannot be subject to unreasonable searches. See generally Edmond, 531 U.S. 32, 121 S.Ct. 447.
|
1883035-18536 | EASTERBROOK, Circuit Judge.
For more than two decades, Washington National Insurance Company (WNIC) underwrote group life and health insurance for members of the Iowa Grain and Feed Association (IGFA). The IGFA had many members and sub-groups. Each constituent unit of the IGFA had to be identified and its risks assessed. Shifting membership created difficulties in collecting the proper premium and handling claims. WNIC engaged The Administrators, a proprietorship through which Robert J. Hoefer does business, to handle all contact with the IGFA and its members. Hoefer and his staff were to negotiate with each unit, bill and collect premiums, establish the eligibility of claimants, pay valid claims, and keep records of all these activities. In exchange, Hoefer was to receive 6.5% of WNIC’s gross premiums from the IGFA. (Because The Administrators is a proprietorship, we drop separate reference to it.)
To make money, WNIC needed premiums sufficient to cover the costs of health and death benefits plus Hoefer’s fees. Hoefer wanted to keep premiums low in order to maximize the number of persons who opted into the group plan. His compensation as a percentage of the gross led Hoefer to want higher aggregate billings, which could be accomplished by selling more policies at stable rates. Hoefer’s desire to maximize gross revenues, contrasted with WNIC’s desire to maximize net profits, put them on a collision course when the costs of medical care began to rise rapidly in the late 1980s and the IGFA business became unprofitable for WNIC.
After a period of increasing friction about the appropriate level of premiums, characterized by an episode in which Hoefer stalked out of a meeting rather than discuss a possible increase in rates, the two parties reached an agreement in September 1989 to increase health insurance rates by 25% and life insurance premiums from 43d: to 54$ per $1,000 of coverage. WNIC’s receipts rose by only 3%, which Hoefer attributed to a combination of price guarantees (the new rate could not go into effect until the guarantee periods expired) and some units’ decisions to drop coverage rather than pay the additional premium. Because WNIC did not deal directly with the IGFA and its constituent groups, it took Hoefer’s word. The business remained unprofitable, and WNIC concluded that rates had to be increased further. Discussions between WNIC and Hoefer produced an agreement in May 1990 to implement a new system of risk classifications. Units within the IGFA with a history of higher claims were to be assessed substantially higher premiums. Hoefer was responsible for classifying the units by risk and implementing the new rates effective June 1, 1990, for some units and July 1, 1990, for the rest.
For a second time, WNIC saw only a minuscule increase in total receipts. Hoefer offered the same explanation. This time WNIC did not believe it. WNIC interpreted a set of tables attached to a letter of August 14,1990, as proof of Hoefer’s failure to implement the scheduled increases. On August 28, 1990, WNIC sent the IGFA a letter terminating all policies, explaining in part:
It is apparent that The Administrators failed to implement the agreed upon renewal action in June. Although the amount of delinquency appears to be substantial, the exact amount cannot be determined without the monthly enrollment by unit for June.
Since full premium payment was not made by August 1, 1990, Washington National considers the premium to be delinquent.
A letter the same date notified Hoefer of the termination and the rationale. WNIC added: “If you have documentation to prove that our calculations are in error and the premium paid was the correct premium due, please forward that documentation to us immediately.” Hoefer did not attempt to show WNIC that the agreement concerning higher premiums had been implemented. Instead of supplying evidence, Hoefer refused to show WNIC any documents, leaving the insurer in the dark about what he had done and even how many insureds there were. WNIC finally obtained a judicial order compelling Hoefer to permit Ernst & Young to audit his records. This audit revealed shortfalls in Hoefer’s billings and collections. A letter of October 2, 1990, formally discharged Hoefer, effective October 31. The IGFA’s coverage continued until early 1991, by agreement with Iowa’s insurance regulators.
WNIC filed this action under the diversity jurisdiction, seeking to recover the premium shortfall from Hoefer on the ground that he was obliged by contract to collect the higher amount. Hoefer filed counterclaims, contending that WNIC broke its own contractual commitments and libeled him in the letter to the IGFA terminating the policies. During discovery it became clear that Hoefer had not implemented the higher life insurance rates and that the collection of higher premiums for health insurance was spotty. According to Hoefer, the failure to change the life insurance rates was a regrettable administrative lapse. As for the health insurance rates, Hoefer insisted that his discretion to set risk classes explained the lack of increase for some units, that guarantees prevented increases for other units, and that any remaining shortfall had been authorized orally by senior managers of WNIC.
A jury resolved all disputes against WNIC. Answering special interrogatories, the jury concluded that Hoefer is not responsible to WNIC for the shortfall in premium. The jury concluded that WNIC broke its contracts by discharging Hoefer and awarded compensatory damages of $1,085,200. Finally, the jury concluded that the letter sent to the IGFA was defamatory and awarded $100,000 in compensatory and $500,000 in punitive damages. The district judge granted WNIC judgment notwithstanding the verdict on Hoefer’s contract claim, ruling that because the principal contract lacked a stated duration, WNIC could dispense with Hoe-fer’s services at will. A separate contract, called the Supplemental Agreement, had a stated term, but the district judge held that this agreement was implicitly contingent on the continued provision of services under the main contract. The court entered judgment on the remainder of the verdict, and both sides have appealed. We begin with defamation.
I
WNIC’s letter to the IGFA explained that the policies were being canceled because the IGFA was not paying the higher premium that WNIC had established. Accusing an intermediary of selling a product for too little is not defamatory — at least not from the customers’ point of view! Most middlemen struggle to acquire reputations for selling at rock-bottom prices. But Randy S. Allman, executive president of the IGFA and the recipient of the letter, testified that a darker thought crossed his mind. Allman knew that the IGFA had paid Hoefer’s bills promptly and fully. If, as Allman believed, Hoefer was billing the correct amount, then WNIC’s failure to receive the correct premium must mean that Hoefer or a member of his staff was embezzling.
According to WNIC, the letter it sent to the IGFA is absolutely privileged under Illinois law. Insurers are required to explain to their insureds precisely why they are changing or canceling policies. In order to facilitate candid communication, Illinois has created an absolute privilege. 215 Ill.Comp. Stat. § 5/143.18 (“There shall be no liability on the part of and no cause of action of any nature shall arise against any [insurer] ... for any statement made ... in any written notice of cancellation or nonrenewal, or any other communications, oral or written, specifying the reasons for cancellation or nonre-newal, or for the providing of information pertaining thereto.”). See also International Administrators, Inc. v. Life Insurance Co. of North America, 753 F.2d 1373, 1379 (7th Cir.1985) (construing this statute). If Illinois law applies, the defamation claim is untenable.
WNIC’s headquarters are in Illinois, and it sent the letter from that state. As its name suggests, the IGFA is located in Iowa. The district judge concluded that Iowa law governs the defamation claim, because the letter’s sting was felt in that state, where Hoefer does business. Illinois law supplies the choice-of-law rules, given the location of the forum. Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). And Illinois follows the “most significant relationship” approach in defamation cases. Ferguson v. Kasbohm, 131 Ill.App.3d 424, 86 Ill.Dec. 605, 475 N.E.2d 984 (1st Dist.1985). This means, as we recognized in International Administrators, that the Illinois privilege does not follow communications broadcast into other states. The “most” significant element of defamation is the injury, as the old rule of lex loci delicti always insisted. That WNIC is free to say anything it pleases when explaining to customers in Illinois why it is terminating their coverage does not imply that it has an equivalent privilege throughout the nation. Other states may have, and enforce, their own rules for what must, may, or may not be communicated to policyholders.
Iowa does not afford insurers an absolute privilege. It does, however, give them a qualified privilege, which may be overcome only by proof of actual malice. Vojak v. Jensen, 161 N.W.2d 100, 105 (Iowa 1968); see also International Administrators, 753 F.2d at 1380-81. A speaker’s belief in the truth of the statement defeats any claim of actual malice. On this record, there can be no doubt that WNIC believed the truth of what it was saying. No reasonable juror could have reached a contrary conclusion. The shortfall in revenue, coupled with Hoe-fer’s refusal to produce records for WNIC’s inspection, led WNIC to conclude that Hoe-fer had not increased the premiums and that the IGFA therefore was not paying the full price for the insurance WNIC was furnishing. Indeed, Hoefer concedes that the statements in the letter are true, at least with respect to the life insurance premiums.
WNIC did not believe that Hoefer and his staff were embezzlers, but then the letter does not accuse them of theft. Allman saw that implication in the letter, but it is hard to understand how this equates to actual malice from WNIC’s perspective. The insurer promptly demonstrated its contrary understanding of the accusation. Allman testified that he was puzzled by the notice of termination and called WNIC, speaking with both Jerry L. Fanger, the vice president who signed the letter, and Geri Gaughan, WNIC’s counsel. They told him that the problem was Hoefer’s failure to assess the correct premium, rather than his failure to remit what the IGFA had paid. Allman conceded on the stand that no one at WNIC ever suggested that Hoefer or one of his employees had embezzled any funds. After a series of additional letters and reports, Allman’s doubts about Hoefer’s honesty were “dispelled”. Iowa treats repetition of defamatory statements as evidence of malice. E.g., Cowman v. LaVine, 234 N.W.2d 114, 120-21 (1975); Rhynas v. Adkisson, 178 Iowa 287, 296, 159 N.W. 877, 880 (1916). It ought to follow, as other courts have held, that subsequent statements negating any defamatory implications may show the absence of malice by demonstrating that the speaker did not contemplate the defamatory reading in the first place. See Logan v. District of Columbia, 447 F.Supp. 1328, 1332 (D.D.C.1978); Hoffman v. Washington Post Co., 433 F.Supp. 600, 605 (D.D.C.1977), affirmed without opinion, 578 F.2d 442 (D.C.Cir.1978); Robert D. Sack, Libel, Slander, and Related Problems 223 (1980). This record lacks any foundation for a conclusion that WNIC knew, or should have recognized, that a recipient would un derstand the letter as a charge of crime. WNIC’s subsequent conduct demonstrates that it leveled no such accusation. Accordingly, no reasonable juror could have found that WNIC acted with “actual malice,” and the letter is privileged under Iowa law. The award of damages for libel cannot stand.
II
WNIC and Hoefer signed two principal contracts: the Administrative Services Agreement of April 1985 and the Supplemental Agreement of March 1990. Each contains a choice-of-law clause specifying the application of Illinois law. According to the jury’s special verdicts, WNIC breached both of the agreements by cutting off the IGFA’s insurance, leaving Hoefer without the fees he expected and thus violating their third contract, the Commission. Agreement of June 1985, which required WNIC to pay the 6.5% commission while the insurance remained in force.
One trouble with this conclusion, as the district court held after trial, is that Hoefer was to receive commissions only while the insurance continued, and the contracts do not commit WNIC to insure the IGFA’s members. They provide that Hoefer will furnish certain services that WNIC needs while it continues to insure the IGFA; whether WNIC will continue to underwrite these risks is a question entirely outside the scope of the contracts between Hoefer and WNIC. Hoefer depicts himself as a beneficiary of the insurance WNIC sold to the IGFA, but this is hardly a plausible understanding. A person claiming the status of a third-party beneficiary must establish that the principals created the contract for his benefit. 155 Harbor Drive Condominium Ass’n v. Harbor Point, Inc., 209 Ill.App.3d 631, 646—47, 154 Ill.Dec. 365, 374-75, 568 N.E.2d 365, 374-75 (1st Dist.1991). In the language of the Restatement (2d) of Contracts § 302(1)(b), the “circumstances [must] indicate that the promisee intends to give the beneficiary the benefit of the promised performance.” See E. Allan Farnsworth, 3 Contracts § 10.3 (1990). “In Illinois, the [required intent] must be evidenced by an express provision in the contract identifying the third-party beneficiary.” Wheeling Trust & Savings Bank v. Tremco, Inc., 153 Ill.App.3d 136, 140, 106 Ill.Dec. 254, 257, 505 N.E.2d 1045, 1048 (1st Dist.1987). The insurance agreements do not identify Hoefer as an intended beneficiary. Even the supposition that Illinois allows some other means of establishing the essential intent would not assist Hoefer. Keeping his proprietorship in funds was not the reason the IGFA wanted to purchase, or WNIC to sell, insurance. Dealings between IGFA and WNIC long predated the engagement of Hoefer, who was no more a “third-party beneficiary” of the insurance than were the persons whose services Hoefer displaced.
Firms sometimes commit themselves to buy goods and services that turn out to be unneeded. Suppose WNIC had leased an office in Iowa to handle the IGFA’s business. This space would have lost its value to WNIC after the lapse of the policies. Still, firms must keep their commitments. If the lease had a five year term, WNIC would have had to sublet the property or swallow the loss; it could not simply walk away without paying rent (or damages). But if the lease ran month-to-month, or day-to-day, WNIC could have quit the premises on short notice, without risk that the landlord would depict itself as a third-party beneficiary of the insurance WNIC wrote for the IGFA. The Administrative Services Agreement, like an open ended lease, lacked a fixed term. Instead it provided:
This Agreement may be terminated for any or all groups by either party by written notice at least 30 days in advance of such termination; provided, [WNIC] may effect termination immediately if [Hoefer] violates the terms hereof or fails to perform to the satisfaction of [WNIC].
The gap between the notice of August 28 and the discharge on October 31 gave Hoefer the 30 days of which the clause speaks. Moreover, WNIC was entitled to “effect termination immediately” given Hoefer’s conceded violation of his obligation to raise the life insurance premium. We may assume that WNIC’s ability to “effect termination immediately” is subject to the understanding that it must act reasonably. Still, WNIC believed that Hoefer had not complied with his side of the bargain, and knowledge gleaned from the audit and this litigation show that this belief was well founded. That there is a bona fide dispute about the quality of Hoefer’s performance concerning the health insurance premiums cannot overcome the fact that there is no dispute at all about Hoefer’s failure to change the life insurance premiums. WNIC concluded that Hoefer was not performing to its satisfaction, and under the contract WNIC was entitled to act on this belief without the hazard that a jury would conclude that Hoefer’s shortcomings were not as serious as they could have been.
There remains the Supplemental Agreement. This document had a term: “The term of this Supplemental Agreement shall be for the period beginning March 19, 1990, and ending December 31, 1991.” The Supplemental Agreement gave Hoefer three new duties, with corresponding compensation. One duty was to compile and present WNIC with certain data for all units and insureds. “Upon WNIC’s receipt of complete data, it will pay $50,000 to The Administrators.” This promise was kept. The second duty was to aid WNIC in finding another firm willing to underwrite the IGFA’s business. “WNIC agrees to pay The Administrators [$150,000] if The Administrators or WNIC secure a signed agreement from a bona fide third party, acceptable to WNIC, by September 1, 1990 from IGFA to completely transfer or sell all risk for the IGFA block of business to said third party.” No such offer was received by September 1, 1990, so WNIC owed Hoefer nothing under this clause. The third duty, and the only one that might be a source of recovery by Hoe-fer, was to classify risks more precisely so that claims paid would be approximately 85% of premiums collected. WNIC promised to pay Hoefer $20,833.33 per month during 1991 for maintaining the break-even ratio of 85%, for an incentive payment of $250,000. This was a cap rather than a guarantee: “In the event that Expected Claims exceed Break Even Claims for the IGFA block of business insured with WNIC and serviced by The Administrators, The Administrators agrees that its compensation under this Supplemental Agreement shall be reduced by the amount by which Expected Claims exceed Break Even Claims, up to a maximum combined total of the compensation otherwise payable to The Administrators hereunder”. Hoefer believes that he would have been able to earn a performance bonus under this clause if the insurance had continued through the end of 1991, although the maximum payment of $250,000 is less than a quarter of the damages the jury awarded.
|
3119806-18230 | CLIFTON, Circuit Judge:
The question posed by this case is whether a party’s failure to timely inform the court of appeals of a settlement that it believes disposes of a pending appeal precludes the party from asserting the affirmative defense of settlement and release in a later proceeding. Over its objection, Chapter 11 debtor Cellular 101, Inc. was ordered to pay an administrative claim of approximately $200,000. Cellular 101 appealed the order to this court. While the appeal was pending, Cellular 101 entered into a settlement agreement that it believed released the claim. Rather than advise the court of appeals of the settlement, though, Cellular 101 continued to pursue its appeal on other grounds. That effort proved unsuccessful, as we affirmed the award. After it lost on appeal, Cellular 101 tried to fend off payment of the award by raising a settlement and release defense. The bankruptcy court and the Bankruptcy Appellate Panel (BAP) both concluded that it was too late for Cellular 101 to unveil that argument and ordered disbursement of funds to pay the administrative claim. We agree and affirm, answering “Yes” to the question posed above.
I. Background
This ease arises out of a bankruptcy court order in 2001 awarding $206,317.60 to Channel Communications, Inc. and John Price from the estate of Cellular 101, for attorneys’ fees and costs incurred in connection with Cellular 101’s Chapter 11 proceedings. The details of that award are not necessary for resolution of the current appeal, but some understanding of the relationship among the players and the genesis of the award may be helpful.
As its name suggests, Cellular 101 sold wireless telephone services and equipment in Santa Barbara, California. It did so as an agent of Channel, which was an authorized AT & T wireless services dealer. Cellular 101 was thus a subdealer of AT & T wireless services in the area. At the time the relevant events began, Channel was entirely owned by John Price and his wife. Cellular 101 had a right of first refusal if Price sold Channel.
AT & T sought to terminate its contract with Channel, complaining that Channel and Cellular 101 engaged in improper business practices. To resolve their dispute, Price and AT & T agreed that Price would sell a controlling interest in Channel to AT & T. AT & T and Channel took the position that the sale would not trigger Cellular 101’s right of first refusal because it would involve a transfer of only 80 percent of Channel’s shares, and they left Cellular 101 out of the deal. Cellular 101 saw things differently and sued AT & T in state court for interference with its business. Cellular 101 also filed a petition for reorganization under Chapter 11 in bankruptcy court.
Once in bankruptcy court, Cellular 101 failed to present a reorganization plan. After the statutory period of exclusivity expired, Price, Channel, and AT & T jointly filed a reorganization proposal that permitted the partial sale of Channel to AT & T to go forward and included a payment to Cellular 101 of nearly $2 million from the proceeds. The plan also permitted Cellular 101 to continue to prosecute its lawsuit against AT & T. The bankruptcy court approved the plan over Cellular 101’s objections.
Shortly thereafter, Channel and Price filed an administrative priority claim seeking $495,252.83 in attorneys’ fees and costs pursuant to 11 U.S.C. § 503(b) for their “substantial contribution” to Cellular 101’s reorganization. The bankruptcy court granted the claim, in a reduced amount, over the objection of Cellular 101. It awarded $175,000 in fees and $31,317.60 in expenses, for a total of $206,317.60. Cellular 101 appealed to the district court, which affirmed. Cellular 101 then filed its first appeal to this court. See Cellular 101, Inc. v. Channel Commc’ns, Inc. (In re Cellular 101, Inc.), 377 F.3d 1092 (9th Cir .2004).
After briefing, but before oral argument, Cellular 101 executed a settlement agreement with AT & T, resolving the state court lawsuit. According to Cellular 101, the broad language of the agreement’s irrevocable release of all claims against Cellular 101 held by AT & T, its subsidiaries, predecessors, or affiliates, also encompassed the administrative claim of Channel and Price against Cellular 101. Cellular 101 did not inform this court of the settlement, however, or argue to us that the settlement released the administrative claim that was the subject of the appeal. Instead, the questions Cellular 101 presented on appeal concerned only the statutory basis for the claim. Id. at 1094. Specifically, Cellular 101 argued that Price and Channel were ineligible to recover fees and costs under 11 U.S.C. § 503(b) for their assistance in Cellular 101’s reorganization because (1) Price was not a “creditor” of the estate, (2) Channel did not “substantially contribute” to the reorganization plan, and (3) Price and Channel acted in their own self interest. Id. at 1095-98. Unaware of the settlement agreement or of its potential impact on the dispute, we issued a published opinion considering and rejecting Cellular 101’s arguments and affirming the bankruptcy court’s award in full. Id.
Shortly after our decision, Price and Channel filed a motion with the bankruptcy court to disburse the funds held to pay their administrative claim. At that point Cellular 101 asserted that the claim had been released by its agreement with AT & T. In an oral ruling, the bankruptcy court held that the AT & T settlement agreement did not apply to the administrative claim and ordered disbursement of the funds. The court also noted that, if the release did apply to the administrative claim, as Cellular 101 asserted, then the prior appeal was
moot by the time that it got to the Ninth Circuit for oral argument, [and the argument] certainly could have been and should have been raised there. If this ultimately goes back up to the Ninth Circuit, I wonder what kind of reception it would get when the Ninth Circuit finds out, “Well, you were rolling the dice to see if the judge on — below would get reversed. Otherwise, you’ve got another arrow in your quiver.” I think you have to shoot all the arrows at one time.
Cellular 101 appealed again, but chose to present its appeal to the BAP rather than to the district court. The BAP affirmed the bankruptcy court’s disbursement order, declining to reach the merits of Cellular 101’s argument that its settlement with AT & T released Channel and Price’s joint administrative claim on behalf of Price. It simply held that Cellular 101 had an obligation to raise the release issue when it was before the Ninth Circuit previously because “the alleged release would have mooted the appeal.” The BAP concluded that Cellular 101 had therefore waived the argument. Cellular 101 petitioned for rehearing, arguing that a party cannot waive a mootness defense because it is jurisdictional. The BAP denied the petition, stating that Cellular 101 had not raised a mootness defense, only the non-jurisdictional affirmative defense of settlement and release. Cellular 101 timely appealed.
II. Discussion
We review decisions of the BAP de novo. Price v. U.S. Tr. (In re Price), 353 F.3d 1135, 1138 (9th Cir.2004); Christian Life Ctr. Litig. Def. Comm. v. Silva (In re Christian Life Ctr.), 821 F.2d 1370, 1373 (9th Cir.1987). We review the bankruptcy court’s conclusions of law de novo and its factual findings for clear error. See Price, 353 F.3d at 1135; see also Salazar v. McDonald (In re Salazar), 430 F.3d 992, 994(9th Cir.2005).
The litigation over this administrative claim has been going on since 2001, and the parties have fought their way over the issue from the bankruptcy court to this court twice, passing through the district court and the BAP one time each along the way. As a result, the matter has now been considered by no fewer than eleven judges and is the subject of two published opinions of this court. Cellular 101 contends that it has followed proper procedure and that it was appropriate for it to wait to raise its settlement defense when it did. We disagree.
The Supreme Court has held that all counsel have a duty “to bring to the federal tribunal’s attention, without delay, facts that may raise a question of mootness.” Arizonans for Official English v. Arizona, 520 U.S. 43, 68 n. 23, 117 S.Ct. 1055, 137 L.Ed.2d 170 (1997) (internal quotations, citations and emphasis omitted). According to the argument now made by Cellular 101, its settlement with AT & T released Channel and Price’s administrative claim and rendered the litigation moot. That happened while Cellular 101’s first appeal was pending before this court, as Cellular 101 was necessarily aware. Cellular 101 had an obligation to inform the court of the settlement and its belief that the claim had been released.
The obligation to inform the court of a potential settlement is of such critical importance to the maintenance of orderly proceedings and to the prevention of needless delay that a lawyer who fails to fulfill that obligation may be personally subject to sanctions. See Gould v. Bowyer, 11 F.3d 82, 84 (7th Cir.1993) (“[I]n order to spare busy courts unnecessary work, parties must advise a court when settlement is imminent.... The duty is implicit in the characterization of lawyers as officers of the court, and a breach of it therefore opens a lawyer to sanctions.”) (citation omitted); see also DHX, Inc. v. Allianz AGF MAT, Ltd., 425 F.3d 1169, 1174-75 (9th Cir.2005) (Beezer, J., concurring) (noting that “[w]e are engaged to decide live cases or controversies as presented by the attorneys of record, and it is not for a court to smoke out who settled with whom,” and that the “failure to promptly disclose” complete and accurate settlement information is “sanctionable conduct”). A party claiming the benefit of a settlement is no less accountable.
Cellular 101’s current appeal rests upon the premise that the AT & T agree ment released the administrative claim. But if that is true now, it was true when Cellular 101 appeared before this court the first time. Even if we assume that Cellular 101 knew that Channel and Price would contest the assertion that the AT & T agreement released their claim, Cellular 101 still should have brought the agreement to the court’s attention. If the court ultimately concluded that the claim was released, the disclosure would have obviated the need for the court to resolve the other issues raised in the first appeal. At a minimum, knowledge of the agreement and the parties’ arguments would have permitted the court to determine, logically and properly, which issues it needed to reach and in what order they should be addressed. Cellular 101 chose, instead, to arrogate to itself the power to make those judgments. Cellular 101 elected to try to win its appeal with the arguments it had already briefed, presumably hoping that if it lost, it could try for a second bite at the apple by raising the release defense after-wards. Regardless of Cellular 101’s motives, we cannot permit the court to be subject to such manipulation. We conclude that by failing to raise the release issue in the prior appeal, Cellular 101 waived its right to assert the defense in subsequent proceedings.
Settlement and release is an affirmative defense and is generally waived if not asserted in the answer to a complaint. See Fed. R. Civ. P. 8(c)(“In responding to a pleading, a party must affirmatively state any avoidance or affirmative defense, including: ... release”); Metcalf v. Golden (In re Adbox, Inc.), 488 F.3d 836, 841 (9th Cir.2007). Even though Cellular 101 could not have asserted the defense at the pleading stage because its settlement with AT & T did not occur until Cellular 101’s first appeal was already pending, Cellular 101 had an opportunity and an obligation to raise the issue at that time because the purported release, in its view, mooted the appeal.
We have held that we “need not and do not consider a new contention that could have been but was not raised on the prior appeal.” Munoz v. County of Imperial, 667 F.2d 811, 817 (9th Cir.1982). Permitting a case to proceed to a decision on the merits before asserting a previously available defense “undermines the integrity of the judicial system,” “wastes judicial resources,” and “imposes substantial costs upon the litigants.” Hill v. Blind Indus. & Servs., 179 F.3d 754, 756 (9th Cir.1999); see also Fogel v. Chestnutt, 668 F.2d 100, 109 (2d Cir.1981) (Friendly, J.) (“It would be absurd that a party who has chosen not to argue a point on a first appeal should stand better as regards the law of the case than one who had argued and lost.”).
We already decided that Cellular 101 is required to pay Price and Channel’s administrative claim, when it affirmed the bankruptcy court’s order. Cellular 101, Inc., 377 F.3d at 1098. That decision has achieved finality. It is the law of the case, and Cellular 101 may not now attack it on a ground that it had a fair opportunity to argue previously. Munoz, 667 F.2d at 817.
Cellular 101 contends that it properly waited until its case was remanded to the bankruptcy court before raising its settlement and release defense because it accurately anticipated that Price and Channel would contest the applicability of the release to their claim and because the viability of the defense turned on facts not present in the appellate record. It argues that the defense therefore could not have been raised previously because it did not fit within the three exceptions to the general rule that appellate courts will not consider an issue raised for the first time on appeal: (1) where “review is necessary to prevent a miscarriage of justice or to preserve the integrity of the judicial process,” (2) “when a new issue arises while appeal is pending because of a change in the law,” or (3) “when the issue presented is purely one of law and either does not depend on the factual record developed below, or the pertinent record has been fully developed.” Bolker v. Comm’r, 760 F.2d 1039, 1042 (9th Cir.1985). Cellular 101 insists that even if it had raised the release issue during the prior appeal, we would have been required to remand the matter for factual findings, implying that its failure to inform the court of the settlement agreement was harmless and should be without consequence.
First, the above list of exceptions is not exhaustive. Appellate courts may always consider challenges to their jurisdiction, including any relevant factual developments, regardless of whether the issue was raised below. See Lowry v. Barnhart, 329 F.3d 1019, 1024 (9th Cir. 2003) (discussing when a court may look outside the district court record and noting that “[consideration of new facts may even be mandatory, for example, when developments render a controversy moot and thus divest us of jurisdiction”). That there actually be an ongoing dispute to resolve is a prerequisite for jurisdiction.
Second, the question of whether the release applied to Price and Channel’s administrative claim was arguably “purely one of law” capable of being resolved by this court without remand for factfinding, and thus may have fallen within the third exception identified above. Cellular 101 argues that AT & T, through its ownership and control of Channel, may have released the claim held jointly by Price and Channel because California Civil Code § 1475 provides that a release by one joint claimant entirely releases a jointly held debt. Relying on Hurley v. Southern California Edison Co., 183 F.2d 125, 131 (9th Cir. 1950), Cellular 101 maintains that the validity of the release turns on its knowledge at the time of the AT & T agreement, including whether it had reason to know that AT & T would not account to Price, and that factfinding and further development of the record was therefore necessary. Had Cellular 101 apprised us of the AT & T settlement during the first appeal, however, we might have held as a matter of law that the terms of the AT & T agreement were unambiguous and did not release Price and Channel’s administrative claim. Alternatively, we could have concluded that the provisions of California Civil Code § 1475, which pertain to obligations held by joint creditors, are simply inapplicable to joint administrative claims awarded in a bankruptcy proceeding. Indeed, it appears that, when the case was actually remanded, the bankruptcy court rejected Cellular 101’s settlement and release argument on the merits without reference to any newly discovered evidence and without making any findings regarding Cellular 101’s mental state.
Third, and most importantly, regardless of the likelihood that remand for factfind-ing might have been necessary, the decision whether and when to remand the matter was one for the court to make, not Cellular 101. Cellular 101 usurped the decision as to how the case should be organized when it proceeded with the arguments it had already presented on appeal and elected not to advise the court of an event which it believed disposed of the claim. The bankruptcy court was correct in its assessment that, having taken its shot, Cellular 101 does not get another opportunity to reach into its quiver for another arrow. Cellular 101 did not have the right to compel the court to reach Cellular 101’s other arguments and to devote considerable effort to writing a published opinion, prior to ascertaining whether the parties had already resolved their dispute.
III. Conclusion
Cellular 101 breached its duty to timely inform the court that it had reached a settlement with AT & T that it understood potentially mooted its prior appeal. As a consequence of failing to timely raise the defense of settlement and release, it waived or forfeited that defense. The BAP properly affirmed the bankruptcy court’s order to disburse funds to pay the administrative claim.
AFFIRMED.
. Cellular 101 offered a number of theories to explain why AT & T had the power to release Price’s interest in the claim, including (1) that Price was a predecessor in interest or affiliate of AT & T and (2) that Channel had become a subsidiary of AT & T and the claim was a joint claim of Price and Channel subject to release by either joint claimant.
|
2156019-19210 | CUMMINGS, Circuit Judge.
This case involves the question whether Robert and John Monday are personally liable for the P. C. Monday Tea Company’s (the “Company”) failure to pay to the Government social security and income taxes withheld from its employees.
The Company was organized in 1918 and sold groceries to housewives through door-to-door truck route salesmen. During the latter half of 1958 and thereafter, Robert Monday was president and John Monday was vice president and secretary of the Company, which had 55 employees. John Monday signed and participated in the preparation of the Company’s tax returns.
In 1956, the financial condition of the Company began to deteriorate. By 1960, its annual gross income was half the average of the previous five years. It could acquire merchandise for resale from its suppliers only on a C.O.D. basis. During the third and fourth quarters of 1960, the Company paid wages to its officers and employees and deducted federal income and social security taxes from the wages. It failed, however, to pay the Government the withheld taxes of $6,619.53 on October 31, 1960, and $5,764.48 on January 31, 1961, the respective due dates for the quarterly payments. In November or December 1960, it belatedly filed its return for withheld taxes for the third quarter of 1960, and it also failed to file its return for the fourth quarter of 1960 until March 1961. Nevertheless, during those quarters, the Company continued to pay business creditors for antecedent debts and for merchandise purchased C.O.D.
In March 1961, Robert Monday borrowed $4,500 from his sister in response to the Internal Revenue Service’s March 1961 demand for payment of withheld social security and income tax moneys of the Company’s employees. John Monday testified that this sum was to cover the withheld taxes for the first quarter of 1961, but Robert Monday testified he thought the payment of $4,500 satisfied all withholding arrearages and made the Company current. In fact, after the $4,500 payment the Company was still delinquent as to the last two quarters of 1960.
In May 1961, the Company went into receivership, and it was adjudicated bankrupt in July 1961. In the bankruptcy proceedings, the Government filed claims for various classes of taxes for 1960 and 1961, including the amounts here in issue. These claims were allowed in the sum of $22,494.53, and in September 1963, the Government realized $10,978.25 on them. Although the bankruptcy referee directed that this amount be applied to the most recent claims of the Government, the Government applied $3,167.57 to the Company’s withholding liability for the second quarter of 1960 and only applied $435.84 to the third quarter of 1960, thus leaving unsatisfied most of the Government’s claim for the third and fourth quarters 1960 withholding taxes. The bankruptcy referee also assigned to the Government $7,400 of the Company’s accounts receivable, but the trial did not disclose whether any of these were collected by the Government.
In March 1964, the Internal Revenue Service assessed a 100% penalty in the amount of $12,384.01 against Robert Monday pursuant to Section 6672 of the Internal Revenue Code of 1954. This assessment was based on the Company’s failure to pay to the Government the federal income and social security taxes withheld from the wages of its employees during the third and fourth quarters of 1960. In March 1966, Robert Monday paid $1,112 of this assessment under protest. In May 1966, he filed this suit in the district court seeking to recover that amount plus interest and seeking a declaration that the penalty assessment against him was null and void. The Government counterclaimed for $10,836.17, the balance of the assessment, plus interest. The Government also filed a third-party complaint against John Monday seeking to recover $11,948.17, plus interest, pursuant to a November 1964 assessment against him under Section 6672 of the Internal Revenue Code.
At the close of the trial, the jury found that Robert and John Monday were under a duty to collect and pay the withheld taxes to the Government for the two quarters in question, pursuant to Sections 6671(b) and 6672 of the Internal Revenue Code of 1954, but that they did not willfully fail to pay the taxes. Therefore, judgment was entered for the Mondays. The district court subsequently denied the Government’s motion for judgment notwithstanding the verdict or for a new trial (294 F. Supp. 1384) and this appeal followed.
Sufficiency of Evidence to Support Jury’s Finding that Robert Monday Had a Duty to Collect and Pay These Taxes to the Government
Under Section 7501 of the Internal Revenue Code, the amount of the withheld income and social security taxes deducted from the Company’s employees’ wages in the third and fourth quarters of 1960 was “to be a special fund in trust for the United States.” See In the Matter of Halo Metal Products, Inc. [United States v. Randall], 419 F.2d 1068 (7th Cir.1969). The “person” liable for withheld taxes under Section 6672 of the Code includes an “officer or employee of a corporation, * * * who as such officer, * * * is under a duty” to see that the funds are remitted to the Government. 26 U.S.C. § 6671(b). The jury specially found that both Robert and John Monday had a duty to collect and pay the Government taxes deducted in the third and fourth quarters of 1960. Robert Monday contends that as to him, this finding cannot be sustained. Our examination of the record reveals sufficient support for the special verdict.
Corporate office does not, per se, impose the duty to collect, account for and pay over the withheld taxes. On the other hand, an officer may have such a duty even though he is not the disbursing officer. Cf. Bloom v. United States, 272 F.2d 215 (9th Cir.1959), certiorari denied, 363 U.S. 803, 80 S.Ct. 1236, 4 L.Ed.2d 1146. The existence of the same duty and concomitant liability in another official likewise has no effect on the taxpayer’s responsibility. Datlof v. United States, 252 F.Supp. 11, 33 (E.D.Pa.1966), affirmed, 370 F.2d 655 (3d Cir.1966), certiorari denied, 387 U.S. 906, 87 S.Ct. 1688, 18 L.Ed.2d 624. Liability attaches to those with power and responsibility within the corporate structure for seeing that the taxes withheld from various sources are remitted to the Government Scott v. United States, 354 F.2d 292, 296, 173 Ct.Cl. 650 (1965); see also Gefen v. United States, 400 F.2d 476, 482 (5th Cir.1968), certiorari denied, 393 U.S. 1119, 89 S.Ct. 990, 22 L.Ed.2d 123. This duty is generally found in high corporate officials charged with general control over corporate business affairs who participate in decisions concerning payment of creditors and disbursal of funds. Cf., e. g., Bloom v. United States, 272 F.2d 215 (9th Cir.1959), certiorari denied, 363 U. S. 803, 80 S.Ct. 1236, 4 L.Ed.2d 1146; Hewitt v. United States, 377 F.2d 921, 924 (5th Cir.1967); Scott v. United States, 354 F.2d 292, 173 Ct.Cl. 650 (1965); Newsome v. United States, 301 F.Supp. 757 (S.D.Texas 1968); see generally, 8A Mertens, Law of Federal Income Taxation, § 47A.25a, pp. 126-128 (1964).
Under the corporate by-laws, Robert Monday’s duties as president included “general supervision of the affairs of the corporation.” Through his own stock ownership and through a voting trust, he controlled the Company. He and his brother signed most of the corporate checks, and both of them conferred from time to time as to what creditors should be paid. They sought payment from Robert, not John. Robert Monday had signed corporate checks payable to the Government with respect to prior withholding taxes. In John’s absence, Robert performed John’s duties. Robert also admitted having read a report prepared by the Company’s certified public accountant informing him of the then overdue taxes. Regardless of the purchasing and promotional activities of Robert, there was ample evidence to sustain the jury’s conclusion on this point. Cf. Kelly v. Lethert, 362 F.2d 629, 634 (8th Cir.1966).
Correctness of Willfulness Instruction
Over the objection of the Government, the district court gave the following instruction as to the meaning of the word “willful” in Section 6672 (note 3 supra):
“You are instructed that for the plaintiff’s and/or third-party defendant’s failure to pay over the taxes withheld to have been willful it is not necessary that there have been present any intent to defraud or to deprive the United States of taxes, nor is it necessary that bad motives or wicked design be shown.
“The term ‘willful’ means a voluntary, conscious and intentional act, done without reasonable cause, to prefer other creditors of the corporation over the government.
“Mere negligence, that is, failure to exercise ordinary care, in respect to collecting, truthfully accounting for or paying over the taxes is not enough to establish willfulness.
“A ‘willful’ act may also be described as one done intentionally, knowingly, and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly, or inadvertently.
“A ‘willful’ act differs essentially from a ‘negligent’ act. The former, that is ‘willful,’ is positive; and the latter, that is ‘negligence,’ is negative.” (Emphasis supplied.)
The Government asserts that it was improper for the district court to permit the jury to excuse acts done with “reasonable cause” or “justifiable excuse.” We agree that it was improper to include these terms in the instruction.
The precise content to be given the concept of “willfulness” varies according to the legal context in which it appears. In criminal statutes, “willfulness” generally requires bad purpose or the absence of any justifiable excuse. United States v. Murdock, 290 U.S. 389, 394, 54 S.Ct. 223, 78 L.Ed. 381. In civil actions, however, these elements need not be present. Rather, willful conduct denotes intentional, knowing and voluntary acts. It may also indicate a reckless disregard for obvious or known risks.
Despite its denomination as a “penalty” assessment, the statutory liability imposed by Section 6672 is essentially civil in nature. Cash v. Campbell, 346 F.2d 670, 673 (5th Cir.1965). Its basic purpose is the protection of governmental revenue. Botta v. Scanlon, 314 F.2d 392, 393 (2d Cir.1963); Spivak v. United States, 370 F.2d 612, 616 (2d Cir.1967), certiorari denied, 387 U.S. 908, 87 S.Ct. 1690, 18 L.Ed.2d 625. It provides a remedy to prevent the unnecessary loss of tax funds by permitting the “taxing authority to reach those responsible for the corporation’s failure to pay the taxes which are owing.” United States v. Graham, 309 F.2d 210, 212 (9th Cir.1962); White v. United States, 372 F.2d 513, 516, 178 Ct.Cl. 765 (1967). In light of this purpose, we agree with those courts which have defined willful action under Section 6672 as referring to voluntary, conscious and intentional —as opposed to accidental — decisions not to remit funds properly withheld to the Government. Spivak v. United States, 370 F.2d 612, 615 (2d Cir.1967), certiorari denied, 387 U.S. 908, 87 S.Ct. 1690, 18 L.Ed.2d 625; Cross v. United States, 311 F.2d 90, 94 (4th Cir.1962); Hewitt v. United States, 377 F.2d 921, 924, 22 A.L.R.3d 1 (5th Cir.1967) ; Flan v. United States, 326 F.2d 356, 358 (7th Cir.1964); Bloom v. United States, 272 F.2d 215, 223 (9th Cir.1959), certiorari denied, 363 U.S. 803, 80 S.Ct. 1236, 4 L.Ed.2d 1146; Scott v. United States, 354 F.2d 292, 295, 173 Ct.Cl. 650 (1965). Liability does not depend upon the presence of bad motive or the specific intent to defraud the Government or deprive it of revenue. White v. United States, 372 F.2d 513, 521, 178 Ct.Cl. 765 (1967).
The standard of willfulness should not be construed to include lack of “reasonable cause” or “justifiable excuse.” These concepts tend to evoke notions of evil motive or bad purpose which properly play no part in the civil definition of willfulness. Cf. Bloom v. United States, 272 F.2d 215, 223-224 (9th Cir.1959), certiorari denied, 363 U. S. 803, 80 S.Ct. 1236, 4 L.Ed.2d 1146; accord, Flan v. United States, 326 F.2d 356, 358 (7th Cir.1964); White v. United States, 372 F.2d 513, 178 Ct.Cl. 765 (1967). In addition, “reasonable cause” and “justifiable excuse” invite consideration of such misleading and improper factors as the financial condition of the business or the demands of creditors. Cf. United States v. Hill, 368 F.2d 617, 621 (5th Cir.1966); United States v. Strebler, 313 F.2d 402, 404 (8th Cir. 1963); Frazier v. United States, 304 F.2d 528, 529-530 (5th Cir.1962). The defenses countenanced by the district court’s use of “reasonable cause” and “justifiable excuse” are inconsistent with the purposes of Congress to protect the sources of revenue by permitting recovery from those individuals charged with the responsibility of transferring withheld funds to the Government.,
We therefore hold that the instruction on “reasonable cause” and “justifiable excuse” was an impermissible addition to the jury’s instructions. The district court should have adopted the following part of the Government’s proferred instruction on willfulness:
“You are instructed that for the plaintiff’s and/or third-party defendant’s failure to pay over the taxes withheld to have been willful it is not necessary that there have been present any intent to defraud or to deprive the United States of taxes; nor is it necessary that bad motives or wicked design be shown.
“An act is willful if it is voluntary, conscious, and intentional. If you find that plaintiff and/or third-party defendant knowingly used available funds to prefer other creditors over the United States then you must find that he acted willfully.”
Despite the erroneous instruction given, we must still consider whether there is sufficient evidence against John and Robert Monday to require a directed verdict in favor of the Government against either brother rather than a new trial.
Evidence of John Monday’s Willfulness
John Monday was the vice president and secretary and a director of the Company. It is uncontested that he was in charge of corporate tax matters. Before their due dates, he and the Company’s bookkeeper prepared the quarterly returns in issue, and John Monday signed them as vice president. Each was filed belatedly and without payment although appropriate checks had evidently been prepared. In his testimony, he stated that during the third and fourth quarters of 1960, he knew these withholding taxes were due and owing and nevertheless wrote checks to other creditors and suppliers of the corporation instead of paying the United States out of otherwise available funds. This preference of others over the Government was clearly an intentional act requiring a verdict in favor of the Government against John Monday since a contrary verdict could never stand.
Evidence of Robert Monday’s Willfulness
Deane Nichol, the certified public accountant employed by the Company in the fall of 1960, testified that he pointed out to Robert in November 1960 that the Company had not paid taxes withheld from its employees and told him of the possible penalties. Robert admitted that he read Deane Nichol’s report which reflected the delinquent taxes. Robert conferred with his brother John as to what creditors should be paid and signed cheeks covering previous trust tax payments to the Government. Robert knew the Company withheld taxes and was supposed to forward them to the Government. He performed John’s functions when John was absent. Since John admitted the $4,500 March 1961 payment was only for the first quarter of 1961, the jury could disbelieve Robert’s statement that he thought it covered the delinquent quarters as well. On the other hand, Robert testified that he did not know of the tax arrearage until March 1961. Because of conflicts in the evidence, there must be a remand with respect to Robert, so that a properly instructed jury can resolve the question of his willfulness.
Meetings with the Internal Revenue Service
The chief defense presented by the Monday brothers revolves around their meetings with Edward Pietrzak, collection department supervisor of the Internal Revenue Service in Milwaukee, Wisconsin. The court below felt that the content of these meetings was relevant to the determination of willfulness. In addition, plaintiff Robert W. Monday contends that as a result of these meetings, the government is estopped to seek recovery from the Company’s officers under Section 6672. We disagree with both propositions.
The evidence of the meetings was directed to the establishment of a “reasonable cause” or “justifiable excuse” for the parties’ failure to perform their duties with respect to the withholding taxes. It was intended to negate any inference of bad faith or improper motivation by establishing reasonable reliance upon the representation that the moneys need not be collected and remitted. Since, as seen, the Mondays are foreclosed from relying upon “reasonable cause” or “justifiable excuse” as an element of willfulness under this Section, they may find no solace in the meetings in this respect.
Nor does the testimony of the content of the meetings support any claim that the Government should be estopped because of the statements made by Pie-trzak. The first meeting of the Government’s agent and the Company’s representatives took place on November 30, 1960. Since this meeting occurred one month after the due date for the third quarter taxes, it furnished no excuse for the previous failure to collect and remit the funds. Neither at that time nor at the subsequent meeting in March 1961, did Pietrzak give the Company or its individual officers any indication that they were relieved of their responsibilities under the various Sections of the Code. At the November meeting, moreover, Pietrzak specifically instructed the Company to keep current, thus precluding any claim that its subsequent failure to remit the fourth quarter taxes resulted from reliance upon his authorization of continued business. In any event, the corporate and individual liabilities under Section 6672 are separate and distinct. Cf. Datlof v. United States, 370 F.2d 655, 656 (3d Cir.1966), certiorari denied, 387 U.S. 906, 87 S.Ct. 1688, 18 L.Ed.2d 624. The taxpayers have failed to disclose any.action by the Government upon which they could reasonably have relied as the grounds for their failure to collect and remit any of the taxes withheld from their employees. Cf. Spivak v. United States, 370 F.2d 612, 615 (2d Cir.1967), certiorari denied, 387 U.S. 908, 87 S.Ct. 1690, 18 L.Ed.2d 625.
Bankruptcy Proceedings
Finally, the Mondays argue that the assessments against” them are improper because the Internal Revenue Service did not apply the $10,978.24 bankruptcy proceeds to the Government’s most recent tax claims, as directed by the bankruptcy referee. As the testimony shows, the Internal Revenue Service deliberately ignored the bankruptcy referee’s direction and applied these proceeds to earlier periods for the “best benefit of the government,” thus preserving the claims against Robert and John Monday individually for the quarters in question under Section 6672.
|
3952262-5308 | Affirmed by unpublished PER CURIAM opinion.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Terrence Peters appeals his conviction and life sentence for one count of conspiracy to distribute 50 grams or more of cocaine base in violation of 21 U.S.C. §§ 846, 841(a)(1), 841(b)(l)(A)(iii) (2006) and one count of conspiracy to possess firearms in furtherance of a drug trafficking offense in violation of 18 U.S.C. § 924(o) (2006). Spencer Peters appeals his conviction and 480 month sentence for one count of conspiracy to distribute 50 grams or more of cocaine base in violation of 21 U.S.C. §§ 846, 841(a)(1), 841(b)(l)(A)(iii) and one count of conspiracy to possess firearms in furtherance of a drug trafficking offense in violation of 18 U.S.C. § 924(o). Clifford Noel appeals his conviction and 360 month sentence for one count of conspiracy to distribute 50 grams or more of cocaine base in violation of 21 U.S.C. §§ 846, 841(a)(1), 841(b)(l)(A)(iii) and one count of conspiracy to possess firearms in furtherance of a drug trafficking offense in violation of 18 U.S.C. § 924(o). We affirm.
The Appellants jointly raise several issues and Noel individually asserts several additional grounds for relief. Appellants first claim that they were denied due process when a potential juror made a statement regarding murder in response to whether she had read anything about any of the Appellants. Noel had previously been convicted of murder in state court (though the conviction was later set aside) and the parties had agreed that no evidence or mention of the murder conviction would be admissible. Appellants claim that they were further prejudiced by the prosecutor’s use of the phrase “autopsy of a drug conspiracy” in opening statements and by a Government witness’s statement on cross-examination that he had previously testified against Noel.
We reject the Appellants’ joint claims. This court reviews a trial court’s decisions at voir dire for abuse of discretion. Rosales-Lopez v. United States, 451 U.S. 182, 188-89, 101 S.Ct. 1629, 68 L.Ed.2d 22 (1981). When prospective jurors have been exposed to pretrial publicity, “the relevant question is not whether the community remembered the case, but whether the jurors ... had such fixed opinions that they could not judge impartially the guilt of the defendant.” Mu’Min v. Virginia, 500 U.S. 415, 430, 111 S.Ct. 1899, 114 L.Ed.2d 493 (1991). Here, the district court examined the venire and was satisfied that they could continue to be impartial. We decline to disturb that finding. Moreover, when viewed in context, we conclude that the prosecutor did not engage in misconduct by referencing an “autopsy” in opening remarks. Finally we conclude that the witness’s statement that he had previously testified against Noel was not reversible error.
Noel’s first individual complaint is that the district court erred in denying his motion for a new trial based on alleged violations of Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963), and Giglio v. United States, 405 U.S. 150, 92 S.Ct. 763, 31 L.Ed.2d 104 (1972).
This court reviews the district court’s ruling on a motion for a new trial for abuse of discretion. See United States v. Fulks, 454 F.3d 410, 431 (4th Cir.2006) (motion for new trial due to Brady violation reviewed for abuse of discretion). The Due Process Clause requires that the government disclose to the defense prior to trial any exculpatory or impeaching evidence in its possession. See Giglio, 405 U.S. at 153-55, 92 S.Ct. 763 (requiring disclosure of evidence affecting the credibility of prosecution witnesses); Brady, 373 U.S. at 86-88, 83 S.Ct. 1194 (requiring disclosure of exculpatory evidence). A failure to disclose violates due process, however, only if the evidence in question: (1) is favorable to the defendant, because it is either exculpatory or impeaching; (2) was suppressed by the government; and (3) is material in that its suppression prejudiced the defendant. Strickler v. Greene, 527 U.S. 263, 281-82, 119 S.Ct. 1936, 144 L.Ed.2d 286 (1999); see Vinson v. True, 436 F.3d 412, 420 (4th Cir.2006).
Assuming that the district court was correct in concluding that the statements in question were favorable in the Brady context, we agree with the court’s conclusion that they were not material. When two Government witnesses testified in a manner inconsistent with their debriefing reports, Noel used those reports to impeach the witnesses. The addition of undisclosed trial preparation reports that demonstrated the same inconsistencies would not have materially contributed to Noel’s defense. See United States v. Hoyte, 51 F.3d 1239 (4th Cir.1995).
Noel next argues that he was denied his right to testify on his own behalf because he chose not to testify for fear that his state conviction, which was later invalidated, would be used to impeach him. As Noel essentially raises an improper impeachment claim, we find that because he did not testify, the claim is not cognizable on appeal. See Luce v. United States, 469 U.S. 38, 43, 105 S.Ct. 460, 83 L.Ed.2d 443 (1984) (holding that defendant who claimed to be deterred from testifying by a court ruling regarding impeachment evidence could not challenge ruling unless he testified and was prejudiced by it).
|
3506043-3260 | MEMORANDUM
MEREDITH, Chief Judge.
This action by petitioner was brought, pursuant to 28 U.S.C. § 2255, to vacate a ten-year sentence he received in United States v. James Lowell Rose and Robert Eugene Edmondson. The motion will be denied and the action dismissed.
Petitioner’s pro se complaint alleges that at the time of the plea of guilty, petitioner was mentally incompetent and did not understand what was going on at his plea hearing and that petitioner had ineffective assistance of counsel.
The facts are these: On September 18, 1969, in cause No. 69 Cr 194(2), defendants Rose and Edmondson were charged with making an assault with intent to rob a postal employee by use of a loaded pistol, in violation of 18 U.S.C. § 2114. This charge carries a mandatory twenty-five year sentence. On September 22, 1969, defendant Rose appeared with retained counsel and entered a plea of not guilty and the cause was set for trial on December 1, 1969. On October 1, 1969, defendant Rose filed a motion requesting a mental examination.
On October 17, 1969, Rose appeared with his retained attorney and there was presented in Court a report from the Medical Center for Medical Prisoners at Springfield, Missouri, dated 11-16-66, which showed at that time he had been admitted on 11-1-65, charged with interstate transportation of forged securities; on May 31, 1966, the staff there concluded that Rose, who was committed under the name of James L. Johnston, was mentally ill and disposition was made to a state hospital; on November 8, 1966, he was examined and the staff concluded that he was mentally competent to stand trial.
On March 4, 1968, Rose was admitted to Stockton State Hospital, Stockton, California.
On August 25, 1969, in a proceeding before the Lake County, Illinois, Nineteenth Judicial Circuit, a hearing was had concerning the mental competency of James L. Rose to stand trial. Rose was represented by counsel. Four psychiatric examinations were introduced, all of which showed defendant Rose to be mentally competent, and defendant and his attorney both conceded that Rose was competent at that time and that Court found Rose competent to stand trial. A copy of the transcript of said proceedings is in the file of this Court, along with the report of the Medical Center for Federal Prisoners at Springfield, Missouri, dated November 16, 1966. Based on the report of August 25, 1969, and the fact that defendant was charged with committing £ crime on September 5, 1969, and his motion was made in October 1969, the Court concluded that he was mentally competent at that time without further examination and denied his motion for a mental examination.
The petitioner is not entitled to a further hearing on this question of mental competency.
“(A)lthough competency at the time of trial may be the subject of a § 2255 motion and require a hearing (cases cited), this is not so where the issue has already been raised and determined in the trial court (cases cited).” Bradley v. United States, 347 F.2d 121 (8th Cir. 1965).
In fact,
“Mental competency to stand trial cannot be raised by a § 2255 motion when such issue has been raised and adjudicated in the trial resulting in the conviction.” Dranow v. United States, 407 F.2d 47 (8th Cir. 1969).
|
956445-8795 | PER CURIAM:
Appellants Gerald and Judy Brown brought this action against Hansen Publications, Inc., alleging violations of sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1,2, and section 2(a) of the Clayton Act, as amended by the Robinson-Patman Act, 15 U.S.C. § 13(a), in the distribution in the Phoenix area of popular (as distinguished from classical or educational) sheet music and music books. The district court entered judgment in favor of Hansen Publications. We affirm.
Hansen Publications, Inc., a Florida corporation wholly owned and controlled by Charles Hansen, is engaged in the publication of popular sheet music and music books. Music Retailers, Inc., and Pacific Coast Music Jobbers, Inc., California corporations wholly owned and controlled by Charles Hansen, are engaged in the distribution and sale of sheet music and music books.
Music Retailers operated concessions for the sale of sheet music and music books in branches of Wallich’s a chain of California music stores. Wallich’s opened a branch in Phoenix, Arizona, with Music Retailers operating the sheet music and music book concession. Music Retailers acquired similar concessions in two other Phoenix music stores, and negotiated unsuccessfully to acquire a concession in a fourth. During the time in question, Music Retailers controlled about 10 percent of the total retail business in popular sheet and book music in the Phoenix area with these concessions.
Appellants purchase sheet music and music books from Hansen Publications and other publishers and sell it at wholesale to retail outlets in Arizona. The concession arrangements between Music Retailers and the three music stores precluded appellants from selling music to these stores. Appellants’ Sherman Act claims rested upon the fact that Music Retailers entered into the three concession arrangements and attempted to negotiate the fourth. Appellants’ Robinson-Patman Act claim rested upon the contention that Hansen Publications made its sheet music and music books available to Music Retailers on more favorable terms than to appellants.
Appellants raise two narrow issues on appeal.
1. The district court rejected appellants’ charge that Hansen Publications attempted to monopolize on the ground that appellants failed to establish the specific intent to monopolize essential to such a claim. Lessig v. Tidewater Oil Co., 327 F.2d 459, 474-75 (9th Cir. 1964). Appellants argue that intent to monopolize was established as a matter of law by the acquisition of the three exclusive concessions and the negotiations to acquire a fourth, because the admitted purpose of these acts was to increase Music Retailers’ sales in the Arizona market by securing on an exclusive basis the business done through these outlets.
An exclusive concession is intended to and does exclude competing sellers from the particular outlet. But exclusive dealing arrangements are not per se illegal. The preemptive purpose present in such arrangements is not necessarily equivalent to the specific intent to exclude competition and fix prices that characterizes attempts to monopolize. Exclusive dealing contracts may be procompetitive in purpose. Appellee’s witnesses avowed such a purpose and expressly denied any intent to exclude competitors or control prices in any part of commerce.
Appellants did not challenge the concession agreements under section 3 of the Clayton Act, 15 U.S.C. § 14. They have not taken issue with the district court’s holdings that these agreements were not unreasonable restraints of trade violating section 1 of the Sherman Act and did not establish monopolization in violation of section 2. Appellants’ only contention on appeal is that the record required a finding of specific intent to monopolize because of the preemptive purpose of the concession agreements. For the reasons stated, we cannot agree with that contention. A finding of intent to monopolize “was not compelled and we cannot say the district court’s contrary determination was clearly erroneous.” Knutson v. The Daily Review, Inc., 548 F.2d 795, 815 (9th Cir. 1976).
2. The district court rejected appellants’ Robinson-Patman Act claim on the ground that Hansen Publications and Music Retailers were so closely related that the latter could not be considered a “purchaser” from the former for the purposes of the Robinson-Patman Act.
As we have noted, both Hansen Publications and Music Retailers are solely owned by Charles Hansen. The two corporations have the same officers and the same directors. In their trial brief appellants concede that “[djuring the times in question Hansen, Pacific Coast and Music Retailers utilized the same employees, the same office space, the same records, and their accounting and payroll [were] all handled by Hansen. In a prior action between these same litigants (Brown & Hansen) a finding of fact was entered that the operations of Hansen and Music Retailers were so intermingled that it was impossible to separate them and that they all were in reality the acts of Hansen.”
The “sales” of sheet music and music books by Hansen Publications to Music Retailers resulted in bookkeeping adjustments in the Miami, Florida, office of the Hansen enterprise. Music “sold” to Music Retailers and not resold to consumers was simply returned to Hansen Publications. The facts relied upon by appellants as reflecting favored treatment of Music Retailers by Hansen Publications (that Hansen Publications did the accounting, paid the employees of Music Retailers, and took back the music sheets and books Music Retailers did not sell) were merely aspects of the integration of the two operations. The district court did not err in concluding that the activities of the Hansen enterprises involved in this litigation were in substance those of a single trader.
Appellants advance two primary arguments to the contrary. The first is based upon testimony that Music Retailers’ local manager exercised considerable discretion in determining the prices at which Music Retailers resold sheet music and music books at wholesale to retail outlets. Appellants argue that control by one corporation of another corporation’s pricing policies and practices is the principal factor determining whether the corporations are to be treated as separate entities for purposes of the Robinson-Patman Act. This may be true when the question is whether related corporations selling in the same market are to be treated as a single trader for the purpose of comparing their respective selling prices under Robinson-Patman Act strictures. See, e. g., Baim & Blank, Inc. v. Philco Corp., 148 F.Supp. 541, 544 (E.D.N.Y.1957). But that is not the question here.
The present case involves the circumstances under which music is transferred to Music Retailers and not the events surrounding Music Retailers’ sales to its customers. The record reveals that Hansen Publications and Music Retailers are parts of a single integrated enterprise and that transfers between them were indistinguishable from dealings within the same corporate entity. Competition was not impaired by the fact that accounting and payroll records for the Charles Hansen enterprises were handled centrally, nor by unrestricted music returns within the integrated operation. The transfer of Hansen music to Music Retailers therefore did not make the latter a “purchaser” for purposes of the statute.
Appellants’ second argument seems to be that the two corporations must be treated as distinct for purposes of the RobinsonPatman Act because Hansen Publications is barred by the copyright laws (for reasons not fully explained in the record) from selling music of the highly successful group “The Beatles,” and Music Retailers was organized as a separate corporate entity to avoid this bar. Whatever may be the case as to the copyright laws, nothing in the record suggests that disregarding the separate corporate entities will enable Charles Hansen to circumvent the purposes of the Robinson-Patman Act. There is therefore no reason for treating Music Retailers as a separate entity on this basis alone.
Affirmed.
. Mutual Fund Investors, Inc. v. Putnam Management Co., 553 F.2d 620, 627 (9th Cir. 1977); Knutson v. The Daily Review, Inc., 548 F.2d 795, 813-14 (9th Cir. 1976); Twin City Sport service, Inc. v. Charles O. Finley & Co., 512 F.2d 1264, 1276 (9th Cir. 1975); Trixler Brokerage Co. v. Ralston Purina Co., 505 F.2d 1045, 1051-52 (9th Cir. 1974); Chisholm Bros. Farm Equip. Co. v. International Harvester Co., 498 F.2d 1137, 1144-45 (9th Cir. 1974); Hallmark Industry v. Reynolds Metals Co., 489 F.2d 8, 11-13 (9th Cir. 1973); Moore v. Jas. H. Matthews & Co., 473 F.2d 328, 332 (9th Cir. 1973); Industrial Building Materials, Inc. v. Interchemical Corp., 437 F.2d 1336, 1344 (9th Cir. 1970).
|
1098637-11441 | MEMORANDUM
Kevin Orton and Michael G. Swan were each convicted of racketeering; RICO conspiracy; conspiracy; and multiple counts of securities fraud, wire fraud, and money laundering. Orton appeals his convictions and sentence, and Orton and Swan both challenge the amount of restitution ordered by the district court. We affirm on all issues discussed in this memorandum. Because the parties are familiar with the facts, we recount them here only as necessary to explain our decision.
1. Issues Relating Only to Orton
A. Sufficiency of the Evidence
Orton maintains that he was never aware of the illegal purpose behind the merger, the payments to brokers, or the accounts and ventures that he created at Swan’s instruction. Viewing the evidence in the light most favorable to the prosecution, we conclude that a rational trier of fact could have found beyond a reasonable doubt that Orton had the requisite intent to commit the offenses of which he was convicted. See Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979).
Orton contends that he did not know the illegal purpose of activities involving accounts of various companies that were used to further the fraud scheme. He asserts that he was told by Swan that the 357 Leasing accounts were used for escrow purposes. The government presented testimony, however, that the activity in the 357 Leasing accounts was not consistent with use as an escrow account—the legitimate explanation that Swan allegedly gave Orton for the accounts. The government also presented evidence of the sudden onset of activity in 357 Leasing during the fraud scheme. The jury could have reasonably inferred that Orton, a trained accountant, would have found such activity questionable.
Further, although' Orton testified that he was never an owner of Paramount Securities, the government introduced a document, signed by Orton, establishing that he was the owner. If the jury disbelieved Orton on the ownership issue, it could well have disbelieved everything else he said about Paramount and, more generally, about his knowledge of the other companies’ activities.
' Orton also maintains that he did not know that the documents filed with the Securities and Exchange Commission contained false or misleading statements. The allegedly false and misleading information consisted of a failure to report the payments sent to stockbrokers. Orton was aware that these payments were made, because he usually sent the payments himself. The jury could reasonably have inferred from the fact that the payments were omitted from the reports Or-ton helped prepare that Orton must have known that the documents contained false or misleading information and that the payments were illegal.
Additionally, Orton testified at trial that he sent large amounts of cash via Federal Express because Teletek’s financial problems and history of bouncing checks forced it to deal in cash frequently and that he stopped using cash payments not because a Currency Transaction Report was generated but because' he concluded that dealing in cash was impractical and dangerous. The jury could have disbelieved this testimony as inherently implausible, given that the amounts of the relevant individual bank withdrawals were consistently just below the amount that banks are required to report, and that there are obvious alternatives to sending cash (such as sending certified checks).
Moreover, the jury could also have relied on Orton’s testimony regarding his lack of knowledge to support the fact that Orton actually had such knowledge. See United States v. Stauffer, 922 F.2d 508, 515 (9th Cir.1990); United States v. Kenny, 645 F.2d 1323, 1346 (9th Cir.1981) (“When the defendant elects to testify, he runs the risk that if disbelieved, the trier of fact may conclude that the opposite of his testimony is the truth.”). If the jury found some of Orton’s statements entirely implausible, especially given his professional expertise, it could have inferred that he knew the very facts of which he was denying knowledge. The jury was also entitled to discredit Swan’s statements denying Orton’s knowledge, particularly in light of the fact that Swan was a close friend of Orton. Further, Swan testified at one point that he was sure he told Orton about the bribes in response to the short selling, because he told everyone else. Two stockbrokers also testified that they had discussed payoff arrangements with Orton.
Given all the evidence, direct and inferential, we cannot conclude that no rational trier of fact could have found that Orton had the requisite intent to commit the offense for which he was convicted. We therefore affirm his convictions.
B. Guilt-Assuming Hypothetical Questions
Although the prosecution’s use of guilt-assuming hypothetical questions to cross-examine Orton’s character witnesses constituted error, United States v. Shwayder, No. 01-10156 (opinion filed concurrently), these questions did not affect Or-ton’s substantial rights and therefore do not warrant reversal under the plain error standard. The witnesses’ answers were very similar to those provided by Shwayder’s character witnesses, and, for similar reasons, were as likely to have aided Or-ton’s cause as to have harmed it.
C. Sentencing Challenges
(i) Grouping of Money Laundering Offenses: The district court properly applied the Sentencing Guidelines’ instructions for grouping Orton’s convictions under 18 U.S.C. § 1956 with those under § 1957. The court followed the directions in the relevant version of the Guidelines, which instructed that offenses for money laundering, governed by U.S.S.G. § 2S1.1 and 2S1.2, be grouped under § 3D1.2(d). The Guidelines require offenses listed under § 3D1.2(d) to be grouped according to the method described in § 3D1.3(b). The district court applied this method by first aggregating the total losses associated with the § 1956 and § 1957 violations and then applying the offense guideline—in this case, § 2S1.1—resulting in the highest offense level. United States v. Savage, 67 F.3d 1435 (9th Cir.1995) did not adopt any contrary interpretation of the Guidelines but, in the course of declining to decide an issue raised on appeal, merely described what one district court had done under the Guidelines’ grouping provisions for money laundering offenses.
(ii) Manager or Supervisor Enhancement: The district court did not clearly err by increasing Orton’s base offense level three points under U.S.S.G. § 3Bl.l(b) for being a manager or supervisor. We need not decide whether Orton directed another criminally responsible participant, see U.S.S.G. § 3B1.1, app. n. 1 & 2, because the district court’s stated findings support an alternative basis for the enhancement—that Orton directed the property or assets of the organization. See U.S.S.G. § 3B1.1, app. n. 2. The three-point enhancement rather than the two-point increase was appropriate here both because the organization “involved five or more participants”. and because it was “otherwise extensive.” U.S.S.G. § 3B1.1, app. n. 3.
(iii) Apprendi Error: Orton argues that the district judge erred under Apprendi v. New Jersey, 530 U.S. 466, 120 S.Ct. 2348, 147 L.Ed.2d 435 (2000), by making factual findings to increase the base offense level under the Sentencing Guidelines. Orton also contends that the judge’s application of the aggregated losses, including the losses associated with his convictions under 18 U.S.C. § 1956, to determine his sentence for convictions under 18 U.S.C. § 1957, constituted a violation of Apprendi. We reject these arguments because ‘Apprendi does not alter the authority of the judge to sentence within the statutory range provided by Congress.” United States v. Buckland, 289 F.3d 558, 570 (9th Cir.2002) (en banc); see also United States v. Johansson, 249 F.3d 848, 861-62 (9th Cir.2001).
2. Challenges to the Restitution Order
A. Acts of Third-Parties: Orton and Swan contend that the district court impermissibly shifted the burden of proof as to the amount of restitution when it did not accept their argument that illegal short selling by third parties was an unrelated, unforeseeable act that actually caused some of the losses for which restitution was ordered. We disagree. Swan and Orton did not make a factual showing on their causation theory so strong that the district court was compelled to accept it in lieu of the government’s showing on causation. The defendants did present testimony indicating that some illegal shorting activity may have taken place. But this activity was directly related to the bribery and took place mostly after the time period that the government used to calculate losses. Moreover, Swan admitted that both legal and illegal shorting were foreseeable as a result of his illegal activities and that he reacted to the short selling by bribing more stockbrokers.
Swan and Orton also contend for the first time' on appeal that negligent mismanagement subsequent to Swan’s departure from Teletek was an unrelated, unforeseeable cause of the losses. Although the defendants rely on evidence that they presented to the district court for a separate purpose, they never asked the district court to consider this evidence to reduce the amount of the restitution order, even when the district court specifically asked if they had any more arguments regarding causation. Because this argument is very fact-dependent, there are no exceptional circumstances explaining why the issue was not Raised below, and since there has been no change in law since the proceedings below, we conclude that Swan and Orton waived this argument. See United States v. Antonakeas, 255 F.3d 714, 721 (9th Cir.2001). In any event, we conclude that the evidence is not sufficient to compel a determination of the amount of loss different from that reached by the district court, as it relates to a very minor proportion of the restitution ordered and does not negate any inference that the downward slide in the company’s fortunes would have occurred without the new management’s asserted errors.
In sum, the district court did not abuse its discretion in accepting the government’s proof of losses. We therefore decline to remand to the district court for an evidentiary hearing regarding the causation for the losses.
b. Application of the■ Restitution Statute: Orton maintains that the district court failed to apply the version of the Victim and Witness Protection Act (“VWPA”) in effect at the time he committed the offenses, see 18 U.S.C. §§ 3663, 3664 (1995), and, as a result, did not reduce the amount of restitution to account for other amounts recovered by the victims.
The district court applied the correct version of the VWPA. Although the district court did not explicitly state that it was applying the 1995 version of the VWPA, the Pre-Sentencing Report explained that this version was the applicable statute. Nothing in the district court’s application of the restitution statute indicates that it was applying a statute other than the 1995 version.
The district court’s judgment ordered that Orton “receive credit for all payments previously made toward any criminal monetary penalties imposed.” The district court also instructed that the defendants be jointly and severally liable for the restitution payments. These instructions assured that there would be no duplication of payments. See United States v. Johnston, 199 F.3d 1015, 1023 (9th Cir.1999).
|
10539565-19496 | WALKER, Circuit Judge:
Plaintiffs Stephen Blumenthal and Les Fein appeal from a judgment of the United States District Court for the Southern District of New York (John F. Keenan, Judge) denying their motion to recover damages for a wrongful injunction and to forfeit the bond posted by defendant Merrill Lynch, Pierce, Fenner & Smith, Inc. (Merrill Lynch). We hold that the district court had jurisdiction to enjoin plaintiffs pending arbitration, but that when the arbitrators dissolved the injunction, it was rendered “wrongful” thereby permitting plaintiffs to recover on the bond. Therefore, we reverse and remand to allow plaintiffs to prove any damages, up to the amount of the bond, that resulted from the injunction.
BACKGROUND
On Friday, February 17, 1989, plaintiffs Blumenthal and Fein, both New York Stock Exchange (“NYSE”) registered representatives, resigned from Merrill Lynch and joined Prudential-Bache Securities, Inc. Plaintiffs took with them customer lists and other records used to service clients.
The Constitution and Rules of the NYSE mandate arbitration of disputes arising out of the employment or termination of employment of a registered representative with a member firm. See NYSE Rule 347; NYSE Constitution, Art. XI, Sec. 1. Additionally, Fein’s employment agreement with Merrill Lynch provided for arbitration of the same type of controversy.
Plaintiffs, on the day they resigned, filed for arbitration with the NYSE and informed Merrill Lynch that they were ready to arbitrate the issue of their continued dealings with their clients on the next available business day — Tuesday, February 21. When Merrill Lynch resisted the Tuesday arbitration, plaintiffs commenced an action in the district court under the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1-15 (1988), seeking to compel arbitration.
Plaintiffs moved the district court for a declaration of arbitrability of their dispute, including any claim for preliminary injunc-tive relief, and for an order compelling arbitration before the NYSE on an expedited basis. Merrill Lynch cross-moved for a preliminary injunction prohibiting plaintiffs from soliciting or accepting orders from their pre-existing clients.
On February 23, 1989, the district court ruled the dispute arbitrable and ordered expedited arbitration before the NYSE. But the district court preliminarily enjoined plaintiffs from using Merrill Lynch customer records or soliciting or accepting business from any Merrill Lynch client. The court conditioned the preliminary injunction upon Merrill Lynch’s posting a $100,000 bond pursuant to Fed.R.Civ.P. 65(c).
On March 16, 1989, after a two-day arbitration, the NYSE panel, “in full and final settlement” of the matter, terminated the preliminary injunctions in effect against the plaintiffs but awarded Merrill Lynch monetary damages of $80,000 against plaintiff Fein alone. Thereafter, plaintiffs moved in the district court for recovery against the bond for “wrongful injunction,” claiming the loss of “substantial commissions and long-time clients” allegedly sustained during the three weeks the injunction was in effect. The district court denied the motion in an order dated September 25, 1989. This appeal followed.
DISCUSSION
Under Fed.R.Civ.P. 65(c), a party subjected to a preliminary injunction in district court who is later found to have been “wrongfully enjoined” may recover against the security bond damages suffered as a result of the injunction. See, e.g., Edgar v. MITE Corp., 457 U.S. 624, 649, 102 S.Ct. 2629, 2644, 73 L.Ed.2d 269 (1982) (Stevens, J., concurring); Philips Business Systems, Inc. v. Executive Communications Systems, Inc., 744 F.2d 287, 290 (2d Cir.1984); Medafrica Line, S.P.A. v. American West African Freight Conference, 654 F.Supp. 155, 156 (S.D.N.Y.1987). Plaintiffs assert that the preliminary injunction later vacated by the arbitrators was “wrongful” because (1) the district court was without jurisdiction to enter an injunction pending arbitration and (2) the arbitrators’ ultimate disposition rendered the injunction substantively wrongful. We disagree with the first contention but agree with the second.
I.
Challenging previous decisions of this court and the weight of federal appellate authority, Blumenthal and Fein assert that the FAA bars a federal district court from issuing a preliminary injunction pending arbitration. They ground their argu ment in the language of the statute and the federal policy favoring arbitration.
Plaintiffs’ statutory argument is based on Section 4 of the FAA. That section provides, in pertinent part, that a party seeking to compel arbitration pursuant to a written agreement “may petition any United States district court which, save for such agreement, would have jurisdiction ” over the subject matter of the case for an order directing that the arbitration proceed according to the agreement (emphasis added). Plaintiffs contend that the words “save for such agreement” operate to divest the district court of jurisdiction over a dispute covered by an arbitration agreement except to order arbitration or to exercise other powers explicitly provided for in the FAA.
Further, citing the “strong federal policy” favoring arbitration, see Shearson/American Express Inc. v. McMahon, 482 U.S. 220, 233, 107 S.Ct. 2332, 2341, 96 L.Ed.2d 185 (1987); Scherk v. Alberto-Culver Co., 417 U.S. 506, 510-11, 94 S.Ct. 2449, 2452-53, 41 L.Ed.2d 270 (1974), and mandating the speedy removal of arbitrable disputes from the courts, see Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 218, 105 S.Ct. 1238, 1241, 84 L.Ed.2d 158 (1985); Moses H. Cone Memorial Hosp. v. Mercury Construction Corp., 460 U.S. 1, 22, 103 S.Ct. 927, 940, 74 L.Ed.2d 765 (1983); Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404, 87 S.Ct. 1801, 1806, 18 L.Ed.2d 1270 (1967), plaintiffs argue that a district court’s injunction pending arbitration abrogates the agreed-upon role of the arbitrators as adjudicators of the dispute. Moreover, plaintiffs argue that the parties here had agreed to submit claims for preliminary injunctive relief to the arbitrators. Finally, they argue that the ability of NYSE arbitration panels to promptly assemble and rule, and to grant preliminary injunctive relief not substantially different from that of a district court, warrants the fashioning of a “rule of necessity” so that at least in NYSE cases a district court should not have preliminary injunction jurisdiction.
The short answer to these arguments is that they come too late in the day in light of controlling precedent to the contrary. In Roso-Lino Beverage Distributors, Inc. v. Coca-Cola Bottling Co., 749 F.2d 124, 125 (2d Cir.1984) (per curiam), we gave explicit and broad recognition to a district court’s power to grant preliminary injunc-tive relief pending arbitration:
We reverse the denial of the preliminary injunction because it appears, from the record before us, that the district court believed its decision to refer the dispute to arbitration stripped the court of power to grant injunctive relief. The fact that a dispute is to be arbitrated, however, does not absolve the court of its obligation to consider the merits of a requested preliminary injunction....
749 F.2d at 125. See also Erving v. Virginia Squires Basketball Club, 468 F.2d 1064, 1067 (2d Cir.1972) (“in a proper case such as we have here, the' only way to preserve the status quo during the penden-cy of the arbitration proceeding is by the granting of injunctive relief”). Roso-Lino ’s broad language removes any doubt that district court injunctions pending arbitration are available only when the contract expressly so provides. See Erving, 468 F.2d at 1066 n. 1; see also Guiness-Harp Corp. v. Jos. Schlitz Brewing Co., 613 F.2d 468, 472-73 (2d Cir.1980) (contract requires maintenance of status quo until arbitration); Connecticut Resources Recovery Auth. v. Occidental Petroleum Corp., 705 F.2d 31, 33-35 (2d Cir.1983) (same).
Courts of appeals elsewhere addressing the issue have endorsed a district court’s power to issue an injunction pending arbitration. See Teradyne, Inc. v. Mostek Corp., 797 F.2d 43, 47-51 (1st Cir.1986); Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Bradley, 756 F.2d 1048, 1051-54 (4th Cir.1985); Sauer-Getriebe KG v. White Hydraulics, Inc., 715 F.2d 348, 350-52 (7th Cir.1983), cert. denied, 464 U.S. 1070, 104 S.Ct. 976, 79 L.Ed.2d 214 (1984); Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Dutton, 844 F.2d 726, 727-28 (10th Cir.1988). But see Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Hovey, 726 F.2d 1286, 1291-92 (8th Cir.1984); Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Scott, No. 83-1480 (10th Cir. May 12, 1983) (unpublished order).
Plaintiffs now ask us to reconsider our holding in Roso-Lino in light of the language of Section 4 of the FAA, and recent Supreme Court decisions, including several decided after Roso-Lino, evincing a policy preference in favor of arbitration. Plaintiffs also point to the Eighth Circuit’s minority view in Hovey, based on arguments similar to those offered by plaintiffs here, that a district court errs in granting injunc-tive relief in an arbitrable controversy. But a decision of one circuit contrary to ours is not by itself compelling and, as discussed below, we are not persuaded by the arguments underlying it.
To begin with, we decline to retreat from Roso-Lino on the ground that our opinion there did not explicitly address the statutory language. Neither Section 4 nor any other section of the FAA precisely addresses the issue before us. The fact that the statute posits a situation where the district court would have jurisdiction in the absence of an agreement to arbitrate does not preclude us from holding that a court retains sufficient jurisdiction to issue an injunction pending arbitration when such an agreement is present.
The Supreme Court decisions cited by plaintiffs have held an increasing number of types of disputes to be arbitrable, see, e.g., Shearson/American Express Inc. v. McMahon, 482 U.S. 220, 107 S.Ct. 2332 (Exchange Act and RICO claims); Alberto-Culver Co., 417 U.S. 506, 94 S.Ct. 2449 (Exchange Act claims under international commercial contracts); Prima Paint Corp., 388 U.S. 395, 87 S.Ct. 1801 (claim of fraud in inducement of entire contract), and have limited judicial discretion under the FAA when a dispute is subject to an arbitration agreement,, see, e.g., Dean Witter Reynolds v. Byrd, 470 U.S. 213, 105 S.Ct. 1238 (courts must enforce arbitration agreements even where result is inefficient, bifurcated proceedings); Moses H. Cone Memorial Hosp., 460 U.S. 1, 103 S.Ct. 927 (district court improperly stayed suit to compel arbitration pending resolution. of state court action also involving issue of arbitrability). To be sure, they manifest a strong federal policy favoring arbitration of disputes. However, none of these decisions addresses the issue in this case — the power of a district court under the FAA to issue an injunction pending arbitration.
Moreover, in our view, the pro-arbitration policies reflected in the foregoing Supreme Court decisions are furthered, not weakened, by a rule permitting a district court to preserve the meaningfulness of the arbitration through a preliminary injunction. Arbitration can become a “hollow formality” if parties are able to alter irreversibly the status quo before the arbitrators are able to render a decision in the dispute. See Teradyne, Inc. v. Mostek Corp., 797 F.2d at 51; Merrill Lynch v. Bradley, 756 F.2d at 1053-54. A district court must ensure that the parties get what they bargained for — a meaningful arbitration of the dispute. As the Supreme Court has stated, “[t]he preeminent concern of Congress in passing the [Federal Arbitration] Act was to enforce private agreements into which - parties had entered.” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. at 221, 105 S.Ct. at 1242. The issuance of an injunction to preserve the status quo pending arbitration fulfills the court’s obligation under the FA A to enforce a valid agreement to arbitrate. See Teradyne, Inc. v. Mostek Corp., 797 F.2d at 51; Merrill Lynch v. Bradley, 756 F.2d at 1054. See also Boys Markets, Inc. v. Retail Clerks Union, 398 U.S. 235, 251-54, 90 S.Ct. 1583, 1592-94, 26 L.Ed.2d 199 (1970) (cited in Roso-Lino).
As an alternative position, plaintiffs urge us to articulate a “rule of necessity” that would regulate a district court’s power to issue injunctions pending arbitration. They argue that such injunctions should issue only after the movant has proved that the arbitrators are unable to provide the requested relief in a timely fashion. Such a rule, plaintiffs contend, would have foreclosed the injunction here because NYSE arbitrations are expeditious. They also argue that such a rule is not foreclosed by our prior cases, including Roso-Lino, because none involved arbitration before the NYSE. In effect they invite us to carve out a “NYSE exception” to the general rule permitting district court injunctions pending arbitration.
We decline this invitation as well. A new “rule of necessity” is unnecessary. At present, the parties are free to litigate the necessity of an injunction under traditional principles, and a district court may decline to issue one upon being satisfied that there is no point in doing so. Where an injunction has been issued and it turns out that prompt arbitration is available, the enjoined party is that much more able to have the injunction promptly reconsidered. In the usual case, where at the time the district court injunction is sought the parties are uncertain as to the promptness and efficacy of the arbitration, a “rule of necessity” would place an unwarranted burden on the movant who would have to litigate the necessity issue based largely on speculation.
In sum, because we conclude that neither the text of the FAA nor the policies underlying it warrant a departure from our holdings culminating in Roso-Lino Beverage Distributors, Inc. v. Coca-Cola Bottling Co., we find that the district court had jurisdiction to issue the injunction pending arbitration.
II.
Our holding that the district court had jurisdiction to issue the preliminary injunction does not end our inquiry into the “wrongfulness” of the relief granted. The arbitrators later vacated the injunction, and the next question is whether this disposition of the controversy compels the conclusion that the preliminary injunction was “wrongful.” We believe that it does.
A party has been “wrongfully enjoined” under Fed.R.Civ.P. 65(c) if it is ultimately found that the enjoined party had at all times the right to do the enjoined act. Medafrica Line, S.P.A. v. American West African Freight Conference, 654 F.Supp. 155, 156 (S.D.N.Y.1987); Factors Etc., Inc. v. Pro Arts, Inc., 562 F.Supp. 304, 308 (S.D.N.Y.1983); Wainwright Securities Inc. v. Wall Street Transcript Corp., 80 F.R.D. 103, 107 (S.D.N.Y.1978). The conclusion that an injunction later dissolved was “wrongful,” in the sense that the party had the right to do the enjoined act, does not necessarily imply that the district court abused its discretion in granting the relief in the first place. See Wainwright Securities, 80 F.R.D. at 107. “[A] temporary injunction may be wrongfully issued although the issuance may not have been improvident as an abusive exercise of the trial court’s discretion.” Atomic Oil Co. v. Bardahl Oil Co., 419 F.2d 1097, 1099 (10th Cir.1969), cert. denied, 397 U.S. 1063, 90 S.Ct. 1500, 25 L.Ed.2d 685 (1970); Wainwright Securities, 80 F.R.D. at 107.
The focus of the “wrongfulness” inquiry is whether, in hindsight in light of the ultimate decision on the merits after a full hearing, the injunction should not have issued in the first instance. This conclusion is supported by the plain meaning of Rule 65(c) and the theory underlying it, that the applicant “consents] to liability up to the amount of the bond, as the price for [the injunction].” Commerce Tankers Corp. v. National Maritime Union, 553 F.2d 793, 800 (2d Cir.), cert. denied, 434 U.S. 923, 98 S.Ct. 400, 54 L.Ed.2d 280 (1977). The injunction bond is designed “to cover any damages that might result if it were later determined that [the applicant] was not entitled to an injunction.” Id. See Russell v. Farley, 105 U.S. 433, 438-41, 26 L.Ed. 1060 (1882); H.E. Fletcher Co. v. Rock of Ages Corp., 326 F.2d 13, 16-17 (2d Cir.1963) (injunction bond renders applicant “liable for damages if in the end it was determined that [the enjoined party] was within its rights in” engaging in enjoined conduct); Rocky Mountain Timber Corp. v. Federal Insurance Co., 502 F.Supp. 433, 434-35 (D.Or.1980); Note, Recovery for Wrongful Interlocutory Injunctions Under Rule 65(c), 99 Harv.L.Rev. 828, 836-42 (1986) (applicant should be liable only if injunction prohibited other party from doing what it was legally'entitled to do). Put another way, the question is whether the plaintiffs “ought not to have been enjoined.” Russell v. Farley, 105 U.S. at 439.
Under these standards, we find that plaintiffs were “wrongfully enjoined” by the district court. In light of the ultimate decision on the merits by the arbitrators, it turned out that Merrill Lynch was not entitled to the injunction it received and that Blumenthal and Fein had at all times the right to do business with their Merrill Lynch clients. The arbitrators “terminated in all respects” the preliminary injunctions preventing Blumenthal and Fein from doing business with the customers they serviced while at Merrill Lynch. The panel also ordered Merrill Lynch to return to each plaintiff “the copies of his customer records,” which the district court had previously ordered turned over to Merrill Lynch. All this was done in the face of specific requests by Merrill Lynch to the arbitrators for the opposite result: a prohibition on plaintiffs’ use of the “confidential” customer lists constituting “trade secrets,” and the issuance of a one-year “blanket injunction” preventing plaintiffs from servicing these people.
The fact that the panel awarded Merrill Lynch damages of $80,000 against plaintiff Fein and did not award any damages to the plaintiffs does not compel a contrary conclusion. The heart of the controversy, for both plaintiffs and defendant, was plaintiffs’ ability to carry on business with their alleged clients, not the assessment of damages. The crux of the relief sought by Merrill Lynch was an injunction against the plaintiffs to counter the potential harm to the firm from the former brokers’ continued solicitation of their old customers. Merrill Lynch was squarely rebuffed by the arbitrators in this regard. The fact that the arbitrators chose to award Merrill Lynch monetary relief, for unspecified reasons, against one of the plaintiffs does not undermine the fact that plaintiffs were fully vindicated on the central issue in the case.
Merrill Lynch next argues that the plaintiffs unsuccessfully sought the relief they request now from the arbitrators and are thus barred by principles of res judicata and collateral estoppel from relitigating the issue. We are not persuaded. Before the arbitrators, plaintiffs sought damages against Merrill Lynch for its purported misconduct in seeking an injunction in federal court, in the face of NYSE rules and policies requiring claims to be submitted to arbitration, not for damages for lost business as a result of the improper issuance of the injunction.
|
10813254-5292 | In August 1981, the plaintiff filed its petition under Rule 36 and, in September, filed the required motion for production of documents. Ct. Cl. R. 36. The defendant has moved to dismiss on the grounds that the plaintiffs petition is not a proper Rule 36 petition and that, under 28 U.S.C. §1500 (1976), the court lacks jurisdiction because of a pending suit in the United States Court of Appeals for the Tenth Circuit. We agree that the petition is improper under Rule 36. We do not dismiss it, however, but treat it instead as a Rule 35 petition. We defer consideration of the section 1500 issue.
I
In early 1980, the plaintiff submitted a bid to the Housing Authority of the Prairie Band of the Potawatomi Tribe of Indians on two construction projects. The plaintiff claims that the Housing Authority preferred its bid, but that, because of arbitrary arid capricious actions by the Depart ment of Housing and Urban Development (”HUD”), the Housing Authority tentatively selected a competitor. The contract, however, was never signed.
In September 1980, the plaintiff sued HUD, a Department official, its competitor and the competitor’s management in the United States District Court for the District of Kansas, to enjoin the award of the contract to the competitor. In May 1981, the court granted the defendants’ motion to dismiss the complaint on the grounds that the plaintiff lacked standing and that the case was moot. Roberson Lumber Co. v. Department of Housing & Urban Development, No. 80-4258 (D. Kan. May 28, 1981). The case is now on appeal to the Tenth Circuit. Id., appeal docketed, No. 81-1727 (10th Cir. Sept. 2, 1981).
II
Rule 36 provides that when
the plaintiff cannot state his case with the requisite particularity without an examination of documents or things or other information in the possession of the United States, . . .he may file a petition. . . stating his claim as far as is in his power and specifying as definitely as he can the documents or things or other information he requires.
The rule further requires that, within 30 days after filing the petition, the plaintiff must move for expedited discovery and, if the motion is granted, may file an amended petition within 30 days after receiving the additional material.
"[A] Rule 36 petition must contain three elements: the petition must expressly specify Rule 36, the plaintiff must have made application for and been unsuccessful in obtaining the documents he requires, and, most important, the plaintiff must be unable to comply with Rule 35 without such discovery.” Miracle Contractors, Inc. v. United States, 229 Ct. Cl. 786, 787 (1982). The government contends that the petition is defective under Rule 36 because the plaintiff can state its claim with particularity, and that the plaintiff is trying to use the expedited discovery provided by this rule to advance its suit in Kansas.
Rule 36 can be used only when it is necessary, i.e., when the plaintiff cannot comply with Rule 35 without expedited discovery. Miracle Contractors, supra; Jenkins v. United States, 224 Ct. Cl. 710 (1980). Rule 33(b)(3) provides: "[T]he circumstances constituting. . arbitrary, capricious or erroneous action shall be stated with particularity.” Ct. Cl. R. 33(b)(3). Rule 33(b)(3) requires that a plaintiff state facts supporting allegations of arbitrary and capricious conduct. Conclusions and generalizations of arbitrary and capricious action are not sufficient. Charley v. United States, 208 Ct. Cl. 457, 465 (1975); Keco Industries, Inc. v. United States, 203 Ct. Cl. 566, 579-81, 492 F.2d 1200, 1207-08 (1974); Greenway v. United States, 163 Ct. Cl. 72, 82 (1963); Harrington v. United States, 161 Ct. Cl. 432, 441 (1963); Mayer v. United States, 145 Ct. Cl. 181, 185 (1959). When, however, "there is enough alleged to warrant a trial 'for the development of the full facts,’” the petition is sufficient. Greenway, 163 Ct. Cl. at 83 (citation omitted).
The plaintiff has alleged several specific instances of arbitrary and capricious conduct. The petition states that the competitor’s bid was preferred despite its failure to "include all information required in paragraph 6.5 of the Indian Housing Handbook” and despite the fact that it failed to meet several specifications and conditions relating to elevation, sewage facilities, setbacks, and roofs. It states also that, in comparing the bids, HUD made improper cost adjustments for a lagoon and for additional living space. These allegations are specific enough to define the issues at trial and to allow the plaintiff to await normal discovery procedures and, accordingly, are sufficient under Rule 33(b)(3). Therefore, the petition does not meet the requirements of Rule 36.
In Miracle Contractors and Jenkins, supra, we held that dismissal was proper when a petition failed to qualify under Rule 36. The plaintiff, however, claims dismissal would be a waste of resources and asks us "to deem Plaintiffs Petition to be a 'non-Rule 36 Petition’” if the petition is improper under Rule 36. The petitions we dismissed in Miracle Contractors and Jenkins failed to comply with both Rule 36 and Rule 35. This petition, however, complies with Rule 35. The government does riot object to our treating this as a Rule 35 petition and, accordingly, we do so.
III
|
7846470-25611 | OPINION & JUDGMENT
BREMER, United States Magistrate Judge.
Plaintiff Merlin C. Long (Long) brings this civil rights action pursuant to 42 U.S.C. § 1983. Long is an inmate serving a life sentence at Iowa State Penitentiary (ISP). Plaintiff prefers to be addressed as Merlene and would like to be referred to as a female. However, to avoid confusion, the Court will refer to Long as a male. For example, it would be difficult to explain how “she” wishes to crossdress as a woman. Defendants are Iowa State Penitentiary (ISP) Warden Thomas Hundley; Crispus Nix, ISPs former warden; Sally Chandler Hal-ford, the director of the Department of Correetions (DOC); Paul Grossheim, the former director of the DOC (now deceased); and Dr. Paul Loeffelholz, M.D., the DOC medical director.
Long alleges that defendants violated his Eighth Amendment right to be free from cruel and unusual punishment by refusing to provide appropriate living conditions and medical treatment. Long claims that defendants violated his Fourteenth Amendment due process rights by refusing to accommodate his gender identity disorder. Long seeks money damages and a declaratory judgment. Long also seeks injunctive relief requiring defendants to (1) provide adequate medical care for his gender identity problems, (2) place him in appropriate living conditions so that his right to privacy is protected, and (3) appropriately classify him. Defendants deny Long’s claims and assert the defense of qualified immunity.
The parties consented to proceed before the undersigned United States Magistrate Judge pursuant to 28 U.S.C. § 636(c). The trial took place on October 27, 1994. Attorney John Whiston, with law student interns Sean McGrevey and Farhan Younus, represented Long. Assistant Attorney General William A. Hill represented defendants. Long filed his post-trial brief November 16, 1994. This matter is fully submitted.
I. FINDINGS OF FACT
Merlin Long is a 61 year old man with a gender identity disorder. He has cross-dressed since an early age. In 1964, Merlin Long, who was convicted of first degree murder, began serving his life sentence at ISP.
Long reported to ISP in women’s clothes and make-up (or in “full drag”), which the officials let him keep but not wear. Finally, ISP officials did allow Long to wear women’s clothes. Long testified that he wore 3-inch fake fingernails, earrings, garter belts, hose, and teddies. He sometimes worked in the visitor’s room dressed as a woman. Long claims to have realized that he was a woman at heart in 1965 or 1966.
In 1981, the ISP administration rescinded Long’s privilege to wear women’s clothing in response to a complaint by a parole board member. This occurred 17 years after the commencement of Long’s sentence, and six months before a major riot resulting in significant changes in the operation of ISP. Since that time Long has worn standard male prisoner attire, which after the 1981 riot consists primarily of blue jeans and a blue work shirt. Long tries to “feminize” his features by plucking his eyebrows, lining his eyes with writing pencils, and by rouging his cheeks with chalk. Within ISP restrictions, Long tries to make his state-issued prison garments look feminine. Hundreds of times, Long has asked for and prison officials have denied, permission to receive and wear women’s clothing and make-up. Long has repeatedly requested medical therapy and surgical sexual transformation. He claims to have entertained thoughts of self castration; however, he has not mutilated himself, nor has he been depressed to the point of attempting suicide.
Long wishes to receive hormone therapy. In 1981, Long first thought seriously about obtaining sex reassignment therapy or surgery and filed a civil action requesting a sex change. Long was aware that the surgery would involve removing his genitalia. The litigation was not pursued. In 1982, upon Long’s request, officials transferred Long to a maximum security facility at the Missouri Department of Corrections where he says he was permitted to dress as a woman at all times. In 1986, Long returned to ISP where he has resided in protective custody and general population.
Defendants maintain that for security reasons they cannot accommodate Long’s desire to wear women’s clothing and undergarments. Acting Warden Hedgepeth testified at trial that permitting Long to crossdress would be contrary to prison policy, draw attention to Long’s uniqueness, allow Long to broadcast his sexual availability, and invite sexual assault from other inmates. Defendants offered no testimony to indicate that Long has been sexually assaulted or harassed in the last ten years. Long claims to have been celibate for approximately ten years due to fear of Acquired Immune Deficiency Syndrome (AIDS) transmission.
Long proposed some ideas at trial as to how defendants might accommodate his desire to crossdress: transfer him to a prison in a state such as Missouri, which allowed him to crossdress and reportedly houses gender dysphorics in their own wing; transfer him to the Iowa Women’s Correctional Facility, which houses only women; or permit him to wear women’s undergarments in his cell. Long argues that his erossdressing would not present any security problems. He points out that his preferred sexual identity is well-known throughout ISP and that, thus, there is not much more he could do to telegraph his “differentness” or sexual availability. Long stated at trial that he does not fear sexual attack by inmates as he is 61 years old.
The health care professionals who examined Long to diagnose his mental disorder differ as to treatment Long should receive. Dr. Walter O. Bockting, Ph.D. testified as plaintiffs expert; Dr. Paul W. Loeffelholz, M.D., Mr. Kazam Hassan, and Mr. Louis L. Gustilo testified on behalf of defendants. Dr. Bockting, a licensed psychologist who works on the Program in Human Sexuality at the University of Minnesota Medical School Department of Family Practice and Community Health, specializes in the diagnosis and treatment of patients with gender identity disorders. Dr. Bockting examined and extensively tested Long in 1993. He found that Long’s crossdressing has developed into intense gender dysphoria. Dr. Bockting suggests that Long needs treatment for despair resulting from his inability to erossdress and the obsessive-compulsive aspects of his personality. Dr. Bockting thinks that Long suffers from depression and anxiety; he believes that tranquilizers will relieve Long’s depression. Dr. Bockting recommends that in the event the tranquilizers prove ineffective, prison staff should provide Long limited opportunities to express his transgender identity and relieve stress through cross-dressing and wearing make-up.
Dr. Bockting recognizes that Long’s other emotional problems could interfere with effective treatment or relief for Long’s gender identity disorder. Dr. Bockting’s interpretation of Long’s MMPI-2 psychological test results indicates that Long is “an individual who may be demanding, rebellious, hostile, aggressive, antisocial, impulsive, exhibitionistie, and promiscuous.” Dr. Bockting reported that “[it] is likely that underneath all of this are deep feelings of insecurity and emotional withdrawal rooted in family of origin dysfunction.” Dr. Bockting noted in his report that a person with Long’s profile may be “highly resistant to psychological treatment.”
Annual psychological evaluation reports by ISP staff indicate that Long has in fact been resistant to treatment. A report completed in 1990 shows that Long’s interview was brief and unproductive. Long “presented himself in a verbally abusive and abrasive manner. He was hostile and belligerent. He answered no question in a direct manner. He ... asked why he should ... cooperate [with the evaluator].” Long indicated that he would not see the Parole Board that year. Long’s 1991 Evaluation shows that while he was fairly congenial, direct, and open, he harbored negative feelings and attitudes toward the prison administration. He expressed the belief that due to his sexual identity administrative staff and prison officials harassed and discriminated against him. He stated that his attitude would “not change for the better until he is given what he deserves, [for example], transfer to minimum custody....”
In 1992, it was reported that while Long was scheduled to see the Parole Board for his annual review, he had no intention of keeping this commitment. In 1993, Long again indicated that he would not participate in a psychological interview for the Parole Board’s purposes. The evaluator noted: “[d]ue to [Long’s] unwillingness to participate in this interview, no meaningful psychological report is submitted.” In 1994, Long declined to be interviewed for his annual psychological evaluation. Long explained that he is apprehensive about meeting with ISP staff members because they are unsympathetic and because he thinks it is unlikely that he will be paroled.
Dr. Bockting does not recommend hormone therapy or surgical transformation of Long’s penis into a vagina. He provides in his evaluation:
As far as hormonal or surgical sex reassignment ... Mr. Long currently does not meet the minimal requirements that would make him eligible---- The obsessive[-]compulsive features of his sexuality and his antisocial personality disorder would need to be adequately managed first.
Dr. Bockting testified that Long also suffers in part from paraphilia (a sexual attraction to “a particular object or subject that is unusu al”) and transvestic fetishism (“a sexual arousal in response to wearing women’s clothes”). However, he thinks Long suffers increasingly from gender identity disorder. The primary motivation for crossdressing distinguishes gender identity disorder from a paraphilia or transvestic fetishism. When a person with gender identity disorder cross-dresses, it is a form of confident self-expression of female identity; when a person with a paraphilia or tranvestie fetish crossdresses, the main motivation is sexual arousal. Dr. Bockting stated that, based upon his analysis of test results, Long erossdresses both to express himself and for sexual stimulation. When asked his opinion regarding Long’s primary motivation for crossdressing, Dr. Bockting stated that Long’s reasons are “increasingly more an expression of female gender identity.”
The ISP psychological staff has not recently administered psychological tests to Long. Dr. Loeffelholz based his diagnosis on a report by a doctor who diagnosed Long in 1964 as having a mere transvestic paraphilia. Dr. Loeffelholz has not personally examined Long recently; he last saw Long professionally over 13 years ago. Dr. Loeffelholz has reviewed Dr. Boekting’s report and recommendations but likened the suggestion regarding a prescription for tranquilizers to “[an inmate’s] grandmother calling him to ask for tranquilizers [for the inmate] because she takes them and feels that they would be appropriate for the inmate.” At trial, Dr. Loeffelholz opined that Long’s primary psychological problem is his serious antisocial and manipulative behavior. Dr. Loeffelholz thinks that Long’s gender identity condition is secondary, and quite mild, in comparison to Long’s other emotional problems.
In spite of Dr. Bockting’s recommendation, the ISP medical staff has not prescribed tranquilizers for Long even though they are available on the prison’s formulary. Dr. Loeffelholz testified that this was because Long has not specifically requested these tranquilizers from ISP staff. Dr. Loeffelholz stated that it is up to Long to make a request through the prison’s Health Care Unit for an evaluation as to the appropriateness of a tranquilizer prescription. Dr. Loeffelholz admitted that he does not generally require psychiatric patients to identify their own problems and request a specific treatment plan. Long has refused to attend some of his regularly scheduled meetings with the staff psychologists. However, Long does use the Health Care Unit extensively for general physical problems.
II. CONCLUSIONS OF LAW
A. Preclusion
Defendants allege that this suit is barred under the principle of res judicata (claim preclusion) or collateral estoppel (issue preclusion). To establish claim preclusion, a party must provide (1) the identity of the previous cause of action; (2) the subject of the prior cause of action; (3) the parties to the prior cause of action; and (4) the quality or capacity of the person for or against whom the claim is made. Tolefree v. City of Kansas City, 980 F.2d 1171, 1175 (8th Cir.1992); Goolsby v. Derby, 189 N.W.2d 909, 914 (Iowa 1971) (“ ‘The doctrine of res judicata’ is well established, and it may exist under two situations: (1) as a bar to a second action upon the cause of action, and (2) as a bar to relitigation of particular facts or issues in a different cause of action.... [I]n both instances, the parties ... must be identical or in privity.... ”). The doctrine of collateral estoppel provides that ‘“when an issue of ultimate fact has once been determined by a valid final judgment, that issue cannot again be litigated between the same parties in any future lawsuit.’ ” U.S. v. Bailey, 34 F.3d 683, 688 (8th Cir.1994) (quoting Ashe v. Swenson, 397 U.S. 436, 443, 90 S.Ct. 1189, 1194, 25 L.Ed.2d 469 (1970)); State v. Butler, 505 N.W.2d 806, 808 (Iowa 1993) (quoting Ashe).
Defendants have not clearly established any of the elements required for claim preclusion. Defendants provide no citation to any previous litigation in which Long presented issues or claims (supposedly dismissed) identical to the ones before the Court. Defendants have not pinpointed any final determination on an issue of ultimate fact litigated by the present parties.
The parties raised the issue of preclusion in the Final Pretrial Order. The parties have neither discussed nor provided any support in fact or law for their contentions on this issue. The defendants have not established a record that demonstrates the elements required for claim or issue preclusion. Therefore, Defendants’ Motion to Dismiss on the basis of preclusion is denied.
B. The Eighth Amendment
The constitutional right of inmates to be free from cruel and unusual punishment is well established. The Supreme Court has held punishments which “ ‘involve the unnecessary and wanton infliction of pain’ ” repugnant to the Eighth Amendment. Rhodes v. Chapman, 452 U.S. 337, 101 S.Ct. 2392, 69 L.Ed.2d 59 (1981); Estelle v. Gamble, 429 U.S. 97, 103-04, 97 S.Ct. 285, 290-91, 50 L.Ed.2d 251 (1976). The Eighth Amendment protects inmates from prison officials’ “deliberate indifference to [their] serious medical needs.” Estelle, 429 U.S. at 104, 97 S.Ct. at 291. Thus, the government must provide medical care for its prison inmates. Id. at 103, 97 S.Ct. at 290. Failure to treat an inmate’s medical needs may produce unnecessary pain and suffering prohibited by the Eighth Amendment. Id.
To prevail on an Eighth Amendment claim, an inmate must prove that (1) the deprivation was sufficiently serious and (2) the defendant officials acted with a sufficiently culpable state of mind. Choate v. Lockhart, 7 F.3d 1370, 1373 (8th Cir.1993). To be guilty of an Eighth Amendment violation a defendant must act with “deliberate indifference” to plaintiffs serious medical needs. Estelle, 429 U.S. at 104, 97 S.Ct. at 290. A “serious” medical need is one which (a) has been diagnosed by a physician as mandating treatment or (b) is so obvious that even a lay person would easily recognize the necessity for medical attention. Johnson v. Busby, 953 F.2d 349, 351 (8th Cir.1991).
Courts have expanded the reach of the Eighth Amendment to reflect society’s evolving standards of decency. White v. Farrier, 849 F.2d 322, 325 (8th Cir.1988). Thus, psychological disorders may rise to the level of serious medical need. White, 849 F.2d at 325; Meriwether v. Faulkner, 821 F.2d 408, 413 (7th Cir.1987), cert. denied, 484 U.S. 935, 108 S.Ct. 311, 98 L.Ed.2d 269 (1987); see Young v. Armontrout, 795 F.2d 55, 56 (8th Cir.1986). The Seventh and Eighth Circuits have recognized transsexualism as a serious medical need that should be treated the same as any other psychiatric disorder. See White, 849 F.2d at 325; Meriwether, 821 F.2d at 413. Transsexualism is a serious psychiatric disorder described as:
a condition that exists when a physiologically normal person ... experiences discomfort or discontent about nature’s choice of his or her sex. This discomfort is generally accompanied by a desire to utilize hormonal, surgical, and civil procedures to allow the individual to live in his or her preferred sex role. The diagnosis is appropriate only if the discomfort has been continuous for at least two years and is not due to another mental disorder.
Meriwether, 821 F.2d at 412 (citing American Psychiatric Association, Diagnostic and Statistical Manual of Mental Disorders (“DSM-III-R”), § 302.5x (3d ed. 1980)).
While transsexual inmates have no constitutional right to any particular type of treatment (i.e., surgery or estrogen therapy), they are entitled to some type of medical treatment. Meriwether, 821 F.2d at 413; see generally White, 849 F.2d at 327 (recognizing other courts’ holdings that inmates are not constitutionally entitled to hormone therapy); Supre v. Ricketts, 792 F.2d 958 (10th Cir. 1986); Tiller v. Owens, 719 F.Supp. 1256, 1308 (W.D.Penn.1989) (“Although a prisoner has a right to some kind of medical treatment, he does not have a right to any particular type of therapy, provided that a therapy option is available.”); Lamb v. Maschner, 633 F.Supp. 351 (Kansas 1986).
This court holds that the extent of Long’s gender identity disorder does not constitute a serious medical need for which treatment is mandated. See Johnson, 953 F.2d at 351. Long’s gender identity problems are secondary to his other psychological problems. In addition to expert testimony, the Court considers several other factors: whether any of the psychiatrists or psychologists on Long’s case recommend the treatment Long seeks; whether Long had a history of nonconformity; and whether Long has received any treatment for mental health that would be inconsistent with the diagnosis of transsexualism. See White, 849 F.2d at 328 (citing Lamb, 633 F.Supp. 351 (D.Kan. 1986)).
The Court gives Dr. Loeffelholz’s analysis limited weight in its decision because of his failure to recently examine or test Long. Dr. Loeffelholz has little education, training, and experience in the area of gender identity disorders, especially compared to that of Dr. Bockting. Dr. Bockting has published at least 7 articles or books and has given at least 35 presentations on transgender issues. He also teaches medical students, residents in family practice, and psychiatry students in the area of gender dysphoria.
Dr. Bockting, Long’s own expert, did not diagnose Long as being a transsexual but as having “gender identity disorder not otherwise specified.” Rather than being a transsexual with characteristic persistent discomfort, a sense of inappropriateness about his assigned sex, and persistent preoccupation with getting rid of his primary and secondary sex characteristics for at least two years, at best Long can be described as a male who prefers to crossdress for both gender identity expression as well as for sexual stimulation. Long claims to have entertained the thought of surgical removal of his genitalia, but he presented no evidence at trial that he is preoccupied with this thought. Long refuses therapy from the ISP staff. It is not clear that a tranquilizer prescription would be effective, particularly in light of his other significant psychiatric problems. Additionally, Long has not met the “real-life” test of living as a woman continuously for several years. White, 849 F.2d at 326; see Meri wether, 821 F.2d at 413 (holding that plaintiff stated a valid Eighth Amendment claim that, if proven, would entitle “her” to medical treatment where plaintiff was transsexual; chemically castrated due to years of estrogen therapy; underwent surgical augmentation of facial structure and body shape in order to resemble a female; and had been living as a female since the age of 14); Phillips, 731 F.Supp. 792 (W.D.Mich.1990) (granting preliminary injunction ordering correctional officials to provide plaintiff with estrogen therapy where plaintiff was a transsexual; cross-dressed, lived as a woman, and received estrogen treatment since she was 17; underwent several surgeries and procedures to enhance her feminine appearance; and defendants’ failure to provide any medical treatment actually reversed the therapeutic effects of years of healing estrogen treatment); see also Lamb, 633 F.Supp. at 353-54 (holding that plaintiff had no right to makeup, women’s clothes, hormone therapy, sex reassignment procedure, or a transfer to a women’s prison where none of the psychiatrists who examined plaintiff recommended hormones or surgery and psychological treatment was provided).
The fact that Dr. Bockting recommended that Long be given a prescription of tranquilizers is not a sufficient basis to find that Long suffers from a serious medical need. Dr. Bockting did not diagnose Long as mandating treatment. See Johnson, 953 F.2d at 351. In essence, Long demands the privilege of crossdressing so that he can exist in the prison on his own terms, rather than in conformity with prison regulations. Dr. Bockting suggests that medication may alleviate Long’s anxiety and obsessive-compulsive features of his personality. The Court finds that this anxiety is not a serious medical need.
Even if Long did have a serious medical need, defendants were not deliberately indifferent to it. Physicians are entitled to exercise their professional judgment in making medical decisions. Taylor v. Turner, 884 F.2d 1088, 1090 (8th Cir.1989). An inmate’s disagreement with the course of medical treatment defendants provide him is an insufficient basis for an eighth amendment violation. Kayser v. Caspari, 16 F.3d 280, 281 (8th Cir.1994); Davis v. Hall, 992 F.2d 151, 153 (8th Cir.1993) (citing Smith v. Marcantonio, 910 F.2d 500, 502 (8th Cir.1990)); White v. Farrier, 849 F.2d 322, 327 (8th Cir.1988). Mere negligence or inadvertence is insufficient to satisfy the eighth amendment deliberate indifference standard. See Estelle, 429 U.S. at 105, 97 S.Ct. at 291-92 (“[A] complaint that a physician has been negligent in diagnosing or treating a medical condition does not state a valid [Eighth Amendment] claim.... Medical malpractice [is not] a constitutional violation.”); Choate, 7 F.3d at 1374. Loeffelholz did not act with deliberate indifference to Long’s allegedly serious medical need merely because he denied Long medication recommended by Dr. Bockting.
The prison wardens and the DOC director were justified in relying on the opinions of medical staff in their determination that Long’s requests to erossdress should not be granted, particularly in light of the conflicting diagnosis and Long’s refusal to participate in evaluation or therapy with ISP psychologists. Crooks v. Nix, 872 F.2d 800, 803 (8th Cir.1989).
Since Long has not established the Eighth Amendment threshold requirement of serious medical need, Long’s request for relief as to his Eighth Amendment claim is denied.
C. The Fourteenth Amendment
Long claims that defendants violated his Fourteenth Amendment due process rights by requiring him to live in a men’s prison despite his preferred gender identity as a female. He claims that defendants violated his rights by failing to provide him with adequate living conditions and meaningful medical treatment.
The Fourteenth Amendment due process clause provides that the State shall not deprive any person of life, liberty, or property without due process of law. See Daniels v. Williams, 474 U.S. 327, 331, 106 S.Ct. 662, 665, 88 L.Ed.2d 662 (1986). Courts have historically applied this guarantee of due process to deliberate decisions of government officials to deprive a person of life, liberty, or property. Id.
An inmate has no constitutional right to a particular prison classification or status. Moody v. Daggett, 429 U.S. 78, 88, 97 S.Ct. 274, 279, 50 L.Ed.2d 236 (1976) (discussing Meachum v. Fano, 427 U.S. 215, 96 S.Ct. 2532, 49 L.Ed.2d 451 (1976), where the Supreme Court found that a state prisoner was not entitled to due process protections upon the discretionary transfer to a substantially less agreeable prison even where the transfer resulted in “grievous loss” to the inmate); see Hewitt v. Helms, 459 U.S. 460, 466-67, 103 S.Ct. 864, 868-69, 74 L.Ed.2d 675 (1983) (noting that the due process clause does not implicitly create an interest in being confined to a general population facility rather than administrative segregation quarters); Ervin v. Busby, 992 F.2d 147, 149-50 (8th Cir.1983) (citing Meachum, 427 U.S. at 225, 96 S.Ct. at 2538, in noting that “the Supreme Court has ruled that the due process clause does not in itself protect a convicted prisoner from transfer between jails in the state prison systems”).
Long does not have even an arguable property or liberty interest in being classified in any way or in any particular type of medical treatment. Thus, placing Long in an “inappropriate” facility and denying his desired medical treatment without giving him the opportunity to be heard does not violate the Fourteenth Amendment. Long has not established that defendants violated his due process rights, and his request for relief as to this claim is denied.
D. Qualifíed Immunity
|
3681768-19837 | PER CURIAM:
Jimmy Mark Edward Whitehead was prosecuted pursuant to 18 U.S.C. § 2113(a) for bank robbery, and pursuant to 18 U.S.C. § 924(c)(l)(A)(ii) for brandishing a firearm during a crime of violence. His first trial ended in mistrial; a jury found him guilty of both crimes in a second trial. On direct appeal, he argues that the district court erred by: (1) failing to dismiss at the conclusion of his first trial on double jeopardy grounds; (2) failing to suppress out-of-court and in-court identifications by two witnesses; (3) denying the defendant’s motion for judgment of an acquittal due to insufficient evidence; (4) construing 18 U.S.C. § 924(e)(l)(A)(ii) as stating a minimum rather than a maximum prison term of seven years; and (5) denying the defendant’s motion for a downward departure due to a purported sentencing disparity. We lack jurisdiction to address the fifth issue and otherwise affirm.
I
We first consider whether the district court erred in denying Whitehead’s motion for judgment of acquittal pursuant to Rule 29. Whitehead contends the evidence is insufficient to support his conviction for participating in the robbery of a credit union in Arlington, Texas and brandishing a gun during that robbery. We review challenges to evidentiary sufficiency do novo, viewing the evidence in the light most favorable to the government and making all reasonable inferences and credibility choices in favor of the conviction. We will uphold the conviction if a “rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.”
The evidence reflects that a teller was accosted by two armed young black males wearing gloves, ski masks and coveralls as she entered the back door of the credit union at approximately 8:00 a.m. to prepare to open it for the day’s business. Once inside, the robbers threatened to harm the teller if they saw a policeman. During the hold-up, the two gunmen spoke to at least one other accomplice using push-to-talk features of cell phones while inside the credit union. They absconded with $453,600 in cash, which they placed in a box after a plastic bag they had used to hold the bills split open. They also removed and took a video surveillance tape. Once the robbers had fled, the teller called 911 at 8:26 a.m.
Cornelius Kiser lived down the street from the credit union, and the morning of the robbery he saw a black male wearing a white tank top walking down the street near the credit union. He thought this attire was odd because it was raining and cold that January morning. A few minutes later, Kiser observed the same man in the breezeway of an apartment complex across the street “grab a couple of bags and a box and leave.”
Jorge Juarez lived in an apartment near the credit union and saw a black male wearing a white “muscle tee” walk back and forth from the street to an apartment stairwell for ten to fifteen minutes the morning of the robbery. Both Juarez and Kiser identified Whitehead from a photo line-up six months later, and Juarez identified Whitehead at trial.
Another area resident, Ernest Harden, a convicted sex offender, saw a black male throw something into bushes that stood in front of an apartment balcony across the street from his home at approximately 8:30 the morning of the robbery. The man Harden observed wore a white “muscle shirt” and appeared to be talking on a cell phone.
The day after the robbery, Jackie Sue Kyles, who lived in the apartment with the balcony Harden identified, found a ski mask and gloves on her balcony and called police. Whitehead’s DNA was found inside both gloves but not on the ski mask. The DNA of Edward Crain and unidentified others was found on the ski mask.
Edward Crain was apprehended about three months after the credit union robbery and confessed to participating in it. He also admitted to participating in two subsequent bank robberies carried out with similar methods. During initial questioning, Crain did not name Whitehead as a participant in any of the crimes, but he ultimately told authorities and testified at Whitehead’s trial that Whitehead was the lead person in the credit union hold-up, although he said Whitehead played no part in the other robberies.
Crain gave detailed testimony at Wdiitehead’s trial about Whitehead’s role in planning and executing the credit union robbery and the division of its proceeds. Crain testified that he robbed the Arlington credit union along with Whitehead, Chuck Oliver, and Jimmy Whitehead’s brother, George Whitehead. Prior to the robbery, the four men conducted surveillance of the credit union. The morning of the robbery, Crain, Oliver, Whitehead, and Whitehead’s brother drove to the credit union in two vehicles. They brought gloves, ski masks, two pistols, and three phones. Whitehead’s brother remained in one vehicle with a phone and a police scanner. Crain, Oliver, and Whitehead drove the other vehicle closer to the credit union. Originally, Crain and Oliver had planned to enter the credit union, so Crain brought his own ski mask, which he had worn many times, and gloves, which were new. The robbers changed their plans just before the robbery, however, and decided instead that Whitehead would enter with Oliver, and that Crain would be the getaway driver. Crain gave his ski mask and gloves to Whitehead. Crain and Whitehead each took a phone. Crain then sat in the car and watched Whitehead and Oliver confront the teller at the credit union’s back door. About 20 minutes later, Oliver reappeared at the back door and waved for Crain to pull up. Oliver got in the vehicle and reported that "Whitehead was still inside with the teller. Crain noticed it was raining at this point. He and Oliver circled the credit union; they could not find Whitehead, so they drove away and found his brother. Whitehead’s brother and Oliver then returned to the credit union to pick up Whitehead. When the three men reunited with Crain, Whitehead was wearing a white tank top, carrying a box of money and blue bags, and missing his mask and gloves. The four went to the home of Lisa Wright, where Whitehead stayed at times, to divide the cash. Crain also testified that prior to the credit union robbery, Whitehead was “poor,” but after- wards, he drove vehicles with expensive accessories and paint jobs, wore expensive jewelry, bought gold “grills” for his teeth, and spent considerable sums at bars with topless female entertainers.
Whitehead contends that Crain’s testimony is unreliable because he is an unindicted co-conspirator and because he previously lied to investigators and did not implicate Whitehead in the credit union robbery until just before trial. Whitehead’s contentions are familiar, and we have consistently rejected similar arguments. The weight and credibility of Crain’s testimony were matters for the Jury-
Whitehead contends that the eye-witness testimony was unreliable. Kiser was not “one hundred percent sure that [Whitehead] was the same person he saw across the street the day of the robbery,” and Kiser was shown a photo lineup days before testifying. Juarez’s testimony “varied greatly between the two trials” and conflicted, and Harden “did not positively identify” Whitehead as the person who ran past Harden’s residence. Whitehead also contends the DNA evidence is inconclusive since DNA in addition to Whitehead’s was found on the gloves and Cram’s DNA, but not Whitehead’s, was found on the ski mask. Again, these are matters for the factfinder to weigh. We note with regard to the DNA evidence that in a post-arrest interview, Whitehead denied that he ever wore or touched the gloves at issue. The jury could have viewed this denial as incriminating.
Viewing all of the evidence in the light most favorable to the government, we must conclude that a rational juror could have found the crimes’ essential elements beyond a reasonable doubt.
II
Whitehead contends that he was placed in double jeopardy when he was subjected to a second trial, citing Oregon v. Kennedy. We review de ?wvo the district court’s denial of a motion to dismiss based on double jeopardy, but we accept the district court’s underlying factual findings unless they are clearly erroneous.
The Double Jeopardy Clause does not normally prohibit retrial, if the second trial results from a mistrial that the defendant requested. The “narrow exception” to this rule is that the “prosecution may not engage in misconduct intended to provoke mistrial requests.” “Only where the governmental conduct in question is intended to ‘goad’ the defendant into moving for a mistrial may a defendant raise the bar of double jeopardy to a second trial after having succeeded in aborting the first on his own motion.” Our inquiry focuses not on whether the prosecution “harassed” or “overreached,” but on the factual issue of whether the prosecutor intended to produce a mistrial.
The district court explicitly found that the prosecutor did not intend to provoke the defense to move for a mistrial:
I find that misconduct on the part of the prosecutor caused the Court to grant the mistrial, but that doesn’t justify granting of the double jeopardy defense. The Supreme Court is real clear that I cannot find that there’s ... double jeopardy unless I find that the prosecutor-intended by his conduct to cause a mistrial. I cannot make such a finding. I think it was a matter of [the prosecutor] seeing what he could get away with, thinking it would help him in the trial. But I don’t think he wanted a mistrial.
This finding was not clearly erroneous. A mistrial was granted because during the first trial, after had Crain testified that Whitehead purchased vehicles, clothing and consumer electronics following the credit union robbery, the prosecutor asked “Do you know what else he was spending his money on?”, and Cain responded “Drugs.” Whitehead’s counsel moved for a mistrial.
The district court had granted a motion in limine prior to the' first trial to exclude evidence that Whitehead used credit union robbery proceeds to buy drugs. After Crain answered “Drugs” during the first trial, the district court held a hearing, and Crain testified that on the morning of the first trial, the prosecutor told Crain and the other witnesses not to mention drugs. Crain recounted that the prosecutor “said there was a motion in limine; cannot use the word drugs in any way, shape, form, or matter. No matter what I ask you, don’t use the word ‘drugs.’ ” Crain explained that he nevertheless answered “drugs” because he was “nervous and a little bit confused about the question and the situation.”
The government actively opposed the defense’s request for mistrial. The prosecutor immediately explained to the judge that he had explicitly instructed Crain not to testify about drugs, and the prosecutor stated he was trying to elicit Crain’s description Whitehead’s expenditures at strip clubs and on a “diamond grill” for his teeth. The government offered a possible solution to lessen the impact of the testimony and to continue the trial. This evidence supports the district court’s finding.
The defense argues the prosecution’s case improved significantly between the first and second trial, and that this improvement is evidence of prosecutorial intent to provoke the defense to move for a mistrial. Relatedly, it claims the prosecution’s initial case was so weak during the first trial that we can infer the government deliberately brought about the mistrial.
Whitehead argues that eye-witness Harden was impeached when it was revealed on cross-examination that he was a convicted sex offender. The prosecution brought out this damaging fact in its direct examination of Harden at the second trial. Whitehead also notes that at the first trial, Juarez testified that he first met with a particular investigator a few weeks after the robbery, when in fact, the meeting occurred six months after the robbery. Whitehead asserts this conflict in the Juarez’s testimony would have been apparent and significant had the first trial continued. Additionally, Whitehead notes, at the first trial, Kiser was asked if the person he observed the morning of the robbery was present in the courtroom during the first trial, and Kiser declined to identify the defendant. The government did not pose the same question in the second trial. Even assuming an inference of intent to goad the defense into moving for a mistrial could be gleaned from these various circumstances, they do not render the district court’s finding of no intent clearly erroneous.
Ill
Whitehead moved unsuccessfully in the district court to suppress the in-court and out-of-court identifications of Whitehead by two witnesses, Juarez and Kiser, on two primary grounds. He maintains these challenges to the admission of this evidence on appeal. We accept a trial court’s factual findings that underlie a ruling on a motion to suppress unless they are clearly erroneous. The question of whether an identification is constitutionally admissible is a mixed question of fact and law.
Whitehead contends the government violated his due process rights by using an impermissibly suggestive photograph lineup to elicit positive identifications from two witnesses. Courts determine whether a photographic lineup violates a defendant’s due process rights by using a two-part test. First, they ask if “the procedure was impermissibly suggestive.” If the lineup was too suggestive, the issue is “whether this created a very substantial risk of misidentification.”
The photographic lineup was not impermissibly suggestive. The witnesses were shown a sheet containing six pictures of young adult black males. They were told they did not have to choose any of the individuals. The witnesses were further instructed not to focus on aspects of a person’s appearance that are susceptible to change, such as hairstyle and facial hair, but rather to focus on unchangeable features such as “their ears, their eyes, [and] their nose.”
Whitehead claims the lineup, when combined with the instructions, impermissibly suggested that witnesses should select his photograph, because he is the only person in the lineup with a “facial deformity.” He asserts that he has a “lazy eye” that is “so manifestly apparent that without other alternatives to select from, the photo lineup was tantamount to a show up.” We disagree based on a review of the photographic lineup. It is not suggestive. Nor were the investigating agents’ comments or instructions.
Whitehead’s second principal argument is that the government violated his Sixth Amendment rights by failing to notify his attorney prior to conducting the photographic lineup. He argues that United States v. Wade requires the government to notify counsel before showing witnesses a photographic lineup containing the defendant. The Supreme Court foreclosed this argument in United States v. Ash, when it stated, “We hold ... that the Sixth Amendment does not grant the right to counsel at photographic displays conducted by the Government for the purpose of allowing a witness to attempt an identification of the offender.” We therefore reject this argument.
IV
The district court sentenced Whitehead to 240 months’ imprisonment for the bank robbery conviction and 120 months’ imprisonment based on the conviction for brandishing a firearm in violation of 18 U.S.C. § 924(c)(l)(A)(ii), with the terms of imprisonment to be served consecutively. The court further ordered Whitehead to pay restitution of $453,600 and a special assessment of $200. Finally, the district court imposed a supervised release term of three years with respect to the bank robbery count, and a term of five years for the weapons violation, to be served concurrently.
With regard to the 120 months’ sentence, Whitehead contends that the district court incorrectly interpreted 18 U.S.C. § 924(c)(l)(A)(ii) as setting forth a minimum seven-year sentence, contending that the statute sets forth a maximum seven-year sentence. Whitehead argues in the alternative that the provision is unconstitutional. We review the district court’s interpretation of a federal statute de novo. We also review the constitutionality of a federal statute de novo
Whitehead’s contention that 18 U.S.C. § 924(c)(1)(A)(ii) imposes a maximum punishment of seven years’ imprisonment for brandishing a firearm during the commission of a crime of violence is contrary to the statute’s unambiguous text and circuit precedent. Section 924(c)(1)(A)(ii) provides that the offender “shall, in addition to the punishment provided for such crime of violence ... if the firearm is brandished, be sentenced to a term of imprisonment of not less than 7 years.” This language plainly sets forth a minimum, rather than a maximum. We have expressly rejected Whitehead’s interpretation in previous decisions, noting that by using the “no less than” language, “Congress has implicitly authorized district courts to impose sentences ... in excess of seven years and up to a maximum of life imprisonment.”
We also- reject Whitehead’s argument that if § 924(c)(l)(A)(ii) can be read to allow sentences greater than seven years, it fails to give defendants sufficient notice and is void for vagueness. As explained above, the language is not vague. In addition, we have previously held that a provision using “not less than” to establish a minimum sentence is “not unconstitutionally vague for failure to fix a maximum sentence.”
V
Prior to sentencing, Whitehead filed a motion for downward departure based on a purported disparity between the 30-year sentence he received and the 15-year sentence his accomplice Crain received as a result of his state-court prosecution and conviction for the credit union robbery. That motion was denied, and Whitehead maintains on appeal that the district court erred by failing to downwardly depart. Whitehead argues the difference between his and Crain’s sentences constitutes a “sentencing disparity” for which the sentencing court should award a downward departure.
We de not reach the merits of this argument because we lack jurisdiction to do so. We possess jurisdiction “to review [a] district court’s decision not to depart downward from the guideline range only if the court based its decision upon an erroneous belief that it lacked the authority to depart.” The record must indicate that the judge held such a belief. The record before us reveals no erroneous understanding. If anything, the record indicates the judge thought he could grant the departure, as he said he would consider it at sentencing. For these reasons, we conclude we lack jurisdiction to reach this argument.
Whitehead does not challenge the reasonableness of his sentence, nor does he contend that the district court improperly applied or weighed any of the factors set forth in 18 U.S.C. § 3553(a).
For the foregoing reasons, we AFFIRM Whitehead’s conviction and sentence.
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.
. See Fed.R.Crim.P. 29.
. United States v. Pennell, 409 F.3d 240, 243 (5th Cir.2005).
. United States v. Redd, 355 F.3d 866, 872 (5th Cir.2003).
. United States v. Hernandez-Bautista, 293 F.3d 845, 853 (5th Cir.2002).
. The federal authorities did not prosecute Crain, but Crain was prosecuted and convicted in state court.
. See United States v. Silva, 748 F.2d 262, 266 (5th Cir.1984) (‘‘[A] conviction may be based solely upon the uncorroborated testimony of an accomplice if the testimony is not incredible or otherwise insubstantial on its face.”).
. 456 U.S. 667, 102 S.Ct. 2083, 72 L.Ed.2d 416 (1982).
. United States v. Botello, 991 F.2d 189, 192 (5th Cir.1993).
. United States v. Gonzalez, 76 F.3d 1339, 1342 (5th Cir.1996).
|
11533594-6683 | MEMORANDUM OPINION AND ORDER
BROADWATER, District Judge.
On this day, the above styled matter came before the Court for consideration of the defendants’ motion for summary judgment (Document No. 15). After considering the defendant’s memorandum of law, the Court finds that the motion should be granted.
I.PROCEDURAL BACKGROUND
On December 9, 1998, the plaintiff brought this action in the form of a civil rights complaint. On February 9, 1999, the Court granted the plaintiffs application for leave to proceed without pre-payment of fees and ordered the Clerk to serve the Attorney General with a copy of the complaint. On August 9, 1999, the Court granted the State of West Virginia’s motion to dismiss. On August 30, 1999, the matter came before the Court for a status conference. Defendant PrimeCare Medical was present by counsel, and plaintiff failed to appear. On August 31, 1999, the Court issued an order directing the plaintiff to respond to the defendant’s pleading and advised him of the consequences associated with failing to respond. As of this date, the plaintiff has failed to respond to the defendant’s dispositive motions.
II.FACTS
The plaintiffs complaint originates from an alleged injury received while incarcerated at the Eastern Regional Jail (ERJ) in Martinsburg, Berkeley County, West Virginia. The plaintiff alleges that on or about October 7, 1998, he was stepped on by another inmate. This incident took place as the plaintiff was sleeping on the floor and the other inmate was climbing out of a top bunk.
The plaintiff alleged that the medical staff at ERJ took x-rays of his back. Also, plaintiff alleges that the x-rays revealed a condition. The plaintiff asserts that medical attention offered by PrimeCare was less than adequate.
III.SUMMARY JUDGMENT STANDARD
Under Fed.R.Civ.P. 56(c), 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.” The party seeking summary judgment bears the initial burden of showing the absence of any issues of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). However, as the United States Supreme Court noted in Anderson v. Liberty Lobby, Inc., Rule 56 itself “provides that a party opposing a properly supported motion for summary judgment may not rest upon mere allegation or denials of [the] pleading, but must set forth specific facts showing that there is a genuine issue for trial.” 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). “The inquiry performed is the threshold inquiry of determining whether there is the need for a trial-whether, in other words, there are any genuine factual issues that can be properly resolved only by a finder of fact because they may reasonably be resolved in favor of either party.” Id. at 250, 106 S.Ct. 2505. See also Charbonnages de France v. Smith, 597 F.2d 406, 414 (4th Cir.1979) (holding that “summary judgment ‘should be granted only where it is perfectly clear that no issue of fact is involved and inquiry into the facts is not desirable to clarify the application of the law.’ ”) (citing Stevens v. Howard D. Johnson Co., 181 F.2d 390, 394 (4th Cir.1950)).
In Celotex, the Court stated that “the plain language of Rule 56(c) mandates 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.” Id. at 322, 106 S.Ct. 2548. Summary judgment is not appropriate until after the non-moving party has had sufficient opportunity for discovery. Oksanen v. Page Memorial Hosp., 912 F.2d 73, 78 (4th Cir.1990), superseded on rehearing, 945 F.2d 696 (4th Cir.1991). Additionally, “[o]n summary judgment the inferences to be drawn from the underlying facts ... must be viewed in the light most favorable to the party opposing the motion.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (citation omitted).
IV. DISCUSSION OF LAW
The Eighth Amendment prohibits cruel and unusual punishment. A convicted prisoner is “entitled to protection only against punishment that is ‘cruel and unusual.’ ” Martin v. Gentile, 849 F.2d 863, 870-871 (4th Cir.1988). “To establish that a health care provider’s actions constitute deliberate indifference to a serious medical need, the treatment, or lack thereof, must be so grossly incompetent, inadequate, or excessive as to shock the conscience or to be intolerable to fundamental fairness.” Miltier v. Beorn, 896 F.2d 848, 851 (4th Cir.1990); Norris v. Detrick, 918 F.Supp. 977, 984 (N.D.W.Va.1996), aff'd, 108 F.3d 1373 (4th Cir.1997). Deliberate indifference to a prisoner’s serious medical needs can constitute deliberate indifference and give rise to a civil rights action under 42 U.S.C. § 1983. Loe v. Armistead, 582 F.2d 1291 (4th Cir.1978), cert. denied, 446 U.S. 928, 100 S.Ct. 1865, 64 L.Ed.2d 281 (1980).
Before a health care provider may be held liable for deliberate indifference, plaintiff must show that his medical needs were serious and that the defendants were deliberately indifferent to those serious medical needs. Estelle v. Gamble, 429 U.S. 97, 106, 97 S.Ct. 285, 50 L.Ed.2d 251 (1976). Further, only when prison officials and medical personnel know that the inmate faces a substantial risk of serious harm and then disregard that risk by failing to take reasonable measures can they be held liable for deliberate indifference. Farmer v. Brennan, 511 U.S. 825, 114 S.Ct. 1970, 128 L.Ed.2d 811 (1994).
The deliberate indifference standard requires plaintiff to show that the providers had a “culpable state of mind.” Wilson v. Seiter, 501 U.S. 294, 297, 111 S.Ct. 2321, 115 L.Ed.2d 271 (1991). “[0]nly the ‘unnecessary and wanton infliction of pain’ implicates the Eighth Amendment.” Id. at 297, 111 S.Ct. 2321 (citations omitted). “[A] prisoner advancing such a claim must, at a minimum, allege ‘deliberate indifference’ to his ‘serious’ medical needs.” Id. at 297, 111 S.Ct. 2321 (citations omitted). “ ‘It is only such indifference’ that can violate the Eighth Amendment.” Id. at 297, 111 S.Ct. 2321 (citations omitted). “[Ajllegations of ‘inadvertent failure to provide adequate medical care’ or of a ‘negligent -... diagnoses],’ simply fail to establish the requisite culpable state of mind.” Id. at 297, 111 S.Ct. 2321 (citations omitted).
|
881084-20322 | PRYOR, Circuit Judge:
Arturo Hernandez appeals his convictions and sentences for conspiracy to possess with intent to distribute two kilograms of cocaine hydrochloride, and possession with intent to distribute two kilograms of cocaine hydrochloride. 18 U.S.C. § 2; 21 U.S.C. §§ 841, 846. Hernandez argues that the evidence was insufficient to support his convictions, the district court erroneously denied his motion for a new trial, and his sentence violated the Sixth Amendment, under United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005). Because the evidence was sufficient to support the verdicts and a new trial was not warranted, we affirm the convictions. Because the district court erred when it applied the Sentencing Guidelines as mandatory and the error was not harmless, we vacate Hernandez’s sentence and remand for resentencing.
I. BACKGROUND
In 2004, Felipe Rivas, a confidential informant, approached David Lopez’s son about buying Lopez’s truck. Lopez’s son asked Rivas if he was interested in drugs. When Rivas spoke with Lopez about buying the truck, he told Lopez that he drove a “semi” for a living. Lopez then asked Rivas if he ever transported drugs, and Rivas responded, yes. Lopez and Rivas exchanged telephone numbers and began to communicate about transporting drugs from Texas to Florida.
Several days later, Rivas met with Lopez and Antonio Benavides to discuss transporting five “keys” of cocaine from Texas. Rivas agreed to go to Texas to get the drugs for Lopez and Benavides. Days later, Rivas called Lopez and stated that he was returning from Texas with the drugs. Lopez informed Rivas that he needed five “keys” of cocaine immediately, and they arranged to meet to transfer the drugs. The agreed upon price was $17,000 per kilogram.
On the day of the meeting, Rivas called Lopez to finalize the exchange. Lopez informed Rivas that he had enough money for only two kilograms because “one of his guys had a car accident.” Drug Enforcement Agents provided Rivas with packaged cocaine, and Rivas took the drugs to the appointed meeting place along with Erica Rodriguez, an undercover officer who posed as his wife. Lopez met Rivas and told him that there were “some guys coming with the money.” Lopez and Rivas then called Benavides to give him directions to the meeting place. Benavides then arrived with Hernandez in a black Ford Expedition. Benavides was driving the vehicle, and Hernandez was riding in the passenger seat. Lopez approached the window of the Expedition and asked how much money Benavides and Hernandez had. Hernandez replied “nine and this.” Hernandez was holding a bag of money and Benavides was pulling more money out of his pockets and putting it in the bag. Lopez took the money from Hernandez.
Rivas then called Lopez over to his vehicle to look at the drugs. Rivas told Lopez there were five kilograms there, and Lopez responded that he would need more because “two of these belongs to these guys.” After Lopez checked the cocaine, Rivas got into his car. He heard Hernandez yell “trainos nos de nosotros” or “bring ours.” Rivas told Lopez to give it to him. Lopez, Benavides, and Hernandez then were arrested.
Hernandez, Lopez, and Benavides were indicted for conspiracy to possess with intent to distribute cocaine hydrochloride and possession with intent to distribute cocaine hydrochloride. Lopez pleaded guilty. Hernandez and Benavides proceeded to trial.
At trial, a number of witnesses testified regarding Hernandez’s involvement in the conspiracy. Rivas, who was wearing a wire during all the transactions, testified that, at the transfer, Lopez asked Hernandez how much money there was and Hernandez responded that there was “nine and this.” Rivas testified that Hernandez was holding a bag full of money. Rivas testified that Benavides also removed money from his pants pockets and put the money in the bag. After the arrests, the agents found $33,800 in the bag.
Rivas testified that, while he was completing the transaction with Lopez, he heard Hernandez say that he wanted his two in Spanish, and Lopez told Rivas “this guy wants his two.” On cross-examination, Rivas stated that Hernandez said “trainos nos de nosotros,” which means “bring us ours.” Rivas further testified that, during the transfer, Lopez stated that he would need more cocaine later because two of the kilograms of cocaine he was purchasing belonged to “these guys,” which referred to Benavides and Hernandez. Rivas testified that he had not seen or heard of Hernandez before the day of the drug deal.
Rodriguez, who remained in Rivas’s truck during the transfer, testified that, toward the end of the transaction, she saw Hernandez make a beckoning motion with his hand and heard him say “bring us our two.” Like Rivas, Rodriguez later testified, on cross-examination, that Hernandez said “trainos nos de nosotros” or “bring us ours.” Rodriguez testified that, before the transfer, she had not seen, heard of, or met Hernandez.
Rana Saoud, a special agent for the Immigration and Customs Enforcement, testified that she participated in the investigation. Saoud videotaped the transaction between Lopez and Rivas. Saoud also testified that she read the Miranda rights and conducted a short interview with Benavides after he had waived his rights. Saoud testified that Benavides stated that he received a telephone call earlier in the day from Hernandez, who asked Benavides to give him a ride to meet with Lopez because Hernandez was drunk and did not want to drive. Another agent, Karl Weiss, testified that Benavides also stated he had not met Hernandez before that day.
Lopez and Benavides also testified at trial. Lopez testified that Hernandez was not involved in the purchase of the cocaine. Lopez stated that he asked to borrow Hernandez’s car because one of his other associates had an accident earlier in the day. Lopez testified that, when he first asked to borrow Hernandez’s car, Hernandez refused because it was his employer’s car. Lopez then asked Hernandez to give him a ride, but Hernandez refused because he was intoxicated. Lopez testified that Hernandez finally agreed to allow him to use the car if someone else drove. Lopez testified that, at the scene of the drug deal, he asked Hernandez to hand him a bag located in the car and asked Benavides how much money was there, to which Benavides replied “nine.” He testified that Hernandez did not say “bring us ours,” but instead shouted that he was leaving.
Benavides testified that Hernandez was drunk the day of the drug deal and possibly did not know what was happening. Benavides testified that he had known Hernandez about a year and a half. Benavides testified that Hernandez was asleep in the car while Benavides drove. Benavides also testified that he did not hear Hernandez say anything.
The jury convicted Hernandez of the offenses charged, and the jury found that Hernandez’s offenses involved two kilograms of cocaine hydrochloride. The district court denied Hernandez’s motion for judgment of acquittal or, in the alternative, a new trial. The district judge stated that, although he questioned the credibility of the witnesses for the prosecution and found the case against Hernandez to be weak, he could not supplant the findings of the jury. After calculating the appropriate sentencing range under the Guidelines, the district court-sentenced Hernandez to the lowest sentence in the range, and the district court stated that it would have imposed a lower sentence if it had the authority.
II. STANDARDS OF REVIEW
We review de novo the denial of a motion for judgment of acquittal. United States v. Bowman, 302 F.3d 1228, 1237 (11th Cir.2002). “When the motion raises a challenge to the sufficiency of the evidence, we review the sufficiency of the evidence de novo, drawing all reasonable inferences in the government’s favor.” Id. We review the denial of a motion for a new trial for abuse of discretion. Butcher v. United States, 368 F.3d 1290, 1297 (11th Cir.2004).
III. DISCUSSION
Hernandez appeals both his convictions and sentence. As to his convictions, Hernandez makes four arguments: (1) the evidence was insufficient to support the verdict; (2) the standard of review used to judge the sufficiency of the evidence is unconstitutional; (3) the district court employed the wrong standard when it denied his motion for a new trial; and (4) the judgment entered against him incorrectly reflects convictions for five kilograms instead of two. Finally, Hernandez argues that his sentence, which was imposed under a mandatory guidelines system, violated the Sixth Amendment contrary to Booker. Because the government correctly concedes both that we should remand this case for resentencing and that the judgment of conviction erroneously states the amount of cocaine involved as five kilograms instead of two, we do not address those two arguments. We address Hernandez’s first three arguments in turn.
A. The Evidence Is Sufficient to Support the Conviction.
Hernandez argues that the evidence is too weak and the inferences too tenuous to support his conviction. He argues that the government has only “two brief snippets of testimony” that connect him with the offenses: the testimony that he said “nine and this” and “bring ours.” Hernandez argues that the statement “nine and this” does not make sense and the government did not explain what the words meant. He also argues that the statement “bring ours” was not explained by the government. Both statements, Hernandez argues, are subject to innocent explanations. Hernandez’s argument fails.
When we review the sufficiency of the evidence, we draw all reasonable inferences in the light most favorable to the government. Bourman, 302 F.3d at 1237. “To sustain a conviction for conspiracy to possess cocaine with intent to distribute, the government must prove beyond a reasonable doubt that (1) an illegal agreement existed; (2) the defendant knew of it; and (3) the defendant, with knowledge, voluntarily joined it.” United States v. McDowell, 250 F.3d 1354, 1365 (11th Cir.2001). Participation in a conspiracy can be inferred from “a development and collocation of circumstances.” Id. (citations omitted). “Although mere presence at the scene of a crime is insufficient to support a conspiracy conviction, presence nonetheless is a probative factor which the jury may consider in determining whether a defendant was a knowing and intentional participant in a criminal scheme.” Id.
“To sustain a conviction for possession of a controlled substance with intent to distribute, the government must show that a defendant knowingly possessed the controlled substance with the intent to distribute it.” United States v. Leonard, 138 F.3d 906, 908 (11th Cir.1998). The government may prove possession by showing actual or constructive possession. Id. at 909. “Constructive possession exists when a defendant has ownership, dominion, or control over an object itself or dominion or control over the premises or the vehicle in which the object is concealed.” Id. “Intent to distribute may be inferred from the amount of [the drug] involved.” United States v. Sarmiento, 744 F.2d 755, 761 (11th Cir.1984).
An individual who aids and abets the crime of possession of a controlled substance with intent to distribute is punishable as a principal. 18 U.S.C. § 2. “To prove guilt under a theory of aiding and abetting, the Government must prove: (1) the substantive offense was committed by someone; (2) the defendant committed an act which contributed to and furthered the offense; and (3) the defendant intended to aid in its commission.” United States v. Camacho, 233 F.3d 1308, 1317 (11th Cir. 2000).
The evidence presented at trial was sufficient to sustain Hernandez’s conviction on both counts. Rivas testified that Hernandez handed over the money used to purchase the drugs and stated the amount of money was “nine and this.” Rivas and Rodriguez both testified that Hernandez told Lopez to “bring us ours,” which a jury could infer referred to the drugs. Rivas also testified that Lopez stated that some of the drugs belonged to Hernandez and Benavides. Besides Hernandez’s presence at the transaction, Benavides and Hernandez arrived in Hernandez’s vehicle. The amount of drugs also was sufficient to support a finding of Hernandez’s intent to distribute the drugs.
Hernandez’s arguments about this evidence are foreclosed by our standard of review, which requires us to view the evidence in the light most favorable to the government. Although Lopez and Benavides testified that Hernandez was not a participant in the conspiracy, the jury was free to disbelieve their testimony. That Hernandez’s statements and behavior are subject to innocent explanations is also immaterial. “A jury is free to choose among reasonable constructions of the evidence.” United States v. Bell, 678 F.2d 547, 549 (5th Cir. Unit B 1982) (en banc). Hernandez cannot prevail on appeal by repeating his unsuccessful argument to the jury.
Our recent opinion in United States v. Diaz-Boyzo, 432 F.3d 1264 (11th Cir.2005), is instructive. In that case, Diaz-Boyzo was indicted in relation to a conspiracy to distribute methamphetamine and cocaine. Diaz-Boyzo was present only on the day of the final transaction. Two conflicting stories were presented at trial regarding Diaz-Boyzo’s involvement with the conspiracy. Villa-Gamino, a member of the conspiracy, and Diaz-Boyzo testified, on the one hand, that Diaz-Boyzo was not involved in the conspiracy and was merely present at the sale of methamphetamine to the confidential informant and undercover agent because he had asked Villa-Gamino for a ride. Id. at 1332-1333. The government presented testimony, on the other hand, that Diaz-Boyzo arrived with VillaGamino to the scene of the drug transaction, rode with Villa-Gamino to pick-up part of the drug delivery, and was present at the final delivery. The government also presented testimony that Diaz-Boyzo was watching Villa-Gamino during the drug transaction, and that Diaz-Boyzo possessed a loaded firearm during the delivery. Id. at 1334-1335. The jury found Diaz-Boyzo guilty.
Diaz-Boyzo argued on appeal that the evidence was not sufficient to support the verdict, but we affirmed his conviction. We held that, although mere presence was insufficient to support the conviction, the evidence taken together was sufficient. With regard to the testimony that DiazBoyzo was not involved in the conspiracy, we noted that “the jury was free to disbelieve and disregard [the dealer’s] testimony that Diaz-Boyzo was not involved in the drug transaction and did not serve as protection for him.” Id. at 1335.
As in Diaz-Boyzo, the evidence of Hernandez’s involvement in the conspiracy was sufficient to support the conviction. The jury was free to disbelieve Hernandez’s mere presence defense and infer from the evidence that Hernandez was a willing participant. If anything, the evidence of Hernandez’s statements during the transaction was more substantial evidence of guilt than the evidence against Diaz-Boyzo.
B. The Standard of Review for Sufficiency of the Evidence Is Constitutional.
In the light of the failure of his latter argument, Hernandez argues that the standard of review used in this Circuit to consider a motion for judgment of acquittal is unconstitutional both on its face and as applied to him. He argues that the standard of review violates the Sixth Amendment right to trial by jury and due process of law. This argument also fails.
Contrary to Hernandez’s protestations, our standard for evaluating the sufficiency of the evidence preserves the right to trial by jury and due process of law. A jury determined Hernandez’s guilt, and we respect that determination. Under our standard, “we are bound by the jury’s credibility determinations, and by its rejection of the inferences raised by the defendant.” United States v. Peters, 403 F.3d 1263, 1268 (11th Cir.2005). The evidence does not have to “exclude every reasonable hypothesis of innocence or be wholly inconsistent with every conclusion except that of guilt[.]” Bell, 678 F.2d at 549. “Instead, the relevant question is whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.” Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 2789, 61 L.Ed.2d 560 (1979).
C. Any Error Committed by the District Court in Denying the Motion for a New Trial Was Harmless.
“On a motion for a new trial based on the weight of the evidence, the court need not view the evidence in the light most favorable to the verdict. It may weigh the evidence and consider the credibility of the witnesses.” United States v. Martinez, 763 F.2d 1297, 1312 (11th Cir. 1985). “If the court concludes that, despite the abstract sufficiency of the evidence to sustain the verdict, the evidence preponderates sufficiently heavily against the verdict that a serious miscarriage of justice may have occurred, it may set aside the verdict, grant a new trial, and submit the issues for determination by another jury.” Id. (internal quotations and citation omitted).
Hernandez argues that the district court abused its discretion when it denied his motion for a new trial because the district court erroneously applied the wrong standard and resolved all the evidence in favor of the government when it considered his motion. Hernandez contends that if the district court had applied the correct standard to his motion for a new trial the district court would have granted him a new trial.
We agree that the district court applied an incorrect standard when it considered Hernandez’s motion for a new trial. In its order denying Hernandez’s motion, the district court only iterated and applied the standard of review appropriate for a motion for judgment of acquittal; that is, the district court viewed all the evidence, made all inferences, and resolved all credibility issues in the light most favorable to the government. As articulated above, that is the not the appropriate standard to apply to a motion for a new trial.
Before we remand this case to the district court to consider the motion for new trial under the appropriate standard, we must determine whether the error of the district court affected Hernandez’s substantial rights or was harmless. An error that “does not affect substantial rights must be disregarded.” Fed. R.Crim.P. 52(a). In determining whether the error of the district court was harmless, we consider what would have happened on appeal if the district court had granted Hernandez’s motion for a new trial. Cf. Butcher, 368 F.3d at 1294-95. It is clear that the grant of a new trial could have been appealed by the government, 18 U.S.C. § 3731, and Hernandez did not contest at oral argument that the government would have appealed the grant of a new trial. If on appeal, we would have reversed the grant of a new trial, then the error of the district court did not affect Hernandez’s substantial rights.
In our evaluation of whether the error of the district court was harmless, we are informed by our opinion in Butcher. In that case, the district court granted habeas corpus relief on the ground that trial counsel had been ineffective for failure to file a timely motion for a new trial. Id. at 1292-93. The district court concluded that the failure of trial counsel prejudiced the petitioners because the trial court would have granted the motion for new trial if it had been timely filed. Id. at 1294. We rea soned that, in determining the prejudice element of the Strickland test, we must consider what would have happened on appeal: “the fairness and reliability of the criminal proceeding ... is not served by deciding the issue without regard to what would have happened on appeal.” Id. at 1295. We reversed the grant of habeas relief because it would have been an abuse of discretion to grant a new trial. Id. at 1300.
The logic of Butcher applies as well to our review of whether the error of the district court was harmful. To explain whether we would have reversed the grant of a new trial on appeal, we first consider the standard for our review of such decisions. We then review the evidence presented at trial.
|
58394-7798 | OPINION AND ORDER
FUSTE, District Judge.
The government filed its preliminary notice to seek the death penalty for this case on June 10, 1997, and withdrew it fifteen days later, after the issue was informally discussed at a status conference on June 23, 1997. Three months later, on September 18, 1997, the United States Department of Justice sent Death Penalty Review Protocol letters to at least five defendants, setting a hearing before the Attorney General’s Review Committee for October 29, less than two weeks before the scheduled trial date of November 10, 1997. The government then moved again to file its preliminary notice to seek the death penalty in the ease against at least five of the original defendants. See 18 U.S.C. § 3591; 21 U.S.C. § 848(e); Local Rule 428. On October 16, 1997, we heard oral arguments on this issue, and on October 24,1997, we denied the government’s motion.
Since this court’s Order of October 24, 1997, denying the government’s motion to seek the death penalty in this case, the Attorney General has approved the case for the Department of Justice’s Trial Attorney to request the death penalty against defendants Andres Colon-Miranda, David Samuel Martinez-Velez, and Edwin Rosario-Rodriguez. Following the Attorney General’s certification for the death penalty, the government filed with this court on November 7, 1997, ■this certification of the death penalty case against the three above-named defendants.
I.
We again note the gravity with which we must consider the government’s motion as “[tjhere is no question that death as a punishment is unique in its severity and irrevocability.” Gregg v. Georgia, 428 U.S. 153, 187, 96 S.Ct. 2909, 2931, 49 L.Ed.2d 859 (1976) (citing Furman v. Georgia, 408 U.S. 238, 286-91, 92 S.Ct. 2726, 2750-53, 33 L.Ed.2d 346 (1972) (Brennan, J., concurring); id. at 306, 92 S.Ct. at 2760 (Stewart, J. concurring)). The court must be particularly vigilant in a capital case to be sure that every safeguard is observed. Powell v. State of Ala., 287 U.S. 45, 71, 53 S.Ct. 55, 65, 77 L.Ed. 158 (1932).
II.
The government’s certification of this case ■ ■places this court in an extremely tenuous position: That of having to balance the gov- " ernment’s legal right to choose to pursue the ' death penalty against the stringent due process requirements triggered in a capital case. .The court faces several options in considering this motion. We may grant the government’s motion and conduct this trial as a capital case, beginning on the date originally scheduled. Second, we may grant the government’s motion and make this a capital case, but order a continuance so that defense counsel may prepare for trial. Third, we could sever the death penalty defendants from the non-capital defendants, and move forward as scheduled in the non-capital case.
III.
To try this case as a capital one on the scheduled date of November 17, 1997, would violate the most fundamental standards of due process. Our original denial of the government’s motion was based on the impossibility of, within the span of just a few weeks, this court’s finding and appointing learned counsel, and learned counsel’s being able to prepare adequately for trial. 18 U.S.C. § 3005, as amended by Section 60026 of the 1994 Act, provides that the court must assign any person indicted for a capital crime two defense counsel, at least one of whom must be learned in the law applicable to capital eases. See also 21 U.S.C. § 848(q)(4). Local Rule 428 of the District of Puerto Rico also requires that a second attorney be appointed to a capital defendant to join local counsel. At least one of those attorneys must be learned in the law applicable to capital cases and, when applicable, qualified as required by 21 U.S.C. § 848(q)(5) or § 848(q)(6). Local Rule 428.
We reiterate how difficult and lengthy a process it is to appoint learned counsel in Puerto Rico, as the Commonwealth has a constitutional prohibition against the death penalty, 1 L.P.R.A. Const, art. II, § 7, and qualified local learned counsel in this field are not available. Federal defendants in Puerto Rico facing a possible death sentence must always look to the mainland for qualified legal assistance. Finding appropriate counsel requires a protracted and arduous process. We must carefully examine each learned counsel candidate’s record and qualifications. After finding potentially qualified counsel, the court must first confirm that local counsel approves, and then appoint such counsel. Needless to say, this lengthy endeavor cannot be resolved in a few weeks, much less in a few days.
Once appointed, learned counsel must undertake the time-consuming task of trial preparation. Were it possible to wish learned counsel to appear as a genie out of a bottle, he or she could not mount an adequate defense by the November 17 trial date. Counsel must carefully investigate a myriad of facts and legal issues, and will need to examine the specific facts of the case relevant to guilt, as well as the related set of facts and issues bearing on the defendant’s family and personal history. See 18 U.S.C. § 3593; 21 U.S.C. §§ 848(j) and (m). An effective defense will also call upon counsel to examine all mitigating factors, including defendant’s mental, emotional, and psychological makeup, and seek the court’s permission to employ the services of investigators, mental health experts, and mitigation specialists.
On October 24, we stated that no defense counsel could possibly complete these tasks within three weeks. We are not dissuaded from that ruling upon further review. As there was insufficient lead time for defense counsel to prepare for trial several weeks ago, we have no doubt that there is inadequate time to prepare only seven days before trial. To require defense counsel even to attempt to undertake this list of duties only one week before trial would be highly offensive to traditional notions of fair play, and effectively prevent the defendant from having any effective representation whatsoever.
IV.
Neither is severance of the trial an intelligent option in this case. The federal system prefers joint trials of defendants who are indicted together, in order to promote efficiency and “ ‘serve the interests of justice by avoiding the scandal and inequity of inconsistent verdicts,’ ” Zafiro v. United States, 506 U.S. 534, 537, 113 S.Ct. 933, 937, 122 L.Ed.2d 317 (1993) (quoting Richardson v. Marsh, 481 U.S. 200, 210, 107 S.Ct. 1702, 1708, 95 L.Ed.2d 176 (1987)), and allowing a more accurate statement of relative eulpabili ty. Richardson, 481 U.S. at 210,107 S.Ct. at 1708. Overlapping evidence among defendants’ offenses mil weigh the balance in favor of a joint trial. United States v. Sutherland, 929 F.2d 765, 778 (1st Cir.1991) (drug offenses and tax evasion offenses were properly joined for trial'because the likely source of income for which defendant had evaded taxes was drug distribution). Here, defendants participated in the same transaction or series of events constituting an offense. See Fed.R.Crim.P. 8(b). In the absence of any prejudice to the defendants by this joinder, this court must follow closely its obligation to promote efficiency and fairness by not severing the defendants unnecessarily.
V.
It is equally offensive to the notions of due process to grant a continuance at this time. Section 3593 of Title 18 provides that in a case involving a possible sentence of death, the government must file a notice, within “a reasonable time” before trial or a guilty plea, that it intends to seek the death penalty. See 18 U.S.C. § 3593. We have previously noted the absence of case law interpreting section 3593, and again look for guidance to the constitutional jurisprudence surrounding the Sixth Amendment right to a speedy trial.
|
4163899-13916 | ORDER AND OPINION
ROBERT L. PITMAN, District Judge.
Appellant James Corletta appeals the entry of summary judgment in favor of Appellee Texas Higher Education Coordinating Board (“THECB”). For the reasons that follow, the Court affirms the Bankruptcy Court’s grant of summary judgment.
BACKGROUND
The instant appeal concerns whether Corletta’s guaranties of student loans borrowed from the THECB survived his Chapter 7 discharge in 1997. When the THECB filed a state court lawsuit in 2011 to collect on Corletta’s guaranty, Corletta moved to reopen his bankruptcy case, seeking a ruling that this debt was discharged in 1997. The background of this case has been thoroughly discussed by the Bankruptcy Court. What follows is an abbreviated overview of the facts particularly relevant to this appeal.
The THECB is an agency of the State of Texas that administers state-sponsored student loan programs. See Tex. Educ. Code AnN. §§ 52.01 et seq., 61.021; 19 Tex. Admin. Code §§ 21.5Í-21.64. It is authorized by the state legislature to issue and sell general obligation bonds of the state of Texas to fund certain loan programs for Texas residents who pursue higher education within the state. See Tex. Const. art. Ill, § 50b-4-50b-7. One such program is the College Access Loan (“CAL”) Program, which exists to “provide[ ] alternative educational loans to Texas students who are unable to meet the cost of attendance.” College Access Loan (CAL) Fact Sheet, Texas Higher Education Coordinating Board, http://www.hhloans.com/index. cfm?ObjeetID=21A41908-C7D3-A868-66 FB91774CF078CB (last visited May 4, 2015). CAL loans often require co-signers, and like all loan programs administered by the THECB, the co-signer “assumes all Lability for the debt and all fees and expenses associated • with the note.” 19 Tex. Admin. Code § 21.53.
In 1993 and 1994, Corletta co-signed three CAL loan promissory notes for his friend Joan Durbin. Each loan agreement contained the following provision regarding co-signors:
This is a guaranty of payment and not of collection. If for any reasons other than death or permanent and total disability of Borrower, the adjacent Borrower’s [ie., co-signer’s] Promissory Note is not paid promptly when due, I will immediately pay the source to the Lender, and I waive any right I might have to require that any action be brought against the Borrower.
(Adv. Dkt. no. 5, Ex. 2, at 9).
In 1997, Corletta filed for Chapter 7 bankruptcy. (DR No. 5, at 9). Corletta included the $18,383.66 CAL loan debt on both his Schedule F and Schedule H, indicating that the debt was a “Co-Signed Student Loan.” Id. Shortly thereafter, the THECB entered a proof of claim on the CAL debt, stating that “[s]inee guaranteed student loans are not dischargeable except as provided for under Title 11 U.S.C. 523(a)(8), we ask that you determine the dischargeability of this debt.” (DR No. 5, at 10). No further action was taken on the CAL debt, and a few months later the Bankruptcy Court entered an order discharging all of Corletta’s dischargeable debts. (DR No. 5, at 11).
After several attempts to collect the student loan debt from Durbin and Corletta, the CAL loans were declared to be in default in November 2005. Id. In 2011, the THECB filed a state court lawsuit against Corletta to collect under the terms of his payment guaranty. Id. In 2014, Corletta filed a motion to reopen his 1997 bankruptcy case, and the Bankruptcy Court agreed to reopen the case “for the limited purposes of ruling on the limited issue of whether the debt owed to the Texas Higher Education Coordinating Board was discharged” in 1997. (Bankr. Dkt. # 28).
On April 15, 2014, the THECB filed a motion for summary judgment, which the Bankruptcy Court granted on September 8, 2014. (DR No. 28). Corletta now appeals this decision.
STANDARDS OF REVIEW
The Bankruptcy Court’s findings of fact are reviewed for clear error and its conclusions of law de novo. Century Indem. Co. v. NGC Settlement Trust (In re Nat’l Gypsum Co.), 208 F.3d 498, 504 (5th Cir.2000); In the Matter of Coston, 987 F.2d 1096, 1099 (5th Cir.1992). A finding of fact is clearly erroneous when “although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.” Anderson v. City of Bessemer City, 470 U.S. 564, 573, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985) (quoting United States v. United States Gypsum, Co., 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746 (1948)). Additionally, the Bankruptcy Court’s denial of a Rule 56(d) motion to allow additional time for discovery will be reviewed for abuse of discretion. See American Family Life Assur. Co. of Columbus v. Biles, 714 F.3d 887, 894 (5th Cir.2013).
DISCUSSION
Corletta presents thirteen separate issues on appeal. ' (Appellant’s Brief, at 2-3). These issues amount to one central question: did the Bankruptcy Court properly grant summary judgm'ent for the THECB. For clarity, the Court will divide Corletta’s issues into five general questions: (1) whether the Bankruptcy Court erred in determining that Corletta is responsible for the underlying debt, (2) whether the CAL loan debt was dischargeable under 11 U.S.C. § 523(a)(8) in 1997, (3) whether § 523(a)(8) apples to co-signors who are not related to the borrower, (4) whether the Bankruptcy Court improperly evaluated the parties’ summary judgment evidence, and (5) whether the Bankruptcy Court erred by allowing the THECB to file an application for attorney’s fees.
A. Responsibility for the Debt
As a preliminary matter, Corletta argues that he is not responsible for the CAL loans because he did not sign the promissory notes. (Appellant’s Brief, at 45). Rather, Corletta argues that he was the victim of identity theft, or in the alternative, that the loans were not signed by an authorized member of the THECB. Id. These questions, however, are not properly before this Court. The Bankruptcy Court reopened this case “for the limited purposes of ruling on the limited issue of whether the debt owed to the Texas Higher Education Coordinating Board was discharged” in 1997, not to determine whether the debt was valid. (Bankr. Dkt. # 28). Although these questions are currently being litigated in a related state court action, for the purposes of this litigation, Corletta has stipulated that the signatures on the loan application are his and that the debt is valid.
B. Dischargeability Under 11 U.S.C. § 523(a)(8)
During most of the twentieth century, courts generally allowed for the discharge of student loan debts, just like other pre-petition unsecured debts. Richard B. Keeton, Guaranteed to Work or it’s Free!: The Evolution of Student Loan Discharge in Bankruptcy and the Ninth Circuit’s Ruling in Hedlund v. Educational Resources Institute, Inc., 89 AM. Bankr. L. J. 65, 74 (2015). In the mid-1970s, however, a growing concern about student loan discharge abuse led Congress to begin placing restrictions on the ability to discharge student loan debt through bankruptcy. Id. at 74-75. Over the next few decades Congress continued to expand these restrictions, and by 1996, the Bankruptcy Code prevented the discharge of all “educational ... loans made, insured or guaranteed by a governmental unit or nonprofit institution.” 11 U.S.C. § 523(a)(8) (1996).
Corletta’s primary argument in this action is that when he filed for bankruptcy in 1997, the law permitted him to discharge his guaranty of the CAL debt. (Appel lant’s Brief, at 3). The Bankruptcy Court, however, found that the CAL loan was an “educational ... loan[ ] made, insured or guaranteed by a governmental unit,” and as such fell under § 523(a)(8)’s exception to discharge. (DR No. 28, at 15-16 (quoting 11 U.S.C. § 523(a)(8))). On appeal, Corietta disputes (1) that the “educational loans” in § 523(a)(8) refer to loans issued by states, (2) that the THECB is a “governmental unit” under § 523(a)(8), and (3) that the CAL loans were made, insured, or guaranteed by a governmental unit.
1. Are the loans by the state government “educational loans” under 11 U.S.C. § 528(a)(8)?
Corietta first argues that the § 523(a)(8) exemption does not apply because in 1997 “educational loans” only referred to “certain student loan debts guaranteed or insured by the United States.” (Appellant’s Brief, at 14). Since the Bankruptcy Court agreed that the term “educational loan” is not defined in § 523(a) (8), Corietta claims that “the [c]ourt therefore erred in not looking to congressional intent to ascertain the correct,scope of the 1997 statute.” Id. But while it is true that the term “educational loan” was not defined in the statute, a court should only resort to wading through the mire of legislative intent when a statute is ambiguous on its face. Rainbow Gun Club, Inc. v. Denbury Onshore, L.L.C., 760 F.3d 405 (5th Cir.2014). Here, such an endeavor is unnecessary.
Section 523(a)(8), as written in 1997, is not ambiguous regarding whether loans provided by state governments qualify as “educational loans.” First, as the Bankruptcy Court rightly acknowledged, § 523(a)(8) contains no qualification or limitation stating that it only applies to federally funded student loans-something Congress could have easily included had it intended such a limitation. Second, the statute expressly states that it applies to any “loan made, insured, or guaranteed by a governmental unit.” 11 U.S.C. § 523(a)(8) (1997). The Bankruptcy Code defines the term “governmental unit” as the “United States; State; Commonwealth; District; Territory; municipality; foreign state; department, agency, or instrumentality of the United States [...], a State, a Commonwealth, a District, a Territory, a municipality, or a foreign state; or other foreign or domestic government.” 11 U.S.C. § 101(27). Interpretation of the Bankruptcy Code “is a holistic endeavor,” United Savings Association of Texas v. Timbers of Inwood Forest Associates, Ltd., 484 U.S. 365, 371, 108 S.Ct. 626, 98 L.Ed.2d 740 (1988), and as such the only sensible interpretation of § 523(a)(8) is that the loans covered by the statute extend to those made, guaranteed, or insured by the states.
2. Is the THECB a “governmental unit”?
Even if § 523(a)(8) extends to state loan programs, Corietta argues that this statute does not exempt the CAL loans from discharge because the THECB is not a “governmental unit” and therefore, its loans are not exempt.
As previously stated, any “department, agency, or instrumentality of ... a State” is considered a “governmental unit” under the Bankruptcy Code. 11 U.S.C. § 101(27). Despite Corletta’s arguments to the contrary, the THECB clearly falls under this definition. The THECB was created by the Texas State Legislature in the Higher Education Coordinating Act of 1965, later codified as Chapter 61 of the Texas Education Code. Tex. EdugCode § 61.021, et seq. Its powers and responsibilities are specifically delineated by the state legislature. Tex. Educ.Code § 61.021 (“[The THECB] shall perform only the functions which are enumerated in this chapter and which the legislature may assign to it”). And it is authorized to issue and sell general obligation bonds of the state of Texas to fund its loan programs. Tex. Const, art. Ill, § 50b^-50b-7. At the very least, this establishes that the THECB is an “agency, or. instrumentality” of Texas.
Corletta, however, asserts that the THECB fails several court-created tests for determining whether an entity is a governmental unit. For example, Corletta cites In re Kahl, 240 B.R. 524 (Bankr.E.D.Pa.1999)-a case which Corletta characterizes as “on all fours with Appellants’ ease.” (Appellant’s Brief, at 31-32)-for the proposition that the THECB fails the so-called “government unit test.” Id As a preliminary matter, in In re Kahl, the court was considering whether the THECB was a government agency for Eleventh Amendment purposes, not whether it was a governmental unit under the Bankruptcy Code. But even so, the court did find that the THECB was a government agency, and therefore granted the agency immunity under the Eleventh Amendment. So rather than cutting against the Bankruptcy Court’s conclusion, In re Kahl supports it.
Similarly, Corletta argues that the THECB fails the “governmental function test” articulated in TI Federal Credit Union v. DelBonis, 72 F.3d 921 (1st Cir.1995). TI Federal Credit Union involved educational loans provided by the Texas Instruments Federal Credit Union. 72 F.3d 921, at 925. The First Circuit held that in order to demonstrate that federal credit unions are instrumentalities of the United States, they must have “an active relationship with the federal government.” Id. at 931. Corletta argues that since the THECB cannot show “an active relationship with the federal government,” it cannot be a governmental unit under 11 U.S.C. § 101(27). Corletta would be correct if the present suit concerned whether the THECB was an instrumentality of the federal government. But the THECB claims to be an instrumentality of the Texas state government, meaning that it must only show that it has “an active relationship” with the State of Texas. And as the discussion above explains, it clearly does.
3. Are the CAL loans made, insured, or guaranteed by the THECB ?
Corletta next argues that the CAL loans are not insured or guaranteed by the THECB or state of Texas, and thus do not fall under § 523(a)(8)’s exception for “educational ... loans made, insured or guaranteed by a governmental unit.” (Appellant’s Brief, at 30-31). But Corletta does not dispute that the CAL loans were at least made by the THECB. As the Bankruptcy Court correctly noted, the THECB is listed on the promissory notes as the lender, making them the “maker” of the loan under any common definition. (Bankr. Op., at 21). So there is no need to determine whether the THECB guaranteed or insured the loans.
C. Unrelated Cosigners
|
215516-14940 | POPE, Circuit Judge.
In this action C. H. Elle Construction Co. and St. Paul-Mercury Indemnity Co. sought to recover from Western Casualty and Surety Co. by way of contribution or indemnity, a portion of the sums, some $15,317.40, paid by St. Paul in satisfaction of a judgment recovered against Elle and one Horsley, an employee of Elle, by way of damages, for personal injuries suffered in an automobile collision. Horsley was driving a certain Chevrolet truck in and about Elle’s business at the time of the collision. St. Paul had issued to Elle its so-called multiple coverage policy insuring Elle against loss by reason of liability imposed by law for bodily injury and property damage. The policy provided that it should be excess insurance beyond the amount payable under any other policy or policies affording insurance protection to Elle.
The Chevrolet truck was the property of one William S. Gagon. The defendant Western Casualty and Surety Co., here called Western, had issued to Gagon a policy of automobile liability insurance covering property damage and property liability for personal injury with limits with respect to each type of damage of $10,000.
It was alleged by the plaintiffs that Horsley was driving the truck with the consent and permission of Gagon. Western’s policy contained a so-called “omnibus clause” which recited that the word “insured” in the policy “includes the named insured and also includes any person while using the automobile and any person or organization legally responsible for the use thereof, providing the actual use of the automobile is by the named insured or with his permission
Because of Elle’s claim that-Horsley had the permission of Gagon to drive the truck, it was asserted as the basis of the suit below that Western was obligated by its policy to defend the suit and that as between the two insurance companies Western’s liability was primary and St. Paul’s insurance was excess only.
The trial court found that at the time of the collision the truck described in Western’s policy was being driven by Horsley “without the permission, express or implied, of the named insured in said policy, namely, William S. Gagon.” The court therefore concluded that Western’s policy of insurance did not insure Horsley or Elle or either of them. Accordingly, judgment was entered for the defendant Western. This appeal followed.
The facts in the case are not in dispute; they present no problem of credibility of witnesses and the entire case was presented to the court and heard upon the basis of stipulations as to the genuineness of certain documents, replies made to requests for admissions, certain other stipulated facts, and upon four depositions taken before trial and made a part of the record. There was no testimony in open court.
Upon an earlier trial of the case on the same record, the trial court took the view that since Gagon had been made a defendant in the action brought by the injured parties to recover damages arising out of the collision, and since the verdict and the judgment had run in favor of Gagon, such prior judgment was a conclusive determination that Horsley was driving the vehicle without the owner’s permission. Upon appeal from that earlier judgment, this court reversed and ordered a retrial. C. H. Elle Construction Co. v. Western Casualty & Surety Co., 9 Cir., 261 F.2d 533. The retrial resulted in the finding and judgment stated above.
Since the trial court had before it only the depositions referred to, the stipulations and the stipulated documents, it would appear that in reviewing the findings of the trial court we have the same freedom in considering the probative value of the evidence before the court as was recognized in Murphey v. United States, 9 Cir., 179 F.2d 743, 744, and in the other cases there cited. See the discussion in Moore’s Federal Practice, 2d Ed., Vol. 5, Sec. 52.04, p. 2637.
But even though we are not required in this case to give to the findings of the trial court the same deference which we would be obliged to do if they were based upon an evaluation of the credibility of witnesses giving oral testimony in court, yet after a consideration of the evidence, which is nowhere in conflict, we find ourselves in agreement with the findings and conclusions of the court below.
William S. Gagon, owner of the Chevrolet truck, was in the business of selling lumber and operating a lumber yard at Soda Springs, Idaho. The truck was used in the business of operating the lumber yard. It was not a family car. Gagon’s wife, Jessie Gagon, acted as bookkeeper for Gagon but there is no evidence in the record that she ever performed any other duties in or about the lumber yard or had anything to do with its management or the management of the business.
On the 22nd day of August, 1954, Horsley, the employee of Elle, went to Gagon’s place of business for the purpose of borrowing the truck. He was then acting for and on behalf of Elle. It was a Sunday and Gagon was away on a fishing trip. Mrs. Gagon was at her sister’s house. Horsley telephoned Mrs. Gagon and asked to borrow the vehicle and Mrs. Gagon then went to the lumber yard and got the keys for the truck and gave them to Horsley. The lumber yard was closed at the time but Mrs. Gagon opened the gates and Horsley drove the truck out of the yard.
Gagon had never authorized his wife to loan any of the equipment; and she had never loaned the truck or anything else to Horsley before. She had neither express nor implied power to lend the truck. It was upon that date that Horsley had the collision which gave rise to the action mentioned.
Appellants argue that the evidence was sufficient to show that Horsley had an implied permission from Gagon to use the truck, contending that Horsley’s prior use of the truck gave rise to such an implied permission. However, the evidence shows that the only times Horsley had driven the truck was when he had done so pursuant to an express understanding with Gagon. On those occasions Horsley had gone to the lumber yard and purchased merchandise for himself; when Gagon did not have a delivery man to deliver the materials to Horsley, Horsley had arranged to deliver the materials himself with the Gagon truck.
We are of the opinion that the record is wholly inadequate to lay any basis for an inference of an implied authority to Horsley to use the truck because of any course of dealing or prior permission.
It is next contended by the appellant that Western admitted coverage with respect to Horsley’s liability. This contention is based upon a notice of policy which was filed by Western with the Idaho Commissioner of Law Enforcement. This notice gave the date and place of the accident, described the Chevrolet truck, stated that it was operated by Horsley, owned by Gagon, what the automobile limits were, and that the policy was in effect on the date of the accident. The form notice was then filled out as follows: “Does this policy apply to the above owner: Yes (x) No ( ) — Does this policy apply to the above operator: Yes (x) (No ( ).” The appellant contends that in stating that the policy applied to Horsley Western was admitting coverage and hence admitting that Horsley was driving within the terms of the conditions of the policy, namely, with the permission of the owner.
Appellee contends that this report or notice is not admissible in evidence and cannot be used against it because of the provisions of the Idaho Code Section 49-1511 as follows:
“Matters not to be evidenced in civil suits.' — Neither the report required by section 49-1504, the action taken by the commissioner pursuant to this act, the findings, if any, of the commissioner upon which such action is based, nor the security filed as provided in this act shall be referred to in any way, nor be any evidence of the negligence or due care of either party, at the trial of any action at law to recover damages.”
Our analysis of the Idaho statutes referred to in the footnote just preceding convinces us that the report filed by the insurance company was not inadmissible in evidence by virtue of any statutory provisions. But though it was receivable in evidence as an admission of coverage and hence of Horsley’s driving with permission of the owner, we must bear in mind that such admissions, unlike judicial admissions, are not conclusive, When other evidence clearly discloses that the admission is a mistaken one, it should be disregarded in the interest of arrival at the truth and the actual facts. State Farm Mutual Auto. Ins. Co. v. Porter, 9 Cir., 186 F.2d 834, 843, 52 A.L.R.2d 515.
TT . HT; f teStim07 sh°WS a complete lack of permission from Gagon to Horsley and shows conclusively that Mrs. Gagon was wholly without authority to grant such permission.
It is argued, however, that Gagon ratified Mrs. Gagon’s act in granting use of the truck on this occasion by sending a bill to Elle for truck rent on the day in question. What happened was that on October 6, 1954, Gagon made out in his own handwriting a notation of a charge to Elle and Horsley for “truck rent $15.” This charge was entered on the Gagon ledger sheet and a bill for this and other items was sent to Elle and paid by it. It is contended by appellants that thus Gagon ratified the grant of permission made by his wife and that that ratification relates back to the original act of Mrs. Gagon and under the familiar rules of ratification it is the equivalent of prior authority. In making this argument appellants rely upon United Services Automobile Association v. Russom, 5 Cir., 241 F.2d 296.
It is true that in the United Services case there is a brief reference to ratification, but the facts in that case are far different from those present here for ^ rator of the car had been ^ using ^ car for gome time consent of the owner wbo wag trying to fleU it to him. The bagig of that decision is clearly an implied permission based on the conduct of the parties. The case contains no discussion of the probiem which we have here and that is whether the insurance company can be charged with a liability through the retroactive operation of a process of ratification of an authority which was not existent on the date in question.
Clearly enough when this accident occurred Western was in no sense responsible and its policy did not cover the accident or liability arising thereunder for Horsley was operating without permission. The question is whether this status of non-liability may be converted into one of responsibility by Gagon’s later ratification. There might well be a nice question here as to whether the sending of the bill was in fact a ratification. It might well be argued that the bill or the making of the charge was equivocal because whether there was or was not permission Elle could properly be charged with the value of the truck’s use. But passing that point, the question is whether under Idaho law, a third person in the position of this insurance company can be rendered retroactively responsible and its existing position changed by a ratification by Gagon of the original unauthorized act of Mrs. Gagon in dealing with Horsley.
No Idaho cases have been found upon this point and we are therefore left to judge as best we may what the Idaho law may be with respect to the creation of such liability by ratification.
Under this situation we feel impelled to rule that the law of Idaho on this point is in accord with the weight of authority and that the applicable principle is that stated in the early case of Taylor v. Robinson, 1859, 14 Cal. 396, 401, as follows: “Now, although the general rule is that the ratification relates back to the time of the inception of the transaction, and has a complete retroactive efficacy, or as the maxim is, Omnis ratihabitio retrotrahitur — yet, this doctrine is not universally applicable. Thus, if third persons acquire rights, after the act is done and before it has received the sanction of the principal, the ratification cannot operate retrospectively, so as to overreach and defeat those rights.”
In Pape v. Home Ins. Co., 2 Cir., 139 F.2d 231, 233, the plaintiff held a policy of insurance upon cotton which provided for payment in case of loss or damage in Spain caused by “riot”, “civil war”, “civil commotion”, or “military or usurped power”. The policy further provided that it did not cover loss resulting from “confiscation or authorized destruction by duly constituted government or civil authorities”. Plaintiff’s cotton was seized during the Spanish Civil War by a labor committee, “a body without official standing”. Plaintiff asserted right to recover under this policy because of this seizure and concededly a cause of action then arose on his behalf. Thereafter the then established government took charge of the cotton and it was asserted “thereby ratified the seizure by the unofficial labor committee.” The insurance company claimed that through this ratification the seizure became one of confiscation by a duly constituted governmental authority. The court said that assuming that a ratification had been made or attempted yet the court’s decision was that it would (139 F.2d at page 235): “* * * rest our conclusion only upon the well settled rule that ratification does not date back to destroy intervening rights of third persons or otherwise to achieve an inequitable result.” The court cited the Restatement of the Law of Agency and other cases.
Professor Mechem in his work on Agency, Section 486, expounds this same principle and states the reason therefor concluding that “The intervening rights of third persons cannot be defeated by the ratification”. He states: “Nor will the principal by ratifying be permitted to impose substantial duties or obligations upon third persons which would not exist if ratification had not taken place.”
In the following section 487, he says: “The doctrine of the preceding section has also been applied, in a number of eases, to prevent the loss by third persons, through the principal’s ratification, of existing defenses against liability, conditions affecting liability, rights to escape liability, and the like.” Referring to Johnson v. North British & Mercantile Ins. Co., 66 Ohio St. 6, 63 N.E. 610, a case very closely resembling the facts before us, Professor Mechem uses it as an example in the following language: “Thus, for example, where an agent has obtained a policy of insurance for his principal, and later, without the authority or knowledge of the principal, has assumed to surrender that policy and take another in its place, — the latter containing the usual provision that it should be void in case of undisclosed prior insurance — it has been held that, after a loss has occurred before the principal has consented to the surrender of the first policy, the principal cannot by the ratification of such surrender deprive the second company of its right to make the defense of other insurance.”
|
5411166-28611 | Opinion for the Court filed by Circuit Judge SENTELLE.
SENTELLE, Circuit Judge.
Judicial Watch filed an action in the District Court for the District of Columbia, seeking enforcement of its Freedom of Information Act (“FOIA”) request for all documents related to the Food and Drug Administration’s (“FDA”) approval of the drug mifepristone. It now appeals from the District Court’s grant of summary judgment in favor of the FDA. Although we affirm the District Court’s decision in a number of respects, because the FDA produced an inadequately detailed Vaughn index, we remand for further explanation of some of the index’s entries.
I. Background
In September 2000, the FDA approved the drug mifepristone, better known as RU-486, for “medical abortion” during the first 49 days of pregnancy. Shortly thereafter, Judicial Watch submitted a FOIA request seeking all mifepristone-related documents in the FDA’s possession. A few months later, having not received any documents, Judicial Watch sought to enforce its request in the District Court. The FDA requested a stay, which the District Court granted. The District Court ordered the FDA to produce all responsive documents by October 15, 2001.
After searching about 250,000 pages of information, the FDA disclosed over 9,000 relevant pages to Judicial Watch on a compact disc. It withheld over 4,000 other relevant documents in their entirety and parts of almost 2,000 more. The FDA compiled and produced a 1,500-page Vaughn index to summarize the withhold-ings. See Vaughn v. Rosen, 484 F.2d 820 (D.C.Cir.1973). In addition to its Vaughn index, the FDA filed a supporting declaration by Andrea Masciale, who supervised the FDA’s search and review of documents for Judicial Watch’s FOIA request. The Masciale declaration described the types of withheld information and defended the application of FOIA Exemptions 3, 4, 5, and 6 to that information. Danco Laboratories and Population Council — mifepristone’s creator and manufacturer, respectively— intervened in the suit and filed two additional affidavits. The intervenors’ affidavits supported the FDA’s reasons for using Exemptions 4 and 6 to withhold information submitted to it during mifepristone’s approval.
The FDA moved for summary judgment. Judicial Watch opposed the motion claiming the FDA performed an inadequate search, filed an inadequately detailed Vaughn index, and invoked several FOIA exemptions improperly. The District Court granted summary judgment for the FDA as to all matters. Judicial Watch now appeals the District Court’s judgment as to the adequacy of the FDA’s Vaughn index and the exemptions. We review de novo the District Court’s grant of summary judgment. Chappell-Johnson v. Powell, 440 F.3d 484, 487 (D.C.Cir.2006).
II. Adequacy of the Vaughn Index
Judicial Watch primarily argues that the FDA has produced an inadequately detailed Vaughn index. In this section, we consider — and reject — the challenge in its broadest sense, as a facial attack on the structure of the Vaughn index. Although we find nothing structurally wrong with the FDA’s submission, we find merit in the narrower part of Judicial Watch’s adequacy argument, specifically that the FDA has vaguely described some individual documents. We defer discussion of the vagueness inquiries until Section III and its subsections dealing with each individual FOIA exemption at issue.
We also note at the outset that at oral argument Judicial Watch appeared to concede the untenable position of its challenge to the adequacy of detail regarding documents only partially withheld. The FDA argued — and we agree — that the released portion of each document satisfied its Vaughn burden by supplementing the corresponding Vaughn index entries. The released content of the documents served to illuminate the nature of the redacted material, often limited to names or addresses. Therefore, we find that the Vaughn index adequately described the partially withheld documents. As with the vagueness questions, we reserve until Section III our discussion of the merits of the FDA’s decision to redact certain documents.
A. Functions of the Vaughn Index Requirement
Because of its unique evidentiary configuration, the typical FOIA case “distorts the traditional adversary nature of our legal system’s form of dispute resolution.” King v. U.S. Dep’t of Justice, 830 F.2d 210, 218 (D.C.Cir.1987) (quoting Vaughn, 484 F.2d at 824). When a party submits a FOIA request, it faces an “asymmetrical distribution of knowledge” where the agency alone possesses, reviews, discloses, and withholds the subject matter of the request. Id. The agency would therefore have a nearly impregnable defensive position save for the fact that the statute places the burden “on the agency to sustain its action.” 5 U.S.C. § 552(a)(4)(B); see also Coastal States Gas Corp. v. Dep’t of Energy, 617 F.2d 854, 861 (D.C.Cir.1980) (“[T]he burden is on [the agency] to establish [its] right to withhold information from the public.”).
Possessing both the burden of proof and all the evidence, the agency has the difficult obligation to justify its actions without compromising its original withholdings by disclosing too much information. The Vaughn index provides a way for the defending agency to do just that. By allowing the agency to provide descriptions of withheld documents, the index gives the court and the challenging party a measure of access without exposing the withheld information. The Vaughn index thereby also serves three important functions that help restore a healthy adversarial process:
[I]t forces the government to analyze carefully any material withheld, it enables the trial court to fulfill its duty of ruling on the applicability of the exemption, and it enables the adversary system to operate by giving the requester as much information as possible, on the basis of which he can present his case to the trial court.
Keys v. U.S. Dep’t of Justice, 830 F.2d 337, 349 (D.C.Cir.1987) (internal quotation marks and citation omitted).
As past cases demonstrate, we focus on the functions of the Vaughn index, not the length of the document descriptions, as the touchstone of our analysis. See, e.g., Tax Analysts v. IRS, 410 F.3d 715, 719-20 (D.C.Cir.2005) (approving of Vaughn index with short descriptions because a combination of declarations and in camera review provided sufficient information for the court to review the claimed exemptions); Coastal States Gas, 617 F.2d at 861 (finding index with short descriptions inadequate because the supporting affidavits made “conclusory assertions of privilege”). Indeed, an agency may even submit other measures in combination with or in lieu of the index itself. Keys, 830 F.2d at 349 (“[I]t is the function, not the form, of the index that is important.”). Among other things, the agency may submit supporting affidavits or seek in camera review of some or all of the documents “so long as they give the reviewing court a reasonable basis to evaluate the claim of privilege.” Gallant v. NLRB, 26 F.3d 168, 172-73 (D.C.Cir.1994) (internal quotation marks and citation omitted). Any measure will adequately aid a court if it “provide[s] a relatively detailed justification, specifically identifies] the reasons why a particular exemption is relevant and correlates] those claims with the particular part of a withheld document to which they apply.” Mead Data Cent., Inc. v. U.S. Dep’t of Air Force, 566 F.2d 242, 251 (D.C.Cir.1977).
B. The Structure of the FDA’s Index
In this case, the FDA took a combined approach. In response to Judicial Watch’s FOIA request, it produced a 1,500-page Vaughn index and supplemented the index with the supporting declaration of Andrea Masciale. The index itself includes eleven categories, consisting of the following: (1) an index identification number; (2) the document’s subject; (3) its date; (4) the author; (5) the recipient; (6) the total number of pages; (7) a category entitled “Attach Page”; (8) the disposition (that is, whether entirely or partially withheld); (9) the reason for being withheld; (10) the statutory authority for the withholding; and (11) the number of pages containing withheld information. Whereas the index takes a document-specific approach, the Masciale declaration steps through the claimed exemptions. It avoids discussion of individual documents, instead describing the kinds of information withheld and how they relate to the exemptions. The inter-venors filed two additional affidavits. Each covers issues specific to the documents submitted to the FDA during mi-fepristone’s approval process, including matters ranging from competition in the abortion market to confidentiality issues.
Judicial Watch argues that the FDA’s index/affidavit combination fails because it does not treat each document individually. Context dictates our approach to the particularity required of agencies. An agency may not claim exemptions too broadly, thereby sweeping unprotected information within the statute’s reach. Mays v. DEA, 234 F.3d 1324, 1328 (D.C.Cir.2000) (rejecting withholding of all documents containing “investigative details” because Exemption 7 does not automatically protect such details). Broad, sweeping claims of privilege without reference to the withheld documents would impede judicial review and undermine the functions served by the Vaughn index requirement. The agency must therefore explain why the exemption applies to the document or type of document withheld and may not ignore the contents of the withheld documents. Campbell v. U.S. Dep’t of Justice, 164 F.3d 20, 30-31 (D.C.Cir.1998) (disapproving submission that had no “language suggesting that the [agency] tailored its response to a specific set of documents”).
On the other hand, abstraction can aid court review when drawing from specific examples. We have never required repetitive, detailed explanations for each piece of withheld information — that is, codes and categories may be sufficiently particularized to carry the agency’s burden of proof. See Keys, 830 F.2d at 349-50. Especially where the agency has disclosed and withheld a large number of documents, categorization and repetition provide efficient vehicles by which a court can review with-holdings that implicate the same exemption for similar reasons. In such cases, particularity may actually impede court review and undermine the functions served by a Vaughn index.
Seizing on the distinction between these two approaches, Judicial Watch asserts that the FDA claimed exemptions only in sweeping and conclusory generalities. We disagree. The FDA explained itself through commonalities, not generalities. Unsurprisingly, among thousands of withheld documents, certain topics and exemptions arose on multiple occasions. The index tied each individual document to one or more exemptions, and the Masciale declaration linked the substance of each exemption to the documents’ common elements. No rule of law precludes the FDA from treating common documents commonly. The FDA’s index/affidavit combination does not resemble the general assertions of privilege that we have rejected in the past.
And we do not fault the FDA for using the language of the statute as part of its explanation for withholding documents. As long as it links the statutory language to the withheld documents, the agency may even “parrot[]” the language of the statute. Landmark Legal Found, v. IRS, 267 F.3d 1132, 1138 (D.C.Cir.2001). There are only so many ways the FDA could have claimed Exemptions 4, 5, and 6 for the thousands of documents generated during mifepristone’s approval. See id. (“It is not the agency’s fault that thou sands of documents belonged in the same category, thus leading to exhaustive repetition.”). Again, our focus is on the functions served by the Vaughn index: to organize the withheld documents in a way that facilitates litigant challenges and court review of the agency’s withholdings. See Keys, 830 F.2d at 349. The FDA’s decision to tie each document to one or more claimed exemptions in its index and then summarize the commonalities of the documents in a supporting affidavit is a legitimate way of serving those functions.
III. The Claimed Exemptions: Vagueness and Merits Challenges
Our holding that the FDA produced a structurally sound Vaughn index does not address the entirety of Judicial Watch’s challenge to the adequacy of the index. Judicial Watch also argues that many of the index’s document descriptions are indecipherable or lack information relevant to its merits claim. It further challenges the merits of the FDA’s use of Exemptions 4, 5, and 6. Judicial Watch does not challenge the FDA’s withholdings pursuant to FOIA Exemption 3. 5 U.S.C. § 552(b)(3).
A. Exemption k
Exemption 4 allows agencies to withhold documents containing matters that are “trade secrets and commercial or financial information obtained from a person and privileged or confidential.” 5 U.S.C. § 552(b)(4). Unlike many other types of information subject to an agency’s control, materials implicating Exemption 4 are generally not developed within the agency. Instead, it must procure commercial information from third parties, either by requirement or by request. The agency thus has an incentive to be a good steward of that information: Disclosure could result in competitive disadvantages to the submitting entity, discouraging them from giving quality information in the future. Critical Mass Energy Project v. NRC, 975 F.2d 871, 877-78 (D.C.Cir.1992) (quoting Nat’l Parks & Conservation Ass’n v. Morton, 498 F.2d 765, 766-70 (D.C.Cir.1974)). The agency may therefore withhold involuntarily submitted information as confidential if disclosure would (1) impair the agency’s ability to get information in the future or (2) cause substantial competitive harm to the entity that submitted the information. Id. at 878 (citing Nat’l Parks, 498 F.2d at 770).
The same incentive applies to the FDA approval process. The FDA requires applying companies to submit volumes of information related to a drug’s development, composition, safety, and manufacture. 21 U.S.C. § 355(b)(1). A company must submit this information in an Investigational New Drug application (“IND”) even prior to conducting clinical trials of a drug. 21 C.F.R. pt. 312. All the information from the IND also goes into the company’s New Drug Application (“NDA”), the formal application for sale and marketing approval from the FDA. 21 C.F.R. pt. 314. Each stage of the FDA’s administrative processes therefore depends directly on submissions from outside the agency.
The submission-dependent nature of the approval process means Exemption 4 extends to at least some information contained in INDs and NDAs. If it did not, other companies “could make use of the information in the INDs in order to eliminate much of the time and effort that would otherwise be required to bring to market a product competitive with the product for which” the submitting company filed the IND. Pub. Citizen Health Research Group v. FDA, 185 F.3d 898, 905 (D.C.Cir.1999). Similarly, “[i]f a manufacturer’s competitor could obtain all the data in the manufacturer’s NDA, it could utilize them in its own NDA without incurring the time, labor, risk, and expense involved in developing them independently.” Webb v. HHS, 696 F.2d 101, 103 (D.C.Cir.1982). Applicants spend a great deal of resources to obtain data for an IND or NDA, and the FDA could not expect full and frank disclosure if it later released such proprietary information into the public domain.
Exemption 4 does not categorically exempt all information in INDs and NDAs, however, and the FOIA requester must have adequate descriptions in order to distinguish between protected and unprotected information. See Pub. Citizen, 185 F.3d at 906. Judicial Watch argues that the index contains many entries— such as document 3021 (“study 88/739/cn”) and document 3023 (“study f/85/486/40”) — • with descriptions too vague to allow it to mount a merits challenge to the FDA’s Exemption 4 claims. Its brief is littered with other entries of which it can make neither heads nor tails, including Documents 1787 and 1788 (“table — main lab temp”) and Document 3331 (“references 89/11450gn”).
The FDA argues that each index entry must be considered in relation to surrounding entries and to the additional information listed in the index. Specifically, the FDA contends that the index clearly relates Document 3331 (“references 89/11450gn”) with Document 3325 (“preclinical expert evaluation of ru38 486— cover pages — 89/11450gn”) and several other nearby documents, including Document 3326 (“table of contents 89/11450gn”). We agree that Document 3325 gives enough description to explain the contents — that is, a preclinical expert evaluation — of all 89/11450gn-related documents.
Other entries defy the FDA’s claim of definition by association, though. For example, Documents 1787 and 1788 (“table— main lab temp”) appear to be freestanding documents. In its brief, the FDA asserts that the description makes “apparent that these records were collected during an FDA inspection of a drug manufacturing facility.” We disagree. In no way do these subject headings, or any other index information, connect these documents to an FDA inspection or to any particular manufacturing facility. Neither does the Masciale declaration. Although it lists “information relating to the manufacturing process” as one type of information redacted under Exemption 4, it never explains that these documents fall into that category.
The same problems infect additional entries. For instance, the FDA labeled Document 2567 as “report re: protocols eh/ 88/486/26, ffr/88/486/03.” Surrounding entries look similar, albeit with different reference numbers, and each refers to a document of several hundred pages. In its brief, the FDA characterizes two similar entries — Documents 3021 (“study 88/739/ cn”) and 3023 (“study f/85/486/40”) — as “reference identification numbers” for “clinical or preclinical studies relating to the drug mifepristone.” The agency added that it withheld the study titles themselves because they “constituted confidential commercial information relating to unapproved uses.” Presumably, the same holds true for Document 2567, but we cannot tell without the FDA’s further explanation. The document descriptions themselves shed little light individually, and surrounding entries do not help.
Documents 1902 through 1924 (“subject records”) also raise questions. At oral argument, the FDA’s counsel suggested that these entries may describe personal records of test subjects, which would explain the agency’s reliance on Exemption 6 and personal privacy in addition to Exemption 4. Outside of counsel’s post hoc explanation, though, the entries remain sufficiently ambiguous to warrant further inquiry. Where the document description only vaguely indicates the information contained therein, the use of multiple exemptions for some documents adds to the confusion about which withheld information fits with which exemption.
The FDA asserts that its affidavit, along with those of the intervenors, makes up for any deficiency in its document descriptions. We agree that the three affidavits do a number of positive things. They show that the documents containing information from INDs or NDAs likely include either trade secrets or commercial information that would be valuable to competitors. They provide evidence, sufficient to satisfy the requirements of Exemption 4, of competitive harm in the medical abortion market that would result from the release of information in the IND. Finally, they also provide sufficient evidence to satisfy Exemption 4 of actual competition in markets for nonapproved uses of mifep-ristone, including cancer treatment. However persuasive, though, each of these points goes to the merits and does little to flesh out the vague document descriptions. Proving the merits of the exemption does no good if the court cannot tie the affidavits to the documents.
It is no surprise that the FDA labeled many index entries with scientific codes, lab jargon, or other identifications specific to the agency. But the FDA may not create its own cryptolect, unknown to the challenger and the court. Without a glossary or technical dictionary, any lay person would be hard pressed to understand the series of numbers and letters given as descriptions in this index. Although the FDA’s brief gives additional explanation for the examples raised by Judicial Watch, countless others in the 1,500-page index remain impenetrable for persons outside the FDA.
By using this shorthand, the FDA missed sight of the Vaughn index’s purpose — to enable the court and the opposing party to understand the withheld information in order to address the merits of the claimed exemptions. Scientific lingo and administrative slang, when unfamiliar, often baffle the brightest among us. To prevent confusion and aid resolution of this case, the FDA should have endeavored to make its technical world appear a little less foreign — and its shorthand a little less short — to Judicial Watch and the court. This is not to say that the FDA could not demonstrate that it properly claimed Exemption 4 as to these documents. Rather, the FDA “has failed to supply us with even the minimal information necessary to make a determination.” Coastal States Gas, 617 F.2d at 861. We accordingly remand the case for further explanation of these technical descriptions.
Judicial Watch also challenges the FDA’s decision to withhold the names and addresses of Population Council’s business partners under Exemption 4. We decline to address the challenge because, as discussed below, we hold that the FDA properly claimed Exemption 6 for the same information.
B. Exemption 5
Exemption 5 permits agencies to withhold “inter-agency or intra-agency memorandums or letters which would not be available by law to a party other than an agency in litigation with the agency.” 5 U.S.C. § 552(b)(5). Such “memorandums or letters” include those protected by the attorney-client privilege and the deliberative process privilege. Coastal States Gas, 617 F.2d at 862. The FDA relied on both privileges but has since released all documents initially withheld under the attorney-client privilege. Accordingly, we only address the question of deliberative process privilege, which Judicial Watch challenges on both adequacy grounds and the merits.
The deliberative process privilege protects agency documents that are both predecisional and deliberative. Id. at 866. We deem a document predecisional if “it was generated before the adoption of an agency policy” and deliberative if “it reflects the give-and-take of the consultative process.” Id. (emphasis omitted). Judicial Watch contends that the FDA has not demonstrated the predecisional nature of documents without dates or with dates coming after the agency approved mifepristone. The entries without dates, it argues, can never prove that a document came before the agency’s decision at issue. The entries with later dates, it contends, are by definition postdecisional.
? we have previously approved the application of the deliberative process privilege for an “undated note,” we cannot adopt Judicial Watch’s proposed categorical rule on undated entries. Krikorian v. Dep’t of State, 984 F.2d 461, 466 (D.C.Cir.1993). Dates are but one way to illustrate a chronology, and the FDA may have other ways to prove that the undated documents were indeed predecisional. As an example, the FDA asserts that Documents 1645 and 1646, though undated, are predecisional because they concern mifepristone’s IND, filed far in advance of the NDA and the FDA’s subsequent approval of the NDA. Other undated documents in the index do not have the benefit of the FDA’s explanation, though. We therefore remand so that the FDA may provide more information, including dates for documents that lack them or explanations where dates cannot be found.
Likewise, documents dated after mifepristone’s approval for abortion may still be predecisional and deliberative with respect to other, nonfinal agency policies, including uses of the drug that the agency has not approved. A contrary rule would undermine the privilege’s purpose to encourage “honest and frank communication within the agency” without fear of public disclosure. Coastal States Gas, 617 F.2d at 866; see also Mead Data Cent., 566 F.2d at 256 (“[T]he quality of administrative decision-making would be seriously undermined if agencies were forced to ‘operate in a fishbowl’ because the full and frank exchange of ideas on legal or policy matters would be impossible.”). The intervenors’ affidavits affirm that the companies continue to pursue other avenues of medical uses for the drug and may later seek FDA approval, which would require further final action by the agency.
The FDA admits, though, that some of the postdated documents have nothing to do with unapproved uses but instead relate to other administrative decisions, including replies to correspondence. The FDA’s failure to provide an adequate explanation prevents us from determining whether every piece of correspondence after a policy is decided constitutes a new final agency action of its own. It may be that reflections on an already-decided policy are neither predecisional nor indicative of the deliberative process of the government. After all, “Exemption five is intended to protect the deliberative process of government and not just deliberative material.” Mead Data Cent., 566 F.2d at 256 (citation omitted). On remand, the FDA must provide additional information regarding these postdated documents and the agency policies they predate and deliberate over.
Judicial Watch also challenges many Exemption 5 entries as vague, including the FDA’s use of otherwise commonly understood words and phrases that it claims shed no light on the documents. For example, Judicial Watch highlights such nontechnical entries as Document 662 (“draft internal q & a”), Document 2377 (“fda form w/attach”), and Document 3222 (“fax re: listing w/attach”). The FDA counters that anyone can understand these descriptions, including “q & a,” the common shorthand for “questions and answers.” Furthermore, the agency argues that many entries labeled “draft” that were transmitted between FDA employees clearly implicate the “deliberative process privilege” by their very nature.
We conclude, however, that these entries suffer from vagueness defects different in kind than those discussed in the section on Exemption 4. These descriptions pose no problems of technical knowledge, but neither do they describe the withheld information. The word “fax,” though commonly understood, tells the court little about the deliberative nature of the information contained in the document in question. Likewise, the term “q & a” says nothing about the information conveyed in the questions and answers.
Certainly, the label “draft” goes to the merits of Exemption 5’s predecisional and deliberative elements, and the court may take notice that a document passed between two FDA employees and had a date prior to the FDA’s approval of mifepri-stone. Coastal States Gas, 617 F.2d at 866 (stating Exemption 5 protects “draft documents”). The FDA did not label all Exemption 5 entries as drafts, however, and we must bear in mind “the strong policy of the FOIA that the public is entitled to know what its government is doing and why.” Id at 868. Terms like “fax” and “q & a” standing alone give the court no way to determine whether the withheld information is of a deliberative nature. Accordingly, on remand the FDA must provide more informative descriptions of these commonly understood documents in addition to the less understood coding of many Exemption 4 entries.
C. Exemption 6
Finally, Exemption 6 allows agencies to withhold “personnel and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.” 5 U.S.C. § 552(b)(6). Citing Exemption 6 for many partially withheld documents, the FDA redacted the names of agency personnel and private individuals and companies who worked on the approval of mifepristone. In addition, it redacted the street addresses of the intervenors and all business partners associated with the manufacturing of the drug. Judicial Watch argues that the FDA cannot claim this exemption for these names and addresses because they are not in files “about an individual.” The case law, however, does not support Judicial Watch’s crabbed reading of the statute.
|
4029793-23982 | BAUER, Circuit Judge.
This case comes to us as a direct appeal from the Eastern District of Wisconsin’s decision to affirm findings of the United States Bankruptcy Court for the Eastern District of Wisconsin. The courts below found: (1) that a $3,000 student loan which Dustin Busson-Sokolik received from the Milwaukee School of Engineering (“MSOE”) in 1999 was a non-dischargeable debt under the United States Bankruptcy Code, and (2) that the school was entitled to collection costs and attorney’s fees in connection with the bankruptcy proceedings pursuant to the promissory note for the loan signed by Busson-Sokolik. The district court also: (1) denied a motion for sanctions against the school, and (2)im-posed sanctions against Busson-Sokolik and his attorney, Chomi Prag. Busson-Sokolik and Prag appeal each of these determinations. After reviewing the district court’s application of the Bankruptcy Code de novo and the underlying factual findings in the case for clear error, we affirm. As to the district court’s imposition of sanctions against Busson-Sokolik and Prag, while we do not find any abuse of discretion in the court’s decision to impose sanctions in this case, we do find the amount of the sanctions assessed to be excessive and therefore hold that the sanctions be reduced by half.
I. BACKGROUND
Busson-Sokolik was a student at MSOE from September 1999 until May 2000. On October 29, 1999, Busson-Sokolik signed a promissory note with MSOE in the amount of $3,000, agreeing in relevant part as follows:
I promise to pay the school, or a subsequent holder of the Promissory Note, the sum of amount(s) advanced to me under the terms of this Note, plus interest and other fees which may become due as provided in this Note. I promise to pay all reasonable collection costs, including attorney fees and other charges, necessary for the collection of any amount not paid when due ... My signature certifies I have read, understand, and agree to the terms and conditions of this Promissory Note.
MSOE sued Busson-Sokolik in a Racine County, Wisconsin state court in April 2005 to recover unpaid sums under the loan agreement and obtained a default judgment of $5,909.63. In June 2005, Bus-son-Sokolik initiated a Chapter 13 bankruptcy proceeding, which was later converted to a Chapter 7 proceeding, in May 2006. On his bankruptcy petition, he listed MSOE as a creditor. In August 2006, Busson-Sokolik filed an adversary complaint against MSOE to determine the dischargeability of his debt to MSOE. The bankruptcy court found that the debt was non-dischargeable and found that Busson-Sokolik owed MSOE $16,248.78, an amount that included costs and attorney’s fees.
Busson-Sokolik appealed the bankruptcy court’s decision to the district court. Lengthy delays in filing ensued and a series of motions alleging misconduct on both sides were filed. Busson-Sokolik filed a motion for sanctions under Fed. R. Bankr.P. 9011 based on alleged false statements in MSOE’s brief and MSOE moved to strike portions of Busson-Sokolik’s reply brief, claiming that it contained arguments that were never raised in the opening brief or in the bankruptcy court. MSOE also moved for costs and fees under Fed. R. Bankr.P. 8020, which permits recovery of such costs and fees when a party has filed a frivolous appeal.
The district court judge denied Busson-Sokolik’s motion for sanctions, but granted MSOE’s motion for costs and fees under Fed. R. Bankr.P. 8020, finding that Bus-son-Sokolik’s appeal was frivolous. He also granted MSOE’s motion to strike arguments in Busson-Sokolik’s reply brief not previously raised, finding those arguments waived. Finally, he affirmed the bankruptcy court’s judgment and awarded $80,290.15 to MSOE, specifying that Bus-son-Sokolik and his attorney were jointly and severally liable for $61,942.50 of the judgment, and that Busson-Sokolik was solely liable for the remaining $18,347.65.
Busson-Sokolik and attorney Prag have timely appealed to this court.
II. DISCUSSION
A. The Dischargeability of Busson-Sokolik’s Loan from the Milwaukee School of Engineering
A key issue is whether the MSOE loan constitutes a non-dischargeable debt under 11 U.S.C. § 523(a)(8). We review questions of law pertaining to the Bankruptcy Code de novo and the factual determinations underlying the lower courts’ conclusions for clear error. See Wiese v. Cmty. Bank of Cent. Wis., 552 F.3d 584, 588 (7th Cir.2009); Mungo v. Taylor, 355 F.3d 969, 974 (7th Cir.2004).
Section 523(a)(8) creates exceptions to the general discharge of a debtor’s financial obligations in bankruptcy under 11 U.S.C. § 727. Under § 523(a)(8)(A), an individual debtor is not discharged from a debt for “(i) 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 (ii) an obligation to repay funds received as an educational benefit, scholarship or stipend,” unless excepting such debt from discharge would impose undue hardship on the debtor and the debtor’s dependents. The bankruptcy court and the district court each found that the MSOE loan was non-dischargeable under § 523(a)(8)(A). We agree.
We note at the outset the parties’ failure to explicitly identify whether the applicable framework for the court’s analysis should be § 523(a)(8)(A)® or (ii). Though the parties refer to § 523(a)(8)(A) generally, the analysis below and in the parties’ briefing before this court tracks § 523(a)(8)(A)®. So, section 523(a)(8)(A)® will be our framework.
It is undisputed that MSOE is a § 501(c)(3) non-profit institution. While it seems clear to us that the funds were furnished as part of a loan program, Bus-son-Sokolik disputes that the funds transferred constituted a loan. We do not find his argument compelling. For there to be a loan, there must be “(i) a contract, whereby (ii) one party transfers a defined quantity of money, goods or services, to another, and (iii) the other party agrees to pay for the sum or items transferred at a later date.” In re Chambers, 348 F.3d 650, 657 (7th Cir.2003). The October 1999 promissory note evinces a contract for the transfer of $3,000 to be repaid at a later date. Since the Bankruptcy Court made a reliable factual finding that the $3,000 was transferred to Busson-Sokolik’s student account on November 9, 1999, each of the three elements of a loan are present.
Busson-Sokolik next challenges whether the loan can properly be considered “educational,” as required to bring the loan within § 523(a)(8)(A). While some courts look to the use of the funds received to determine whether a loan is educational, we adopt the approach taken by the Fifth Circuit in In re Murphy, 282 F.3d 868 (5th Cir.2002). In so doing, we hold that it is the purpose of a loan which determines whether it is “educational.” This approach seems most consistent with the language of § 523(a)(8)(A). It also aligns with the broader goal of protecting lenders against debtors who divert educational funds toward other uses. In our view, adopting a “use” test would be problematic. Such a test would enable students who abuse funds intended for their education to receive the benefit of a discharge, while those who use the loan proceeds as intended would “retain the burden of paying them even after a chapter 7 discharge.” Murphy, 282 F.3d at 873. The “purpose” test avoids this potential problem by refocusing the inquiry on the nature and character of the loan. For example, rather than trying to determine whether a computer purchased with loan money was used for schoolwork, personal use or some combination of both, we need only ask whether the lender’s agreement with the borrower was predicated on the borrower being a student who needed financial support to get through school.
We find the following facts established below relevant to our inquiry into the purpose of the MSOE loan: (1) MSOE is a school; (2) the loan was part of a package that included scholarship and grant money toward completion of Busson-Sokolik’s education at MSOE; (3) the promissory note for the loan was signed while Busson-Sokolik was a student at MSOE; (4) Bus-son-Sokolik had to be a student to be eligible for the loan he received from MSOE; and (5) the MSOE loan money was deposited into Busson-Sokolik’s student account at MSOE, an account he presumably would not have had if he were not a student. Together these facts establish that the loan was part of a program specifically designed by the school to provide financial support to students working to complete their education. Under the purpose driven test this court has adopted, there is no question that the loan was educational. As a result, we affirm the finding that 11 U.S.C. § 523(a)(8) bars Busson-Sokolik from discharging his debt to MSOE in bankruptcy because the debt resulted from an educational loan.
B. The Imposition of Collection Costs and Attorney’s Fees
We now turn to Busson-Sokolik’s argument that the bankruptcy court improperly allowed MSOE to recover costs and attorney’s fees in this case.
Under the “American Rule,” a litigant who prevails in a lawsuit is not ordinarily allowed to collect attorney’s fees from the losing side. See Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 247, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975). However, this rule can be overcome by statute or by an enforceable contract with a provision regarding the allocation of attorney’s fees. See Travelers Cas. and Sur. Co. of America v. Pacific Gas and Elec. Co., 549 U.S. 443, 448, 127 S.Ct. 1199, 167 L.Ed.2d 178 (2007).
Busson-Sokolik is correct that there was no statutory basis for an award of attorney’s fees during the bankruptcy proceedings. However, the basis for the bankruptcy court’s award of fees was contractual, not statutory. Under the promissory note for the MSOE loan, Busson-Sokolik agreed in writing to pay “all reasonable collection costs, including attorney’s fees and other charges, necessary for the collection of any amount not paid when due.” The bankruptcy court found a valid contract existed between the parties that allowed MSOE to recover its fees based on the above-referenced language in the promissory note. This was not error. As the Supreme Court held in the Travelers case, “it remains true that an otherwise enforceable contract allocating attorney’s fees (i.e. one that is enforceable under substantive, nonbankruptcy law) is allowable in bankruptcy except where the Bankruptcy Code provides otherwise.” Travelers, 549 U.S. at 448, 127 S.Ct. 1199. The fact that the fees were incurred litigating a bankruptcy case does not disallow MSOE’s contract based claim for attorney’s fees under Travelers. Since the promissory note was an enforceable contract, the fees were separately recoverable under the substantive law of contracts. Furthermore, Busson-Sokolik has not argued that any portion of the Bankruptcy Code specifically prohibits a court from awarding such fees under a contract theory. Finding no applicable exception in the Bankruptcy Code and no barrier to formation of a valid contract between MSOE and Busson-Sokolik, we affirm the award of costs and attorney’s fees to MSOE pursuant to the terms of the promissory note.
In concluding our discussion of Busson-Sokolik’s claim that fees were im properly awarded, we note his argument that the district court erred in striking portions of his reply brief that related to the merger doctrine. The district court found that Busson-Sokolik failed to raise the merger doctrine in his initial brief at the district court level. Chief Judge Clevert therefore held that Busson-Sokolik had waived any argument that the fee award was improper based on the merger doctrine. We agree with the district court that the merger issues were waived and decline to apply an exception to waiver for the reasons set forth below.
Waiver occurs when an appellant attempts to raise an issue on appeal that was not adequately raised below. This court has held that when an issue was not raised in the bankruptcy court, a finding that the issue is waived at the district court level is “the correct result, since to find otherwise would permit a litigant simply to bypass the bankruptcy court.” Matter of Weber, 25 F.3d 413, 415 (7th Cir.1994). When asked at oral argument what her best effort was to raise the doctrine of merger before the bankruptcy court, Busson-Sokolik’s counsel was unable to present any evidence that the issue was addressed in that court. Instead she indicated that her focus had been on the “American rule” and the lack of a statutory basis for awarding the fees. Since we find no evidence in the record or from Busson-Sokolik’s counsel that the issue was raised in the bankruptcy court, we hold that any argument related to the merger doctrine was waived before it reached the district court.
Though it is within this court’s discretion to find an exception to waiver and to consider an appellant’s argument despite the appellant having waived it, the circumstances here hardly justify an exception. It is only under “exceptional circumstances” that we will hear an argument not adequately presented below. Matter of Weber, 25 F.3d at 416. Busson-Sokolik argues that we should consider the merger issue because “an award by the bankruptcy court of close to $9,000 in attorney’s fees to the Milwaukee School of Engineering based on an unenforceable contract is inherently unfair.” As we have already discussed above, there was a valid contract between the parties which provided for the allocation of attorney’s fees. Busson-Sokolik’s characterization of the contract as “unenforceable” is therefore incorrect. As to the amount of the fees awarded, Busson-Sokolik’s characterization is similarly misguided. Busson-Sokolik provides no support for his proposition that a $9,000 fee in a case such as this is inherently unreasonable or unfair. The bankruptcy court explicitly found that MSOE attorney’s fees in the amount of $8,955 were reasonable. Absent any meaningful challenge to the award by Bus-son-Sokolik, we see no reason to disturb that finding.
The district court first became aware of Busson-Sokolik’s merger argument in a reply brief. At that point the issue was waived twice over: first, because the argument was never raised in the bankruptcy court; and second, because arguments raised for the first time in a reply brief as opposed to the appellant’s opening brief are deemed waived. See, e.g., Nelson v. La Crosse County Dist. Atty., 301 F.3d 820, 836 (7th Cir.2002); James v. Sheahan, 137 F.3d 1003, 1008 (7th Cir.1998). The proper response to an argument improperly raised in such a brief is to move to strike the offending portion of the brief. Cleveland v. Pona Co., 38 F.3d 289, 297 (7th Cir.1994). MSOE timely filed a motion to strike the relevant portions of Bus-son-Sokolik’s reply brief and the district court properly granted the motion. Since Busson-Sokolik has failed to show “excep tional circumstances” that would make this case a favorable candidate for an exception to waiver, we decline to discuss the merits of those portions of his argument that relate to the merger doctrine.
C. The Parties’ Motions for Sanctions
Finding no error in the district court’s decision to grant MSOE’s motion to strike portions of Busson-Sokolik’s reply brief, we now turn to Busson-Sokolik’s arguments that the district court erred (1) in denying his request for sanctions against MSOE under Fed. R. Bankr.P. 9011, and (2) in entering sanctions against him and his attorney, Chomi Prag, under Fed. R. Bankr.P. 8020. We review both determinations for abuse of discretion. Such abuse occurs only when a court has acted contrary to the law or reached an unreasonable result. In re Rimsat, Ltd., 212 F.3d 1039, 1046 (7th Cir.2000).
1. Denial of Motion for Sanctions Against MSOE
An attorney is subject to sanctions under Fed. R. Bankr.P. 9011 when he submits a petition, pleading, written motion or other paper to the court that falls into one of four categories: (1) the document was submitted for an improper purpose (i.e., to harass one’s adversary or to delay or drive up the costs of litigation); (2) the claims contained in the document are frivolous because they lack support under existing law; (3) the allegations contained in the document lack evidentiary support or are unlikely to have evidentiary support upon further investigation; or (4) the denials in the document are unwarranted based on the evidence. Fed. R. Bankr.P. 9011(b)(1)-(4). A motion for sanctions may be made under Fed. R. Bankr.P. 9011(c)(1)(A), as Busson-Sokolik did in this case, but any such motion is subject to a 21-day safe harbor provision.
Busson-Sokolik alleges sanctionable behavior on the part of MSOE based largely on statements contained in MSOE’s brief before the district court. However, we need not reach the merits of any alleged violation on the part of MSOE because Busson-Sokolik undisputedly violated the safe harbor provision. On his own admission in the district court on October 31, 2008 and in his brief before this court, Busson-Sokolik concedes that he and his attorney did not provide MSOE with an adequate opportunity to withdraw the contested portions of its brief as required by the safe harbor provision of Fed. R. Bankr.P. 9011(c)(1)(A).
While we appreciate the candor with which Busson-Sokolik and his counsel have acknowledged their error in failing to abide by the 21-day window, their forthcomingness is not sufficient to persuade us to revive an inquiry into the allegations raised. Though Busson-Sokolik correctly points out that courts are able to enter an order for sanctions on their own initiative, there is no requirement under Fed. R. Bankr.P. 9011(c)(1)(B) that a court act sua sponte to impose sanctions. Chief Judge Clevert denied Busson-Sokolik’s motion for sanctions based on the safe harbor provision, a decision which we find com ports with the law. To the extent that he was nevertheless empowered to impose sanctions under Fed. R. Bankr.P. 9011(c)(1)(B) and declined to do so, we choose not to disturb that judgment.
2. Sanctions Imposed Against Busson-Sokolik and Chomi Prag
We now turn to the final issue for our review, namely whether the district court abused its discretion when it awarded sanctions for filing a frivolous appeal against Busson-Sokolik and his attorney, Chomi Prag.
The district court’s imposition of sanctions was based on Fed. R. Bankr.P. 8020, which reads as follows:
If a district court or bankruptcy appellate panel determines that an appeal from an order, judgment, or decree of a bankruptcy judge is frivolous, it may, after a separately filed motion or notice from the district court or bankruptcy appellate panel and reasonable opportunity to respond, award just damages and single or double costs to the appellee.
Chief Judge Clevert made several determinations in support of his finding that Busson-Sokolik’s “appeal, as litigated, was frivolous.” He summarized Busson-Sokolik and Prag’s behavior throughout the course of the proceedings as follows:
Motions were filed by appellant without any basis in the rules, deadlines were ignored, procedural requirements were dismissed as unnecessary, and duplicative filings and objections were made thereby making it impossible for appellee to minimize its costs in this action.
In his decision, Chief Judge Clevert referenced appellants’ reliance on the merger doctrine despite having waived it, several misstatements in the record made by Prag, the Fed. R. Bankr.P. 9011 motion filed against MSOE, which he called “baseless,” and the improper filing of an appeal to this court while district court proceedings were still pending.
We do not find that Chief Judge Clevert erred in imposing sanctions based on Fed. R. Bankr.P. 8020. Busson-Sokolik and his attorney were free to appeal their case to the district court, but ample evidence suggests that the manner in which the appeal was litigated bordered on the frivolous. Courts consider a variety of factors in deciding whether to impose sanctions under Fed. R. Bankr.P. 8020. We are not convinced that Busson-Sokolik and his attorney appealed in bad faith. However, bad faith is only one of the many factors to be considered in determining whether sanctions are appropriate in any given case. We are also not convinced that the appeal itself (as contrasted with the manner in which the appeal was litigated) was frivolous. Because of appellants’ procedural error in failing to abide by the safe harbor provision of Fed. R. Bankr.P. 9011, the courts have never reached the merits of that claim. And because courts are able to find an exception to waiver, the merger argument, though unsuccessful, did have some basis in law. Appellants’ most egregious errors in this litigation appear to have been procedural ones. These errors were numerous and well documented. Therefore, given the stringent standard of abuse of discretion by which we are bound, we find that the act of awarding sanctions under Fed. R. Bankr.P. 8020 was a reasonable exercise of Chief Judge Clevert’s discretion.
Notwithstanding the reasonableness of the decision to award sanctions and the reasonableness of MSOE’s fees , we do not find that the full amount awarded in the district court was necessary to achieve the deterrent purposes of Fed. R. Bankr.P. 8020. As such, we exercise this court’s own discretion to reduce the sanctions imposed by half. In so doing, we acknowledge that “[w]hile an award of attorney’s fees may be necessary to fulfill the deterrent purposes of Rule 8020, the award should not subject Appellant to financial ruin.” In re Bonfield, 2005 WL 2810702 at *1 (W.D.Wash.). The fees accrued in this case are sizeable and would be difficult for many litigants to pay. Recognizing that Busson-Sokolik is a student who has filed for bankruptcy and finding no evidence of bad faith on the part of Busson-Sokolik or his attorney, we conclude that a reduction in sanctions is warranted in this case.
III. CONCLUSION
Busson-Sokolik and his attorney, Chomi Prag, are jointly and severally liable to MSOE for $30,971.25, an amount which we find represents “just damages” under Fed. R. Bankr.P. 8020. Busson-Sokolik remains solely liable for $18,347.65, an amount which represents the July 11, 2007 judgment on decision in the bankruptcy court, coupled with $2,098.87 in judgment interest. The remaining $30,971.25 of the fee award is Vacated. On all other grounds, we Affirm.
. Busson-Sokolik claims that “no funds changed hands” between him and MSOE, but since he does not dispute that his student account was credited with the loan money, this argument is unfounded. If the loan money was transferred to the student’s account, it became available for his use, much like a bank deposit. While the facts indicate that a credit on Busson-Sokolik’s student account was later refunded to his mother, this is irrelevant to the question of whether a loan was made to Busson-Sokolik in the first place. Finding no clear error on the question of whether the funds were in fact transferred to Busson-Sokolik and no defects in the formation of a valid contract between the parties, we affirm the finding that the sum MSOE transferred to Busson-Sokolik was a loan.
. “Abuse of discretion” is the clear standard for evaluating a judge’s decision to impose sanctions in a bankruptcy case. See In re Rimsat, Ltd., 212 F.3d 1039, 1046 (7th Cir.2000). While the standard for evaluating a judge’s decision not to impose sanctions in a bankruptcy case is somewhat less clear, we adopt the Sixth Circuit’s approach of using the "abuse of discretion” standard. See In re Downs, 103 F.3d 472, 480 (6th Cir.1996) (holding that the applicable standard of review for evaluating a bankruptcy court's denial of Fed. R. Bankr.P. 9011 sanctions is "abuse of discretion” and noting similar approaches taken by the Ninth and Tenth Circuits).
|
940654-26114 | OPINION
JOHN C. NINFO, II, Bankruptcy Judge.
This appeal arises from the November 15, 1996 Memorandum-Decision, Findings of Fact, Conclusions of Law and Order of Chief Bankruptcy Judge Stephen D. Gerling of the United States Bankruptcy Court for the Northern District of New York (the “Bankruptcy Court Order”) which: (1) modified the automatic stay pursuant to Bankruptcy Code Section 362(a)(7) to permit Manufacturers & Traders Trust Company (the “Bank”) to exercise a right of setoff under Section 553 to the extent of certain monies on deposit with the Bank in a Payment Account (the “Payment Account”) maintained in the name of Bennett Funding Group, Inc. (the “Debtor”); and (2) ordered that any excess in the Payment Account after the payment of the amounts owed to the Bank be turned over to Richard C. Breeden as Trustee (the “Trustee”). For the reasons set forth below, we AFFIRM the Bankruptcy Court Order permitting the setoff.
I. Facts
On March 29, 1996, the Debtor, along with its three other related corporate entities, filed voluntary Chapter 11 petitions, and on May 3,1996, the Bankruptcy Court approved the joint administration of the eases.
Prior to its filing, the Debtor was engaged in the business of originating, purchasing and selling commercial leases of copy machines and other office equipment. In order to obtain financing for its operations, the Debt- or compiled and sold to banks and other investors “packages” of leases where it was the lessor. As part of these financing transactions with banks, the Debtor prepared, executed and presented a “Payment Account Agreement” which governed the establishment of a Payment Account, which provided, in part, a convenient mechanism for the repayment of the monthly principal and interest which would become due to the bank. By the Payment Account Agreement the Debtor granted the banks a security interest in the monies on deposit in the Payment Account equivalent to one month’s advance payment due on all of the leases sold to that bank (the “Collateral”). The Bank would then automatically deduct this payment from the Account each month when it became due.
The Bank had entered into a total of six lease purchase financing transactions with the Debtor, but only two, those entered into on October 25, 1991 and January 31, 1992, remained unpaid at the time of the petition.
The Bank’s lease packages show the uniform pattern of documentation utilized by the Debtor in obtaining financing. In addition to a Payment Account Agreement, by an Assignment of Contracts and a separate Bill of Sale, the Debtor sold and assigned the lease, packages to the Bank. By a Servicing Agreement, the Debtor undertook to service the leases and collect the lease payments from the lessees and remit them to the Bank for deposit into the Payment Account on a monthly basis. The Debtor also executed a Guarantee of the lease payments due, a Guarantee Collateral Agreement and a Promissory Note, which included an amortization schedule of the monthly payment due to the Bank. It was this amortization schedule that the Bank utilized in deducting the monthly payment from the Payment Account.
Since the Payment Account Agreement is the focal point of this appeal, it is helpful to review some of its key provisions. Paragraph 6 of the Payment Account Agreement provided that the amounts deposited by the Debtor into the Payment Account were to be invested by the Bank, and any interest earned was to be credited to the Debtor, which was required to report and pay any income taxes which became due. However, there was no stated or negotiated interest rate provided for in the Agreement. Paragraph 7 of the Agreement authorized the Debtor to withdraw from the Account any interest or other amounts in excess of the Collatera once every three months, and provided that once perfor manee of all the obligations required under the financing documents were performed, the Debtor was entitled to withdraw any remaining amounts, including any accrued interest, from the Account. Paragraph 8 of the Agreement provided that until such time as all of the obligations required under the financing documents were performed, the Debtor was prohibited from assigning, withdrawing or selling any of its interests in the amounts on deposit in the Account.
As of the petition date, the balance in the Payment Account with the Bank was $53,- ' 691.75. On the October 25, 1991 lease package, the monthly payment due was $2,061.72, and the balance on the Note was $13,920.31. On the January 31, 1992 lease package, the monthly payment due Was $657.66, and the balance due on the Note was $9,989.25.
When the Debtor’s petition was filed, the Bank placed a “Strumpf-Style” administrative hold on the Payment Account. See Citizens Bank of Maryland v. Strumpf, — U.S. -, 116 S.Ct. 286, 133 L.Ed.2d 258 (1995) (citations omitted). On April 22, 1996, the Bank filed its Motion to Vacate the Automatic Stay to be allowed to exercise its alleged right of setoff against the Payment Account. After the Bankruptcy Court Order was entered, the Bank retained $23,909.56, the amount due on the two unpaid Promissory Notes, and it remitted $29,782.19, the excess in the Payment Account, to the Trustee.
II. Issues Presented
Whether the Bankruptcy Court abused its discretion in modifying the automatic stay to permit the Bank to exercise a right of setoff depends on whether: (1) there existed a mutuality of debts between the Debtor and the Bank, which in part depends on whether the Payment Account was a “general account”, rather than “special purpose account”; (2) Section 553(a)(3) precluded an exercise of the Bank’s right of setoff; and (3) there were otherwise compelling circumstances which would have precluded an exercise of the Bank’s right of setoff.
III. The Parties’Arguments
The Trustee’s primary argument, for which he relied on Katz v. First National Bank of Glen Head, 568 F.2d 964 (2d Cir.1977), was that the requirement of mutuality of debts does not exist in this case because the sums deposited into the Payment Account in excess of the Collateral were not “checkable” by the Debtor, which could not withdraw them at will. The Trustee also asserted, alluding to the existence of a “Ponzi” scheme, that setoff was precluded under Section 553(a)(3)(C) because the Bank’s debt to the Debtor was incurred for the purpose of obtaining a right of setoff against the Debtor. In support of his assertions, the Trustee pointed out that there were funds on deposit in the Payment Account which were substantially in excess of the required Collateral, and such funds-had not been withdrawn by the Debtor.
The Committee argued that for there to be mutual debts which would entitle the Bank to a right of setoff, the Payment-Account must be determined to be a “general” deposit account, rather than a “special purpose” account. The Committee asserted that the Payment Account was a “special purpose” account because: (1) it was established for a special purpose; (2) the monthly deposits into the Payment Account were accepted by the Bank to be applied to a pre-existing debt; (3) the Bank did not have the unfettered right to use and invest the funds on deposit; and (4) the Debtor was not entitled to withdraw the funds on deposit at will. The Committee also alleged that the intent of the parties was unclear from a reading of the Payment Account Agreement, which was in some respects ambiguous, and, therefore, the Bankruptcy Court should have conducted- a plenary hearing to determine whether or not the Payment Account was a “special purpose” account.
The Bank has maintained that: (1) mutuality of debts existed because of the Guarantee and the Promissory Notes; and (2) as correctly determined by the Bankruptcy Court, the Payment Account was a “general” account, and not a “special purpose” account, since: (a) there was no requirement that the funds on deposit in the Account be segregat ed and not commingled with the general assets of the Bank; (b) the Bank was required to pay interest on the Account; (c) the Debtor’s ability to withdraw funds from the Account only on a quarterly basis was a limitation which it imposed upon itself, and, therefore, did not affect the Debtor-Creditor relationship between the Bank and the Debt- or; (d) the critical provisions of the Payment Account Agreement were consistent with those of a “general account”; and (e) the way the Account was maintained as to the amounts on deposit in excess of the Collateral was consistent with the maintenance of a “general” account.
IY. Standard of Review
Rule 8013 of the Federal Rules of Bankruptcy Procedure determines this Panel’s review of a bankruptcy judge’s judgment, order or decree. Accordingly, a bankruptcy court’s findings of facts may not be set aside unless clearly erroneous, and a bankruptcy judge’s legal conclusions are reviewed de novo. See In re David Fischer, 202 B.R. 341, 344 (E.D.N.Y.1996); In re Dill, 163 B.R. 221, 224 (E.D.N.Y.1994); Piccolo v. Dime Sav. Bank of New York, 145 B.R. 753 (N.D.N.Y.1992); In re Southold Dev. Corp., 134 B.R. 705 (E.D.N.Y.1991). Accord In re Ionosphere Clubs, 922 F.2d 984, 988-89 (2d Cir.1990), cert. denied sub nom., Air Line Pilots Association International v. Shugrue, 502 U.S. 808, 112 S.Ct. 50, 116 L.Ed.2d 28 (1991). Further, a finding of fact is clearly erroneous “when, although there is evidence to support it, the reviewing court on the entire record is left with the definite and firm conviction that a mistake has been committed.” In re Dill, 163 B.R. at 224; In re Southold Dev., 134 B.R. at 708, n. 3 (citing Anderson v. Bessemer City, 470 U.S. 564, 573, 105 S.Ct. 1504, 1511, 84 L.Ed.2d 518 (1985)) (quoting United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 541-42, 92 L.Ed. 746, reh’g denied, 333 U.S. 869, 68 S.Ct. 788, 92 L.Ed. 1147 (1948))).
The decision of whether to lift the automatic stay is “committed to the sound discretion of the Bankruptcy Judge.” Manhattan King David Restaurant, Inc. v. Levine, 163 B.R. 36, 40 (S.D.N.Y.1993). As such, the Bankruptcy Judge’s decision may be overturned “only upon a showing of abuse of discretion.” In re Sonnax Industries, Inc., 907 F.2d 1280, 1286 (2d Cir.1990); In re One Times Square Associates Ltd. Partnership, 165 B.R. 773 (S.D.N.Y.1994), aff'd, 41 F.3d 1502 (2d Cir.1994), cert. denied, sub nom., One Times Square Associates Ltd. Partnership v. Banque Nationale de Paris, 513 U.S. 1153, 115 S.Ct. 1107, 130 L.Ed.2d 1072 (1995).
V. Discussion
We are aware that the Debtor’s filing came as a result of what is termed by the United States Securities and Exchange Commission and the media as the largest “Ponzi” scheme in U.S. history, and that this Payment Account Agreement mechanism was uniformly used by the Debtor in its financing transactions with approximately 250 banks, and that $8,000,000.00 or more was on deposit in these Accounts at the time the Debtor filed its petition. As such, the determination of the right to these monies is of significant consequence to the banks, the estate and the unsecured creditors of the Debtor.
We believe that the Bankruptcy Court did not abuse its discretion when it modified the automatic stay to permit the Bank to exercise a right of setoff under Section 553, and that the Bankruptcy Court was not clearly erroneous in finding that: (1) there was a mutuality of debts which existed between the Debtor and the Bank because the Payment Account, despite any limitations on the Account which existed at the election of the Debtor, was not inconsistent with a “general” account and was clearly not a “special purpose” account; (2) the preclusion to setoff in Section 553(a)(3)(C) was not applicable; and (3)there were no compelling circumstances presented which would otherwise limit the Bank’s right of setoff.
A. The Right of Setoff in General:
The right of setoff by a creditor is governed by Section 553 which does not create a right of setoff, but merely preserves the right if it otherwise exists under applicable non-bankruptcy law. See Citizens Bank of Maryland v. Strumpf, — U.S. —, 116 S.Ct. 286, 138 L.Ed.2d 258 (1995) (citations omitted); In re Chateaugay Corp., 94 F.3d 772, 777, n. 5 (2d Cir.1996); In re Ionosphere Clubs, Inc., 164 B.R. 839, 841 (Bankr.S.D.N.Y.1994). In this ease, the applicable New York State law recognizes both a common law and statutory right of setoff. In re Westchester Structures, Inc., 181 B.R. 730, 740 (Bankr.S.D.N.Y.1995).
A creditor bears the burden of proving a right of setoff and must establish the following three criteria: (1) the debtor must owe a debt to the creditor which arose pre-petition; (2) the debtor must have a claim against the creditor which arose prepetition; and (3) the debt and claim must be mutual. In re Ionosphere Clubs, Inc., 164 B.R. at 841 (citing Braniff Airways, Inc. v. Exxon Co., U.S.A., 814 F.2d 1030 (5th Cir.1987)). Once the technical requirements of setoff are satisfied, “the bankruptcy judge must scrutinize the right of setoff in light of the Bankruptcy Code’s goals and objectives. These goals include ... equitable treatment of all creditors.” Ionosphere Clubs, 164 B.R. at 841 (quoting In re Lakeside Community Hospital, Inc., 151 B.R. 887 (N.D.Ill.1993)). In addition, the right of setoff is within the bankruptcy court’s discretion, and it may “invoke equity to bend the rules,” if required, to avert injustice. In re Westchester Structures, Inc., 181 B.R. at 740; see also Bohack Corp. v. Borden, Inc., 599 F.2d 1160 (2d Cir.1979).
With respect to the Bankruptcy Code’s goals and objectives, given the inherent premium on notions of equity, “the right of set off ... allows entities that owe each other to apply their mutual debts against each other, thereby avoiding ‘the absurdity of making A pay B when B owes A.’” Citizens Bank of Maryland v. Strumpf, — U.S. at -, 116 S.Ct. at 289. Moreover, setoff “occupies a favored position in our history of jurisprudence,” a position with which the courts should interfere “only under the most compelling circumstances.” Bohack Corp., 599 F.2d at 1164; In re Utica Floor Maint., Inc., 41 B.R. 941, 944 (N.D.N.Y.1984); see also Pereira v. United Jersey Bank, N.A., 201 B.R. 644 (S.D.N.Y.1996) (providing a comprehensive historical analysis of the Second Circuit’s repeated approval of the right of set-off).
With respect to the requirement that the debts be mutual, generally, mutual debts are “due to and from the same person in the same capacity.” In re Sentinel Prods. Corp., P.I., Inc., 192 B.R. 41, 45 (N.D.N.Y.1996) (quoting Modern Settings Inc. v. Prudential-Bache Sec., Inc., 936 F.2d 640, 648 (2d Cir.1991) (citations omitted)). Moreover, mutuality is strictly construed against the party seeking setoff. In re Sentinel Prods. Corp., 192 B.R. at 45 (citing In re Westchester Structures, Inc., 181 B.R. at 739). Accordingly, United States Bankruptcy Judge Burton R. Lifland has aptly stated: “a narrow interpretation of mutuality ensures that setoff is allowed only in situations in which the equitable considerations are strongest: namely where the claims or debts are owed between the same parties in the same right or capacity.” Ionosphere Clubs, 164 B.R. at 843.
B. The Bank’s Right of Setoff:
The finding of the Bankruptcy Court that both the Bank and the Debtor were obligated to each other on pre-petition debts and that mutuality existed was not clearly erroneous.
A pre-petition debt was owed by the Debt- or to the Bank by virtue of the Bank’s purchase of lease packages from the Debtor and the Debtor’s execution of the Promissory Notes and Guarantees for the October 25, 1991 and January 31, 1992 financing transactions.
A pre-petition debt was also owed to the Debtor by the Bank in that any amounts on deposit in the Payment Account in excess of the Collateral were “withdrawable” by the Debtor on a quarterly basis, resulting in a debtor (Bank) — creditor (Debtor) relationship. Although it may be true that the creation of the concept of the Payment Account and the drafting and presentation of the underlying Payment Account Agreement by the Debtor was intended by the Debtor to facilitate its payments to the Bank, and also encourage the Bank and other banks to do business with it, any limitations on the Payment Account appear to have been at the unilateral election of the Debtor, not at the insistence of the banks.
The Trustee, at oral argument, vigorously asserted that the Payment Account was nothing more than a “failed collateral account,” so that we should conclude that it could not have been intended to be, or in fact have been, even in part, a “general” account resulting in a debtor-creditor relationship. Even if the Payment Account was a “failed collateral account,” it was because of the woeful and unilateral failure of the Debtor. It appears that the Debtor originally drafted and regularly presented the Payment Account Agreement as part of its uniform documentation in order to obtain financing, and the Agreement was simply accepted by the banks. Even if the Account was a failed collateral account, this does not result in the conclusion that this was not, therefore, a “general” account as to any excess on deposit over the Collateral. The Debtor, or any party asserting that an account is a “special purpose” account, bears the burden to demonstrate that the account is other than a “general” account since New York State law presumes-that a deposit account is a “general” account. The Trustee’s mere argument that the Payment Account was nothing more than a “failed collateral account” does not persuade us that either the Debtor, the Trustee or the Committee met its burden before the Bankruptcy Court to demonstrate that the Payment Account was a “special purpose” account.
The Committee has argued that a determination of whether mutuality of debts existed turns on the determination of whether the Payment Account is viewed a “special purpose” account or as a “general” deposit account, and the Trustee has further argued that the requirement of mutuality of debts does not exist because the sums on deposit in the Payment Account were not “checkable” by the Debtor, or withdrawable at will.
Generally, if an account is held in trust or dedicated to a special use, a bank may, be prohibited from setoff. 5 L. King, Collier on Bankruptcy, ¶ 553.03[3][c][iv] at 36-37 (15th ed. rev.1996); see also The Swan Brewery Company, Ltd. v. United States Trust Company of New York, 832 F.Supp. 714, 718 (S.D.N.Y.1993). Under New York law, whether an account is general or specific depends upon the mutual intent of the parties, and there is a presumption that deposits are general, rather than specific. Swan Brewery Company, Ltd., 832 F.Supp. at 718 (citing Peoples Westchester Savings Bank v. F.D.I.C., 961 F.2d 327, 332 (2d Cir.1992), and In re Kountze Bros., 103 F.2d 785 (2d Cir.1939) (citations omitted)).
In Swan, although the objection to setoff was raised in the context of a summary judgment motion, Judge Sweet, stating that courts look to all of the circumstances surrounding the creation of an account to ascertain whether the depositor and the depository institution mutually intended the account to be special or general, provides an excellent survey of all of the pertinent cases cited by the Bank, the Committee and the Trustee in their briefs. See Swan Brewery Company, Ltd., 832 F.Supp. at 719-20.
We believe the most important principles learned from this survey are that: (1) even if funds are deposited for a specific purpose that is not determinative of the question of whether the account is a “general” or “specific purpose” account. Id.; In re Kountze Bros., 103 F.2d 785 (2d Cir.1939) (holding that an account was a general account although the funds were deposited for the specific purpose of the payment of bonds issued by the depositors); and (2) the existence or absence of an agreement that funds on deposit in the account were to be kept separate and isolated from other accounts in the bank or the bank’s general funds is a critical factor. See (In re Matter of Goodson Steel Corp.) Republic National Bank of Houston v. Sheinfeld, 488 F.2d 776 (5th Cir.1974). In Republic, funds from a Payroll Account which were used to meet the payroll of the debtor’s employees and to pay withholding and FICA taxes, was held to be a “general checking account”, and not a “special account” that deprived Republic of its setoff rights, since there was no agreement that the account was to be kept separate and isolated from the general funds in the bank. Additionally, the court noted that as long as the account had a credit balance, the debtor could use the funds in its regular course of business, exactly the same as it did with other checking accounts. Republic, 488 F.2d at 779-80; see also Miller v. Wells Fargo Bank International Corp., 540 F.2d 548, 560 (2d Cir.1976).
We believe, as did-the Bankruptcy Court, that the Debtor, the Committee and the Trustee have failed to meet their burden to establish that the Payment Account established pursuant to the Payment Account Agreement was a “special purpose” account. In its Order, the Bankruptcy Court stated that an “essential element of mutuality inheres in the tension between the debtor-depositor’s right to the use of the money on the one hand, and the creditor-bank’s right to repayment on the other____ ”, See Decision, p. 8 (citing In re Savig, 50 B.R. 1003, 1005 (D.Minn.1985)). We believe that the Bankruptcy Court was correct and did not err, based on the facts presented, when it found that mutuality of debts did exist, and that the Payment Account Agreement was a “general account”, and, as such, the right of setoff existed as to that portion of the Account which was in excess of the required Collateral. See Decision, p. 10.
As the Bankruptcy Court correctly stated, “at the most, the Account was a general deposit account, established for the special purpose of providing a vehicle for payment to the Bank, but nonetheless, was still a general deposit account.” See Decision, p. 8.
Although some of the provisions contained in the Payment Account Agreement might be found in an agreement which established a “special purpose” account, and might in another set of facts and circumstances help to persuade a court that an account was a “special purpose” account rather than a “general” account, when all of the provisions of the Payment Account Agreement are considered together along with the facts and circumstances of the relationship of these parties, including how the Payment Account was maintained, we believe that the conclusion by the Bankruptcy Court that this was a “general” account was correct.
One of the significant facts of the parties’ relationship was that for a significant period of time the amounts maintained on deposit in the Payment Account were far in excess of the required Collateral, and during the last year or more before the petition, even exceeded the payoff balances due on the Promissory Notes. This would indicate that the Debtor was maintaining the Account in that fashion for purposes other than to repay the Bank.
Furthermore, as previously discussed, certain critical terms of the Payment Account Agreement indicate that the Account was to be used as a general account. The Debtor: (1) was paid interest on all of the amounts on deposit; (2) was required to pay income taxes on the interest income; and (3) was allowed to withdraw from the Account quarterly. Although the Trustee has asserted that an ability to withdraw only quarterly negates the necessary element that deposits in a “general” account be “withdrawable at will,” it was the Debtor which determined its “will” regarding withdrawability, not the Bank which appears to have merely accepted the terms of the Debtor’s Payment Account Agreement as presented. Also, the Payment Account Agreement did not require that the Bank segregate the amounts on deposit in excess of the required Collateral, and it appears that such amounts were in fact commingled with the Bank’s other general deposits. We consider the absence of such a requirement to be a profound demonstration of the presumption that the treatment of the funds in the Payment Account was to be the same as that of any other “general” account maintained at the Bank.
We are not persuaded that the mere provision for one month’s advance payment to be maintained as Collateral in the Payment Account, transformed an account which would otherwise be clearly a “general” account into a “special purpose” account.
We also believe that the parties’ treatment of the monies on deposit in the Payment Account in excess of the required Collateral is consistent with that of a “general” account, and it typifies the Supreme Court’s assertion that such an account “consists of nothing more or less than a promise to pay, from the bank to the depositor ...” Strumpf, — U.S. at -, 116 S.Ct. at 290. Despite the limitations on the Payment Account, which were the result of the unilateral decision of the Debtor, the overwhelming use of the Payment Account was consistent with that of a “general” account. As such, the Bank remained indebted to the Debtor for the amounts deposited into the Payment Account in excess of the required Collateral, and the Debtor remained indebted on the Promissory Notes and Guarantees which it had executed to the Bank. Thus, mutuality of debts existed and the Bankruptcy Court was correct in finding that the Bank had a right of setoff.
C. § 553(a)(3) — Exceptions to the Right of Setoff:
Having properly determined that the Bank had a right of setoff under New York law, the Bankruptcy Court then addressed the Trustee’s contention that the right was limited by Section 553(a)(3). Decision, p. 10.
The Trustee’s argument was that the right of setoff was precluded because the Bank’s debt to the Debtor was incurred for the purpose of obtaining a right of setoff against the Debtor given the alleged existence of a “Ponzi” scheme and the fact that there were funds on deposit in the Payment Account significantly in excess of the required Collateral.
|
3167794-21983 | OPINION OF THE COURT
AMBRO, Circuit Judge.
In this appeal we explore the contours of a corollary to the “plain view” doctrine, known as “plain feel,” in the context of a Terry search. After doing so, we conclude that the search at issue here — during which an officer discovered marijuana in Vikram Yamba’s pocket, and this in turn led to the discovery of slips of paper resulting in his conviction for wire fraud— was legal. We therefore affirm the judgment of the District Court.
I. Factual and Procedural Background
Yamba was indicted by a grand jury on seven counts of wire fraud, in violation of 18 U.S.C. §§ 1343 and 2. The evidence against Yamba included several pieces of paper with what appeared to be credit card numbers written on them. These papers were discovered on Yamba’s person during a routine inventory search that took place when he was booked at the police station after having been arrested for possession of marijuana. After unsuccessfully moving to suppress the papers as the fruits of an illegal search, Yamba was found guilty on all seven counts after a bench trial. He was sentenced to 18 months in prison and three years of supervised release. On this appeal he challenges only his conviction, arguing that the search that turned up the marijuana was illegal and, thus, that the papers discovered at his booking on marijuana-possession charges should have been suppressed at his trial on the wire fraud charges.
The facts as found by the District Court regarding the initial search (which revealed the marijuana) are set out in detail in the District Court’s thorough opinion. See United States v. Yamba, 407 F.Supp.2d 703, 705-06 (W.D.Pa.2006). The Court’s findings are not clearly erroneous, United States v. Perez, 280 F.3d 318, 336 (3d Cir.2002), and we summarize them here.
While on duty, Officer Matthew Livingstone saw a U-Haul truck parked at a gas station in a manner that blocked one of the entrances from the street, as well as some parking spaces. Livingstone approached the truck. As he got closer, he saw that the driver, Charles Coleman, was holding an open pocket knife. Livingstone also saw two passengers in the truck, Yamba and Jimaah Kpakpo, making “quick and furtive movements” below the dashboard.
When Officer Livingstone asked Coleman what he was doing at the gas station, Coleman responded that he, Yamba, and Kpakpo were delivering furniture to friends. Coleman, however, could not provide the names of these friends or the address to which he was delivering the furniture. Livingstone then asked to see Coleman’s driver’s license and the rental truck agreement. He also asked if there was anything in the truck besides furniture. Coleman responded that there was not and told Livingstone that he could search the truck if he wanted. Before Livingstone did so, though, he radioed his dispatcher to check on Coleman’s credentials, and the dispatcher reported that there was an outstanding warrant for his arrest. Livingstone then handcuffed Coleman and sat him in the police car.
After that, Livingstone asked Yamba and Kpakpo to step out of the truck in order to conduct a patdown search of both of them. When he was frisking Yamba, Livingstone felt a plastic bag in Yamba’s right jacket pocket. Livingstone testified, credibly according to the District Court, as follows:
As I was conducting the pat-down, along the right side, right coat pocket, I could feel a plastic bag. I noted through training and experience [that] narcotics are stored and transported in plastic baggies. After a brief second of just feeling it, I could tell that there was a soft spongy-like substance that is consistent with marijuana inside. I then recovered the bag from his pocket and found it contained suspected marijuana.
Livingstone then handcuffed Yamba and put him in the police car with Coleman. The patdown search of Kpakpo was uneventful.
At that point Officer Livingstone searched the rear of the U-Haul and found that it contained new furniture, wrapped in plastic. Upon questioning, Kpakpo said that he owned the furniture, that he had purchased it with a credit card, and that he was selling it. Soon after this, the dispatcher informed Livingstone that she had mistakenly reported that there was an outstanding warrant for Coleman’s arrest, but that his license was suspended. Livingstone wrote Coleman a ticket for driving with a suspended license and then released him and Kpakpo. Because there was now no driver for the U-Haul, Livingstone had it impounded. He arrested Yamba for possession of marijuana.
At the police station during Yamba’s booking, an inventory search of his person revealed “several slips of paper with the words ‘credit card’ and lines of numbers alternating down the page.” When Livingstone asked Yamba about it, he reported that he had received the papers from a friend. Livingstone then read Yamba his Miranda warnings and questioned him. Based on that questioning, Livingstone obtained a search warrant for the U-Haul. It was later determined that the furniture in the U-Haul was purchased from a Kaufmann’s department store with one of the credit card numbers found on the papers discovered during the inventory search. This led to Yamba’s conviction, which forms the basis of this appeal.
We review de novo the District Court’s ruling that the initial pat-down search revealing the marijuana was legal and, thus, that the papers discovered at booking were admissible at the trial on the wire fraud counts. Perez, 280 F.3d at 336.
II. Discussion
Yamba’s argument proceeds in two parts. First, he contends that though Officer Livingstone ostensibly seized him pursuant to Terry v. Ohio, 392 U.S. 1, 8 S.Ct. 1868, 20 L.Ed.2d 889 (1968), the seizure in fact was illegal, as that case does not per mit an officer to do so under these circumstances. Second, he argues that, even if he was properly seized, the subsequent search of his person was outside the scope allowed under Terry. We address each contention in turn.
A. The Teiry Stop
In Terry, the Supreme Court held that a warrantless seizure based on less than probable cause could be constitutionally permissible. Specifically, the Court said that
where a police officer observes unusual conduct which leads him reasonably to conclude in light of his experience that criminal activity may be afoot and that the persons with whom he is dealing may be armed and presently dangerous, where in the course of investigating this behavior he identifies himself as a policeman and makes reasonable inquiries, and where nothing in the initial stages of the encounter serves to dispel his reasonable fear for his own or others’ safety, he is entitled for the protection of himself and others in the area to conduct a carefully limited search of the outer clothing of such persons in an attempt to discover weapons which might be used to assault him.
Id. at 30, 88 S.Ct. 1868. In outlining the contours of a permissible “Terry stop,” the Court noted that “[t]he officer need not be absolutely certain that the individual is armed; the issue is whether a reasonably prudent man in the circumstances would be warranted in the belief that his safety or that of others was in danger.” Id. at 27, 88 S.Ct. 1868. “The police officer must be able to point to specific and articulable facts which, taken together with rational inferences from those facts, reasonably warrant the intrusion.” Id. at 21, 88 S.Ct. 1868. Consistent with these statements, we have ruled that when “determining whether a stop is justified, the court must view the circumstances surrounding the stop in their entirety, giving due weight to the experience of the officers.” United States v. Rickus, 737 F.2d 360, 365 (3d Cir.1984).
In this case, the entirety of the circumstances, as described by Officer Livingstone’s testimony (found by the District Court to be credible), justified the Terry stop of Yamba. First, the U-Haul in which Yamba sat was parked in an odd and obstructive manner. Second, as Livingstone approached the U-Haul he observed the driver, Coleman, holding an open pocket knife. Third, he also noticed “quick and furtive movements” by the passengers, Yamba and Kpakpo. And fourth, upon having his dispatcher run a check on Coleman’s license, Livingstone was informed that Coleman had an outstanding arrest warrant. This report later proved to be in error, but Livingstone was not unreasonable in relying on it. See United States v. Mosley, 454 F.3d 249, 260 n. 16 (3d Cir.2006).
Given these facts, Livingstone was “justified in believing that the individual whose suspicious behavior he [wa]s investigating at close range [Yamba] [wa]s armed and presently dangerous to the officer or to others.” Terry, 392 U.S. at 24, 88 S.Ct. 1868. As Livingstone testified,
The pat-down was for officer safety. I already had one knife. I knew there was a weapon in the car, and a lot of times we as police officers like to add plus one. Where there’s one weapon, there’s likely another weapon.
There were three of them at one point [Coleman, Yamba, and Kpakpo], and there was myself and my partner!, who arrived at the scene shortly before Yam-ba’s pat-down]. So we’re outnumbered. It was for officer safety.
.... We already had one wanted person.
.... The fast movements of the hands going from the dash and then being concealed underneath them and what appeared to be in the pockets was also an issue.
The fact that Mr. Coleman could not provide any answers to simple questions that I had asked him also raised my suspicion of some possible criminal activity.
This testimony — again, found by the District Court to be credible — reveals the “specific and articulable facts which, taken together, with rational inferences from those facts, reasonably warranted]” subjecting Yamba to a pat-down search. Id. at 21, 88 S.Ct. 1868. The stop, therefore, was justified under Terry.
B. Seizing the Contraband under the “Plain Feel” Doctrine
That Officer Livingstone was entitled to stop Yamba under Terry still leaves the question of whether the pat-down search was properly conducted. For if it was not, there would be a ripple effect on the criminal case against him, ending in the exclusion of the papers with allegedly stolen credit card numbers as “fruitfs] of the poisonous tree.” Wong Sun v. United States, 371 U.S. 471, 487-88, 83 S.Ct. 407, 9 L.Ed.2d 441 (1963); see Sibron v. New York, 392 U.S. 40, 65-66, 88 S.Ct. 1889, 20 L.Ed.2d 917 (1968); United States v. Brown, 448 F.3d 239, 244 (3d Cir.2006). Those papers, of course, were found in a routine (and legal) inventory search upon Yamba’s booking at the police station, Illinois v. Lafayette, 462 U.S. 640, 103 S.Ct. 2605, 77 L.Ed.2d 65 (1983), which took place after his arrest — an arrest made possible only by the discovery of marijuana during the Terry search.
In Terry, the Supreme Court said that “[t]he scope of the search must be strictly tied to and justified by the circumstances which rendered its initiation permissible.” 392 U.S. at 18, 88 S.Ct. 1868. It later expounded on that statement when speaking about Terry searches specifically:
The purpose of this limited search is not to discover evidence of crime, but to allow the officer to pursue his investigation without fear of violence.... So long as the officer is entitled to make a forcible stop, and has reason to believe that the suspect is armed and dangerous, he may conduct a weapons search limited in scope to this protective purpose.
Adams v. Williams, 407 U.S. 143, 146, 92 S.Ct. 1921, 32 L.Ed.2d 612 (1972) (footnote omitted) (emphasis added). The proper scope of a search becomes critical when police discover something suspicious they were not expecting or intending to find. And in such a case the “plain view” doctrine often governs whether their discovery can be admitted against a defendant. See, e.g., Arizona v. Hicks, 480 U.S. 321, 107 S.Ct. 1149, 94 L.Ed.2d 347 (1987).
As the Supreme Court has said, precedent has “come to reflect the rule that if, while lawfully engaged in an activity in a particular place, police officers perceive a suspicious object, they may seize it immediately.” Texas v. Brown, 460 U.S. 730, 739, 103 S.Ct. 1535, 75 L.Ed.2d 502 (1983) (plurality opinion) (citing Frazier v. Cupp, 394 U.S. 731, 89 S.Ct. 1420, 22 L.Ed.2d 684 (1969); Harris v. United States, 390 U.S. 234, 88 S.Ct. 992, 19 L.Ed.2d 1067 (1968); United States v. Lefkowitz, 285 U.S. 452, 52 S.Ct. 420, 76 L.Ed. 877 (1932); Marron v. United States, 275 U.S. 192, 48 S.Ct. 74, 72 L.Ed. 231 (1927)). The “plain view” doctrine, therefore, is best understood “not as an independent exception to the warrant clause, but simply as an extension of whatever the prior justification for an officer’s access to an object may be.” Brown, 460 U.S. at 738-39, 103 S.Ct. 1535 (internal quotation marks omitted). So understood, courts have logically extended this concept to permit the admission of evidence discovered with other sensory faculties. See, e.g., United States v. Angelos, 433 F.3d 738, 747 (10th Cir.2006) (“plain smell”) (citing United States v. Haley, 669 F.2d 201, 203 (4th Cir.1982); United States v. Clayton, 210 F.3d 841, 845 (8th Cir.2000); United States v. Rhiger, 315 F.3d 1283, 1290 (10th Cir.2003)); United States v. Baranek, 903 F.2d 1068, 1070-72 (6th Cir.1990) (“plain hearing”). In this case, we deal with another application of the “plain view” doctrine: “plain feel.”
Unlike “plain hearing” and “plain smell,” which the Supreme Court has not decided, it has put its imprimatur on “plain feel.” In Minnesota v. Dickerson, the Court took up the issue of “whether police officers may seize nonthreatening contraband detected during a protective patdown search of the sort permitted by Terry,” and decided that “the answer clearly is that they may, so long as the officers’ search stays within the bounds marked by Terry.” 508 U.S. 366, 373, 113 S.Ct. 2130, 124 L.Ed.2d 334 (1993). Since Dickerson, our Court has not had the opportunity to examine and apply its teachings in a precedential opinion.
In Dickerson, police officers were patrolling a neighborhood and saw the defendant leaving what was known to them as a “crack house.” When he saw the officers in their patrol car, the defendant “abruptly halted and began walking in the opposite direction.” Id. at 368-69, 113 S.Ct. 2130. He then walked into an alley. This activity aroused the suspicion of the officers, and they decided to investigate further. After ordering the defendant to stop, one of the officers conducted a Terry search of the defendant. According to the Court, “[t]he search revealed no weapons, but the officer did take an interest in a small lump in [the defendant’s] nylon jacket.” Id. at 369, 113 S.Ct. 2130. The officer testified later at an evidentiary hearing that, “[a]s I pat-searched the front of his body, I felt a lump, a small lump, in the front pocket. I examined it with my fingers and it slid and it felt to be a lump of crack cocaine in cellophane.” Id. At that point the officer “reached into [the defendant’s] pocket and retrieved a small plastic bag containing one fifth of one gram of crack cocaine.” Id. The trial court admitted the contraband by “analogizing to the ‘plain-view’ doctrine.” Id. The Minnesota Court of Appeals, though finding a valid Terry stop, reversed the evidentiary ruling, concluding that “the officers had overstepped the bounds allowed by Terry in seizing the cocaine.” Id. at 370, 113 S.Ct. 2130. Both the Minnesota Supreme Court and the U.S. Supreme Court affirmed.
Before addressing the “plain feel” concept, the Supreme Court first described the “plain view” doctrine from which it derived:
[I]f police are lawfully in a position from which they view an object, if its incriminating character is immediately apparent, and if the officers have a lawful right of access to the object, they may seize it without a warrant. If, however, the police lack probable cause to believe that an object in plain view is contraband without conducting some further search of the object — i.e., if its incriminating character is not immediately apparent — the plain-view doctrine cannot justify its seizure.
Id. at 375, 113 S.Ct. 2130 (citations, brackets, and internal quotation marks omitted). Applying this rule, the Court focused on the trial court’s findings regarding what the officer believed about the lump in the defendant’s pocket. Specifically, it noted that the officer “made no claim that he suspected this object to be a weapon.” Id. at 378, 113 S.Ct. 2130 (internal quotation marks omitted). “[T]he officer’s own testimony,” the Court went on to say, “belies any notion that he ‘immediately’ recognized the lump as crack cocaine. Rather, ... the officer determined that the lump was contraband only after squeezing, sliding, and otherwise manipulating the contents of the defendant’s pocket — a pocket which the officer already knew contained no weapon.” Id.
Since Dickerson, many courts have focused on exactly how “immediately” an officer must know that something felt during a Terry search is contraband or precisely how much a clothed object can be manipulated before a search becomes illegal. See, e.g., United States v. Williams, No. CRIM. RDB-05-0240, 2005 WL 1902490, at *6 (D.Md. Aug.9, 2005); United States v. Ramirez, No. 02 CR 1228(GEL), 2003 WL 260572, at *7 (S.D.N.Y. Feb.5, 2003) (“No doubt a meta-physician could draw distinctions between ‘immediately’ knowing something, knowing it after a ‘second or two,’ being 90% certain of something after running one’s fingers across it, and knowing for certain after squeezing it.”). And in the course of admitting in evidence certain contraband that was discovered in a Terry search, courts have credited testimony by some police officers that suggests remarkable sensory powers. See, e.g., United States v. Ashley, 37 F.3d 678, 681 (D.C.Cir.1994) (admitting in evidence contraband known “immediately” to be crack, despite the fact that it was found “inside two pair of pants, a pair of briefs, a paper bag, a paper napkin, and a plastic bag”). Even the officer in this case testified — credibly, according to the District Court — that after feeling through a “middle medium weight jacket” for what “[pjrobably wasn’t even a half second,” he nevertheless “could tell right away” that the lump in Yamba’s pocket was marijuana.
We reject a narrow focus on how quickly and certainly the nature of an object felt during a Terry search is known and on how much manipulation of a person’s clothing is acceptable. In Terry, the Supreme Court authorized police officers to perform a routine pat-down search for weapons. Such searches necessarily involve a certain amount of “squeezing, sliding and otherwise manipulating” of a suspect’s outer clothing, 508 U.S. at 378, 113 S.Ct. 2130, in an attempt to discern whether weapons are hidden underneath. Thus, the problem with the officer’s actions in Dickerson must be more than simply their occurrence. And a close reading of the case reveals what that “more” entails.
The Court in Dickerson clearly identified the object of a proper Terry search: weapons. Id. at 373, 113 S.Ct. 2130 (stating that a Terry search “must be strictly limited to that which is necessary for the discovery of weapons which might be used to harm the officer or others nearby.” (internal quotation marks omitted)). The same sentence in Dickerson that identified “squeezing, sliding and otherwise manipulating the contents of the defendant’s pocket” as a problem also noted that the officer committed the offending conduct when he “already knew [the pocket] contained no weapon.” Id. at 378, 113 S.Ct. 2130. The Court repeated the refrain in the next paragraph:
Here, the officer’s continued exploration of [the defendant’s] pocket after having concluded that it contained no iveapon was unrelated to the sole justification of the search under Terry: the protection of the police officer and others nearby. It therefore amounted to the sort of evidentiary search that Terry expressly refused to authorize and that we have condemned in subsequent cases.
Id. (emphasis added; brackets, ellipsis, internal quotation marks, and citations omitted).
The proper question under Dickerson, therefore, is not the immediacy and certainty with which an officer knows an object to be contraband or the amount of manipulation required to acquire that knowledge, but rather what the officer believes the object is by the time he concludes that it is not a weapon. That is, a Terry search cannot purposely be used to discover contraband, but it is permissible that contraband be confiscated if spontaneously discovered during a properly executed Terry search. Moreover, when determining whether the scope of a particular Terry search was proper, the areas of focus should be whether the officer had probable cause to believe an object was contraband before he knew it not to be a weapon and whether he acquired that knowledge in a manner consistent with a routine frisk. United States v. Jones, 303 F.Supp.2d 702, 706 (D.Md.2004) (citing Dickerson, 508 U.S. at 376, 113 S.Ct. 2130; Hicks, 480 U.S. at 327, 107 S.Ct. 1149).
Assuming that an officer is authorized to conduct a Terry search at all, he is authorized to assure himself that a suspect has no weapons. He is allowed to slide or manipulate an object in a suspect’s pocket, consistent with a routine frisk, until the officer is able reasonably to eliminate the possibility that the object is a weapon. If, before that point, the officer develops probable cause to believe, given his training and experience, that an object is contraband, he may lawfully perform a more intrusive search. If, indeed, he discovers contraband, the officer may seize it, and it will be admissible against the suspect. If, however, the officer “goes beyond what is necessary to determine if the suspect is armed, it is no longer valid under Terry and its fruits will be suppressed.” Dickerson, 508 U.S. at 373, 113 S.Ct. 2130.
|
5763160-16949 | PER CURIAM:
Margaret Hayward appeals the decision of the district court affirming the Department of Labor’s (DOL) decision to deny survivor benefits for the death of her husband. The Energy Occupational Illness Compensation Program Act, 42 U.S.C. § 7384 et seq. (the Act), provides, among other things, for the lump-sum payment to survivors of persons who contracted cancer as a result of exposure to radiation during employment in the United States nuclear weapons program. Survivors may receive benefits under the Act “only if’ there is a 50% or greater probability that the decedent contracted cancer from exposure to radiation during employment in a covered facility. Id. at §§ 73841(9)(B), 7384n(b). To make this determination, the DOL is required to use interactive software that estimates the probability of causation for various types of cancer using certain “default settings.” 42 C.F.R. §§ 81.20, 81.21. The sole issue in this appeal is whether the DOL acted arbitrarily and capriciously in refusing to adjust these default settings in light of the decedent’s exceedingly rare form of prostate cancer. Under the deferential standard of review required, because the DOL set forth a rational connection between the relevant factors and its decision to retain the default settings, the district court did not err in granting summary judgment upholding the DOL’s decision. As a result, we affirm.
I. STATUTORY SCHEME
Congress enacted The Energy Occupational Illness Compensation Program Act to provide benefits to employees with illnesses caused by exposure to radiation and other toxic substances in the course of their work for the Department of Energy (DOE) or its predecessor agencies, and certain of its contractors and subcontractors. See 42 U.S.C. § 7384. Under Part B of the Act, employees or their eligible survivors can receive a lump-sum payment of $150,000 for certain illnesses, including cancer, caused by exposure to radiation in the course of employment at Department of Energy facilities. Id. at §§ 73841(9)(A) and (B), 7384s(a)(l). An employee or his or her survivors are entitled to compensation under Part B of the Act “if, and only if, the cancer ... was at least as likely as not related to employment” in a covered facility. Id. at § 7384n(b).
An individual seeks benefits under Part B of the Act by filing a claim with the DOL’s Office of Workers’ Compensation Programs (OWCP). See 20 C.F.R. §§ 30.100, 30.101. When a claim is made, the OWCP gathers the employee’s relevant factual and medical information and transfers it to the National Institute for Occupational Safety and Health (NIOSH) to perform a radiation dose reconstruction. The dose reconstruction estimates the amount of radiation received by the employee during covered employment using a variety of factors including the employee’s age, gender, employment history, workplace characterization data, and any other information useful for characterizing workplace radiation exposure. 42 C.F.R. § 82.14. The OWCP uses the completed dose reconstruction to determine whether the employee’s cancer is “at least as likely as not related to employment” in a covered facility. See 42 U.S.C. § 7384n(b).
The OWCP bases its probability calculation on an interactive-computer-software program specifically designed for adjudication of claims under Part B of the Act, the NIOSH-IREP. 42 C.F.R. § 81.20. The NIOSH-IREP “models the dose-response relationship between ionizing radiation and 33 cancers using morbidity data from the ... Japanese atomic bomb survivor cohort.” Id. at § 81.10(a). The program uses these models coupled with NIOSH’s dose reconstruction to calculate the probability that the employee developed cancer due to radiation exposure during employment in a covered facility. The program’s default settings account for uncertainty from several sources, including statistical uncertainty in the various cancer risk models. Id. at § 81.11. The program, however, contains a feature entitled “User Defined Additional Uncertainty” that “can be adjusted to account for the presence of additional uncertainty and bias correction not presently” accounted for by the program’s default settings. The program’s-manual states that the default settings should only be adjusted “after sufficient justification accompanied by a written rationale.”
After OWCP finishes its probability of causation calculation, it issues a recommended decision on the claim. 20 C.F.R. § 30.305(a). The claimant can file objections within 60 days of the date of the recommended decision. Id. at § 30.310(a). Once adjudication of the claim is complete, the Final Adjudication Branch within the OWCP issues the DOL’s final decision.
II. FACTUAL AND PROCEDURAL BACKGROUND
Margaret Hayward is the surviving widow of Milton Hayward. Mr. Hayward worked in the DOE’s nuclear weapons program for over fifteen years, during which time he was exposed to ionizing radiation. On February 3, 1997, doctors diagnosed Mr. Hayward with sarcomatoid carcinoma, an exceedingly rare form of prostate cancer. The cancer spread rapidly and he died shortly thereafter.
Ms. Hayward filed a claim for compensation under Part B of the Act based on her husband’s death. As required by the Act, the OWCP gathered Mr. Hayward’s relevant factual and medical information and transferred the claim to NIOSH to perform a radiation dose reconstruction. OWCP then used the dose reconstruction and the NIOSH-IREP program to calculate a 21.41% probability that Mr. Hayward developed cancer from radiation exposure during his employment with the DOE. Based on this figure, the OWCP issued a recommended decision denying Ms. Hayward’s claim.
Ms. Hayward objected to the OWCP’s recommended decision and requested a hearing. Although she lodged several objections, she primarily contended that the OWCP significantly underestimated the probability that radiation caused Mr. Hayward’s cancer due to its failure to consider the rarity of sarcomatoid carcinoma and its alleged higher correlation with radiation exposure (as compared to other forms of prostate cancer). At the hearing, Ms. Hayward provided medical literature regarding cancer patients treated with radiation therapy and a letter from Mr. Hayward’s doctor to support these claims. Ms. Hayward contended that this evidence justified adjusting the default settings of the “User Defined Uncertainty Distribution” within the NIOSH-IREP program.
Following the hearing, the DOL hearing representative sought guidance from a DOL physicist concerning the propriety of adjusting the default settings of the NIOSH-IREP program based on Ms. Hayward’s objections. Nearly a month later, and after consulting with a representative of the developer of the program, the DOL physicist concluded that Ms. Hayward’s objections did not justify altering the program’s default settings. Thereafter, the OWCP’s Final Adjudication Branch issued a final decision denying Ms. Hayward’s survivor claim.
Ms. Hayward filed an original complaint in the Northern District of Texas, alleging that the DOL acted arbitrarily and capriciously in refusing to adjust the default settings of the NIOSH-IREP program to account for the rarity of Mr. Hayward’s cancer. Subsequently, the Director of the Division of Energy Employees Occupational Illness Compensation Program, acting under his regulatory authority, vacated the OWCP’s final decision and returned Ms. Hayward’s claim to the Final Adjudication Branch for a revised final decision addressing in more detail Ms. Hayward’s objections. The revised final decision more thoroughly addressed Ms. Hayward’s objections by incorporating the findings of the DOL physicist. Ms. Hayward then filed an amended complaint in the Northern District, again arguing that the DOL acted arbitrarily and capriciously in denying her claim. The DOL moved for summary judgment on this claim, arguing that it was entitled to judgment as a matter of law because the administrative record showed that the OWCP considered the relevant factors and issued a final decision rationally related to those factors. The district court granted summary judgment for the DOL. Ms. Hayward appeals that decision.
III. STANDARD OF REVIEW
This Court reviews the grant of summary judgment de novo, applying the same standard to review the DOL decision as the district court. Templet v. HydroChem Inc., 367 F.3d 473, 477 (5th Cir.2004). Because Part B of the Act does not contain a standard of review and does not require that a formal hearing be held, the district court correctly reviewed the OWCP’s final decision under the arbitrary and capricious standard set forth in section 706(2)(A) of the Administrative Procedures Act.
The arbitrary and capricious standard is “highly deferential,” and we must afford the agency’s decision “a presumption of regularity.” United States v. Garner, 767 F.2d 104, 116 (5th Cir.1985) (citation omitted). We limit our review to whether the agency “articulated a rational connection between the facts found and the decision made,” Pension Benefit Guar. Corp. v. Wilson N. Jones Mem’l Hosp., 374 F.3d 362, 367 (5th Cir.2004), and “it is well-settled that an agency’s action must be upheld, if at all, on the basis articulated by the agency itself.” Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 42-43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983). Although we must conduct a “searching and careful review” of the administrative record to determine whether the agency acted in an arbitrary and capricious manner, we may not substitute our judgment for the agency’s. Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 415-416, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971). Our mandate is not to “weigh the evidence pro and con but to determine whether the agency decision was based on a consideration of relevant factors and whether there was a clear error of judgment.” Delta Found., Inc. v. United States, 303 F.3d 551, 562 (5th Cir. 2002) (internal quotations omitted). Courts will “uphold a decision of less than ideal clarity if the agency’s path may reasonably be discerned.” Nat’l Ass’n of Home Builders v. Defenders of Wildlife, — U.S. -, 127 S.Ct. 2518, 2530, 168 L.Ed.2d 467 (2007) (quoting Bowman Transp., Inc. v. Arkansas-Best Freight System, Inc., 419 U.S. 281, 286, 95 S.Ct. 438, 42 L.Ed.2d 447 (1974)). In reviewing technical agency decisions such as these, “[w]e must look at the decision not as a chemist, biologist, or statistician that we are qualified neither by training nor experience to be, but as a reviewing court exercising our narrowly defined duty of holding agencies to certain minimal standards of rationality.” Gulf Restoration Network v. United States Dep’t of Transp., 452 F.3d 362, 368 (5th Cir.2006) (citation omitted).
IV. DISCUSSION
This case presents the very circumstance contemplated by Gulf Restoration. Ms. Hayward asks the court to disregard the agency’s expertise and substitute its own judgment of scientific literature unaccompanied by expert analysis. Ms. Hayward’s sole contention is that the OWCP acted arbitrarily and capriciously in refusing to adjust the default settings of the NIOSH-IREP program to account for the rare nature of her deceased husband’s cancer. She bases this argument on two related grounds. First, she argues that sar-comatoid carcinoma, because of its rarity, cannot be fairly compared to the typical adenocarcinoma, the type of prostate cancer most represented in the dose-risk relationship model used by the NIOSH-IREP program to determine the probability of causation for all types of prostate cancer. Second, she argues that sarcomatoid carcinoma should be treated differently than other forms of prostate cancer because, she contends, it is far more likely to be caused by exposure to radiation.
Having reviewed the administrative record, we agree that the OWCP did not engage in arbitrary and capricious decision making when it chose to retain the default settings of the NIOSH-IREP program. The OWCP, after consulting with a DOL physicist, issued a final decision that specifically addressed both of Ms. Hayward’s objections. With respect to Ms. Hayward’s objection concerning the rarity of sarcomatoid carcinoma, the OWCP responded that the excess relative risk (ERR) of prostate (or any) cancer is determined by the following formula: ERR/ dose [Cancer risk attributable to radiation exposure] [divided by] [base-link risk (of that cancer to the general population) [plus] cancer risk attributable to radiation exposure]. It further stated:
The prostate cancer morphology (i.e., adenocarcinoma or sarcomatoid carcinoma) does not affect the ERR/dose and the resultant NIOSH-IREP result. Any difference (or rarity) in the type of prostate cancer is already accounted for in the definition of ERR/dose; the incidence rate of each of these prostate cancers is inherently reflected within the “general population” cohort. NIOSH-IREP uses the ERR/does data for “All Male Genitalia” from the Japanese Atomic Bomb survivors, and therefore, would be inclusive of all types of prostate cancers.
Thus, the OWCP specifically considered Ms. Hayward’s objection concerning the rarity of sarcomatoid carcinoma but determined that the dose-risk model that the NIOSH-IREP program uses to calculate the probability of causation for all types of prostate cancer already accounts for this factor. In other words, the general prostate cancer data used by the OWCP, while based primarily on adenocarcinoma (because it is more common), includes cases of sarcomatoid carcinoma as well and thus yields an accurate probability of causation for both types of prostate cancer.
Indeed, the practice of grouping rare cancers in more general cancer categories was specifically intended by HHS — the agency charged with the task of developing a method of computing causation under the Act. HHS regulations indicate that the failure to group rare cancers with more common cancers would provide the rare cancers with an unfair advantage due to the high level of uncertainty about their dose-risk relationship. See Guidelines for Determining Probability of Causation Under the Employees Energy Occupational Illness Compensation Program Act of 2000; Final Rule, 67 Fed.Reg. 22296, 22302 (May 2, 2002). To counter this uncertainty, HHS noted that the dose-risk models used by NIOSH would group rarer cancers into more general cancer categories. Id. Thus, in refusing to adjust the default settings of the NIOSH-IREP program to account for the rarity of sarcoma-toid carcinoma, the OWCP operated the program consistent with its intended use.
With respect to Ms. Hayward’s argument that the NIOSH-IREP program failed to account for the greater probability that radiation exposure caused her husband’s cancer, the OWCP’s final decision responded:
• Radiation is only one of many potentially cancer-causing agents; the carcinogenic effects of radiation cannot be distinguished from any other toxic agent. Further, it is a generally accepted fact that prostate cancer is less radiogenic than many other cancers.
• There is no evidence that sarcomatoid carcinoma of the prostate is highly correlated with radiation exposure, nor that this rare form of prostate cancer (sarcomatoid) is more radiogenic than the more general form (adenocarci-noma)
In its initial decision, the OWCP more fully explained its statement that there is “no evidence” that sarcomatoid carcinoma is more radiogenic than adenocarcinoma. The OWCP noted that the:
literature [Ms. Hayward] submitted on the correlation on this point refers to radiation that was received as part of a therapeutic treatment for the [adenocar-cinoma] form of prostate cancer. Such treatment involves a much more focused and localized administration of radiation than would occur in an occupational setting.
The literature submitted by Ms. Hayward suggests that individuals already suffering from the adenocarcinoma form of prostate cancer are more likely to develop sarcomatoid carcinoma if they undergo radiation therapy as treatment. The OWCP specifically noted, and Ms. Hayward does not contest, that Mr. Hayward was diagnosed with only one primary cancer, sarco-matoid carcinoma. Thus, the OWCP could rationally conclude that this literature is inapplicable to Mr. Hayward’s situation.
Under our limited scope of review,' the question is not whether sarcomatoid carcinoma is more radiogenic than other forms of prostate cancer, whether Mr. Hayward contracted cancer from radiation exposure during his employment, or even whether the OWCP used the best method to make this determination. Rather, the question is a narrow one: Whether the OWCP considered the relevant factors and provided a reasoned basis for its decision to deny Ms. Hayward’s claim? After reviewing the administrative record, we conclude that the OWCP satisfied this minimum threshold and thus its denial of Ms. Hayward’s survivor claim was not arbitrary or capricious.
|